Form of Amended Underwriting Agreement 1(iv)
XETAL, INC.
UNDERWRITING AGREEMENT
New York, New York
______________, 1998
Dear Xetal, Inc.,
Xetal, Inc., a Utah corporation (the Company), confirms its agreement with
▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corp. (formerly Worthington Capital Group, Inc. (you, the
Underwriter or ▇▇▇▇▇▇ ▇▇▇▇▇) as follows: The Company retains ▇▇▇▇▇▇ ▇▇▇▇▇ as
its exclusive agent to sell (the Offering), on a best efforts basis, a minimum
of 300,000 shares (the Shares) of the Companys common stock, $0.001 par value
per share (the Common Stock) and 300,000 redeemable common stock purchase
warrants (the Public Warrants) and a maximum of 540,000 shares of Common Stock
and 540,000 Public Warrants, at a price to the public of $5.00 per share of
Common Stock and $0.10 per Public Warrant, each such Public Warrant entitling
the holder to purchase one (1) share of Common Stock during an offering period
commencing on the date hereof and expiring on _______________________, 1998,
unless extended by the mutual consent of the Company and the Underwriter for up
to an additional thirty (30) days (such period, as same may be extended, being
hereinafter referred to as the Offering Period). The shares of Common Stock
and the Public Warrants are being offered separately and are separately
transferable immediately upon issuance. Each Public Warrant is exercisable for
a period of four years from _____________, 1999 until _____________, 2003 and
entitles the holder to purchase one (1) share of Common Stock at an initial
exercise price of $5.00, subject to prior redemption by the Company as more
fully described in the Registration Statement and Prospectus referred to below.
Such 540,000 shares of Common Stock and 540,000 Public Warrants are hereinafter
collectively referred to as the Securities. The Company also proposes to issue
and sell to you warrants (the Underwriters Warrants) at a purchase price of
$0.0001 per Underwriters Warrant pursuant to the Underwriters Warrant Agreement
entitling the holder to purchase an aggregate of 54,000 shares of Common Stock
exercisable for a period o f four years from ______________, 1999 until
___________________, 2003 at an initial exercise price of $8.25, subject to
adjustment in amount pro rata in the event all of the Common Stock and/or
Warrants are not sold in the Offering. The securities issuable upon exercise
of the Underwriters Warrants are hereinafter referred to as the Underwriters
Securities. The shares of Common Stock issuable upon exercise of the Public
Warrants are hereinafter sometimes referred to as the Warrant Shares. The
Securities, the Common Stock, the Public Warrants, the Underwriters Warrants,
the Underwriters Securities and the Warrant Shares are more fully described in
the Registration Statement and the Prospectus referred to below.
1. Representations and Warranties. (a) The Company, a Utah corporation, which
has three wholly-owned subsidiaries, APO Health, Inc., a New York corporation,
Dental Alternatives, Inc., a New York corporation and Universal Medical
Distributors, Inc., a ____________ corporation (individually a Subsidiary and
collectively the Subsidiaries), represents and warrants to, and agrees with,
the Underwriter as of the date hereof, and as of the Closing Date (hereinafter
defined) and the Option Closing Date (hereinafter defined), if any, as follows:
(i)The Company has prepared and filed with the Securities and Exchange
Commission (the Commission) a registration statement, and an amendment or
amendments thereto, on Form SB-2 (No. 333-20525), including any related
preliminary prospectus (Preliminary Prospectus), for the registration of the
Securities, the shares of Common Stock, the Public Warrants, the Underwriters
Warrants, the Underwriters Securities and the Warrant Shares under the
Securities Act of 1933, as amended (the Act), which registration statement
and amendment or amendments have been prepared by the Company in conformity
with the requirements of the Act, and the Rules and Regulations of the
Commission thereunder. The Company will promptly file a further amendment to
said registration statement in the form heretofore delivered to the Underwriter
and will not file any other amendment thereto to which the Underwriter shall
have objected in writing after having been furnished with a copy thereof.
Except as the co ntext may otherwise require, such registration statement, as
amended, on file with the Commission at the time the registration statement
becomes effective (including the Prospectus, financial statements, schedules,
exhibits and all other documents or information incorporated by reference
therein and all information deemed to be a part thereof as of such time
pursuant to paragraph (b) of Rule 430(A) of the rules and regulations), is
hereinafter called the Registration Statement, and the form of prospectus in
the form first filed with the Commission pursuant to Rule 424(b) of the rules
and regulations, is hereinafter called the Prospectus. For purposes hereof,
Rules and Regulations mean the rules and regulations adopted by the
Commission under either the Act or the Securities Exchange Act of 1934, as
amended (the Exchange Act), as applicable.
(ii) Neither the Commission nor any state regulatory authority has issued
any order preventing or suspending the use of any Preliminary Prospectus, the
Registration Statement or Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Companys 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 Prospectuses, the Registration Statement or Prospectus at the time
of filing thereof contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein and necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that this representation and warranty does not
apply to statements made in reliance upon and in conformity with written
information furnished to the Company with respect to the Underwriter by or on
behalf of the Underwriter expressly for use in such Preliminary Prospectus,
Registration Statement or Prospectus or any amendment or supplement thereto.
(iii) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (hereinafter defined) and each
Option Closing Date (hereinafter defined), if any, and during such longer
period as the Prospectus may be required to be delivered in connection with
sales by the Underwriter or a dealer, the Registration Statement and the
Prospectus will contain all statements which are required to be stated therein
in accordance with the Act and the Rules and Regulations, and will conform to
the requirements of the Act and the Rules and Regulations; neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, contains or will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein and necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, provided, however, that this representation and
warranty does not apply to statements made or statements omitted in reliance
upon and in conformity with information furnished to the Company in writing by
or on behalf of the Underwriter (as set forth in paragraph 1(a)(ii) hereof)
expressly for use in the Preliminary Prospectus, Registration Statement or
Prospectus or any amendment thereof or supplement thereto.
(iv) Each of the Subsidiaries are wholly-owned subsidiaries of the
Company. Each of the Company and the Subsidiaries 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, neither the
Company nor the Subsidiaries own an equity interest in any corporation,
partnership, trust, joint venture or other business entity. Each of the
Company and the Subsidiaries is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which its ownership
or leasing of any properties or the character of its operations require such
qualification or licensing except where the failure(s) to be so qualified,
licensed and in good standing, individually or in the aggregate, would not
materially and adversely affect the condition, financial or otherwise, or the
earnings, business affairs, position, prospects, value, operation, properties,
busine ss or results of operations of the Company and the Subsidiaries. Each
of the Company and the Subsidiaries has all requisite power and authority
(corporate and other), and has obtained any and all authorizations, approvals,
orders, licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including, without limitation,
those having jurisdiction over environmental or similar matters), necessary to
own or lease its properties and conduct its business as described in the
Prospectus, or is subject to no material liability or disability by reason of
the failure to obtain such authorizations, approvals, orders, licenses,
certificates, franchises and permits; each of the Company and the Subsidiaries
is and has been doing business in compliance with all such authorizations,
approvals, orders, licenses, certificates, franchises and permits and all
federal, state, local and foreign laws, rules and regulations and neither the
Company nor the S ubsidiaries have received any notice of proceedings relating
to the revocation or modification of any such authorization, approval, order,
license, certificate, franchise, or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would materially
and adversely affect the condition, financial or otherwise, or the earnings,
business affairs, position, prospects, value, operations, properties, business,
or results of operations of the Company and the Subsidiaries. The disclosures
in the Registration Statement concerning the effects of federal, state, local,
and foreign laws, rules and regulations on the business of the Company and the
Subsidiaries as currently conducted and as contemplated are correct in all
material respects and do not omit to state a material fact necessary to make
the statements contained therein not misleading in light of the circumstances
in which they were made.
(v) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and will have the adjusted
capitalization set forth therein on the Closing Date (hereinafter defined) and
the Option Closing Date(hereinafter defined), if any, based upon the
assumptions set forth therein, and the Company is not a party to or bound by
any instrument, agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities, except for this
Agreement and as described in the Prospectus. The Securities, the Common
Stock, the Public Warrants, the Underwriters Warrants, the Underwriters
Securities and the Warrant Shares (collectively, hereinafter sometimes
referred to as the IPO Securities) and all other securities issued or
issuable by the Company conform or, when issued and paid for, will 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 and its Subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable and the holders thereof
have no rights of rescission with respect thereto, and are not subject to
personal liability by reason of being such holders; and none of such securities
were issued in violation of the preemptive rights of any holders of any
security of the Company or the Subsidiaries or similar contractual rights
granted by the Company or the Subsidiaries. The IPO 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 requ ired to be taken for the authorization,
issue and sale of the IPO Securities has been duly and validly taken; and the
certificates representing the IPO Securities are in due and proper form. Upon
the issuance and delivery pursuant to the terms hereof of the IPO Securities to
be sold by the Underwriter hereunder, the purchasers of the IPO Securities,
will acquire good and marketable title to such IPO Securities free and clear of
any lien, charge, claim, encumbrance, pledge, security interest, defect or
other restriction or equity of any kind whatsoever.
(vi) The financial statements of the Company together with the
related notes and schedules thereto, included in the Registration Statement,
each Preliminary Prospectus and the Prospectus fairly present the financial
position, income, changes in cash flow, changes in stockholders equity and the
results of operations of the Company and the Subsidiaries at the respective
dates and for the respective periods to which they apply and the pro forma
financial information included in the Registration Statement, each Preliminary
Prospectus and the Prospectus presents fairly on a basis consistent with that
of the audited financial statements included therein, the Companys and the
Subsidiaries pro forma net income or loss per share, as the case may be, pro
forma net tangible book value, and the pro forma capitalization and such
financial statements have been prepared in conformity with generally accepted
accounting principles and the Rules and Regulations, consistently applied thro
ughout the periods involved. There has been no material adverse change or
development involving a material change in the condition, financial or
otherwise, or in the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operation of the Company or the
Subsidiaries whether or not arising in the ordinary course of business, since
the date of the financial statements included in the Registration Statement and
the Prospectus, and the outstanding debt, the property, both tangible and
intangible, and the business of the Company and the Subsidiaries conforms in
all material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(vii) The Company and each of its Subsidiaries (A) has paid all
federal, state, local, and foreign taxes for which it is liable, including, but
not limited to, withholding taxes and amounts payable under Chapters 21 through
24 of the Internal Revenue Code of 1986, as amended (the Code), and has
furnished all information returns it is required to furnish pursuant to the
Code, (B) has established adequate reserves for such taxes which are not due
and payable, and (C) does not have any tax deficiency or claims outstanding,
proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is payable by
or on behalf of the purchasers of the IPO Securities in connection with (A) the
purchase of and the issuance and transfer by the Company of the IPO Securities
and (B) the consummation by the Company of any of its obligations under this
Agreement.
(ix) The Company and each of its Subsidiaries maintains insurance policies,
including, but not limited to, general liability, product liability if
applicable and property insurance, which insures the Company and its
Subsidiaries and their employees, against such losses and risks generally
insured against by comparable businesses. The Company and its Subsidiaries (A)
have not failed to give notice or present any insurance claim with respect to
any matter, including but not limited to the Companys or the Subsidiaries
business, property or employees, under the insurance policy or surety bond in a
due and timely manner, (B) does not have any disputes or claims against any
underwriter of such insurance policies or surety bonds or has not failed to pay
any premiums due and payable thereunder, and (C) has not failed to comply with
all conditions contained in such insurance policies and surety bonds. To the
Companys knowledge there are no facts or circumstances under any such
insurance po licy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company and/or its
Subsidiaries.
(x) There is no action, suit, proceeding, inquiry, arbitration, investigation,
litigation or governmental proceeding (including, without limitation, those
having jurisdiction over environmental or similar matters), domestic or
foreign, pending or threatened against (or circumstances that may give rise to
the same), or involving the properties or business of the Company or its
Subsidiaries which (A) questions the validity of the capital stock of the
Company, its Subsidiaries or this Agreement, the Underwriters Warrant
Agreement, the Warrant Agreement or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement, the Underwriters
Warrant Agreement, or the Warrant Agreement, (B) 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 (C) if adversely determined, might materially and
adversely aff ect the condition, financial or otherwise, or the business
affairs or business prospects, earnings, liabilities, prospects, stockholders
equity, value, properties, business or assets of the Company and its
Subsidiaries.
(xi) The Company has full legal right, power and authority to authorize, issue,
deliver and sell the IPO Securities, enter into this Agreement, the
Underwriters Warrant Agreement and the Warrant Agreement and to consummate the
transactions provided for herein and therein; and each of this Agreement, the
Underwriters Warrant Agreement and the Warrant Agreement have been duly and
properly authorized, executed and delivered by the Company. This Agreement,
the Underwriters Warrant Agreement and the Warrant Agreement each constitute a
legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, and neither the Companys issue and sale
of the IPO Securities or execution or delivery of this Agreement, the
Underwriters Warrant Agreement and the Warrant Agreement or its performance
hereunder and thereunder, its consummation of the transactions contemplated
herein and therein, or the conduct of its business as described in the
Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or
will constitute a default under, or result in the creation or imposition of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company or its Subsidiaries pursuant to the
terms of, (A) the certificate of incorporation or by-laws of the Company or its
Subsidiaries (B) any license, contract, indenture, mortgage, deed of trust,
voting trust agreement, stockholders agreement, note, loan or credit agreement
or any other agreement or instrument to which the Company or its Subsidiaries
is a party or by which it is or may be bound or by which its properties or
assets (tangible or intangible) are or may be subject, or any indebtedness, or
(C) any s tatute, judgment, decree, order, rule or regulation applicable to the
Company or its Subsidiaries by 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 its Subsidiaries
or any of their activities or properties, in each case except as described in
the Prospectuses and except for conflicts, breaches, violations, defaults,
creations or impositions which do not and would not have a material adverse
effect on the condition, financial or otherwise, or the earnings, business
affairs, position, shareholders equity, value, operation, properties, business
or results of operations of the Company and its Subsidiaries.
(xii) No consent, approval, authorization or order of, and no filing with, any
court, regulatory body, government agency or other body, domestic or foreign
which has not theretofore been obtained, is required for the issuance of the
IPO Securities pursuant to the Prospectus and the Registration Statement, the
issuance of the Underwriters Warrants, the execution, delivery or performance
of this Agreement, the Underwriters Warrant Agreement and the Warrant
Agreement, and the transactions contemplated hereby and thereby, including,
without limitation, any waiver of any preemptive, first refusal or other rights
that any entity or person may have for the issue and/or sale of any of the IPO
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
purchase and distribution of the IPO Securities and the Underwriters purchase
of the Underwriters Warrants to be sold by the Company hereunder and
thereunder.
(xiii) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company and/or its Subsidiaries is a party
or by which it may be bound or to which its assets, properties or business may
be subject have been duly and validly authorized, executed and delivered by the
Company and/or its Subsidiaries and constitute the legal, valid and binding
agreement of the Company and its Subsidiaries, enforceable against the Company
and its Subsidiaries, in accordance with its terms. The descriptions in the
Registration Statement of agreements, contracts and other documents and
statutes and regulations are accurate and fairly present the information
required to be shown with respect thereto by Form SB-2, and there are no
contracts or other documents which are required by the Act to be described in
the Registration Statement or filed as exhibits to the Registration Statement
which a re not described or filed as required, and the exhibits which have been
filed are complete and correct copies of the documents of which they purport to
be copies.
(xiv) Subsequent to the respective dates as of which information is set forth
in the Registration Statement and Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company nor any of its
Subsidiaries have (A) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, (B) entered into any
transaction other than in the ordinary course of business, or (C) declared or
paid any dividend or made any other distribution on or in respect of its
capital stock of any class, and there has not been any change in the capital
stock, or any change in the debt (long or short term) or liabilities or
material change in or affecting the business affairs or prospects, management,
stockholders equity, properties, business, financial operations or assets of
the Company and its Subsidiaries.
(xv) Except as described in the final Prospectus no default exists in the due
performance and observance of any term, covenant or condition of any license,
contract, indenture, mortgage, installment sale agreement, lease, deed of
trust, voting trust agreement, stockholders agreement, partnership agreement,
note, loan or credit agreement, purchase order, or any other material agreement
or instrument evidencing an obligation for borrowed money, or any other
material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries may
be bound or to which the property or assets (tangible or intangible) of the
Company or any of its Subsidiaries is subject or affected, which default would
have a material adverse effect on the condition, financial or otherwise,
earnings, business affairs, position, stockholders equity, value, operation,
properties, business or results of operations of the Company and the
Subsidiaries.
(xvi) Each of the Company and its Subsidiaries has generally enjoyed a
satisfactory employer-employee relationship with its employees and is in
compliance in all material respects with all federal, state, local, and foreign
laws and regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours. There are no pending
investigations involving the Company or any of the Subsidiaries by the U.S.
Department of Labor, or any other governmental agency responsible for the
enforcement of such federal, state, local, or foreign laws and regulations.
There is no unfair labor practice charge or complaint against the Company or
any Subsidiary pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the Company or any Subsidiary, or any predecessor entity, and none
has ever occurred. No representation question exists respecting the employees
of the Company or any Subsidiary and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company or its
Subsidiary. No grievance or arbitration proceeding is pending under any
expired or existing collective bargaining agreements of the Company or its
Subsidiaries. No labor dispute with the employees of the Company or its
Subsidiaries exists, or, to the knowledge of the Company is imminent.
(xvii) Except as described in the Prospectus, each of the Company and its
Subsidiaries does not maintain, sponsor or contribute to any program or
arrangement that is an employee pension benefit plan, an employee welfare
benefit plan or a multi employer plan as such terms are defined in Sections
3(2), 3(1) and 3(37), respectively, of the Employee Retirement Income Security
Act of 1974, as amended (ERISA) (ERISA Plans). The Company and/or each
Subsidiary does not maintain or contribute, now or at any time previously, to a
defined benefit plan, as defined in Section 3(35) of ERISA. No ERISA Plan (or
any trust created thereunder) has engaged in a prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Code, which could
subject the Company or the Subsidiaries to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each ERISA Plan is
in compliance with all material reporting, disclosure and other requirements of
the Code and ERISA as they relate to any such ERISA Plan. Determination
letters have been received from the Internal Revenue Service with respect to
each ERISA Plan which is intended to comply with Code Section 401(a), stating
that such ERISA Plan and the attendant trust are qualified thereunder. Neither
the Company or any Subsidiary has never completely or partially withdrawn from
a multi employer plan.
(xviii) The Company and its Subsidiaries have not taken and will not take,
directly or indirectly and the Company and its Subsidiaries will use their best
efforts to ensure that any of their employees, directors, stockholders or
affiliates (within the meaning of the Rules and Regulations) of any of the
foregoing has not taken or will not 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 IPO Securities or otherwise.
(xix) None of the patents, patent applications, trademarks, service marks,
trade names and copyrights, and licenses and rights to the foregoing presently
owned or held by the Company or any of its Subsidiaries are in dispute, to the
Companys knowledge, or are in any conflict with the right of any other person
or entity. The Company and its Subsidiaries (i) own or have the license or
other right to use, free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects or other restrictions or equities of any
kind whatsoever, all patents, trademarks, service marks, trade names and
copyrights, technology and licenses and rights with respect to the foregoing,
used in the conduct of their 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, except as set forth in the Prospectuses and
(ii) except as set forth in the Prospectus, are not obligated or under any
liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service ▇▇▇▇, tradename, copyright, know-how, technology or other
intangible asset, with respect to the use thereof or in connection with the
conduct of their business or otherwise.
(xx) Neither the Company nor any of its Subsidiaries have received any notice
of infringement of or conflict with asserted rights of others with respect to
any trademark, service ▇▇▇▇, trade name or copyright or other intangible asset
used or held for use by it in connection with the conduct of its business
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, might have a material adverse effect on the condition,
financial or otherwise, or the business affairs, position, properties, results
of operations or net worth of the Company and its Subsidiaries.
(xxi) The Company and its Subsidiaries have good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property stated in the Prospectus, to be owned or leased by it free and clear
of all liens, charges, claims, encumbrances, pledges, security interests,
defects, or other restrictions or equities of any kind whatsoever, other than
those referred to in the Prospectus and liens for taxes not yet due and
payable.
(xxii) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which each of its officers, directors or any
person or entity deemed to be an affiliate of the Company and any stockholders
of the Company has agreed not to, directly or indirectly, offer to sell, sell,
grant any option for the sale of, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of any securities issued by the Company (either
pursuant to Rule 144 of the Rules and Regulations or otherwise) or dispose of
any beneficial interest therein for a period of not less than 24 months
following the effective date of the Registration Statement without the prior
written consent of the Underwriter except that only with respect to 10,000
common shares held by certain trusts and no more, the period is 6 months and
not 24 months, and that for a period of 5 years following the Effective Date of
the Registration Statement any such security which has been issued and is
outsta nding on the effective date of the Registration Statement and is to be
sold or otherwise disposed of pursuant to such Rule 144 with the consent of the
Underwriter shall only be sold or otherwise disposed of through the
Underwriter. The Company will cause the Transfer Agent, as defined below, to
▇▇▇▇ an appropriate legend on the face of stock certificates representing all
of such securities and to place "stop transfer" orders on the Companys stock
ledgers.
(xxiii) The Company has caused to be duly executed binding and enforceable
agreements with respect to all of the outstanding loans made to the Company
from time to time wherein the Company and each lender has agreed that the
Company will not make payment of principal or accumulated interest thereon for
an eighteen (18) month period from the completion of the Offering except that
Pre-Bridge Notes in the principal amount of $250,000 and Bridge Notes in the
principal amount of $250,000 plus interest thereon are being paid from the
proceeds of the Offering.
(xxiv) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finders or origination fee with respect to the sale of the IPO Securities
hereunder or any other arrangements, agreements, understandings, payments or
issuance with respect to the Company, the Subsidiaries or any of their
officers, directors, stockholders, partners, employees or affiliates that may
affect the Underwriters compensation, as determined by the National
Association of Securities Dealers, Inc. (NASD), except for the sum of $25,000
previously paid by the Company to the Underwriter and the Company is aware that
the Underwriter shall compensate any of its personnel who may have acted in
such capacities as they shall determine in their sole discretion.
(xxv) The Common Stock and the Public Warrants have been approved for quotation
on the National Association of Securities Dealers, Inc. Electronic Bulletin
Board and upon notice of issuance, listing on the Boston Stock Exchange
(BSE).
(xxvi) Neither the Company, the Subsidiaries nor any of their respective
officers, employees, agents or any other person acting on behalf of the Company
or the Subsidiaries has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or
agent of a customer or supplier, or official or employee of any governmental
agency (domestic or foreign) or instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or foreign)
or other person who was, is, or may be in a position to help or hinder the
business of the Company or the Subsidiaries (or assist the Company or the
Subsidiaries in connection with any actual or proposed transaction) which (A)
might subject the Company or the Subsidiaries, or any other such person to any
damage or penalty in any civil, criminal or governmental litigation or proc
eeding (domestic or foreign), (B) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the Company
or the Subsidiaries, or (C) if not continued in the future, might adversely
affect the assets, business, operations or prospects of the Company or the
Subsidiaries. The Companys and the Subsidiaries internal accounting controls
are sufficient to cause the Company to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(xxvii) Except as set forth in the Prospectus, no officer, director, or
stockholder of the Company or any Subsidiary, or any affiliate or associate
(as these terms are defined in Rule 405 promulgated under the Rules and
Regulations) of any of the foregoing persons or entities has or has had, either
directly or indirectly, (A) an interest in any person or entity which (1)
furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Company or any Subsidiary, or (2)
purchases from or sells or furnishes to the Company or any Subsidiary any goods
or services, or (B) a beneficiary interest in any contract or agreement to
which the Company or any Subsidiary 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 or any Subsidiary, and any officer, director, and 5% or
more stockholders (as such term is defined in the Prospectus) of the Company
or any Subsidiary, or any partner, affiliate or associate of any of the
foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company and delivered to
the Underwriter or to Underwriters Counsel (as defined herein) shall be deemed
a representation and warranty by the Company to the Underwriter as to the
matters covered thereby.
(xxix) The minute books of the Company and each Subsidiary have been made
available to the Underwriter and contains a complete summary of all meetings
and actions of the directors and stockholders of the Company and each
Subsidiary since the time of its incorporation, and reflects all transactions
referred to in such minutes accurately in all material respects.
(xxx) Except and to the extent described in the Prospectus, no holders of any
securities of the Company or the Subsidiaries or of any options, warrants or
other convertible or exchangeable securities of the Company or the Subsidiaries
have the right to include any securities issued by the Company or the
Subsidiaries in the Registration Statement or any registration statement under
the Act and no person or entity holds any anti-dilution rights with respect to
any securities of the Company or the Subsidiaries.
(xxxi) The Company has as of the effective date of the Registration Statement
(a) entered into employment agreements with ▇▇. ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ on
terms and conditions satisfactory to the Underwriter, and (ii) purchased
Key-Man insurance on the lives of ▇▇. ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ in the sum of
$1,000,000 each which names the Company as the sole beneficiary on terms and
conditions satisfactory to the Underwriter.
(xxxii) The Company has entered into a Warrant Agreement with respect to the
Public Warrants substantially in the form filed as Exhibit __________ to the
Registration Statement and a Underwriters Warrant Agreement with respect to
the Underwriters Warrants substantially in the form filed as Exhibit _________
to the Registration Statement, each with American Stock Transfer and Trust
Company in form and substance satisfactory to the Underwriter.
(xxxiii) Immediately prior to the effective date of the Registration Statement
there shall be no more than an aggregate of 914,131 shares of Common Stock
issued and outstanding (including any and all (a) securities with equivalent
rights as the Common Stock, (b) Common Stock or such equivalent securities,
issuable upon the exercise of options, warrants and other contract rights, and
(c) Securities convertible directly or indirectly into Common Stock or such
equivalent securities, and excluding a maximum of 100,000 shares of Common
Stock which are issuable upon exercise of options which may be granted pursuant
to the Companys 1996 Stock Option Plan.
(xxxiv) Subsequent to the date hereof and prior to any Closing Date or Option
Closing Date except as otherwise described in or contemplated by the
Prospectuses, the Company will not issue or acquire any equity securities.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the warranties, representations and agreements herein
contained, and subject to the satisfaction of all the terms and conditions of
this Agreement, the Company agrees to engage the Underwriter, and the
Underwriter agrees to serve as the Companys exclusive agent to sell, on a best
efforts basis, a minimum of 300,000 shares of Common Stock and 300,000 Public
Warrants (the Minimum Offering) and a maximum of 540,000 shares of Common
Stock and 540,000 Public Warrants (the Maximum Offering), less, in the case
of each such security, an underwriting commission of ten percent (10%) of the
gross sale price of each such security sold in the Offering by deduction from
the proceeds of the Offering. The Underwriter may allow a concession not
exceeding $_______ per share of Common Stock and $______ per Public Warrant to
Selected Dealers who are members of the NASD, and to certain foreign dealers,
and such dealers may reallow to NASD members and to certain foreign dealers a
concession not exceeding $_____ per share of Common Stock and $____ per Public
Warrant.
(b) The proceeds from the sale of the Securities shall be deposited by the
Underwriter upon receipt thereof in an escrow account (the Escrow Account) at
The Chase Manhattan Bank, a New York state chartered bank with offices at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ until the Minimum Offering amount of
300,000 shares of Common Stock and 300,000 Public Warrants are sold and
$1,530,000 is deposited in the Escrow Account. If the Minimum Offering amount
is not sold and the proceeds thereof deposited into the Escrow Account prior to
the expiration of the Offering Period, the Offering proceeds received from
investors will be promptly refunded to the investors in full without interest
thereon and/or deduction of any kind therefrom.
(c) Delivery of the Securities and payment therefore shall be made at 10:00
a.m., New York time on each Closing Date and Option Closing Date, if any, as
hereinafter defined, at the offices of the Underwriter or such other location
as may be agreed upon by you and the Company. Delivery of certificates for the
Common Stock and Public Warrants (in definitive form and registered in such
names and in such denominations as you shall request by written notice to the
Company delivered at least four business days prior to the Closing Date or
Option Closing Date, if any), shall be made to you for the account of the
purchasers of the Securities against payment of the purchase price therefor by
certified or bank check or wire transfer payable in New York Clearing House
funds to the order of the Company. The Company will make such certificates
available for inspection at least one business day prior to the Closing Date
and Option Closing Date, if any, at such place as you shall designate.
3. Closing Date
The Closing Date shall be not later than the fourth business day following
receipt of the Minimum Offering amount in cleared funds and thereafter as
additional funds are received up to the Maximum Offering amount at such times
as you shall determine (the Option Closing Date) and advise the Company by at
least three full business days notice.
4. Covenants and Agreements of the Company. The Company covenants and agrees
with the Underwriter as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable (such Registration Statement to be in form and substance
satisfactory to the Underwriter and its counsel) and will not at any time,
whether before or after the effective date of the Registration Statement, file
any amendment to the Registration Statement or supplement to the Prospectus or
file any document under the Act or Exchange Act before termination of the
offering of the Securities by the Underwriter of which the Underwriter shall
not previously have been advised and furnished with a copy, or to which the
Underwriter shall have objected unless required under the Act, the Exchange Act
or the Rules and Regulations thereunder or which is not in compliance with the
Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof, the Company
will advise the Underwriter and confirm the notice in writing, (I) when the
Registration Statement, as amended, becomes effective, if the provisions of
Rule 430A promulgated under the Act will be relied upon, when the Prospectus
has been filed in accordance with said Rule 430A and when any post-effective
amendment to the Registration Statement becomes effective, (ii) of the issuance
by the Commission of any stop order or of the initiation, or the threatening,
of any proceeding, suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of the Preliminary Prospectus or
the Prospectus, or any amendment or supplement thereto, or the institution of
proceedings for that purpose (iii) of the issuance by the Commission or by any
state securities commission of any proceedings for the suspension of the
qualification of any of the Securities for offering or sale in any j
urisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the receipt of any comments from the Commission; and (v)
of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for additional
information. If the Commission or any state securities commission authority
shall enter a stop order or suspend such qualification at any time, the Company
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 Underwriter and its counsel) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424 (b) (or, if applicable and if consented to by the Underwriter, pursuant to
Rule 424 (b)(47).
(d)The Company will give the Underwriter notice of its intention to file or
prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriter in connection with the offering of the IPO Securities which differs
from the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Rules and
Regulations), and will furnish the Underwriter with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such prospectus to
which the Underwriter or Doros & Brescia, P.C. (Underwriters Counsel), shall
reasonably object unless required under the Act or the Rules and Regulations
thereunder.
(e)The Company shall take all action, in cooperation with the Underwriter, at
or prior to the time the Registration Statement becomes effective, to qualify
the IPO Securities for offering and sale under the securities laws of such
jurisdictions as the Underwriter may designate to permit the continuance of
sales and dealings therein for as long as may be necessary to complete the
distribution, and shall make such applications, file such documents and furnish
such information as may be required for such purpose; provided, however, the
Company shall not be required to qualify as a foreign corporation or file a
general or limited consent to service of process in any such jurisdiction. In
each jurisdiction where such qualification shall be effected, the Company will,
unless the Underwriter agrees that such action is not at the time necessary or
advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may reasonably be required by the la ws of such
jurisdiction to continue such qualification. It is agreed that Underwriters
Counsel (or its designees) shall perform all such required Blue Sky legal
services.
(f) During the time when a prospectus is required to be delivered under the
Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the IPO Securities in accordance with the provisions hereof and the Prospectus,
or any amendments or supplements thereto. If at any time when a prospectus
relating to the IPO Securities is required to be delivered under the Act, any
event shall have occurred as a result of which, in the reasonable opinion of
counsel for the Company or Underwriters Counsel, the Prospectus, as then
amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were m ade, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act and the Rules and Regulations, the Company
will notify the Underwriter promptly and prepare and file with the Commission
an appropriate amendment or supplement in accordance with Section 10 of the
Act, each such amendment or supplement to be reasonably satisfactory to
Underwriters Counsel, and the Company will furnish to the Underwriter copies of
such amendment or supplement as soon as available and in such quantities as the
Underwriter may reasonably request.
(g) During the time when a prospectus relating to the IPO Securities is
required to be delivered under the Act, the Company will use its best efforts
to comply with all requirements imposed upon it by the Act and the Securities
Exchange Act of 1934 (the Exchange Act), as now and hereafter amended and by
the Regulations, as from time to time in force, as necessary to permit the
continuance of sales of or dealings in the IPO Securities in accordance with
the provisions hereof and the Prospectus and the Company shall use its best
efforts to keep the Registration Statement current and effective so long as a
Prospectus is required to be delivered in connection with the sale of the IPO
Securities by the Underwriter or by dealers effecting transactions therein in
connection with the initial public offering thereof. If at any time when a
prospectus relating to the IPO Securities is required to be delivered under the
Act, any event shall have occurred as a result of which, in the reasonable
opinion of counsel for the Company or counsel for the Underwriter, the
Prospectus as then amended or supplemented (or the prospectus contained in a
new registration statement filed by the Company pursuant to Paragraph 4(y),
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, in the reasonable opinion of either such counsel, it is necessary at any
time to amend the Prospectus (or the prospectus contained in such new
registration statement) to comply with the Act, the Company will notify you
promptly and prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act and will furnish to you
copies thereof.
(h) The Company will reserve and keep available for issuance that maximum
number of its authorized but unissued shares of Common Stock which are issuable
upon exercise of the Public Warrants and issuable upon exercise of the
Underwriters Warrants (including the underlying securities) outstanding from
time to time.
(i) The Company will timely prepare and file at its sole cost and expense one
or more post-effective amendments to the Registration Statement or a new
registration statement as required by law as will permit holders of the Public
Warrants and Underwriters Warrants (collectively the Warrants) to be
furnished with a current prospectus in the event and at such time as the
Warrants are exercised, and the Company will use its best efforts and due
diligence to have the same be declared effective (with the intent that the same
be declared effective as soon as the Warrants become exercisable) and to keep
the same effective so long as the Warrants are outstanding. The Company will
deliver a draft of each such post-effective amendment or new registration
statement to the Underwriter at least ten days prior to the filing of such
post-effective amendment or registration statement.
(j) So long as any of the Warrants remain outstanding, the Company will timely
deliver and supply to its Warrant agent sufficient copies of the Companys
current Prospectus, as will enable such Warrant agent to deliver a copy of such
Prospectus to any Warrant or other holder where such Prospectus delivery is by
law required to be made.
(k) So long as any of the Warrants remain outstanding, the Company shall
continue to employ the services of a firm of independent certified public
accountants reasonably acceptable to the Underwriter in connection with the
preparation of the financial statements to be included in any registration
statement to be filed by the Company hereunder, or any amendment or supplement
thereto. During the same period, the Company shall employ the services of a
law firm(s) reasonably acceptable to the Underwriter in connection with all
legal work of the Company, including the preparation of a registration
statement to be filed by the Company hereunder, or any amendment or supplement
thereto.
(l) So long as any of the Warrants remain outstanding, the Company shall
continue to appoint a Warrant agent for the Warrants, who shall be reasonably
acceptable to the Underwriter.
(m) As soon as practicable, but in any event not later than 45 days after the
end of the 12-month period beginning on the day after the end of the fiscal
quarter of the Company during which the effective date of the Registration
Statement occurs (90 days in the event that the end of such fiscal quarter is
the end of the Companys fiscal year), the Company shall make generally
available to its security holders, in the manner specified in Rule 158(b) of
the Rules and Regulations, and to the Underwriter, an earnings statement which
will be in the detail required by, and will otherwise comply with, the
provisions of Section 11(a) of the Act and Rule 158(a) of the Rules and
Regulations, which statement need not be audited unless required by the Act,
covering a period of at least 12 consecutive months after the effective date of
the Registration Statement.
(n) During a period of seven years after the date hereof, the Company will
furnish to its stockholders, as soon as practicable, annual reports (including
financial statements audited by independent public accountants) and unaudited
quarterly reports of earnings, and will deliver to the Underwriter:
(i) concurrently with furnishing such quarterly reports to its stockholders,
statements of income of the Company for each quarter in the form filed on Form
10-Q with the Commission and certified by the Companys 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;
(v) every press release and every material news item or article of interest to
the financial community in respect of the Company or its affairs which was
released or prepared by or on behalf of the Company; and
(vi) any additional information of a public nature concerning the Company (and
any future subsidiaries) or its businesses which the Underwriter may reasonably
request.
During such seven-year period, if the Company has active subsidiaries, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and
will be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(o) The Company will maintain American Stock Transfer and Trust Company as its
Transfer Agent and Registrant (the Transfer Agent) and counsel, accounting
firm and financial printer for its Common Stock and Public Warrants all of whom
shall be reasonably acceptable to the Underwriter. Such Transfer Agent shall,
for a period of two years following the Closing Date, deliver to the
Underwriter the daily securities position of the Companys stockholders of
record and for a period of three (3) years thereafter the monthly securities
position.
(p) The Company will furnish to the Underwriter or on the Underwriters order,
without charge, at such place as the Underwriter may designate, copies of each
Preliminary Prospectus, the Registration Statement, any pre-effective or
post-effective amendments thereto (two of which copies will be signed and will
include all financial statements and exhibits), the Prospectus, and all
amendments and supplements thereto, including any Prospectus prepared after the
effective date of the Registration Statement, in each case as soon as available
and in such quantities as the Underwriter may reasonably request.
(q) On or before the effective date of the Registration Statement, the Company
shall provide the Underwriter with true copies of duly executed, legally
binding and enforceable agreements pursuant to which for a period of not less
than 24 months after the effective date of the Registration Statement, each
holder of securities issued by the Company and outstanding at the effective
date of the Registration Statement aggregating 755,000 in shares of Common
Stock (including, securities convertible into Common Stock of the Company)
agrees that it or he or she will not, directly or indirectly, issue, offer to
sell, sell, grant an option for the sale of, assign, transfer, pledge,
hypothecate or otherwise encumber or dispose of any of such securities (either
pursuant to Rule 144 of the Rules and Regulations or otherwise) or dispose of
any beneficial interest therein without the prior written consent of the
Underwriter (collectively, the Lock-up Agreements). During the two (2) year
period com mencing with the effective date of the Registration Statement, the
Company shall not issue any securities under Regulation S and will not, without
the prior written consent of the Underwriter, sell, contract or offer to sell,
issue, transfer, assign, pledge, distribute, or otherwise dispose of, directly
or indirectly, any debt security of the Company or any shares of Common Stock
or any options, rights or warrants with respect to any shares of Common Stock
(other than upon exercise of options or warrants referred to in the
Registration Statement, or with respect to transactions between the Company and
its lenders and purchasers of mortgage backed securities). 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 Companys ledgers.
(r) The Company has not taken and will not take, directly or indirectly, and
the Company will use their its efforts to ensure that any of its employees,
officers, directors, stockholders or affiliates (within the meaning of the
Rules and Regulations) will take, directly or indirectly, any action designed
to, or which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any securities of the Company.
(s) The Company shall apply the net proceeds from the sale of the IPO
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 except
as described in the Prospectuses.
(t) 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.
(u) The Company shall furnish to the Underwriter as early as practicable prior
to each of the date hereof, the Closing Date and each Option Closing Date, if
any, but no later than two (2) full business days prior thereto, a copy of the
latest available unaudited interim financial statements of the Company (which
in no event shall be as of a date more than thirty (30) days prior to the date
of the Registration Statement) which have been read by the Companys
independent public accountants, as stated in their letters to be furnished
pursuant to Section 6(j) hereof.
(v) The Company shall cause the Common Stock and the Public Warrants to be
listed on the NASD Electronic Bulletin Board and on the BSE, and for a period
of seven (7) years from the date hereof, use its best efforts to maintain such
listings of the Common Stock and the Public Warrants to the extent outstanding.
(w) For a period of five (5) years from the Closing Date, the Company shall
furnish to the Underwriter at the Underwriters request and at the Companys
sole expense, (i) the list of holders of all of the Companys securities, (ii)
a Blue Sky Trading Survey for secondary sales of the Companys securities
prepared by counsel to the Company, and (iii) daily consolidated transfer
sheets relating to the Common Stock and the Public Warrants but not more than
six (6) times per year.
(x) As soon as practicable, (i) but in no event more than five business days
before the effective date of the Registration Statement, file a Form 8-A with
the Commission providing for the registration under the Exchange Act of the
Securities and (ii) but in no event more than 30 days from the effective date
of the Registration Statement, take all necessary and appropriate actions to be
included in Standard and Poors Corporation Records Service in order to satisfy
the requirements for manual exemption in those states where available and to
maintain such inclusion for as long as the IPO Securities are outstanding.
(y) Until the completion of the distribution of the IPO Securities, the Company
shall not without the prior written consent of the Underwriter and
Underwriters Counsel, issue, directly or indirectly any press release or other
communication or hold any press conference with respect to the Company or its
activities or the offering contemplated hereby, other than trade releases
issued in the ordinary course of the Companys business consistent with past
practices with respect to the Companys operations.
(z) For a period of three (3) years after the effective date of the
Registration Statement, the Underwriter shall have the right to designate, one
(1) individual for election to the Companys Board of Directors ("Board") and
the Company shall cause such individual to be elected to the Board. In the
event the Underwriter shall not have designated such individual at the time of
any meeting of the Board or such person is unavailable to serve, the Company
shall notify the Underwriter of each meeting of the Board and an individual
designated by the Underwriter shall be permitted to attend all meetings of the
Board and to receive all notices and other correspondence and communications
sent by the Company to members of the Board. Such individual shall be
reimbursed for all out-of-pocket expenses incurred in connection with his or
her service on, or attendance at meetings of, the Board. The Company shall
provide its outside directors with compensation in the form of cash and/or
options on ts Common Stock as deemed appropriate and similar for similar
companies.
(aa) The Company hereby grants to the Underwriter a right of first refusal on
the terms and subject to the conditions set forth in this paragraph, for a
period of three years from the effective date of the Registration Statement, to
purchase for its account or to sell for the account of the Company or its
present or future subsidiaries, any securities of the Company or any of its
present or future subsidiaries, with respect to which the Company or any of its
present or future subsidiaries may seek a public or private sale. The Company,
for a period of five years from the effective date of the Registration
Statement, will consult, and will cause such present or future subsidiaries to
consult with the Underwriter with regard to any such offering or placement and
will offer, or cause any of its present or future subsidiaries to offer, to the
Underwriter the opportunity, on terms not more favorable to the Company or such
present or future subsidiary than they can secure elsewhere, to pur hase or
sell any such securities. If the Underwriter fails to accept in writing such
proposal made by the Company or any of its present or future subsidiaries
within fifteen business days after receipt of a notice containing such
proposal, then the Underwriter shall have no further claim or right with
respect to the proposal contained in such notice. If, thereafter, such
proposal is materially modified, the Company shall again consult, and cause
each present or future subsidiary to consult, with the Underwriter in
connection with such modification and shall in all respects have the same
obligations and adopt the same procedures with respect to such proposal as are
provided hereinabove with respect to the original proposal.
(bb) For a period equal to the lesser of (i) seven (7) years from the date
hereof, and (ii) the date of the sale to the public of the securities issuable
upon exercise of the Underwriters Warrants and the Underwriters Securities,
the Company will not take any action or actions which may prevent or disqualify
the Companys use of Form SB-2 for the registration under the Act of the
securities issuable upon exercise of the Underwriters Warrants and the
Underwriters Securities.
(cc) Commencing one year from the date hereof, the Company shall pay the
Underwriter a commission equal to seven percent (7%) of the aggregate exercise
price of the Public Warrants, payable on the date of the exercise thereof on
terms provided in the Warrant Agreement. The Company will not solicit the
exercise of the Public Warrants other than through the Underwriter and will not
authorize any other dealer or engage in such solicitation without the
Underwriter prior written consent. Commission will be payable only if (i)
the Public Warrant is exercised at least 12 months after the dated of this
Prospectus; (ii) the market price of the Common Stock on the date that the
Public Warrant is exercised is greater than the exercise price of the Warrants;
(iii) the exercise of the Warrant was solicited by a member of the National
Association of Securities Dealers, Inc.; (iv) the Public Warrant is not held in
a discretionary account; (v) disclosure of the compensation arrangements is
made t the time of the exercise of the Warrant; (vi) the holder of the Public
Warrant has stated in writing that the exercise was solicited and designated in
writing the soliciting broker-dealer; and (vii) the solicitation of exercise of
the Public Warrant was not in violation of Rule 10b-6 promulgated under the
Exchange Act. However, no fees will be payable to the Underwriter in
connection with Public Warrants voluntarily exercised without solicitation by
the Underwriter.
(dd) On or before the effective date of the Registration Statement, the Company
shall have retained a financial public relations firm reasonably satisfactory
to the Underwriter, which shall be continuously engaged from such engagement
date to a date twelve (12) months from the Closing Date.
5 Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and the Option
Closing Date (to the extent not paid at the Closing Date) all expenses and fees
(other than fees of Underwriters Counsel, except as provided in (iv) below)
upon presentation of an itemized schedule of expenses incident to the
performance of the obligations of the Company under this Agreement, the
Underwriters Warrant Agreement and the Warrant Agreement including, without
limitation, (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing, (including mailing and handling charges)
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments
and supplements thereto and the printing, mailing (including the payment of
postage with respect thereto) and delivery of this Agreement, the Underwriters
Warrant Agreeme t, the Warrant Agreement, and related documents, including the
cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
Underwriter and such dealers as the Underwriter may reasonably request, in
quantities as hereinabove stated, (iii) the printing, engraving, issuance and
delivery of the IPO Securities, including, but not limited to, (x) the purchase
by the Underwriter of the Underwriters Warrants from the Company, (y) the
consummation by the Company of any of its obligations under this Agreement, the
Underwriters Warrant Agreement, and the Warrant Agreement, and (z) the sale of
the IPO Securities by the Underwriter in connection with the distribution
contemplated hereby to the extent that expenses relate to the printing,
engraving, issuance and delivery of the IPO Securities, (iv) the qualification
of the IPO 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 legal fees of counsel Doros & Brescia, P.C., of $40,000
plus disbursements incurred by them in connection therewith, (v) fees and
expenses of the transfer agent, warrant agent and registrar, (vi) applications
for assignments of a rating of the IPO Securities by qualified rating agencies,
(vii) the fees payable to the Commission, and the NASD, and (viii) the fees
and expenses incurred in connection with the listing of the IPO Securities on
the NASD Electronic Bulletin Board, the BSE and any other exchange.
(b) If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 6, Section 10(a) or Section 12, the Company shall
reimburse and indemnify the Underwriter for all of its actual out-of-pocket
expenses, including the fees and disbursements of Underwriters Counsel (and in
addition to fees and expenses of Underwriters Counsel incurred pursuant to
Section 5(a)(iv) above for which the Company shall remain liable) less any
amounts previously paid, provided, however, that in the event of a termination
pursuant to Section 10(a) hereof such obligation of the Company shall not
exceed $50,000.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 5, it will pay to the Underwriter by
certified or bank cashiers check or, at the election of the Underwriter, by
deduction from the proceeds of the Offering, on the initial Closing Date and
each Option Closing Date, a non-accountable expense allowance equal to two
percent (2%) of the gross proceeds of the Offering (a minimum of $30,600 and a
maximum of $55,080) less the amount of $25,000 which was previously paid by the
Company to the Underwriter.
(d) The Underwriter shall not be responsible for any expense of the Company or
others or for any charge or claim related to the Offering in the event that the
sale of the IPO Securities as contemplated hereunder is not consummated.
6 Conditions of the Underwriters Obligations. The obligations of the
Underwriter hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company and its Subsidiaries herein as of
the date hereof and as of the Closing Date and each Option Closing Date, if
any, as if they had been made on and as of the Closing Date or each Option
Closing Date, as the case may be; the accuracy on and as of the Closing Date or
Option Closing Date, if any, of the statements of the officers of the Company
made pursuant to the provisions hereof; and the performance by the Company on
and as of the Closing Date and each Option Closing Date, if any, of its
covenants and obligations hereunder and to the following further conditions:
(a) The Registration Statement, which shall be in form and substance
satisfactory to Underwriters Counsel, shall have become effective no later
than 12:00 p.m., New York time, on the date of this Agreement or such later
date and time as shall be consented to in writing by the Underwriter, 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 IPO Securities and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the Co
mission for filing pursuant to Rule 424(b) of the Rules and Regulations within
the prescribed time period, and prior to the Closing Date the Company shall
have provided evidence satisfactory to the Underwriter of such timely filing,
or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Rules and Regulations.
(b) The Underwriter shall not have advised the Company that the Registration
Statement, or any amendment thereto, contains an untrue statement of fact
which, in the Underwriters opinion, is material, or omits to state a fact
which, in the Underwriters 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, or that the
Prospectus, or any supplement thereto, contains an untrue statement of fact
which, in the Underwriters opinion, is material and is required to be stated
therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Underwriter shall have received from
Underwriters Counsel, such opinion or opinions with respect to the
organization of the Company and its Subsidiaries, the validity of the IPO
Securities, the Underwriters Warrants, the Registration Statement, the
Prospectus and other related matters as the Underwriter may request and
Underwriters Counsel shall have received such papers and information as they
request to enable them to pass upon such matters.
(d) At the Closing Date, the Underwriter shall have received the favorable
opinion of B. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. counsel to the Company, dated as of the
Closing Date, addressed to the Underwriter and in form and substance
satisfactory to Underwriters Counsel, to the effect that:
(i) each of the Company and the Subsidiaries (A) has been duly organized and is
validly existing as a corporation in good standing under the laws of its
jurisdiction; (B) to such counsels knowledge has all requisite corporate
power and authority to own or lease its properties and conduct its business as
described in the Prospectus; (C) to such counsels knowledge 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 (D) to such counsels
knowledge, 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, o
the earnings, business affairs or prospects, properties, business, assets or
results of operations of the Company and the Subsidiaries taken as a whole. To
the knowledge of such counsel the disclosures in the Registration Statement
concerning the effects of federal, state and local laws, rules and regulations
on the Companys or any Subsidiaries business as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
fact necessary to make the statements contained therein not misleading in light
of the circumstances in which they were made:
(ii) to such counsels knowledge, except as set forth in the Prospectus, the
Company nor any Subsidiary does not own an equity interest in any other
corporation, partnership, joint venture, trust or other business entity;
(iii) to such counsels knowledge the Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and any amendment or
supplement thereto, under Capitalization, and, to such counsels knowledge,
the Company nor any Subsidiary 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
Underwriters Warrant Agreement, the Warrant Agreement and as described in the
Prospectus. The IPO 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. To the
knowledge of such counsel all issued and outstanding securities of the Company
and the Subsidiaries have been duly authorized and validly issued and are fully
paid and non-assessable; the holders thereof have no contr ctual rights of
rescission with respect thereto, and are not subject to personal liability
under the laws of the State of Utah as currently in effect by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company. The IPO
Securities to be sold by the Company hereunder and under the Underwriters
Warrant Agreement and the 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 IPO
Securities when issued will be duly and validly taken; and the certifica tes
representing the IPO Securities are in due and proper form. The Public
Warrants and the Underwriters Warrants constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
therefore the number and type of securities of the Company called for thereby.
Upon payment the issuance and delivery pursuant to this Agreement of the IPO
Securities to be sold by the Company hereunder, the purchasers thereof, will
acquire good and marketable title to the IPO Securities free and clear of any
pledge, lien, charge, claim, encumbrance, pledge, security interest, or other
restriction or equity of any kind whatsoever.
(iv) the Registration Statement is effective under the Act, and, if applicable,
filing of all pricing information has been timely made in the appropriate form
under Rule 430A, and, to such counsels knowledge, no stop order suspending
the use of the Preliminary Prospectus, the Registration Statement or Prospectus
or any part of any thereof or suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending, threatened or contemplated under the Act;
(v) each of the Preliminary Prospectus, the Registration Statement, and the
Prospectus and any amendments or supplement thereto (other than the financial
statements and other financial and statistical data included therein, as to
which no opinion need be rendered) comply as to form in all material respects
with the requirements of the Act and the Rules and Regulations.
(vi) to the best of such counsels 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
substantially 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 or any Subsidiary is a party or by which it is bound,
including any document to which the Company or any Subsidiary is a party or by
which it is bound, incorporated by reference into the Prospectus and any
supplement or ame dment thereto, are accurate in all material respects and
fairly represent the information required to be shown by Form SB-2; (C) there
is not pending or threatened against the Company or any Subsidiary 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 or any Subsidiary which (1)
is required to be disclosed in the Registration Statement which is not so
disclosed (and such proceedings as are summarized in the Registration Statement
are accurately summarized in all respects), (2) questions the validity of the
capital stock of the Company or any Subsidiary or this Agreement, the
Underwriters Warrant Agreement or the 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) except as disclosed in the Prospectus, there is no action, suit or
proceeding pending, or threatened, against or affecting the Company or any
Subsidiary before any court or arbitrator or governmental body, agency or
official (or any basis thereof known to such counsel) in which an adverse
decision which may result in a material adverse change in the condition,
financial or otherwise, or the earnings, position, prospects, stockholders
equity, value, operation, properties, business or results of operations of the
Company and the Subsidiaries taken as a whole, which could adversely affect the
present or prospective ability of the Company to perform its obligations under
this Agreement, the Underwriter s Warrant Agreement or the Warrant Agreement
or which in any manner draws into question the validity or enforceability of
this Agreement, the Underwriters Warrant Agreement or the Warrant Agreement;
(vii) the Company has full legal right, power and authority to enter into this
Agreement, the Underwriters Warrant Agreement and the Warrant Agreement and to
consummate the transactions provided for herein and therein; and this
Agreement, the Underwriters Warrant Agreement and the Warrant Agreement has
been duly authorized, executed and delivered by the Company. Each of this
Agreement, the Underwriters Warrant Agreement and the Warrant Agreement
assuming due authorization, execution and delivery by each other party hereto
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
imited by applicable law), and neither the Companys execution or delivery of
this Agreement, the Underwriters Warrant Agreement and the Warrant Agreement,
its performance hereunder or thereunder, its consummation of the transactions
contemplated herein or therein, or the conduct of its business as described in
the Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or
will constitute a default under, or result in the creation or imposition of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company or the Subsidiaries pursuant to the
terms of, (A) the certificate of incorporation or by-laws of the Company or the
Subsidiaries, (B) any license, contract, indenture, mortgage, deed of trust,
voting trust agreement, stockholders agreement, note, loan or credit agreement
or any other agreement or instrument to known to such counsel which the Company
or any of the Subsidiaries 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 or any of the Subsidiaries of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body domestic or foreign, having jurisdiction over the
Company or any of the Subsidiaries or any of its activities or properties,
except for conflicts, breaches, violations, defaults, creations or impositions
which do not and would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs, position,
shareholders equity, value, operations, properties, business or results of
operations of the Company and the Subsidiaries taken as a whole;
(viii) except as described in the Prospectus, no consent, approval,
authorization or order, and no filing with, any court, regulatory body,
government agency or other body (other than such as may be required under Blue
Sky laws, as to which no opinion need be rendered) is required in connection
with the issuance of the IPO Securities pursuant to the Prospectus and the
Registration Statement, the issuance of the Underwriters Warrants, the
performance of this Agreement, the Underwriters Warrant Agreement and the
Warrant Agreement and the transactions contemplated hereby and thereby;
(ix) the properties and business of the Company and the Subsidiaries conform
to the description thereof contained in the Registration Statement and the
Prospectus;
(x) to such counsels knowledge and except as described in the Prospectus
neither the Company nor any of the Subsidiaries is in breach of, or in default
under, any term or provision of any license, contract, indenture, mortgage,
installment sale agreement, deed of trust, lease, voting trust agreement,
stockholders agreement, partnership agreement, note, loan or credit agreement
or any other agreement or instrument evidencing an obligation for borrowed
money, or any other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries may
be bound or to which the property or assets (tangible or intangible) of the
Company or any of the Subsidiaries is subject or affected, which could
materially adversely affect the Company or any of the Subsidiaries; and neither
the Company nor any of the Subsidiaries is in violation of any term or
provision of its Certificate of Incorporation or By-Laws, or in violation of
any fra chise, license, permit, judgment, decree, order, statute, rule or
regulation the result of which would materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs, position,
shareholders equity, value, operation, properties, business or results of
operations of the Company and the Subsidiaries taken as a whole;
(xi) to the knowledge of such counsel and except as described in the Prospectus
the Company and the Subsidiaries owns or possesses, free and clear of all liens
or encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and licenses necessary
to conduct its business (including, without limitation any such licenses or
rights described in the Prospectus as being owned or possessed by the Company
or any Subsidiary), and to the best of such counsels knowledge after
reasonable investigation, there is no claim or action by any person pertaining
to, or proceeding, pending, or threatened, which challenges the exclusive
rights of the Company or any Subsidiary with respect to any trademarks, service
marks, copyrights, service names, trade names, patents, patent applications and
licenses used in the conduct of the Companys or any Subsidiarys bus ness
(including, without limitations, any such licenses or rights described in the
Prospectus as being owned or possessed by the Company or any Subsidiary).
(xii) the IPO Securities have been approved for listing on the NASD Electronic
Bulletin Board and the Companys Registration Statement on Form 8-A under the
Exchange Act has become effective;
(xiii) to such counsels knowledge, 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) to such counsels knowledge, except as described in the Prospectus, no
person, corporation, trust, partnership, association or other entity has the
right to include and/or register any securities of the Company in the
Registration Statement, require the Company to file any registration statement
or, if filed, to include any security in such registration statement;
(xv) to such counsels knowledge, except as described in the Prospectus, there
are no claims, payments, issuances, arrangements or understandings for services
in the nature of a finders or origination fee with respect to the sale of the
IPO Securities hereunder or the financial consulting arrangement or any other
arrangements, agreements, understandings, payments or issuances that may affect
the Underwriters compensation, as determined by the NASD;
(xvi) the Lock-up Agreements are legal, valid and binding obligations of the
parties thereto, enforceable against each such party and any subsequent holder
of the securities subject thereto in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors rights and the application of equitable
principles in any action, legal or equitable); and 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
or the Subsidiaries, 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 opi nion of any
such other counsel is in form satisfactory to such counsel. At each Option
Closing Date, if any, the Underwriter shall have received an opinion letter
from B. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., counsel to the Company, dated the Option Closing
Date, addressed to the Underwriter and in form and substance satisfactory to
Underwriters Counsel confirming as of such Option Closing Date the statements
made in its opinion delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing Date, if
any, Underwriters Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions of the
Company and its Subsidiaries, or herein contained.
(f) Prior to each Closing Date and each Option Closing Date, if any, (i) there
shall have been no adverse change nor development involving a prospective
change in the condition, financial or otherwise, prospects, stockholders
equity or the business activities of the Company and the Subsidiaries taken as
a whole, whether or not in the ordinary course of business, from the latest
dates as of which such condition is set forth in the Registration Statement and
Prospectus; (ii) there shall have been no transaction, not in the ordinary
course of business, entered into by the Company or any Subsidiary, (iii)
neither the Company nor any Subsidiary shall be in default under any provision
of any instrument relating to any outstanding indebtedness; (iv) neither the
Company nor any of the Subsidiaries shall have issued any securities (other
than the IPO Securities and the Underwriters Warrants) or declared or paid any
dividend or made any distribution in respect of its capital stock of any clas
and there has not been any change in the capital or any change in the debt
(long or short term) or liabilities or obligations of the Company or any
Subsidiary (contingent or otherwise); (v) no material amount of the assets of
the Company or the Subsidiaries shall have been pledged or mortgaged, except as
set forth in the Registration Statement and Prospectus; (vi) no action, suit or
proceeding, at law or in equity, shall have been pending or threatened (or
circumstances giving rise to same) against the Company or any Subsidiary, or
affecting any of its properties or business before or by any court or federal,
state or foreign commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may adversely affect the business,
operations, management prospects or financial condition or assets of the
Company or the Subsidiaries taken as a whole, except as set forth in the
Registration Statement and Prospectus: and (vii) no stop order shall have been
issu ed under the Act and no proceedings therefor shall have been initiated,
threatened or contemplated by the Commission.
(g) At each of the Closing Date and each Option Closing Date, if any,
the Underwriter shall have received a certificate of the principal executive
officer and the chief financial or chief accounting officer of the Company,
dated the Closing Date or Option Closing Date, as the case may be, to the
effect that each of such persons has carefully examined the Registration
Statement, the Prospectus and this Agreement, and that:
(i) The representations and warranties in this Agreement of the Company and its
Subsidiaries are true and correct, as if made on and as of the Closing Date or
the Option Closing Date, as the case may be, and the Company and its
Subsidiaries have complied with all agreements and covenants and satisfied all
conditions contained in this Agreement on their part to be performed or
satisfied at or prior to such Closing Date or Option Closing Date, as the case
may be;
(ii) No stop order suspending the effectiveness of the Registration Statement
or any part thereof has been issued, and no proceedings for that purpose have
been instituted or are pending or are contemplated or threatened under the Act;
(iii) The Registration Statement and the Prospectus and, if any, each amendment
and each supplement thereto, contain all statements and information required to
be included therein, and none of the Registration Statement, the Prospectus nor
any amendment or supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and neither the
Preliminary Prospectus or any supplement thereto included any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(iv) Since the dates as of which information is given in the Registration
Statement and the Prospectus, (A) there must not have been any material change
in the shares of Common Stock or liabilities of the Company or any Subsidiary
except as set forth in or contemplated by the Prospectus; (B) there must not
have been any material adverse change in the general affairs, management,
business, financial condition or results of operations of the Company or any
Subsidiary, whether or not arising from transactions in the ordinary course of
business, as set forth in or contemplated by the Prospectus; (C) the Company
and each Subsidiary must not have sustained any material loss or interference
with its business from any court or from legislative or other governmental
action, order or decree, whether foreign or domestic, or from any other
occurrence, not described in the Registration Statement and Prospectus; (D)
there must not have occurred any event that makes untrue or incorrect in any
materi l respect any statement or information contained in the Registration
Statement or Prospectus or that is not reflected in the Registration Statement
or Prospectus but should be reflected therein in order to make the statements
or information therein, in light of the circumstances in which they were made,
not misleading in any material respect; (E) the Company and each Subsidiary
must not have incurred up to and including the Closing Date or the Option
Closing Date, as the case may be, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent; (F)
the Company and each Subsidiary must not have paid or declared any dividends or
other distributions on its capital stock; (G) the Company and each Subsidiary
must not have entered into any transactions not in the ordinary course of
business; (H) there has not been any change in the capital stock or long-term
debt or any increase in the short-term borrowings (other than any increase in
the s hort-term borrowings in the ordinary course of business) of the Company
or any Subsidiary; (i) the Company and each Subsidiary must not have sustained
any material loss or damage to its property or assets, whether or not insured;
and (J) there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been set forth. References to the
Registration Statement and the Prospectus in this subsection (g) are to such
documents as amended and supplemented at the date of such certificate.
(h) By the Closing Date, the Underwriter will have received clearance
from the NASD as to the amount of compensation allowable or payable to the
Underwriter, as described in the Registration Statement.
(i) At the time this Agreement is executed, the Underwriter shall
have received a letter, dated such date, addressed to the Underwriter in form
and substance satisfactory (including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriter and Underwriters Counsel, from ▇▇▇▇▇▇ & ▇▇▇▇▇▇:
(i) confirming that they are independent accountants with
respect to the Company and the Subsidiaries within the meaning of the Act and
the applicable Rules and Regulations;
(ii) stating that it is their opinion that the financial
statements of the Company and the Subsidiaries included in the Registration
Statement comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations thereunder and
that the Underwriter may rely upon the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ with respect
to the financial statements and supporting schedules included in the
Registration Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim financial
statements of the Company and the Subsidiaries (with an indication of the date
of the latest available unaudited interim financial statements), a reading of
the latest available minutes of the stockholders and board of directors and the
various committees of the boards of directors of the Company and the
Subsidiaries, consultations with officers and other employees of the Company
and the Subsidiaries responsible for financial and accounting matters and other
specified procedures and inquiries, nothing has come to their attention which
would lead them to believe that (A) the unaudited financial statements, if any,
of the Company and the Subsidiaries 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 pres
ented in conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial statements of
the Company and the Subsidiaries included in the Registration Statement, or (B)
at a specified date not more than five (5) days prior to the effective date of
the Registration Statement, there has been any change in the capital stock or
long-term debt of the Company and the Subsidiaries, or any decrease in the
stockholders equity or net current assets or net assets of the Company and the
Subsidiaries as compared with amounts shown in the ________________, 19__
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;
(iv) setting forth, at a date not later than five (5) days
prior to the date of the Registration Statement, the amount of liabilities of
the Company and the Subsidiaries (including a breakdown of commercial paper and
notes payable to banks) ;
(v) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company and the Subsidiaries set forth
in the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company and the Subsidiaries
and excluding any questions requiring an interpretation by legal counsel, with
the results obtained from the application of specified readings, inquiries and
other appropriate procedures (which procedures do not constitute an examination
in accordance with generally accepted auditing standards) set forth in the
letter and found them to be in agreement;
(vi) stating that they have in addition carried out certain
specified procedures, not constituting an audit, with respect to certain pro
forma financial information which is included in the Registration Statement and
the Prospectus and that nothing has come to their attention as a result of such
procedures that caused them to believe such unaudited pro forma financial
information does not comply in form in all respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of that information;
(vii) stating that they have not during the immediately preceding five (5) year
period brought to the attention of any of the Companys management any
weakness, as defined in Statement of Auditing Standard No. 60 Communication
of Internal Control Structure Related Matters Noted in an Audit, in any of the
Companys internal controls; and
(viii) statements as to such other matters incident to the transaction
contemplated hereby as the Underwriter may reasonably request.
(j) At the Closing Date and each Option Closing Date, if any, the Underwriter
shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, a letter, dated as of the Closing
Date or the Option Closing Date, as the case may be, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection (i)
of this Section, except that the specified date in the referred to letter shall
be a date not more than five days prior to the Closing Date or the Option
Closing Date, as the case may be, and, if the Company has elected to rely on
Rule 430A of the Rules and Regulations, to the further effect that they have
carried out procedures as specified in clause (v) of subsection (i) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Underwriter and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified i n such
clause (v).
(k) On each of the Closing Date and Option Closing Date, if any, there shall
have been duly tendered to the Underwriter the appropriate number of IPO
Securities.
(l) No order suspending the sale of the IPO Securities in any jurisdiction
designated by the Underwriter pursuant to subsection (e) of Section 4 hereof
shall have been issued on either the Closing Date or the Option Closing Date,
if any, and no proceedings for that purpose shall have been instituted or shall
be contemplated.
(m) On or before the Closing Date, the Common Stock and the Public Warrants
shall have been approved for quotation on the NASD Electronic Bulletin Board
and shall have been authorized upon official notice of issuance for trading on
the BSE.
(n) On or before the Closing Date, there shall have been delivered to the
Underwriter the Lock-up Agreements, in form and substance satisfactory to
Underwriters Counsel.
(o) On or before the Closing Date, the Company shall have executed the
financial consulting agreement with the Underwriter, in final form and
substance satisfactory to the Underwriter.
(p) On or before the Closing Date, the Company shall have executed and
delivered to the Underwriter, (i) the Underwriters Warrant Agreement
substantially in the form filed as Exhibit ________ to the Registration
Statement in final form and substance satisfactory to the Underwriter, and (ii)
the Underwriters Warrants in such denominations and to such designees as shall
have been provided to the Company.
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 Underwriter may terminate this Agreement
or, if the Underwriter so elects, it may waive any such conditions which have
not been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Underwriter (for
purposes of this Section 7 Underwriter shall include the officers, directors,
partners, employees, agents and counsel of the Underwriter, and each person, if
any, who controls the Underwriter (controlling person) within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, from and against
any and all losses, claims, damages, expenses or liabilities, joint or several
(and actions in respect thereof), whatsoever (including but not limited to any
and all expenses whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever), as such are incurred, to which the Underwriter or such controlling
person may become subject under the Act, the Exchange Act, or any other statute
or at common law or otherwise or under the laws of foreign countries, arising
out of or based upon any untrue statement or alleged untrue st atement of a
material fact contained (i) in any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time amended and supplemented);
(ii) in any post-effective amendment or amendments or any time new registration
statement and prospectus in which is included securities of the Company issued
or issuable upon exercise of the IPO Securities; or (iii) in any application or
other document or written communication (in this Section 7 collectively called
Application) executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the IPO
Securities under the securities laws thereof or filed with the Commission, any
securities commission or agency, the NASD, the BSE or any securities exchange;
or the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of the Prospectus, in the light of the circum stances under which
they were made), unless such statement or omission was made in reliance upon
and in conformity with written information furnished to the Company with
respect to the Underwriter by or on behalf of such Underwriter expressly for
use in any Preliminary Prospectus, the Registration Statement or Prospectus, or
any amendment thereof or supplement thereto, or in any Application, as the case
may be. The indemnity agreement in this subsection (a) shall be in addition to
any liability which the Company may have at common law or otherwise.
(b) The Underwriter agrees to indemnify and hold harmless the Company, each of
its directors, each of its officers who has signed the Registration Statement,
and each other person, if any, who controls the Company within the meaning of
the Act, to the same extent as the foregoing indemnity from the Company to the
Underwriter but only with respect to statements or omissions, if any, made in
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any Application made in reliance
upon, and in strict conformity with, written information furnished to the
Company with respect to the 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 Prospect us directly
relating to the transactions effected by the Underwriter in connection with
this offering. The Company acknowledges that the statements with respect to
the public offering of the IPO Securities set forth under the heading
Underwriting and the stabilization legend in the Prospectus have been
furnished by the Underwriter expressly for use therein.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, suit or proceeding, such indemnified
party shall, if a claim in respect thereof is to be made against one or more
indemnifying parties under this Section 7, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party or parties
of the commencement thereof, the indemnifying party or parties will be entitled
to participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice f rom such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action at the
expense of the indemnifying party, (ii) the indemnifying parties shall not have
employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifyi ng parties (in which case the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses of one
additional counsel shall be borne by the indemnifying parties. In no event
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. Anything in this Section 7 to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution in any case in
which (i) an indemnified party makes claim for indemnification pursuant to this
Section 7, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that the express
provisions of this Section 7 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 I PO Securities or (B) if the allocation provided by clause (A) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of each of the contributing parties, on the one hand, and
the party to be indemnified on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations. In any
case where the Company is a contributing party and the Underwriter is the
indemnified party, the relative benefits received by the Company, on the one
hand, and the Underwriter, on the other, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities
(before deducting expenses) bear to the total underwriting discounts received
by the Underwriter hereunder, in each case as set forth in the Prospectus.
Relative fault sh all 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 necessary to make the
statements made, in light o the circumstances under which they were made, not
misleading relates to information supplied by the Company, or by the
Underwriter, and the parties relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions in respect thereof)
referred to above in this subdivision (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subdivision (d) the Underwriter shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
IPO Securities sold by the Underwriter hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Act, each officer of
the Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subparagraph (d), Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this subparagraph (d), notify
such party or parties from whom contribution may be sought, but the omission so
to notify such party or part ies shall not relieve the party or parties from
whom contribution may be sought from any obligation it or they may have
hereunder or otherwise than under this subparagraph (d), or to the extent that
such party or parties were not adversely affected by such omission. The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto, shall be
deemed to be representations, warranties and agreements at the Closing Date and
any Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and its Subsidiaries and the
respective indemnity agreements contained in Section 7 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Underwriter, the Company, any controlling person of the
Underwriter or the Company, and shall survive termination of this Agreement or
the issuance and delivery of the IPO Securities to the Underwriter.
9. Effective Date. This Agreement shall become effective at 10:00 a.m., New
York City time, on the first full business day following the day on which the
Registration Statement becomes effective.
10. Termination.
(a Subject to subsection (b) of this Section 10, the Underwriter shall have
the right to terminate this Agreement, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in the Underwriters
opinion will in the immediate future materially disrupt the financial markets;
or (ii) any material adverse change in the financial markets shall have
occurred; or (iii) if trading on the New York Stock Exchange, the American
Stock Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction; or (iv) if the United States shall have become
involved in a war or major hostilities, or if there shall have been an
escalation in an existing war or major hostilities or a national emergency
shall have be en declared in the United States; or (v) if a banking moratorium
has been declared by a state or federal authority; or (vi) if a moratorium in
foreign exchange trading has been declared; or (vii) if the Company and/or any
of its Subsidiaries, shall have sustained a loss material or substantial to the
Company by fire, flood, accident, hurricane, earthquake, theft, sabotage or
other calamity or malicious act which, whether or not such loss shall have
been insured, will, in the Underwriters opinion, make it inadvisable to
proceed with the delivery of the IPO Securities; or (vii) if there shall have
been such a material adverse change in the condition (financial or otherwise),
business affairs or prospects of the Company and/or any of its Subsidiaries,
whether or not arising in the ordinary course of business, which would render,
in the Underwriters judgment, either of such parties unable to perform
satisfactorily its respective obligations as contemplated by this Agreement or
the ▇▇▇▇ ▇▇▇▇▇▇▇▇ Statement, or such material adverse change in the general
market, political or economic conditions, in the United States or elsewhere as
in the Underwriters judgment would make it inadvisable to proceed with the
offering, sale and/or delivery of the IPO Securities.
(b) If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 10(a), the Company shall promptly reimburse and indemnify
the Underwriter for all of its actual out-of-pocket expenses, including the
fees and disbursements of counsel for the Underwriter in an amount not to
exceed $50,000 (less amounts previously paid pursuant to Section 5(c) above).
Notwithstanding any contrary provision contained in this Agreement, if this
Agreement shall not be carried out within the time specified herein, or any
extension thereof granted to the Underwriter, by reason of any failure on the
part of the Company to perform any undertaking or satisfy any condition of this
Agreement by it to be performed or satisfied (including, without limitation,
pursuant to Section 6 or Section 12) then, the Company shall promptly reimburse
and indemnify the Underwriter for all of their actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriter (less
amounts previously paid pursuant to Section 5 (c) above). In addition, the
Company shall remain liable for all Blue Sky counsel fees and expenses and Blue
Sky filing fees. Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement
(including, without limitation, pursuant to Sections 6 and 10 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. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed to the
Underwriter at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇▇, Jr., President, with a copy to Doros & Brescia, P.C., ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Notices to the Company shall be directed to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇ ▇▇▇▇▇, Chief Executive Officer,
with a copy to B. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇.
12. Parties. This Agreement shall inure solely to the benefit of and shall be
binding upon, the Underwriter, the Company and the controlling persons,
directors and officers referred to in Section 7 hereof, and their respective
successors, legal Underwriters and assigns and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained.
No purchaser of Securities from the Underwriter shall be deemed to be a
successor by reason merely of such purchase.
13. 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.
14. 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.
15. Entire Agreement; Amendments. This Agreement, the Underwriters Warrant
Agreement and the Warrant Agreement constitute the entire agreement of the
parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof.
This Agreement may not be amended except in a writing, signed by the
Underwriter and the Company. If the foregoing correctly sets forth the
understanding between the Underwriter and the Company, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us. Very truly yours,
XETAL, INC.
By:
▇▇. ▇▇▇ ▇▇▇▇▇, Chief Executive Officer
By:
▇▇▇▇▇ ▇▇▇▇▇, President
Confirmed and accepted as of
the date first above written
▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL CORP.
By:
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President