Underwriting Agreement
Exhibit 1
June 13, 2007
ThinkEquity Partners LLC
Feltl and Company, Inc., d/b/a Feltl and Company
As Representatives of the several Underwriters
c/o ThinkEquity
Partners LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Wireless Ronin Technologies, Inc., a Minnesota corporation (the
“Company”), proposes to issue and sell to the
several underwriters named in Exhibit A hereto (the
“Underwriters”) an aggregate of
3,000,000 shares of its common stock, $.01 par value
per share (the “Common Stock”) and an
additional 600,000 shares of Common Stock if and to the extent
that such additional shares have been registered pursuant to a
Rule 462(b) Registration Statement (as defined below) (the
“Rule 462(b) Firm Shares”), and the
selling shareholder identified on Exhibit B hereto
(the “Selling Shareholders”) propose to sell to
the Underwriters an aggregate of 1,000,000 shares of Common
Stock. The 3,000,000 shares of Common Stock and any
Rule 462(b) Firm Shares to be sold by the Company and the
1,000,000 shares of Common Stock to be sold by the Selling
Shareholders are collectively called the “Firm
Shares.” In addition, the Company has granted to the
Underwriters an option to purchase up to an additional
600,000 shares of Common Stock, and an additional 90,000
shares of common stock if and to the extent that such shares
have been registered pursuant to a Rule 462(b) Registration
Statement (the “Rule 462(b) Optional
Shares”), as provided in Section 2 of this
Underwriting Agreement (this “Agreement”). The
600,000 shares of Common Stock subject to the Underwriters’
option to purchase and any Rule 462(b) Optional Shares are
collectively called the “Optional Shares”. The
Firm Shares and any Optional Shares purchased by the
Underwriters are collectively called the “Offered
Shares.” ThinkEquity Partners LLC, a Delaware limited
liability company (“ThinkEquity”) and Feltl and
Company, Inc., d/b/a Feltl and Company, a Minnesota corporation
(“Feltl”) have agreed to act as representatives
of the several Underwriters (in such capacity, the
“Representatives”) in connection with the
offering and sale of the Offered Shares.
The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) a
registration statement on
Form SB-2
(File
No. 333-142999),
which contains a form of prospectus to be used in connection
with the public offering and sale of the Offered Shares. Such
registration statement, as amended, including the financial
statements, exhibits and schedules thereto, in the form in which
it was declared effective by the Commission under the Securities
Act of 1933, as amended, and the rules and regulations
promulgated thereunder (collectively, the “Securities
Act”), including any information deemed to be a part
thereof at the time of effectiveness pursuant to Rule 430A
under the Securities Act, is called the “Registration
Statement.” Any registration statement filed by the
Company pursuant to Rule 462(b) under the Securities Act is
called the “Rule 462(b) Registration
Statement,” and from and after the date and time of
filing of the Rule 462(b) Registration Statement, the term
“Registration Statement” shall include the
Rule 462(b) Registration Statement. Such prospectus, in the
form first used by the Underwriters to confirm sales of the
Offered Shares, is called the “Prospectus.” All
references in this Agreement to (i) the Registration
Statement, the Rule 462(b) Registration Statement, a
preliminary prospectus or the Prospectus, or any amendments or
supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System
(“XXXXX”) and (ii) the Prospectus shall be
deemed to include the “electronic Prospectus” provided
for use in connection with the offering of the Offered Shares as
contemplated by Section 3(l) of this Agreement.
The Company and the Selling Shareholders hereby confirm their
respective agreements with the Underwriters as follows:
1. Representations and Warranties.
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A. Representations and Warranties of the
Company. The Company hereby represents, warrants
and covenants to each of the Underwriters that:
(a) Compliance with Registration
Requirements. The Registration Statement and any
Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act or, with
respect to any Rule 462(b) Registration Statement, will be
declared effective by the commission upon filing thereof. The
Company has complied with all requests of the Commission for
additional or supplemental information. No stop order suspending
the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement is in effect, and no
proceedings for such purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated or
threatened by the Commission.
Each preliminary prospectus and the Prospectus, complied or will
comply in all material respects with the applicable provisions
of the Securities Act, and if filed by electronic transmission
pursuant to XXXXX (except as may be permitted by
Regulation S-T
under the Securities Act), was identical to the copy thereof
delivered to the Underwriters for use in connection with the
offer and sale of the Offered Shares. Each of the Registration
Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became or
becomes effective, complied or will comply in all material
respects with the applicable provisions of the Securities Act
and did not and will not, through the date of any Option Closing
Date (as defined below) and completion of the Underwriters’
distribution of the Offered Shares, 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 Prospectus and any prospectus included
within the Disclosure Package (as defined below), each as
amended or supplemented, as of the Initial Sale Time (as defined
below), as of the First Closing Date (as defined below) or any
Option Closing Date, as the case may be, did not and will not
contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties set
forth in the two immediately preceding sentences do not apply to
statements in or omissions from the Registration Statement, any
Rule 462(b) Registration Statement, or any post-effective
amendment thereto, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity
with information relating to any Underwriter furnished to the
Company in writing by the Representatives expressly for use
therein, it being understood and agreed that the only such
information furnished by the Representatives to the Company
consists of the information described in Section 9(b)
below. There are no agreements or understandings (including
those that have not been reduced to writing) or other documents
required to be described in the Prospectus or to be filed as
exhibits to the Registration Statement which have not been
described or filed as required
(b) Offering Materials Furnished to the
Underwriter. The Company has delivered to each of
the Representatives one complete manually signed copy of the
Registration Statement and of each consent and certificate of
experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and preliminary
prospectuses and the Prospectus, as amended or supplemented, in
such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.
(c) Disclosure Package. The term
“Disclosure Package” shall mean, collectively,
(i) the preliminary prospectus that is included in the
Registration Statement immediately prior to the Initial Sale
Time (as defined below), if any, as amended or supplemented,
(ii) any issuer free writing prospectuses as defined in
Rule 433 of the Securities Act (each, an “Issuer
Free Writing Prospectus”) identified in
Schedule 1 hereto, and (iii) any other free
writing prospectus that the parties hereto shall hereafter
expressly agree in writing to treat as part of the Disclosure
Package. As of 4:30 pm (Eastern time) on the date of this
Agreement is referred to herein as the “Initial Sale
Time”.
(d) Issuer Free Writing
Prospectuses. Each Issuer Free Writing
Prospectus, as of its issue date and at all subsequent times
through the completion of the public offering and sale of the
Offered Shares or until any earlier date that the Company
notified or notifies the Representatives as described in the
next sentence, did not, does not and will not include any
information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement. The
foregoing sentence does not apply to statements in or omissions
from any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by
the
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Representatives specifically for use therein, it being
understood and agreed that the only such information furnished
by the Representatives consists of the information described as
such in Section 9(b) hereof.
(e) Distribution of Offering Material By the
Company. The Company has not distributed and will
not distribute, prior to the later of any Option Closing Date
and the completion of the Underwriters’ distribution of the
Offered Shares, any offering material in connection with the
offering and sale of the Offered Shares other than a preliminary
prospectus, the Prospectus, any Issuer Free Writing Prospectus
reviewed and consented to by the Representatives or included in
Schedule 1 hereto or the Registration Statement.
(f) The Underwriting Agreement. This
Agreement has been duly authorized, executed and delivered by,
and is a valid and binding agreement of, the Company and its
Subsidiaries (as defined below) 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.
(g) Authorization of the Offered
Shares. The Offered Shares to be purchased by the
Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued
and delivered by the Company pursuant to this Agreement, will be
validly issued, fully paid and nonassessable.
(h) No Transfer Taxes. There are no transfer taxes
or other similar fees or charges under federal law or the laws
of any state, or any political subdivision thereof, required to
be paid in connection with the execution and delivery of this
Agreement or the issuance by the Company or sale by the Company
of the Offered Shares.
(i) No Applicable Registration or Other Similar
Rights. There are no persons with registration or
other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included
in the offering contemplated by this Agreement, except for such
rights as have been duly waived in writing prior to the date of
this Agreement, and, if requested in writing by the
Representatives, copies of such written waivers have been
furnished to the Representatives.
(j) No Material Adverse Change. Except as
otherwise expressly disclosed or described in the Disclosure
Package and the Prospectus, subsequent to the respective dates
as of which information is given in the Disclosure Package and
the Prospectus: (i) there has been no adverse change, or
any development that could reasonably be expected to result in
an adverse change in the condition, financial or otherwise, or
in the earnings, business, operations or prospects of the
Company that is, individually or in the aggregate, material to
the Company, whether or not arising from transactions in the
ordinary course of business, of the Company (any such change or
effect is called a “Material Adverse Change”);
(ii) the Company and any Subsidiaries, considered as one
entity, have neither incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or
agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of
capital stock or repurchase or redemption by the Company of any
class of capital stock, nor is there any agreement or
understanding with respect to the same.
(k) Independent Accountants. Virchow,
Xxxxxx & Company, LLP, who have expressed their
opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes and schedules
thereto) filed with the Commission as a part of the Registration
Statement and included in the Disclosure Package and the
Prospectus, are and, during the periods covered by their report,
were an independent registered public accounting firm within the
meaning of
Regulation S-X
issued under the Securities Act and the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and
as required under the Securities Act and the Exchange Act.
(l) Preparation of the Financial
Statements. The financial statements filed with
the Commission as a part of the Registration Statement and
included in the Disclosure Package and the Prospectus present
fairly the financial position of the Company as of and at the
dates indicated and the results of its operations and cash flows
for the periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting
principles as applied in the United States applied on a
consistent basis throughout the periods involved. No other
financial statements or supporting schedules are required to be
included in the Registration Statement. The financial
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data set forth under the captions “Prospectus
Summary — Summary of Selected Financial
Information,” “Capitalization,” “Selected
Financial Data,” “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”
and elsewhere in the preliminary prospectus included the
Disclosure Package and the Prospectus fairly present the
information set forth therein on a basis consistent with that of
the financial statements contained in the Registration Statement.
(m) Incorporation and Good Standing of the
Company. The Company has been duly incorporated
and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation and has
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Disclosure Package and the Prospectus and to enter into and
perform its obligations under this Agreement. The Company is
duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except for such
jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in
a Material Adverse Change. All of the issued and outstanding
capital stock of the Subsidiaries issued to the Company has been
duly authorized and validly issued, is fully paid and
nonassessable, and is owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance or claim
except are described in the Disclosure Package and the
Prospectus. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other
than the Subsidiaries listed in Exhibit 21 to the
Registration Statement (the “Subsidiaries”),
and has not, either directly and indirectly, held either
beneficially or of record any capital stock or other securities
with equity features of any entity other than the Subsidiaries.
None of the Subsidiaries have any assets or liabilities
(contingent or otherwise) that are material to the Company.
(n) Capitalization and Other Capital Stock
Matters. The authorized, issued and outstanding
capital stock of the Company is as set forth in each of the
Disclosure Package and the Prospectus under the caption
“Capitalization” (other than for subsequent issuances,
if any, pursuant to employee benefit plans described in the
Disclosure Package and the Prospectus or upon exercise of
outstanding options or warrants described in the Disclosure
Package and the Prospectus). The Common Stock (including the
Offered Shares) conforms in all material respects to the
description thereof contained in the Disclosure Package and the
Prospectus. All of the issued and outstanding shares of Common
Stock have been duly authorized and validly issued, are fully
paid and nonassessable and have been issued in compliance with
all applicable federal and state securities laws. None of the
outstanding shares of Common Stock were issued in violation of
any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants,
preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the
Company, other than those accurately described in the Disclosure
Package and the Prospectus. The description of the
Company’s stock option, stock bonus and other stock plans
or arrangements, and the options or other rights granted
thereunder, set forth in each of 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.
(o) Listing; Exchange Act
Registration. The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act and listed on
the Nasdaq Capital Market tier of the NASDAQ Stock Market, LLC
and the Company has taken no action designed to, or reasonably
likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or delisting the Common
Stock from the NASDAQ Stock Market, LLC, nor has the Company
received any notification that the Commission or the NASDAQ
Stock Market, LLC is contemplating terminating such registration
or listing.
(p) Non-Contravention of Existing Instruments; No
Further Authorizations or Approvals
Required. Neither the Company nor any of its
Subsidiaries is (i) in violation or is in default (or, with
the giving of notice or lapse of time, would be in default)
(“Default”) under its charter or bylaws,
(ii) is in Default under any indenture, mortgage, loan or
credit agreement, deed of trust, note, contract, franchise,
lease or other agreement, obligation, condition, covenant or
instrument to which the Company or any of its Subsidiaries is a
party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any of its
Subsidiaries is subject (each, an “Existing
Instrument”), or (iii) is in violation of any
statute, law, rule, regulation, judgment, order or decree of any
court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the
Company or any of its Subsidiaries or any of its properties, as
applicable, except with respect to clauses (ii) and
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(iii) only, for such violations as would not, individually
or in the aggregate, result in a Material Adverse Change. The
execution, delivery and performance of this Agreement by the
Company and consummation of the transactions contemplated
hereby, by the Disclosure Package and by the Prospectus
(i) have been duly authorized by all necessary corporate
action and will not result in any Default under the charter or
bylaws of the Company or any of its Subsidiaries, (ii) will
not conflict with or constitute a breach of, or Default or a
Debt Repayment Triggering Event (as defined below) under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of
its Subsidiaries pursuant to, or require the consent of any
other party to, any Existing Instrument, except for such
conflicts, breaches, Defaults, Debt Repayment Triggering Events
(as defined below), liens, charges or encumbrances as would not,
individually or in the aggregate, result in a Material Adverse
Change, and (iii) will not result in any violation of any
law, regulation, order or decree applicable to the Company or
any of its Subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or any of its
Subsidiaries or any of its or their properties, except for such
violations as would not, individually or in the aggregate,
result in a Material Adverse Change. No consent, approval,
authorization or other order of, or registration or filing with,
any court or other governmental or regulatory authority or
agency, is required for the execution, delivery and performance
of this Agreement by the Company and consummation of the
transactions contemplated hereby, by the Disclosure Package and
by the Prospectus, except such as have been obtained or made by
the Company or its Subsidiaries and are in full force and effect
under the Securities Act, applicable state securities or blue
sky laws and from the National Association of Securities
Dealers, Inc. (the “NASD”), and (B) such
consents, approvals, authorizations, orders, registrations or
qualifications that, if not obtained or made, would not
individually or in the aggregate result in a Material Adverse
Change. As used herein, a “Debt Repayment Triggering
Event” means any event or condition which gives, or
with the giving of notice or lapse of time would give, the
holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or its Subsidiaries.
(q) No Material Actions or
Proceedings. There are no legal or governmental
actions, suits or proceedings pending or, to the Company’s
knowledge, threatened (i) against or affecting the Company
or any of its Subsidiaries, (ii) which has as the subject
thereof any officer, director or employee of, or property owned
or leased by, any of the Company or its Subsidiaries,
(iii) relating to environmental or discrimination matters,
where in any such case any such action, suit or proceeding, if
so determined adversely, would reasonably be expected to result
in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement
or by the Prospectus. No labor problem or dispute with the
employees of the Company or any of its Subsidiaries or with the
employees of any third party, with whom the Company or its
Subsidiaries has a material relationship, exists or, to the best
of the Company’s knowledge, is threatened or imminent.
(r) Intellectual Property Rights. The
Company and its Subsidiaries own or possess valid and
enforceable licenses or other rights to use all trademarks,
trade names, service marks, patent rights (including all patents
and patent applications), copyrights, domain names, licenses,
approvals, know-how (including trade secrets and other
unpatented
and/or
unpatentable proprietary or confidential information, systems or
procedures), inventions, trade secrets, technologies,
proprietary techniques (including processes and substances) and
other similar rights (collectively, “Intellectual
Property Rights”) reasonably necessary to conduct its
business as now conducted and as currently contemplated to be
conducted as disclosed in the Registration Statement, the
Disclosure Package and the Prospectus, free and clear of all
liens, claims and encumbrances, other than as described in the
Registration Statement, the Disclosure Package and the
Prospectus, except where the failure to own or have such rights
would not, individually or in the aggregate, have a material
adverse effect on such conduct of the business or on the assets,
liabilities, financial condition, results of operations and
prospects of the Company and its Subsidiaries; and the expected
expiration of any of such Intellectual Property Rights would not
result in a Material Adverse Change. Other than as described in
the Registration Statement, the Disclosure Package and the
Prospectus: (i) there are no third parties who, to the
Company’s knowledge, have any rights in the Intellectual
Property Rights that could preclude the Company and its
Subsidiaries from conducting their business as currently
conducted or as presently contemplated to be conducted as
described in the Registration Statement, the Disclosure Package
and the Prospectus; (ii) there are no pending or, to the
best knowledge of the Company, threatened actions, suits,
proceedings, investigations or claims by others challenging the
rights of the Company or any of its Subsidiaries (or if the
Intellectual Property Rights are licensed to the Company or any
of its Subsidiaries, the licensor thereof) in any Intellectual
Property owned or licensed to the Company and its Subsidiaries;
(iii) neither the Company nor any of its Subsidiaries nor
(if the
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Intellectual Property Rights are licensed to the Company and its
Subsidiaries) the licensor thereof has infringed, or received
any notice of infringement of or conflict with, any rights of
others with respect to the Intellectual Property; and
(iv) there is no dispute between any of the Company and its
Subsidiaries and any licensor with respect to any Intellectual
Property Right. The Company and its Subsidiaries have taken all
steps necessary or appropriate to protect, maintain and
safeguard the Intellectual Property Rights for which improper or
unauthorized disclosure would impair its value or validity and
has entered into appropriate and enforceable
(i) nondisclosure and confidentiality agreements,
(ii) invention assignment and other assignment agreements
with all current employees and contractors, and all past
employees and contractors to the extent necessary to so protect,
maintain and safeguard the Intellectual Property Rights, and
(iii) has made appropriate filings and registrations in
connection with the foregoing.
(s) Title to Properties. The Company and
its Subsidiaries have good and marketable title to all the
properties and assets reflected as owned in the financial
statements referred to in Section 1(l) above (or elsewhere
in the Disclosure Package and the Prospectus), in each case free
and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except as
expressly described in the Disclosure Package and the Prospectus
or such as (i) do not materially and adversely affect the
value of such property and do not materially interfere with the
use made or proposed to be made of such property by the Company
or its Subsidiaries, or (ii) would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect. The real property, improvements, equipment and personal
property held under lease by the Company or its Subsidiaries are
held under valid and enforceable leases, with such exceptions as
(i) are not material and do not materially interfere with
the use made or proposed to be made of such real property,
improvements, equipment or personal property by the Company or
its Subsidiaries, or (ii) would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(t) Tax Law Compliance. Each of the
Company and its Subsidiaries have filed all necessary federal,
state and foreign income, employment and franchise tax returns
and has paid all taxes required to be paid by any of them and,
if due and payable, any related or similar assessment, fine or
penalty levied against any of them. The Company has made
adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 1(l) 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 and its Subsidiaries has not been finally determined.
(u) Company Not an “Investment
Company.” The Company has been advised by
its legal counsel 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 Offered Shares and
application of the proceeds thereof contemplated under “Use
of Proceeds” in each of 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.
(v) Insurance. Each of the Company and
its Subsidiaries are insured by recognized, financially sound
and reputable institutions with policies in such amounts and
with such deductibles and covering such risks as are generally
deemed adequate and customary for their business including, but
not limited to, policies covering real and personal property
owned or leased by the Company and its Subsidiaries against
theft, damage, destruction and acts of vandalism. All policies
of insurance and surety bonds insuring the Company or its
Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company
and its Subsidiaries are in compliance with the terms of such
policies and instruments in all material respects; and there are
no claims by the Company or its Subsidiaries under any such
policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights
clause. The Company has no reason to believe that it or its
Subsidiaries will not be able (i) to renew its existing
insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in
a Material Adverse Change. Neither the Company nor any of its
Subsidiaries have been denied any insurance coverage which it
has sought or for which it has applied.
(w) No Price Stabilization or
Manipulation. The Company has not taken and will
not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization
or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Offered Shares. The Company
acknowledges that
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the Underwriters may engage in passive market making
transactions in the Offered Shares on The Nasdaq Capital Market
tier of the NASDAQ Stock Market, LLC in accordance with
Regulation M under the Exchange Act.
(x) Related Party Transactions. No
relationship, direct or indirect, exists between or among any of
the Company or any of its Subsidiaries, on the one hand, and the
directors, officers, employees, contractors, stockholders,
customers, distributors or suppliers of the Company or any of
its Subsidiaries, on the other, that is required by the
Securities Act to be described in the Registration Statement,
the Disclosure Package and the Prospectus and that is not so
described.
(y) Disclosure Controls and
Procedures. The Company has established and will
maintain disclosure controls and procedures (as such term is
defined in
Rules 13a-15(e)
and
15d-15(e)under
the Exchange Act), which (i) are designed to ensure that
information relating to the Company is made known to the
Company’s principal executive officer and its principal
financial officer by others within the Company, particularly
during the periods in which the periodic reports required under
the Exchange Act are being prepared, and (ii) are effective
in all material respects to perform the functions for which they
were established. Based on the evaluation of the Company’s
disclosure controls and procedures described above, the Company
is not aware of (a) any deficiency in the design or
operation of internal controls which could adversely affect the
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. Since the most recent
evaluation of the Company’s disclosure controls and
procedures described above, there have been no significant
changes in internal controls or in other factors that could
significantly affect internal controls.
(z) No Unlawful Contributions or Other
Payments. Neither the Company nor its
Subsidiaries nor, to the best of the Company’s knowledge,
any director, officer, employee, agent, contractor, distributor
or other persons acting on behalf of any of the Company or its
Subsidiaries, has made any contribution or other payment to any
official of, or candidate for, any federal, state or foreign
office in violation of any law or of the character required to
be disclosed in the Disclosure Package and the Prospectus.
(aa) Company’s Accounting
System. The books, records and accounts of the
Company and its Subsidiaries accurately and fairly reflect, in
all material respects and in reasonable detail, the transaction
in, and the dispositions of, the assets of, and the results of
operations of, the Company and its Subsidiaries. The Company and
its Subsidiaries maintain a system of accounting controls
sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles as applied in the United States
and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with
respect to any differences. The Company has no “off-balance
sheet arrangements,” as that term is defined in
Item 303(a)(4)(ii) of
Regulation S-K
under the Securities Act and the Exchange Act.
(bb) Compliance with Environmental
Laws. Except as would not, individually or in the
aggregate, result in a Material Adverse Change (i) neither
the Company nor its Subsidiaries is in violation of any federal,
state, local or foreign law or regulation relating to pollution
or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum and petroleum products (collectively,
“Materials of Environmental Concern”), or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Materials of Environment Concern (collectively,
“Environmental Laws”), which violation
includes, but is not limited to, noncompliance with any permits
or other governmental authorizations required for the operation
of the business of the Company or its Subsidiaries under
applicable Environmental Laws, or noncompliance with the terms
and conditions thereof, nor has the Company or its Subsidiaries
received any written communication, whether from a governmental
authority, citizens group, employee or otherwise, that alleges
that the Company or its Subsidiaries is in violation of any
Environmental Law; (ii) there is no claim, action or cause
of action filed with a court or governmental authority, no
investigation with respect to which the Company or its
Subsidiaries have received written notice, and no written notice
by any person or entity alleging
7
potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys’ fees or
penalties arising out of, based on or resulting from the
presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or operated
by the Company or its Subsidiaries, now or in the past
(collectively, “Environmental Claims”), pending
or, to the best of the Company’s knowledge, threatened
against the Company or its Subsidiaries or any person or entity
whose liability for any Environmental Claim the Company or its
Subsidiaries have retained or assumed either contractually or by
operation of law; (iii) to the best of the Company’s
knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence
or disposal of any Material of Environmental Concern, that
reasonably could result in a violation of any Environmental Law
or form the basis of a potential Environmental Claim against the
Company or its Subsidiaries or against any person or entity
whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by
operation of law, and neither the Company nor its Subsidiaries
is subject to any pending or threatened proceeding under
Environmental Law to which a governmental authority is a party
and which is reasonably likely to result in monetary sanctions
of $100,000 or more.
(cc) ERISA Compliance. The Company and
any “employee benefit plan” (as defined under the
Employee Retirement Income Security Act of 1974, as amended, and
the regulations and published interpretations thereunder
(collectively, “ERISA”)) established or
maintained by the Company, its Subsidiaries or its “ERISA
Affiliates” (as defined below) are in compliance in all
material respects with ERISA. “ERISA Affiliate”
means, with respect to the Company and its Subsidiaries, any
member of any group of organizations described in
Sections 414(b),(c),(m) or (o) of the Internal Revenue
Code of 1986, as amended, and the regulations and published
interpretations thereunder (the “Code”) of
which the Company and its Subsidiaries are a member. No
“reportable event” (as defined under ERISA) has
occurred or is reasonably expected to occur with respect to any
“employee benefit plan” established or maintained by
the Company, its Subsidiaries or any of its ERISA Affiliates. No
“employee benefit plan’ established or maintained by
the Company, its Subsidiaries or any of its ERISA Affiliates, if
such “employee benefit plan” were terminated, would
have any “amount of unfunded benefit liabilities” (as
defined under ERISA). Neither the Company nor its Subsidiaries
nor any of its ERISA Affiliates has incurred or reasonably
expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Section 412,
4971, 4975 or 4980B of the Code. Each “employee benefit
plan” established or maintained by the Company, its
Subsidiaries or any of its ERISA Affiliates that is intended to
be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification.
(dd) Brokers. Other than as required by
the terms of this Agreement, there is no broker, finder or other
party that is entitled to receive from the Company or its
Subsidiaries any brokerage or finder’s fee or other fee,
commission or performance-based compensation as a result of any
transactions contemplated by this Agreement.
(ee) No Outstanding Loans or Other
Indebtedness. There are no outstanding loans,
advances (except normal advances for business expenses in the
ordinary course of business) or guarantees of indebtedness by
any of the Company or its Subsidiaries to, or for the benefit
of, any of the officers, directors, employees or consultants of
any of the Company or its Subsidiaries.
(ff) Compliance with Laws. Except as
expressly described in the Registration Statement, the
Disclosure Package and the Prospectus, the Company: (i) is
in full compliance with all statutes, rules, regulations,
permits, licenses, authorizations, ordinances, orders, decrees
and guidances issued by the applicable federal, state, local or
foreign governmental or self-regulatory agencies or bodies
having authority over the Company or its Subsidiaries
(“Governmental Authority”) applicable to the
conduct of its business as described under
“BUSINESS — General — Business
Strategy — The Ronincast Solution — Our
Markets — Our Customers — Product
Description — Our Suppliers — Agreement with
Xxxxxxxx Special Assets Group, Inc. — Services”
(“Applicable Laws”), except for such
non-compliance as would not, individually or in the aggregate,
result in a Material Adverse Change; (ii) has not received
any notice of adverse finding, warning letter, untitled letter
or other correspondence or notice from any Governmental
Authority alleging or asserting noncompliance with any
Applicable Laws or any licenses, certificates, approvals,
clearances, registrations, authorizations, permits, orders and
supplements or amendments thereto required by any such
Applicable Laws (“Authorizations”);
(iii) possesses all Authorizations required for the conduct
of its business and such Authorizations are valid and in full
force and effect and the Company is not in violation of any
8
term of any such Authorizations, except for any failure to
possess or violation of any Authorization as would not,
individually or in the aggregate, result in a Material Adverse
Change; (iv) has not received notice of any pending or
threatened claim, suit, proceeding, hearing, enforcement, audit,
investigation, arbitration or other action from any Governmental
Authority or third party alleging that any Company operation or
activity is in violation of any Applicable Laws or
Authorizations and the Company has no knowledge or reason to
believe that any such Governmental Authority or third party is
considering any such claim, suit, proceeding, hearing,
enforcement, audit, investigation, arbitration or other action;
(v) has not received notice that any Governmental Authority
has taken, is taking or intends to take action to limit,
suspend, modify or revoke any Authorizations and the Company has
no knowledge or reason to believe that any such Governmental
Authority is considering such action; (vi) has filed,
obtained, maintained or submitted all reports, documents, forms,
notices, applications, records, claims, submissions and
supplements or amendments as are required by all Applicable Laws
or Authorizations and all such reports, documents, forms,
notices, applications, records, claims, submissions and
supplements or amendments were complete and correct on the date
filed (or were corrected or supplemented by a subsequent
submission), except for any failure to file, obtain, maintain,
or submit, and any failure to be complete and correct as would
not result, individually or in the aggregate, in a Material
Adverse Change; and (vii) has not, either voluntarily or
involuntarily, initiated, conducted, or issued or caused to be
initiated, conducted or issued, any recall, market withdrawal or
replacement, post-sale warning or other notice or action
relating to an alleged lack of efficacy of any product, any
alleged product defect, or violation on any Applicable Laws or
Authorizations; the Company is not aware of any facts that would
cause the Company to initiate any such notice or action; and the
Company does not have any knowledge or reason to believe that
any Governmental Authority or third party intends to initiate
any such notice or action.
(gg) Nasdaq Governance Rules. The Company
has duly adopted organizational structures and policies
sufficient to comply with the requirements of The NASDAQ Stock
Market LLC corporate governance rules in effect as of the date
hereof and as may be proposed to be amended in accordance with
any proposed rules of The NASDAQ Stock Market LLC published for
comment as of the date hereof.
(hh) Patent Filings. The Company has duly
and properly filed or caused to be filed with the United States
Patent and Trademark Office (the “PTO”) all
patent applications owned by the Company (the “Company
Patent Applications”). The Company has complied, or is
in the process of complying, with the PTO’s duty of candor
and disclosure for the Company Patent Applications and has made
no material misrepresentation in the Company Patent
Applications. The Company is not aware of any information
material to a determination of patentability regarding the
Company Patent Applications not called or being called to the
attention of the PTO or similar foreign authority which would
preclude the grant of a patent for the Company Patent
Applications. The Company has no knowledge of any information
which would preclude the Company from having clear title to, and
complete ownership of, the Company Patent Applications.
(ii) Suppliers. No supplier of products
to the Company has ceased shipments to the Company or indicated,
to the Company’s best knowledge, an interest in decreasing
or ceasing its sales to the Company or otherwise modifying its
relationship with the Company, other than in the normal and
ordinary course of business consistent with past practices in a
manner which would not, individually or in the aggregate, result
in a Material Adverse Change.
(jj) Statistical and Market Data. The
scientific, statistical and market-related data included in the
Registration Statement, the Disclosure Package and the
Prospectus are accurately based on or derived from sources that
are credible and generally recognized as authoritative in the
Company’s industry.
(kk) MD&A. There are no
transactions, arrangements or other relationships that are
required to be disclosed in the Disclosure Package and the
Prospectus by the Commission’s “Statement About
Management’s Discussion and Analysis of Financial Condition
and Results of Operations” that are not so disclosed or
described as required.
(ll) Xxxxxxxx-Xxxxx Act. The Company is
in material compliance with all applicable provisions of the
U.S. Sarbanes Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith that are
affective and applicable to the Company.
(mm) Compliance with Money Laundering
Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in
material compliance with applicable financial recordkeeping and
reporting
9
requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, the USA Patriot Act, the money
laundering statutes of all jurisdictions to which the Company
and its Subsidiaries are subject, the rules and regulations
thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental
agency (collectively, the “Money Laundering
Laws”), and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving any of the Company and its Subsidiaries
with respect to the Money Laundering Laws is pending, or to the
knowledge of the Company, threatened.
(nn) Sanctions by OFAC. Neither the
Company nor its Subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of
any of the Company or 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 and its Subsidiaries
will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other
person or entity, for the purpose of financing the activities of
any person currently subject to any U.S. sanctions
administered by OFAC.
(oo) No Issuance of Securities. Except as
expressly disclosed or described in the Prospectus, the Company
has not sold or issued any securities during the six-month
period preceding the date of the Disclosure Package and the
Prospectus, including any sales pursuant to Rule 144A
under, or Regulations D or S of, the Securities Act.
(pp) Lock-Up
Agreements. All of the
lock-up
agreements described in Section 6(j) hereof are in full
force and effect.
Any certificate signed by an officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters
shall be deemed to be a representation and warranty by the
Company to the Underwriters 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 6
hereof, counsel to the Company and to the Underwriter, will rely
upon the accuracy and truthfulness of the foregoing
representations and hereby consents to such reliance.
B. Representations and Warranties of the Selling
Shareholders. Each Selling Shareholder severally
represents, warrants and covenants to each of the Underwriters
that:
(a) The Underwriting Agreement. This
Agreement has been duly authorized, executed and delivered by or
on behalf of such Selling Shareholder and is a valid and binding
agreement of such Selling Shareholder, 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 (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) The Power of Attorney. The Power of
Attorney of such Selling Shareholder appointing certain
individuals named therein as such Selling Shareholder’s
attorneys-in-fact (each, an
“Attorney-in-Fact”)
to the extent set forth therein relating to the transactions
contemplated hereby and by the Disclosure Package and the
Prospectus (the “Power of Attorney”) has been
duly authorized, executed and delivered by such Selling
Shareholder and is a valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by
applicable law and 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
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(c) Title to Offered Shares to be
Sold. Such Selling Shareholder has, and on the
First Closing Date will have, good and valid title to all of the
Offered Shares which may be sold by such Selling Shareholder
pursuant to this Agreement on such date and the legal right and
power to sell, transfer and deliver all of the Offered Shares
which may be sold by such Selling Shareholder pursuant to this
Agreement and to comply with its other obligations hereunder and
thereunder.
10
(d) Delivery of the Offered Shares to be
Sold. Delivery of the Offered Shares which are
sold by such Selling Shareholder pursuant to this Agreement will
pass good and valid title to such Offered Shares, free and clear
of any security interest, mortgage, pledge, lien, encumbrance or
other adverse claim.
(e) Non-Contravention; No Further Authorizations or
Approvals Required. The execution and delivery by
such Selling Shareholder of, and the performance by such Selling
Shareholder of its obligations under, this Agreement or the
Power of Attorney will not contravene or conflict with, result
in a breach of, or constitute a Default under, or require the
consent of any other party to, the charter or by-laws,
partnership agreement, trust agreement or other organizational
documents of such Selling Shareholder or any other agreement or
instrument to which such Selling Shareholder is a party or by
which it is bound or under which it is entitled to any right or
benefit, any provision of applicable law or any judgment, order,
decree or regulation applicable to such Selling Shareholder of
any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over such Selling
Shareholder. No consent, approval, authorization or other order
of, or registration or filing with, any court or other
governmental authority or agency, is required for the
consummation by such Selling Shareholder of the transactions
contemplated in this Agreement, except such as have been
obtained or made and are in full force and effect under the
Securities Act, applicable state securities or blue sky laws and
from the NASD.
(f) No Registration, Pre-emptive, Co-Sale or Other
Similar Rights. Such Selling Shareholder
(i) does not have any registration or other similar rights
to have any equity or debt securities registered for sale under
the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as are
described in the Prospectus, (ii) does not have any
preemptive right, co-sale right or right of first refusal or
other similar right to purchase any of the Offered Shares that
are to be sold by the Company or the other Selling Shareholder
to the Underwriters pursuant to this Agreement, except for such
rights as such Selling Shareholder has waived prior to the date
hereof or as have been described in the Registration Statement
and Prospectus, and (iii) does not own any warrants,
options or similar rights to acquire, and does not have any
right or arrangement to acquire, any capital stock, right,
warrants, options or other securities from the Company, other
than those disclosed in the Registration Statement and the
Prospectus.
(g) No Further Consents, etc. Except for
such consents, approvals and waivers which have been obtained by
such Selling Shareholder on or prior to the date of this
Agreement, no consent, approval or waiver is required under any
instrument or agreement to which such Selling Shareholder is a
party or by which it is bound or under which it is entitled to
any right or benefit, in connection with the offering, sale or
purchase by the Underwriters of any of the Offered Shares which
may be sold by such Selling Shareholder under this Agreement or
the consummation by such Selling Shareholder of any of the other
transactions contemplated hereby.
(h) Disclosure Made by such Selling Shareholder in the
Prospectus. All information furnished by or on
behalf of such Selling Shareholder in writing expressly for use
in the Registration Statement, the Disclosure Package and the
Prospectus is, and on the First Closing Date will be, true,
correct, and complete in all material respects, and does not,
and on the First Closing Date will not, contain any untrue
statement of a material fact or omit to state any material fact
necessary to make such information not misleading. Such Selling
Shareholder confirms as accurate the number of shares of Common
Stock set forth opposite such Selling Shareholder’s name in
the Prospectus under the caption “Principal and Selling
Shareholders” (both prior to and after giving effect to the
sale of the Offered Shares).
(i) No Price Stabilization or Manipulation; Compliance
with Regulation M. Such Selling Shareholder
has not taken, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Stock,
whether to facilitate the sale or resale of the Offered Shares
or otherwise, and has taken no action which would directly or
indirectly violate any provision of Regulation M.
(j) No Transfer Taxes or Other
Fees. There are no transfer taxes or other
similar fees or charges under Federal law or the laws of any
state, or any political subdivision thereof, required to be paid
in connection with the execution and delivery of this Agreement
or the sale by such Selling Shareholder of the Offered Shares.
(k) Distribution of Offering Materials by the Selling
Shareholders. Such Selling Shareholder has not
distributed and will not distribute, prior to the later of
(i) the expiration or termination of the option granted to
the several Underwriters under Section 2 and (ii) the
completion of the Underwriters’ distribution of the Offered
Shares, any
11
offering material in connection with the offering and sale of
the Offered Shares other than a preliminary prospectus, the
Disclosure Package, the Prospectus or the Registration Statement
or other materials, if any, permitted by the Securities Act.
(l) Confirmation of Company Representations and
Warranties. Such Selling Shareholder is familiar
with the Registration Statement and the Prospectus and has no
knowledge of any material fact, condition or information not
disclosed in the Registration Statement or the Prospectus which
has had or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect and is not prompted
to sell any of the Offered Shares by any material information
concerning the Company which is not set forth in the
Registration Statement and the Prospectus.
Such Selling Shareholder acknowledges that the Underwriters and
counsel to the Underwriters, will rely upon the accuracy and
truthfulness of the foregoing representations and hereby
consents to such reliance.
2. Purchase, Sale and Delivery of the Offered Shares.
(a) The Firm Shares. Upon the terms
herein set forth, (i) the Company agrees to issue and sell
to the several Underwriters the Firm shares, including an
aggregate of 3,000,000 shares of Common Stock and up to an
additional 600,000 Rule 462(b) Firm Shares, and
(ii) the Selling Shareholders agree to transfer and sell to
the several Underwriters an aggregate of 1,000,000 Firm Shares,
with each Selling Shareholder selling the number of Firm Shares
set forth opposite such Selling Shareholder’s name on
Schedule B. On the basis of the representations,
warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, each Underwriter
agrees, severally and not jointly, to purchase from the Company
and the Selling Shareholders the respective number of Firm
Shares set forth opposite such Underwriter’s name on
Schedule A. The purchase price per Firm Share to be
paid by the several Underwriters to the Company and the Selling
Shareholders shall be $6.51 per share.
(b) The First Closing Date. Delivery of
the Firm Shares to be purchased by the Underwriters and payment
therefor shall be made at the offices of Xxxxxx Xxxxxxx
Xxxxxx & Brand, LLP, 00 Xxxxx 0xx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx 00000 (or such other
place as may be agreed to by the Company and the
Representatives) at 9:00 a.m. Minneapolis, Minnesota
time, on June 19, 2007, or such other time as the
Representatives shall designate by notice to the Company (the
time and date of such closing are called the “First
Closing Date”). The Company and the Selling
Shareholders hereby acknowledge that circumstances under which
the Representatives may provide notice to postpone the First
Closing Date as originally scheduled include any determination
by the Company, the Selling Shareholders or the Representatives
to recirculate to the public copies of an amended or
supplemented Prospectus or a delay as contemplated by the
provisions of Section 7.
(c) The Optional Shares; the Option Closing
Date. In addition, on the basis of the
representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth,
the Company hereby grants an option to the several Underwriters
to purchase, severally and not jointly, the Optional Shares,
including up to an aggregate of 600,000 shares of Common Stock
and up to an additional 90,000 Rule 462(b) Optional Shares,
from the Company at the purchase price per share to be paid by
the Underwriters for the Firm Shares. The option granted
hereunder is for use by the Underwriters solely in covering any
over-allotments in connection with the sale and distribution of
the Firm Shares. The option granted hereunder may be exercised
at any time and from time to time in whole or in part upon
notice by the Representatives to the Company, which notice may
be given at any time within 45 days from the date of this
Agreement. Such notice shall set forth (i) the aggregate
number of Optional Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in
which the Optional Shares are to be registered and
(iii) the time, date and place at which such Optional
Shares will be delivered (which time and date may be
simultaneous with, but not earlier than, the First Closing Date;
and in such case the term “First Closing Date”
shall refer to the time and date of delivery of certificates for
the Firm Shares and such Optional Shares). Such time and date of
delivery, if subsequent to the First Closing Date, is called an
“Option Closing Date” and shall be determined
by the Representatives and shall not be earlier than three nor
later than five full business days after delivery of such notice
of exercise. If any Optional Shares are to be purchased, each
Underwriter agrees, severally and not jointly, to purchase the
number of Optional Shares (subject to such adjustments to
eliminate fractional shares as the Representative may determine)
that bears the same proportion to the total number of Optional
Shares to be purchased as the number of Firm Shares set forth on
Schedule A
12
opposite the name of such Underwriter bears to the total number
of Firm Shares. The Representatives may cancel the option at any
time prior to its expiration by giving written notice of such
cancellation to the Company.
(d) Public Offering of the Offered
Shares. The Representatives hereby advise the
Company and the Selling Shareholders that the Underwriters
intend to offer for sale to the public, initially on the terms
set forth in the Prospectus, their respective portions of the
Offered Shares as soon after this Agreement has been executed
and the Registration Statement has been declared effective as
the Representatives, in their sole judgment, have determined is
advisable and practicable.
(e) Payment for the Offered
Shares. Payment for the Offered Shares to be sold
by the Company shall be made at the First Closing Date (and, if
applicable, at each Option Closing Date) by wire transfer of
immediately available funds to the order of the Company. Payment
for the Offered Shares to be sold by each Selling Shareholder
shall be made at the First Closing Date by wire transfer of
immediately available funds to the order of such Selling
Shareholder.
It is understood that the Representatives have been authorized,
for their own accounts and the accounts of the several
Underwriters, to accept issuance, transfer and delivery of and
receipt for, and make payment of the purchase price for, the
Firm Shares and any Optional Shares the Underwriters have agreed
to purchase. Each of ThinkEquity and Feltl, individually and not
as a Representative of the several Underwriters, may (but shall
not be obligated to) make payment for any Offered Shares to be
purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the
applicable Option Closing Date, as the case may be, for the
account of such Underwriter, but any such payment shall not
relieve such Underwriter from any of its obligations under this
Agreement.
The Selling Shareholder hereby agrees that it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any,
payable upon the sale or delivery of the Offered Shares to be
sold by the Selling Shareholder to the several Underwriters, or
otherwise in connection with the performance of the Selling
Shareholder’s obligations hereunder.
(f) Delivery of the Offered Shares. The
Company shall issue and the Selling Shareholder shall transfer
the Firm Shares, and each shall deliver, or cause to be
delivered, to the Representatives for the accounts of the
several Underwriters certificates for the Firm Shares to be sold
by them at the First Closing Date, against the irrevocable
release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. The Company shall
also issue the Optional Shares and deliver, or cause to be
delivered, to the Representatives for the accounts of the
several Underwriters, certificates for the Optional Shares the
Underwriters have agreed to purchase from it at the First
Closing Date or the applicable Option Closing Date, as the case
may be, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price
therefor. At least two full business days prior to the First
Closing Date (or the applicable Option Closing Date, as the case
may be), (i) the Selling Shareholder shall deliver to the
transfer agent and registrar of the Common Stock (the
“Transfer Agent”) any certificates evidencing
shares of Common Stock (to the extent that the Transfer Agent
requires delivery of such certificates) necessary to cause the
Transfer Agent to arrange for the transfer and delivery of the
Offered Shares in accordance with the provisions of this
Section 2(f) and authorize and instruct the Transfer Agent
to cancel any such certificates, and (ii) each of the
Company and the Selling Shareholder shall authorize the Transfer
Agent to arrange for the issuance, transfer and delivery of the
Offered Shares in accordance with the provisions of this
Section 2(f). The Offered Shares shall be registered in
such names and denominations as the Representatives shall have
agreed upon and requested at least two full business days prior
to the First Closing Date (or the applicable Option Closing
Date, as the case may be). Time shall be of the essence, and
delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriters.
(g) Delivery of Prospectus to the
Underwriter. Not later than 12:00 p.m.
(Minneapolis, Minnesota time) on the second business day, or
such shorter period as may be required by law, following the
date the Offered Shares are first released by the Underwriters
for sale to the public, the Company shall deliver or cause to be
delivered copies of the Prospectus in such quantities and at
such places as shall be agreed upon and requested by the
Representatives.
3. Additional Covenants.
13
A. Covenants of the Company. The Company
further covenants and agrees with the Underwriter as follows:
(a) Representatives’ Review of Proposed Amendments
and Supplements. During the period beginning on
the Initial Sale Time and ending on the later of the First
Closing Date or such other date, as in the opinion of counsel
for the Underwriters, the Prospectus is no longer required by
law to be delivered in connection with sales by an Underwriter
or dealer, including in circumstances where such requirement may
be satisfied pursuant to Rule 172 (the “Prospectus
Delivery Period”), prior to amending or supplementing
the Registration Statement (including any registration statement
filed under Rule 462(b) under the Securities Act), the
Disclosure Package or the Prospectus, the Company shall furnish
to the Representatives for review a copy of each such proposed
amendment or supplement, and the Company shall not file any such
proposed amendment or supplement without the consent of the
Representatives, provided that such consent shall not be
unreasonably withheld.
(b) Securities Act Compliance. After the
date of this Agreement, the Company shall promptly advise the
Representatives in writing of (i) the receipt of any
comments of, or requests for additional or supplemental
information from, the Commission, (ii) the time and date of
any filing of any post-effective amendment to the Registration
Statement or any amendment or supplement to any preliminary
prospectus or the Prospectus, (iii) the time and date that
any post-effective amendment to the Registration Statement
becomes effective and (iv) the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto
or of any order preventing or suspending the use of the
Registration Statement, any preliminary prospectus or the
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. The
Company shall use its best efforts to prevent the issuance of
any such stop order or prevention or suspension of such use. If
the Commission shall enter any such stop order at any time, the
Company will use its best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company
agrees that it shall comply with the provisions of
Rules 424(b), under the Securities Act and will use its
best efforts to confirm that any filings made by the Company
under such Rule 424(b) were received in a timely manner by
the Commission.
(c) Amendments and Supplements to the Prospectus and
Other Securities Act Matters. No later than
10:00 a.m. Eastern Daylight Time on the business day
immediately following the date of this Agreement, the Company
shall file a Rule 462(b) Registration Statement with the
Commission registering the offer and sale to the Underwriters in
this offering of 600,000 Rule 462(b) Firm Shares and 90,000
Rule 462(b) Optional Shares. If, during the Prospectus
Delivery Period, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the
Registration Statement or the Prospectus in order to make the
statements therein, in the light of the circumstances under
which they were made or then prevailing, as the case may be, not
misleading, or if in the opinion of the Representatives or
counsel for the Underwriters it is otherwise necessary to amend
or supplement the Registration Statement or the Prospectus to
comply with applicable the Securities Act or the Exchange Act,
including in connection with the delivery of the Prospectus, the
Company agrees to promptly prepare (subject to
Section 3(A)(a) hereof), file with the Commission and
furnish at its own expense to the Underwriters and to dealers,
amendments or supplements to the Registration Statement or the
Prospectus so that the statements in the Registration Statement
or the Prospectus as so amended or supplemented will not, in the
light of the circumstances under which they were made or then
prevailing, as the case may be, misleading or so that the
Registration Statement or the Prospectus, as amended or
supplemented, will comply with law. Neither the consent of the
Representatives to, or delivery to the Representatives of, any
such amendment or supplement shall constitute a waiver of any of
the Company’s obligations under this Section 3(A)(c)
or under Section 6.
(d) Permitted Free Writing
Prospectuses. The Company agrees that, unless it
obtains the prior written consent of the Representatives, it
will not make any offer relating to the Offered Shares that
would constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a “free writing prospectus” (as
defined in Rule 405 of the Securities Act) required to be
filed by the Company with the Commission or retained by the
Company under Rule 433 of the Securities Act; provided that
the prior written consent of the Representatives hereto shall be
deemed to have been given in respect of the Free Writing
Prospectuses included in Schedule 1 hereto. Any such free
writing prospectus consented to by the Representatives is
hereinafter referred to as a “Permitted Free Writing
Prospectus”. The Company agrees that (i) it has
treated and will treat, as the case may be, each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus, and
(ii) has complied and will comply, as the case may be,
14
with the requirements of Rules 164 and 433 of the
Securities Act applicable to any Permitted Free Writing
Prospectus, including in respect of timely filing with the
Commission, legending and record keeping.
(e) Copies of the Registration Statement and the
Prospectus. The Company will furnish, without
charge, to the Representatives signed copies of the Registration
Statement (including exhibits thereto) and, during the
Prospectus Delivery Period, as many copies of the Prospectus and
any amendments or supplements thereto and the Disclosure Package
as the Representatives may reasonably request.
(f) Blue Sky Compliance. The Company
shall cooperate with the Representatives and counsel for the
Underwriters to qualify or register the Offered Shares for sale
under (or obtain exemptions from the application of) the state
securities or blue sky laws or other foreign laws of those
jurisdictions designated by the Representatives, shall comply
with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for
the distribution of the Offered Shares. The Company shall not be
required to qualify as a foreign corporation or to take any
action that would subject it to general service of process in
any such jurisdiction where it is not presently qualified or
where it would be subject to taxation as a foreign corporation.
The Company will advise the Representatives promptly of the
suspension of the qualification or registration of (or any such
exemption relating to) the Offered Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best
efforts to obtain the withdrawal thereof at the earliest
possible moment.
(g) Use of Proceeds. The Company shall
apply the proceeds from the sale of the Offered Shares sold by
it in the manner described under the caption “Use of
Proceeds” in each of the Disclosure Package and the
Prospectus.
(h) Transfer Agent. The Company shall
engage and maintain, at its expense, an independent, qualified
and experienced registrar and transfer agent for the Common
Stock.
(i) Earnings Statement. As soon as
practicable, the Company will make generally available to its
security holders and to the Representatives an earnings
statement (which need not be audited) covering the twelve-month
period ending December 31, 2007, that satisfies the
provisions of Section 11(a) of the, and Rule 158 under
the, Securities Act.
(j) Periodic Reporting
Obligations. During the Prospectus Delivery
Period, the Company shall file, on a timely basis, with the
Commission and The NASDAQ Stock Market LLC all reports and
documents required to be filed under the Exchange Act.
Additionally, the Company shall timely report the use of
proceeds from the issuance of the Offered Shares as may be
required under Rule 463 under the Securities Act.
(k) Listing. The Company will take such
steps as may be required to cause, subject to notice of
issuance, the Offered Shares to be listed on The NASDAQ Stock
Market LLC, and will comply with the corporate governance or
similar rules of The NASDAQ Stock Market LLC.
(l) Company to Provide Copy of the Prospectus in
Form That May be Downloaded from the
Internet. If requested, the Company shall cause
to be prepared and delivered, at its expense, within one
business day from the effective date of this Agreement, to the
Representatives an “electronic Prospectus” to be used
by the Underwriters in connection with the offering and sale of
the Offered Shares. As used herein, the term “electronic
Prospectus” means a form of Prospectus, and any amendment
or supplement thereto, that meets each of the following
conditions: (i) it shall be encoded in an electronic
format, satisfactory to the Representatives, that may be
transmitted electronically by the Underwriters and the other
Underwriters to offerees and purchasers of the Offered Shares
for at least the Prospectus Delivery Period; (ii) it shall
disclose the same information as the paper Prospectus and
Prospectus filed pursuant to XXXXX, except to the extent that
graphic and image material cannot be disseminated
electronically, in which case such graphic and image material
shall be replaced in the electronic Prospectus with a fair and
accurate narrative description or tabular representation of such
material, as appropriate; and (iii) it shall be in or
convertible into a paper format or an electronic format,
satisfactory to the Representatives, that will allow investors
to store and have access to the Prospectus at a future time,
without charge to investors (other than any fee charged for
subscription to the Internet as a whole and for on-line time).
The Company hereby confirms that, upon receipt of a
15
request by an investor or his or her representative within the
Prospectus Delivery Period, the Company shall transmit or cause
to be transmitted promptly, without charge, a paper copy of the
Prospectus.
(m) Agreement Not to Offer or Sell Additional
Securities. During the period commencing on the
date hereof and ending on the 180th day following the date
of the Prospectus, (the
“Lock-up
Period”) the Company will not, without the prior
written consent of the Representatives (which consent may be
withheld at the sole discretion of the Representatives),
directly or indirectly, sell, offer to sell, contract to sell,
pledge, hypothecate, grant any option to purchase, transfer or
otherwise dispose of, grant any rights with respect to, or file
a registration statement with the Commission in respect of, or
establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act, or be the subject of any
hedging, short sale, derivative or other transaction that is
designed to, or reasonably expected to lead to, or result in,
the effective economic disposition of, any shares of Common
Stock, options or warrants to acquire shares of the Common Stock
or securities exchangeable or exercisable for or convertible
into shares of Common Stock, or publicly announce an intention
to do any of the foregoing (other than as contemplated by this
Agreement with respect to the Offered Shares) or publicly
announce the Company’s intention to do any of the
foregoing; provided, however, that the Company
may issue shares of its Common Stock or options or other awards
to purchase its Common Stock, or Common Stock upon the exercise
of options, warrants or convertible securities, pursuant to any
stock option, stock bonus or other incentive plan or other
arrangement described in the Prospectus, but only if the holders
of such shares, options or other awards, or shares issued upon
exercise of such options, warrants or convertible securities
agree in writing not to sell, offer, dispose of or otherwise
transfer any such shares, options or warrants during such
Lock-up
Period without the prior written consent of the Representatives
(which consent may be withheld at the sole discretion of the
Representatives). Notwithstanding the restrictions set forth
above in this Section 3A(m), the Company shall be permitted
to file a registration statement on
Form S-8
on which it registers shares of its Common Stock reserved for
issuance pursuant to outstanding options and warrants issued to
present or former employees or directors of the Company or under
the Company’s equity incentive plan and non-employee
director stock option plan, as disclosed in the Prospectus, and
shall be permitted to issue shares of Common Stock upon the
exercise of options, warrants or other convertible securities
outstanding on the date hereof and disclosed in the Prospectus.
Notwithstanding the foregoing, if (a) during the period
that begins on the date that is 15 calendar days plus three
business days before the last day of the
Lock-up
Period and ends on the last day of the
Lock-up
Period, the Company issues an earnings release or material news
or a material event relating to the Company occurs; or
(b) prior to the expiration of the
Lock-up
Period, the Company announces that it will release earnings
results during the
15-day
period beginning on the last day of the
Lock-up
Period, then the restrictions imposed in this clause shall
continue to apply until the expiration of the date that is 15
calendar days plus three business days after the date on which
the issuance of the earnings release or the material news or
material event occurs, unless the Representatives waive such
extension. The Company will provide the Representatives and each
individual subject to the
180-day
restricted period pursuant to the
lock-up
agreements described in Section 3(B)(a) with prior written
notice of any such announcement that gives rise to an extension
of the
Lock-Up
Period or such180-day restricted period.
(n) Compliance with Xxxxxxxx-Xxxxx
Act. During the Prospectus Delivery Period, the
Company will comply in all material respects with all applicable
securities and other laws, rules and regulations, including,
without limitation, the Xxxxxxxx-Xxxxx Act, and use its best
efforts to cause the Company’s directors and officers, in
their capacities as such, to comply in all material respects
with such laws, rules and regulations, including, without
limitation, the provisions of the Xxxxxxxx-Xxxxx Act.
(o) Future Reports to the
Underwriter. For a period of five years following
the date of the Prospectus, the Company will furnish to the
Representatives (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report of the Company
containing the balance sheet of the Company as of the close of
such fiscal year and statements of income, shareholders’
equity and cash flows for the year then ended and the opinion
thereon of the Company’s independent public or certified
public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on
Form 10-K,
Quarterly Report on
Form 10-Q,
Current Report on
Form 8-K
or other report filed by the Company with the Commission, the
NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company
mailed generally to holders of its capital stock; provided,
however, that the filing of such reports and communications with
the Commission through the XXXXX system shall satisfy the
requirements of this Section 3(o).
16
(p) Investment Limitation. The Company
shall not invest, or otherwise use the proceeds received by the
Company from its sale of the Offered Shares, in such a manner as
would require the Company to register as an investment company
under the Investment Company Act.
(q) No Manipulation of Price. The Company
will not take, directly or indirectly, any action designed to
cause or result in, or that has constituted or might reasonably
be expected to constitute, the stabilization or manipulation of
the price of any securities of the Company.
(r) Existing
Lock-Up
Agreements. The Company will pay all reasonable
expenses incurred by the Representatives in connection with
strictly enforcing all agreements between the Representatives
and each director, officer and any of its security holders that
prohibit the sale, transfer, assignment, pledge or hypothecation
of any of the Company’s securities in connection with the
public offering contemplated by this Agreement. In addition, the
Company will direct the transfer agent to place stop transfer
restrictions upon any such securities of the Company.
(s) Company Trademarks. Upon written
request of any of the Underwriters, the Company shall furnish,
or cause to be furnished, to such Underwriter an electronic
version of the Company’s trademarks, both for use on the
Underwriter’s website, if any, operated by the Underwriter
for the purpose of facilitating the on-line offering of the
Offered Shares (the “License”); provided,
however, that the License shall be used solely for the purpose
described above, the Underwriter shall comply with all
trademark, trade name, and service xxxx notice markings required
by the Company and shall not use the marks in any manner that
adversely reflects upon the image or quality of the Company. The
License is granted without any fee, the License is
non-exclusive, and the License may not be assigned, transferred
or sub-licenses by the Underwriter.
B. Covenants of the Selling
Shareholders. Each Selling Shareholder further
covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional
Shares. Such Selling Shareholder will not,
without the prior written consent of the Representatives (which
consent may be withheld in their sole discretion), directly or
indirectly, sell, offer, contract or grant any option to sell
(including without limitation any short sale), pledge, transfer,
establish an open “put equivalent position” within the
meaning of
Rule 16a-1(h)
under the Exchange Act, or otherwise dispose of any shares of
Common Stock, options or warrants to acquire shares of Common
Stock, or securities exchangeable or exercisable for or
convertible into shares of Common Stock currently or hereafter
owned either of record or beneficially (as defined in
Rule 13d-3
under Securities Exchange Act of 1934, as amended) by the such
Selling Shareholder, or publicly announce such Selling
Shareholder’s intention to do any of the foregoing, for a
period commencing on the date hereof and continuing through the
close of trading on the last day of the
Lock-up
Period. The foregoing sentence shall not apply to (i) the
sale of Offered Shares to the Underwriters pursuant to this
Agreement, (ii) transactions relating to shares of Common
Stock or other securities acquired in open market transactions
after completion of the offering contemplated by this Agreement,
(iii) the transfer of any or all of the shares of Common
Stock owned by such Selling Shareholder as a bona fide gift or
gifts; provided, however, that in any such case it shall be a
condition to such transfer that the transferee executes and
delivers to the Representatives an agreement stating that the
transferee is receiving and holding such shares subject to the
provisions of this Section 3(B)(a), and there shall be no
further transfer of such shares except in accordance with this
Section 3(B)(a) and (iv) the transfer of any or all of
the shares of Common Stock owned by such Selling Shareholder as
a distribution to its shareholders or members; provided,
however, that in any such case it shall be a condition to such
transfer that the transferee executes and delivers to the
Representatives an agreement stating that the transferee is
receiving and holding such shares subject to the provisions of
this Section 3(B)(a), and there shall be no further
transfer of such shares except in accordance with this
Section 3(B)(a). Notwithstanding the foregoing, if
(a) during the period that begins on the date that is 15
calendar days plus three business days before the last day of
the Lock-up
Period and ends on the last day of the
Lock-up
Period, the Company issues an earnings release or material news
or a material event relating to the Company occurs; or
(b) prior to the expiration of the
Lock-up
Period, the Company announces that it will release earnings
results during the
16-day
period beginning on the last day of the
Lock-up
Period, then the restrictions imposed in this clause shall
continue to apply until the expiration of the date that is 15
calendar days plus three business days after the date on which
the issuance of the earnings release or the material news or
material event occurs, unless the Representatives waive such
extension.
17
(b) No Stabilization or Manipulation; Compliance with
Regulation M. Such Selling Shareholder will
not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization
or manipulation of the price of the Common Stock or any other
reference security with respect to the Common Stock, whether to
facilitate the sale or resale of the Offered Shares or
otherwise, and such Selling Shareholder will, and will use
reasonable efforts to cause each of its affiliates to, comply
with all applicable provisions of Regulation M in
connection with the offering of the Offered Shares. If the
limitations of Rule 102 do not apply with respect to the
Offered Shares or any other reference security pursuant to any
exception set forth in Section (d) of Rule 102, then
promptly upon notice from the Representative (or, if later, at
the time stated in the notice), such Selling Shareholder will,
and will use reasonable efforts to cause each of its affiliates
to, comply with Rule 102 as though such exception was not
available but the other provisions of Rule 102 (as
interpreted by the Commission) did apply.
(c) Delivery of Reporting
Documentation. To deliver to the Representatives
prior to the First Closing Date properly completed and executed
United States Treasury Department Forms or such other
documentation reasonably requested by the Representatives for
the purposes of satisfying any applicable obligations to report
the transactions contemplated by this Agreement with
Governmental Authorities.
C. Waiver of Performance. Upon agreement
of the Representatives, the Representatives may, on behalf of
the several Underwriters, in their sole discretion, waive in
writing the performance by the Company or the Selling
Shareholders of any one or more of the foregoing covenants.
4. Covenant of the Underwriter. The
Representatives certify to and covenant with the Company that
they have not and will not use, authorize use of, refer to, or
participate in the planning for use of any “free writing
prospectus”, as defined in Rule 405 under the
Securities Act (which term includes use of any written
information furnished to the Commission by the Company and not
incorporated by reference into the Registration Statement and
any press release issued by the Company), other than (i) a
free writing prospectus that contains no “issuer
information” (as defined in Rule 433(h)(2) under the
Securities Act) that was not included (including through
incorporation by reference) in the preliminary prospectus,
(ii) any Issuer Free Writing Prospectus identified on
Schedule 1, or (iii) any free writing prospectus
prepared by the Representatives and approved by the Company in
advance in writing.
5. Payment of Expenses.
(a) The Company agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations
hereunder, including, without limitation (i) all expenses
incident to the issuance and delivery of the Offered Shares
(including all printing and engraving costs), (ii) all fees
and expenses of the registrar and transfer agent of the Common
Stock, (iii) all necessary issue, transfer and other stamp
taxes imposed on the Company in connection with the issuance and
sale by the Company of the Offered Shares to the Underwriters,
(iv) all fees and expenses of the Company’s counsel,
independent public or certified public accountants and other
advisors, (v) all costs and expenses incurred in connection
with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial
statements, exhibits, schedules, consents and certificates of
experts), each Issuer Free Writing Prospectus, each preliminary
prospectus, the Prospectus and any Prospectus wrapper, and all
amendments and supplements thereto, and this Agreement,
(vi) all filing fees, and reasonable attorneys’ fees
and expenses incurred by the Company and the Underwriters in
connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any
part of the Offered Shares for offer and sale under the state
securities or blue sky laws or any foreign jurisdiction, and
preparing and printing a “Blue Sky Survey” or
memorandum, and any supplements thereto, advising the
Underwriter of such qualifications, registrations and
exemptions, (vii) the filing fees incident to, and the
reasonable fees and expenses of counsel for the Underwriters in
connection with, the NASD’s review and approval of the
Underwriter’s participation in the offering and
distribution of the Offered Shares, (viii) the fees and
expenses associated with including the Offered Shares on The
NASDAQ Stock Market LLC, (ix) all other fees, costs and
expenses referred to in Item 25 of Part II of the
Registration Statement, (x) the costs and expenses of the
Company relating to investor presentations on any “road
show” undertaken in connection with the marketing of the
Offered Shares, including, without limitation, expenses
associated with the production of road show slides and graphics,
fees and expenses of any consultants engaged by the Company or
the Underwriters (with the Company’s prior consent which
shall not unreasonably be withheld) in connection with the road
show presentations, lodging expenses of the Underwriter and
officers of the Company and any such consultants, and all
transportation expenses, in connection with the road show,
(xi) a nonaccountable expense allowance payable to the
Underwriters equal to one percent (1%) of the public offering
price of the Firm Shares payable on the First Closing Date,
18
less the refundable $50,000 deposit already paid by the Company
to the Representatives, (xii) the reasonable fees and
expenses of the Underwriters in connection with due diligence
meetings with the investment community, and (xiii) in
addition to the fees and expenses of counsel to the Underwriters
specifically identified above in this Section 5(a), all
other reasonable fees and expenses of such counsel incurred
incident to and in connection with the performance of the
Underwriting obligations under and the transactions contemplated
by this Agreement; provided, however, that the fees and
expenses required to be paid by the Company under subsections
5(a)(xii) and (xiii) above shall not exceed $50,000 in the
aggregate. Except as otherwise provided in this Agreement, the
Underwriters shall pay their own respective expenses, including
the fees and disbursements of their legal counsel.
6. Conditions of the Obligations of the
Underwriter. The obligations of the several
Underwriters to purchase and pay for the Offered Shares as
provided herein on the First Closing Date and, with respect to
the Optional Shares, any Option Closing Date, shall be subject
to the accuracy of the representations and warranties on the
part of the Company set forth in Section 1 hereof as of the
date hereof and as of the First Closing Date as though then made
and, with respect to the Optional Shares, as of any Option
Closing Date as though then made, to the timely performance by
the Company of its covenants and other obligations hereunder,
and to each of the following additional conditions:
(a) Accountants’ Comfort Letter. On
the date hereof, the Representatives shall have received from
Virchow, Xxxxxx & Company, LLP, independent public or
certified public accountants for the Company, a letter dated the
date hereof addressed to the Underwriters, in form and substance
satisfactory to the Underwriters, containing statements and
information of the type ordinarily included in accountant’s
“comfort letters” to underwriters, delivered according
to Statement of Auditing Standards No. 72 (or any successor
bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the
Registration Statement and the Prospectus.
(b) Compliance with Registration Requirements; No Stop
Order; No Objection from NASD. For the period
from and after effectiveness of this Agreement and prior to the
First Closing Date and, with respect to the Optional Shares, any
Option Closing Date:
(i) the Company, if required, 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;
(ii) all material required to be filed by the Company
pursuant to Rule 433(d) under the Securities Act shall have
been filed with the Commission within the applicable time
periods prescribed for such filings under such Rule 433;
(iii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment to the Registration
Statement, shall be in effect and no proceedings for such
purpose shall have been instituted or threatened by the
Commission; and
(iv) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(c) No Material Adverse Change. For the
period from and after the date of this Agreement and prior to
the First Closing Date and, with respect to the Optional Shares,
any Option Closing Date: (i) in the judgment of the
Representatives there shall not have occurred any Material
Adverse Change, and (ii) there shall not have been any
change or decrease specified in the letter referred to in
paragraph (a) of this Section 6 which is, in the sole
judgment of the Representatives, so material and adverse as to
make it impractical or inadvisable to proceed with the offering
or delivery of the Offered Shares as contemplated by the
Registration Statement and the Prospectus.
(d) Opinion of Counsel for the
Company. On each of the First Closing Date and
any Option Closing Date, the Representatives shall have received
the favorable opinion of Xxxxxx and Xxxxxx, P.A., counsel for
the Company, dated as of such closing date, in form and
substance satisfactory to the Representatives, the form of which
is attached as Exhibit A.
19
(e) Opinion of Counsel for the
Underwriter. On each of the First Closing Date
and any Option Closing Date, the Representatives shall have
received the favorable opinion of Xxxxxx Xxxxxxx
Xxxxxx & Brand, LLP, counsel for the Underwriters,
dated as of such closing date in a form satisfactory to the
Representatives.
(f) Officers’ Certificate. On each
of the First Closing Date and any Option Closing Date, the
Representatives shall have received the written certificates
executed by the Chairman, President and Chief Executive Officer
of the Company and the Executive Vice President and Chief
Financial Officer of the Company and the Vice President and
Controller of the Company, dated as of such closing date, to the
effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and any
amendment or supplement thereto, any Issuer Free Writing
Prospectus and any amendment or supplement thereto and this
Agreement, to the effect set forth in subsection (b) of
this Section 6, and further to the effect that:
(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 Sections 1A and 3A of this Agreement
are true and correct with the same force and effect as though
expressly made on and as of such closing date;
(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; and
(iv) (A) any financial projections presented to the
Representatives for their review were prepared in good faith and
represent the Company management’s best estimate of the
Company’s financial condition following the First Closing
Date; and (B) the net proceeds to be derived from the
offering that is the subject hereof are sufficient to fund the
Company’s operations for at least twelve (12) months
following the First Closing Date.
(g) Secretary’s Certificate. On each
of the First Closing Date and any Option Closing Date, the
Representatives shall have received the written certificates
executed by the Secretary of the Company, dated as of such
closing date, in form and substance satisfactory to the
Representatives, certifying as to (i) the incumbency and
the signatures of those officers of the Company executing this
Agreement and such other certificates or documents contemplated
under this Agreement, (ii) the charter or bylaws of the
Company, and (iii) the resolutions of the Board of
Directors of the Company authorizing the execution and delivery
of this Agreement and such other certificates or documents
contemplated under this Agreement, a copy of such resolutions to
be attached to said certificate.
(h) Good Standing. The Representatives
shall have received on and as of the First Closing Date or any
Option Closing Date, as the case may be, satisfactory evidence
of the good standing of each of the Company and its Subsidiaries
in the jurisdiction of their respective organization and their
good standing as a foreign entity in such other jurisdictions as
the Representatives may reasonably request, in each case in
writing or any standard form from the appropriate Governmental
Authorities of such jurisdictions.
(i) Bring-down Comfort Letter. On each of
the First Closing Date and any Second Closing Date, the
Representatives shall have received from Virchow,
Xxxxxx & Company, LLP, as the independent registered
public accounting firm for the Company, a letter dated such
date, in form and substance satisfactory to the Representatives
to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection (a) of this
Section 6, except that the specified date referred to
therein for the carrying out of procedures shall be no more than
three business days prior to the First Closing Date and any
Option Closing Date, if applicable.
(j) Lock-Up
Agreement from Certain Securityholders of the Company other than
the Selling Shareholder. On or prior to the date
hereof, the Company shall have furnished to the Representatives
an agreement in the form of Exhibit B hereto, or in such
other form that is satisfactory to the Representatives, from
each director and officer of the Company, and such agreement
shall be in full force and effect on each of the First Closing
Date and any Option Closing Date.
20
(k) Opinion of Counsel for the Selling
Shareholders. On each of the First Closing Date,
the Representatives shall have received the opinion of Xxxxx X.
Xxxxxxxxx, counsel for the Selling Shareholders, dated as of
such First Closing Date, the form of which is attached as
Exhibit C (and the Representatives shall have received an
additional conformed copies of such counsel’s legal opinion
for the other Underwriters).
(l) Selling Shareholders’
Certificates. On the First Closing Date, the
Representatives shall receive a written certificate executed by
each Selling Shareholder, dated as of such Closing Date, to the
effect that:
(i) the representations, warranties and covenants of such
Selling Shareholder set forth in Section 1B and 3B of this
Agreement are true and correct in all material respects (except
for any such representation or warranty that is by its terms
qualified by materiality, which representation or warranty shall
be true and correct) with the same force and effect as though
expressly made by such Selling Shareholder on and as of such
First Closing Date; and
(ii) such Selling Shareholder has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date.
(m) Selling Shareholders’
Documents. On the date hereof, the Company and
the Selling Shareholders shall have furnished for review by the
Representatives (a) a copy of the Power of Attorney,
(b) a copy of an instruction letter signed by each of the
Selling Shareholders authorizing the Company to cause the
Offered Shares owned by them to be transferred to be sold in
connection with the offering of the Offered Shares and
(c) such information, certificates and documents as the
Representative may reasonably request.
(n) Additional Documents. On or before
each of the First Closing Date and any Option Closing Date, the
Representatives and counsel for the Underwriters shall have
received such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass
upon the issuance and sale of the Offered Shares as contemplated
herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of
the conditions or agreements, herein contained.
If any condition specified in this Section 6 is not
satisfied when and as required to be satisfied, this Agreement
may be terminated by the Representatives by notice to the
Company and the Selling Shareholders at any time on or prior to
the First Closing Date and, with respect to the Optional Shares,
at any time prior to the applicable Option Closing Date, which
termination shall be without liability on the part of any party
to any other party, except that Section 5, Section 7,
Section 9 and Section 10 shall at all times be
effective and shall survive such termination.
7. Reimbursement of Underwriter
Expenses. If this Agreement is terminated by the
Representatives pursuant to Section 6, Section 8 or
Section 11, hereof, or if the sale to the Underwriters of
the Offered Shares on the First Closing Date is not consummated
because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the
Representatives and the other Underwriters, severally, upon
demand, for all out-of-pocket expenses that shall have been
reasonably incurred by the Representatives and such other
Underwriters in connection with the proposed purchase and the
offering and sale of the Offered Shares, including, but not
limited to, fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone
charges, up to the $50,000 deposit already received by the
Representatives. The Company shall have no obligation to the
Representatives or the other Underwriters for out-of-pocket
expenses referenced in this Section 7 to the extent that
the Representatives and other Underwriters’ out-of-pocket
expenses, in the aggregate, exceed $50,000. In the event all
such out-of-pocket expenses do not equal or exceed $50,000, the
Underwriters shall, as soon as reasonably practicable, pay the
Company the difference between the aggregate amount of all such
out-of-pocket expenses and $50,000.
8. 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 by the Commission to the Company and
the Representatives of the effectiveness of the Registration
Statement under the Securities Act.
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 the Representatives or the other
21
Underwriters, except that the Company shall be obligated to
reimburse the expenses of the Representatives and the other
Underwriters to the extent required by Sections 5 and 7
hereof, (b) the Representatives to the Company, except as
provided in Section 7, or (c) any party hereto to any
other party except that the provisions of Section 9 and
Section 10 shall at all times be effective and enforceable
and shall survive such termination.
9. Indemnification.
(a) Indemnification of the
Underwriter. Each of the Company and each Selling
Shareholder agrees to indemnify and hold harmless each
Underwriter, its officers, directors 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, joint or several, as
incurred, to which such Underwriter, its officers, directors and
employees 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 prior 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 or Rule 430C under the Securities Act, or
the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the
statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact
contained in any Issuer Free Writing Prospectus, any preliminary
prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made,
not misleading; or (iii) in whole or in part upon any
inaccuracy in the representations and warranties of the Company
or such Selling Shareholder contained herein; or (iv) in
whole or in part upon any failure of the Company or any of its
Subsidiaries , or such Selling Shareholder, to perform its
obligations hereunder or under law; or (v) any act or
failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to,
the Common Stock or the offering contemplated hereby, and which
is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon any
matter covered by clause (i) through (iv) above,
provided that neither the Company nor any Selling Shareholder
shall be liable under this clause (v) to the extent that a
court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act
undertaken or omitted to be taken by an Underwriter through its
gross negligence, bad faith or willful misconduct; and to
reimburse any Underwriter, its officers, directors and employees
and each such controlling person for any and all expenses
(including the fees and disbursements of counsel for any
Underwriter chosen by such Underwriter) as such expenses are
reasonably incurred by such Underwriter, officer, director,
employee, 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 (A) 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
an Underwriter expressly for use in the Registration Statement,
any Issuer Free Writing Prospectus, any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto); and
(B) that with respect to any preliminary prospectus, the
foregoing indemnity agreement shall not inure to the benefit of
any Underwriter or any person controlling such Underwriter if
copies of any subsequent preliminary prospectus were timely
delivered to the Representatives and a copy of such subsequent
preliminary prospectus was not sent or given by or on behalf of
the Representatives to such person, if required by law so to
have been delivered, at or prior to the written confirmation of
the sale of the Offered Shares to such person, and if a court of
competent jurisdiction shall have determined by a final
non-appealable judgment that the subsequent preliminary
prospectus would have cured the defect giving rise to such loss,
claim, damage, liability or expense. The indemnity agreement set
forth in this Section 9(a) shall be in addition to any
liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and
Officers. Each Underwriter agrees, severally and
not jointly, to indemnify and hold harmless the Company, each of
its directors, each of its officers who signed the Registration
Statement, the Selling Shareholders and each person, if any, who
controls the Company or any Selling Shareholder within the
meaning of the Securities Act or the Exchange Act, against any
loss, claim, damage, liability or expense, as incurred, to which
the Company, or any such director, officer, Selling Shareholder
or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law
or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected
with the prior written consent of the Underwriter),
22
insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of
or is based upon any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any
Issuer Free Writing Prospectus, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or
arises out of or is based upon the omission or alleged omission
to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any
Issuer Free Writing Prospectus, any preliminary prospectus, or
the Prospectus (or any amendment or supplement thereto), in
reliance upon and in conformity with written information
furnished to the Company or the Selling Shareholders by the
Representatives expressly for use therein; and to reimburse the
Company, or any such director, officer, Selling Shareholder or
controlling person, for any legal and other expenses (subject to
Section 9(c) hereof) reasonably incurred by the Company, or
any such director, officer, Selling Shareholder or controlling
person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability,
expense or action. Each of the Company and each of the Selling
Shareholders hereby acknowledges that the only information that
the Underwriter has furnished to the Company and the Selling
Shareholders expressly for use in the Registration Statement,
any Issuer Free Writing Prospectus, any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) are
the statements set forth under “Commissions and
Expenses,”
“Lock-Up
Agreement” (but excluding the first three sentences
thereof), and “Stabilization; Short Positions and Penalty
Bids” subheadings under the caption
“Underwriting” in the Prospectus. The indemnity
agreement set forth in this Section 9(b) shall be in
addition to any liabilities that each Underwriter may otherwise
have.
(c) Notifications and Other Indemnification
Procedures. Promptly after receipt by an
indemnified party under this Section 9 of notice of the
commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying
party under this Section 9, 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 9 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 9 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 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.
(d) Settlements. The indemnifying party
under this Section 9 shall not be liable for any settlement
of any proceeding effected without its prior written consent,
but if settled with such consent or if there be a final
non-appealable judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any
loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by Section 9(c)
hereof, the indemnifying party agrees that it shall be liable
for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more
than 30 days after receipt by such indemnifying party of
the aforesaid request, including notice of the terms of such
settlement, and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request
prior to the date of
23
such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity
was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action,
suit or proceeding and 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.
10. Contribution. If the indemnification
provided for in Section 9 is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid
or payable by such indemnified party, as incurred, as a result
of any losses, claims, damages, liabilities or expenses referred
to therein (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the
Selling Shareholders, on the one hand, and the Underwriters, on
the other hand, from the offering of the Offered Shares pursuant
to this Agreement or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also
the relative fault of the Company and the Selling Shareholders,
on the one hand, and the Underwriters, 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 Company and the Selling Shareholders, on the one
hand, and the Underwriters, on the other hand, in connection
with the offering of the Offered Shares pursuant to this
Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the
Offered Shares pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Shareholders,
and the total underwriting discount received by the
Underwriters, in each case as set forth on the front cover page
of the Prospectus, bear to the aggregate public offering price
of the Offered Shares as set forth on such cover page. The
relative fault of the Company and the Selling Shareholders, on
the one hand, and the Underwriters, on the other hand, shall be
determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact or any
such inaccurate or alleged inaccurate representation or warranty
relates to information supplied by the Company or the Selling
Shareholders, on the one hand, or the Underwriters, on the other
hand, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such
statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth
in Section 9(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 9(c) with respect to notice of
commencement of any action shall apply if a claim for
contribution is to be made under this Section 10; provided,
however, that no additional notice shall be required with
respect to any action for which notice has been given under
Section 9(c) for purposes of indemnification.
The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant
to this Section 10 were determined by pro rata allocation
or by any other method of allocation which does not take account
of the equitable considerations referred to in this
Section 10.
Notwithstanding the provisions of this Section 10, no
Underwriter shall not be required to contribute any amount in
excess of the underwriting commissions or discount received by
such Underwriter in connection with the Offered Shares
underwritten by it and distributed to the public. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters’ obligation
to contribute pursuant to this Section 10 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 10, each
officer, director and employee of an Underwriter and each
person, if any, who controls such 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 with the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the
Company.
24
11. Termination of this Agreement. Prior
to the First Closing Date, this Agreement may be terminated by
the Representatives by notice given to the Company and the
Selling Shareholders if at any time (a) trading in or
listing of any of the Company’s securities shall have been
suspended or limited by the Commission or by The NASDAQ Stock
Market LLC or trading in securities generally on either The
NASDAQ Stock Market LLC or the New York Stock Exchange shall
have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock
exchanges by the Commission or the NASD; (b) a general
banking moratorium shall have been declared by any federal, New
York, Delaware or Minnesota authorities or a material disruption
in commercial banking or securities settlement or clearing
services in the United States has occurred; or (c) 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 the United States’ or international
political, financial or economic conditions, as in the
reasonable judgment of the Representatives is material and
adverse and makes it impracticable or inadvisable to market the
Offered Shares in the manner and on the terms described in the
Prospectus or to enforce contracts for the sale of securities;
(d) in the judgment of the Representatives, there shall
have occurred any Material Adverse Change; or (e) the
Company shall have sustained a loss by strike, fire, flood,
earthquake, storm, accident or other calamity of such character
as in the reasonable judgment of the Underwriter may interfere
materially with the conduct of the business and operations of
the Company regardless of whether or not such loss shall have
been insured. Any termination pursuant to this Section 11
shall be without liability on the part of (x) the Company
or the Selling Shareholders to the Underwriters, except that the
Company and the Selling Shareholders shall be obligated to
reimburse the expenses of the Representatives and the
Underwriters pursuant to Section 5 and Section 7
hereof, (y) the Underwriters to the Company or the Selling
Shareholders, or (z) any party hereto to any other party,
except that the provisions of Section 9 and Section 10
shall at all times be effective and shall survive such
termination.
12. Default of Underwriters. If any
Underwriter or Underwriters default in their obligations to
purchase the Common Shares hereunder on either the First or any
Second Closing Date and the aggregate number of shares of
Offered Shares that such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%)
of the total number of Offered Shares that the Underwriters are
obligated to purchase on such Closing Date, the Representatives
may make arrangements satisfactory to the Company for the
purchase of such Offered Shares by other persons, including any
of the Underwriters, but if no such arrangements are made by
such Closing Date, the non-defaulting Underwriters shall be
obligated severally, in proportion to their respective
commitments hereunder, to purchase the Offered Shares that such
defaulting Underwriters agreed but failed to purchase on such
Closing Date. If any Underwriter or Underwriters so default and
the aggregate number of shares of Offered Shares with respect to
which such default or defaults occur exceeds ten percent (10%)
of the total number of shares of Offered Shares that the
Underwriters are obligated to purchase on such Closing Date and
arrangements satisfactory to the Representatives and the Company
for the purchase of such Common Shares by other persons are not
made within 36 hours after such default, this Agreement
will terminate without liability on the part of any
non-defaulting Underwriters or the Company, except as provided
in Section 14 (provided that if such default occurs with
respect to Offered Shares after the First Closing Date, this
Agreement will not terminate as to the Firm Common Shares or the
Offered Shares purchased prior to such termination). As used in
this Underwriting Agreement, the term “Underwriter”
includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter
from liability for its default.
13. No Advisory or Fiduciary
Responsibility. The Company and the Selling
Shareholders acknowledge and agree that: (i) the purchase
and sale of the Offered Shares pursuant to this Agreement,
including the determination of the public offering price of the
Offered Shares and any related discounts and commissions, is an
arm’s-length commercial transaction between the Company and
each Selling Shareholder, on the one hand, and the Underwriters,
on the other hand, and the Company and each Selling Shareholder
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 Subsidiaries, affiliates,
stockholders, creditors or employees, the Selling Shareholders,
or any other party; (iii) no Underwriter has assumed, and
will not assume, an advisory, agency or fiduciary responsibility
in favor of the Company or any Selling Shareholder 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 or any Selling
Shareholder on other matters) and no Underwriter has any
obligation to the Company or any Selling Shareholder with
respect to the offering contemplated hereby except the
obligations expressly set forth in this Agreement;
(iv) each Underwriter and its respective affiliates may be
engaged in a
25
broad range of transactions that involve interests that differ
from those of the Company and the Selling Shareholders and that
no Underwriter has any obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary
relationship; and (v) no Underwriter has provided any
legal, accounting, regulatory or tax advice with respect to the
offering contemplated hereby and the Company and each Selling
Shareholder has consulted its own legal, accounting, regulatory
and tax advisors to the extent it deemed appropriate.
This Agreement supersedes all prior agreements and
understandings (whether written or oral) between the Company and
the Selling Shareholders, on one hand, and the Underwriters, on
the other hand, with respect to the subject matter hereof. The
Company and each Selling Shareholder hereby waives and releases,
to the fullest extent permitted by law, any claims that the
Company or such Selling Shareholder may have against any
Underwriter with respect to any breach or alleged breach of
agency or fiduciary duty.
14. Representations and Indemnities to Survive
Delivery. The respective indemnities, agreements,
representations, warranties and other statements of the Company
and its Subsidiaries, the Selling Shareholders, their respective
officers, and of the Underwriters set forth in or made pursuant
to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any
Underwriter, the Company, any Selling Shareholder, or any of
their respective partners, officers or directors or any
controlling person, as the case may be, and will survive
delivery of and payment for the Offered Shares sold hereunder
and any termination of this Agreement.
15. Notices. All communications hereunder
shall be in writing and shall be mailed, hand delivered or
telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
ThinkEquity Partners LLC and Feltl and Company
As Representatives of the several Underwriters
c/o ThinkEquity Partners LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Chief Compliance Officer
As Representatives of the several Underwriters
c/o ThinkEquity Partners LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Chief Compliance Officer
with copies to:
Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
00 Xxxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
00 Xxxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
If to the Company or its Subsidiaries:
Wireless Ronin Technologies, Inc.
00000 Xxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
00000 Xxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
with a copy to:
Xxxxxx and Xxxxxx, P.A.
00 Xxxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
00 Xxxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
26
If to the Selling Shareholder:
Spirit Lake Tribe
X.X. Xxx 000
Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Attention: Chairman
X.X. Xxx 000
Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Attention: Chairman
with a copy to:
Xxxxx X. Xxxxxxxxx
000 Xxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Facsimile: (000) 000-0000
000 Xxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Facsimile: (000) 000-0000
Any party hereto may change the address for receipt of
communications by giving written notice to the others.
16. Successors. This Agreement will inure
to the benefit of and be binding upon the parties hereto and to
the benefit of the employees, officers and directors and
controlling persons referred to in Section 9 and
Section 10, and in each case their respective successors,
and no other person will have any right or obligation hereunder.
The term “successors” shall not include any purchaser
of the Offered Shares from any Underwriter merely by reason of
such purchase.
17. Partial Unenforceability. The
invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or
enforceability of any other Section, paragraph or provision
hereof. If any Section, paragraph or provision of this Agreement
is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and
enforceable.
18. Failure of One of More of the Selling Shareholders
to Sell and Deliver Offered Shares. If one or
more of the Selling Shareholders shall fail to sell and deliver
to the Underwriters the Offered Shares to be sold and delivered
by such Selling Shareholders at the First Closing Date pursuant
to this Agreement, then the Underwriters may at their option, by
written notice from the Representatives to the Company and the
Selling Shareholders, either (i) terminate this Agreement
without any liability on the part of any Underwriter or, except
as provided in Sections 5, 7, 9 and 10 hereof, the Company
or (in the event that only one of the Selling Shareholders so
failed) the other Selling Shareholder, or (ii) purchase the
shares which the Company and (in the event that only one of the
Selling Shareholders so failed) the other Selling Shareholders
have agreed to sell and deliver in accordance with the terms
hereof. If one or more of the Selling Shareholders shall fail to
sell and deliver to the Underwriters the Offered Shares to be
sold and delivered by such Selling Shareholders pursuant to this
Agreement at the First Closing Date or the applicable Option
Closing Date, then the Underwriters shall have the right, by
written notice from the Representatives to the Company and the
Selling Shareholders, to postpone the First Closing Date or the
applicable Option Closing Date, as the case may be, but in no
event for longer than seven days in order that the required
changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be
effected.
19. Governing Law and Consent to
Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF MINNESOTA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SUCH STATE. ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR BASED UPON THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (“RELATED PROCEEDINGS”) MAY BE
INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA
LOCATED IN HENNEPIN COUNTY, MINNESOTA, OR THE COURTS OF THE
STATE OF MINNESOTA IN EACH CASE LOCATED IN MINNEAPOLIS OR ST.
XXXX, MINNESOTA (COLLECTIVELY, THE “SPECIFIED
COURTS”), AND EACH OF THE COMPANY, ITS SUBSIDIARIES AND
THE UNDERWRITER IRREVOCABLY SUBMIT 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. EACH OF THE COMPANY, ITS
SUBSIDIARIES AND THE UNDERWRITER IRREVOCABLY AND UNCONDITIONALLY
WAIVE ANY
27
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.
20. 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 signed 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.
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 9 and the contribution provisions of
Section 10, and is fully informed regarding said
provisions. Each of the parties hereto further acknowledges that
the provisions of Sections 9 and 10 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.
[SIGNATURE PAGES
FOLLOW]
28
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,
WIRELESS RONIN TECHNOLOGIES, INC.
| By: |
|
Xxxxxxx X. Xxxx
Chairman, President and Chief Executive Officer
SPIRIT LAKE TRIBE
By: _
_
Name: _
_
Title: _
_
29
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
THINKEQUITY PARTNERS LLC
| By: |
|
Xxxx X. Xxx
Partner
FELTL AND COMPANY, INC.
| By: |
|
Xxxx X. Xxxxx
Chief Executive Officer
30
SCHEDULE A
UNDERWRITERS
|
Number of Firm |
Number of Firm |
|||||||
|
Shares to be |
Shares to be |
|||||||
|
Purchased |
Purchase |
|||||||
|
(w/o
Rule 462(b) |
(with maximum
Rule |
|||||||
|
Underwriters
|
Firm Shares) | 462(b) Firm Shares) | ||||||
|
ThinkEquity Partners LLC
|
1,800,000 | 2,070,000 | ||||||
|
Feltl and Company, Inc.
|
1,800,000 | 2,070,000 | ||||||
|
Barrington Research Associates,
Inc.
|
400,000 | 460,000 | ||||||
|
Total
|
4,000,000 | 4,600,000 | ||||||
SCHEDULE B
SELLING
SHAREHOLDERS
|
Number of Firm |
||||
|
Selling
Shareholders
|
Shares to be Sold | |||
|
Spirit Lake Tribe
|
1,000,000 | |||
|
Total
|
1,000,000 | |||
SCHEDULE 1
SCHEDULE OF
FREE WRITING PROSPECTUSES
INCLUDED IN THE
DISCLOSURE PACKAGE
EXHIBIT A
FORM OF
OPINION OF COUNSEL FOR THE COMPANY
EXHIBIT B
FORM OF
LOCK-UP
AGREEMENT
,
2007
ThinkEquity Partners LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Feltl and Company
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Re: Wireless Ronin
Technologies, Inc. (the “Company”)
Ladies and Gentlemen:
The undersigned, an owner of record or beneficially, or a
pledgee, of common stock, $0.01 par value per share, of the
Company (“Common Stock”) or securities convertible
into or exchangeable or exercisable for Common Stock,
understands and acknowledges that the Company has filed or
intends to file with the Securities and Exchange Commission (the
“Commission”) a registration statement on
Form S-1,
Form SB-2
(if eligible), or other applicable Form (the “Registration
Statement”) for the offer and sale of shares of Common
Stock to the public, including shares subject to an
over-allotment option to be described in the Registration
Statement (collectively, the “Shares”). The
undersigned recognizes that the public offering will be of
benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its
operations. The undersigned further understands that the
Company, as issuer, and ThinkEquity Partners LLC and Feltl and
Company, as the representatives of the underwriters, (the
“Representatives”) to be named in that certain
proposed underwriting agreement expected to be entered into in
connection with the public offering of the Shares (the
“Underwriting Agreement”) will be relying upon the
representations and agreements of the undersigned contained in
this letter agreement (this “Agreement”) in carrying
out the public offering and in entering into the Underwriting
Agreement.
In order to induce the Representatives to proceed with the
public offering, the undersigned agrees, for the benefit of the
Company and the Representatives, that should such public
offering be effectuated, the undersigned will not (and will
cause any spouse, domestic partner or minor child or immediate
family member of the spouse, domestic partner or the undersigned
living in the undersigned’s household not to), without the
prior written consent of the Representatives (which consent may
be withheld in the Representatives’ sole discretion),
during the 180 day period commencing on the effective date
of the Registration Statement (the
“Lock-Up
Period”), directly or indirectly:
(i) sell, offer to sell, contract to sell, pledge,
hypothecate, grant any option to purchase, transfer or otherwise
dispose of, grant any rights with respect to, or file (or
participate in the filing of) a registration statement with the
Commission in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder with respect to, or be
the subject of any hedging, short sale, derivative or other
transaction that is designed to, or reasonably expected to lead
to, or result in, the effective economic disposition of, any
Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock now owned or hereafter acquired
by the undersigned or with respect to which the undersigned (or
the undersigned’s spouse, domestic partner or minor child
or immediate family member of the spouse, domestic partner or
the undersigned living in the undersigned’s household) has
or hereafter acquires record or beneficial ownership over;
(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 Common Stock or any securities
convertible into or exercisable or exchangeable for Common
Stock, whether any such transaction is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise;
(iii) otherwise effect any disposition of any Common Stock
or any securities convertible into or exercisable or
exchangeable for Common Stock; or
(iv) publicly announce an intention to do any of the
foregoing.
Notwithstanding the above, if (a) during the period that
begins on the date that is 15 calendar days plus three business
days before the last day of the
Lock-Up
Period and ends on the last day of the
Lock-Up
Period, the Company issues an earnings release or material news
or a material event relating to the Company occurs; or
(b) prior to the expiration of the
Lock-Up
Period, the Company announces that it will release earnings
results during the
16-day
period beginning on the last day of the
Lock-Up
Period, then the restrictions imposed by this Agreement shall
continue to apply until the expiration of the date that is 15
calendar days plus three business days after the date on which
the issuance of the earnings release or the material news or
material event occurs.
The undersigned hereby agrees and consents to the entry of stop
transfer instructions with the Company’s transfer agent and
registrar against the transfer of shares of Common Stock or
securities convertible into or exchangeable or exercisable for
Common Stock held by the undersigned except in compliance with
this Agreement.
This Agreement is irrevocable and will be binding on the
undersigned and the respective successors, heirs, personal
representatives and assigns of the undersigned.
[Signature
Page Follows]
Signature
Please Print Name
For Entity Signature:
Print Name of Entity
By
_
_
(Indicate capacity of person signing if signing as custodian,
trustee, or on behalf of an entity)
EXHIBIT C
FORM OF OPINION OF COUNSEL FOR THE SELLING
SHAREHOLDERS
