CHINA GREEN, INC. _________ Shares of Common Stock UNDERWRITING AGREEMENT
Exhibit
1.1
_________
Shares of Common Stock
_________,
2010
Grandview
Capital, Inc.
0000
Xxxxxx Xxxx
Xxxxx
0000
Xxxxxxxxxx,
Xxxxxxx 00000
Ladies
and Gentlemen:
China
Green, Inc., a Delaware corporation (the “Company”), proposes to issue
and sell, pursuant to the terms of this Underwriting Agreement (the “Agreement”) and the
Subscription Agreement in the form of Exhibit A attached
hereto (the “Subscription
Agreement”), up to 1,000,000 shares (the “Offered Shares”) of common
stock, par value $0.00001 per share (the “Common Stock”) to investors
(the “Investors”) on a
best efforts basis. In addition, with the mutual consent of the
Company and Grandview Capital, Inc. (“Grandview”), the Company may
sell up to an aggregate of 150,000 additional shares of Common Stock (the “Oversubscription
Shares”). The Offered Shares and the Oversubscription Shares
are described more fully in the Registration Statement (as hereinafter defined)
and are collectively referred to below as the “Shares.”
The
Company hereby confirms its agreement with Grandview to act as lead underwriter
in connection with such issuance and sale of the Offered Shares, and in
particular agrees as follows:
1.
Agreement to Act as
Underwriter.
(a) On the
basis of the representations, warranties and agreements of the Company herein
contained and subject to all the terms and conditions of this Agreement, the
Company hereby appoints, and Grandview agrees to act, as the Company’s lead
underwriter in connection with the issuance and sale, on a best efforts basis,
by the Company of the Shares to the Investors. The Company agrees
that the FINRA registered broker-dealers listed on Schedule A hereto
shall act as co-underwriters for the Shares (such co-underwriters, collectively
with Grandview, the “Underwriters”), it being
agreed, however, that Grandview and such other co-underwriters selected by
Grandview shall be the exclusive underwriters for the Shares.
(b) The
Company shall pay to the Underwriters 3.5% of the proceeds received by the
Company from the sale of the Shares as set forth on the cover page of the
Prospectus (as hereinafter defined), except for those such sales of the Shares
to the purchasers listed on Schedule [●], by which the Company shall pay to the
Underwriters 2% of the proceeds received from such sales.
(c) The
Company will also issue to the Underwriters warrants to purchase Common Stock
(the “Underwriter
Warrants”) in an amount equal to 7% of the Offered Shares as set forth on
the cover page of the Prospectus, subject to certain adjustments, and allocated
between them as they shall mutually agree. The Underwriter Warrants
will be non-exercisable for six (6) months after the Closing Date and will
expire five (5) years after the Closing Date. The Underwriter
Warrants are exercisable at 6.00 per share, equal to 120% of public offering
price of the Shares and shall not be redeemable by the Company.
(d) The
Company shall pay to the Underwriters a non-accountable expense allowance equal
to 2.5% of the gross proceeds of the offering.
(e) The
Company shall pay to Grandview a Financial Advisory Fee equal to 0.5% of the
gross proceeds that the Company received from this offering as follows: (i)
$10,000 upon execution of the engagement letter between the Company and
Grandview, (ii) $15,000 upon the initial filing of the Registration Statement
and (iii) the remaining balance equal to 0.5% (after deducting (i) and (ii) of
the gross proceeds that the Company received from this offering upon Closing of
the offering.
(f) The
Shares are being sold at a price of $5.00 per share (the “Purchase
Price”). The purchases of the Shares shall be evidenced by the
execution of Subscription Agreements by each of the Investors and the
Company.
(g) The
offering contemplated hereby shall commence on the date hereof and shall expire
on the earliest to occur of (i) the date that all the Shares are fully
subscribed for, (ii) 30 days after the Effective Date (as defined below), unless
extended to a later date with the mutual consent of the Company and Grandview,
or (iii) such date mutually agreed by the Company and Grandview (the “Closing Date”). The
period of time set forth in this Section 1(g) is referred to herein as the
“Offering
Period.”
(h) Subject
to the provisions of this Agreement and to the performance by the Company of all
of its obligations to be performed hereunder, the Underwriters agree to use
their best efforts to assist in arranging for sales of Shares. The Company
recognizes that “best efforts” does not assure that the offering contemplated
hereby will be consummated. It is understood and agreed that the
Underwriters shall not and are under no obligation to purchase any Shares for
their own account and that this Agreement does not create any partnership, joint
venture or other similar relationship between or among the Underwriters and the
Company.
2.
Delivery and
Payment.
(a) Concurrently
with the execution and delivery of this Agreement, the Company, the
Underwriters, and _____________, as escrow agent (the “Escrow Agent”), shall enter
into an Escrow Agreement substantially in the form of Exhibit C attached
hereto (the “Escrow
Agreement”), pursuant to which an escrow account will be established, at
the Company’s expense, for the benefit of the Investors (the “Escrow
Account”). Prior to any Closing Date (as hereinafter defined):
(i) each of the Investors will deposit in the Escrow Account an amount equal to
the price per Share as shown on the cover page of the Prospectus (as hereinafter
defined) multiplied by the number of Offered Shares purchased by it, and (ii) on
the last business day of each week following the Effective Date (or such earlier
date as may be reasonably requested by the Company or Grandview), the Escrow
Agent will notify the Company and Grandview in writing of the amount of the
funds then being held by the Escrow Agent in payment for the Shares (the “Received Funds”).
(b) At 10:00
a.m., New York City time, on such date or dates as may be agreed upon by the
Company and Grandview (each, a “Closing Date” and the first to
occur, the “Initial Closing
Date”) beginning on the Effective Date and ending at the conclusion of
the Offering Period, the Escrow Agent will release the Received Funds from the
Escrow Account to each of the Company and the Underwriters as provided in the
Escrow Agreement, and the Company shall deliver the Shares purchased thereby to
the Investors, and the Underwriter Warrants relating thereto to Grandview. The
Company shall deliver or cause to be delivered the Shares to the Investors with
the delivery of the Shares to be made through the facilities of The Depositary
Trust Company’s DWAC system (or, if requested by any investor, as indicated on
the signature page of the Subscription Agreement for such Investors, through the
physical delivery of certificates evidencing the Shares purchased by such
Investor to the residential or business address indicated on such signature
page).
(c) One or
more closings of the transactions contemplated hereby (each, a “Closing”) may be undertaken
during the Offering Period. Such Closings shall take place at the
offices of Ellenoff Xxxxxxxx & Schole LLP, counsel to the Underwriters
(“Underwriter Counsel”)
at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, XX 00000, or at such other place as the Company and Grandview
may agree. All actions taken at any Closing shall be deemed to have
occurred simultaneously. The conditions set forth herein and the
obligations of the Company set forth herein shall apply equally to each
Closing.
3.
Representations and
Warranties of the Company. The Company represents and warrants
and covenants to the Underwriters that:
(a) A
registration statement (including all pre-effective effective amendments thereto
and all post-effective amendments thereto filed before the execution of this
Agreement, the “Registration
Statement”) on Form S-1 (File No. ____________) with respect to the
Offered Shares and the shares of Common Stock underlying the Underwriter
Warrants (“Underwriter Warrant
Shares”) has
been prepared by the Company in conformity with the requirements of the
Securities Act and the rules and regulations (the “Rules and Regulations”) of the
Securities and Exchange Commission (the “Commission”), has been filed
with the Commission and has become effective. The Company and the
transactions contemplated by this Agreement meet the requirements and comply
with the conditions for the use of Form S-1. As used in this
Agreement:
(i) “Applicable Time” means 5:30
p.m. (New York City time) on the date of this Agreement;
(ii) “Effective Date” means the date
as of which the Registration Statement became, or is deemed to have become,
effective under the Securities Act in accordance with the Rules and
Regulations;
(iii) “Prospectus” means,
collectively, each of: (i) the preliminary prospectus relating to the Offered
Shares, dated _______, 2010, (ii) the Company’s free writing prospectus, dated
____, 2010 (the “Approved
FWP”) and (iii) the final prospectus relating to the Offered Shares,
including any prospectus contained in any post-effective amendment to the
Registration Statement and/or supplement thereto relating to the Offered Shares,
in each case as filed with the Commission pursuant to the Rules and Regulations;
and
(iv) “Registration Statement” means,
collectively, the various parts of such registration statement, each as amended
as of the Effective Date for such part, including the Prospectus and all
exhibits to such registration statement.
(b) The
Registration Statement has heretofore become effective under the Securities Act
or, with respect to any registration statement to be filed to register the offer
and sale of Offered Shares pursuant to Rule 462(b) under the Securities Act,
will be filed with the Commission and become effective under the Securities Act
no later than 10:00 p.m., New York City time, on the date of determination of
the public offering price for the Offered Shares. No stop order of
the Commission preventing or suspending the use of any Prospectus, or the
effectiveness of the Registration Statement, has been issued, and no proceedings
for such purpose have been instituted or, to the Company’s knowledge, are
contemplated by the Commission.
(c) The
Registration Statement, at the time it became effective, as of the date hereof,
and as of each Closing Date, conformed and will conform in all material respects
to the requirements of the Securities Act and the Rules and
Regulations. The Prospectus conforms to the requirements of the
Securities Act and the Rules and Regulations.
(d) The
Registration Statement did not, as of the Effective Date, contain an 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.
(e) The
Prospectus will not, as of its date and as of each Closing Date, contain an
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; provided, however, that the
Company makes no representation or warranty with respect to any statement
contained in the Prospectus in reliance upon and in conformity with information
concerning the Underwriters and furnished in writing by the Underwriters to the
Company expressly for use in the Prospectus, as set forth in Section
8(b).
(f) The
exhibits filed as part of the Registration Statement, at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Securities Act, the Securities
Exchange Act of 1934 (the “Exchange Act”) and the Rules
and Regulations, and, when read together with the other information in the
Prospectus, do not contain an 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. There are no contracts or other documents
(including, without limitation, any voting agreement), which are required to be
described in the Registration Statement and the Prospectus or filed as exhibits
to the Registration Statement by the Securities Act, the Exchange Act or the
Rules and Regulations and which have not been so described, filed or
incorporated by reference. All such contracts and other documents to
which the Company is a party have been authorized, executed and delivered by the
Company, constitute valid and binding agreements of the Company, and are
enforceable against the Company in accordance with the terms thereof, subject to
the effect of applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally and equitable principles of general
applicability.
(g) The
statistical, industry-related and market-related data included in the
Registration Statement and the Prospectus are based on or derived from sources
which the Company reasonably and in good faith believes are reliable and, in all
material respects, accurate. Such data agree with the sources from
which they are derived.
(h) The
Company has filed all proxy statements, reports and other documents required to
be filed by it under the Exchange Act (the “SEC Reports”). Each
SEC Report was, at the time of its filing, in compliance in all material
respects with the requirements of its respective form and none of the SEC
Reports, nor the financial statements (and the notes thereto) included in the
SEC Reports, as of their respective filing dates, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) The
Company is, and as of each Closing Date will be, duly organized, validly
existing and in good standing under the laws of the State of
Delaware. The Company has, and as of each Closing Date will have,
full power and authority to conduct all the activities conducted by it, to own
or lease all the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. The
Company is, and as of each Closing Date will be, duly licensed or qualified to
do business and in good standing as a foreign organization in all jurisdictions
in which the nature of the activities conducted by it or the character of the
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so qualified or in good standing or have such
power or authority would not, individually or in the aggregate, have a material
adverse effect or would not reasonably be expected to have a material adverse
effect on or affecting the business, properties, those prospects specifically
described in the Registration Statement and the Prospectus, management,
consolidated financial position, stockholders’ equity or results of operations
of the Company and its Subsidiaries (as defined below) taken as a whole (a
“Material Adverse
Effect”). Complete and correct copies of the articles or
certificate of incorporation and of the bylaws of the Company and all amendments
thereto have been delivered to the Underwriters, and no changes therein will be
made subsequent to the date hereof and prior to the Initial Closing Date, except
as described in the Registration Statement.
(j) Schedule
2 of this Agreement contains a true and complete list of all of the subsidiaries
(each, a “Subsidiary”
and collectively, the “Subsidiaries”). Each
Subsidiary has been duly organized and validly exists as a corporation in good
standing under the laws of its jurisdiction of formation. The
Subsidiaries are duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or in good
standing which will not have a Material Adverse Effect. All of the
shares of issued capital stock of the Subsidiaries has been duly authorized and
validly issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of any lien, encumbrance, claim,
security interest, restriction on transfer, shareholders’ agreement, voting
trust or other defect of title whatsoever.
(k) The
issued and outstanding shares of capital stock of the Company have been validly
issued, are fully paid and nonassessable and, other than as set forth in the
Registration Statement, are not subject to any preemptive rights, rights of
first refusal or similar rights. The Company has an authorized,
issued and outstanding capitalization as set forth in the Prospectus as of the
dates referred to therein. The descriptions of the securities of the Company in
the Registration Statement and the Prospectus are, and as of each Closing Date
will be, complete and accurate in all respects. Except as set forth
in the Registration Statement and the Prospectus, the Company does not have
outstanding any options to purchase, or any rights or warrants to subscribe for,
or any securities or obligations convertible into, or exchangeable for, or any
contracts or commitments to issue or sell, any shares of capital stock or other
securities other than the Offered Shares.
(l) The
Company has full legal right, power and authority to enter into this Agreement,
the Subscription Agreements and the Escrow Agreement (together, the “Transaction Documents”) and
perform the transactions contemplated hereby and thereby. The
Transaction Documents have been authorized and validly executed and delivered by
the Company and are legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their respective terms,
subject to the effect of applicable bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and equitable principles of general
applicability.
(m) As of the
date hereof, there are 6,514,750 shares of Common Stock issued and outstanding
and no shares of preferred stock, par value $0.00001, issued and
outstanding. As of the date hereof, there are -0- shares of Common
Stock were issuable upon the exercise of all options, warrants and convertible
securities outstanding.
(n) The
issuance and sale of each of the Offered Shares have been duly authorized by the
Company, and the Offered Shares, when issued and paid for in accordance with
this Agreement, will be duly and validly issued, fully paid and nonassessable
and will not be subject to preemptive or similar rights. The
Underwriter Warrant Shares have been duly authorized and reserved for issuance
pursuant to the terms of the Underwriter Warrants, and the Warrants Shares, when
issued by the Company upon valid exercise of the Underwriter Warrants, and
payment of the exercise price, will be duly and validly issued, fully paid and
nonassessable and will not be subject to preemptive or similar
rights. The holders of the Offered Shares will not be subject to
personal liability by reason of being such holders. The Offered
Shares, when issued, will conform in all material respects to the description
thereof set forth in or incorporated into the Prospectus.
(o) The
consolidated financial statements and the related notes included in the
Registration Statement and the Prospectus present fairly, in all material
respects, the financial condition of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of operations and cash
flows at the dates and for the periods covered thereby in conformity with
generally accepted accounting principles (“GAAP”). No other
financial statements or schedules of the Company, the Subsidiaries or any other
entity are required by the Securities Act or the Rules and Regulations to be
included in the Registration Statement or the Prospectus. All
disclosures contained in the Registration Statement and the Prospectus regarding
“non-GAAP financial measures” (as such term is defined by the Rules and
Regulations) comply with the Exchange Act and the Securities Act, to the extent
applicable. The Company and the Subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet obligations or any variable interest entities), not disclosed in the
Registration Statement and the Prospectus.
(p) There are no pro forma or as adjusted financial
statements which are required to be included in the Registration Statement and the Prospectus in accordance with Regulation S-X
under the Securities Act which have not been included as so
required. The pro forma and/or as adjusted financial information
included in the Registration Statement and the Prospectus has been properly
compiled and prepared in accordance with the applicable requirements of the
Securities Act and the Rules and Regulations and include all adjustments
necessary to present fairly, in accordance with GAAP and in all material
respects, the pro forma and as adjusted financial position of the respective
entity or entities presented therein at the respective dates indicated and their
cash flows and the results of operations for the respective periods
specified. The assumptions used in preparing the pro forma and as
adjusted financial information included in the Registration Statement and the
Prospectus provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described
therein. The related pro forma and pro forma as adjusted adjustments
give appropriate effect to those assumptions; and the pro forma and pro forma as
adjusted financial information reflect the proper application of those
adjustments to the corresponding historical financial statement
amounts.
(q) Xxxxxx
Xxxxxxx CF (H.K.) CPA Limited (the “Accountants”), who have
reported on such consolidated financial statements and schedules, are registered
independent public accountants with respect to the Company as required by the
Securities Act and the Rules and Regulations and by the rules of the Public
Company Accounting Oversight Board. The consolidated financial
statements of the Company and the related notes and schedules included in the
Registration Statement and the Prospectus have been prepared in conformity with
the requirements of the Securities Act, Exchange Act and the Rules and
Regulations and present fairly the information shown therein.
(r) There is
and has been no failure on the part of the Company, or to its knowledge, any of
the Company’s directors or officers, in their capacities as such, to comply with
any provisions of the Sarbanes Oxley Act of 2002 and the rules and regulations
promulgated therewith (the “Sarbanes Oxley Act”)
applicable to the Company. Each of the principal executive officer
and the principal financial officer of the Company (or each former principal
executive officer of the Company and each former principal financial officer of
the Company, as applicable) has made all certifications
required
by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act with respect to all reports,
schedules, forms, statements and other documents required to be filed by it with
the Commission. For purposes of the preceding sentence, “principal
executive officer” and “principal financial officer” shall have the meanings
given to such terms in the Xxxxxxxx-Xxxxx Act. The Company has taken
all necessary actions to ensure that it is in compliance with all provisions of
the Xxxxxxxx-Xxxxx Act that are in effect and with which the Company is required
to comply. The Company’s Board of Directors satisfies all
“independence” requirements (as that term is defined under applicable laws,
rules and regulations), including, without limitation, all members of the audit
committee of the Company’s Board of Directors, meet the qualifications of
independence as set forth under applicable laws, rules and regulations
and the audit committee of the Company’s Board of Directors has, or
will have prior to the approval of the listing of the Common Stock on the NASDAQ
Capital Market (“NASDAQ”) at least one member
who is “financially sophisticated” (as that term is defined under applicable
laws, rules, regulations and listing standards).
(s) The
Company and its Subsidiaries maintain systems of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability; (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 the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the Company and designed such disclosure controls and procedures to
ensure that material information relating to the Company and its Subsidiaries is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, is being
prepared. The Company presented in its Form 10-K and its amendment
for the year ended June 30, 2009 (such date, the “Evaluation Date”) the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation
Date. Since the Evaluation Date, there have been no significant
changes in the Company’s internal controls (as such term is defined in
Regulation S-K under the Exchange Act) or, to the Company’s knowledge, in other
factors that could significantly affect the Company’s internal
controls.
(t) Except as
set forth in or otherwise contemplated by the Registration Statement: (i) since
the Evaluation Date and prior to the Initial Closing Date, there has not been
and will not have been any change in the capital stock of the Company (except
for changes in the number of outstanding shares of Common Stock of the Company
due to the issuance of shares upon the exercise of stock options, the issuance
of shares upon the conversion of convertible promissory notes outstanding as of
the date hereof, or upon the grant of restricted stock pursuant to the Company’s
authorized and approved employee incentive plans) or long-term debt of the
Company or the Subsidiaries or any dividend or distribution of any kind
declared, set aside for payment, paid or made by the Company on any class of
capital stock, or any material adverse change, or any development that would
reasonably be expected to result in a material adverse change, in or affecting
the business, properties, those prospects specifically described in the
Registration Statement and the Prospectus, management, consolidated financial
position, stockholders’ equity, or results of operations of the Company and its
Subsidiaries taken as a whole (a “Material Adverse Change”) and
(ii) since the Evaluation Date, neither the Company nor the Subsidiaries have
sustained, and the Company is unaware of any existing condition (other than
those conditions occurring naturally and of equivalent risk to similarly
situated businesses) with respect to any of its properties that, to the
knowledge of the Company, is reasonably likely to cause the Company or its
Subsidiaries to sustain, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority,
except in each case as otherwise disclosed in the Registration Statement and the
Prospectus.
(u) Since the
date as of which information is given in the Registration Statement, neither the
Company nor the Subsidiaries have entered or will enter into any transaction or
agreement, not in the ordinary course of business, that is material to the
Company and the Subsidiaries taken as a whole, or incurred or has reason to
believe that they will incur any liability or obligation, direct or contingent,
not in the ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole.
(v) Each of
the Company and the Subsidiaries has good and valid title to all real and
personal property described in the Registration Statement or the Prospectus as
being owned by them that are material to the businesses of the Company and the
Subsidiaries taken as a whole, in each case free and clear of all liens,
encumbrances and claims except those that: (i) do not materially interfere with
the use made and proposed to be made of such property by the Company and the
Subsidiaries or (ii) would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Any real property
described in the Registration Statement or the Prospectus as being leased by the
Company or the Subsidiaries that is material to the business of the Company and
the Subsidiaries taken as a whole is held by them under valid, existing and
enforceable leases, except those that (A) do not materially interfere with the
use made or proposed to be made of such property by the Company and the
Subsidiaries or (B) would not be reasonably expected, individually or in the
aggregate, to have a Material Adverse Effect.
(w) The
Company is not, nor upon completion of the transactions contemplated herein will
it be, an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment company,” as such terms are defined
in the Investment Company Act of 1940, as amended.
(x) There are
no legal, governmental or regulatory actions, suits, investigations or
proceedings pending to which the Company, its officers and directors or the
Subsidiaries are a party or to which any property of the Company or the
Subsidiaries is the subject that, individually or in the aggregate, if
determined adversely to the Company or the Subsidiaries, would reasonably be
expected to have a Material Adverse Effect or materially and adversely affect
the ability of the Company to perform its obligations under the Transaction
Documents. To the Company’s knowledge, no such actions, suits or
proceedings are threatened or contemplated by any governmental or regulatory
authority or threatened by others. To the Company’s knowledge, there
are no current or pending legal, governmental or regulatory investigations,
actions, suits or proceedings that are required under the Securities Act to be
described in the Prospectus that are not so described.
(y) Each of
the Company and the Subsidiaries have, and as of each Closing Date will have:
(i) all governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to carry on its respective business as presently
conducted except where the failure to have such governmental licenses, permits,
consents, orders, approvals and other authorizations would not have a Material
Adverse Effect, (ii) complied with all laws, regulations and orders applicable
to either it or its business, except where the failure to so comply would not
have a Material Adverse Effect, and (iii) performed all its obligations required
to be performed, and is not, and as of each Closing Date will not be, in
default, under any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement, lease, contract or other
agreement or instrument (collectively, a “contract or other agreement”)
to which it is a party or by which its property is bound or affected and, to the
Company’s knowledge, no other party under any material contract or other
agreement to which it is a party is in default in any respect thereunder, except
where such default, individually or in the aggregate, would not have a Material
Adverse Effect. The Company and the Subsidiaries are not in violation
of any material provision of their respective organizational or governing
documents.
(z) The
Company has all corporate power and authority to enter into the Transaction
Documents, and to carry out the provisions and conditions hereof and thereof,
and all consents, authorizations, approvals and orders required in connection
herewith and therewith have been obtained, except such as have been obtained,
such as may be required under state securities or Blue Sky Laws or the by-laws
and rules of the Financial Industry Regulatory Authority or any successor
organization (the “FINRA”) or the NASDAQ in
connection with the distribution of the Offered Shares by the
Underwriters.
(aa) Neither
the execution of the Transaction Documents, nor the issuance, offering or sale
of the Offered Shares, nor the consummation of any of the transactions
contemplated herein or in the Subscription Agreements or Escrow Agreement, nor
the compliance by the Company with the terms and provisions hereof or thereof
will conflict with, or will result in a breach of, any of the terms and
provisions of, or has constituted or will constitute a default under, or has
resulted in or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or the Subsidiaries
pursuant to the terms of any contract or other agreement to which the Company or
the Subsidiaries may be bound or to which any of the property or assets of the
Company or the Subsidiaries are subject, except such conflicts, breaches or
defaults as may have been waived or such conflicts, breaches or defaults,
individually or in the aggregate, as shall not result in a Material Adverse
Effect; nor will such action result in any violation of the provisions of the
organizational or governing documents of the Company or the Subsidiaries, or any
statute or any order, rule or regulation applicable to the Company or the
Subsidiaries or of any court or of any federal, state or other regulatory
authority or other government body having jurisdiction over the Company or the
Subsidiaries, except such violations, individually or in the aggregate, that
shall not result in a Material Adverse Effect.
(bb) No
statement, representation or warranty made by the Company in this Agreement or
made in any certificate or document required by the Transaction Documents to be
delivered to the Underwriters, the Investors or the Escrow Agent was or will be,
when made, in light of the circumstances under which such statement was made,
inaccurate, untrue or incorrect in any material respect.
(cc) The
Company and its directors, officers or controlling persons have not taken,
directly or indirectly, any action intended, or which might reasonably be
expected, to cause or result, under the Exchange Act or otherwise, in, or which
has constituted, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Common Stock.
(dd) No holder
of securities of the Company has rights to the registration of any securities of
the Company as a result of the filing of the Registration Statement or the
transactions contemplated by this Agreement, except for such rights as have been
waived or satisfied, or as described in the Registration Statement.
(ee) The
Company’s Common Stock is not currently quoted or traded on any national
exchange or trading market. The Company has applied to
list its Common Stock the NASDAQ Capital Market. The Company has no
reason to believe that it will not in the foreseeable future continue to be in
compliance with all listing and maintenance requirements of the NASDAQ Capital
Market.
(ff) The
Company is not involved in any material labor dispute nor is any such dispute
known by the Company to be threatened.
(gg) The
business and operations of the Company and the Subsidiaries have been and are
being conducted in compliance with all applicable laws, ordinances, rules,
regulations, licenses, permits, approvals, plans, authorizations or requirements
relating to occupational safety and health, or pollution, or protection of
health or the environment (including, without limitation, those relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic substances, materials or wastes into ambient
air, surface water, groundwater or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in nature) of
any governmental department, commission, board, bureau, agency or
instrumentality of the United States, any state or political subdivision
thereof, or any foreign jurisdiction, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto, except where the failure to be in such compliance will not,
individually or in the aggregate, have a Material Adverse Effect; and neither
the Company nor the Subsidiaries have received any notice from any governmental
instrumentality or any third party alleging any material violation thereof or
liability thereunder (including, without limitation, liability for costs of
investigating or remediating sites containing hazardous substances and/or
damages to natural resources).
(hh) Except as
disclosed in the Registration Statement: (i) to the Company’s knowledge, each of
the Company and the Subsidiaries own or have obtained valid and enforceable
licenses or options for the inventions, patent applications, patents, trademarks
(both registered and unregistered), trade names, copyrights and trade secrets
necessary for the conduct of its respective business as currently conducted
(collectively, the “Intellectual Property”); and
(ii) (a) to the Company’s knowledge, there are no third parties who have any
ownership rights to any Intellectual Property that is owned by, or has been
licensed to, the Company or the Subsidiaries for the products described in the
Registration Statement that would preclude the Company or the Subsidiaries from
conducting its
business
as currently conducted and have a Material Adverse Effect, except for the
ownership rights of the owners of the Intellectual Property licensed or optioned
by the Company or the Subsidiaries; (b) to the Company’s knowledge, there are
currently no sales of any products that would constitute an infringement by
third parties of any Intellectual Property owned, licensed or optioned by the
Company or the Subsidiaries, which infringement would have a Material Adverse
Effect; (c) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others challenging the rights of the
Company or the Subsidiaries in or to any Intellectual Property owned, licensed
or optioned by the Company or the Subsidiaries, other than claims which would
not reasonably be expected to have a Material Adverse Effect; (d) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any Intellectual Property
owned, licensed or optioned by the Company or the Subsidiaries, other than
non-material actions, suits, proceedings and claims, or other than normal patent
application examination procedures; and (e) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others that
the Company or the Subsidiaries infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary right of others, other
than non-material actions, suits, proceedings and claims.
(ii) Each of
the Company and the Subsidiaries have filed all necessary federal, state and
foreign income and franchise tax returns and have paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of any tax deficiency
which has been or might be asserted or threatened against it or the Subsidiaries
which could have a Material Adverse Effect.
(jj) On each
Closing Date, all stock transfer or other taxes (other than income taxes) which
are required to be paid in connection with the sale and transfer of the Offered
Shares to be sold hereunder will be, or will have been, fully paid or provided
for by the Company and all laws imposing such taxes will be or will have been
complied with in all material respects.
(kk) Each of
the Company and the Subsidiaries maintain insurance of the types and in the
amounts that the Company reasonably believes is adequate for their respective
businesses, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company or the Subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against by similarly situated companies, all of which insurance is in
full force and effect.
(ll) Neither
the Company nor the Subsidiaries, nor, to the knowledge of the Company, any
director or officer, has directly or indirectly: (i) made any unlawful
contribution to any candidate for public office, or failed to disclose fully any
contribution in violation of law, (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof, (iii) violated or is in violation
of any provisions of the U.S. Foreign Corrupt Practices Act of 1977 or (iv) made
any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(mm) Each
officer, director and any other holder of outstanding shares in excess of 5% of
Common Stock of the Company as of the effective date of the Registration listed
on Schedule 3 hereto has delivered to Grandview an agreement in the form of
Exhibit D
hereto duly executed by such persons.
(nn) The
Company has delivered to Grandview an agreement in the form of Exhibit E hereto to
the effect that it will not, for a period of 90 days from the Initial Closing
Date, without the prior written consent of Grandview and except as contemplated
by this Agreement, offer to sell, sell, contract to sell, grant any option to
purchase or otherwise dispose (or announce any offer, sale, grant of any option
to purchase or other disposition) of any shares of capital stock of the Company
or securities convertible into, or exchangeable or exercisable for, shares of
capital stock of the Company, except with respect to the capital stock listed on
Schedule 3(nn).
(oo) The
Company has not distributed and, prior to the later to occur of the final
Closing Date and completion of the distribution of the Offered Shares, will not
distribute any offering material in connection with the offering and sale of the
Offered Shares other than the Prospectus (including the Approved FWP) and any
Permitted Free Writing Prospectus (as defined below) to which Grandview has
consented.
(pp) Each
material employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is maintained,
administered or contributed to by the Company or any of its affiliates for
employees or former employees of the Company and the Subsidiaries has been
maintained in material compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended (the “Code”); no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has occurred which would result in a material liability to the Company or
the Subsidiaries with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption; and for each such plan that
is subject to the funding rules of Section 412 of the Code or Section 302 of
ERISA, no “accumulated funding deficiency” as defined in Section 412 of the Code
has been incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeds the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions.
(qq) Except as
disclosed in the Registration Statement, the Company is not a party to or
subject to any employment contract or arrangement providing for annual future
compensation, or the opportunity to earn annual future compensation (whether
through fixed salary, bonus, commission, options or otherwise) of more than
$150,000 to any officer, consultant, director or employee.
(rr) No
relationship, direct or indirect, exists between or among the Company or the
Subsidiaries, on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or the Subsidiaries, on the other, which
is required by the Securities Act to be disclosed in the Registration Statement
and the Prospectus and is not so disclosed.
(ss) The
Company has not sold or issued any securities that would be integrated with the
offering of the Offered Shares contemplated by this Agreement pursuant to the
Securities Act, the Rules and Regulation or the interpretations thereof by the
Commission.
(tt) Neither
the Company nor the Subsidiaries are a party to any contract, agreement or
understanding with any person (other than this Agreement) that would give rise
to a valid claim against the Company or the Subsidiaries or the Underwriters for
a brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Offered Shares. Neither the Company nor the
Subsidiaries are a party to any contract, agreement or understanding with any
person (other than this Agreement) which would result in any compensation or
other item of value owed to such other person being aggregated with the
compensation to be received by the Underwriters hereunder.
(uu) No
forward-looking statement (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act) (a “Forward Looking Statement”)
contained in the Registration Statement and the Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good
faith. The Forward Looking Statements under the heading “Management’s
Discussion and Analysis of Financial Condition and Results of Operations: (i)
were made by the Company with a reasonable basis and in good faith and reflect
the Company’s good faith reasonable best estimate of the matters described
therein, and (ii) have been prepared in accordance with Regulation S-K under the
Securities Act.
(vv) The
operations of the Company and the Subsidiaries are and have been in material
compliance with applicable financial record keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the
Uniting and Strengthening of America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended, the
money laundering statutes of all jurisdictions to which the Company or the
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 the Company or the Subsidiaries
with respect to the Money Laundering Laws is pending or, to the best knowledge
of the Company, threatened.
(ww) Neither
the Company, nor the Subsidiaries, nor, to the knowledge of the Company, any
director or officer, employee, agent or other person acting on behalf of the
Company or the Subsidiaries have, in the course of its actions for, or on behalf
of, the Company: (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
(xx) As used
in this Agreement, references to matters being “material” with respect to the
Company shall mean a material event, change, condition, status or effect related
to the condition (financial or otherwise), properties, assets (including
intangible assets), liabilities, those prospects specifically described in the
Registration Statement and the Prospectus, business, operations or results of
operations of the Company.
(yy) As used
in this Agreement, the term “knowledge of the Company” (or
similar language) shall mean the knowledge of the officers and directors of the
Company who are named in the Prospectus, with the assumption that such officers
and directors shall have made reasonable and diligent inquiry of the matters
presented.
(zz) Any
certificate signed by or on behalf of the Company and delivered to the
Underwriters or to Underwriters’ Counsel shall be deemed to be a representation
and warranty by the Company to each Underwriter as to the matters covered
thereby.
4.
Agreements of the
Company. The Company covenants and agrees with the
Underwriters as follows:
(a) The
Registration Statement has become effective, and if Rule 430A is used or the
filing of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus (properly completed if Rule 430A has been used),
subject to the prior approval of Grandview, pursuant to Rule 424(b) within the
prescribed time period and will provide a copy of such filing to Grandview
promptly following such filing.
(b) The
Company will not, during such period as the Prospectus would be required by law
to be delivered in connection with sales of the Offered Shares by an underwriter
or dealer in connection with the offering contemplated by this Agreement, file
any amendment or supplement to the Registration Statement or the Prospectus
unless a copy thereof shall first have been submitted to Grandview within a
reasonable period of time prior to the filing thereof and Grandview shall not
have reasonably objected thereto in good faith.
(c) The
Company will notify the Underwriters promptly, and will, if requested, confirm
such notification in writing: (i) when any post-effective amendment to the
Registration Statement becomes effective; (ii) of any request by the Commission
for any amendments to the Registration Statement or any amendment or supplements
to the Prospectus or for additional information; (iii) of the issuance by the
Commission of any stop order preventing or suspending the effectiveness of the
Registration Statement, the Prospectus, or the initiation of any proceedings for
that purpose or the threat thereof; (iv) of becoming aware of the occurrence of
any event that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue in any material respect or that
requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading; and (v) of receipt by the
Company of any notification with respect to any suspension of the qualification
of the Offered Shares for offer and sale in any jurisdiction. If at
any time the Commission shall issue any order suspending the effectiveness of
the Registration Statement in connection with the offering contemplated hereby,
the Company will make every reasonable effort to obtain the withdrawal of any
such order at the earliest possible moment. If the Company has
omitted any information from the Registration Statement, pursuant to Rule 430A,
it will use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to said Rule 430A and to notify
the Underwriters promptly of all such filings.
(d) If, at
any time when a Prospectus relating to the Offered Shares is required to be
delivered under the Securities Act, the Company becomes aware of the occurrence
of any event as a result of which the Prospectus, as then amended or
supplemented, would, in the reasonable judgment of counsel to the Company or
Underwriter Counsel, include 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, or the
Registration Statement, as then amended or supplemented, would, in the
reasonable judgment of counsel to the Company or Underwriter Counsel, include
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other reason it is
necessary, in the reasonable judgment of counsel to the Company or Underwriter
Counsel, at any time to amend or supplement the Prospectus or the Registration
Statement to comply with the Securities Act or the Rules and Regulations, the
Company will promptly notify Grandview and, subject to Section 4(b) hereof, will
promptly prepare and file with the Commission, at the Company’s expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such compliance
and will deliver to the Underwriters, without charge, such number of copies
thereof as the Underwriters may reasonably request. The Company
consents to the use of the Prospectus or any amendment or supplement thereto by
the Underwriters.
(e) The
Company will furnish to the Underwriters and Underwriter Counsel, without
charge: (i) one conformed copy of the Registration Statement as originally filed
with the Commission and each amendment thereto, including financial statements
and schedules, and all exhibits thereto, (ii) so long as a prospectus relating
to the Offered Shares is required to be delivered under the Securities Act, as
many copies of the Prospectus or any amendment or supplement thereto as the
Underwriters may reasonably request.
(f) The
Company will comply with all the undertakings contained in the Registration
Statement.
(g) The
Company represents and agrees that, except for the Approved FWP, it has not and
will not, unless it obtains the prior consent of Grandview, which consent will
not be unreasonably withheld, conditioned or delayed, make any offer relating to
the Offered Shares that would constitute an “issuer free writing prospectus,” as
defined in Rule 433 promulgated under the Securities Act, or that would
otherwise constitute a “free writing prospectus,” as defined in Rule 405
promulgated under the Securities Act, required to be filed with the
Commission. Any such free writing prospectus consented to by
Grandview (including the Approved FWP) is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents that it has treated or
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer
free writing prospectus,” as defined in Rule 433 promulgated under the
Securities Act, and has complied and will comply with the requirements said
Rule 433 applicable to any Permitted Free Writing Prospectus, including
timely filing with the Commission where required, legending and record
keeping. The Company will retain in accordance with the Rules and
Regulations all Permitted Free Writing Prospectuses not required to be filed
pursuant to the Rules and Regulations.
(h) Prior to
the sale of the Offered Shares to the Investors, the Company will cooperate with
Grandview and Underwriter Counsel in connection with the registration or
qualification of the Offered Shares for offer and sale under the state
securities or Blue Sky laws of such jurisdictions as Grandview may reasonably
request, if any; provided, that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to general service of process in any
jurisdiction where it is not now so subject.
(i) The
Company will apply the net proceeds from the offering and sale of the Offered
Securities in the manner set forth in the Prospectus under the caption “Use of
Proceeds.” Without the written consent
of Grandview, which shall not be unreasonably withheld, conditioned or delayed,
no proceeds of the Offering will be used to pay outstanding loans from officers,
directors or stockholders.
(j) The
Company will use its best efforts to ensure that the Offered Shares are listed
on the NASDAQ Capital Market at the time of the Initial Closing, and seeking and
using its best efforts to maintain such listing for a period of at least three
(3) years after the Closing.
(k) The
Company shall retain a firm of independent certificate public accountants,
acceptable to Grandview, which will have the responsibility for the preparation
of the financial statements and the financial exhibits, if any, to be included
in the Registration Statement and continuing to retain such accountants, or
comparable accountants, for a period of at least three (3) years after the
Closing.
(l) The
Company shall retain a transfer agent for the Company’s Common Stock and
continue to retain such transfer agent, or a comparable firm, for a period of
three (3) years after the Closing.
(m) The
Company shall engage a financial public relations firm reasonably acceptable to
their relations with their security holders, and continue to retain such firm,
or a comparable firm, for a period of two (2) years after the
Closing.
(n) The
Company shall register with the Corporation Records Service published by
Standard & Poor’s Corporation and covenant to maintain such registration for
a period of three (3) years from the Closing.
(o) The
Company will not at any time, directly or indirectly, take any action intended,
or which might reasonably be expected, to cause or result in, or which will
constitute, stabilization of the price of the Offered Shares to facilitate the
sale or resale of any of the Offered Shares.
(p) The
Company shall, upon the reasonable request of the Underwriters, deliver written
affirmation of any certificate delivered to the Underwriters pursuant to Section
7 prior to any Closing Date following the Initial Closing Date.
(q) The
Company shall supply Grandview and its counsel, at the Company’s costs, with a
reasonable number of bound volumes of the public offering materials within a
reasonable time after the Closing, as well as a reasonable number of
commemorative Lucite tombstones as requested by Grandview.
(r) Upon the
Closing, the Company will grant Grandview the right of first refusal to
co-manage any public underwriting or private placement of debt or equity
securities (excluding (i) sales to employees under any compensation or stock
option plan approved by the shareholders of the Company, (ii) shares issued in
payment of the consideration for an acquisition and (iii) conventional banking
arrangements and commercial debt financing) of the Company or any subsidiary or
successor of the Company during the one year period following the completion of
the offering. If Grandview accepts such right of first refusal,
Grandview shall be entitled to no less than 33.33% of the underwriting,
non-accountable expenses allowance, warrant coverage or other investment banking
compensation for any such offering and shall act as the lead manager of any such
offering. If Grandview fails to accept in writing any such proposal
for such public or private sale within 20 days after receipt of a written notice
from the Company containing such proposal, then Grandview will have not claim or
right with respect to any such sale contained in any such notice.
5.
Agreements of the
Underwriters. The Underwriters agree that it shall not include
any “issuer information” (as defined in Rule 433 under the Securities Act) in
any “free writing prospectus” (as defined in Rule 405) used or referred to by
such Underwriters without the prior consent of the Company (any such issuer
information with respect to whose use the Company has given its consent, which
consent will not be unreasonably withheld, conditioned or delayed, “Permitted Issuer
Information”); provided that: (i) no such consent shall be required with
respect to any such issuer information contained in any document filed by the
Company with the Commission prior to the use of such free writing prospectus and
(ii) “issuer information,” as used in this Section 5 shall not be deemed to
include information prepared by such Underwriters on the basis of or derived
from issuer information. The Underwriters also agree to provide to
each Investor, prior to the Closing, a copy of the Prospectus and any amendments
or supplements thereto.
6.
Expenses. Whether
or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay all costs and expenses incident to
the performance of the obligations of the Company under this Agreement,
including but not limited to costs and expenses of or relating to:
(a) the
preparation, printing and filing of the Registration Statement (including each
pre- and post-effective amendment thereto) and exhibits thereto, any Permitted
Free Writing Prospectus, the Prospectus and any amendments or supplements
thereto, including all fees, disbursements and other charges of counsel and
accountants to the Company;
(b) the
preparation and delivery of certificates representing the Offered
Shares;
(c) furnishing
(including costs of shipping and mailing) such copies of the Registration
Statement (including all pre- and post-effective amendments thereto), the
Prospectus and any Permitted Free Writing Prospectus, and all amendments and
supplements thereto, as may be requested for use in connection with the direct
placement of the Offered Shares;
(d) the
listing of the Common Stock on the NASDAQ Capital Market;
(e) any
filings required to be made by the Underwriters with the FINRA, and the fees,
disbursements and other charges of counsel for the Underwriters in connection
therewith;
(f) the cost
and charges of any transfer agent or registrar for the Offered
Shares;
(g) the
registration or qualification of the Offered Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions reasonably designated by
Grandview, including the reasonable fees, disbursements and other charges of
Underwriter Counsel in connection therewith and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda;
(h) fees,
disbursements and other charges of counsel to the Company;
(i) reasonable
fees, disbursements and other charges of Underwriter Counsel, up to a maximum of
$_____, including any fees incurred in connection with any Blue Sky
registrations described in subsection (g) above;
(j) fees and
disbursements of the Accountants, including those incurred in delivering the
letter(s) described in Section7(f) of this Agreement;
(k) the fees
of the Escrow Agent;
(l) any stock
transfer taxes incurred in connection with the offering contemplated by this
Agreement;
(m) all
expenses of the Company and its representatives incurred in connection with
attending or hosting meetings, or “road shows” with prospective purchasers of
the Offered Shares;
(n) all
reasonable travel and other out-of-pocket expenses of the Underwriters on a
fully accountable basis, up to a maximum of $_______;
(o) all fees,
expenses and disbursements relating to background checks of the Company’s
officers and directors in an amount not to exceed [$3,000] per individual;
provided, that the Company shall only be responsible for the fees, expenses and
disbursements for the background checks for up to [seven (7)] individuals;
and
(p) all other
costs and expenses incident to the performance of the Company obligations
hereunder which are not otherwise specifically provided for in this Section
6.
7.
Conditions of the
Obligations of the Underwriters. The obligations of the
Underwriters hereunder are subject to the following conditions:
(a) (i) No
stop order suspending the effectiveness of the Registration Statement shall have
been issued, and no proceedings for that purpose shall be pending or threatened
by any securities or other governmental authority (including, without
limitation, the Commission), (ii) no order suspending the effectiveness of
the Registration Statement or the qualification or registration of the Offered
Shares under the securities or Blue Sky laws of any jurisdiction shall be in
effect and no proceeding for such purpose shall be pending before, or threatened
or contemplated by, any securities or other governmental authority (including,
without limitation, the Commission), (iii) any request for additional
information on the part of the staff of any securities or other governmental
authority (including, without limitation, the Commission) shall have been
complied with to the satisfaction of the staff of the Commission or such
authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement, any Permitted Free Writing Prospectus or the
Prospectus shall have been filed unless a copy thereof was first submitted to
Grandview and Grandview did not object thereto in good faith, and Grandview
shall have received certificates of the Company, dated as of the Initial Closing
Date and signed by the President and Chief Executive Officer or the Chairman of
the Board of Directors of the Company, and the Chief Financial Officer of the
Company, to the effect of clauses (i), (ii) and (iii).
(b) Since the
respective dates as of which information is given in the Registration Statement
and the Prospectus: (i) there shall not have been a Material Adverse
Change, whether or not arising from transactions in the ordinary course of
business, in each case other than as set forth in or contemplated by the
Registration Statement and the Prospectus and (ii) the Company shall not
have sustained any material loss or interference with its business or properties
from fire, explosion, flood or other casualty, whether or not covered by
insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree, which is not set forth in the Registration
Statement and the Prospectus, if in the reasonable judgment of Grandview any
such development makes it impracticable or inadvisable to consummate the sale
and delivery of the Offered Shares to Investors as contemplated
hereby.
(c) Since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall have been no litigation or other proceeding
instituted against the Company or any of its officers or directors in their
capacities as such, before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, which litigation or proceeding, in the reasonable judgment of
Grandview, could have a Material Adverse Effect.
(d) Each of
the representations and warranties of the Company contained herein shall be true
and correct in all material respects as of each Closing Date, as if made on such
date, and all covenants and agreements herein contained to be performed on the
part of the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to such Closing Date shall have been
duly performed, fulfilled or complied with in all material
respects.
(e) The
Underwriters shall have received an opinion, dated the Initial Closing Date, of
Xxxxxx + Xxxxxx LLP with respect to the matters set forth in Exhibit F
hereto.
(f) Satisfactory
completion by Grandview of its due diligence investigation and analysis of: (i)
the Company’s arrangements with its officers, directors, employees, affiliates,
customers and suppliers, (ii) the audited historical financial statements of the
Company for the fiscal years ended June 30, 2007, 2008 and 2009 and (iii) the
Company’s projected financial results for the fiscal years ending December 31,
2010 through 2011.
(g) The
execution of this Underwriting Agreement.
(h) The
Company meeting the criteria necessary for inclusion of the Common Stock on the
NASDAQ Capital Market and seeking and using its best efforts to maintain such
listing for a period of at least three (3) years after the Closing.
(i) Neither
the Company not any of its affiliates has, either prior to the initial filing or
the effect date of the Registration Statement, made any offer or sale of any
securities which are required to be “integrated” pursuant to the Securities Act
or the regulations thereunder with the offer and sale of the Offered Shares
pursuant to the Registration Statement.
(j) The
Company’s registration of the Common Stock under the provisions of Section 12(b)
or (g), as applicable, of the Securities Exchange Act of 1934 on or prior to the
effective date of the offering.
(k) The
Company obtaining and maintaining a qualified Chief Financial
Officer.
(l) The
Company retaining a firm of independent certificate public accountants
acceptable to Grandview.
(m) The
Company retaining a financial printer reasonably acceptable to
Grandview.
(n) The
Company retaining a transfer agent for the Company’s Common Stock reasonably
acceptable to Grandview.
(o) The
Company engaging a financial public relations firm reasonably acceptable to
Grandview.
(p) The
Company registering with the Corporation Records Services published by Standard
& Poor’s Corporation.
(q) Prior to
the Initial Closing Date, the Accountants shall have furnished to the
Underwriters a letter, dated the date of its delivery (the “Comfort Letter”), addressed to
the Underwriters and in form and substance satisfactory to Grandview, confirming
that: (i) they are independent public accountants with respect to the Company
within the meaning of the Securities Act and the Rules and Regulations; (ii) in
their opinion, the financial statements and any supplementary financial
information included in the Registration Statement and examined by them comply
as to form in all material respects with the applicable accounting requirements
of the Securities Act and the Rules and Regulations; (iii) on the basis of
procedures, not constituting an examination in accordance with generally
accepted auditing standards, set forth in detail in the Comfort Letter, a
reading of the latest available interim financial statements of the Company,
inspections of the minute books of the Company since the latest audited
financial statements included in the Prospectus, inquiries of officials of the
Company responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in the Comfort Letter to a date not
more than five days prior to the date of the Comfort Letter, nothing came to
their attention that caused them to believe that: (A) as of a
specified date not more than five days prior to the date of the Comfort Letter,
there have been any changes in the capital stock of the Company or any increase
in the long-term debt of the Company, or any decreases in net current assets or
net assets or other items specified by Grandview, or any increases in any items
specified by Grandview, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in the Comfort Letter; and (B) for the period
from the date of the latest financial statements included in the Prospectus to
the specified date referred to in Clause (A), there were any decreases in
revenues or the total or per share amounts of net income or other items
specified by Grandview, or any increases in any items specified by Grandview, in
each case as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by Grandview, except in each
case for decreases or increases which the Prospectus discloses have occurred or
may occur or which are described in the Comfort Letter; and (iv) in addition to
the examination referred to in their reports included in the Prospectus and the
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an examination in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by Grandview, which are derived
from the general accounting, financial or other records of the Company, as the
case may be, which appear in the Prospectus or in Part II of, or in exhibits or
schedules to, the Registration Statement, and have compared such amounts,
percentages and financial information with such accounting, financial and other
records and have found them to be in agreement.
(r) At the
Initial Closing Date, there shall be furnished to the Underwriters a
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to Grandview to the effect that each signer has carefully
examined the Registration Statement and the Prospectus, and that to each of such
person’s knowledge:
(i) (A) As of
the date of such certificate, (x) the Registration Statement does not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (y) the Prospectus does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (B) no event has occurred as a
result of which it is necessary to amend or supplement the Prospectus in order
to make the statements therein not untrue or misleading in any material
respect.
(ii) All the
representations and warranties of the Company contained in this Agreement that
are qualified as to materiality or Material Adverse Effect shall have been on
the date hereof and shall be as of the Initial Closing Date, as if made on and
as of the Initial Closing Date, true and complete in all respects, and all the
representations and warranties of the Company contained in this Agreement that
are not qualified as to materiality or Material Adverse Effect shall have been
true and complete in all material respects on the date hereof and shall be true
and complete in all material respects as of the Initial Closing Date, provided,
however, that any representation or warranty of the Company in this Agreement
made only as of some date other than the date hereof shall have been true and
complete only as of such other date.
(iii) Each of
the covenants required herein to be performed by the Company on or prior to the
date of such certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or prior to the
delivery of such certificate has been duly, timely and fully complied
with.
(iv) No stop
order or other order suspending the effectiveness of the Registration Statement,
or any part thereof, or the qualification or registration of the Offered Shares
under the securities or Blue Sky laws of any jurisdiction, has been issued and
no proceedings for that purpose have been instituted or are contemplated by the
Commission.
(v) Any
request for additional information on the part of the staff of any securities or
other governmental authority (including, without limitation, the Commission)
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities.
(vi) Subsequent
to the date of the most recent financial statements in the Prospectus, there has
been no Material Adverse Change.
(s) The
Offered Shares shall be qualified for sale in such states as Grandview may
reasonably request, and each such qualification shall be in effect and not
subject to any stop order or other proceeding on any Closing Date with respect
to the sale of the Offered Shares in such state or states, as provided for
herein.
(t) The
Company shall have furnished or caused to be furnished to the Underwriters such
a customary certificate of the Company’s Secretary, as well as certificates, in
addition to those specifically mentioned herein, as Grandview may have
reasonably requested as to the accuracy and completeness at the Initial Closing
Date of any statement in the Registration Statement or the Prospectus, as to the
accuracy at the Initial Closing Date of the representations and warranties of
the Company as to the performance by the Company of its obligations hereunder,
or as to the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Underwriters.
(u) Grandview
shall have received the agreements referred to in Section 3(mm) and (nn) hereof
substantially in the form of Exhibits D and E
hereto.
8.
Indemnification.
(a) The
Company shall indemnify and hold harmless the Underwriters, their respective
present and former affiliated entities, managers, members, legal counsel,
directors, officers, partners, stockholders, employees and agents and each
person, if any, who controls the Underwriters within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, obligations, penalties, judgments, awards, costs,
disbursements, liabilities, expenses and damages, joint or several, (including
any and all investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which it, or any of them, may become
subject under the Securities Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on (i) any
untrue statement or alleged untrue statement made by the Company in
Section 3 of this Agreement, (ii) any untrue statement or alleged
untrue statement of any material fact contained in (A) the Registration
Statement or the Prospectus or any amendment or supplement thereto, (B) any
Permitted Free Writing Prospectus or any amendment or supplement thereto,
(C) any application or other document, or any amendment or supplement
thereto, executed by the Company based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to qualify the
Offered Securities under the securities or Blue Sky laws thereof or filed with
the Commission or any securities association or securities exchange (each, an
“Application”),
(iii) the omission or alleged omission to state in the Registration
Statement, the Prospectus or any Permitted Free Writing Prospectus, or any
amendment or supplement thereto, or any Application a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or (iv) in connection
with the acceptance of or the performance or non-performance of the Underwriters
obligations under this Agreement; provided, however, that the
Company will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Offered Shares in the public
offering to any person found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily and
directly from the gross negligence and willful misconduct of the
Underwriters. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The
Underwriters will indemnify and hold harmless the Company, each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, each director of the Company and each officer
of the Company who signs the Registration Statement to the same extent as the
foregoing indemnity from the Company to the Underwriters, but only insofar as
losses, claims, liabilities, expenses or damages arise out of or are based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the Underwriters
furnished in writing to the Company by the Underwriters expressly for use in the
Registration Statement, the Prospectus or any Permitted Free Writing
Prospectus. This indemnity agreement will be in addition to any
liability that the Underwriters might otherwise have. The Company
acknowledges that, for all purposes under this Agreement: (i) the fourth to last
paragraph under the heading “Plan of Distribution” in the Prospectus and (ii)
the names of the Underwriters, constitute the only information relating to the
Underwriters furnished in writing to the Company by the Underwriters expressly
for inclusion in the Registration Statement or the Prospectus.
(c) Any party
that proposes to assert the right to be indemnified under this Section 8
will, promptly after receipt of notice of commencement of any action against
such party in respect of which a claim is to be made against an indemnifying
party or parties under this Section 8, notify each such indemnifying party of
the commencement of such action, enclosing a copy of all papers served, but the
omission so to notify such indemnifying party will not relieve it from any
liability that it may have to any indemnified party under the foregoing
provisions of this Section 8 unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified
party will have the right to employ its own counsel in any such action, but the
fees, expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that a conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party that would prevent the counsel
selected by the indemnifying party from representing the indemnified party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (3) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or
parties. It is understood that the indemnifying party or parties
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm admitted to practice in such jurisdiction at any
one time for all such indemnified party or parties. All such fees,
disbursements and other charges will be reimbursed by the indemnifying party
promptly as they are incurred. The Company will not, without the
prior written consent of Grandview (which consent will not be unreasonably
withheld, conditioned or delayed), settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or proceeding
in respect of which indemnification has been sought hereunder (whether or not
the Underwriters or any person who controls any of the Underwriters within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of the Underwriters and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding. An indemnifying party will not be liable
for any settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld, conditioned or
delayed).
(d) In order
to provide for just and equitable contribution in circumstances in which the
indemnification provided for in the foregoing paragraphs of this Section 8 is
applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or the Underwriters, the Company and the
Underwriters will contribute to the total losses, claims, liabilities, expenses
and damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Underwriters such as persons
who control the Company within the meaning of the Securities Act or the Exchange
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company
and the Underwriters may be subject in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting Company expenses) received by the Company as set forth in the table on
the cover page of the Prospectus bear to the fee received by the Underwriters
hereunder. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence but also the relative
fault of the Company, on the one hand, and the Underwriters on the other, with
respect to the statements or omissions which resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, liability, expense or damage, or action in respect
thereof, referred to above in this Section 8(d) shall be deemed to include, for
purpose of this Section 8(d), any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8(d),
the Underwriters shall not be required to contribute any amount in excess of the
fee received by it, and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(d), any person who
controls a party to this Agreement within the meaning of the Securities Act or
the Exchange Act will have the same rights to contribution as that party, and
each officer of the Company who signed the Registration Statement will have the
same rights to contribution as the Company, subject in each case to the
provisions hereof. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action against such party in respect of
which a claim for contribution may be made under this Section 8(d), will notify
any such party or parties from whom contribution may be sought, but the omission
so to notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section
8(d). No party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will not be
unreasonably withheld).
9.
Termination.
(a) The
obligations of the Underwriters under this Agreement may be terminated at any
time prior to the completion of the distribution of the Offered Shares, by
notice to the Company from Grandview, without liability on the part of the
Underwriters to the Company if, prior to delivery and payment for the Offered
Shares, in the sole judgment of Grandview: (i) trading in the Common Stock
of the Company shall have been suspended by the Commission or by NASDAQ Capital
Market, or, if the Common Stock is not listed on NASDAQ Capital Market, if
trading shall have been suspended by the OTC Bulletin Board, (ii) trading
in securities generally on the New York Stock Exchange or the Nasdaq Stock
Market shall have been suspended or limited or minimum or maximum prices shall
have been generally established on any of such exchange or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by any of such exchange
or by order of the Commission or any court or other governmental authority,
(iii) a general banking moratorium shall have been declared by Federal or
New York State authorities, or (iv) any material adverse change in the financial
or securities markets in the United States or any outbreak or material
escalation of hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis (including any material act of
terrorism) shall have occurred, the effect of any of which is such as to make
it, in the sole judgment of Grandview, impracticable or inadvisable to market
the Offered Shares on the terms and in the manner contemplated by the
Prospectus.
(b) If this
Agreement shall be terminated pursuant to any of the provisions hereof, or if
the sale of the Offered Shares provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth herein is not
satisfied, in each case because of any refusal, inability or failure on the part
of the Company to perform any agreement herein or comply with any provision
hereof, the Company will, subject to demand by Grandview, reimburse the
Underwriters for all reasonable out-of-pocket accountable expenses directly
incurred in connection herewith.
10.
No Fiduciary
Duty. The Company acknowledges and agrees that in connection
with this offering, sale of the Offered Shares or any other services the
Underwriters may be deemed to be providing hereunder, notwithstanding any
preexisting relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the
Underwriters: (i) no fiduciary relationship between the Company and any other
person, on the one hand, and the Underwriters, on the other, exists; (ii) the
Underwriters are not acting as advisors, experts or otherwise, to the Company,
including, without limitation, with respect to the determination of the offering
price of the Offered Shares, and such relationship between the Company, on the
one hand, and the Underwriters, on the other, is entirely and solely commercial,
based on arms-length negotiations; (iii)
any duties and obligations that the Underwriters may have to the Company
shall be limited to those duties and obligations specifically stated herein; and
(iv) the Underwriters and their respective affiliates may have interests that
differ from those of the Company. The Company hereby waives any
claims that the Company may have against the Underwriters with respect to any
breach of fiduciary duty in connection with this offering.
11.
Notices. All
communications hereunder, except as may be otherwise specifically provided
herein, shall be in writing, and:
(a) if sent
to Grandview or any Underwriter, shall be mailed, delivered, or faxed and
confirmed in writing, to Grandview Capital, Inc., 0000 Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxxx Xxxxxxxxx, with copies to Ellenoff
Xxxxxxxx & Schole LLP, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxxxxx, Esq.;
and
(b) if sent
to the Company shall be mailed, delivered, or faxed and confirmed in writing to
the Company at the addresses set forth in the Registration Statement, with a
copy to Xxxxxx & Xxxxxx, LLP, 000 Xxxxx 0 Xxxxx, Xxxxxxxxx, Xxx Xxxxxx,
00000, Attention: Xxxxxxx X. Xxxxxx, Esq.;
Any such
notices and other communications shall take effect at the time of receipt
thereof.
12.
Survival. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Company and the Underwriters set forth in this Agreement
or made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of: (i) any investigation made by or
on behalf of the Company, any of its officers or directors, the Underwriters or
any controlling person referred to in Section 8 hereof and (ii) delivery of
and payment for the Offered Shares. The respective agreements,
covenants, indemnities and other statements set forth in Sections 6 and 8
hereof shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
13.
Successors. This
Agreement shall inure to the benefit of and shall be binding upon the
Underwriters, the Company and their respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that: (i) the indemnification and
contribution contained in Sections 8(a) and (d) of this Agreement shall
also be for the benefit of the directors, officers, employees and agents of the
Underwriters and any person or persons who control the Underwriters within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and (ii) the indemnification and contribution contained in
Sections 8(b) and (d) of this Agreement shall also be for the benefit of
the directors of the Company, the officers of the Company who have signed the
Registration Statement and any person or persons who control the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act. No Investor shall be deemed a successor because of such
purchase.
14.
Applicable Law;
Venue. This Agreement shall be deemed to have been executed
and delivered in New York and both this Agreement and the transactions
contemplated hereby shall be governed as to validity, interpretation,
construction, effect, and in all other respects by the laws of the State of New
York, without regard to the conflicts of laws principals thereof (other than
Section 5-1401 of The New York General Obligations Law). Each of the
Underwriters and the Company: (a) agrees that any legal suit, action or
proceeding arising out of or relating to this Agreement and/or the transactions
contemplated hereby shall be instituted exclusively in the Supreme Court of the
State of New York, New York County, or in the United States District Court for
the Southern District of New York, (b) waives any objection which it may have or
hereafter to the venue of any such suit, action or proceeding, and (c)
irrevocably consents to the jurisdiction of Supreme Court of the State of New
York, New York County, or in the United States District Court for the Southern
District of New York in any such suit, action or proceeding. Each of
the Underwriters and the Company further agrees to accept and acknowledge
service of any and all process which may be served in any such suit, action or
proceeding in the Supreme Court of the State of New York, New York County, or in
the United States District Court for the Southern District of New York and
agrees that service of process upon the Company mailed by certified mail to the
Company’s address or delivered by Federal Express via overnight delivery shall
be deemed in every respect effective service of process upon the Company, in any
such suit, action or proceeding, and service of process upon the Underwriters
mailed by certified mail to the Underwriters’ address or delivered by Federal
Express via overnight delivery shall be deemed in every respect effective
service process upon the Underwriter, in any such suit, action or
proceeding. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST
EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND
CREDITORS) HEREBY WAIVES ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND
THE PROSPECTUS.
15.
Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. Delivery of a signed counterpart of this
Agreement by facsimile or other electronic transmission shall constitute valid
and sufficient delivery thereof.
16.
Entire
Agreement. This Agreement, together with the schedule and
exhibits attached hereto and as the same may be amended from time to time in
accordance with the terms hereof, contains the entire agreement among the
parties hereto relating to the subject matter hereof and there are no other or
further agreements outstanding not specifically mentioned herein.
17.
Severability. If
any term or provision of this Agreement or the performance thereof shall be
invalid or unenforceable to any extent, such invalidity or unenforceability
shall not affect or render invalid or unenforceable any other provision of this
Agreement and this Agreement shall be valid and enforced to the fullest extent
permitted by law.
18.
Headings. The
headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this
Agreement.
[Signature Page
Follows]
Please
confirm that the foregoing correctly sets forth the agreement between the
Company and the Underwriters.
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Very
truly yours,
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By:
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Name:
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Title:
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Confirmed
by Grandview, acting for itself and as a representative of the Underwriters
named on Schedule
A attached hereto, as of the date first above mentioned:
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GRANDVIEW
CAPITAL, INC.
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By:
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Name:
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Title:
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