EXHIBIT 1.1
[Form of Underwriting Agreement - Subject to Additional Review]
1,300,000 SHARES OF COMMON STOCK AND
1,000,000 SHARES OF CONVERTIBLE REDEEMABLE PREFERRED STOCK
STANDARD AUTOMOTIVE CORPORATION
UNDERWRITING AGREEMENT
New York, New York
, 1997
▇▇▇▇▇ & COMPANY, INC.
MILLENNIUM FINANCIAL GROUP, INC.
As Representatives of the
Several Underwriters listed on Schedule A hereto
c/▇ ▇▇▇▇▇ & Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Standard Automotive Corporation, a Delaware corporation (the "Company"),
confirms its agreement with ▇▇▇▇▇ & Company, Inc. ("▇▇▇▇▇"), Millennium
Financial Group, Inc. ("Millennium"), and each of the underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 11), for
whom ▇▇▇▇▇ and Millennium are acting as co-representatives (in such capacity,
▇▇▇▇▇ and Millennium each shall hereinafter sometimes be referred to as a
Representative and collectively as "you" or the "Representatives"), with respect
to the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of the Company's
common stock, $0.001 par value per share ("Common Stock"), and the Company's
convertible redeemable preferred stock, $0.001 par value per share ("Convertible
Preferred Stock") set forth in Schedule A hereto. The aggregate
1,300,000 shares of Common Stock and 1,000,000 shares of Convertible Preferred
Stock will be separately tradeable upon issuance and are hereinafter referred to
as the "Firm Securities." The shares of Convertible Preferred Stock may be
redeemed by the Company at a redemption price of $[___] [IPO price per share of
Convertible Preferred Stock] per share, plus accumulated and unpaid dividends,
at any time after __________, 2000 [30 months from the date of this Agreement]
on thirty (30) days' prior written notice, provided that the closing bid price
of the Common Stock equals or exceeds $[____] [180% of the initial public
offering price of the Common Stock] per share, for any twenty (20) trading days
within a period of thirty (30) consecutive trading days ending on the fifth
trading day prior to the date of the notice of redemption. The shares of
Convertible Preferred Stock may be converted into Common Stock at any time after
__________, 1998 [180 days from the date of this Agreement] prior to redemption
at the ratio of one share of Common Stock for each share of Convertible
Preferred Stock, an effective conversion price of $[____] [IPO price per share
of Convertible Preferred Stock] per share or 120% of the initial public offering
price per share of Common Stock (subject to adjustment under certain
circumstances including in the event of the failure by the Company to pay a
dividend on the Convertible Preferred Stock within 30 days after a dividend
payment date, which will result in each instance in a reduction of $0.50 per
share in the conversion price but not below $9.00 per share).
Upon your request, as provided in Section 2(b) of this Agreement, the
Company shall also issue and sell to the Underwriters, acting severally and not
jointly, up to an additional 195,000 Shares of Common Stock and/or 150,000
Shares of Convertible Preferred Stock for the purpose of covering
over-allotments, if any. Such 195,000 Shares of Common Stock and 150,000 Shares
of Convertible Preferred Stock are hereinafter collectively referred to as the
"Option Securities." The Company also proposes to issue and sell to the
Representatives warrants (the "Representatives' Warrants") pursuant to the
Representatives' Warrant Agreement (the "Representatives' Warrant Agreement")
for the purchase of an additional 130,000 Shares of Common Stock and/or 100,000
Shares of Convertible Preferred Stock. The Shares of Common Stock and the Shares
of Convertible Preferred Stock issuable upon exercise of the Representatives'
Warrants and the Shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock issuable upon exercise of the Representatives'
Warrants are hereinafter referred to as the "Representatives' Securities." The
Firm Securities, the Option Securities, the Representatives' Warrants and the
Representatives' Securities (collectively, hereinafter referred to as the
"Securities") are more fully described in the Registration Statement and the
Prospectus referred to below.
Simultaneously with the closing of the purchase of the shares of Common
Stock and Convertible Preferred Stock by the Underwriters, the Company will
acquire in a separate Acquisition Transaction (the "Acquisition") all of the
Common Stock and ownership interest of Ajax Manufacturing Company, a New Jersey
corporation ("Ajax"), the consideration for which will be a combination of cash
payable by the Company and a three-year promissory note payable by Ajax as
described in the Registration Statement.
1. Representations and Warranties of each of the Company and Ajax. The
Company represents and warrants to, and agrees with, each of the Underwriters as
of the date hereof, and
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as of the Closing Date (as hereinafter defined) and each Option Closing Date (as
hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form S-1 (No. 333-33465), including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Firm Securities, the Option Securities and the Representatives'
Securities under the Securities Act of 1933, as amended (the "Act"), which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the rules and
regulations (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 Underwriters and will not file any other
amendment thereto to which the Underwriters shall have objected in writing after
having been furnished with a copy thereof. Except as the context may otherwise
require, such registration statement, as amended, on file with the Commission at
the time the registration statement becomes effective (including the prospectus,
financial statements, schedules, exhibits and all other documents 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." 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.
(b) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary Prospectus,
the Registration Statement or Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or threatened. Each of the Preliminary Prospectus, the Registration Statement
and Prospectus at the time of filing thereof conformed with the requirements of
the Act and the Rules and Regulations, and none of the Preliminary Prospectus,
the Registration Statement or Prospectus at the time of filing thereof contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or 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 Underwriters by or on behalf of the Underwriters
expressly for use in such Preliminary Prospectus, Registration Statement or
Prospectus or any amendment thereof or supplement thereto.
(c) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (as defined herein) and each
Option Closing Date (as defined herein), if any, and during such longer period
as the Prospectus may be required to be delivered in connection with sales by
the Underwriters or a dealer, the Registration Statement and the Prospectus will
contain all statements which are required to be stated therein in accordance
with
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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, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided, however,
that this representation and warranty does not apply to statements made or
statements omitted in reliance upon and in conformity with information furnished
to the Company in writing by or on behalf of any Underwriter expressly for use
in the Preliminary Prospectus, Registration Statement or Prospectus or any
amendment thereof or supplement thereto.
(d) Each of the Company and Ajax has been duly organized and is
validly existing as a corporation in good standing under the laws of the state
of its incorporation. Except as set forth in the Prospectus, each of the Company
and Ajax does not own an interest in any corporation, partnership, trust, joint
venture or other business entity. Each of the Company and Ajax 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. Each of the Company and
Ajax has all requisite power and authority (corporate and other), and 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; each of the Company and
Ajax is and has been doing business in compliance with all such authorizations,
approvals, orders, licenses, certificates, franchises and permits and all
applicable federal, state, local and foreign laws, rules and regulations; and
each of the Company and Ajax has not received any notice of proceedings relating
to the revocation or modification of any such authorization, approval, order,
license, certificate, franchise, or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the earnings,
position, prospects, value, operation, properties, business or results of
operations of each of the Company and Ajax. The disclosures in the Registration
Statement concerning the effects of federal, state, local, and foreign laws,
rules and regulations on each of the Company and Ajax's business as currently
conducted and as contemplated are correct in all material respects and do not
omit to state a material fact required to be stated therein or necessary to make
the statements contained therein not misleading in light of the circumstances
under which they were made.
(e) Each of the Company and Ajax has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus under "Capitalization"
and "Description of Securities" and will have the adjusted capitalization set
forth therein on the Closing Date and each Option Closing Date, if any, based
upon the assumptions set forth therein, and each of the Company and Ajax 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 Representatives' 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
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securities of each of the Company and Ajax 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
each of the Company and Ajax or similar contractual rights granted by each of
the Company and Ajax. As of the Closing Date, after giving effect to the
Acquisition, all of the issued and outstanding shares of capital stock of Ajax
will be owned by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance or claim; and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in Ajax are
outstanding. 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. Upon the issuance and delivery pursuant to the terms
hereof of the Securities to be sold by the Company hereunder, the Underwriters
or the Representatives, as the case may be, will acquire good and marketable
title to such Securities free and clear of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity of any kind
whatsoever.
(f) The financial statements of each of the Company and Ajax,
together with the related notes and schedules thereto, included in the
Registration Statement, each Preliminary Prospectus and the Prospectus fairly
present the financial position, income, changes in cash flow, changes in
stockholders' equity and the results of operations of each of the Company and
Ajax at the respective dates and for the respective periods to which they apply
and such financial statements have been prepared in conformity with generally
accepted accounting principles and the Rules and Regulations, consistently
applied throughout the periods involved and such financial statements as are
audited have been examined by BDO ▇▇▇▇▇▇▇ LLP, who are independent certified
public accountants within the meaning of the Act and the Rules and Regulations,
as indicated in their reports filed therewith. There has been no adverse change
or development involving a prospective adverse change in the condition,
financial or otherwise, or in the earnings, position, prospects, value,
operation, properties, business, or results of operations of each of the Company
and Ajax, whether or not arising in the ordinary course of business, since the
date of the financial statements included in the Registration Statement and the
Prospectus and the outstanding debt, the property, both tangible and intangible,
and the business of each of the Company and Ajax, conform in all material
respects to the descriptions thereof contained in the Registration Statement and
the Prospectus. Financial information (including, without limitation, any pro
forma financial information) set forth in the Prospectus under the headings
"Summary Financial Data," "Selected Consolidated Financial Data,"
"Capitalization," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," fairly present, on the basis stated in the
Prospectus, the information set forth therein, and have been derived from or
compiled on a basis consistent with that of the audited financial statements
included in the Prospectus; and, in the case of pro forma financial information,
if any, the assumptions used in the preparation thereof are reasonable and the
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adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein. The amounts shown as accrued for current and
deferred income and other taxes in such financial statements are sufficient for
the payment of all accrued and unpaid federal, state, local and foreign income
taxes, interest, penalties, assessments or deficiencies applicable to each of
the Company and Ajax, whether disputed or not, for the applicable period then
ended and periods prior thereto; adequate allowance for doubtful accounts has
been provided for unindemnified losses due to the operations of each of the
Company and Ajax; and the statements of income do not contain any items of
special or nonrecurring income not earned in the ordinary course of business,
except as specified in the notes thereto.
(g) Each of the Company and Ajax (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, as amended (the "Code"), or has established
adequate reserves for such taxes, (ii) has furnished all information returns it
is required to furnish pursuant to the Code, (iii) has established adequate
reserves for such taxes which are not due and payable, and (iv) does not have
any tax deficiency or claims outstanding, proposed or assessed against it, other
than as described in the Registration Statement.
(h) No transfer tax, stamp duty or other similar tax is payable by
or on behalf of the Underwriters in connection with (i) the issuance by the
Company of the Securities, (ii) the purchase by the Underwriters of the Firm
Securities and the Option Securities from the Company and the purchase by the
Representatives of the Representatives' Warrants from the Company, (iii) the
consummation by each of the Company and Ajax of any of its obligations under
this Agreement, or (iv) resales of the Firm Securities and the Option Securities
in connection with the distribution contemplated hereby.
(i) Each of the Company and Ajax maintains insurance policies,
including, but not limited to, general liability, malpractice and property
insurance, which insures each of the Company, Ajax and their employees, against
such losses and risks generally insured against by comparable businesses. Each
of the Company and Ajax (A) has not failed to give notice or present any
insurance claim with respect to any matter, including but not limited to each of
the Company and Ajax's business, property or employees, under any 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 failed to pay any premiums due and payable thereunder, or (C) has 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 each of the Company and Ajax.
(j) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or business of, each of the
Company and Ajax which (i) questions the validity of the capital stock of each
of the Company and Ajax, this Agreement, or the Representatives' Warrant
Agreement, or of any action taken or to be taken by each of the Company and Ajax
pursuant to or in connection with
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this Agreement or the Representatives' Warrant 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) might materially and adversely
affect the condition, financial or otherwise, or the earnings, position,
prospects, stockholders' equity, value, operation, properties, business or
results of operations of each of the Company and Ajax.
(k) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, enter into this Agreement and
the Representatives' Warrant Agreement and to consummate the transactions
provided for in this Agreement and the Representatives' Warrant Agreement; and
this Agreement and the Representatives' Warrant Agreement have each been duly
and properly authorized, executed and delivered by the Company. Each of this
Agreement and the Representatives' Warrant Agreement constitutes a legal, valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, and none of the Company's issue and sale of the
Securities, execution or delivery of this Agreement or the Representatives'
Warrant Agreement, its performance hereunder and thereunder, its consummation of
the transactions contemplated herein and therein, or the conduct of its business
as described in the Registration Statement, the Prospectus, and any amendments
or supplements thereto, conflicts with or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of each of the Company and Ajax pursuant to
the terms of (i) the amended and restated articles of incorporation or amended
and restated by-laws of each of the Company and Ajax, (ii) any license,
contract, collective bargaining agreement, indenture, mortgage, deed of trust,
lease, voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which each of the Company and
Ajax is a party or by which each of the Company and Ajax is or may be bound or
to which its 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 each of the Company and Ajax 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 each of the Company and
Ajax or any of its activities or properties.
(l) 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 Representatives' Warrant Agreement and the transactions contemplated hereby
and thereby, including without limitation, any waiver of any preemptive, first
refusal or other rights that any entity or person may have for the issue and/or
sale of any of the Securities, except such as have been or may be obtained under
the Act or may be required under state securities or Blue Sky laws in connection
with the Underwriters' purchase and distribution of the Firm Securities and the
Option Securities, and the Representatives' Warrants to be sold by the Company
hereunder.
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(m) 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 each of the Company and Ajax is a party or
by which it or they may be bound or to which its or their respective assets,
properties or business may be subject have been duly and validly authorized,
executed and delivered by each of the Company and Ajax and constitute the legal,
valid and binding agreements of each of the Company and Ajax, as the case may
be, enforceable against it in accordance with its terms. The descriptions in the
Registration Statement of agreements, contracts and other documents are accurate
and fairly present the information required to be shown with respect thereto by
Form S-1, and there are no contracts or other documents which are required by
the Act to be described in the Registration Statement or filed as exhibits to
the Registration Statement which are not described or filed as required, and the
exhibits which have been filed are complete and correct copies of the documents
of which they purport to be copies.
(n) 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, each of the Company
and Ajax 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 change in the debt (long or short term) or liabilities or material adverse
change in or affecting the general affairs, management, financial operations,
stockholders' equity or results of operations of each of the Company and Ajax.
(o) No default exists in the due performance and observance of any
term, covenant or condition of any license, contract, collective bargaining
agreement, 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 each of the Company and Ajax is a party or by
which each of the Company and Ajax may be bound or to which the property or
assets (tangible or intangible) of each of the Company and Ajax is subject or
affected.
(p) Each of the Company and Ajax has generally enjoyed a
satisfactory employer-employee relationship with its employees and 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
each of the Company and Ajax 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 each of the Company and Ajax pending before the National
Labor Relations Board or any lockout, strike, picketing, boycott, dispute,
slowdown or stoppage pending or threatened against or involving each of the
Company and Ajax, or any predecessor entity, and none has ever occurred. No
representation question exists respecting the employees of each of the Company
and Ajax, and no collective bargaining agreement or modification thereof is
currently being negotiated by each of the Company and Ajax. No grievance or
arbitration proceeding is pending under any expired
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or existing collective bargaining agreements of each of the Company and Ajax. No
labor dispute with the employees of each of the Company and Ajax exists, or, is
imminent.
(q) Neither the Company nor Ajax maintains, sponsors or
contributes 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"). Neither the Company nor Ajax maintains or contributes, 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 each of the Company and Ajax 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.
Each of the Company and Ajax has never completely or partially withdrawn from a
"multiemployer plan."
(r) Neither the Company, nor Ajax, nor any of their respective
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.
(s) Except as otherwise disclosed in the Prospectus, none of the
patents, patent applications, trademarks, service marks, trade names and
copyrights, and licenses and rights to the foregoing presently owned or held by
each of the Company and Ajax, are in dispute so far as known by each of the
Company and Ajax or are in any conflict with the right of any other person or
entity. Each of the Company and Ajax (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,
trademarks, service marks, trade names and copyrights, technology and licenses
and rights with respect to the foregoing, used in the conduct of its business as
now conducted or proposed to be conducted without infringing upon or otherwise
acting adversely to the right or claimed right of any person, corporation or
other entity under or with respect to any of the foregoing and (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, trademark, service ▇▇▇▇, 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.
(t) Each of the Company and Ajax 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,
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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.
(u) BDO ▇▇▇▇▇▇▇ LLP, 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.
(v) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which each of the Company's officers,
directors and all holders of the Common Stock of the Company or securities
exchangeable or exercisable for or convertible into shares of Common Stock, has
agreed not to, directly or indirectly, issue, offer, offer to sell, sell, grant
any option for the sale or purchase of, assign, transfer, pledge, hypothecate 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 twelve (12) months following the
effective date of the Registration Statement without the prior written consent
of ▇▇▇▇▇. During the twelve (12) month period commencing on the effective date
of the Registration Statement, the Company shall not, without the prior written
consent of ▇▇▇▇▇, sell, contract or offer to sell, issue, transfer, assign,
pledge, distribute, or otherwise dispose of, directly or indirectly, any shares
of Common Stock or any options, rights or warrants with respect to any shares of
Common Stock. The Company will cause the Transfer Agent (as hereinafter defined)
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.
(w) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company, or any of its officers, directors, stockholders,
partners, employees or affiliates, that may affect the Underwriters'
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
(x) The Common Stock has been approved for quotation on the
American Stock Exchange ("Amex").
(y) None of the Company or Ajax, nor any of their respective
officers, employees, agents or any other person acting on behalf of the Company
or Ajax has, directly or indirectly, given or agreed to give any money, gift or
similar benefit (other than legal price concessions to customers in the ordinary
course of business) to any customer, supplier, employee or agent of a customer
or supplier, or official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is, or may be in a position to help or hinder the business of each of
the Company and Ajax (or assist each of the Company and Ajax in connection with
any actual or proposed transaction) which (a) might subject each of the Company
and Ajax, or any other such person to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or foreign), (b) if
not given in the
10
past, might have had a material adverse effect on the assets, business or
operations of each of the Company and Ajax, or (c) if not continued in the
future, might adversely affect the assets, business, condition, financial or
otherwise, earnings, position, properties, value, operations or prospects of
each of the Company and Ajax. Each of the Company and Ajax's internal accounting
controls are sufficient to cause each of the Company and Ajax to comply with the
Foreign Corrupt Practices Act of 1977, as amended.
(z) Except as set forth in the Prospectus, no officer, director,
stockholder or partner of each of the Company and Ajax, or any "affiliate" or
"associate" (as these terms are defined in Rule 405 promulgated under the Rules
and Regulations) of any of the foregoing persons or entities has or has had,
either directly or indirectly, (i) an interest in any person or entity which (A)
furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by each of the Company and Ajax, or (B)
purchases from or sells or furnishes to each of the Company and Ajax any goods
or services, or (ii) a beneficiary interest in any contract or agreement to
which each of the Company and Ajax is a party or by which it may be bound or
affected. Except as set forth in the Prospectus under "Certain Transactions,"
there are no existing agreements, arrangements, understandings or transactions,
or proposed agreements, arrangements, understandings or transactions, between or
among each of the Company and Ajax, and any officer, director, or 5% or greater
securityholder of the Company, or any partner, affiliate or associate of any of
the foregoing persons or entities.
(aa) Any certificate signed by any officer of the Company or of
Ajax, and delivered to the Underwriters or to Underwriters' Counsel (as defined
herein) shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
(ab) The minute books of each of the Company and Ajax have been
made available to the Underwriters and contain a complete summary of all
meetings and actions of the directors (including committees thereof) and
stockholders of each of the Company and Ajax, since the time of its
incorporation, and reflect all transactions referred to in such minutes
accurately in all material respects.
(ac) Except and to the extent described in the Prospectus, no
holders of any securities of each of the Company and Ajax or of any options,
warrants or other convertible or exchangeable securities of each of the Company
and Ajax have the right to include any securities issued by each of the Company
and Ajax in the Registration Statement or any registration statement to be filed
by the Company or to require each of the Company and Ajax to file a registration
statement under the Act and no person or entity holds any anti-dilution rights
with respect to any securities of each of the Company and Ajax.
(ad) The Company has as of the effective date of the Registration
Statement (i) entered into an employment agreement with ▇▇▇▇ ▇▇▇▇▇▇▇ in the form
filed as Exhibit 10.2 to the Registration Statement and (ii) purchased term key
person insurance on the life of ▇▇▇▇ ▇▇▇▇▇▇▇ in the amount of two (2) million
dollars which policy names the Company as the sole beneficiary thereof.
11
(ae) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus under the caption "Use of Proceeds"
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 (the "1940 Act").
(af) Each of the Company and Ajax maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparations of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ag) The Company has entered into the Stock Purchase Agreement
with ▇▇▇▇ ▇▇▇▇▇▇▇ (the "Stock Purchase Agreement"), set forth as Exhibit 10.1 to
the Registration Statement, pursuant to which the Company will acquire in a
separate Acquisition all of the common stock and ownership interest of Ajax. The
Stock Purchase Agreement is in full force and effect, has been duly and validly
authorized, executed and delivered by the parties thereto, and is valid and
binding on the parties thereto in accordance with its terms and none of the
parties thereto is in default in any respect thereunder. A complete and correct
copy of the Stock Purchase Agreement (including exhibits and schedules) has been
delivered to the Representatives and no changes therein will be made subsequent
hereto and prior to the Closing Date.
(ah) The representations and warranties made in the Stock Purchase
Agreement by the Company and Ajax and/or ▇▇▇▇ ▇▇▇▇▇▇▇ are true and correct in
all material respects, except for such changes permitted or contemplated by such
Stock Purchase Agreement.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter,
severally and not jointly, agrees to purchase from the Company at a price of
$___ [92% of the public offering price] per share of Common Stock and $___ [92%
of the public offering price] per share of Convertible Preferred Stock, that
number of Firm Securities set forth in Schedule A opposite the name of such
Underwriter, subject to such adjustment as the Representatives in their
discretion shall make to eliminate any sales or purchases of fractional shares,
plus any additional number of Firm Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 11 hereof.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of an
additional 195,000 Shares of Common Stock at a price of $___ [92% of the public
offering price] per share of Common Stock and/or an additional 150,000 Shares of
12
Convertible Preferred Stock at a price of $___ [92% of the public offering
price] per share of Convertible Preferred Stock. The option granted hereby will
expire forty-five (45) days after (i) the date the Registration Statement
becomes effective, if the Company has elected not to rely on Rule 430A under the
Rules and Regulations, or (ii) the date of this Agreement if the Company has
elected to rely upon Rule 430A under the Rules and Regulations, and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Securities upon notice by the Representatives to the
Company setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for any such Option Securities. Any such time and date of delivery (an
"Option Closing Date") shall be determined by the Representatives, but shall not
be later than three (3) full business days after the exercise of said option,
nor in any event prior to the Closing Date, as hereinafter defined, unless
otherwise agreed upon by the Representatives and the Company. Nothing herein
contained shall obligate the Underwriters to make any over-allotments. No Option
Securities shall be delivered unless the Firm Securities shall be simultaneously
delivered or shall theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Securities shall be made at the offices of ▇▇▇▇▇ at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be
agreed upon by the Representatives and the Company. Such delivery and payment
shall be made at 10:00 a.m. (New York City time) on
, 1997 or at such other time and date as shall be agreed upon by the
Representatives and the Company, but not less than three (3) nor more than five
(5) full business days after the effective date of the Registration Statement
(such time and date of payment and delivery being herein called the "Closing
Date"). In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
office of Representatives or at such other place as shall be agreed upon by the
Representatives and the Company on each Option Closing Date as specified in the
notice from the Representatives to the Company. Delivery of the certificates for
the Firm Securities and the Option Securities, if any, shall be made to the
Underwriters against payment by the Underwriters, severally and not jointly, of
the purchase price for the Firm Securities and the Option Securities, if any, to
the order of the Company for the Firm Securities and the Option Securities, if
any, by New York Clearing House funds. In the event such option is exercised,
each of the Underwriters, acting severally and not jointly, shall purchase that
proportion of the total number of Option Securities then being purchased which
the number of Firm Securities set forth in Schedule A hereto opposite the name
of such Underwriter bears to the total number of Firm Securities, subject in
each case to such adjustments as the Representatives in their discretion shall
make to eliminate any sales or purchases of fractional shares. Certificates for
the Firm Securities and the Option Securities, if any, shall be in definitive,
fully registered form, shall bear no restrictive legends and shall be in such
denominations and registered in such names as the Underwriters may request in
writing at least two (2) business days prior to the Closing Date or the relevant
Option Closing Date, as the case may be. The certificates for the Firm
Securities and the Option Securities, if any, shall be made available to the
Representatives at such office or such other place as the Representatives may
designate for inspection, checking and packaging no later than 9:30 a.m. on the
last business day prior to the Closing Date or the relevant Option Closing Date,
as the case may be.
13
(d) On the Closing Date, the Company shall issue and sell to the
Representatives Representatives' Warrants at a purchase price of $.0001 per
warrant, which Representatives' Warrants shall entitle the holders thereof to
purchase an aggregate of 130,000 shares of Common Stock and/or 100,000 shares of
Convertible Preferred Stock. The Representatives' Warrants shall be exercisable
for a period of four (4) years commencing one (1) year from the effective date
of the Registration Statement at a price equaling one hundred sixty-five percent
(165%) of the respective initial public offering price of the shares of Common
Stock and the shares of Convertible Preferred Stock. The Representatives'
Warrant Agreement and form of Warrant Certificate shall be substantially in the
form filed as Exhibit [___] to the Registration Statement. Payment for the
Representatives' Warrants shall be made on the Closing Date.
3. Public Offering of the Shares of Common Stock and the Shares of
Convertible Preferred Stock. As soon after the Registration Statement becomes
effective as the Representatives deem advisable, the Underwriters shall make a
public offering of the shares of Common Stock and shares of Convertible
Preferred Stock (other than to residents of or in any jurisdiction in which
qualification of the shares of Common Stock and shares of Convertible Preferred
Stock is required and has not become effective) at the price and upon the other
terms set forth in the Prospectus. The Representatives may from time to time
increase or decrease the respective public offering price after distribution of
the shares of Common Stock and shares of Convertible Preferred Stock has been
completed to such extent as the Representatives, in their discretion deem
advisable. The Underwriters may enter into one or more agreements as the
Underwriters, in each of their sole discretion, deem advisable with one or more
broker-dealers who shall act as dealers in connection with such public offering.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable 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 shares
of Common Stock and shares of Convertible Preferred Stock by the Underwriters of
which the Representatives shall not previously have been advised and furnished
with a copy, or to which the Representatives 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 Representatives 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
14
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
shall enter a stop order or suspend such qualification at any time, the Company
will make every effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representatives) 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 Representatives,
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 fifth business day after the effective date of
the Registration Statement.
(d) The Company will give the Representatives notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Securities which
differs from the corresponding prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Rules and
Regulations), and will furnish the Representatives 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 Representatives or ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP ("Underwriters'
Counsel") shall object.
(e) The Company shall endeavor in good faith, in cooperation with
the Representatives, 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 Representatives 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 Representatives agree 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
15
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
Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representatives promptly and prepare and file with the
Commission an appropriate amendment or supplement in accordance with Section 10
of the Act, each such amendment or supplement to be satisfactory to
Underwriters' Counsel, and the Company will furnish to the Underwriters copies
of such amendment or supplement as soon as available and in such quantities as
the Underwriters may request.
(g) As soon as practicable, but in any event not later than
forty-five (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 (ninety (90) days in the event that
the end of such fiscal quarter is the end of each of the Company and Ajax'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 Representatives, 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 twelve (12)
consecutive months after the effective date of the Registration Statement.
(h) During a period of seven (7) years after the date hereof, the
Company will furnish to its stockholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly reports of earnings, and will deliver to the
Representatives:
i. concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company for each quarter in
the form furnished to the Company's stockholders and certified by the
Company's principal financial or accounting officer;
ii. concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company as at the end of the
preceding fiscal year, together with statements of operations,
stockholders' equity, and cash flows of the Company for such fiscal
year, accompanied by a copy of the certificate thereon of independent
certified public accountants;
iii. as soon as they are available, copies of all reports
(financial or other) mailed to stockholders;
iv. as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD
or any securities exchange;
16
v. every press release and every material news item or article of
interest to the financial community in respect of the Company, or its
affairs, which was released or prepared by or on behalf of the Company;
and
vi. any additional information of a public nature concerning the
Company (and any future subsidiary) or its businesses which the
Representatives may reasonably request.
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(ies) are consolidated, and
will be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(i) The Company will maintain a transfer agent ("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 Convertible Preferred Stock.
(j) The Company will furnish to the Representatives or on the
Representatives' order, without charge, at such place as the Representatives 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 quantities as the Representatives may request.
(k) On or before the effective date of the Registration Statement,
the Company shall provide the Representatives with true original copies of duly
executed, legally binding and enforceable agreements pursuant to which, for a
period of twelve (12) months from the effective date of the Registration
Statement, each of the Company's officers, directors and all holders of the
Common Stock of the Company or securities exchangeable or exercisable for or
convertible into shares of Common Stock agrees that it or he or she will not,
directly or indirectly, issue, offer to sell, sell, grant an option for the sale
or purchase of, assign, transfer, pledge, hypothecate 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 consent of ▇▇▇▇▇ (collectively, the "Lock-up Agreements"). During the
twelve (12) month period commencing on the effective date of the Registration
Statement, the Company shall not, without the prior written consent of the
▇▇▇▇▇, sell, contract or offer to sell, issue, transfer, assign, pledge,
distribute, or otherwise dispose of, directly or indirectly, any shares of
Common Stock or any options, rights or warrants with respect to any shares of
Common Stock. On or before the Closing Date, the Company shall deliver
instructions to the Transfer Agent authorizing it to place appropriate legends
on the certificates representing the securities subject to the Lock-up
Agreements and to place appropriate stop transfer orders on the Company's
ledgers. The Company further covenants that it will not file a registration
statement with the Commission during the twelve (12) month period commencing on
the effective date of the Registration Statement without the prior written
consent of ▇▇▇▇▇.
17
(l) None of each of the Company or Ajax, nor any of their
respective officers, directors, stockholders, nor any of their affiliates
(within the meaning of the Rules and Regulations) will take, directly or
indirectly, any action designed to, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price of
any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "Use of
Proceeds" in the Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form SR as may be
required pursuant to Rule 463 under the Act) from time to time, under the Act,
the Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Act, the Exchange Act, and the Rules and Regulations.
(o) Each of the Company and Ajax shall furnish to the
Representatives as early as practicable prior to each of the date hereof, the
Closing Date and each Option Closing Date, if any, but no later than two (2)
full business days prior thereto, a copy of the latest available unaudited
interim financial statements of each of the Company and Ajax (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 each of the Company and Ajax's
independent public accountants, as stated in their letters to be furnished
pursuant to Sections 6(n) and 6(o) hereof.
(p) The Company shall cause the Common Stock and the Convertible
Preferred Stock to be listed on AMEX and, for a period of seven (7) years from
the date hereof, use its best efforts to maintain the AMEX listing of the Common
Stock and the Convertible Preferred Stock to the extent outstanding.
(q) For a period of five (5) years from the Closing Date, the
Company shall furnish to the Representatives at either Representatives'
reasonable request and the Company's sole expense, (i) daily consolidated
transfer sheets relating to the Common Stock and the Convertible Preferred Stock
(ii) the list of holders of all of the Company's securities and (iii) a Blue Sky
"Trading Survey" for secondary sales of the Company's securities prepared by
counsel to the Company.
(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 thirty (30) days after
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 to continue such inclusion for a period
of not less than seven (7) years.
18
(s) The Company hereby agrees that, except as set forth above in
Section 4(k) and the 340,000 shares reserved for future issuance under the
Company's 1997 Stock Option Plan ("Stock Option Plan"), it will not, for a
period of twelve (12) months from the effective date of the Registration
Statement, adopt, propose to adopt or otherwise permit to exist any employee,
officer, director, consultant or compensation plan or similar arrangement,
permitting (i) the grant, issue, sale or entry into any agreement to grant,
issue or sell any option, warrant or other contract right (x) at an exercise
price that is less than the greater of the public offering prices of the Common
Stock and the Convertible Preferred Stock set forth herein and the fair market
value on the date of grant or sale or (y) to any of its executive officers or
directors or to any holder of 5% or more of the Common Stock or the Convertible
Preferred Stock; (ii) the maximum number of shares of Common Stock, Convertible
Preferred Stock or other securities of the Company purchasable at any time
pursuant to options or warrants issued by the Company to exceed such 340,000
shares reserved for future issuance under the Company's Stock Option Plan; (iii)
the payment for such securities with any form of consideration other than cash;
or (iv) the existence of stock appreciation rights, phantom options or similar
arrangements. Furthermore, the Company agrees that for a period of twelve (12)
months from the effective date of the Registration Statement, the Company will
not amend any material employment agreement or option agreement or other
agreement providing compensation to any officer, director or other principal
stockholder, without the prior written consent of ▇▇▇▇▇.
(t) Until the completion of the distribution of the Securities,
each of the Company and Ajax shall not, without the prior written consent of the
Representatives and Underwriters' Counsel, issue, directly or indirectly, any
press release or other communication or hold any press conference with respect
to each of the Company and Ajax or its activities or the offering contemplated
hereby, other than trade releases issued in the ordinary course of each of the
Company and Ajax's business consistent with past practices with respect to each
of the Company and Ajax's operations.
(u) For a period equal to the lesser of (i) seven (7) years from
the date hereof, and (ii) the sale to the public of the Representatives'
Securities, each of the Company and Ajax will not take any action or actions
which may prevent or disqualify the Company's use of Form S-1 (or other
appropriate form) for the registration under the Act of the Representatives'
Securities.
(v) For a period of three (3) years after the effective date of
the Registration Statement, the Company agrees that ▇▇▇▇▇ shall have the right
to designate one (1) person to attend all meetings of the Board of Directors of
the Company (the "Board"). The Company shall send to such person all notices and
other correspondence and communications sent by the Company to members of the
Board. Such designee(s) of ▇▇▇▇▇ shall be reimbursed for all out-of-pocket
expenses incurred in connection with their attendance of meetings of the Board.
(w) Each of the Company, Ajax and ▇▇▇▇ ▇▇▇▇▇▇▇ will: (i) use
its/his best efforts to satisfy all conditions to consummation of the Ajax
Acquisition as set forth in the Stock Purchase Agreement with respect thereto;
(ii) use its/his best efforts to cause each other party to such Stock Purchase
Agreement to satisfy all conditions to the consummation of the Ajax Acquisition;
and (iii) promptly notify the Representatives of the occurrence of any event
which may result in the non-consummation of the Ajax Acquisition on the First
Closing Date.
19
(x) Each of the Company and ▇▇▇▇ ▇▇▇▇▇▇▇ covenant that they will
consummate the Acquisition Transaction at the Closing Date upon notice that the
Firm Securities have been paid for and delivered in accordance with the terms
set forth in Section 2 of this Agreement.
(y) The Company covenants that at the Closing it will instruct the
Representatives to pay the proceeds from the sale of the Firm Securities (net of
underwriting discounts and expenses) directly to ▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to the
terms of the Stock Purchase Agreement and as disclosed in the Prospectus.
(z) The Company covenants that upon the written request of either
Representative it will assign to the Representatives the Company's rights under
the Stock Purchase Agreement to enforce the Company's rights against ▇▇▇▇
▇▇▇▇▇▇▇ for breach of any representations, warranties or covenants contained in
the Stock Purchase Agreement.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on the Closing Date, and each
Option Closing Date, if any, all expenses and fees (other than fees of
Underwriters' Counsel, except as provided in (iv) below) incident to the
performance of the obligations of the Company under this Agreement, the
Representatives' Warrant Agreement and the Stock Purchase 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 Representatives'
Warrant Agreement, the Agreement Among Underwriters, 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 Underwriters and such dealers as the
Underwriters may request, in quantities as hereinabove stated, (iii) the
printing, engraving, issuance and delivery of the Securities including, but not
limited to, (x) the purchase by the Underwriters of the Firm Securities and the
Option Securities and the purchase by the Representatives of the
Representatives' Warrants from the Company, (y) the consummation by the Company
of any of its obligations under this Agreement and the Representatives' Warrant
Agreement, and (z) resale of the Firm Securities and the Option Securities by
the Underwriters in connection with the distribution contemplated hereby, (iv)
the qualification of the Securities under state or foreign securities or "Blue
Sky" laws and determination of the status of such securities under legal
investment laws, including the costs of printing and mailing the "Preliminary
Blue Sky Memorandum", the "Supplemental Blue Sky Memorandum" and "Legal
Investments Survey," if any, and disbursements and fees of counsel in connection
therewith, (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 "tombstone"
advertisement expenses, (vi) costs and expenses in connection with due diligence
investigations, including but not limited to the fees of any independent
counsel, expert or consultant retained, (vii) fees and expenses of the Transfer
20
Agent and registrar and all issue and transfer taxes, if any, (viii)
applications for assignment of a rating of the Securities by qualified rating
agencies, (ix) the fees payable to the Commission and the NASD, and (x) the fees
and expenses incurred in connection with the quotation of the Securities on the
AMEX or Nasdaq and any other exchange.
(b) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 6 (except Sections 6(c), 6(j) and
6(n)) or Section 12, the Company shall reimburse and indemnify the Underwriters
for all of their actual out-of-pocket expenses, including the reasonable fees
and disbursements of counsel for the Underwriters and all Blue Sky counsel fees
(excluding filing fees) and disbursements (less amounts previously 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
Representatives on the Closing Date by certified or bank cashier's check or, at
the election of the Representatives, by deduction from the proceeds of the
offering of the Firm Securities, a non-accountable expense allowance equal to 3%
of the gross proceeds received by the Company from the sale of the Firm
Securities, $50,000 of which has been paid to date. In the event the
Representatives elect to exercise the overallotment option described in Section
2(b) hereof, the Company further agrees to pay to the Representatives on each
Option Closing Date, by certified or bank cashier's check, or at the
Representatives' election, by deduction from the proceeds of the Option
Securities purchased on such Option Closing Date, a non-accountable expense
allowance equal to 3% of the gross proceeds received by the Company from the
sale of such Option Securities.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of each of the Company and Ajax herein as of the
date hereof and as of the Closing Date and each Option Closing Date, if any, as
if they had been made on and as of the Closing Date or each Option Closing Date,
as the case may be; the accuracy on and as of the Closing Date or Option Closing
Date, if any, of the statements of the officers of the Company made pursuant to
the provisions hereof; and the performance by each of the Company and Ajax on
and as of the Closing Date and each Option Closing Date, if any, of its
covenants and obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 9:30 a.m., New York time, on the date of this Agreement or such later
date and time as shall be consented to in writing by the Representatives, and,
at the Closing Date and each Option Closing Date, if any, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending or contemplated by the Commission and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Underwriters' Counsel. If the Company has elected to
rely upon Rule 430A of the Rules and Regulations, the price of the Common Stock,
the price of the Convertible Preferred Stock and any price-related information
previously omitted from the effective Registration Statement pursuant to such
Rule 430A shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) of the Rules and Regulations within the prescribed time period and,
prior to the Closing Date, the
21
Company shall have provided evidence satisfactory to the Representatives 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 Representatives shall not have advised the Company that
the Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Representatives' opinion, is material, or omits
to state a fact which, in the Representatives' 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 Representatives' opinion, is material, or
omits to state a fact which, in the Representatives' 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 each of the Closing Date and each Option
Closing Date, if any, the Representatives shall have received from Underwriters'
Counsel, such opinion or opinions with respect to the organization of each of
the Company and Ajax, the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as the Representatives may
reasonably request and Underwriters' Counsel shall have received such papers and
information as they reasonably request to enable them to pass upon such matters.
(d) At the Closing Date, the Underwriters shall have received the
favorable opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP, counsel to the
Company, dated the Closing Date, addressed to the Underwriters and in form and
substance satisfactory to Underwriters' Counsel, to the effect that:
i. the Company (A) has been duly organized and is validly existing
as a corporation in good standing under the laws of its jurisdiction,
(B) 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, and (C) has all requisite corporate power
and authority, and 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 compliance with all such authorizations, approvals,
orders, 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,
certificate, franchise, or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
materially adversely affect the business, operations, condition,
financial or otherwise, or the earnings, business affairs, 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 on the Company's business as currently
22
conducted and as contemplated are correct in all material respects and
do not omit to state a fact required to be stated therein or necessary
to make the statements contained therein not misleading in light of the
circumstances in which they were made;
ii. except as described in the Prospectus, 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 "CAPITALIZATION", and the Company is not a
party to or bound by any instrument, agreement or other arrangement
providing for it to issue, sell, transfer, purchase or redeem any
capital stock, rights, warrants, options or other securities, except for
this Agreement and the Representatives' Warrant Agreement and as
described in the Prospectus. The Securities and all other securities
issued or issuable by the Company conform in all material respects to
all statements with respect thereto contained in the Registration
Statement and the Prospectus. All issued and outstanding securities of
the Company have been duly authorized and validly issued and are fully
paid and non-assessable; the holders thereof have no rights of
rescission with respect thereto, and are not subject to personal
liability 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 any similar rights granted by the Company.
The Securities to be sold by the Company hereunder and under the
Representatives' Warrant Agreement are not and will not be subject to
any preemptive or other similar rights of any stockholder, have been
duly authorized and, when issued, paid for and delivered in accordance
with the terms hereof, will be validly issued, fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; the holders thereof will not be subject to any liability
solely as such holders; all corporate action required to be taken for
the authorization, issue and sale of the Securities has been duly and
validly taken; and the certificates representing the Securities are in
due and proper form. The Representatives' Warrants and the shares of
Convertible Preferred Stock constitute valid and binding obligations of
the Company to issue and sell, upon exercise thereof and payment
therefor, the number and type of securities of the Company called for
thereby. Upon the issuance and delivery pursuant to this Agreement of
the Firm Securities and the Option Securities and the Representatives'
Warrants to be sold by the Company, the Underwriters and the
Representatives, respectively, will acquire good and marketable title to
the Firm Securities and the Option Securities and the Representatives'
Warrants free and clear of any pledge, lien, charge, claim, encumbrance,
pledge, security interest, or other restriction or equity of any kind
whatsoever. No transfer tax is payable by or on behalf of the
Underwriters in connection with (A) the issuance by the Company of the
Securities, (B) the purchase by the Underwriters of the Firm Securities
and the Option Securities from the Company, and the purchase by the
Representatives of the Representatives' Warrants from the Company (C)
the consummation by the Company of any of its obligations under this
Agreement or the Representatives' Warrant Agreement, or (D) resales of
the Firm Securities and the Option Securities in connection with the
distribution contemplated hereby.
23
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 or contemplated under the Act;
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, (A) there are no
agreements, contracts or other documents required by the Act to be
described in the Registration Statement and the Prospectus and filed as
exhibits to the Registration Statement other than those described in the
Registration Statement (or required to be filed under the Exchange Act
if upon such filing they would be incorporated, in whole or in part, by
reference therein) and the Prospectus and filed as exhibits thereto, and
the exhibits which have been filed are correct copies of the documents
of which they purport to be copies; (B) the descriptions in the
Registration Statement and the Prospectus and any supplement or
amendment thereto of contracts and other documents to which the Company
is a party or by which it is bound, including any document to which the
Company is a party or by which it is bound, incorporated by reference
into the Prospectus and any supplement or amendment thereto, are
accurate and fairly represent the information required to be shown by
Form S-1; (C) there is not pending or threatened against the Company any
action, arbitration, suit, proceeding, inquiry, investigation,
litigation, governmental or other proceeding (including, without
limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or
circumstances that may give rise to the same), or involving the
properties or business of the Company which (x) is required to be
disclosed in the Registration Statement which is not so disclosed (and
such proceedings as are summarized in the Registration Statement are
accurately summarized in all respects), (y) questions the validity of
the capital stock of the Company or this Agreement or the
Representatives' Warrant Agreement, or of any action taken or to be
taken by the Company pursuant to or in connection with any of the
foregoing; (D) no statute or regulation or legal or governmental
proceeding required to be described in the Prospectus is not described
as required; and (E) there is no action, suit or proceeding pending, or
threatened, against or affecting the Company before any court or
arbitrator or governmental body, agency or official (or any basis
thereof known to such counsel) in which there is a reasonable
possibility of a decision which may result in a material adverse change
in the condition, financial or otherwise, or the earnings, position,
prospects, stockholders' equity, value, operation, properties, business
or results of operations of the Company, which could adversely affect
the present or prospective ability of the Company to perform its
obligations under this Agreement or the Representatives' Warrant
24
Agreement or which in any manner draws into question the validity or
enforceability of this Agreement or the Representatives' Warrant
Agreement;
vii. the Company has full legal right, power and authority to
enter into each of this Agreement and the Representatives' Warrant
Agreement, and to consummate the transactions provided for therein; and
each of this Agreement and the Representatives' Warrant Agreement has
been duly authorized, executed and delivered by the Company. Each of
this Agreement and the Representatives' Warrant 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 and
the Representatives' Warrant Agreement, its performance hereunder or
thereunder, its consummation of the transactions contemplated herein or
therein, or the conduct of its business as described in the Registration
Statement, the Prospectus, and any amendments or supplements thereto,
conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes
or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever
upon, any property or assets (tangible or intangible) of the Company
pursuant to the terms of, (A) the certificate of incorporation or
by-laws of the Company, (B) any license, contract, collective bargaining
agreement, indenture, mortgage, deed of trust, lease, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any
other agreement or instrument to which the Company is a party or by
which it is or may be bound or to which any of its properties or assets
(tangible or intangible) is or may be subject, or any indebtedness, or
(C) any statute, judgment, decree, order, rule or regulation applicable
to the Company of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body (including,
without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over the
Company or any of its respective activities or properties.
viii. no consent, approval, authorization or order, and no filing
with, any court, regulatory body, government agency or other body (other
than such as may be required under Blue Sky laws, as to which no opinion
need be rendered) is required in connection with the issuance of the
Firm Securities and the Option Securities pursuant to the Prospectus and
the Registration Statement, the issuance of the Representatives'
Warrants, the performance of this Agreement and the Representatives'
Warrant Agreement, and the transactions contemplated hereby and thereby;
ix. 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
25
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;
x. the Company is not in breach of, or in default under, any term
or provision of any license, contract, collective bargaining agreement,
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 properties 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 Amended and Restated Articles
of Incorporation or Amended and Restated By-Laws or in violation of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation;
xi. the statements in the Prospectus under "RISK FACTORS," "THE
COMPANY," "BUSINESS," "MANAGEMENT," "PRINCIPAL STOCKHOLDERS," "CERTAIN
TRANSACTIONS," "DESCRIPTION OF SECURITIES," and "SHARES ELIGIBLE FOR
FUTURE SALE" 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;
xii. the Securities have been accepted for quotation on the AMEX;
xiii. the persons listed under the caption "PRINCIPAL
STOCKHOLDERS" in the Prospectus are the respective "beneficial owners"
(as such phrase is defined in regulation 13d-3 under the Exchange Act)
of the securities set forth opposite their respective names thereunder
as and to the extent set forth therein;
xiv. none of the Company nor any of its officers, stockholders,
employees or agents, nor any other person acting on behalf of the
Company has, directly or indirectly, given or agreed to give any money,
gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee
or agent of a customer or supplier, or official or employee of any
governmental agency or instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or
foreign) or other person who is or may be in a position to help or
hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) which (A) might subject the Company to
any damage or penalty in any civil, criminal or governmental litigation
or proceeding, (B) if not given in the past, might have had an adverse
effect on the assets, business or operations of the Company, as
reflected in any of the financial statements contained in the
Registration Statement, or (C) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the
Company;
xv. 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,
26
require the Company to file any registration statement or, if filed, to
include any security in such registration statement;
xvi. 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 arrangements or any other
arrangements, agreements, understandings, payments or issuances that may
affect the Underwriters' compensation, as determined by the NASD;
xvii. assuming due execution by the parties thereto other than the
Company, the Lock-up Agreements are legal, valid and binding obligations
of the 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);
xviii. 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";
xix. the minute books of the Company have been made available to
the Underwriters and contain a complete summary of all meetings and
actions of the directors and stockholders of the Company since the time
of its incorporation and reflect all transactions referred to in such
minutes accurately in all material respects;
xx. except as set forth in the Prospectus and to the best
knowledge of such counsel, no officer, director or stockholder of the
Company, or any "affiliate" or "associate" (as these terms are defined
in Rule 405 promulgated under the Rules and Regulations) of any of the
foregoing persons or entities has or has had, either directly or
indirectly, (A) an interest in any person or entity which (x) furnishes
or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Company, or (y) purchases from
or sells or furnishes to the Company any goods or services, or (B) a
beneficial interest in any contract or agreement to which the Company is
a party or by which it may be bound or affected. Except as set forth in
the Prospectus under "CERTAIN TRANSACTIONS," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or
among the Company, and any officer, director, or 5% or greater
securityholder of the Company, or any affiliate or associate of any such
person or entity;
xxi. to the best of such counsel's knowledge, after due inquiry,
there is no action, suit, proceeding, inquiry, investigation, litigation
or governmental proceeding, domestic or foreign, pending or threatened
(or circumstances that may give rise to the same) involving the
Company's production, use, testing, manufacturing or marketing of any
27
products or services, which (i) questions the authority of the Company
to produce, use, test, manufacture or market any products or services as
described in the Prospectus, (ii) questions the completeness or accuracy
of data generated by any trials, tests or studies being conducted by or
on behalf of the Company, (iii) is required to be disclosed in the
Prospectus which is not so disclosed, or (iv) might materially and
adversely affect the condition, financial or otherwise, or the earnings,
prospects, value, operations or business of the Company.
xxii. none of the Company nor any of its affiliates shall be
subject to the requirements of or shall be deemed an "Investment
Company," pursuant to and as defined under, respectively, the Investment
Company Act.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company, and
representatives of the independent public accountants for the Company, at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement, the Prospectus, and related matters and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which 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
Preliminary Prospectus or Prospectus or amendment or supplement thereto as of
the date of such opinion contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or the Prospectus). Such counsel shall
further state that its opinions may be relied upon by Underwriters' Counsel in
rendering its opinion to the Underwriters.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of responsible officers of the Company and certificates
or other written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such statements or certificates
shall be delivered to Underwriters' Counsel if requested. 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 Representatives,
Underwriters' Counsel and they are each justified in relying thereon. Any
opinion of counsel for the Company 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 accord.
28
(e) At each Option Closing Date, if any, the Underwriters shall
have received the favorable opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon
LLP, counsel to the Company, dated on such Option Closing Date, addressed to the
Underwriters and in form and substance satisfactory to Underwriters' Counsel
confirming as of such Option Closing Date the statements made by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP in its opinions delivered on the Closing Date.
(f) At the Closing Date, the Underwriters shall have received the
favorable opinion of ▇▇▇▇ ▇▇▇▇▇, Esq. counsel to Ajax, dated the Closing Date,
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
i. Ajax (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 each jurisdiction in which its ownership or leasing of
any properties or the character of its operations requires such
qualification or licensing, and (C) has all requisite corporate power
and authority, and 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; Ajax is and has been doing
business in compliance with all such authorizations, approvals, orders,
licenses, certificates, franchises and permits and all federal, state
and local laws, rules and regulations; and, Ajax has not received any
notice of proceedings relating to the revocation or modification of any
such authorization, approval, order, license, certificate, franchise, or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially adversely
affect the business, operations, condition, financial or otherwise, or
the earnings, business affairs, position, prospects, value, operation,
properties, business or results of operations of Ajax. The disclosures
in the Registration Statement concerning the effects of federal, state
and local laws, rules and regulations on Ajax's business as currently
conducted and as contemplated are correct in all material respects and
do not omit to state a fact required to be stated therein or necessary
to make the statements contained therein not misleading in light of the
circumstances in which they were made;
ii. except as described in the Prospectus, Ajax does not own an
interest in any other corporation, partnership, joint venture, trust or
other business entity;
iii. Ajax is not a party to or bound by any instrument, agreement
or other arrangement providing for it to issue, sell, transfer, purchase
or redeem any capital stock, rights, warrants, options or other
securities, except for the Stock Purchase Agreement, as described in the
Prospectus. The Securities and all other securities issued or issuable
by Ajax conform in all material respects to all statements with respect
thereto contained in the Stock Purchase Agreement. All issued and
outstanding securities of Ajax have been duly authorized and validly
issued and are fully paid and non-assessable; the holder thereof have no
rights of rescission with respect thereto, and are not subject to
personal liability by reason of being such holder; and none of such
securities were issued in violation of the
29
preemptive rights of any holders of any security of Ajax or any similar
rights granted by Ajax. The securities to be sold by Ajax under the
Stock Purchase Agreement are not and will not be subject to any
preemptive or other similar rights of any stockholder, have been duly
authorized and, when issued, paid for and delivered in accordance with
the terms of the Stock Purchase Agreement, will be validly issued, fully
paid and non-assessable and conform to the description thereof contained
in the Prospectus and the Stock Purchase Agreement; the Company will not
be subject to any liability solely as holders such securities; all
corporate action required to be taken for the authorization, issue and
sale of the securities has been duly and validly taken; and the
certificates representing the securities are in due and proper form.
Upon the delivery pursuant to the Stock Purchase Agreement of Ajax's
issued and outstanding common stock, the Company will acquire good and
marketable title to Ajax's issued and outstanding common stock free and
clear of any pledge, lien, charge, claim, encumbrance, pledge, security
interest, or other restriction or equity of any kind whatsoever. No
transfer tax is payable by or on behalf of the Company in connection
with (A) the purchase by the Company of Ajax's issued and outstanding
common stock from Ajax or (B) the consummation by Ajax of any of its
obligations under this Agreement or the Stock Purchase Agreement.
iv. to the best of such counsel's knowledge, (A) the descriptions
in the Registration Statement and the Prospectus and any supplement or
amendment thereto of contracts and other documents to which Ajax is a
party or by which it is bound, including any document to which Ajax is a
party or by which it is bound, incorporated by reference into the
Prospectus and any supplement or amendment thereto, are accurate and
fairly represent the information required to be shown by Form S-1; (B)
there is not pending or threatened against Ajax any action, arbitration,
suit, proceeding, inquiry, investigation, litigation, governmental or
other proceeding (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or
foreign, pending or threatened against (or circumstances that may give
rise to the same), or involving the properties or business of Ajax which
(x) is required to be disclosed in the Registration Statement which is
not so disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all respects), (y)
questions the validity of the capital stock of Ajax or this Agreement or
the Stock Purchase Agreement, or of any action taken or to be taken by
Ajax pursuant to or in connection with any of the foregoing; and (C)
there is no action, suit or proceeding pending, or threatened, against
or affecting Ajax before any court or arbitrator or governmental body,
agency or official (or any basis thereof known to such counsel) in which
there is a reasonable possibility of a decision which may result in a
material adverse change in the condition, financial or otherwise, or the
earnings, position, prospects, stockholders' equity, value, operation,
properties, business or results of operations of Ajax, which could
adversely affect the present or prospective ability of Ajax to perform
its obligations under this Agreement or the Stock Purchase Agreement or
which in any manner draws into question the validity or enforceability
of this Agreement or the Stock Purchase Agreement;
v. Ajax has full legal right, power and authority to enter into
each of this Agreement and the Stock Purchase Agreement, and to
consummate the transactions provided for therein; and each of this
Agreement and the Stock Purchase Agreement has been duly
30
authorized, executed and delivered by Ajax. Each of this Agreement and
the Stock Purchase Agreement, assuming due authorization, execution and
delivery by each other party thereto constitutes a legal, valid and
binding agreement of Ajax enforceable against Ajax 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 Ajax's execution or delivery of
this Agreement and the Stock Purchase 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 Ajax pursuant to the terms of, (A) the certificate of
incorporation or by-laws of Ajax, (B) any license, contract, collective
bargaining agreement, indenture, mortgage, deed of trust, lease, voting
trust agreement, stockholders agreement, note, loan or credit agreement
or any other agreement or instrument to which Ajax is a party or by
which it is or may be bound or to which any of its properties or assets
(tangible or intangible) is or may be subject, or any indebtedness, or
(C) any statute, judgment, decree, order, rule or regulation applicable
to Ajax 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 Ajax or any of
its respective activities or properties.
vi. no consent, approval, authorization or order, and no filing
with, any court, regulatory body, government agency or other body (other
than such as may be required under Blue Sky laws, as to which no opinion
need be rendered) is required in connection with the performance of this
Agreement and the Stock Purchase Agreement, and the transactions
contemplated hereby and thereby;
vii. the properties and business of Ajax conform in all material
respects to the description thereof contained in the Registration
Statement and the Prospectus; and Ajax 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;
viii. Ajax is not in breach of, or in default under, any term or
provision of any license, contract, collective bargaining agreement,
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
31
instrument to which Ajax is a party or by which Ajax may be bound or to
which the properties or assets (tangible or intangible) of Ajax is
subject or affected; and Ajax is not in violation of any term or
provision of its Amended and Restated Articles of Incorporation or
Amended and Restated By-Laws or in violation of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation;
ix. none of Ajax nor any of its officers, stockholders, employees
or agents, nor any other person acting on behalf of Ajax has, directly
or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary
course of business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any governmental agency
or instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other
person who is or may be in a position to help or hinder the business of
Ajax (or assist it in connection with any actual or proposed
transaction) which (A) might subject Ajax to any damage or penalty in
any civil, criminal or governmental litigation or proceeding, (B) if not
given in the past, might have had an adverse effect on the assets,
business or operations of Ajax, as reflected in any of the financial
statements contained in the Registration Statement, or (C) if not
continued in the future, might adversely affect the assets, business,
operations or prospects of Ajax;
x. no person, corporation, trust, partnership, association or
other entity has the right to include and/or register any securities of
Ajax, require Ajax to file any registration statement or, if filed, to
include any security in such registration statement;
xi. except as described in the Prospectus, Ajax 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";
xii. the minute books of Ajax have been made available to the
Underwriters and contain a complete summary of all meetings and actions
of the directors and stockholders of Ajax since the time of its
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects;
xiii. except as set forth in the Prospectus and to the best
knowledge of such counsel, no officer, director or stockholder of Ajax,
or any "affiliate" or "associate" (as these terms are defined in Rule
405 promulgated under the Rules and Regulations) of any of the foregoing
persons or entities has or has had, either directly or indirectly, (A)
an interest in any person or entity which (x) furnishes or sells
services or products which are furnished or sold or are proposed to be
furnished or sold by Ajax, or (y) purchases from or sells or furnishes
to Ajax any goods or services, or (B) a beneficial interest in any
contract or agreement to which Ajax is a party or by which it may be
bound or affected. Except as set forth in the Prospectus under "CERTAIN
TRANSACTIONS," there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the
32
Company, and any officer, director, or 5% or greater securityholder of
Ajax, or any affiliate or associate of any such person or entity;
xiv. to the best of such counsel's knowledge, after due inquiry,
there is no action, suit, proceeding, inquiry, investigation, litigation
or governmental proceeding, domestic or foreign, pending or threatened
(or circumstances that may give rise to the same) involving Ajax's
production, use, testing, manufacturing or marketing of any products or
services, which (i) questions the authority of Ajax to produce, use,
test, manufacture or market any products or services as described in the
Prospectus, (ii) questions the completeness or accuracy of data
generated by any trials, tests or studies being conducted by or on
behalf of Ajax, (iii) is required to be disclosed in the Prospectus
which is not so disclosed, or (iv) might materially and adversely affect
the condition, financial or otherwise, or the earnings, prospects,
value, operations or business of Ajax.
xv. none of Ajax nor any of its affiliates shall be subject to the
requirements of or shall be deemed an "Investment Company," pursuant to
and as defined under, respectively, the Investment Company Act.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of Ajax, and representatives
of the independent public accountants for Ajax, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Preliminary Prospectus, the Registration
Statement, the Prospectus, and related matters and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Preliminary
Prospectus, the Registration Statement and Prospectus, on the basis of the
foregoing, no facts have come to the attention of such counsel which 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
Preliminary Prospectus or Prospectus or amendment or supplement thereto as of
the date of such opinion contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or the Prospectus). Such counsel shall
further state that its opinions may be relied upon by Underwriters' Counsel in
rendering its opinion to the Underwriters.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of responsible officers of Ajax 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
Ajax, provided that copies of any such statements or certificates shall be
delivered to Underwriters' Counsel if requested. The opinion of such counsel for
Ajax
33
shall state that the opinion of any such other counsel is in form satisfactory
to such counsel and that the Representatives, Underwriters' Counsel and they are
each justified in relying thereon. Any opinion of counsel for Ajax 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 accord.
(g) At the Closing Date, the Underwriters shall have received the
favorable opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq. environmental counsel to the Company,
dated the Closing Date, addressed to the Underwriters in substantially the form
attached hereto as Exhibit A.
(h) On or prior to each of the Closing Date and each Option
Closing Date, if any, Underwriters' Counsel shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of each of the Company and Ajax, or herein contained.
(i) Prior to each of the Closing Date and each Option Closing
Date, if any, (i) there shall have been no material adverse change nor
development involving a prospective change in the condition, financial or
otherwise, earnings, position, value, properties, results of operations,
prospects, stockholders' equity or the business activities of each of the
Company and Ajax, 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 each of the Company or Ajax, from
the latest date as of which the financial condition of each of the Company and
Ajax is set forth in the Registration Statement and Prospectus which is
materially adverse to each of the Company or Ajax; (iii) neither the Company nor
Ajax shall be in material default under any provision of any instrument relating
to any outstanding indebtedness; (iv) neither the Company nor Ajax shall have
issued any securities (other than the Securities) or declared or paid any
dividend or made any distribution in respect of its capital stock of any class
and there has not been any change in the capital stock or any material change in
the debt (long or short term) or liabilities or obligations of each of the
Company or Ajax (contingent or otherwise); (v) no material amount of the assets
of each of the Company or Ajax 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 each of the Company or Ajax, or
affecting any of its respective properties or businesses before or by any court
or federal, state or foreign commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding may materially adversely
affect the business, operations, earnings, position, value, properties, results
of operations, prospects or financial condition or income of each of the Company
and Ajax; and (vii) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated, threatened or contemplated by
the Commission.
(j) At each of the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received a certificate of each of the Company
and Ajax signed by the
34
principal executive officer and by the chief financial or chief accounting
officer of each of the Company and Ajax, dated the Closing Date or Option
Closing Date, as the case may be, to the effect that each of such persons has
carefully examined the Registration Statement, the Prospectus, the Stock
Purchase Agreement and this Agreement, and that:
i. The representations and warranties of each of the Company and
Ajax in the Stock Purchase Agreement and this Agreement are true and
correct, as if made on and as of the Closing Date or the Option Closing
Date, as the case may be, and each of the Company and Ajax has complied
with all agreements and covenants and satisfied all conditions contained
in the Stock Purchase Agreement and this Agreement on its part to be
performed or satisfied at or prior to such Closing Date or Option
Closing Date, as the case may be;
ii. No stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued, and no proceedings for
that purpose have been instituted or are pending or, to the best of each
of such person's knowledge, are contemplated or threatened under the
Act;
iii. The Registration Statement and the Prospectus and, if any,
each amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the
Registration Statement, the Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading and neither the Preliminary
Prospectus or any supplement thereto included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
iv. Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (a) neither the
Company nor Ajax has incurred up to and including the Closing Date or
the Option Closing Date, as the case may be, other than in the ordinary
course of its business, any material liabilities or obligations, direct
or contingent; (b) neither the Company nor Ajax has paid or declared any
dividends or other distributions on its capital stock; (c) neither the
Company nor Ajax has entered into any material transactions not in the
ordinary course of business; (d) there has not been any change in the
capital stock or long-term debt or any increase in the short-term
borrowings (other than any increase in the short-term borrowings in the
ordinary course of business) of each of the Company or Ajax; (e) neither
the Company nor Ajax has sustained any material loss or damage to its
properties or assets, whether or not insured; (f) there is no litigation
which is pending or threatened (or circumstances giving rise to same)
against each of the Company or Ajax or any affiliated party which is
required to be set forth in an amended or supplemented Prospectus which
has not been set forth; and (g) 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
(j) are to such documents as amended and supplemented at the date of such
certificate.
35
(k) By the Closing Date, the Underwriters will have received
clearance from the NASD as to the amount of compensation allowable or payable to
the Underwriters, as described in the Registration Statement.
(l) At the time this Agreement is executed, the Underwriters shall
have received a letter, dated such date, addressed to the Underwriters in form
and substance satisfactory (including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriters and Underwriters' Counsel, from BDO ▇▇▇▇▇▇▇ LLP:
i. confirming that they are independent certified public
accountants with respect to each of the Company and Ajax 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 each of the Company and Ajax 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 Representatives may rely upon the
opinion of BDO ▇▇▇▇▇▇▇ LLP with respect to the financial statements and
supporting schedules included in the Registration Statement;
iii. stating that, on the basis of a limited review which included
a reading of the latest available unaudited interim financial statements
of each of the Company and Ajax, a reading of the latest available
minutes of the stockholders and board of directors and the various
committees of the board of directors of each of the Company and Ajax,
consultations with officers and other employees of each of the Company
and Ajax responsible for financial and accounting matters and other
specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that (A) the unaudited financial
statements and supporting schedules of each of the Company and Ajax
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 each of the Company and Ajax included in the Registration Statement,
or (B) at a specified date not more than five (5) days prior to the
effective date of the Registration Statement, there has been any change
in the capital stock or long-term debt of each of the Company and Ajax,
or any decrease in the stockholders' equity or net current assets or net
assets of each of the Company and Ajax as compared with amounts shown in
the June 30, 1997 balance sheet 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 (C) during the period from June
30, 1997 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, net earnings or increase in net earnings per common share
of any of each of the Company and Ajax or the Subsidiaries, in each case
as compared with the corresponding period beginning June 30, 1996, 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;
36
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
each of the Company and Ajax taken as a whole (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 each of the Company and Ajax
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 each of
the Company and Ajax and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries and other appropriate
procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the
letter and found them to be in agreement;
vi. statements as to such other matters incident to the
transaction contemplated hereby as the Representatives may reasonably
request.
(m) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from BDO ▇▇▇▇▇▇▇ LLP a letter, dated as of the
Closing Date or the Option Closing Date, as the case may be, to the effect that
they reaffirm that statements made in the letter furnished pursuant to
subsection (l) of this Section, except that the specified date referred to shall
be a date not more than five (5) days prior to the Closing Date or the Option
Closing Date, as the case may be, and, if the Company has elected to rely on
Rule 430A of the Rules and Regulations, to the further effect that they have
carried out procedures as specified in clause (v) of subsection (i) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Representatives 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).
(n) On each of the Closing Date and each Option Closing Date, if
any, there shall have been duly tendered to the Representatives for the several
Underwriters' accounts the appropriate number of Securities.
(o) No order suspending the sale of the Securities in any
jurisdiction designated by the Representatives pursuant to subsection (e) of
Section 4 hereof shall have been issued on either the Closing Date or the Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(p) On or before the Closing Date, the Company shall have executed
and delivered to the Representatives (i) the Representatives' Warrant Agreement
substantially in the form filed as Exhibit 4.2 to the Registration Statement, in
final form and substance satisfactory to ▇▇▇▇▇, and (ii) the Representatives'
Warrants in such denominations and to such designees as shall have been provided
to the Company by ▇▇▇▇▇.
37
(q) On or before the Closing Date, the Firm Securities and Option
Securities shall have been duly approved for listing on AMEX, subject to
official notice of issuance.
(r) On or before the Closing Date, there shall have been delivered
to the Representatives all of the Lock-up Agreements, in form and substance
satisfactory to Underwriters' Counsel.
(s) With respect to the Ajax Acquisition:
i. each condition to the obligations of the Company set forth in
Section [___] of the Stock Purchase Agreement shall have been satisfied,
without waiver or modification, except as may be approved by the
Representatives;
ii. each certificate delivered to the Company pursuant to the
Stock Purchase Agreement shall have also been delivered to the
Representatives;
iii. counsel for Ajax shall have furnished to the Representatives
a letter, in form and substance satisfactory to the Representatives, to
the effect that they are entitled to rely on the opinion of such counsel
delivered to the Company pursuant to the Stock Purchase Agreement as if
such opinion were addressed to them; and
iv. on the Closing Date the Representatives shall have received
opinions, in form and substance satisfactory to the Representatives,
from counsel for the Company and counsel for Ajax, to the effect that
the Acquisition pursuant to the Stock Purchase Agreement has become
effective and that such Acquisition was consummated in accordance with
the provisions of the Stock Purchase Agreement, which has been duly
authorized by the Company and Ajax and their respective stockholders,
and complies in all respects with applicable law.
(t) The Stock Purchase Agreement shall be in full force and effect
and none of the parties thereto shall be in default thereunder. The
Representatives shall have received assurances reasonably satisfactory to them
that all documents required to be filed in the respective states in order to
effectuate the consummation of the Acquisition shall have been approved for
filing by the appropriate authorities in each state and that all of such
Acquisition documents shall be filed substantially concurrently with the
consummation of the transactions pursuant to this Agreement.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or the relevant Option Closing Date,
as the case may be, is not so fulfilled, the Representatives may terminate this
Agreement or, if the Representatives so elect, they may waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
7. Indemnification.
(a) The Company and Ajax agree to indemnify and hold harmless each
of the Underwriters (for purposes of this Section 7 "Underwriter" shall include
the officers, directors,
38
partners, employees, agents and counsel of the Underwriter, including
specifically each person who may be substituted for an Underwriter as provided
in Section 11 hereof), and each person, if any, who controls the Underwriter
("controlling person") within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several (and actions, proceedings,
investigations, inquiries, suits and litigation in respect thereof), whatsoever
(including but not limited to any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such claim,
action, proceeding, investigation, inquiry, suit or litigation, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon (A) any untrue statement
or alleged untrue statement of a material fact contained (i) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as from time to time
amended and supplemented); (ii) in any post-effective amendment or amendments or
any 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 each of the Company and Ajax or
based upon written information furnished by each of the Company and Ajax 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 each of the Company and Ajax
contained herein or in any certificate by or on behalf of each of the Company
and Ajax 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 each of the Company and
Ajax with respect to any Underwriter by or on behalf of such Underwriter
expressly for use in any Preliminary Prospectus, the Registration Statement or
Prospectus, or any amendment thereof or supplement thereto, or in any
application, as the case may be. The indemnity agreement in this subsection (a)
shall be in addition to any liability which each of the Company and Ajax may
have at common law or otherwise.
The foregoing indemnity with respect to any untrue statement
contained in or omission from a Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, liability, claim, damage or expense
purchased any of the Securities which are the subject thereof if (1) each of the
Company or Ajax shall sustain the burden of proving that such asserting person
did not receive a copy of the Prospectus (or the Prospectus as amended or
supplemented) at or prior to the written confirmation of the sale of such
Securities to such person and the untrue statement contained in or omitted from
such Preliminary Prospectus was corrected in the Prospectus (or the Prospectus
as amended or supplemented); and (2) the Company shall have complied with its
covenant pursuant to Section 4(f) of this Agreement.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless each of the Company and Ajax, each of their
respective directors, each of their
39
respective officers who has signed the Registration Statement, and each other
person, if any, who controls each of the Company and Ajax within the meaning of
the Act, to the same extent as the foregoing indemnity from each of the Company
and Ajax to the Underwriters but only with respect to statements or omissions,
if any, made in any Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or in any application
made in reliance upon, and in strict conformity with, written information
furnished to each of the Company and Ajax with respect to any Underwriter by
such Underwriter expressly for use in such Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any such application, provided that such written information or
omissions only pertain to disclosures in the Preliminary Prospectus, the
Registration Statement or Prospectus directly relating to the transactions
effected by the Underwriters in connection with this Offering. The Company
acknowledges that the statements with respect to the public offering of the Firm
Securities and the Option Securities set forth under the heading "Underwriting"
and the stabilization legend in the Prospectus have been furnished by the
Underwriters expressly for use therein and constitute the only information
furnished in writing by or on behalf of the Underwriters for inclusion in the
Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any claim, action, suit,
investigation, inquiry, proceeding or litigation, 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 claim, action, suit, investigation, inquiry,
proceeding or litigation 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 thereof 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 thereof within a reasonable
time after notice of commencement thereof, 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 thereof 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 claim, action, suit,
investigation, inquiry, proceeding or litigation or separate but similar or
related claims, actions, suits, investigations, inquiries, proceedings or
litigation in the
40
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, action, suit,
investigation, inquiry, proceeding or litigation 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, suit, investigation,
inquiry, proceeding or litigation 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, action, suit, investigation, inquiry,
proceeding or litigation), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit, investigation, inquiry, proceeding or
litigation and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(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 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 Firm Securities and the Option 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 each of the Company and Ajax is the contributing party and the
Underwriters are the indemnified party, the relative benefits received by each
of the Company and Ajax on the one hand, and the Underwriters, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Firm Securities and the Option Securities (before deducting
expenses) bear to the total underwriting discounts received by the Underwriters
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 each of the Company and Ajax, or by the Underwriters, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, expenses or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Underwriters shall not be required to contribute any amount in excess of the
underwriting
41
discount applicable to the Firm Securities and the Option Securities purchased
by the Underwriters hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls each of the Company and Ajax or the Underwriter within the meaning of
the Act, each officer of the Company who has signed the Registration Statement,
and each director of each of the Company and Ajax shall have the same rights to
contribution as each of the Company and Ajax or the Underwriter, as the case may
be, subject in each case to this subsection (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect to which a claim for
contribution may be made against another party or parties under this subsection
(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 subsection (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 each of the Company and Ajax submitted
pursuant hereto, shall be deemed to be representations, warranties and
agreements at the Closing Date and the Option Closing Date, as the case may be,
and such representations, warranties and agreements of each of the Company and
Ajax 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, each of the Company and Ajax, any controlling
person of any Underwriter or each of the Company and Ajax, and shall survive
termination of this Agreement or the issuance and delivery of the Securities to
the Underwriters and the Representatives, as the case may be.
9. Effective Date. This Agreement shall become effective at 10:00 a.m.,
New York City time, on the next full business day following the date hereof, or
at such earlier time after the Registration Statement becomes effective as the
Representatives, in their 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 Representatives of telegrams to
securities dealers releasing such securities for offering or the release by the
Representatives 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
Representatives shall have the right to terminate this Agreement, (i) if any
domestic or international event or act or occurrence has materially adversely
disrupted, or in the Representatives' opinion will in the immediate future
materially adversely disrupt, the financial markets; or (ii) if any material
adverse change in the financial markets shall have occurred; or (iii) if trading
generally shall have been
42
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the NASD, the Commission or
any governmental authority having jurisdiction over such matters; 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; (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 either the Company or
Ajax shall have sustained a loss material or substantial to either the Company
or Ajax 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 Representatives' opinion, make it inadvisable to proceed
with the offering, sale and/or delivery of the Securities; or (ix) if there
shall have been such a material adverse change in the conditions or prospects of
either the Company or Ajax, or such material adverse change in the general
market, political or economic conditions, in the United States or elsewhere,
that, in each case, in the Representatives' judgment, would make it inadvisable
to proceed with the offering, sale and/or delivery of the Securities or (x) if
▇▇▇▇ ▇▇▇▇▇▇▇ shall no longer serve either the Company or Ajax in his present
capacity.
(b) If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 10(a) the Company shall promptly
reimburse and indemnify the Representatives for all of its actual out-of-pocket
expenses, including the fees and disbursements of counsel for the Underwriters
and all Blue Sky counsel fees (excluding filing fees) and disbursements (less
amounts previously paid pursuant to Section 5(c) above). In addition, the
Company shall remain liable for all Blue Sky counsel fees and disbursements,
expenses and filing fees. 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 Representatives, by
reason of any failure on the part of either the Company or Ajax 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 (except if this
Agreement is terminated pursuant to Sections 6(c), 6(l) or 6(q)) or Section 12)
then, the Company shall promptly reimburse and indemnify the Representatives for
all of their actual out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters (less amounts previously paid
pursuant to Section 5(c) above). In addition, the Company shall remain liable
for all Blue Sky counsel fees and disbursements, 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, 11 and 12 hereof), and whether or not this Agreement
is otherwise carried out, the provisions of Section 5 and Section 7 shall not be
in any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
11. Substitution of the Underwriters. If one or more of the Underwriters
shall fail (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 6, Section 10 or Section 12
hereof) to purchase the Securities which it or they are obligated to purchase on
such date under this Agreement (the "Defaulted Securities"),
43
the Representatives shall have the right, within 24 hours thereafter, to make
arrangement for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the total number of Firm Securities to be purchased on such date, the
non-defaulting Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total
number of Firm Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters (or, if such
default shall occur with respect to any Option Securities to be
purchased on an Option Closing Date, the Underwriters may at the
Representatives' option, by notice from the Representatives to the
Company, terminate the Underwriters' obligation to purchase Option
Securities from the Company on such date).
No action taken pursuant to this Section 11 shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default which does not result in a termination
of this Agreement, the Representatives shall have the right to postpone the
Closing Date for a period not exceeding seven (7) days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements.
12. Default by the Company. If the Company shall fail at the Closing
Date or at any Option 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 (or, if such default shall occur with respect to
any Option Securities to be purchased on an Option Closing Date, the
Underwriters may at the Representatives' option, by notice from the
Representatives to the Company, terminate the Underwriters' obligation to
purchase Option Securities from the Company on such date) without any liability
on the part of any non-defaulting party other than pursuant to Section 5,
Section 7 and Section 10 hereof. No action taken pursuant to this Section 12
shall relieve the Company from liability, if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representatives, ▇▇▇▇▇ & Company, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇, Chairman and Millennium Financial Group, Inc., ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, Managing Director, with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq. Notices to the Company shall be directed to the Company at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
44
08876-4056, Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Chairman of the Board, Vice President,
Treasurer and Chief Financial and Accounting Officer, with a copy to: ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained. No purchaser of Securities from any Underwriter shall be deemed to be
a successor by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement, the Warrant Agreement
and the Representatives' 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 Representatives
and the Company.
45
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
STANDARD AUTOMOTIVE CORPORATION
By:________________________________________
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman of the Board, Vice President,
Treasurer and Chief Financial and
Accounting Officer
AJAX MANUFACTURING COMPANY
By:________________________________________
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇▇
___________________________________________
Confirmed and accepted as of
the date first above written.
▇▇▇▇▇ & COMPANY, INC.
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By:______________________________________
Name:
Title:
MILLENNIUM FINANCIAL GROUP, INC.
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By:______________________________________
Name:
Title:
SCHEDULE A
Number of
Number of Shares of
Shares of Convertible
Common Stock Preferred Stock
Name of Underwriters to be Purchased to be Purchased
-------------------- --------------- ---------------
▇▇▇▇▇ & Company, Inc..................
Millennium Financial Group, Inc.......
Total................................. 1,300,000 1,000,000
========= =========
EXHIBIT A
[FORM OF ENVIRONMENTAL OPINION - TO BE DETERMINED]