Exhibit 1.1
ICOP DIGITAL, INC.
UNDERWRITING
AGREEMENT
dated
, 2009
Paulson Investment Company,
Inc.
Underwriting
Agreement
, 2009
Paulson Investment Company,
Inc.
811 SW Naito Parkway
Portland, Oregon 97204
Ladies and Gentlemen:
Introductory.
ICOP Digital, Inc., a Colorado
corporation (the “ Company ”) proposes to issue
and sell to the several underwriters named in Schedule A (the
“ Underwriters ”) (i) an aggregate of
(the “Firm Units”) issued by the Company. Each Unit
will consist of ten shares (the “ Shares ”) of
common stock, no par value, of the Company (“ Common
Stock ) and ten six month non-callable Class B warrants (the
“ Warrants ”). The Warrants are to be issued
under the terms of a Warrant Agreement (the “ Warrant
Agreement ”) by and between the Company and Computershare
Investor Services, as stock transfer and warrant agent (the “
Warrant Agent ”), substantially in the form most
recently filed as an exhibit to the Registration Statement
(hereinafter defined). Each Warrant entitles the holder thereof to
purchase one share of Common Stock at a price equal to $
[110% of the closing price of the Company’s Common Stock on
the effective date], subject to adjustment under the terms of the
Warrant Agreement. Shares of Common Stock issued upon exercise of
the Warrants are referred to herein collectively as the “
Warrant Shares .” The Shares, Warrants and Warrant
Shares are sometimes referred to herein as the “
Underlying Securities .”
The respective number of the Firm
Units to be so purchased by the several Underwriters are set forth
opposite their names in Schedule I hereto. In addition, the Company
has granted to the Underwriters an option to purchase up to an
additional
Units [15% of the total number of Firm Units] (the “
Option Units ”) as provided in Section 2. Unless
specified to the contrary, all references herein to
“Units” shall be deemed to include the Firm Units and
the Option Units (to the extent the aforementioned option has been
exercised) and all references herein to Shares, Warrants and
Warrant Shares shall be deemed to include the Shares, Warrants and
Warrant Shares underlying the Option Units (to the extent the
aforementioned option has been exercised). Firm Units and, if and
to the extent such option is exercised, the Option Units are
collectively referred to herein as the “ Units
.”
Paulson Investment Company, Inc. has
agreed to act as representative of the several Underwriters (in
such capacity, the “ Representative ”) in
connection with the offering and sale of the Units.
As the Representative, you have
advised the Company that: (a) that you are authorized to enter
into this Agreement for yourself as Representative and on behalf of
the several Underwriters; and (b) the several Underwriters are
willing, acting severally and not jointly, to purchase the numbers
of Firm Units set forth opposite their respective names in Schedule
I.
In consideration of the mutual
agreements contained herein and of the interests of the parties in
the transactions contemplated hereby, the parties hereto agree as
follows:
S ECTION 1. Representations and Warranties of
the Company.
The Company represents, warrants and
covenants to each Underwriter as follows:
(a) Filing of the Registration
Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the “ Commission
”) a registration statement on Form S-1 (File No. 333-
), which contains a form of prospectus to be used in connection
with the public offering and sale of the Units. Such registration
statement, as amended, including the financial statements,
schedules and exhibits thereto, and the documents incorporated by
reference in the prospectus contained in the registration statement
at the time such registration statement became effective, in the
form in which it was declared effective by the Commission under the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (collectively, the “ Securities
Act ”), and including any required information deemed to
be a part thereof at the time of effectiveness pursuant to Rule
430A, Rule 430B or Rule 430C under the Securities Act, or pursuant
to the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder (collectively, the “
Exchange Act ”), is called the “ Registration
Statement .” Any registration statement filed by the
Company pursuant to Rule 462(b) under the Securities Act is called
the “ Rule 462(b) Registration Statement ,” and
from and after the date and time of filing of the Rule 462(b)
Registration Statement the term “ Registration
Statement ” shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first filed pursuant to
Rule 424(b) under the Securities Act after the date and time that
this Agreement is executed and delivered by the parties hereto (the
“ Execution Time ”), or, if no filing pursuant
to Rule 424(b) under the Securities Act is required, the form of
final prospectus relating to the Units included in the Registration
Statement at the effective date of the Registration Statement, is
called the “ Prospectus .” All references in
this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, the Company’s preliminary prospectus
included in the Registration Statement (each a “
preliminary prospectus ”), the Prospectus, or any
amendments or supplements to any of the foregoing, shall include
any copy thereof filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System (“
EDGAR ”). Any reference herein to any preliminary
prospectus or the Prospectus or any supplement or amendment to
either thereof shall be deemed to refer to and include any
documents incorporated by reference therein as of the date of such
reference.
(b) Compliance with Registration
Requirements. The Registration Statement has been declared
effective by the Commission under the Securities Act. The Company
has complied to the Commission’s satisfaction with all
requests of the Commission for additional or supplemental
information. No stop order preventing or suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect, and no proceedings for such
purpose have been instituted or are pending or, to the best
knowledge of the Company, are contemplated or threatened by the
Commission.
2
Each preliminary prospectus and the
Prospectus when filed complied or will comply in all material
respects with the Securities Act and, if filed by electronic
transmission pursuant to IDEA (except as may be permitted by
Regulation S-T under the Securities Act), was identical in content
to the copy thereof delivered to the Underwriters for use in
connection with the offer and sale of the Units other than with
respect to any artwork and graphics that were not filed. Each of
the Registration Statement, any Rule 462(b) Registration Statement
and any post-effective amendment thereto, at the time it became
effective and at all subsequent times until the expiration of the
prospectus delivery period required under Section 4(3) of the
Securities Act, complied and will comply in all material respects
with the Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus (including any Prospectus
wrapper), as amended or supplemented, as of its date and at all
subsequent times until the Underwriters have completed their
distribution of the offering of the Units, did not and will not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or
the Prospectus, or any amendments or supplements thereto, made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by the
Representative expressly for use therein, it being understood and
agreed that the only such information furnished by the
Representative consists of the information described as such in
Section 8 hereof. There are no contracts or other documents
required to be described in the Prospectus or to be filed as
exhibits to the Registration Statement that have not been described
or filed as required.
(c) Disclosure Package . The
term “ Disclosure Package ” shall mean
(i) the preliminary prospectus, as amended or supplemented,
(ii) the issuer free writing prospectuses as defined in Rule
433 of the Securities Act (each, an “ Issuer Free Writing
Prospectus ”), if any, identified in Schedule B hereto
and (iii) any other free writing prospectus that the parties
hereto shall hereafter expressly agree in writing to treat as part
of the Disclosure Package. As of 9:00 a.m. (Eastern time) on the
date of this Agreement (the “ Initial Sale Time
”), the Disclosure Package did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions
from the Disclosure Package based upon and in conformity with
written information furnished to the Company by any Underwriter
through the Representative specifically for use therein, it being
understood and agreed that the only such information furnished by
or on behalf of any Underwriter consists of the information
described as such in Section 8 hereof.
(d) Company Not Ineligible
Issuer . (i) At the time of filing the Registration
Statement and (ii) as of the date of the execution and
delivery of this Agreement (with such date being used as the
determination date for purposes of this clause (ii)), the Company
was not and is not an Ineligible Issuer (as defined in Rule 405 of
the Securities Act), without taking account of any determination by
the Commission pursuant to Rule 405 of the Securities Act that it
is not necessary that the Company be considered an Ineligible
Issuer.
3
(e) Issuer Free Writing
Prospectuses . No Issuer Free Writing Prospectus includes any
information that conflicts with the information contained in the
Registration Statement, including any document incorporated by
reference therein that has not been superseded or modified. The
foregoing sentence does not apply to statements in or omissions
from any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by any
Underwriter through the Representative specifically for use
therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the
information described as such in Section 8 hereof.
(f) Offering Materials Furnished
to Underwriters. The Company has delivered to the
Representative two complete manually signed copies of the
Registration Statement and of each consent and certificate of
experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and preliminary
prospectuses and the Prospectus, as amended or supplemented, in
such quantities and at such places as the Representative have
reasonably requested for each of the Underwriters.
(h) Distribution of Offering
Material By the Company. The Company has not distributed and
will not distribute, prior to the later of each Subsequent Closing
Date (as defined below) and the completion of the
Underwriters’ distribution of the Units, any offering
material in connection with the offering and sale of the Units
other than a preliminary prospectus, the Prospectus, any Issuer
Free Writing Prospectus reviewed and consented to by the
Representative and the Registration Statement.
(i) The Underwriting
Agreement. This Agreement has been duly authorized (to the
extent applicable), executed and delivered by, and is a valid and
binding agreement of, the Company, enforceable in accordance with
its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies
of creditors or by general equitable principles.
(j) Authorization of the Common
Stock and Validity of the Warrants, the Representative’s
Warrants and the Warrant Agreement.
(i) The Common Stock included in the
Units to be purchased by the Underwriters from the Company
(including Units purchasable on exercise of the Underwriters’
over-allotment option described in Section 2(c)) have been
duly authorized and reserved for issuance and sale, and, when
issued and sold pursuant to this Agreement, will be validly issued,
fully paid and nonassessable.
(ii) The Warrants included in the
Units to be purchased by the Underwriters from the Company have
been duly and validly authorized by all required corporate actions
and will, when issued and delivered by the Company pursuant to this
Agreement, be validly executed and delivered by, and will be valid
and binding agreements of, the Company, enforceable in accordance
with their terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles.
4
(iii) The Representative’s
Warrants have been duly and validly authorized by all required
corporate actions and will, when issued and delivered by the
Company pursuant to this Agreement, be validly executed and
delivered by, and will be valid and binding agreements of, the
Company, enforceable in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general
equitable principles.
(iv) The Common Stock issuable on
exercise of the Warrants has been duly authorized and reserved for
issuance and sale pursuant to their terms and, when issued and
delivered by the Company pursuant to such warrants, will be validly
issued, fully paid and nonassessable.
(v) The Warrant Agreement has been
duly and validly authorized by all required corporate actions of
the Company and will, when executed and delivered by the Company
(and assuming due and valid execution by the Warrant Agent),
constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(vi) Each of the Warrants and the
Representative’s Warrants will, when issued, possess rights,
privileges, and characteristics as represented in the most recent
form of Warrant Agreement or Representative’s Warrants, as
the case may be, filed as an exhibit to the Registration
Statement.
(k) No Applicable Registration or
Other Similar Rights. Except as fairly and accurately described
in the Registration Statement, there are no persons with
registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or
included in the offering contemplated by this Agreement, except for
such rights as have been duly waived.
(l) No Material Adverse
Change. Except as otherwise disclosed in the Disclosure
Package, subsequent to the respective dates as of which information
is given in the Disclosure Package: (i) there has been no
material adverse change, or any development that could reasonably
be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions
in the ordinary course of business, of the Company (any such change
is called a “ Material Adverse Change ”);
(ii) the Company has not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary
course of business nor entered into any material transaction or
agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company in respect of its capital
stock.
(m) Independent Accountants.
Cordovano and Honeck LLP, who have expressed their opinion with
respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) filed with the
Commission as a part of the Registration Statement and included in
the Disclosure Package and the Prospectus, is an independent
registered public accounting firm as required by the Securities Act
and the Exchange Act.
5
(n) Preparation of the Financial
Statements. Each of the historical financial statements filed
with the Commission as a part of or incorporated by reference in
the Registration Statement, and included or incorporated by
reference in the Disclosure Package and the Prospectus, presents
fairly the information provided as of and at the dates and for the
periods indicated. Such financial statements comply as to form with
the applicable accounting requirements of the Securities Act and
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes
thereto. No other financial statements or supporting schedules are
required to be included or incorporated by reference in the
Registration Statement. Each item of historical or pro forma
financial data relating to the operations, assets or liabilities of
the Company and its predecessor set forth in summary form in each
of the preliminary prospectus and the Prospectus fairly presents
such information on a basis consistent with that of the complete
financial statements contained in the Registration
Statement.
(o) Incorporation and Good
Standing; Subsidiaries. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation and has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Disclosure Package and the
Prospectus and to enter into and perform its obligations under this
Agreement. The Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction
in which such qualification is required except for such
jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a
Material Adverse Change. The Company does not own or control,
directly or indirectly, any corporation, association or other
entity.
(p) Capitalization and Other
Capital Stock Matters. The authorized, issued and outstanding
capital stock of the Company is as set forth in the each of the
Disclosure Package and the Prospectus under the caption
“Capitalization” (other than for subsequent issuances,
if any, pursuant to employee benefit plans described in each of the
Disclosure Package and the Prospectus or upon exercise of
outstanding options or warrants described in the Disclosure Package
and Prospectus, as the case may be). The Common Stock conforms,
and, when issued and delivered as provided in this Agreement, the
Warrants and the Representative’s Warrants will comply in all
material respects to the description thereof contained in the each
of the Disclosure Package and Prospectus. All of the issued and
outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable and have been
issued in compliance with federal and state securities laws. None
of the outstanding shares of Common Stock were issued in violation
of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants,
preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company
other than those accurately described in the Disclosure Package and
the Prospectus. The description of the Company’s stock
option, stock purchase and other stock plans or arrangements, and
the options or other rights granted thereunder, set forth or
incorporated by reference in each of the Disclosure Package and the
Prospectus accurately and fairly presents the information required
to be shown with respect to such plans, arrangements, options and
rights.
6
(q) Exchange Listing. The
Units, Common Stock and Warrants have been approved for listing on
the NASDAQ Capital Market under the symbols “ICOP_,”
“ICOP” and “ICOP_,” respectively. The
Company has taken no action designed to, or likely to have the
effect of, terminating the listing of its Units, Common Stock or
Warrants on the NASDAQ Capital Market, nor has the Company received
any notification that NASDAQ is contemplating terminating such
listing.
(r) Non-Contravention of Existing
Instruments; No Further Authorizations or Approvals Required.
The Company is not in violation of its charter or bylaws or in
default (or, with the giving of notice or lapse of time, would be
in default) (“ Default ”) under any indenture,
mortgage, loan or credit agreement, note, contract, franchise,
lease or other instrument to which it is a party or by which it or
it may be bound (including, without limitation, such agreements and
contracts filed as exhibits to the Registration Statement or to
which any of the property or assets of the Company is subject
(each, an “ Existing Instrument ”)), except for
such Defaults as would not, individually or in the aggregate,
result in a Material Adverse Change. The Company’s execution,
delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Disclosure Package and
the Prospectus (i) have been duly authorized by all necessary
corporate action and will not result in any violation of the
provisions of the charter or bylaws of the Company, (ii) will
not conflict with or constitute a breach of, or Default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to,
or require the consent of any other party to, any Existing
Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the
aggregate, result in a Material Adverse Change and (iii) will
not result in any violation of any law, administrative regulation
or administrative or court decree applicable to the Company. No
consent, approval, authorization or other order of, or registration
or filing with, any court or other governmental or regulatory
authority or agency, is required for the Company’s execution,
delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Disclosure Package and
the Prospectus, except the registration or qualification of the
Units under the Securities Act and applicable state securities or
blue sky laws and from the Financial Industry Regulatory Authority,
Inc. (the “ FINRA ”).
(s) No Material Actions or
Proceedings. Except as otherwise disclosed in the Disclosure
Package and the Prospectus, there are no legal or governmental
actions, suits or proceedings pending or, to the best of the
Company’s knowledge, threatened (i) against or affecting
the Company, (ii) which have as the subject thereof any
officer or director (in such capacities) of, or property owned or
leased by, the Company or (iii) relating to environmental or
discrimination matters, where in any such case (A) there is a
reasonable possibility that such action, suit or proceeding might
be determined adversely to the Company and (B) any such
action, suit or proceeding, if so determined adversely, would
reasonably be expected to result in a Material Adverse Change or
adversely affect the consummation of the transactions contemplated
by this Agreement. No material labor dispute with the employees of
the Company exists or, to the best of the Company’s
knowledge, is threatened or imminent except for such disputes as
would not, individually or in the aggregate, result in a Material
Adverse Change.
7
(t) Intellectual Property
Rights. The Company owns or possesses sufficient trademarks,
trade names, patent rights, copyrights, domain names, licenses,
approvals, trade secrets and other similar rights (collectively,
“ Intellectual Property Rights ”) reasonably
necessary to conduct its businesses as now conducted; and the
expected expiration of any of such Intellectual Property Rights
would not result in a Material Adverse Change. The Company has not
received any notice of infringement or conflict with asserted
Intellectual Property Rights of others, which infringement or
conflict, if the subject of an unfavorable decision, would result
in a Material Adverse Change. The Company is not a party to or
bound by any options, licenses or agreements with respect to the
Intellectual Property Rights of any other person or entity that are
required to be set forth in the Disclosure Package and the
Prospectus and are not described in all material respects. None of
the technology employed by the Company has been obtained or is
being used by the Company in violation of any contractual
obligation binding on the Company or, to the Company’s
knowledge, any of its officers, directors or employees or otherwise
in violation of the rights of any persons.
(u) All Necessary Permits,
etc. Except as otherwise disclosed in the Disclosure Package
and the Prospectus or except as would not result in a Material
Adverse Change, the Company possesses such valid and current
certificates, authorizations or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary
to conduct its businesses, and the Company has not received any
notice of proceedings relating to the revocation or modification
of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material
Adverse Change.
(v) Title to Properties. The
Company has good and marketable title to all the properties and
assets reflected as owned in the financial statements referred to
in Section 1(n) above (or elsewhere in the Disclosure Package
and the Prospectus), in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and
other defects, except such as do not materially and adversely
affect the value of such property and do not materially interfere
with the use made or proposed to be made of such property by the
Company. The real property, improvements, equipment and personal
property held under lease by the Company are held under valid and
enforceable leases, with such exceptions as are not material and do
not materially interfere with the use made or proposed to be made
of such real property, improvements, equipment or personal property
by the Company.
(w) Tax Law Compliance. The
Company has filed all necessary federal, state and foreign income
and franchise tax returns and has paid all taxes required to be
paid by it and, if due and payable, any related or similar
assessment, fine or penalty levied against it. The Company has made
adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(n) above in respect of all
federal, state and foreign income and franchise taxes for all
periods as to which the tax liability of the Company has not been
finally determined.
(x) Company Not an
“Investment Company.” The Company has been advised
of the rules and requirements under the Investment Company Act of
1940, as amended (the “ Investment Company Act
”). The Company is not, and after receipt of payment for the
Units and the application of the proceeds thereof as contemplated
under the caption “Use of Proceeds” in
8
each of the preliminary prospectus and the
Prospectus will not be, an “investment company” within
the meaning of the Investment Company Act and will conduct its
business in a manner so that it will not become subject to the
Investment Company Act.
(y) Insurance. The Company is
insured by recognized, financially sound and reputable institutions
with policies in such amounts and with such deductibles and
covering such risks as the Company reasonably believes are adequate
and customary for its business including, but not limited to,
policies covering real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism and
earthquakes. The Company reasonably believes that it will be able
(i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not result
in a Material Adverse Change. The Company has not been denied any
insurance coverage which it has sought or for which it has
applied.
(z) No Price Stabilization or
Manipulation. The Company has not taken and will not take,
directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or
manipulation of the price of any securities of the Company to
facilitate the sale or resale of the Units or the underlying
securities. The Company acknowledges that the Underwriters may
engage in passive market making transactions in the Company’s
Common Stock on the NASDAQ Capital Market in accordance with
Regulation M under the Exchange Act.
(aa) Related Person
Transactions. There are no business relationships or
related-person transactions involving the Company or any other
person required to be described in the preliminary prospectus or
the Prospectus that have not been described as required.
(bb) Disclosure Controls and
Procedures . The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule
13a-15(e) under the Exchange Act), which (i) are designed to
ensure that material information relating to the Company is made
known to the Company’s principal executive officer and its
principal financial officer by others within those entities,
particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared, (ii) will
be evaluated for effectiveness as of the end of each fiscal quarter
and fiscal year of the Company and (iii) are effective in all
material respects to perform the functions for which they were
established. The Company is not aware of (a) any significant
deficiency in the design or operation of internal controls which
could adversely affect the Company’s ability to record,
process, summarize and report financial data or any material
weaknesses in internal controls or (b) any fraud, whether or
not material, that involves management or other employees who have
a significant role in the Company’s internal
controls.
(cc) Company’s Accounting
System . The Company maintains a system of accounting controls
sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
9
(dd) No Unlawful Contributions or
Other Payments. Neither the Company nor, to the best of the
Company’s knowledge, any employee or agent of the Company has
made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of
any law or of the character required to be disclosed in the
Disclosure Package and the Prospectus.
(ee) Compliance with
Environmental Laws. Except as would not, individually or in the
aggregate, result in a Material Adverse Change (i) the Company
is not in violation of any federal, state, local or foreign law or
regulation relating to pollution or protection of human health or
the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or
wildlife, including without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum and petroleum products
(collectively, “ Materials of Environmental Concern
”), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environment Concern (collectively, “
Environmental Laws ”), which violation includes, but
is not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the
business of the Company under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the
Company received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that
alleges that the Company is in violation of any Environmental Law;
(ii) there is no claim, action or cause of action filed with a
court or governmental authority, no investigation with respect to
which the Company has received written notice, and no written
notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs,
natural resources damages, property damages, personal injuries,
attorneys’ fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of
any Material of Environmental Concern at any location owned, leased
or operated by the Company, now or in the past (collectively,
“ Environmental Claims ”), pending or, to the
best of the Company’s knowledge, threatened against the
Company or any person or entity whose liability for any
Environmental Claim the Company has retained or assumed either
contractually or by operation of law; and (iii) to the best of
the Company’s knowledge, there are no past or present
actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission,
discharge, presence or disposal of any Material of Environmental
Concern, that reasonably could result in a violation of any
Environmental Law or form the basis of a potential Environmental
Claim against the Company or against any person or entity whose
liability for any Environmental Claim the Company has retained or
assumed either contractually or by operation of law.
(ff) ERISA Compliance. The
Company and any “employee benefit plan” (as defined
under the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and published interpretations
thereunder (collectively, “ ERISA ”))
established or maintained by the Company or its “ERISA
Affiliates” (as defined below) are in compliance in all
material respects with ERISA. “ ERISA Affiliate
” means, with respect to the Company, any member
of
10
any group of organizations described in Sections
414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations
thereunder (the “ Code ”) of which the Company
is a member. No “reportable event” (as defined under
ERISA) has occurred or is reasonably expected to occur with respect
to any “employee benefit plan” established or
maintained by the Company or any of its ERISA Affiliates. No
“employee benefit plan” established or maintained by
the Company or any of its ERISA Affiliates, if such “employee
benefit plan” were terminated, would have any “amount
of unfunded benefit liabilities” (as defined under ERISA).
Neither the Company nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV
of ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Sections 412,
4971, 4975 or 4980B of the Code. Each “employee benefit
plan” established or maintained by the Company, or any of its
ERISA Affiliates that is intended to be qualified under
Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause
the loss of such qualification.
(gg) Corporate Governance .
The Company has adopted organizational structures and policies
sufficient to comply with the requirements of NASDAQ’s
corporate governance standards in effect as of the date hereof
(collectively, the “NASDAQ Corporate Governance
Standards”). Without limiting the generality of the
foregoing, the Company’s Board of Directors has validly
appointed an Audit Committee, a Nominating and Governance Committee
and a Compensation Committee (collectively, the “
Committees ”), whose composition satisfies the
requirements of the NASDAQ Corporate Governance Standards. The
Board of Directors and the Committees have each adopted a charter
governing the respective activities of each such Committee that
satisfies the requirements of the NASDAQ Corporate Governance
Standards. The Committees have each acted in accordance with the
provisions of their respective charters, as amended from time to
time.
(hh) Compliance with
Sarbanes-Oxley Act of 2002. The Company and, to the best of its
knowledge, its officers and directors are in compliance with
applicable provisions of the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated in connection therewith (the
“ Sarbanes-Oxley Act ”) that are effective and
are actively taking steps to ensure that they will be in compliance
with other applicable provisions of the Sarbanes-Oxley Act upon the
effectiveness of such provisions, including, without limitation,
Section 402 related to loans, Section 404 related to
management’s assessment of the Company’s internal
controls and its independent public accounting firm’s
attestation related thereto, and Sections 302 and 906 related to
certifications.
(ii) Unlawful Payments . The
Company or any other person associated with or acting on behalf of
the Company including, without limitation, any director, officer,
agent or employee of the Company, has not, directly or indirectly,
while acting on behalf of the Company (i) used any corporate
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (ii) made
any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns
from corporate funds; (iii) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any other unlawful payment.
11
(jj) Compliance with Money
Laundering Laws . The operations of the Company are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the USA
Patriot Act, the money laundering statutes of all applicable
jurisdictions, 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 with respect to the
Money Laundering Laws is pending, or to the best knowledge of the
Company, threatened.
(kk) OFAC Sanctions . The
Company is not nor, to the knowledge of the Company, is any
director, officer, agent, employee or affiliate of the Company
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”); and the Company will not directly or
indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(ll) Offerings of Securities
. Except as described in the Registration Statement, the Company
has not sold or issued any securities during the three-year period
preceding the date of filing of the Registration Statement,
including any sales pursuant to Rules 144A or 701 under, or
Regulations D or S of, the Securities Act.
(mm) Offerings of Securities in
this Offering. In connection with this offering, the Company
has not offered and will not offer its Common Stock or any other
securities convertible into or exchangeable or exercisable for
Common Stock in a manner in violation of the Securities Act; and
the Company has not distributed and will not distribute any
offering material in connection with the offer and sale of the
Units, except for the Preliminary Prospectus, the Prospectus, any
Issuer Free Writing Prospectus or the Registration
Statement.
(nn) Material Understandings,
Generally . Except as fairly described in the Prospectus and
the Disclosure Package, the Company has not made a determination to
take any action and is not a party to any understanding, whether or
not legally binding, with any other person with respect to the
taking of any action that, if known to prospective purchasers of
the Units, would be likely to affect their assessment of the value
or prospects of the Company or their decision to invest in the
Units.
Any certificate signed by an officer
of the Company and delivered to the Representative or to counsel
for the Underwriters shall be deemed to be a representation and
warranty by the Company to each Underwriter as to the matters set
forth therein.
The Company acknowledges that the
Underwriters and, for purposes of the opinions to be delivered
pursuant to Section 5 hereof, counsel to the Company and
counsel to the Underwriters, will rely upon the accuracy and
truthfulness of the foregoing representations and hereby consents
to such reliance.
12
S ECTION 2. Purchase, Sale and Delivery of the
Units.
(a) The Firm Units. Upon the
terms herein set forth, the Company agrees to issue and sell the
Firm Units to the several Underwriters. On the basis of the
representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase, at a
price of $
per Unit (which price reflects an underwriters’ discount of
10%), the number of Firm Units set forth opposite the name of each
Underwriter in Schedule I hereof, subject to adjustments in
accordance with Section 9 hereof.
(b) The First Closing Date.
Delivery of the Firm Units to be purchased by the Underwriters and
payment therefor shall be made at 10:00 a.m. New York time on
, 2009, or such other time and date as the Representative shall
designate by notice to the Company (the time and date of such
closing are called the “ First Closing Date ”).
The Company hereby acknowledges that circumstances under which the
Representative may provide notice to postpone the First Closing
Date as originally scheduled include, but are in no way limited to,
any determination by the Company or the Representative to
recirculate to the public copies of an amended or supplemented
Prospectus or Disclosure Package or a delay as contemplated by the
provisions of Section 10 or Section 19.
(c) The Option Units; Each
Subsequent Closing Date. In addition, on the basis of the
representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the
Company hereby grants an option to the Underwriters to purchase up
to an aggregate of
Option Units from the Company at the purchase price per Unit to be
paid by the Underwriters for the Firm Units. The option granted
hereunder may be exercised at any time and from time to time upon
notice by the Representative to the Company, which notice may be
given at any time within 45 days from the date of this Agreement.
Such notice shall set forth (i) the aggregate number of Option
Units as to which the Underwriters are exercising the option,
(ii) the names and denominations in which the Option Units are
to be registered and (iii) the time, date and place at which
such Option Units will be delivered (which time and date may be
simultaneous with, but not earlier than, the First Closing Date;
and in such case the term “First Closing Date” shall
refer to the time and date of delivery of the Firm Units and the
Option Units). Each time and date of delivery, if subsequent to the
First Closing Date, is called the “ Subsequent Closing
Date ” and shall be determined by the Representative and
shall not be earlier than three nor later than five full business
days after delivery of such notice of exercise.
(d) Public Offering of the
Units. The Representative hereby advises the Company that the
Underwriters intend to offer for sale to the public, as described
in the Prospectus, their respective portions of the Units as soon
after this Agreement has been executed and the Registration
Statement has been declared effective as the Representative, in its
sole judgment, has determined is advisable and
practicable.
(e) Payment for the Units.
Payment for the Units to be sold by the Company shall be made at
the First Closing Date (and, if applicable, at any Subsequent
Closing Date) by wire transfer of immediately available funds to
the order of the Company.
13
It is understood that the
Representative has been authorized, for its own account and the
accounts of the several Underwriters, to accept delivery of and
receipt for, and make payment of the purchase price for, the Firm
Units and any Option Units the Underwriters have agreed to
purchase. The Representative, individually and not as the
Representative of the Underwriters, may (but shall not be obligated
to) make payment for any Units to be purchased by any Underwriter
whose funds shall not have been received by the Representative by
the First Closing Date or any Subsequent Closing Date, as the case
may be, for the account of such Underwriter, but any such payment
shall not relieve such Underwriter from any of its obligations
under this Agreement.
(f) Delivery of the Units.
Delivery of the Firm Units and the Option Units shall be made
through the facilities of The Depository Trust Company unless the
Representative shall otherwise instruct. Time shall be of the
essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the
Underwriters.
(g) Delivery of Prospectus to the
Underwriters. Not later than 10:00 p.m. New York Time on the
second business day following the date the Units are first released
by the Underwriters for sale to the public, the Company shall
deliver or cause to be delivered, copies of the Prospectus in such
quantities and at such places as the Representative shall
request.
(h) Representative’s
Warrants . In addition to the sums payable to the
Representative as provided elsewhere herein, the Representative
shall be entitled to receive at the closing occurring on the First
Closing Date, for itself alone and not as Representative of the
Underwriters, as additional compensation for its services,
Representative’s Warrants for the purchase of
Units at a price of $
per Unit (120% of the initial public offering price of the Units),
upon the terms and subject to adjustment and conversion as
described in the form of Representative’s Warrants filed as
an exhibit to the Registration Statement.
S ECTION 3. Covenants of the
Company.
The Company covenants and agrees
with each Underwriter as follows:
(a) Representative’s Review
of Proposed Amendments and Supplements. During the period
beginning at the Initial Sale Time and ending on the later of the
First Closing Date or such date as, in the opinion of counsel for
the Underwriters, the Prospectus is no longer required by law to be
delivered in connection with sales by an Underwriter or dealer,
including under circumstances where such requirement may be
satisfied pursuant to Rule 172 under the Securities Act (the
“ Prospectus Delivery Period ”), prior to
amending or supplementing the Registration Statement or the
Prospectus, including any amendment or supplement through
incorporation by reference of any report filed under the Exchange
Act, the Company shall furnish to the Representative for review a
copy of each such proposed amendment or supplement, and the Company
shall not file any such proposed amendment or supplement to which
the Representative reasonably object.
(b) Securities Act
Compliance. After the date of this Agreement, the Company shall
promptly advise the Representative in writing (i) when the
Registration Statement, if not effective at the Execution Time,
shall have become effective, (ii) of the receipt of any
comments
14
of, or requests for additional or supplemental
information from, the Commission, (iii) of the time and date
of any filing of any post-effective amendment to the Registration
Statement or any amendment or supplement to any preliminary
prospectus or the Prospectus, (iv) of the time and date that
any post-effective amendment to the Registration Statement becomes
effective and (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto or of any order
or notice preventing or suspending the use of the Registration
Statement, any preliminary prospectus or the Prospectus, or of any
proceedings to remove, suspend or terminate from listing the Units,
Common Stock or Warrants from any securities exchange upon which it
is listed for trading, or of the threatening or initiation of any
proceedings for any of such purposes. The Company shall use its
best efforts to prevent the issuance of any such stop order or
prevention or suspension of such use. If the Commission shall enter
any such stop order or order or notice of prevention or suspension
at any time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment, or will file
a new registration statement and use its best efforts to have such
new registration statement declared effective as soon as
practicable. Additionally, the Company agrees that it shall comply
with the provisions of Rules 424(b) and 430A, as applicable, under
the Securities Act, including with respect to the timely filing of
documents thereunder, and will use its reasonable efforts to
confirm that any filings made by the Company under such Rule 424(b)
were received in a timely manner by the Commission.
(c) Exchange Act Compliance.
During the Prospectus Delivery Period, the Company will file all
documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the Exchange Act in the manner and
within the time periods required by the Exchange Act.
(d) Amendments and Supplements to
the Registration Statement, Prospectus and Other Securities Act
Matters. If, during the Prospectus Delivery Period, any event
or development shall occur or condition exist as a result of which
the Disclosure Package or the Prospectus as then amended or
supplemented would include any untrue statement o
