Exhibit 1.1
2,000,000 Units, each Unit Consisting of
Two Shares of Common Stock and One Redeemable Warrant
▇▇▇▇▇▇ MOTORCYCLE COMPANY, LTD.
UNDERWRITING AGREEMENT
New York, New York
May __, 2004
▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co., Inc.
As Underwriter
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇ Motorcycle Company, Ltd., a Delaware corporation (the
"Company") confirms its agreement with ▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co., Inc. (the
"Underwriter") with respect to the sale by the Company as assisted by the
Underwriter as agent of the Company on a best efforts basis of a minimum of
550,000 and up to 2,000,000 units ("Units") (the "Public Offering"). Each Unit
consists of two shares of the Company's Common Stock, $0.001 par value ("Common
Stock") and one warrant to acquire one additional share of Common Stock
("Redeemable Warrants"). The shares of Common Stock and Redeemable Warrants
comprising the Units will be separately tradable immediately after issuance. The
2,000,000 Units and the Common Stock and the Redeemable Warrants underlying the
Units are hereinafter referred to as the "Firm Securities." Each Redeemable
Warrant is exercisable commencing on [May ___, 2005 [twelve months after the
date of the Prospectus] until [May ___, 2009 [five years after the date of the
Prospectus], unless previously redeemed by the Company, at an initial exercise
price of $6.00 per share. The Redeemable Warrants may be redeemed by the
Company, in whole but not in part, at a redemption price of $0.25 per warrant at
any time after [November __, 2004], six months after the date of the Prospectus,
on thirty (30) days' prior written notice, provided that the average closing
sale price of the Common Stock as reported on the American Stock Exchange
("Amex") or such other exchange or bulletin on which the Common Stock trades
equals or exceeds $10.00 per share for twenty (20) consecutive trading days.
The Units are offered for sale at the price of $10.25 per Unit. All
proceeds from the sale of the Units will be deposited into an escrow account
with HSBC Bank USA (the "Escrow Agent"), ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
pursuant to the Escrow Agreement, dated May __, 2004 (the "Escrow Agreement"),
until we have either sold the minimum 550,000 Units or the Public Offering has
terminated. The Public Offering will terminate ninety (90) days after the
Prospectus referred to below is effective, unless we extend the Public Offering
for an additional ninety (90) days (the "Extended Offering"). If we have not
sold at least the minimum 550,000 Units and deposited into our escrow account
gross proceeds of $5,637,500 by the termination of the Public Offering or the
Extended Offering, all proceeds held in escrow shall be promptly returned to
investors, without interest. Once we have sold the minimum 550,000 Units, we
will release all proceeds from escrow and conduct an initial closing (the
"Initial Closing"). We will continue to hold further closings on the Units sold
in excess of the first 550,000 minimum Units until the Public Offering
terminates (each such closing an "Additional Closing").
The Firm Securities (hereinafter referred to as the "Securities") are more fully
described in the Registration Statement and the Prospectus referred to below.
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the
Underwriter as of the date hereof, and as of the date of the Initial Closing
(the "Initial Closing Date") and the date of any Additional Closing (an
"Additional Closing Date"), if any, as follows:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and
amendments thereto, on Form SB-2 (SEC Registration No. 333-109119), for
the registration of the Securities under the Securities Act of 1933, as
amended (the "Act"), which registration statement and amendments have been
prepared by the Company in conformity with the requirements of the Act,
and the rules and regulations (the "Regulations") of the Commission under
the Act. The Company will promptly file a further amendment to said
registration statement in the form heretofore delivered to the Underwriter
and will not, file any other amendment thereto to which the Underwriter
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 filed as
a part thereof or incorporated therein (including, but not limited to
those 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 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 Regulations, is
hereinafter called the "Prospectus." "Preliminary Prospectus" means each
prospectus included in the Registration Statement or any amendments
thereof, before the Registration Statement becomes effective under the
Act, and any prospectus filed with the Commission by the Company with the
consent of the Underwriter pursuant to Rule 424(a) of the Rules and
Regulations. 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. For purposes hereof, "Material Adverse Effect" means a
material adverse effect on the business, condition (financial or
otherwise), earnings, management, properties, assets, results of
operations, stockholders' equity or prospects of the Company.
(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 the 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 to the Company's
knowledge, threatened. Each of the Registration Statement and Prospectus
at the time of filing thereof conformed with the requirements of the Act
and the Rules and Regulations, and neither of 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 warranty does not apply to statements made in
reliance upon and in conformity with written information furnished to the
Company with respect to the Underwriter by the Underwriter expressly for
use in such Registration Statement or Prospectus.
(iii) When the Registration Statement becomes effective and at
all times subsequent thereto up to the Initial Closing Date and each
Additional Closing Date, if any, and during such longer period as the
Prospectus may be required to be delivered in connection with sales by the
Underwriter 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 at the time of effectiveness or filing, as the case may be, up to
the Initial Closing Date and each Additional Closing Date, 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
the Underwriter 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 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 requires such
qualification or licensing. The Company has all requisite corporate power
and authority, and the Company has obtained any and all material
authorizations, approvals, orders, licenses, including, but not limited to
liquor 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 and has been doing business in
compliance with all such authorizations, approvals, orders, licenses,
including, but not limited to liquor licenses, certificates, franchises
and permits and all federal, state and local 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, including, but not limited to liquor licenses, 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, position,
prospects, value, operation, properties, business 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,
including, but not limited to national highway safety and environmental
laws 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 information set forth under "Pro Forma Capitalization"
and "Description of Securities" is true and correct 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, the Underwriter's Warrant
Agreement and as described in the Prospectus. 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 will be in due and proper form.
(vi) The financial statements, including the related notes and
schedules thereto, included in the Registration Statement 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 and Prospectus presents fairly the information
shown therein and to the extent based upon or derived from the financial
statements, have been compiled on a basis consistent with the financial
statements presented therein. Such financial statements have been prepared
in conformity with generally accepted accounting principles and the Rules
and Regulations, consistently applied throughout the periods involved.
There has been no adverse change in the condition, financial or otherwise,
or in the earnings, position, prospects, value, operation, properties,
business, or results of operations 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.
Financial information set forth in the Prospectus under the headings
"Summary Consolidated Financial Information," "Pro Forma Capitalization,"
and "Plan of Operations," fairly present, on the basis stated in the
Prospectus, the information set forth therein, have been derived from or
compiled on a basis consistent with that of the audited financial
statements included in the Prospectus.
(vii) The Company (i) 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 (the "Code"), and has furnished all
information returns it is required to furnish pursuant to the Code, (ii)
has established adequate reserves for such taxes which are not due and
payable, and (iii) 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 Underwriter in connection with (i) the
issuance by the Company of the Securities, (ii) the sale by the Company
through the Underwriter as agent of the Company, (iii) the consummation by
the Company of any of its obligations under this Agreement or (iv) resales
of the Securities in connection with the distribution contemplated hereby.
(ix) The Company maintains insurance policies, including, but
not limited to, general liability and property insurance, which insures
the Company and its employees, against such losses and risks as is
customary in the case of entities engaged in the same or similar business
and similarly situated. 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. On or before the Initial Closing, the Company shall
obtain key-man life insurance in an amount not less than one million
dollars ($1,000,000) on the life of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and the Company
shall be the sole beneficiary of such insurance.
(x) Except as described in the Registration Statement, 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 to the Company's knowledge threatened against, or
involving the properties or business of, the Company which (i) questions
the validity of the capital stock of the Company, this Agreement or of any
action taken or to be taken by the Company pursuant to or in connection
with this Agreement, (ii) 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
material respects), or (iii) would result in a Material Adverse Effect.
(xi) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, enter into this
Agreement and to consummate the transactions provided for in such
agreements; and this Agreement has been duly and properly authorized,
executed and delivered by the Company. This Agreement constitutes a legal,
valid and binding agreement of the Company enforceable against the Company
in accordance with its terms, except (i) as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws affecting creditors' rights
generally, (ii) as enforceability of any indemnification or contribution
provisions may be limited under applicable laws or the public policies
underlying such laws and (iii) that the remedies of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings may be brought. None of the Company's issue and sale of the
Securities, execution or delivery of this Agreement, its performance
hereunder and thereunder, its consummation of the transactions
contemplated herein and therein, 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, (i) the certificate of incorporation or
by-laws of the Company, (ii) 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 (iii) 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.
(xii) Except as described 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 performance of this 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 required under state securities or
Blue Sky laws in connection with the Underwriter's assistance in the sale
and distribution of the Firm Securities, and the Underwriter's Warrants to
be sold by the Company hereunder.
(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 any of 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 are accurate in all
material respects 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 in all material respects complete and correct copies of the
documents of which they purport to be copies.
(xiv) Except as described in the Registration Statement, the
Company is not in violation of its articles of incorporation or bylaws or
in default in any material respect in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which the Company is a party or by which its assets are
bound, or, except as described in the Registration Statement and the
Prospectus, in violation of any law, administrative regulation or ruling
or court decree applicable to the Company or any of its properties.
Neither the issuance nor the sale of the Securities nor the execution and
delivery of this Agreement nor the performance of the obligations of the
Company set forth herein nor the consummation of the transactions herein
contemplated require any consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other government
body (except such as may be required under the Securities Act or other
securities laws or Blue Sky laws or rules of the National Association of
Securities Dealers, Inc. (the "NASD") that may be applicable to the
Underwriter) or will conflict with the articles of incorporation is a
party or by which it or its property is bound, or any law, administrative
regulation or ruling or court decree applicable to the Company or any of
its properties, which conflict, breach or default would have a material
adverse effect on the business, condition (financial or otherwise) or
property of the Company taken as a whole.
(xv) 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 (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, (ii) entered into
any transaction other than in the ordinary course of business, or (iii)
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 material change in the debt (other
than as described in the Prospectus or Registration Statement) or
liabilities of the Company.
(xvi) 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 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.
(xvii) The Company is in compliance 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 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 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 to which the Company is a party.
(xviii) 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 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."
(xix) Neither the Company nor any of its employees, directors,
stockholders, partners, 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.
(xx) Except as otherwise disclosed in the Prospectus, none of
the patents, patent applications, trademarks, service marks, service
names, domain names, trade names and copyrights and none of the licenses
and rights to the foregoing presently owned or held by the Company are in
dispute or to the Company's knowledge are in any conflict with the right
of any other person or entity. The Company (i) owns or has the 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, patent applications, trademarks, service marks,
service names, domain names, 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 (ii) is not obligated or under any liability
whatsoever to make any payment by way of royalties, fees or otherwise to
any owner or licensee of, or other claimant to, any patent, patent
application, trademark, service ▇▇▇▇, service names, domain names, trade
name, copyright, know-how, technology or other intangible asset, with
respect to the use thereof or in connection with the conduct of its
business or otherwise. There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental or other
proceeding, domestic or foreign, pending or threatened (or circumstances
that may give rise to the same) against the Company which challenges the
exclusive rights of the Company with respect to any trademarks, trade
names, service marks, service names, domain names, copyrights, patents,
patent applications or licenses or rights to the foregoing used in the
conduct of its business, or which challenge the right of the Company to
use any technology presently used or contemplated to be used in the
conduct of its business.
(xxi) The Company owns and has the unrestricted right to use
all trade secrets, know-how (including all other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), inventions, technology, designs, processes, works of
authorship, computer programs and technical data and information
(collectively herein "intellectual property") that are material to the
development, manufacture, operation and sale of all products and services
sold or proposed to be sold by the Company, free and clear of and without
violating any right, lien, or claim of others, including without
limitation, former employers of its employees; provided, however, that the
possibility exists that other persons or entities, completely
independently of the Company, or its employees or agents, could have
developed trade secrets or items of technical information similar or
identical to those of the Company. The Company is not aware of any such
development of similar or identical trade secrets or technical information
by others.
(xxii) 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
interests, 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.
(xxiii) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company ("▇▇▇▇▇▇▇▇▇"),
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.
(xxiv) The Company has caused to be duly executed legally
binding and enforceable agreements pursuant to which all of the officers
and directors of the Company, all holders of shares of Common Stock and
holders of securities exchangeable or exercisable for or convertible into
shares of Common Stock have agreed not to, directly or indirectly, offer,
sell, grant any option for the sale of, assign, transfer, pledge,
hypothecate, distribute or otherwise encumber or dispose of any shares of
Common Stock or securities convertible into, exercisable or exchangeable
for or evidencing any right to purchase or subscribe for 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 six (6) months following the effective date of the
Registration Statement without the prior written consent of the
Underwriter and the Company. In addition, the Company shall not sell or
offer for sale any of its securities for a period of thirteen (13) months
from the effective date of the Registration Statement without the consent
of the Underwriter except pursuant to options and warrants issued on the
effective date of the Registration Statement or which may be issued
pursuant to the Company's 2004 Stock Incentive Plan. 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.
(xxv) Except as described in the Prospectus under
"Underwriting," 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
Underwriter's compensation, as determined by the National Association of
Securities Dealers, Inc. ("NASD").
(xxvi) Neither the Company nor any of its officers, directors
employees, agents, or any other person associated with or acting on behalf
of the Company has used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political
activity; made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; violated or
is in violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(xxvii) Any certificate signed by any officer of the Company,
and delivered to the Underwriter's Counsel (as defined herein) shall be
deemed a representation and warranty by the Company to the Underwriter as
to the matters covered thereby.
(xxviii) The Company: (i) has made and kept accurate books and
records; (ii) has maintained internal and accounting controls which
provide reasonable assurance that: (A) transactions are executed in
accordance with management's authorization; (B) transactions are recorded
as necessary to permit preparation of the financial statements and to
maintain accountability for its assets; (C) access to its assets have been
permitted only in accordance with management's authorization; and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(xxix) 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 to be filed by the Company or to
require the Company to file a registration statement under the Act and no
person or entity holds any anti-dilution rights with respect to any
securities of the Company.
(xxx) The properties and business of the Company conform in
all material respects to the description thereof contained in the
Registration Statement and the Prospectus; and 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, in each case free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, 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.
(xxxi) To the Company's knowledge and based on questionnaires
received by the Company from its officers, directors and 5% or greater
shareholders, there are no affiliations or associations between any member
of the NASD and any of the Company's officers, directors or 5% or greater
shareholders, except as set forth in the Registration Statement.
(xxxii) 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 Securities hereunder or financial consulting arrangement or any other
arrangements, agreements, understandings, payments or issuances related to
the Underwriter's compensation.
(xxxiii) The Company is not and, after giving effect to the
offer and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended.
(xxxiv) Any statistical and market-related data included in
the Prospectus are based on or derived from sources that the Company
believes to be reliable and accurate, and the Company has obtained the
written consent to the use of such data from such sources to the extent
required.
2. Sale of the Units.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to issue and sell a minimum of 550,000 Units (the "Minimum") and a
maximum of up to 2,000,000 Units (the "Maximum") in the Public Offering. All
Units to be offered and sold in the Public Offering shall be issued and sold
through the Underwriter, as agent of the Company, to the public and the
Underwriter agrees to use its best efforts to sell the Units as agent for the
Company, at the price per unit set forth on the cover page of the Final
Prospectus for the Public Offering (the "Public Offering Price"). The Company
agrees to pay the Underwriter a commission ("Selling Commission") equal to ten
percent (10%) of the Public Offering Price of the Units sold in the Minimum and
a seven percent (7%) commission on all Units sold thereafter in each case
through the Underwriter in the Public Offering (including units sold through
selected dealers). It shall be the Underwriter's responsibility to compensate
any selected dealers out of the commissions that it receives from the Company.
The Underwriter may reject any offer to purchase the Units made through the
Underwriter or a selected dealer in whole or in part, and any such rejection
shall not be deemed a breach of the Underwriter's agreement contained herein.
(b) It is understood that, after the Registration Statement becomes
effective, the Underwriter proposes to sell the Units to the public as agent for
the Company upon the terms and conditions set forth in the Prospectus. The
Escrow procedures established by the Underwriter shall comply with Commission
Rule 15c2-4 promulgated under the Exchange Act. All purchasers to whom the
Underwriter sells Units shall be instructed to make their check for payment of
the Units payable to ["▇▇▇▇▇▇ Motorcycle Company, Ltd. Public Offering Escrow
Account."] In addition, the Underwriter shall comply with Rule 15c2-4. The
Underwriter shall transmit all funds that it receives from purchasers to the
Escrow Agent by noon of the next business day following receipt thereof. Only
broker/dealers who are either (i) members in good standing of the NASD that are
registered with the NASD and maintain net capital pursuant to Rule 15c3-1
promulgated under the Exchange Act of not less than $25,000 or (ii) dealers with
their principal places of business located outside the United States, its
territories and its possessions and not registered as brokers or dealers under
the Exchange Act, who have agreed not to make any sales within the United
States, its territories or its possessions or to persons who are nationals
thereof or residents therein shall be designated selected dealers by the
Underwriter. The Underwriter shall require all selected dealers to comply with
Rule 15c2-4.
(c) After the sale of the minimum 550,000 Units and for any
Additional Closing the Underwriter shall direct the Escrow Agent to make payment
for the Units sold hereunder by wire transfer. Such payment is to be made at the
offices of ____________________, at 10:00 a.m. local time, on or about
______________ ___, 2004, or at such other time, date and place as the
Underwriter and the Company shall agree upon, each such time and date being
herein referred to as a "Closing Date." Unless the transaction is closed
book-entry through The Depository Trust Company and no certificates are
requested, in which case the procedures applicable thereto shall be complied
with, the certificates for the Units will be delivered in such denominations and
in such registrations as the Underwriter requests in writing not later than the
third (3rd) full business day prior to any Closing Date, and will be made
available for inspection by the Underwriter at least twenty-four (24) hours
prior to any Closing Date. Any such certificates will be delivered by the
Company to its transfer agent, or the Depository Trust Company, as applicable,
by 12:00 p.m. on the day prior to any Closing Date, along with addressed labels
to be used to mail the certificates to the purchasers thereof. The Company shall
direct the Escrow Agent to deliver (i) payment of the portion of the Selling
Commission due to the Underwriter by wire transfer or certified or bank
cashier's check drawn to the order of the Underwriter in next day funds, to the
Underwriter on any Closing Date and (ii) payment of the portion of the Selling
Commission due to each selected dealer by wire transfer or certified or bank
cashier's check drawn to the order of such selected dealer in next day funds, to
each selected dealer on any Closing Date.
3. Public Offering of the Units. As soon after the Registration Statement
becomes effective as the Underwriter deems advisable, the Underwriter shall make
a public offering of the Units (other than to residents of or in any
jurisdiction in which qualification of the Units is required and has not become
effective) at the price and upon the other terms set forth in the Prospectus.
The Underwriter 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
Underwriter, in its discretion deems advisable. The Underwriter may enter into
one of more agreements as the Underwriter, in its sole discretion, deems
advisable with one or more broker-dealers who shall act as dealers in connection
with such public offering.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with the Underwriter 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 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 Underwriter of which
the Underwriter shall not previously have been advised and furnished with a
copy, or to which the Underwriter 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 Underwriter and confirm the 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 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 shall use its
best efforts to obtain the prompt withdrawal of the order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Underwriter) 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 Underwriter, pursuant to
Rule 424(b)(4)) 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 fifteenth business day after the effective date of the
Registration Statement.
(d) The Company will give the Underwriter 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
Underwriter 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 Underwriter 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 Underwriter or
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP ("Underwriter's Counsel"), shall object.
(e) The Company shall endeavor in good faith, in cooperation with
the Underwriter, at or prior to the time the Registration Statement becomes
effective, to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as the Underwriter 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 Underwriter 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.
(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 delivered under the Act, any event shall
have occurred as a result of which, in the opinion of counsel for the Company or
Underwriter's 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, the
Company will notify the Underwriter 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
Underwriter's Counsel, and the Company will furnish to the Underwriter copies of
such amendment or supplement as soon as available and in such quantities as the
Underwriter 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 Underwriter, 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, in the
event the Company is not subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, 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 Underwriter:
(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;
(i) 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;
(ii) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders;
(iii) 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
(iv) any additional information of a public nature concerning
the Company (and any future subsidiary) or its businesses which the
Underwriter may request.
(v) During such seven-year period, if the Company has an
active subsidiary, the foregoing financial statements will be on a
consolidated basis to the extent that the accounts of the Company
and its subsidiary are consolidated, and will be accompanied by
similar financial statements for any significant subsidiary which is
not so consolidated.
(vi) The Company will maintain a Transfer Agent and Warrant
Agent ("Transfer Agent") 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 Common Stock and Redeemable
Warrants.
(j) The Company will furnish to the Underwriter's order, without
charge, at such place as the Underwriter may designate, copies of each
Preliminary Prospectus, the Registration Statement and 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 reasonable quantities as the Underwriter may request.
(k) On or before the effective date of the Registration Statement,
the Company shall provide the Underwriter with true copies of duly executed,
legally binding and enforceable agreements pursuant to which, for a period of
180 days from the effective date of the Registration Statement, the officers and
directors of the Company, all holders of shares of Common Stock and holders of
securities exchangeable or exercisable for or convertible into shares of Common
Stock, agree that it or he or she will not directly or indirectly, issue, offer
to sell, grant an option for the sale of, assign, transfer, pledge, hypothecate,
distribute or otherwise encumber or dispose of any shares of Common Stock or
securities convertible into, exercisable or exchangeable for or evidencing any
right to purchase or subscribe for any shares of Common Stock (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 Underwriter
and the Company (the "Lock-up Agreements"). For a period of 13 months from the
effective date of the Registration Statement, the Company shall not, without the
prior written consent of the Underwriter, issue, sell, grant or otherwise dilute
the securities in any offering, public or private except pursuant to options and
warrants issued on the effective date of the Registration Statement or which may
be issued thereafter pursuant to the Company's 2004 Stock Incentive Plan. On or
before any 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 Agreements and to place
appropriate stop transfer orders on the Company's ledgers.
(l) Neither the Company, nor any of its officers, directors,
stockholders, nor any of their respective affiliates (within the meaning of the
Rules and Regulations) will take, directly or indirectly, any action prohibited
by Regulation M under the Act in connection with the offering of the Securities.
(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. Except as described 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 will 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 hire a Chief Financial Officer acceptable to
the Underwriter in all respects to commence employment as of the Initial Closing
Date.
(p) The Company shall furnish to the Underwriter as early as
practicable prior to each of the date hereof, the Initial Closing Date and each
Additional 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 the Registration Statement) which have
been read by the Company's independent public accountants, as stated in its
letter to be furnished pursuant to Section 6(j) hereof.
(q) For a period of one (1) year from each Closing Date, the Company
shall furnish to the Underwriter at the Underwriter's request and at the
Company's sole expense, (i) daily consolidated transfer sheets relating to the
Common Stock and the Redeemable Warrants, and (ii) the list of holders of all of
the Company's securities, to be provided by the Company on no more than four
occasions during such period.
(r) As soon as practicable, (i) but in no event more than five (5)
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
▇▇▇▇▇'▇ OTC Manual and, as long as the Company is subject to the reporting
requirements under Section 13 or 15(d) of the Exchange Act, use its best efforts
to continue such inclusion for a period of not less than three (3) years.
(s) Until the completion of the distribution of the Firm Securities,
the Company shall not without the prior written consent of the Underwriter's
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 equal to the lesser of (i) three (3) years from the
date hereof, and (ii) the sale to the public of the Underwriter's Securities,
the Company will not take any action or actions which may prevent or disqualify
the Company's use of Form SB-2 or Form S-1 (or other appropriate form) for the
registration under the Act of the Underwriter's Securities.
(u) For a period of one (1) year after the effective date of the
Registration Statement, the Underwriter shall have the right to designate one
(1) individual to attend all meetings of the Company's Board of Directors (the
"Board"). The Company shall notify the Underwriter of each meeting of the Board
and the Company shall send to such individual 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 attendance of meetings of the Board.
(v) For a period of thirteen (13) months after the effective date of
the Registration Statement, the Company shall not restate, amend or alter any
term of any written employment, consulting or similar agreement entered into
between the Company and any officer, director or key employee as of the
effective date of the Registration Statement in a manner which is more favorable
to such officer, director or key employee, without the prior written consent of
the Underwriter.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Initial Closing
Date and any Additional Closing Date (to the extent not paid at the Initial
Closing) all expenses and fees (other than fees of Underwriter's Counsel, except
as provided in (iv) below) incident to the performance of the obligations of the
Company under this 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 Selected Dealer Agreements, 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
Underwriter and such dealers as the Underwriter may request, in quantities as
hereinabove stated, (iii) the printing, engraving, issuance and delivery of the
Securities including, but not limited to, (x) the consummation by the Company of
any of its obligations under this Agreement, and (y) sale of the Securities by
the Company through the Underwriter as the agent of the Company 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 Underwriter's Counsel in
connection therewith, provided that such Blue Sky counsel fees shall not exceed
$20,000 if the Securities are listed on a national securities exchange, (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 and "tomb-stone" advertisement
expenses, provided that the Underwriter's road show expenses shall not exceed
$50,000, (vi) costs and expenses in connection with due diligence
investigations, including but not limited to the fees of any independent counsel
or consultant retained, (vii) fees and expenses of the transfer agent and
registrar, (viii) the fees payable to the Commission and the NASD, and (ix) the
fees and expenses incurred in connection with the quotation of the Securities on
Amex and any other exchange.
(b) If this Agreement is terminated by the Underwriter in accordance
with the provisions of Section 6 or Section 11, (i) the Company shall reimburse
and indemnify the Underwriter for all of its actual out-of-pocket expenses,
including the fees and disbursements of Underwriter's Counsel, less any amounts
already paid pursuant to Section 5(c) hereof.
(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
Underwriter on each Closing Date, by deduction from the proceeds of the offering
contemplated herein a non-accountable expense allowance equal to one percent
(1%) of the gross proceeds received by the Company from the sale of the Firm
Securities, $35,000 of which has been paid to date.
6. Conditions of the Underwriter's Obligations. The obligations of the
Underwriter 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 Initial Closing Date and each Additional Closing Date, if any, with
respect to the Company as if it had been made on and as of the Initial Closing
Date or each Additional Closing Date, as the case may be; the accuracy on and as
of the Initial Closing Date or each Additional 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 Initial Closing Date
and each Additional Closing Date, if any, of its covenants and obligations
hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective under the
Act not later than the date of this Agreement or such later date and time as
shall be consented to in writing by the Underwriter, and, at the Initial Closing
Date and each Additional 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
threatened 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 Underwriter's 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 Closing Date the Company shall
have provided evidence satisfactory to the Underwriter 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 Underwriter shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Underwriter's opinion, is material, or omits to state a
fact which, in the Underwriter'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 Underwriter's opinion, is material, or omits to state a fact
which, in the Underwriter'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 Initial Closing Date, the Underwriter shall
have received from Underwriter's Counsel, such opinion or opinions with respect
to such matters as the Underwriter may request and Underwriter's Counsel shall
have received such papers and information as they request to enable them to pass
upon such matters.
(d) At the Initial Closing Date, the Underwriter shall have received
the favorable opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., counsel to the Company, dated
the Initial Closing Date, addressed to the Underwriter and in form and substance
satisfactory to Underwriter's 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, (B) is duly qualified and licensed and in good standing as a
foreign corporation in all states listed on Exhibit A hereto, and (C) has
all requisite corporate power and authority; and the Company has obtained
any and all necessary 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 and has been doing business in material
compliance with all such authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal, state and local
laws, rules and regulations; 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 have a Material Adverse Effect. 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 the best of such counsel's knowledge, the Company does
not own an 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 "Pro Forma Capitalization" and
"Description of Securities," 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 Securities,
and all other securities issued or issuable by the Company conform 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 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 are not and will not be subject to any preemptive or
other similar rights of any stockholder; the holders thereof will not be
subject to any liability solely as such holders; and the certificates
representing the Firm Securities. The Firm Securities have been duly
authorized for issuance, delivery and sale by the Company through the
Underwriter as its agent pursuant to this Agreement, and when issued and
delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued, fully paid and
non-assessable, free and clear of any pledge, lien, charge, claim,
encumbrance, security interest, or other restriction or equity of any kind
whatsoever. There are no restrictions upon the voting or transfer of any
of the Securities pursuant to the Company's certificate of incorporation
or bylaws. No transfer tax is payable by or on behalf of the Underwriter
in connection with (A) the issuance and sale by the Company of the Firm
Securities or (B) the consummation by the Company of any of its
obligations under this Agreement;
(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 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 or, to the best of such
counsel's knowledge, threatened by the Commission;
(v) each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or supplements 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: (i) the
descriptions in the Registration Statement and Prospectus of statutes,
legal and governmental proceedings, contracts and other documents are
accurate in all material respects; (ii) there are no statutes, legal or
governmental proceedings, contracts or documents that are required to be
described in the Prospectus, or documents that are required to be filed as
exhibits to the Registration Statement that are not described or filed as
required and the exhibits which have been filed are correct copies of the
documents of which they purport to be copies; (iii) there is no action,
suit, arbitration, proceeding, inquiry or investigation before or by any
court or governmental body or agency, domestic or foreign, now pending or
threatened against the Company or its property or assets, which is
required to be disclosed in the Registration Statement which is not so
disclosed therein, or which, if determined adversely, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect or which would adversely affect the present or prospective ability
of the Company to perform its obligations under this Agreement.
(vii) the Company has full legal right, power and authority to
enter into each of this Agreement and to consummate the transactions
provided for herein and therein; and each of this Agreement has been duly
authorized, executed and delivered by the Company. This Agreement,
assuming due authorization, execution and delivery by each other party
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
none of the Company's execution or delivery of this 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 respective properties or assets (tangible or
intangible) is or may be subject, 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;
(viii) except as described in the Prospectus and except as has
been obtained, no consent, approval, authorization or order of, 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 or
sale of the Units pursuant to the Prospectus, the issuance of the
Underwriter's Warrants, and the Registration Statement, the performance of
thisAgreement, and the transactions contemplated hereby;
(ix) to the best knowledge of such counsel, 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; and the Company is not
in violation of any term or provision of its certificate of incorporation
by-laws, or in violation of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, except for such violations of
franchises, licenses, permits, judgments, decrees, orders, statutes, rules
or regulations which would not, individually or in the aggregate, have a
Material Adverse Effect;
(x) the statements in the Prospectus under "Business,"
"Management," "Security Ownership of Certain Beneficial Owners and
Management," "Related Party Transactions," "Description of Securities" and
"Shares Eligible for Future Sales" have been reviewed by such counsel, and
insofar as they refer to statements of law, descriptions of statutes,
licenses, rules or regulations or legal conclusions, are correct in all
material respects;
(xi) except as described in the Prospectus, no person,
corporation, trust, partnership, association or other entity has the right
to include and/or register any 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;
(xii) assuming due execution and delivery by the parties
thereto other than the Company, the Lock-up Agreements are legal, valid
and binding obligations of parties thereto, enforceable against the 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 except as rights to indemnity or contribution may be
limited by applicable law); and (xiii) 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".
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 officers, representatives and accountants 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 Registration
Statement and Prospectus, on the basis of the foregoing, no facts have come to
the attention of such counsel which lead them to believe that either the
Registration Statement or any amendment thereto, at the time such Registration
Statement or amendment became effective or the 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).
Such opinion shall not state that it is to be governed or qualified
by, or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991), or any comparable
State bar accord.
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 Underwriter's Counsel) of
other counsel acceptable to Underwriter's Counsel, familiar with the applicable
laws; (B) as to matters of fact, to 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 Underwriter's Counsel if requested. The opinion shall also
state that the Underwriter's Counsel is entitled to rely thereon. 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 Underwriter and
they are justified in relying thereon.
At each Additional Closing Date, if any, the Underwriter shall have
received the favorable opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., counsel to the
Company, dated the Additional Closing Date, addressed to the Underwriter and in
form and substance satisfactory to Underwriter's Counsel, confirming as of
Additional Closing Date the statements made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. in its
opinion delivered on such Closing Date.
(e) On or prior to each of the Closing Date and each Additional
Closing Date, if any, (i) there shall not have been, and no development shall
have occurred that could reasonably be expected to result in, any material
adverse 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, from the latest date as of which the financial condition of
the Company is set forth in the Registration Statement and Prospectus which is
materially adverse to 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); the Company shall not have 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 stock of the Company, or any material
change in the debt (other than as described in the Prospectus and the
Registration Statement) 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 result in a Material
Adverse Effect; and (vii) no stop order shall have been issued under the Act and
no proceedings therefor shall have been initiated or threatened by the
Commission.
(f) At each of the Initial Closing Date and each Additional Closing
Date, if any, the Underwriter shall have received a certificate of the Company
signed by the principal executive officer and by the chief financial or chief
accounting officer of the Company, dated the Initial Closing Date or Additional
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 of the Company in this
Agreement are true and correct, as if made on and as of the Initial
Closing Date or the Additional 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 Initial Closing Date or Additional 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, to
the best of each of such person's knowledge, 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) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, (a)
the Company has not incurred up to and including the Closing Date or any
Additional Closing Date, if any, as the case may be, other than in the
ordinary course of its business, any material liabilities or obligations,
direct or contingent; (b) the Company has not paid or declared any
dividends or other distributions on its capital stock; (c) the Company has
not entered into any transactions not in the ordinary course of business;
(d) there has not been any change in the capital stock of the Company or
any material change in the debt (other than as described in the Prospectus
and the Registration Statement) of the Company; (e) the Company has not
sustained any material loss or damage to its property or assets, whether
or not insured; (g) there is no litigation which is pending or threatened
(or circumstances giving rise to same) against the Company, or any
affiliated party of any of the foregoing which is required to be set forth
in an amended or supplemented Prospectus which has not been set forth; and
(h) 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.
(g) By the Closing Date, the Underwriter will have received
clearance from the NASD as to the amount of compensation allowable or payable to
the Underwriter, as described in the Registration Statement.
(h) At the time this Agreement is executed, the Underwriter shall
have received a letter, dated such date, addressed to the Underwriter 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
Underwriter and Underwriter's Counsel, from ▇▇▇▇▇▇▇▇▇;
(i) confirming that they are independent certified public
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 and supporting schedules 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 Underwriter may rely upon the opinion
of ▇▇▇▇▇▇▇▇▇ with respect to such 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, 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 pro forma
financial information contained in the Registration Statement and
Prospectus does not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and
Regulations or is not fairly presented in conformity with generally
accepted accounting principles applied on a basis consistent with that of
the audited financial statements of the Company or the unaudited pro forma
financial information included in the Registration Statement, (B) the
unaudited financial statements and supporting schedules 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 (C) 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 of
the Company, any change in the long-term debt of the Company, or any
decrease in the stockholders' equity of the Company or any decrease in the
net current assets or net assets of the Company as compared with amounts
shown in the December 31, 2003 balance sheets included in the Registration
Statement, other than as set forth in or contemplated by the Registration
Statement, or, if there was any change or decrease, setting forth the
amount of such change or decrease, and (D) during the period from December
31, 2003 to a specified date not more than five (5) days prior to the
effective date of the Registration Statement, there was any decrease in
net revenues or net earnings of the Company or increase in net earnings
per common share of the Company, in each case as compared with the
corresponding period beginning December 31, 2003 other than as set forth
in or contemplated by the Registration Statement, or, if there was any
such decrease, setting forth the amount of such 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 break-down 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; and
(vi) statements as to such other matters incident to the
transaction contemplated hereby as the Underwriter may request.
(i) At the Initial Closing Date and each Additional Closing Date, if
any, the Underwriter shall have received from ▇▇▇▇▇▇▇▇▇ a letter, dated as of
the Initial Closing Date or the Additional Closing Date, as the case may be, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (j) of this Section hereof except that the specified date
referred to shall be a date not more than five days prior to the Initial Closing
Date or the Additional 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
(j) of this Section with respect to certain amounts, percentages and financial
information as specified by the Underwriter 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).
(j) The Company shall have delivered to the Underwriter a letter
from ▇▇▇▇▇▇▇▇▇ addressed to the Company stating that they have not during the
immediately preceding two year period brought to the attention of the Company's
management any "weakness" as defined in Statement of Auditing Standards No. 60
"Communication of Internal Control Structure Related Matters Noted in an Audit,"
in any of the Company's internal controls.
(k) On each of the Initial Closing Date and Additional Closing Date,
if any, there shall be duly tendered to the Underwriter the appropriate number
of Securities.
(l) No order suspending the sale of the Securities in any
jurisdiction designated by the Underwriter pursuant to subsection (e) of Section
4 hereof shall have been issued on either the Initial Closing Date or the
Additional Closing Date, if any, and no proceedings for that purpose shall have
been instituted or threatened.
(m) On or before the Initial Closing Date, there shall have been
delivered to the Underwriter all of the Lock-up Agreements, in form and
substance satisfactory to Underwriter's Counsel.
If any condition to the Underwriter's obligations hereunder to be
fulfilled prior to or at the Initial Closing Date or the relevant Additional
Closing Date, as the case may be, is not so fulfilled, the Underwriter may
terminate this Agreement or, if the Underwriter so elects, it may waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
7. Indemnification.
(a) The Company, agrees to indemnify and hold harmless the
Underwriter (for purposes of this Section 7, "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the
Underwriter), 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, proceedings,
investigations, inquiries, and suits in respect thereof), whatsoever (including
but not limited to any and all costs and expenses whatsoever reasonably incurred
in investigating, preparing or defending against such action, proceeding,
investigation, inquiry or suit, 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 (A) any untrue statement or alleged untrue statement of a
material fact contained (i) in the Registration Statement or the Prospectus (as
from time to time amended and supplemented); (ii) in any post-effective
amendment or amendments or any 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 filed,
delivered or used in any jurisdiction in order to qualify the Securities under
the securities laws thereof or filed with the Commission, any state securities
commission or agency, Amex or any other securities exchange, (B) 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), or
(C) any breach of any representation, warranty, covenant or agreement of the
Company contained herein or in any certificate by or on behalf of the Company or
any of its officers delivered pursuant hereto unless, in the case of clause (A)
or (B) above, such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company with respect to the
Underwriter expressly for use in the Registration Statement or the Prospectus,
or any amendment thereof or supplement thereto, or in any application, as the
case may be. The Company and the Underwriter agree that the information included
the [second] and [sixth] paragraphs under the heading ["Underwriting"] in the
Prospectus and the [fifth] paragraph on the front cover of the Prospectus
constitute the only information furnished by the Underwriter or on their behalf
for inclusion in the Registration or the Prospectus.
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) The Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, officers employees, agents and counsel, 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 Underwriter
but only with respect to statements or omissions, if any, made in 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 the
Underwriter by the Underwriter expressly for use in 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 to
disclosures in the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriter 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 "[ ]" and the stabilization
legend in the Prospectus have been furnished by the Underwriter expressly for
use therein and constitute the only information furnished in writing by or on
behalf of the Underwriter for inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in addition
to any liability which the Underwriter may have at common law or otherwise.
(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, investigation,
inquiry, suit or proceeding 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, investigation, inquiry, suit or proceeding 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, investigation,
inquiry, suit or proceeding or separate but similar or related actions,
investigations, inquiries, suits or proceedings 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. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, investigation, inquiry,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party form all
liability arising out of such claim, action, suit or proceeding and (ii) doe
snot include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.
(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 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, investigations, inquiries, suits or proceedings 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 the contributing
party and the Underwriter is the indemnified party, the relative benefits
received by the Company on the one hand, and the Underwriter, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) bear to the total
underwriting discounts received by the Underwriter hereunder, in each case as
set forth in the table on 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
Underwriter, 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, investigations, inquiries,
suits or proceedings 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, claim, investigation, inquiry, suit or proceeding. Notwithstanding the
provisions of this subdivision (d) the Underwriter shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by the Underwriter 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, inquiry,
investigation 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 Initial
Closing Date and the Additional Closing Date, if any, as the case may be, and
such representations, warranties and agreements of the Company and the 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
delivery of the Securities to the purchasers of the Firm Securities and the
Underwriter.
9. Effective Date.
(a) 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
Underwriter, in its discretion, shall release the Securities for 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 Underwriter of telegrams to securities
dealers releasing such shares for offering or the release by the Underwriter 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 Underwriter
shall have the right to terminate this Agreement, after the date hereof, (i) if
any domestic or international event or act or occurrence has materially
disrupted, or in the Underwriter's opinion will in the immediate future
materially adversely disrupt the financial markets; or (ii) any material adverse
change in the financial markets shall have occurred; or (iii) if trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Boston Stock Exchange, the
Chicago Board of Trade, the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange, the Commission or any other government authority having
jurisdiction; or (iv) if trading of any of the securities of the Company shall
have been suspended, or any of the securities of the Company shall have been
delisted, on any exchange or in any over-the-counter market; or (v) 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 (vi) if a
banking moratorium has been declared by a state or federal authority; or (vii)
if a moratorium in foreign exchange trading has been declared; or (viii) 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 Underwriter's opinion, make it inadvisable to proceed with the delivery
of the Securities; or (viii) if there shall have occurred any outbreak or
escalation of hostilities or any calamity or crisis or there shall have been
such a material adverse change in the conditions or prospects of the Company, or
such material adverse change in the general market, political or economic
conditions, in the United States or elsewhere as in the Underwriter's judgment
would make it inadvisable to proceed with the offering, sale and/or delivery of
the Securities.
(b) If this Agreement is terminated by the Underwriter in accordance
with the provisions of Section 10(a) the Company shall promptly reimburse and
indemnify the Underwriter for all of its actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriter (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 Underwriter, by reason of any failure on the part of the Company to
perform any undertaking or satisfy any condition of this Agreement by it to be
performed or satisfied (including, without limitation, pursuant to Section 6 or
Section 12) then, the Company shall promptly reimburse and indemnify the
Underwriter for all of their actual out-of-pocket expenses, including the fees
and disbursements of counsel for the Underwriter (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 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 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. Default by the Company. If the Company shall fail at the Closing Date
or at any Additional Closing Date, as applicable, to sell and deliver the number
of Securities which it is obligated to sell hereunder on such date, then this
Agreement shall terminate 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.
12. 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 Underwriter shall be directed to the
Underwriter at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: [_______]
, with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. Notices to the Company shall
be directed to the Company at ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Attention: [________], with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq.
13. Parties. This Agreement shall inure solely to the benefit of and shall
be binding upon, the Underwriter, 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 the Underwriter shall be deemed to be a successor
by reason merely of such purchase.
14. 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.
15. 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.
16. Entire Agreement; Amendments. This Agreement and the Underwriter's
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 Underwriter and the Company.
If the foregoing correctly sets forth the understanding between the
Underwriter 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,
▇▇▇▇▇▇ MOTORCYCLE COMPANY, LTD.
By:
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Name:
Title:
Confirmed and accepted as of
the date first above written.
▇▇▇▇▇, ▇▇▇▇▇▇▇ & CO., INC.
By:
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Name:
Title: