1,250,000 Units
NEW YORK HEALTH CARE, INC.
UNDERWRITING AGREEMENT
, 1996
RAS Securities Corp.
As Representative of the
Several Underwriters listed on Schedule A hereto
▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
New York Health Care, Inc., a New York corporation (the "Company") confirms
its agreement with RAS Securities Corp. ("RAS") and each of the underwriters
named in Schedule A hereto (collectively, the "Underwriters," which term shall
also include any underwriter substituted as hereinafter provided in Section 11),
for whom RAS is acting as representative (in such capacity, RAS shall
hereinafter be referred to as "you" or the "Representative"), with respect to
the sale by the Company and the purchase by the Underwriters, acting severally
and not jointly, of the respective numbers of units set forth in said Schedule
A, each unit consisting of one share ("Shares") of the Company's common stock,
$.01 par value per share ("Common Stock"), and two warrants to acquire one
additional share of Common Stock ("Public Warrant"). The shares of Common Stock
and Public Warrants comprising the units will be immediately separable and
tradeable upon issuance and will not trade as units. The Public Warrants are
exercisable, in pairs only, from _________ , 1997 until _________ , 2001, at an
initial exercise price of $4.00 for one share of Common Stock, subject to prior
redemption by the Company as more fully described in the Registration Statement
and Prospectus referred to below. Such 1,250,000 units are hereinafter referred
to as the "Firm Units." Upon your request, as provided in Section 2(b) of this
Agreement, the Company shall also issue and sell to you up to an additional
187,500 Shares and/or 375,000 Public Warrants for the purpose of covering
over-allotments, if any, in the sale of the Firm Units. Such 187,500 Shares
and/or 375,000 Public Warrants are hereinafter referred to as the "Option
Securities." The Firm Units and the Options Securities are hereinafter
collectively referred to as the "Units." The Company also proposes to issue and
sell to you warrants (the "Representative's Warrants") pursuant to the
Representative's Warrant Agreement dated _________ , 1996 between the
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Representative and the Company (the "Representative's Warrant Agreement") for
the purchase of an additional 125,000 Shares and/or 250,000 Public Warrants. The
Shares and/or Public Warrants issuable upon exercise of the Representative's
Warrants are hereinafter referred to as the "Representative's Securities." The
shares of Common Stock issuable upon exercise of the Public Warrants (including
the Public Warrants issuable upon exercise of the Representative's Warrants) are
hereinafter sometimes referred to as the "Warrant Shares." The Units, the
Shares, the Public Warrants, the Representative's Warrants, the Representative's
Securities and the Warrant Shares are more fully described in the Registration
Statement and the Prospectus referred to below.
1. Representations and Warranties. (a) The Company represents and
warrants to, and agrees with, each of the Underwriters as of the date hereof,
and as of the Closing Date (hereinafter defined) and the Option Closing Date
(hereinafter defined), if any, as follows:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form SB-2 (No. 333- 08155), including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Shares, the Public Warrants, the Representative's Securities and the
Warrant Shares under the Securities Act of 1933, as amended (the "Act"), which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the Rules and
Regulations of the Commission thereunder. The Company will promptly file a
further amendment to said registration statement in the form heretofore
delivered to the Underwriters and will not file any other amendment thereto to
which the Underwriters shall have objected in writing after having been
furnished with a copy thereof. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents or information
incorporated by reference therein) and all information deemed to be a part
thereof as of such time pursuant to paragraph (b) of Rule 430(A) of the rules
and regulations) is hereinafter called the "Registration Statement", and the
form of prospectus in the form first filed with the Commission pursuant to Rule
424(b) of the rules and regulations is hereinafter called the "Prospectus." For
purposes hereof, "Rules and Regulations" mean the rules and regulations adopted
by the Commission under either the Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as applicable.
(ii) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary Prospectus,
the Registration Statement or Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or threatened. Each of the Preliminary Prospectus, the Registration Statement
and Prospectus at the time of filing thereof conformed with the requirements of
the Acts and the Rules and Regulations, and none of the Preliminary Prospectus,
the Registration Statement or Prospectus at the time of filing thereof contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein and necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that this representation and
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warranty does not apply to statements made in reliance upon and in conformity
with written information furnished to the Company with respect to the
Underwriters by or on behalf of the Underwriters expressly for use in such
Preliminary Prospectus, Registration Statement or Prospectus or any amendment or
supplement thereto. It is understood that the statements set forth in the
Prospectus on page 2 with respect to stabilization, under the heading
"Underwriting" and the identity of counsel to the Underwriters under the heading
"Legal Matters" constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in the Registration Statement
and Prospectus, as the case may be.
(iii) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (hereinafter defined) and each
Option Closing Date (hereinafter defined), if any, and during such longer period
as the Prospectus may be required to be delivered in connection with sales by
the Underwriters or a dealer, the Registration Statement and the Prospectus will
contain all statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations, and will conform to the requirements
of the Act and the Rules and Regulations; neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, contains or will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided, however, that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of any
Underwriter (as set forth in paragraph 1(a)(ii) hereof) expressly for use in the
Preliminary Prospectus, Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
(iv) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its incorporation.
The Company does not own an equity interest in any corporation, partnership,
trust, joint venture or other business entity. The Company is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations require such qualification or licensing except where the failure(s)
to be so qualified, licensed and in good standing, individually or in the
aggregate, would not materially and adversely affect the condition, financial or
otherwise, or the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operations of the Company. The
Company has all requisite power and authority (corporate and other), and has
obtained any and all authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), necessary to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and has been
doing business in compliance with all such authorizations, approvals, orders,
licenses, certificates, franchises and permits and all federal, state, local and
foreign laws, rules and regulations and the Company has not received any notice
of proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, business
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affairs, position prospects, value, operations, properties, business, or results
of operations of the Company. The disclosures in the Registration Statement
concerning the effects of federal, state, local, and foreign laws, rules and
regulations on the Company's business as currently conducted and as contemplated
are correct in all material respects and do not omit to state a material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which they were made.
(v) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and will have the adjusted
capitalization set forth therein on the Closing Date (hereinafter defined) and
the Option Closing Date (hereinafter defined), if any, based upon the
assumptions set forth therein, and the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this Agreement
and as described in the Prospectus. The Common Stock, the Shares, the Public
Warrants, the Representative's Warrants, the Representative's Securities and the
Warrant Shares (collectively, hereinafter sometimes referred to as the
"Securities") and all other securities issued or issuable by the Company conform
or, when issued and paid for, will conform, in all respects, to all statements
with respect thereto contained in the Registration Statement and the Prospectus.
All issued and outstanding securities of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and the holders thereof
have no rights of rescission with respect thereto and are not subject to
personal liability by reason of being such holders; and none of such securities
were issued in violation of the preemptive rights of any holders of any security
of the Company or similar contractual rights granted by the Company. The
Securities are not and will not be subject to any preemptive or other similar
rights of any stockholder, have been duly authorized and, when issued, paid for
and delivered in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable and will conform to the description thereof contained in
the Prospectus; the holders thereof will not be subject to any liability solely
as such holders; all corporate action required to be taken for the
authorization, issue and sale of the Securities has been duly and validly taken;
and the certificates representing the Securities are in due and proper form.
Upon the issuance and delivery pursuant to the terms hereof of the Securities to
be sold by the Company hereunder, the Underwriters or the Representative, as the
case may be, will acquire good and marketable title to such Securities free and
clear of any lien, charge, claim, encumbrance, pledge, security interest, defect
or other restriction or equity of any kind whatsoever.
(vi) The financial statements of the Company together with the related
notes and schedules (if any) thereto, included in the Registration Statement,
each Preliminary Prospectus and the Prospectus fairly present the financial
position, income, changes in cash flow, changes in stockholders' equity and the
results of operations of the Company at the respective dates and for the
respective periods to which they apply and the pro forma financial information
included in the Registration Statement, each Preliminary Prospectus and the
Prospectus presents fairly on a basis consistent with that of the audited
financial statements included therein, the Company's pro forma net income or
loss per share, as the case may be, pro forma net tangible book value, and the
pro forma capitalization and such financial statements have been prepared in
conformity with generally
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accepted accounting principles and the Rules and Regulations, consistently
applied throughout the periods involved. There has been no material adverse
change or development involving a material change in the condition, financial or
otherwise, or in the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operation of the Company whether
or not arising in the ordinary course of business, since the date of the
financial statements included in the Registration Statement and the Prospectus,
and the outstanding debt, the property, both tangible and intangible, and the
business of the Company conforms in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
(vii) The Company (A) has paid all federal, state, local, and foreign
taxes for which it is liable, including, but not limited to, withholding taxes
and amounts payable under Chapters 21 through 24 of the Internal Revenue Code of
1986, as amended (the "Code"), and has furnished all information returns it is
required to furnish pursuant to the Code, (B) has established adequate reserves
for such taxes which are not due and payable, and (C) does not have any tax
deficiency or claims outstanding, proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is payable by
or on behalf of the Underwriters in connection with (A) the issuance by the
Company of the Securities, (B) the purchase by the Underwriters of the Units,
the Shares, the Public Warrants and the Warrant Shares and the purchase by the
Representative of the Representative's Warrants from the Company, (C) the
consummation by the Company of any of its obligations under this Agreement, or
(D) resales of the Securities in connection with the distribution contemplated
hereby.
(ix) The Company maintains insurance policies, including, but not
limited to, general liability, product liability and property insurance, which
insures the Company and its employees, against such losses and risks generally
insured against by comparable businesses. The Company (A) has not failed to give
notice or present any insurance claim with respect to any matter, including but
not limited to the Company's business, property or employees, under the
insurance policy or surety bond in a due and timely manner, (B) does not have
any disputes or claims against any underwriter of such insurance policies or
surety bonds or has not failed to pay any premiums due and payable thereunder,
or (C) has not failed to comply with all conditions contained in such insurance
policies and surety bonds. There are no facts or circumstances under any such
insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the company.
(x) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or business of the Company
which (A) questions the validity of the capital stock of the Company or this
Agreement, the Representative's Warrant Agreement, the Warrant Agreement (as
defined in Section 1(xxxiii) below) or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement, the Representative's
Warrant Agreement, or the Warrant Agreement, (B) is required to
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be disclosed in the Registration Statement which is not so disclosed (and such
proceedings as are summarized in the Registration Statement are accurately
summarized in all material respects), or (C) if adversely determined, might
materially and adversely affect the condition, financial or otherwise, or the
business affairs or business prospects, earnings, liabilities, prospects,
stockholders' equity, value, properties, business or assets of the Company.
(xi) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, enter into this Agreement,
the Representative's Warrant Agreement and the Warrant Agreement and to
consummate the transactions provided for herein and therein; and each of this
Agreement, the Representative's Warrant Agreement and the Warrant Agreement have
been duly and properly authorized, executed and delivered by the Company. This
Agreement, the Representative's Warrant Agreement and the Warrant Agreement each
constitute a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, and neither the Company's
issue and sale of the Securities or execution or delivery of this Agreement, the
Representative's Warrant Agreement and the Warrant Agreement or its performance
hereunder and thereunder, its consummation of the transactions contemplated
herein and therein, or the conduct of its business as described in the
Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or will
constitute a default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company pursuant to the terms of, (A) the
certificate of incorporation or by-laws of the Company, (B) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
the which is properties or assets (tangible or intangible) is or may be subject,
or any indebtedness, or (C) any statute, judgment, decree, order, rule or
regulation applicable to the Company of any arbitrator, court, regulatory body
or administrative agency or other governmental agency or body (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or any of
its activities or properties, in each case except for conflicts, breaches,
violations, defaults, creations or impositions which do not and would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs, position, shareholder's equity, value, operation,
properties, business or results of operations of the Company.
(xii) Other than as set forth in the Prospectus, no consent, approval,
authorization or order of, and no filing with, any court, regulatory body,
government agency or other body, domestic or foreign, is required for the
issuance of the Securities pursuant to the Prospectus and the Registration
Statement, the issuance of the Representative's Warrants, the execution,
delivery or performance of this Agreement, the Representative's Warrant
Agreement and the Warrant Agreement, and the transactions contemplated hereby
and thereby, including, without limitation, any waiver of any preemptive, first
refusal or other rights that any entity or person may have for the issue and/or
sale of any of the Securities, except such as have been or may be obtained under
the Act or may be
6
required under state securities or Blue Sky laws in connection with the
Underwriters' purchase and distribution of the Securities and the
Representative's purchase of the Representative's Warrants to be sold by the
Company hereunder and thereunder.
(xiii) All executed agreements, contracts or other documents or copies
of executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which its assets, properties or business may be subject have been
duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding agreements of the Company, enforceable
against the Company, in accordance with their respective terms. The descriptions
in the Registration Statement of agreements, contracts and other documents and
statutes and regulations are accurate and fairly present the information
required to be shown with respect thereto by Form SB-2, and there are no
contracts or other documents which are required by the Act to be described in
the Registration Statement or filed as exhibits to the Registration Statement
which are not described or filed as required, and the exhibits which have been
filed are complete and correct copies of the documents of which they purport to
be copies.
(xiv) Subsequent to the respective dates as of which information is
set forth in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not
(A) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, (B) entered into any transaction other than in
the ordinary course of business, or (C) declared or paid any dividend or made
any other distribution on or in respect of its capital stock of any class, and
there has not been any change in the capital stock, or any change in the debt
(long or short term) or liabilities or material change in or affecting the
business affairs or prospects, management, stockholders' equity, properties,
business, financial operations or assets of the Company.
(xv) No default exists in the due performance and observance of any
term, covenant or condition of any license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust agreement,
stockholders agreement, partnership agreement, note, loan or credit agreement,
purchase order, or any other material agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement or instrument to
which the Company is a party or by which the Company may be bound or to which
the property or assets (tangible or intangible) of the Company is subject or
affected, which default would have a material adverse effect on the condition,
financial or otherwise, earnings, business affairs, position, shareholder's
equity, value, operation, properties, business or results of operations of the
Company.
(xvi) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance in all
material respects with all federal, state, local, and foreign laws and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours. There are no pending investigations involving
the Company, by the U.S. Department of Labor, or any other governmental agency
responsible for the enforcement of such federal, state, local, or foreign laws
and regulations. There is no unfair labor
7
practice charge or complaint against the Company pending before the National
Labor Relations Board or any strike, picketing, boycott, dispute, slowdown or
stoppage pending or threatened against or involving the Company, or any
predecessor entity, and none has ever occurred. No representation question
exists respecting the employees of the Company and no collective bargaining
agreement or modification thereof is currently being negotiated by the Company.
No grievance or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company. No labor dispute with the
employees of the Company exists, or, to the knowledge of the Company is
imminent.
(xvii) Except as described in the Prospectus, the Company does not
maintain, sponsor or contribute to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). The Company does not maintain or contribute, now or
at any time previously, to a defined benefit plan, as defined in Section 3(35)
of ERISA. No ERISA Plan (or any trust created thereunder) has engaged in a
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code, which could subject the Company to any tax penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal Revenue Service with
respect to each ERISA Plan which is intended to comply with Code Section 401(a),
stating that such ERISA Plan and the attendant trust are qualified thereunder.
The Company has never completely or partially withdrawn from a "multiemployer
plan."
(xviii) Neither the Company nor any of its employees, directors,
stockholders, or affiliates (within the meaning of the Rules and Regulations) of
any of the foregoing has taken or will take, directly or indirectly, any action
designed to or which has constituted or which might be expected to cause or
result in, under the Exchange Act, or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities or otherwise.
(xix) None of the patents, patent applications, trademarks, service
marks, trade names and copyrights, and licenses and rights to the foregoing
presently owned or held by the Company are in dispute or are in any conflict
with the right of any other person or entity. The Company (A) owns or has the
license or other right to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever, all patents, trademarks, service marks, trade
names and copyrights, technology and licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted or proposed to
be conducted without infringing upon or otherwise acting adversely to the right
or claimed right of any person, corporation or other entity under or with
respect to any of the foregoing and (B) except as set forth in the Prospectus,
is not obligated or under any liability whatsoever to make any payments by way
of royalties, fees or otherwise to any owner or licensee of, or other claimant
to, any patent, trademark, service ▇▇▇▇, tradename, copyright, know-how,
technology or other
8
intangible asset, with respect to the use thereof or in connection with the
conduct of its business or otherwise.
(xx) The Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any trademark, service
▇▇▇▇, trade name or copyright or other intangible asset used or held for use by
it in connection with the conduct of its businesses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, might
have a material adverse effect on the condition, financial or otherwise, or the
business affairs, position, properties, stockholder's equity, financial
operations or assets of the Company.
(xxi) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property stated
in the Prospectus, to be owned or leased by it free and clear of all liens,
charges, claims, encumbrances, pledges, security interest, defects, or other
restrictions or equities of any kind whatsoever, other than those referred to in
the Prospectus and liens for taxes not yet due and payable.
(xxii) ▇. ▇. ▇▇▇▇▇▇ & Co. LLP., Certified Public Accountants, whose
report is filed with the Commission as a part of the Registration Statement, are
independent certified public accountants as required by the Act and the Rules
and Regulations.
(xxiii) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which each of its officers, directors or any
person or entity deemed to be an affiliate of the Company and any stockholders
of the Company has agreed not to, directly or indirectly, sell of any shares of
Common Stock (either pursuant to Rule 144 of the Rules and Regulations or
otherwise) or dispose of any beneficial interest therein for a period of not
less than 24 months following the effective date of the Registration Statement
without the prior written consent of the Representative and that any Common
Stock which has been issued and is outstanding on the effective date of the
Registration Statement and is to be sold or otherwise disposed of pursuant to
such Rule 144 with the consent of the Representative shall only be sold or
otherwise disposed of through the Representative. The Company will cause the
Transfer Agent, as defined below, to ▇▇▇▇ an appropriate legend on the face of
stock certificates representing all of such securities and to place "stop
transfer" orders on the Company's stock ledgers.
(xxiv) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company, or any of its officers, directors, stockholders,
partners, employees or affiliates that may affect the Underwriters'
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD") and the Company is aware that the Representative and each of the
Underwriter's shall compensate any of their respective personnel who may have
acted in such capacities as they shall determine in their sole discretion.
9
(xxv) The Shares, the Common Stock and the Public Warrants have been
approved for quotation on the Nasdaq SmallCap Market and, upon notice of
issuance, listing on the Boston Stock Exchange ("BSE").
(xxvi) Neither the Company, nor any of its officers, employees, agents
or any other person acting on behalf of the Company has, directly or indirectly,
given or agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or official or
employee of any governmental agency (domestic or foreign) or instrumentality of
any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is, or may be in a
position to help or hinder the business of the Company (or assist the Company in
connection with any actual or proposed transaction) which (A) might subject the
Company, or any other such person to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or foreign), (B) if
not given in the past, might have had a materially adverse effect on the assets,
business, operations or prospects of the Company, or (C) if not continued in the
future, might adversely affect the assets, business, operations or prospects of
the Company. The Company's internal accounting controls are sufficient to cause
the Company to comply with the Foreign Corrupt Practices Act of 1977, as
amended.
(xxvii) Except as set forth in the Prospectus, no officer, director,
or stockholder of the Company, or any "affiliate" or "associate" (as these terms
are defined in Rule 405 promulgated under the Rules and Regulations) of any of
the foregoing persons or entities has or has had, either directly or indirectly,
(A) an interest in any person or entity which (1) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by
the Company, or (2) purchases from or sells or furnishes to the Company any
goods or services, or (B) a beneficiary interest in any contract or agreement to
which the Company is a party or by which it may be bound or affected. Except as
set forth in the Prospectus under "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company, and any officer, director, Principal Security Holder (as such term is
defined in the Prospectus) of the Company, or any partner, affiliate or
associate of any of the foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP ("
Underwriters' Counsel") shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
(xxix) The minute books of the Company have been made available to the
Underwriters and contain a complete summary of all meetings and actions of the
directors and stockholders of the Company, since the time of its incorporation
and reflects all transactions referred to in such minutes accurately in all
material respects.
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(xxx) Except and to the extent described in the Prospectus, no holders
of any securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right to include
any securities issued by the Company in the Registration Statement or any
registration statement under the Act and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
(xxxi) The Company has as of the effective date of the Registration
Statement (A) entered into employment agreements with ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ providing for annual salaries of $175,000 and $140,000 respectively,
each on terms and conditions satisfactory to the Representative, and (B)
purchased "key-man" insurance on the lives of ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
which name the Company as the sole beneficiary on terms and conditions
satisfactory to the Representative.
(xxxii) The Company has entered into a warrant agreement with respect
to the Public Warrants, substantially in the form filed as Exhibit 4.3 to the
Registration Statement ("Warrant Agreement") with Continental Stock Transfer and
Trust Company in form and substance satisfactory to the Representative.
(xxxiii) Immediately prior to the effective date of the Registration
Statement there shall be no more than an aggregate of 2,831,250 shares of Common
Stock issued and outstanding (including any and all (A) securities with
equivalent rights as the Common Stock, (B) Common Stock or such equivalent
securities, issuable upon the exercise of options, warrants and other contract
rights, and (C) securities convertible directly or indirectly into Common Stock
or such equivalent securities, and excluding the Representative's Warrants).
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter,
severally and not jointly, agrees to purchase from the Company at a price of
$3.78 per Unit, that number of Firm Units set forth in Schedule A opposite the
name of such Underwriter, subject to such adjustment as the Representative in
its sole discretion shall make to eliminate any sales or purchases of fractional
shares, plus any additional number of Firm Units which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 11 hereof.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements, herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of an
additional 187,500 Shares at a price of $3.60 per Share and/or 375,000 Public
Warrants at a price of $.09 per Public Warrant. The option granted hereby will
expire 30 days after the date the Registration Statement becomes effective and
may be exercised in whole or in part from time to time upon notice by the
Representative to the Company setting forth the number of Option Securities as
to which the
11
several Underwriters are then exercising the option and the time and date of
payment and delivery for any such Option Securities. Any such time and date of
delivery (an "Option Closing Date") shall be determined by the Representative,
but shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Date (hereinafter defined), unless
otherwise agreed upon by the Representative and the Company. Nothing herein
contained shall obligate the Underwriters to make any over-allotments. No Option
Securities shall be delivered unless the Firm Units shall be simultaneously
delivered or shall theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates
evidencing the Firm Units shall be made at the offices of RAS Securities Corp.
at ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be
agreed upon by the Representative and the Company. Such delivery and payment
shall be made at 10:00 a.m. (New York City time) on , 1996 or at such other time
and date as shall be agreed upon by the Representative and the Company, but no
less than three (3) nor more than ten (10) full business days after the
effective date of the Registration Statement (such time and date of payment and
delivery being herein called "Closing Date"). In addition, in the event that any
or all of the Option Securities are purchased by the Underwriters, payment of
the purchase price for, and delivery of certificates for, such Option Securities
shall be made at the above mentioned office of the Representative or at such
other place as shall be agreed upon by the Representative and the Company on
each Option Closing Date as specified in the notice from the Representative to
the Company. Delivery of the certificates for the Firm Units and the Option
Securities if any, shall be made to the Underwriters against payment by the
Underwriters, severally and not jointly, of the purchase price for the Firm
Units and the Option Securities if any, to the order of the Company by New York
Clearing House Funds. In the event such option is exercised, each of the
Underwriters, acting severally and not jointly, shall purchase that proportion
of the total number of Option Securities then being purchased which the number
of Firm Units set forth in Schedule A hereto opposite the name of such
Underwriter bears to the total number of Firm Units, subject in each case to
such adjustments as the Representative in its discretion shall make to eliminate
any sales or purchases of fractional shares. Certificates for the Firm Units and
the Option Securities if any, shall be in definitive, fully registered form,
shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Underwriters may request in writing at least two
(2) business days prior to Closing Date or the relevant Option Closing Date, as
the case may be. The certificates for the Firm Units and the Option Securities
if any, shall be made available to the Representative at such office or such
other place as the Representative may designate for inspection, checking and
packaging no later than 9:30 a.m. on the last business day prior to Closing Date
or the relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representative the Representative's Warrants at a purchase price of $.0001 per
warrant, which warrants shall entitle the holders thereof to purchase an
aggregate of 125,000 Shares and/or 250,000 Public Warrants. The Representative's
Warrants shall be exercisable for a period of four (4) years commencing one (1)
year from the Closing Date at a price of $4.80 per Share and $.12 per Public
Warrant. The Representative's Warrant Agreement and form of Warrant Certificates
with respect to each of the
12
(i) Representative's Warrants to purchase Shares and (ii) Representative's
Warrants to purchase Public Warrants, shall be substantially in the form filed
as Exhibit 4.2 to the Registration Statement. Payment for the Representative's
Warrants shall be made on the Closing Date.
3. Public Offering of the Units. As soon after the Registration Statement
becomes effective as the Representative deems advisable, the Underwriters shall
make a public offering of the Firm Units and such of the Option Securities as
they may determine (other than to residents of or in any jurisdiction in which
qualification of the Shares and Public Warrants are required and has not become
effective) at the price and upon the other terms set forth in the Prospectus.
The Representative may from time to time increase or decrease the public
offering price after distribution of the Units has been completed to such extent
as the Representative, in its sole discretion deems advisable. The Underwriters
may enter into one or more agreements as the Underwriters, in each of their sole
discretion, deem advisable with one or more broker-dealers who shall act as
dealers in connection with such public offering. Investors in the public
offering will be required to purchase one Share and two Public Warrants together
or multiples thereof. Such units of Securities will however be immediately
separable and tradeable upon issuance and will not be registered or listed on
any exchange for trading as units.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable (such Registration Statement to be in form and substance
satisfactory to the Representative and Underwriters' Counsel) and will not at
any time, whether before or after the effective date of the Registration
Statement, file any amendment to the Registration Statement or supplement to the
Prospectus or file any document under the Act or Exchange Act before termination
of the offering of the Units by the Underwriters of which the Representative
shall not previously have been advised and furnished with a copy, or to which
the Representative shall have objected or which is not in compliance with the
Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof,
the Company will advise the Representative and confirm by notice in writing, (i)
when the Registration Statement, as amended, becomes effective, if the
provisions of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective, (ii)
of the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto, or the
institution of proceedings for that purpose (iii) of the issuance by the
Commission or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the receipt of any comments from the Commission; and (v)
of
13
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information. If
the Commission or any state securities commission authority shall enter a stop
order or suspend such qualification at any time, the Company will make every
effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representative and Underwriters' Counsel) or transmit the
Prospectus by a means reasonably calculated to result in filing with the
Commission pursuant to Rule 424 (b)(1) (or, if applicable and if consented to by
the Representative, pursuant to Rule 424 (b)(47) not later than the Commission's
close of business on the earlier of (i) the second business day following the
execution and delivery of this Agreement and (ii) the fifth business day after
the effective date of the Registration Statement.
(d) The Company will give the Representative notice of its intention
to file or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities which differs
from the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
and will furnish the Representative with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such prospectus to which the
Representative or Underwriters' Counsel, shall reasonably object.
(e) The Company shall take all action, in cooperation with the
Representative, at or prior to the time the Registration Statement becomes
effective, to qualify the Units for offering and sale under the securities laws
of such jurisdictions as the Representative may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such documents
and furnish such information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a foreign corporation
or file a general or limited consent to service of process in any such
jurisdiction. In each jurisdiction where such qualification shall be effected,
the Company will, unless the Representative agrees that such action is not at
the time necessary or advisable, use all reasonable efforts to file and make
such statements or reports at such times as are or may reasonably be required by
the laws of such jurisdiction to continue such qualification. It is agreed that
Underwriters' Counsel (or its designees) shall perform all such required Blue
Sky legal services.
(f) During the time when a prospectus is required to be delivered
under the Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when a prospectus relating
to the Securities is required to be
14
delivered under the Act, any event shall have occurred as a result of which, in
the reasonable opinion of counsel for the Company or Underwriters' Counsel, the
Prospectus, as then amended or supplemented, includes an untrue statement of a
material fact or omits to state any 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, or if it is necessary at any time to
amend the Prospectus to comply with the Act and the Rules and Regulations, the
Company will notify the Representative promptly and prepare and file with the
Commission an appropriate amendment or supplement in accordance with Section 10
of the Act, each such amendment or supplement to be satisfactory to
Underwriters' Counsel, and the Company will furnish to the Underwriters copies
of such amendment or supplement as soon as available and in such quantities as
the Underwriters may request.
(g) As soon as practicable, but in any event not later than 45 days
after the end of the 12- month period beginning on the day after the end of the
fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its security holders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Representative, an earnings
statement which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules
and Regulations, which statement need not be audited unless required by the Act,
covering a period of at least 12 consecutive months after the effective date of
the Registration Statement.
(h) During a period of seven years after the date hereof, the Company
will furnish to its stockholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly reports of earnings, and will deliver to the Representative:
(i) concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company for each quarter in the form
furnished to the Company's stockholders and certified by the Company's principal
financial or accounting officer;
(ii) concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company as at the end of the preceding
fiscal year, together with statements of operations, stockholders' equity, and
cash flows of the Company for such fiscal year, accompanied by a copy of the
certificate thereon of independent certified public accountants;
(iii) as soon as they are available, copies of all reports (financial
or other) mailed to stockholders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD or any
securities exchange;
15
(v) every press release and every material news item or article of
interest to the financial community in respect of the Company or its affairs
which was released or prepared by or on behalf of the Company; and
(vi) any additional information of a public nature concerning the
Company (and any future subsidiaries) or its businesses which the Representative
may reasonably request.
During such seven-year period, if the Company has active subsidiaries, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and will
be accompanied by similar financial statements for any significant subsidiary
which is not so consolidated.
(i) The Company will maintain a Transfer Agent, counsel, accounting firm,
financial printer and, if necessary under the jurisdiction of incorporation of
the Company, a Registrar (which may be the same entity as the Transfer Agent)
for its Units, Common Stock and Public Warrants all of whom shall be reasonably
acceptable to the Representative. Such Transfer Agent shall, for a period of
five years following the Closing Date, deliver to the Representative the monthly
securities position of the Company's stockholders of record.
(j) The Company will furnish to the Representative or on the
Representative's order, without charge, at such place as the Representative may
designate, copies of each Preliminary Prospectus, the Registration Statement any
pre-effective or post-effective amendments thereto (two of which copies will be
signed and will include all financial statements and exhibits), the Prospectus,
and all amendments and supplements thereto, including any Prospectus prepared
after the effective date of the Registration Statement, in each case as soon as
available and in such quantities as the Representative may reasonably request.
(k) On or before the effective date of the Registration Statement, the
Company shall provide the Representative with true copies of duly executed,
legally binding and enforceable agreements pursuant to which for a period of not
less than 24 months after the effective date of the Registration Statement, each
holder of securities issued by the Company and outstanding at the effective date
of the Registration Statement (including securities convertible into Common
Stock of the Company) agrees that it or he or she will not, directly or
indirectly, issue, offer to sell, sell, grant an option for the sale of, assign,
transfer, pledge, hypothecate or otherwise encumber or dispose of any of such
securities (either pursuant to Rule 144 of the Rules and Regulations or
otherwise) or dispose of any beneficial interest therein without the prior
written consent of the Representative (collectively, the "Lock-up Agreements").
The Lock-up Agreements shall also provide that any such securities that may be
sold pursuant to Rule 144 (with the Representative's consent) shall be executed
through the Representative. The commission for any such open market transactions
shall not exceed 5% and the sales price shall be reasonably related to the
market. During the three year period commencing with the effective date of the
Registration Statement, the Company shall not issue any securities under
Regulation S and not, without the prior written consent of the Representative,
sell, contract or offer to sell, issue, transfer, assign, pledge, distribute, or
otherwise dispose of, directly or
16
indirectly, any debt security of the Company or any shares of Common Stock or
any issue of preferred stock of the Company, or any options, rights or warrants
with respect to any shares of Common Stock or any issue of preferred stock of
the Company, (other than upon exercise of (i) the Representative's Warrants (ii)
options granted to ▇▇▇▇▇ ▇▇▇▇▇ to purchase up to 75,000 shares of Common Stock
at $3.00 per share (iii) options granted pursuant to an incentive stock option
plan of the Company in effect prior to the filing of the initial Registration
Statement, such plan to provide that the Board of Directors of the Company shall
have the power to grant, at its discretion, options to eligible individuals, to
purchase up to an aggregate amount of 262,500 shares of Common Stock at an
exercise price per share equal to the market price of a share of Common Stock at
the close of business on the date of any such option grant; provided that, for a
period of three (3) years commencing on the effective date of the Registration
Statement, the exercise price of options granted must be not less than the
greater of the fair market value per share of Common Stock on the date of grant
or $4.00 per share, such plan to otherwise be on terms and conditions
satisfactory to the Representative and (iv) options granted pursuant to any
further qualified option plan of the Company, approved by the Company's
shareholders pursuant to a proxy after the Closing Date, which in any event
shall not provide for options to purchase more than 262,500 shares of Common
Stock per year, shall provide that, for a period of three (3) years commencing
on the date of such an increase, the exercise price of options granted must be
not less than the greater of the fair market value per share of Common Stock on
the date of grant or $4.00 per share, and shall otherwise be on terms and
conditions satisfactory to the Representative. On or before the Closing Date,
the Company shall deliver instructions to the Transfer Agent authorizing it to
place appropriate legends on the certificates representing the securities
subject to the Lock-up Agreement and to place appropriate stop transfer orders
on the Company's ledgers.
(l) Neither the Company, nor any of its officers, directors,
stockholders or affiliates (within the meaning of the Rules and Regulations)
will take, directly or indirectly, any action designed to, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "Use of
Proceeds" in the Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form SR as may be
required pursuant to Rule 463 under the Act) from time to time, under the Act,
the Exchange Act and the Rules and Regulations, and all such reports, forms and
documents filed shall comply as to form and substance with the applicable
requirements under the Act, the Exchange Act and the Rules and Regulations.
(o) The Company shall furnish to the Representative as early as
practicable prior to each of the date hereof, the Closing Date and each Option
Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date of
17
the Registration Statement) which have been read by the Company's independent
public accountants, as stated in their letters to be furnished pursuant to
Section 6(j) hereof.
(p) The Company shall cause the Shares, the Common Stock and the
Public Warrants to be listed on the Nasdaq SmallCap Market and upon the request
of the Representative to be listed on the BSE, and for a period of seven (7)
years from the date hereof, use its best efforts to maintain such listings of
the Shares, the Common Stock and the Public Warrants to the extent outstanding.
(q) For a period of five (5) years from the Closing Date, the Company
shall furnish to the Representative at the Representative's request and at the
Company's sole expense, (i) the list of holders of all of the Company's
securities and (ii) a Blue Sky "Trading Survey" for secondary sales of the
Company's securities prepared by counsel to the Company.
(r) The Company shall as soon as practicable, (i) but in no event more
than five business days before the effective date of the Registration Statement,
file a Form 8-A with the Commission providing for the registration under the
Exchange Act of the Securities and (ii) but in no event more than 30 days from
the effective date of the Registration Statement, take all necessary and
appropriate actions to be included in Standard and Poor's Corporation
Descriptions and ▇▇▇▇▇'▇ Manual in order to satisfy the requirements for "manual
exemption" in those states where available and to maintain such inclusion for as
long as the Securities are outstanding.
(s) Until the completion of the distribution of the Securities, the
Company shall not without the prior written consent of the Representative and
Underwriters' Counsel, issue, directly or indirectly any press release or other
communication or hold any press conference with respect to the Company or its
activities or the offering contemplated hereby, other than trade releases issued
in the ordinary course of the Company's business consistent with past practices
with respect to the Company's operations.
(t) For a period of three (3) years after the effective date of the
Registration Statement, the Representative shall have the right to designate one
(1) individual for election to the Company's Board of Directors ("Board") and
the Company shall cause such individual to be elected to the Board. In the event
the Representative shall not have designated such individual at the time of any
meeting of the Board or such person is unavailable to serve, the Company shall
notify the Representative of each meeting of the Board and an individual
designated by the Representative shall be permitted to attend all meetings of
the Board and to receive all notices and other correspondence and communications
sent by the Company to members of the Board. Such individual shall be reimbursed
for all out-of-pocket expenses incurred in connection with his or her service
on, or attendance at meetings of, the Board. The Company shall provide its
outside directors with compensation in the form of cash and/or options on its
Common Stock as deemed appropriate and customary for similar companies.
18
(u) For a period equal to the lesser of (i) seven (7) years from the
date hereof, and (ii) the date of the sale to the public of the securities
issuable upon exercise of the Representative's Securities, the Company will not
take any action or actions which may prevent or disqualify the Company's use of
any form otherwise available for the registration under the Act of the
securities issuable upon exercise of the Representative's Securities.
(v) Commencing one year from the date hereof, the Company shall pay
the Representative a commission equal to five percent (5%) of the exercise price
of the Public Warrants, payable on the date of the exercise thereof on terms
provided for in the Warrant Agreement. The Company will not solicit the exercise
of the Public Warrants other than through the Representative and will not
authorize any other dealer or engage in such solicitation without the
Representative's prior written consent.
(w) On or before the effective date of the Registration Statement, the
Company shall have retained a financial public relations firm reasonably
satisfactory to the Representative, which shall be continuously engaged from
such engagement date to a date twelve (12) months from the Closing Date.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and
the Option Closing Date (to the extent not paid at the Closing Date) all
expenses and fees (other than fees of Underwriters' Counsel, except as provided
in (iv) below) incident to the performance of the obligations of the Company
under this Agreement, the Representative's Warrant Agreement and the Warrant
Agreement including, without limitation, (i) the fees and expenses of
accountants and counsel for the Company, (ii) all costs and expenses incurred in
connection with the preparation, duplication, printing, (including mailing and
handling charges) filing, delivery and mailing (including the payment of postage
with respect thereto) of the Registration Statement and the Prospectus and any
amendments and supplements thereto and the printing, mailing (including the
payment of postage with respect thereto) and delivery of this Agreement, the
Representative's Warrant Agreement, the Warrant Agreement, and related
documents, including the cost of all copies thereof and of the Preliminary
Prospectuses and of the Prospectus and any amendments thereof or supplements
thereto supplied to the Underwriters and such dealers as the Underwriters may
request, in quantities as hereinabove stated, (iii) the printing, engraving,
issuance and delivery of the Securities, including, but not limited to, (x) the
purchase by the Underwriters of the Securities and the purchase by the
Representative of the Representative's Warrants from the Company, (y) the
consummation by the Company of any of its obligations under this Agreement, the
Representative's Warrant Agreement, and the Warrant Agreement, and (z) resale of
the Securities by the Underwriters in connection with the distribution
contemplated hereby, (iv) the qualification of the Securities under state or
foreign securities or "Blue Sky" laws and determination of the status of such
securities under legal investment laws, including the costs of printing and
mailing the "Preliminary Blue Sky Memorandum", the "Supplemental Blue Sky
Memorandum" and "Legal Investments Survey," if any, and disbursements and fees
of counsel in connection therewith, provided, however, that the
19
Company's obligation with respect to such "Blue Sky" fees and disbursement of
counsel shall not exceed $30,000 (v) advertising costs and expenses, including
but not limited to costs and expenses in connection with the "road show",
information meetings and presentations, bound volumes and prospectus
memorabilia, tombstones in the Wall Street Journal and other appropriate
publications, (vi) costs, fees and expenses in connection with due diligence
investigations, including but not limited to the costs of background checks on
key management and/or personnel of the Company and the fees of any independent
counsel or consultant retained, (vii) fees and expenses of the transfer agent,
warrant agent, escrow agent, if any, and registrar, (viii) applications for
assignments of a rating of the Securities by qualified rating agencies, (ix) the
fees payable to the Commission, Nasdaq and the NASD, and (x) the fees and
expenses incurred in connection with the listing of the Securities on the Nasdaq
SmallCap Market, the BSE and any other exchange.
(b) If this Agreement is terminated by the Underwriters in accordance
with the provisions of Section 6, Section 10(a) or Section 12, the Company shall
reimburse and indemnify the Representative for all of its actual out-of-pocket
expenses, including the fees and disbursements of Underwriters' Counsel (and in
addition to fees and expenses of Underwriter's Counsel incurred pursuant to
Section 5(a)(iv) above for which the Company shall remain liable), provided,
however, that in the event of a termination pursuant to Section 10(a) hereof
such obligation of the Company shall not exceed $50,000.
(c) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 5, it will pay to the
Representative on the Closing Date by certified or bank cashier's check or, at
the election of the Representative, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance equal to three
percent (3%) of the gross proceeds received by the Company from the sale of the
Firm Units. In the event the Representative elects to exercise the
over-allotment option described in Section 2(b) hereof, the Company further
agrees to pay to the Representative on each Option Closing Date (by certified or
bank cashier's check or, at the Representative's election, by deduction from the
proceeds of the offering) a non-accountable expense allowance equal to three
percent (3%) of the gross proceeds received by the Company from the sale of the
relevant Option Securities.
(d) The Underwriters shall not be responsible for any expense of the
Company or others or for any charge or claim related to the offering
contemplated by hereunder in the event that the sale of the Securities as
contemplated hereunder is not consummated.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any, as if they had been
made on and as of the Closing Date or each Option Closing Date, as the case may
be; the accuracy on and as of the Closing Date or Option Closing Date, if any,
of the statements of the officers of the Company made pursuant to the provisions
hereof; and the performance by the Company on and as of the Closing Date and
each Option Closing Date, if any, of its covenants and obligations hereunder and
to the following further conditions:
20
(a) The Registration Statement, which shall be in form and substance
satisfactory to the Representative and Underwriter's Counsel, shall have become
effective no later than 12:00 p.m., New York time, on the date of this Agreement
or such later date and time as shall be consented to in writing by the
Representative and, at the Closing Date and each Option Closing Date, if any, no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or
shall be pending or contemplated by the Commission and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of Underwriters' Counsel. If the Company has elected
to rely upon Rule 430A of the Rules and Regulations, the price of the Units and
any price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to the Closing Date the Company
shall have provided evidence satisfactory to the Representative of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Rules and Regulations.
(b) The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representative's opinion, is material, or omits to state a
fact which, in the Representative's opinion, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, or
that the Prospectus, or any supplement thereto, contains an untrue statement of
fact which, in the Representative's opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Representative shall have
received from Underwriters' Counsel, such opinion or opinions with respect to
the organization of the Company, the validity of the Securities, the
Representative's Warrants, the Registration Statement, the Prospectus and other
related matters as the Representative may request and Underwriters' Counsel
shall have received such papers and information as they request to enable them
to pass upon such matters.
(d) On the Closing Date, the Underwriters shall have received the
favorable opinion of Scheichet & ▇▇▇▇▇, P.C., counsel to the Company, dated the
Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) the Company (A) has been duly organized and is validly existing as
a corporation in good standing under the laws of its jurisdiction, and (B) has
all requisite corporate power and authority, and has obtained any and all
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over environmental or
similar matters), to own or lease its properties and conduct its business as
described in the Prospectus; the Company is duly qualified and licensed and in
good standing as a foreign corporation in each jurisdiction in which its
ownership or leasing of any properties or the character of its operations
requires such qualification
21
or licensing; to such counsel's knowledge, the Company has not received any
notice of proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially adversely affect the business, operations,
condition, financial or otherwise, or the earnings, business affairs or
prospects, properties, business, assets or results of operations of the Company.
The disclosures in the Registration Statement concerning the effects of federal,
state and local laws, rules and regulations on the Company's business as
currently conducted and as contemplated are correct in all material respects and
do not omit to state a fact necessary to make the statements contained therein
not misleading in light of the circumstances in which they were made.
(ii) to such counsel's knowledge, the Company does not own an equity
interest in any other corporation, partnership, joint venture, trust or other
business entity;
(iii) the Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and any amendment or supplement
thereto, under "Capitalization", and, to such counsel's knowledge, after due
inquiry, the Company is not a party to or bound by any instrument, agreement or
other arrangement providing for it to issue any capital stock, rights, warrants,
options or other securities, except for this Agreement, the Representative's
Warrant Agreement, the Warrant Agreement and as described in the Prospectus. The
Securities, and all other securities issued or issuable by the Company, conform
in all material respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding securities
of the Company have been duly authorized and validly issued and are fully paid
and non-assessable; the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability under the laws of the
State of New York as currently in effect by reason of being such holders; and
none of such securities were issued in violation of the preemptive rights of any
holders of any security of the Company. The Securities to be sold by the Company
hereunder and under the Representative's Warrant Agreement are not and will not
be subject to any preemptive or other similar rights of any stockholder, have
been duly authorized and, when issued, paid for and delivered in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable and
conform to the description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely as such holders; all
corporate action required to be taken for the authorization, issue and sale of
the Securities has been duly and validly taken; and the certificates
representing the Securities are in due and proper form. The Public Warrants and
the Representative's Warrants constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment therefore the
number and type of securities of the Company called for thereby. Upon the
issuance and delivery pursuant to this Agreement of the Securities to be sold by
the Company, the Underwriters and the Representative will acquire good and
marketable title to the Securities free and clear of any pledge, lien, charge,
claim, encumbrance, pledge, security interest, or other restriction or equity of
any kind whatsoever. No transfer tax is payable by or on behalf of the
Underwriters in connection with (A) the issuance by the Company of the
Securities, (B) the purchase by the Underwriters and the Representative of the
Securities from the Company,
22
(C) consummation by the Company of any of its obligations under this Agreement,
or (D) resales of the Securities in connection with the distribution
contemplated hereby.
(iv) the Registration Statement is effective under the Act, and, if
applicable, filing of all pricing information has been timely made in the
appropriate form under Rule 430A, and, to such counsel's knowledge, after due
inquiry no stop order suspending the use of the Preliminary Prospectus, the
Registration Statement or Prospectus or any part of any thereof or suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending, threatened or
contemplated under the Act;
(v) each of the Preliminary Prospectus, the Registration Statement,
and the Prospectus and any amendments or supplement thereto (other than the
financial statements and other financial and statistical data included therein,
as to which no opinion need be rendered) comply as to form in all material
respects with the requirements of the Act and the Rules and Regulations.
(vi) to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be described in
the Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement other than those described in the Registration Statement
(or required to be filed under the Exchange Act if upon such filing they would
be incorporated, in whole or in part, by reference therein) and the Prospectus
and filed as exhibits thereto, and the exhibits which have been filed are
correct copies of the documents of which they purport to be copies; (B) the
descriptions in the Registration Statement and the Prospectus and any supplement
or amendment thereto of contracts and other documents to which the Company is a
party or by which it is bound, including any document to which the Company is a
party or by which it is bound, incorporated by reference into the Prospectus and
any supplement or amendment thereto, are accurate in all material respects and
fairly represent the information required to be shown under the Act and the
Rules and Regulations of the Commission thereunder; (C) there is not pending or
threatened against the Company any action, arbitration, suit, proceeding,
inquiry, investigation, litigation, governmental or other proceeding (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or circumstances
that may give rise to the same), or involving the properties or business of the
Company which (1) is required to be disclosed in the Registration Statement
which is not so disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all respects), (2) questions
the validity of the capital stock of the Company or this Agreement or of any
action taken or to be taken by the Company pursuant to or in connection with any
of the foregoing; (D) no statute or regulation or legal or governmental
proceeding required to be described in the Prospectus is not described as
required; and (E) except as disclosed in the Prospectus, there is no action,
suit or proceeding pending, or threatened, against or affecting the Company
before any court or arbitrator or governmental body, agency or official (or any
basis thereof known to such counsel) in which an adverse decision which may
result in a material adverse change in the condition, financial or otherwise, or
the earnings, position, prospects, stockholders' equity, value, operation,
properties, business or results of operations of the Company, could adversely
affect the present or prospective ability of the Company to perform its
obligations under
23
this Agreement, the Representative's Warrant Agreement or the Warrant Agreement
or which in any manner draws into question the validity or enforceability of
this Agreement, the Representative's Warrant Agreement or the Warrant Agreement;
(vii) the Company has full legal right, power and authority to enter
into this Agreement, the Representative's Warrant Agreement and the Warrant
Agreement and to consummate the transactions provided for therein; and this
Agreement, the Representative's Warrant Agreement and the Warrant Agreement has
been duly authorized, executed and delivered by the Company. This Agreement, the
Representative's Warrant Agreement and the Warrant Agreement assuming due
authorization, execution and delivery by each other party hereto and thereto
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or contribution may be
limited by applicable law), and neither the Company's execution or delivery of
this Agreement, the Representative's Warrant Agreement and the Warrant
Agreement, its performance hereunder or thereunder, its consummation of the
transactions contemplated herein or therein, or the conduct of its business as
described in the Registration Statement, the Prospectus, and any amendments or
supplements thereto, conflicts with or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of the Company pursuant to the terms of, (A)
the certificate of incorporation or by-laws of the Company, (B) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (C) any statute, judgment, decree, order, rule
or regulation applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or body (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or any of
its activities or properties, except for conflicts, breaches, violations,
defaults, creations or impositions which do not and would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs, position, shareholder's equity, value, operations, properties,
business or results of operations of the Company.
(viii) except as described in the Prospectus, no consent, approval,
authorization or order, and no filing with, any court, regulatory body,
government agency or other body (other than such as may be required under Blue
Sky laws, as to which no opinion need be rendered) is required in connection
with the issuance of the Securities pursuant to the Prospectus and the
Registration Statement, the issuance of the Representative's Warrants, the
performance of this Agreement, the Representative's Warrant Agreement and the
Warrant Agreement and the transactions contemplated hereby and thereby;
24
(ix) the properties and business of the Company conform to the
description thereof contained in the Registration Statement and the Prospectus;
(x) the Company is not in breach of, or in default under, any term or
provision of any license, contract, indenture, mortgage, installment sale
agreement, deed of trust, lease, voting trust agreement, stockholders'
agreement, partnership agreement, note, loan or credit agreement or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is a party or by which the
Company may be bound or to which the property or assets (tangible or intangible)
of the Company is subject or affected, which could materially adversely affect
the Company; and the Company is not in violation of any term or provision of its
Certificate of Incorporation or By-Laws, or in violation of any franchise,
license, permit, judgment, decree, order, statute, rule or regulation the result
of which would materially and adversely affect the condition, financial or
otherwise, or the earnings, business affairs, position, shareholders' equity,
value operation, properties, business or results of operations of the Company.
(xi) the Company owns or possesses, free and clear of all liens or
encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and licenses necessary
to conduct its business (including, without limitation any such licenses or
rights described in the Prospectus as being owned or possessed by the Company),
and to the best of such counsel's knowledge after reasonable investigation,
there is no claim or action by any person pertaining to, or proceeding, pending,
or threatened, which challenges the exclusive rights of the Company with respect
to any trademarks, service marks, copyrights, service names, trade names,
patents, patent applications and licenses used in the conduct of the Company's
business (including, without limitations, any such licenses or rights described
in the Prospectus as being owned or possessed by the Company).
(xii) except as described in the Prospectus, the Company does not (A)
maintain, sponsor, or contribute to any ERISA Plans, (B) maintain or contribute
now or at any time previously, to a defined benefit plan, as defined in Section
3(35) of ERISA, and (C) has never completely or partially withdrawn from a
"multiemployer plan"; and
(xiii) the Securities have been approved for listing on the Nasdaq
SmallCap Market and the BSE, and the Company's Registration Statement on Form
8-A under the Exchange Act has become effective.
(xiv) to such counsel's knowledge, the persons listed under the
caption "PRINCIPAL SECURITY HOLDERS" in the Prospectus are the respective
"beneficial owners" (as such phrase is defined in Regulation 13d-3 under the
Exchange Act) of the securities set forth opposite their respective names
thereunder as and to the extent set forth therein;
(xv) to such counsel's knowledge, except as described in the
Prospectus, no person, corporation, trust, partnership, association or other
entity has the right to include and/or register any
25
securities of the Company in the Registration Statement, require the Company to
file any registration statement or, if filed, to include any security in such
registration statement;
(xvi) to such counsel's knowledge, except as described in the
Prospectus, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee with
respect to the sale of the Units hereunder or the financial consulting
arrangement between the Representative and the Company, if any, or any other
arrangements, agreements, understandings, payments or issuances that may affect
the Underwriters' compensation, as determined by the NASD;
(xvii) the Lock-up Agreements are legal, valid and binding obligations
of the parties thereto, enforceable against each such party and any subsequent
holder of the securities subject thereto in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable); and
(xviii) all action under the Act necessary to make the public offering
and consummate the sale of the Securities as provided in this Agreement has been
taken by the Company. The provisions of the Certificate of Incorporation and
By-laws of the Company comply as to form in all material respects with the Act
and the Rules and Regulations.
Such counsel shall state that such counsel has participated in conferences
with officers and other representatives of the Company and representatives of
the independent public accountants for the Company, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Preliminary Prospectus, the Registration
Statement, the Prospectus, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which
leads counsel to believe that either the Registration Statement or any amendment
thereto, at the time such Registration Statement or amendment became effective
or the Preliminary Prospectus or Prospectus or amendment or supplement thereto
as of the date of such opinion 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 not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or Prospectus).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to
26
the extent they deem proper, on certificates
and written statements of responsible officers of the Company and certificates
or other written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such statements or certificates
shall be delivered to Underwriters' Counsel if requested; and (C) as to
regulatory matters, to the extent specified in such opinion and to the extent
reliance is reasonable, on the opinion of special regulatory counsel to the
Company. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel is in form satisfactory to such counsel and
that the Representative and they are justified in relying thereon.
At each Option Closing Date, if any, the Underwriters shall have received
the favorable opinion of Scheichet & ▇▇▇▇▇, P.C., counsel to the Company, dated
the Option Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel confirming as of such Option Closing Date
the statements made in its opinion delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing
Date, if any, Underwriters' Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or covenants of the
Company herein contained.
(f) Prior to each of Closing Date and each Option Closing Date, if
any, (i) there shall have been no adverse change nor development involving a
prospective change in the condition, financial or otherwise, prospects,
stockholders' equity or the business activities of the Company, whether or not
in the ordinary course of business, from the latest dates as of which such
condition is set forth in the Registration Statement and Prospectus; (ii) there
shall have been no transaction, not in the ordinary course of business, entered
into by the Company, (iii) the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness; (iv) the
Company shall not have issued any securities (other than the Securities) or
declared or paid any dividend or made any distribution in respect of its capital
stock of any class and there shall not have been any change in the capital or
any change in the debt (long or short term) or liabilities or obligations of the
Company (contingent or otherwise); (v) no material amount of the assets of the
Company shall have been pledged or mortgaged, except as set forth in the
Registration Statement and Prospectus (vi) no action, suit or proceeding, at law
or in equity, shall have been pending or threatened (or circumstances giving
rise to same) against the Company, or affecting any of its properties or
business before or by any court or federal, state or foreign commission, board
or other administrative agency wherein an unfavorable decision, ruling or
finding may adversely affect the business, operations, management prospects or
financial condition or assets of the Company, except as set forth in the
Registration Statement and Prospectus: and (vii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated,
threatened or contemplated by the Commission.
27
(g) At each of the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received a certificate of the principal executive
officer and the chief financial or chief accounting officer of the Company,
dated the Closing Date or Option Closing Date, as the case may be, to the effect
that each of such persons has carefully examined the Registration Statement, the
Prospectus and this Agreement, and that:
(i) The representations and warranties in this Agreement of the
Company are true and correct, as if made on and as of the Closing Date or the
Option Closing Date, as the case may be, and the Company has complied with all
agreements and covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to such Closing
Date or Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued, and no proceedings for that
purpose have been instituted or are pending or, are contemplated or threatened
under the Act;
(iii) The Registration Statement and the Prospectus and, if any, each
amendment and each supplement thereto, contain all statements and information
required to be included therein, and none of the Registration Statement, the
Prospectus nor any amendment or supplement thereto includes any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and neither
the Preliminary Prospectus or any supplement thereto included any untrue
statement of a material fact or omitted to state any 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; and
(iv) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (A) there has not been any material
change in the shares of Common Stock or liabilities of the Company except as set
forth in or contemplated by the Prospectus; (B) there has not been any material
adverse change in the general affairs, management, business, financial condition
or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, as set forth in or contemplated
by the Prospectus; (C) the Company has not sustained any material loss or
interference with its business from any court or from legislative or other
governmental action, order or decree, whether foreign or domestic, or from any
other occurrence, not described in the Registration Statement and Prospectus;
(D) there has not occurred any event that makes untrue or incorrect in any
material respect any statement or information contained in the Registration
Statement or Prospectus or that is not reflected in the Registration Statement
or Prospectus but should be reflected therein in order to make the statements or
information therein, in light of the circumstances in which they were made, not
misleading in any material respect; (E) the Company has not incurred up to and
including the Closing Date or the Option Closing Date, as the case may be, other
than in the ordinary course of its business, any material liabilities or
obligations, direct or contingent; (F) the Company has not paid or declared any
dividends or other distributions on its capital stock; (G) the Company has not
entered into any transactions not in the ordinary course of business; (H) there
has not been any change in the capital stock or long-term debt
28
or any increase in the short-term borrowings (other than any increase in the
short-terms borrowings in the ordinary course of business) of the Company; (I)
the Company has not sustained any material loss or damage to its property or
assets, whether or not insured; and (J) there has occurred no event required to
be set forth in an amended or supplemented Prospectus which has not been set
forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(h) By the Closing Date, the Underwriters will have received clearance
from the NASD as to the amount of compensation allowable or payable to the
Underwriters, as described in the Registration Statement.
(i) At the time this Agreement is executed, the Underwriters shall
have received a letter, dated such date, addressed to the Underwriters in form
and substance satisfactory (including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriters and Underwriters' Counsel, from ▇. ▇. ▇▇▇▇▇▇ & Co. LLP,:
(i) confirming that they are independent accountants with respect to
the Company within the meaning of the Act and the applicable Rules and
Regulations;
(ii) stating that it is their opinion that the financial statements of
the Company included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act and the
Rules and Regulations thereunder and that the Representative may rely upon the
opinion of ▇.▇. ▇▇▇▇▇▇ & Co. LLP, with respect to the financial statements and
supporting schedules included in the Registration Statement;
(iii) stating that, on the basis of a limited review which included a
reading of the latest available unaudited interim financial statements of the
Company (with an indication of the date of the latest available unaudited
interim financial statements), a reading of the latest available minutes of the
stockholders and board of directors and the various committees of the boards of
directors of the Company, consultations with officers and other employees of the
Company responsible for financial and accounting matters and other specified
procedures and inquiries, nothing has come to their attention which would lead
them to believe that (A) the unaudited financial statements, if any, of the
Company included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the Act and the
Rules and Regulations or are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements of the Company included in the
Registration Statement, or (B) at a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there has been any
change in the capital stock or long-term debt of the Company, or any decrease in
the stockholders' equity or net current assets or net assets of the Company as
compared with amounts shown in the [ ] 199 balance sheet included in the
Registration Statement, other than as set forth in or contemplated by the
Registration
29
Statement, or, if there was any change or decrease, setting forth the amount of
such change or decrease;
(iv) setting forth, at a date not later than five (5) days prior to
the date of the Registration Statement, the amount of liabilities of the Company
(including a breakdown of commercial paper and notes payable to banks) ;
(v) stating that they have compared specific dollar amounts, numbers
of shares, percentages of revenues and earnings, statements and other financial
information pertaining to the Company set forth in the Prospectus in each case
to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including work
sheets, of the Company and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in agreement;
(vi) stating that they have in addition carried out certain specified
procedures, not constituting an audit, with respect to certain pro forma
financial information which is included in the Registration Statement and the
Prospectus and that nothing has come to their attention as a result of such
procedures that caused them to believe such unaudited pro forma financial
information does not comply in form in all respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of that information;
(vii) stating that they have not during the immediately preceding five
(5) year period brought to the attention of any of the Company's management any
"weakness," as defined in Statement of Auditing Standard No. 60 "Communication
of Internal Control Structure Related Matters Noted in an Audit," in any of the
Company's internal controls; and
(viii) statements as to such other matters incident to the transaction
contemplated hereby as the Representative may request.
(j) On or prior to the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received from ▇.▇. ▇▇▇▇▇▇ & Co. LLP, a letter,
dated as of the Closing Date or the Option Closing Date, as the case may be, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (i) of this Section, except that the specified date in
the referred to shall be a date not more than five days prior to the Closing
Date or the Option Closing Date, as the case may be, and, if the Company has
elected to rely on Rule 430A of the Rules and Regulations, to the further effect
that they have carried out procedures as specified in clause (v) of subsection
(i) of this Section with respect to certain amounts, percentages and financial
information as specified by the Representative and deemed to be a part of the
Registration Statement pursuant to Rule 430A(b) and have found such amounts,
percentages and financial information to be in agreement with the records
specified in such clause (v).
30
(k) On each of Closing Date and Option Closing Date, if any, there
shall have been duly tendered to the Representative for the several
Underwriters' accounts the appropriate number of Securities.
(l) No order suspending the sale of the Securities in any jurisdiction
designated by the Representative pursuant to subsection (e) of Section 4 hereof
shall have been issued on either the Closing Date or the Option Closing Date, if
any, and no proceedings for that purpose shall have been instituted or shall be
contemplated.
(m) On or before Closing Date, the Shares, the Common Stock and the
Public Warrants shall have been approved for quotation on the Nasdaq SmallCap
Market and shall have been authorized upon official notice of issuance for
trading on the BSE.
(n) On or before Closing Date, there shall have been delivered to the
Representative the Lock-up Agreements, in form and substance satisfactory to the
Representative.
(o) On or before the Closing Date, the Company shall have executed a
mergers and acquisition agreement with the Representative in form and substance
satisfactory to the Representative.
(p) On or before the Closing Date, the Company shall have executed the
Representative's Warrant Agreement and the Warrant Agreement together with the
applicable Warrant Certificates, each in form and substance satisfactory to the
Representative.
(q) On or before the Closing Date the Representative shall have
received executed copies of the employment agreements and insurance policies
referred to in Section 1 (a) (xxxi) hereof, each to the satisfaction of the
Representative.
(r) Each of the employee bonus pool plan and incentive stock option
plan of the Company shall be in effect as of the Closing Date, shall be in
accordance with terms of the Letter Agreement dated March 6, 1996 between the
Company and RAS and shall otherwise be on terms and conditions satisfactory to
the Representative.
(s) On or before the Closing Date, the Company shall have obtained
officers and directors liability insurance, the terms and conditions of which
shall be reasonably satisfactory to the Representative, and shall keep such
insurance in place for a period of five years from the Closing Date.
If any condition to the Underwriters' obligations hereunder to be fulfilled
prior to or at the Closing Date or the relevant Option Closing Date, as the case
may be, is not so fulfilled, the Representative may terminate this Agreement or,
if the Representative so elects, it may waive any such conditions which have not
been fulfilled or extend the time for their fulfillment.
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7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the Underwriter,
including specifically each person who may be substituted for an Underwriter as
provided in Section 11 hereof), and each person, if any, who controls the
Underwriter ("controlling person") within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions in
respect thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), as such are
incurred, to which the Underwriter or such controlling person may become subject
under the Act, the Exchange Act, or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
(i) in any Preliminary Prospectus, the Registration Statement or the Prospectus
(as from time to time amended and supplemented); (ii) in any post-effective
amendment or amendments or any time new registration statement and prospectus in
which is included securities of the Company issued or issuable upon exercise of
the Securities; or (iii) in any application or other document or written
communication (in this Section 7 collectively called "Application") executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any securities commission or agency,
Nasdaq, the BSE or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to any Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment thereof or supplement thereto, or in
any Application, as the case may be.
The indemnity agreement in this subsection (a) shall be in addition to any
liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each other person, if
any, who controls the Company within the meaning of the Act, to the same extent
as the foregoing indemnity from the Company to the Underwriters but only with
respect to statements or omissions, if any, made in any Preliminary Prospectus,
the Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any Application made in reliance upon, and in strict conformity
with, written information furnished to the Company with respect to any
Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any such Application, provided that such written
information or omissions only pertain
32
to disclosures in the Preliminary Prospectus, the Registration Statement or
Prospectus directly relating to the transactions effected by the Underwriters in
connection with this offering. The Company acknowledges that the statements with
respect to the public offering of the Securities set forth under the heading
"Underwriting" and the stabilization legend in the Prospectus have been
furnished by the Underwriters expressly for use therein and constitute the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party or parties
of the commencement thereof, the indemnifying party or parties will be entitled
to participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action at the
expense of the indemnifying party, (ii) the indemnifying parties shall not have
employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses of one additional
counsel shall be borne by the indemnifying parties. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 7 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution in any case
in which (i) an indemnified party makes claim for indemnification pursuant to
this Section 7, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7
33
provide for indemnification in such case, or (ii) contribution under the Act may
be required on the part of any indemnified party, then each indemnifying party
shall contribute to the amount paid as a result of such losses, claims, damages,
expenses or liabilities (or actions in respect thereof) (A) in such proportion
as is appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand, from the offering of the Securities or (B) if the allocation
provided by clause (A) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is a contributing party
and the Underwriters are the indemnified party, 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
of the Units (before deducting expenses) bear to the total underwriting
discounts received by the Underwriters hereunder, in each case as set forth in
the table in the cover page of the Prospectus. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions in respect thereof)
referred to above in this subdivision (d) shall be deemed to include 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 subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by the Underwriters hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Act, each officer of the
Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subparagraph (d), Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this subparagraph (d), notify
such party or parties from whom contribution may be sought, but the omission so
to notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this subparagraph (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution agreement
set forth above shall be in addition to any liabilities which any indemnifying
party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto, shall be
deemed to be representations, warranties and agreements at the
34
Closing Date and any Option Closing Date, as the case may be, and such
representations, warranties and agreements of the Company and the respective
indemnity agreements contained in Section 7 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
any Underwriter, the Company, any controlling person of any Underwriter or the
Company, and shall survive termination of this Agreement or the issuance and
deliver of the Securities to the Underwriters and the Representative, as the
case may be.
9. Effective Date. This Agreement shall become effective at 10:00 a.m., New
York City time, on the next full business day following the date hereof, or at
such earlier time after the Registration Statement becomes effective as the
Representative, in it's discretion, shall release the Securities for the sale to
the public; provided, however, that the provisions of Sections 5, 7 and 10 of
this Agreement shall at all times be effective. For purposes of this Section 9,
the Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Representative of telegrams to
securities dealers releasing such shares for offering or the release by the
Representative for publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the Representative
shall have the right to terminate this Agreement, (i) if any domestic or
international event or act or occurrence has disrupted, or in the
Representative's opinion will in the immediate future disrupt the financial
markets; or (ii) any material adverse change in the financial markets shall have
occurred; or (iii) if trading on the New York Stock Exchange, the American Stock
Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction; or (iv) if the United States shall have become
involved in a war or major hostilities, or if there shall have been an
escalation in an existing war or major hostilities or a national emergency shall
have been declared in the United States; or (v) if a banking moratorium has been
declared by a state or federal authority; or (vi) if a moratorium in foreign
exchange trading has been declared; or (vii) if the Company, shall have
sustained a loss material or substantial to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in the
Representative's opinion, make it inadvisable to proceed with the delivery of
the Securities; or (vii) if there shall have been such a material adverse change
in the condition (financial or otherwise), business affairs or prospects of the
Company, whether or not arising in the ordinary course of business, which would
render, in the Representative's judgment, either of such parties unable to
perform satisfactorily its respective obligations as contemplated by this
Agreement or the Registration Statement, or such material adverse change in the
general market, political or economic conditions, in the United States or
elsewhere as in the Representative's judgment would make it inadvisable to
proceed with the offering, sale and/or delivery of the Securities.
35
(b) If this Agreement is terminated by the Representative in
accordance with the provisions of Section 10(a), the Company shall promptly
reimburse and indemnify the Representative for all of its actual out-of-pocket
expenses, including the fees and disbursements of counsel for the Underwriters
in an amount not to exceed $50,000 (less amounts previously paid pursuant to
Section 5(c) above). Notwithstanding any contrary provision contained in this
Agreement, if this Agreement shall not be carried out within the time specified
herein, or any extension thereof granted to the Representative, by reason of any
failure on the part of the Company to perform an undertaking or satisfy any
condition of this Agreement to be performed or satisfied by the Company
(including, without limitation, pursuant to Section 6 or Section 12) then, the
Company shall promptly reimburse and indemnify the Representative for all of its
actual out-of-pocket expenses, including the fees and disbursements of counsel
for the Underwriters (less amounts previously paid pursuant to Section 5 (c)
above). In addition, the Company shall remain liable for all Blue Sky counsel
fees and expenses and Blue Sky filing fees. Notwithstanding any contrary
provision contained in this Agreement, any election hereunder or any termination
of this Agreement (including, without limitation, pursuant to Sections 6, 10, 11
and 12 hereof), and whether or not this Agreement is otherwise carried out, the
provisions of Section 5 and Section 7 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
11. Substitution of the Underwriters. If one or more of the Underwriters
shall fail (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 6, Section 10 or Section 12
hereof) to purchase the Securities which it or they are obligated to purchase on
such date under this Agreement (the "Defaulted Securities"), the Representative
shall have the right, within 24 hours thereafter, to make arrangement for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
total number of Firm Units to be purchased on such date, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non- defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total
number of Firm Units, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default which does not result in a termination of
this Agreement, the Representative shall have the right to postpone the Closing
Date for a period not exceeding seven
36
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents.
12. Default by the Company. If the Company shall fail at the Closing Date
or any Option Closing Date, as applicable, to sell and deliver the number of
Units which it is obligated to sell hereunder on such date, then this Agreement
shall terminate (or, if such default shall occur with respect to any Option
Securities to be purchased on any Option Closing Date, the Underwriters may at
the Representative's option, by notice from the Representative to the Company,
terminate the Underwriters' obligation to purchase Option Securities from the
Company on such date) without any liability on the part of any non-defaulting
party other than pursuant to Section 5, Section 7 and Section 10 hereof. No
action taken pursuant to this Section shall relieve the Company from liability,
if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representative at ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Chairman of the Board, with a copy to Bachner, Tally, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq. Notices to the Company shall be directed to the Company at New York Health
Care, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇, with a
copy to Scheichet & ▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and shall
be binding upon, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 7 hereof, and their respective
successors, legal representatives and assigns and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
37
17. Entire Agreement; Amendments. This Agreement, the Representative's
Warrant Agreement and the Warrant Agreement constitute the entire agreement of
the parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Representative
and the Company.
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
NEW YORK HEALTH CARE, INC.
By:
-----------------------
▇▇▇▇▇ ▇▇▇▇▇, President
Confirmed and accepted as of
the date first above written
RAS SECURITIES CORP.
For itself and as Representative of the several
Underwriters named in Schedule A hereto
By:
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman
38
SCHEDULE A
Name of Underwriters Number of Firm
Securities to
be purchased
TOTAL
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39