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UNDERWRITING AGREEMENT
_______________, 1996
R.T.G. ▇▇▇▇▇▇▇▇ & Company, Inc.
As Representative of the Several Underwriters
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
All American Food Group, Inc., a New Jersey corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several underwriters named in Schedule I hereto, for whom
R.T.G. ▇▇▇▇▇▇▇▇ & Company, Inc. ("R.T.G. ▇▇▇▇▇▇▇▇") is acting as the
Representative (the "Underwriters"), 1,100,000 shares of the common stock, no
par value (the "Common Stock") of the Company (the "Firm Shares"). In
addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to you the option to purchase up to 110,000 additional shares
of Common Stock (the "Additional Shares"). The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares". The Shares
are more fully described in the Registration Statement and Prospectus referred
to below. Unless the context otherwise requires, references herein to "you" are
to the Underwriters collectively, through R.T.G. ▇▇▇▇▇▇▇▇.
The Company confirms as follows its agreement with you:
1. REGISTRATION STATEMENT AND PROSPECTUS: The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission"), in
accordance with the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder (the "Rules and
Regulations", and together with said Act, the "Act"), a registration statement
on Form SB-2 (File No. 333-4490) and may have filed one or more amendments
thereto, including in such registration statement and in certain amendments
thereto a related preliminary prospectus for the registration under the Act of
the Shares. In addition, subject to the provisions of Section 4(e) hereof, the
Company has filed or will promptly file a further amendment to such
registration statement prior to the effectiveness of such registration
statement, unless an amendment is not required pursuant to Rule 430A of the
Rules and Regulations. As used in this Agreement, the term "Registration
Statement" means such registration statement, including the prospectus,
financial statements and schedules thereto, exhibits and other documents filed
as part thereof, as amended when, and in the form in which, it is declared
effective by the Commission, and, in the event any post-effective amendment
thereto is filed thereafter and on or before the Closing Date (ashereinafter
defined), shall also mean (from and after the date such post-effective
amendment is effective under the Act) such registration statement as so
amended, provided that such Registration Statement, at the time it becomes
effective, may omit such information as is permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A of the
Rules and Regulations, which information ("Rule 430 Information") shall be
deemed to be included in such Registration Statement when a final prospectus is
filed with the Commission in accordance with Rules 430A and 424(b)(1) or (4) of
the Rules and Regulations; the term "Preliminary Prospectus" means each
prospectus included in the Registration Statement, or any amendments thereto,
before it becomes effective under the Act, the form of prospectus omitting Rule
430A Information included in the Registration
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Statement when it becomes effective, if applicable (the "Rule 430A
Prospectus"), and any prospectus filed by the Company with your consent
pursuant to Rule 424(a) under the Act; the term "Prospectus" means the final
prospectus included as part of the Registration Statement, except that (i) if
any prospectus (including any preliminary prospectus) which differs from such
prospectus included in the Registration Statement is provided to you for use in
connection with the offering of the Shares (whether or not such differing
prospectus is required to be filed by the Company pursuant to Rule 424(b) under
the Act), the term "Prospectus" as used herein shall mean such differing
prospectus from and after the date on which it shall have been first used, and
(ii) in the event any supplement to or amendment of such prospectus is made
after the date on which the Registration Statement is declared effective and on
or prior to the Closing Date, the term "Prospectus" shall also mean (with
respect to any supplement, from and after the date such supplement is first
used or, with respect to any amendment, the date such amendment is effective
under the Act) such prospectus as so supplemented or amended; and the term
"Effective Date" means (i) if the Company and you have determined not to
proceed pursuant to Rule 430A under the Act, the date on which the Registration
Statement becomes effective, or (ii) if the Company and you have determined to
proceed pursuant to Rule 430A under the Act, the date of this Agreement.
2. AGREEMENTS TO SELL AND PURCHASE: Subject to the terms and
conditions herein set forth, the Company agrees to sell to you and each of you
agree, severally and not jointly, to purchase from the Company, at a purchase
price of $_____ per Firm Share, the number of Shares (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying the aggregate
number of Firm Shares to be sold by a fraction, the numerator of which is the
aggregate number of Firm Shares to be purchased by each of you as set forth
opposite your respective names in Schedule I hereto and the denominator of
which is the aggregate number of Firm Shares to be purchased hereunder.
Subject to the terms and conditions herein set forth, the Company
further agrees to sell to you, and you shall have the right to purchase from
the Company, up to 165,000 Additional Shares at a purchase price of $_____ per
Additional Share. Additional Shares may be purchased solely for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares. If any Additional Shares are to be purchased, each of you, severally,
agrees to purchase from the Company that proportion (subject to such
adjustments as you may both determine to avoid fractional Additional Shares) of
the number of Additional Shares to be purchased which the number of Firm Shares
set forth opposite your name in Schedule I bears to the aggregate number of
Firm Shares to be purchased from the Company hereunder. Additional Shares may
be purchased at any time and from time to time on or before the thirtieth day
following the date of this Agreement upon written notice from you to the
Company specifying the number of Additional Shares to be purchased.
You will offer the Shares for sale at the initial public offering
price set forth on the cover of the Prospectus. After the initial public
offering, you may from time to time increase or decrease the public offering
price, in your sole discretion, by reason of changes in general market
conditions or otherwise.
3. DELIVERY AND PAYMENT: Delivery of and payment for the Firm Shares
shall be made at 10:00 A.M., New York City time, on _ ______________, 1996
(such time and date are referred to herein as the "Closing Date"), at the
offices of _____________ at ___________________________________________________.
Delivery of and payment for Additional Shares shall be made at said
offices of ___________, or at such other place, and at such time(s) and date(s)
(each an "Optional Closing Date") as may be agreed upon in writing by you and
the Company; provided, however, that in no event may an Optional Closing
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Date be (i) earlier than the Closing Date, or (ii) earlier than three or later
than ten business days after the date on which the related notice to purchase
Additional Shares is given, or (iii) earlier than the fifth business day
following the Closing Date or the most recent Optional Closing Date.
The Closing Date, the Optional Closing Date and the time and place of
delivery of and payment for the Shares and Additional Shares may be varied by
agreement between you and the Company. Delivery of certificates for the Shares
(in definitive form, registered in such names and in such denominations as you
shall request at least two business days prior to the Closing Date by written
notice to the Company) shall be made to you against payment of the purchase
price therefor by certified or official bank check or checks payable in New
York Clearing House funds to the order of the Company. For the purpose of
expediting the checking and packaging of certificates for the Shares, the
Company agrees to make such certificates available for inspection at the
offices of __________ at least 24 hours prior to the Closing Date and each
Optional Closing Date, as the case may be.
On the Closing Date, at the time of the delivery and payment for the
Firm Shares, the Company shall (i) pay to R.T.G. ▇▇▇▇▇▇▇▇ as a non-accountable
expense allowance a sum equal to $.________ per Share for each Firm Share
purchased by the Underwiters hereunder (or an aggregate of $__________________
in respect of the Firm Shares), less the $65,000 heretofore paid in respect
thereof, by certified or official bank check or checks payable in New York
Clearing House funds payable to the order of, and in accordance with
instructions from, R.T.G. ▇▇▇▇▇▇▇▇, and (ii) issue, sell and deliver to R.T.G.
▇▇▇▇▇▇▇▇, for an aggregate purchase price of $110, warrants to purchase up to
an aggregate of 110,000 Shares (as the context requires, together with the
Underwriter's Warrant Agreement in connection therewith, the "Underwriter's
Warrants") in substantially in the form filed as an exhibit to the Registration
Statement. The shares of Common Stock issuable upon exercise of the
Underwriter's Warrants are hereinafter referred to collectively as the
"Underwriter's Warrants Shares". The Underwriter's Warrants will be exercisable
at an initial exercise price of $____ per Share at any time and from time to
time, in whole or in part, during a five-year period commencing one year
following the Effective Date. The Company has granted R.T.G. ▇▇▇▇▇▇▇▇ certain
registration rights with respect to the Underwriter's Warrants and the
securities issuable upon exercise thereof, as set forth in said Underwriter's
Warrants.
On each Optional Closing Date, at the time of the delivery and payment
for the Additional Shares, the Company shall pay to R.T.G. ▇▇▇▇▇▇▇▇ as a
non-accountable expense allowance, a sum equal to $.___ per Additional Share
for each Additional Share purchased by the Underwriters on such date by
certified or official bank check or checks payable in New York Clearing House
funds payable to the order of, and in accordance with instructions from, R.T.G.
▇▇▇▇▇▇▇▇.
4. COVENANTS AND AGREEMENTS OF THE COMPANY: (A) The Company
covenants and agrees with you as follows:
(a) The Company will notify you promptly by telephone and (if
requested by you) will confirm such advice in writing, (1)
when the Registration Statement has become effective and when
any post-effective amendment thereto becomes effective, (2) if
Rule 430A under the Act is used, or the Prospectus is
otherwise required to be filed with the Commission pursuant to
Rule 424(b) under the Act, when the Prospectus is filed with
the Commission pursuant to Rule 424(b) under the Act, (3) of
any request by the Commission for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information, (4) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement, preventing or suspending the
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use of the Preliminary Prospectus, the Prospectus, the
Registration Statement or any amendment or supplement thereto,
or refusing to permit the effectiveness of the Registration
Statement ("Stop Order"), or the initiation of any proceedings
for any of those purposes, (5) of the happening of any event
during the period mentioned in paragraph (f) below which in
the reasonable judgment of the Company makes any statement
made in the Registration Statement or the Prospectus untrue or
which requires the making of any changes in the Registration
Statement or the Prospectus in order to make the statements
therein not misleading, and (6) of the receipt of any comments
from the Commission or the Blue Sky or securities authorities
of any jurisdiction regarding the Registration Statement, any
post-effective amendment thereto, the Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto. The
Company will use its best efforts to prevent the issuance of
any Stop Order by the Commission or any notification from the
Blue Sky or securities authorities of any jurisdiction
suspending the qualification or registration of the Shares for
sale in such jurisdictions, and if at any time the Commission
shall issue any Stop Order, or if the Blue Sky or securities
authorities of any jurisdiction shall issue notification
suspending the qualification or registration of the Shares,
the Company will make every reasonable effort to obtain the
withdrawal of such Stop Order or notification at the earliest
possible moment. The Company will promptly advise you of its
receipt of any notification with respect to the suspension of
the qualification or registration of the Shares for offer or
sale in any jurisdiction or the initiation or threatening of
any action or proceeding for such purpose.
(b) Prior to any public offering of the Shares by you, the Company
will cooperate with you and your counsel in registering or
qualifying the Shares for offer or sale under the Blue Sky or
securities laws, rules or regulations of such jurisdictions as
you may reasonably request; provided that in no event shall
the Company be obligated to register or qualify to do business
as a foreign corporation in any jurisdiction where it is not
now so registered or qualified or to take any action which
would subject it to general service of process, or to taxation
as a foreign corporation doing business, in any jurisdiction
where it is not now so subject. The Company will pay all fees
and expenses relating to the registration or qualification of
the Shares under such Blue Sky or securities laws of such
jurisdictions as you may designate (including the legal fees,
expenses and disbursements of your counsel for the
registration or qualification of the Shares in such
jurisdictions as you shall determine). After registration,
qualification or exemption of the Shares for offer and sale in
such jurisdictions, and for as long as any offering pursuant
to this Agreement continues, the Company, at your reasonable
request, will file and make such statements or reports, and
pay the fees applicable thereto, at such times as are or may
be required by the laws, rules or regulations of such
jurisdictions in order to maintain and continue in full force
and effect the registration, qualification or exemption for
offer or sale of the Shares in such jurisdictions. After the
termination of the offering contemplated hereby, and as long
as any of the Shares are outstanding, the Company will use its
best efforts to file and make, and pay all fees applicable
thereto, such statements and reports and renewals of
registration as are or may be required by the laws, rules or
regulations of such jurisdictions to maintain and continue in
full force and effect the registration, qualification or
exemption for secondary market transactions in the Shares, in
the various jurisdictions in which the Shares were originally
registered, qualified or exempted for offer or sale.
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(c) The Company will furnish to you, without charge, four
manually-signed copies of the Registration Statement as
originally filed on Form SB-2 and of any amendments (including
post-effective amendments thereto), including financial
statements and schedules, if any, and all consents,
certificates and exhibits (including those incorporated
therein by reference to the extent not previously furnished to
you), heretofore or hereafter made, signed by or on behalf of
its officers whose signatures are required thereon and a
majority of its board of directors.
(d) The Company will use its best efforts to cause the
Registration Statement to become effective under the Act.
Upon such effectiveness, if the Company and you have
determined not to proceed pursuant to Rule 430A under the Act,
the Company will timely file a Prospectus pursuant to, and in
conformity with, Rule 424(b), if required, and if the Company
and you have determined to proceed pursuant to Rule 430A under
the Act, the Company will timely file a Prospectus pursuant
to, and in conformity with, Rules 424(b) and 430A under the
Act.
(e) The Company will give you and your counsel advance notice of
its intention to file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus,
whether before or after the effective date of the Registration
Statement, and will not file any such amendment or supplement
unless the Company shall have first delivered copies of such
amendment or supplement to you and your counsel, and you and
its counsel shall have given your consent to the filing of
such amendment or supplement, which consent shall not be
unreasonably withheld or delayed. Any such amendment or
supplement shall comply with the Act.
(f) From and after the Effective Date, the Company will deliver to
you, without charge, as many copies of the Prospectus or any
amendment or supplement thereto as you may reasonably request.
The Company consents to the use of the Prospectus or any
amendment or supplement thereto by you and by all dealers to
whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for such period of time
thereafter as the Prospectus is required by law to be
delivered in connection therewith. If during such period of
time any event shall occur which in the reasonable judgment of
you or your counsel should be set forth in the Prospectus in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or
if it is necessary to supplement or amend the Prospectus to
comply with law, the Company will forthwith prepare and duly
file with the Commission an appropriate supplement or
amendment thereto, and will deliver to you, without charge,
such number of copies thereof as you may reasonably request.
(g) The Company will promptly pay all expenses in connection with
(1) the preparation, printing, filing, distribution and
mailing (including, without limitation, express delivery
service) of the Registration Statement, each preliminary
prospectus, the Prospectus, and the preliminary and final
forms of Blue Sky memoranda (if any); (2) the issuance and
delivery of the Shares; (3) the fees and expenses of legal
counsel and independent accountants for the Company relating
to, among other things, opinions of counsel, audits, review of
unaudited financial statements and cold comfort review; (4) the
fees and expenses of a registrar or transfer agent for the
Common Stock; (5) the printing, filing,
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distribution and mailing (including, without limitation,
express delivery service) of this Agreement and the Selected
Dealer Agreement; (6) furnishing such copies of the
Registration Statement, the Prospectus and any preliminary
prospectus, and all amendments and supplements thereto, as may
reasonably be requested for use in connection with the
offering and sale of the Shares by you or by dealers to whom
Shares may be sold; (7) any fees and communication expenses
with respect to filings required to be made by you with the
National Association of Securities Dealers Regulation, Inc.
(the "NASDR"); and (8) the listing of the Shares on the Nasdaq
SmallCap market.
(h) On the Closing Date, the Company shall sell to R.T.G.
▇▇▇▇▇▇▇▇, the Underwriter's Warrants to purchase 110,000
Shares for an aggregate purchase price of $110.
(i) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than by notice given by you
pursuant to Section 8 hereof) or if for any reason the Company
shall be unable to perform its obligations hereunder, unless
such termination or inability to perform is due, in whole or
in material part, to the default, omission, action or failure
of yours, the Company will reimburse R.T.G. ▇▇▇▇▇▇▇▇ for all
of its out-of-pocket expenses (including the fees and expenses
of its counsel) reasonably incurred by it in connection
herewith through the date of such termination, less the
$65,000 advance paid in respect thereof. In the event such
advance exceeds such accountable out-of-pocket expenses, the
difference shall be refunded to the Company.
(j) Other than securities issued pursuant to, or the issuance of
which is contemplated by, the Registration Statement, for a
period of nine months following the effective date of the
Registration Statement, the Company will not issue more than
150,000 shares of its Common Stock, which shares will be
issued only for the purpose of satisfying vendor debt, and for
the ensuing 15 months (for a total of 24 months following the
effective date), the Company will not issue securities which,
when aggregated with any shares issued in satisfaction of
vendor debt pursuant to the foregoing clause, represent more
than 10% of the number of shares of Common Stock issued and
outstanding immediately prior to the effective date of the
Registration Statement, except with your prior written
consent, which will not unreasonably be withheld or delayed.
(k) On or prior to the Closing Date, the Company shall obtain and
provide to you the Lock-up Letters (the "Lock-up Letters")
described in the Prospectus.
(l) The Company has reserved and, so long as the Underwriter's
Warrants remain exercisable in accordance with their terms
shall continue to reserve and keep available the maximum
number of shares of its authorized but unissued Common Stock
and other securities which are issuable upon exercise of the
Underwriter's Warrants.
(m) For a period of five years after the date of this Agreement,
the Company shall:
(1) retain ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ or another firm of
independent public accountants, reasonably acceptable
to you, as its auditors, and at its own expense,
shall cause such independent certified public
accountants to review (but not audit) the Company's
financial statements and those of its subsidiaries
for each of the first three fiscal quarters of each
fiscal year prior to the announcement of quarterly
financial information, the filing of the Company's
10-Q quarterly reports and the mailing of quarterly
financial information to its stockholders;
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(2) cause the Company's Board of Directors to meet not
less frequently than twice in each calendar year,
upon proper notice for each such meeting to be
distributed to directors prior to such meeting (or
upon proper waiver of such notice), together with
minutes of the preceding meeting, provided that if
not practicable, such minutes shall be distributed as
soon thereafter as is reasonably possible;
(3) distribute to its security holders, within 120 days
after the end of each fiscal year, or such longer
period as may be permitted by applicable law, an
annual report (containing certified financial
statements of the Company and its subsidiaries)
prepared in accordance with those required under Rule
14a-3(b) of Regulation 14A promulgated by the
Commission under the Securities Exchange Act of 1934,
as amended; and
(4) appoint Continental Stock Transfer and Trust Company
or another transfer agent reasonably acceptable to you
as transfer agent for the Common Stock and warrant
agent for the Warrants, in each case reasonably
acceptable to you.
(n) For a period of five years after the date of this Agreement,
the Company shall furnish you, free of charge, with the
following:
(1) within 90 days after the end of each fiscal year,
financial statements for the Company and its
subsidiaries certified by the independent certified
public accountants referred to in Section 4(m)(1)
above, including a balance sheet, statement of
operations, statement of stockholders' equity and
statement of cash flows, in each case for the Company
and its subsidiaries, with supporting schedules,
prepared in accordance with generally accepted
accounting principles, as at the end of such fiscal
year and for the twelve months then ended,
accompanied by a copy of the certificate or report
thereon of such independent certified public
accountants;
(2) (x) for so long as the Company is a reporting company
under any of Sections 12(b), 12(g) or 15(d) of the
Securities Exchange Act, as amended, and the rules
and regulations of the Commission promulgated
thereunder (collectively, the "Exchange Act"),
promptly after filing with the Commission, copies of
all reports and proxy soliciting material which the
Company is required to file under the Exchange Act,
or (y) at such times as the Company is not a
reporting company under the aforesaid provisions of
the Exchange Act, as soon as practicable after the
end of each of the first three fiscal quarters of
each fiscal year, financial statements of the Company
and its subsidiaries, including a balance sheet,
statement of operations, statement of stockholders'
equity and statement of cash flows as at the end of,
or for each such fiscal quarter and the comparable
period of the preceding year, which statements need
not be audited;
(3) as soon as practicable after they have first been
distributed to stockholders of the Company, copies of
each annual and interim financial or other report or
communication sent by the Company to its stockholders
(except to the extent duplicative of information
furnished pursuant to any other clause of this
Section 4(n));
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(4) as soon as practicable following release or other
dissemination, copies of every press release and
every material news item and article in respect of
the Company or its affairs released or otherwise
disseminated by the Company;
(5) such additional documents and information with
respect to the Company and its affairs and the
affairs of its subsidiaries, if any, as you may from
time to time reasonably request.
(o) The Company agrees to expand its Board of Directors from three
(3) to no more than five (5) members within thirty (30) days
following the Effective Date, at least two (2) of which
members will be unaffiliated with the Company; and that for a
period of five years after the date of this Agreement, to use
its best efforts to cause the Company's Board of Directors to
nominate a designee of you for election to the Company's Board
of Directors, and to solicit proxies for the election of such
designee as a director of the Company, so long as, during such
time, you elects to select such a designee and such designee
otherwise meets the qualification for election as director of
the Company. At least 60 days prior to the earlier of any
election of the Board of Directors or the commencement of any
solicitation of proxies for such election, the Company shall
notify you of the date of such election or of the commencement
of such solicitation. You shall have the right to furnish
written notice to the Company of the name of the person
designated by you to serve as director no more than 30 days
following receipt of such notice. In the absence of such
notice from you, the director then serving and previously
designated by you, if any, shall be nominated and shall stand
for reelection. In the event you shall choose not to
designate a representative for election to the Company's Board
of Directors, a representative designated by you shall be duly
authorized to attend all meetings of the Company's Board of
Directors in a nonvoting observer capacity and, in such event,
the Company shall give such representative copies of all
notices, minutes, consents, and other materials that it
provides its directors; provided, however, that such
representative shall agree to hold in confidence and trust and
to act in a fiduciary manner with respect to all information
so provided. If the Company maintains a liability insurance
policy offering coverage for acts or omissions of its officers
and directors, it agrees to include your designee as an
insured under such policy.
(p) On or prior to the Effective Date, the Company will have
obtained the listing of the Shares on the Nasdaq SmallCap
Market, subject only to notice of issuance and the
registration of such securities under the Exchange Act. For a
period of five years from the date of this Agreement, the
Company agrees, at its sole cost and expense, to use its best
efforts to ensure that its securities continue to be listed on
the Nasdaq SmallCap Market (or such other market or exchange
to which you reasonably consents), provided that the Company
otherwise complies with the prevailing requirements for such
listing.
(q) For a period of twenty-four (24) months after the date of this
Agreement the Company will not seek to amend its certificate
of incorporation to authorize the issuance
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of any other class of its capital stock, including, without
limitation, any preferred stock, without your prior written
consent, which consent shall not be unreasonably withheld or
delayed.
(r) As soon as practicable after the date of this Agreement, the
Company shall apply for listing in Standard and Poor's
Corporate Record Service and Annual Report Service and ensure
the Company's continued listing for a period of not less than
five years, provided that the Company's otherwise complies
with prevailing requirements for such listing.
(s) The Company agrees, at its own cost and expense, to deliver to
you and its counsel, within a reasonable period after the last
Optional Closing Date, or the expiration of the period in
which you may exercise the over-allotment option, two bound
volumes containing copies of all documents and correspondence
filed with, or received from, the Commission and the NASDR
relating to the offering of the Shares and the closing
thereof, including related matters. In addition, the Company
shall bear the costs of such "tombstone" advertisements as you
may reasonably request and of 12 "embodiments."
(t) The Company will make generally available to its security
holders and deliver to you as soon as it is practicable to do
so (but in no event later than the 45th day after the end of
the twelve-month period beginning at end of fiscal quarter of
the Company during which the Registration Statement
becomes effective, or, if the Registration Statement becomes
effective during the Company's last fiscal quarter, the 90th
day after the end of such twelve-month period), an earnings
statement of the Company and its subsidiaries (which need not
be audited) covering a period of at least twelve consecutive
months commencing after the effective date of the Registration
Statement, which shall satisfy the requirements of Section
11(a) of the Act.
(u) The Company will, promptly upon your reasonable request,
prepare and file with the Commission any amendments or
supplements to the Registration Statement, any Preliminary
Prospectus or the Prospectus and take any other action, which
in the reasonable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to you,
may be reasonably necessary or advisable in connection with
the distribution of the Shares, and will use its best efforts
cause the same to become effective as promptly as reasonably
possible.
(v) The Company will furnish to you as early as practicable prior
to the Closing Date and any Optional Closing Date, as the case
may be, but no less than two full business days prior thereto,
a copy of the latest available unaudited interim financial
statements of the Company and its subsidiaries which have been
reviewed by the Company's independent certified public
accountants, as stated in their letters to be furnished
pursuant to Section 7(e) hereof; provided, however, that if
that latest available unaudited interim financial statements
theretofore have been included in the Registration Statement,
a Preliminary Prospectus, a Rule 430A Prospectus or a
Prospectus previously filed with the Commission, no additional
financial statements need be furnished pursuant hereto. Any
such financial statements will be on a consolidated basis to
the extent the accounts of the
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Company and its subsidiaries are generally consolidated in
reports furnished to the Company's stockholders.
(w) The Company will apply the net proceeds from the issuance and
sale of the Shares for the purposes and in the manner set
forth under the caption "Use of Proceeds" in the Prospectus,
and will file on a timely basis such reports with the
Commission with respect to the sale of the Shares and the
application of the proceeds therefrom as may be required
pursuant to Rule 463 under the Act. The Company will operate
its business in such a manner and, pending application of the
net proceeds of the offering for the purposes andin the manner
set forth under the caption "Use of Proceeds" in the
Prospectus, will invest such net proceeds in certain types of
securities so as not to become an "investment company" as such
term is defined under the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(x) The Company has filed a registration statement on Form 8-A
covering the Shares pursuant to Section 12(b) of the Exchange
Act and will use its best efforts to cause said registration
statement to become effective on the Effective Date. The
Company will comply with all registration, filing and
reporting requirements of the Exchange Act, which may from
time to time be applicable to the Company. The Company shall
comply with the provisions of all undertakings contained in
the Registration Statement.
(y) Prior to the Closing Date or any Optional Closing Date, as the
case may be, the Company shall neither issue any press release
or other communication, directly or indirectly, nor hold any
press conference with respect to the offering of the Shares,
the Company, its subsidiaries or its business, results of
operations, condition (financial or otherwise), property,
assets, liabilities or prospects of the Company or any of its
subsidiaries, without the prior written consent of you, which
consent shall not unreasonably be denied or delayed; provided,
however, that if counsel to the Company is of the opinion that
the issuance of a press release or other communication or a
press conference is required to comply with or avoid a
violation of applicable law, and having been so informed you
decline to consent thereto, the Company shall be permitted to
issue such press release or other communication or hold such
press conference in the manner advised by its counsel.
(z) For a period of ninety (90) days after the date hereof, the
Company will not, directly or indirectly, take any action
designed, or which will constitute or which might reasonably
be expected to cause or result in, stabilization or
manipulation of the market price of the Shares, or the
facilitation of the sale or resale of the Shares.
(aa) Neither the Company nor any of its subsidiaries will grant any
person or entity registration rights with respect to any of
its securities, except such rights as are subordinate to the
registration rights contained in the Underwriter's Warrant
Agreement and are exercisable no earlier than six months after
the securities to be registered upon exercise of such
registration rights have been offered for sale pursuant to an
effective registration statement under the Act and registered
or qualified for sale under the Blue Sky or state securities
law, rules or regulations of the jurisdictions in which such
securities are to be offered for sale.
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(bb) The Company hereby agrees to retain R.T.G. ▇▇▇▇▇▇▇▇ for a
period of three (3) years following the Closing Date to
provide consultations, discussions and analysis of financial,
market and industry matters at an annual fee of $30,000, such
fee to be due and payable in full on the Closing Date.
(cc) The Company hereby agrees to enter into a Merger and
Acquisition Agreement with R.T.G. ▇▇▇▇▇▇▇▇ pursuant to which
R.T.G. ▇▇▇▇▇▇▇▇ will receive a finder's fee ranging from 10%
of the first $1,000,000, 5% of the next $1,000,000, 4% of the
next $1,000,000, 3% of the next $1,000,000 and 2% of any
excess over $4,000,000 of the consideration involved in any
transaction involving the Company introduced by R.T.G.
▇▇▇▇▇▇▇▇ and consummated with three years following the
closing of the Offering.
(dd) The Company hereby agrees as promptly as practicable to obtain
Key Man Life Insurance on the life of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, payable
to the Company, in the amount of $4,000,000, or such lesser
amount as is the maximum obtainable for an annual premium not
to exceed $7,500. The Company shall cause such Key Man
Insurance to be maintained in force until the second
anniversary of the Closing Date; provided, however, that the
amount thereof may be reduced by the amount necessary to
maintain the annual premium at not more than $7,500.
(ee) The Company hereby agrees, that for a period of three years
following the Closing Date, promptly upon request therefor, it
will provide to you, free of charge, copies of the Company's
daily transfer sheets prepared by the Company's transfer agent
and a list of the Company's stockholders.
(ff) The Company hereby agrees to retain a public relations firm
reasonably acceptable to you to provide financial public
relations advice and assistance in a manner reasonably
acceptable to you and, until the fifth anniversary of the
Closing Date (or such earlier date on which R.T.G. ▇▇▇▇▇▇▇▇
shall cease to own any Underwriter's Warrants or shares
of Common Stock issued in respect thereof), to continue to
retain such firm or another firm reasonably acceptable to you
to provide such financial public relations advice and
assistance.
(gg) The Company hereby agrees that, during the period ending
December 31, 1997, it will not, without your prior consent,
increase the compensation paid or payable, or grant any stock
options, to any executive officer of the Company, except
pursuant to the Company's Stock Option Plan as described in
the Registration Statement.
(hh) The Company hereby agrees that, until the fifth anniversary of
the Closing (or such earlier date on which R.T.G. ▇▇▇▇▇▇▇▇
shall cease to own any Underwriter's Warrants or shares
of Common Stock issued in respect thereof), the Company will
consult with R.T.G. ▇▇▇▇▇▇▇▇ concerning, and furnish to it
for its review, copies of any financial information,
news releases and/or other publicity regarding the Company,
its business, or any terms of any proposed offering of the
Company's securities, before disclosing such information,
releases, publicity or terms to any third party.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY: (A) The Company
represents and warrants to you that:
(a) When the Registration Statement becomes effective, and at all
times subsequent thereto to and including the Closing Date and
each Optional Closing Date, and during such longer period as
the Prospectus may be required to be delivered in connection
with sales by you or any dealer, and during such longer period
until any post-effective amendment thereto shall become
effective, the Registration Statement (and any post-effective
amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the
Commission any amendment or supplement to the Registration
Statement or the Prospectus) will contain all material
statements which are required to be stated therein in
accordance with the Act, will comply in all material respects
with the Act, and will not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading, and no event will have occurred which should
have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not then
been set forth in such an amendment or supplement; if a Rule
430A Prospectus is included in the Registration Statement at
the time it becomes effective, the Prospectus filed pursuant
to Rules 430A and 424(b) (1) or (4) will contain all Rule 430A
Information and all statements which are required to be stated
therein in accordance with the Act, will comply in all
material respects with the Act, and will not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading; and each
Preliminary Prospectus, as of the date filed with the
Commission, did not include any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading; except that no representation or warranty is made
in this Section 5(A)(a) with respect to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 6(b)
with respect to you expressly for inclusion in any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or
any amendment or supplement thereto.
(b) Neither the Commission nor the Blue Sky or securities
authorities of any jurisdiction has issued an order suspending
the effectiveness of the Registration Statement, preventing or
suspending the use of any Preliminary Prospectus, the
Prospectus, the Registration Statement, or any amendment or
supplement thereto, refusing to permit the effectiveness
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of the Registration Statement, or suspending the registration
or qualification of the Shares, nor has the Commission or any
of such authorities instituted or, to the knowledge of the
Company, threatened to institute any proceedings with respect
to such an order.
(c) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of New Jersey, its
jurisdiction of incorporation. The Company and each of its
subsidiaries have full corporate power and authority and has
obtained all necessary consents, authorizations, approvals,
orders, licenses, certificates, declarations and permits of
and from, and have made all required filings with, all
federal, state, local and other governmental authorities and
all courts and other tribunals, to own, lease, license and use
their properties and assets and to carry on their respective
businesses in the manner described in the Prospectus, except
where the failure to do so will not have a material adverse
effect on the business, properties or financial condition of
the Company and its subsidiaries, taken as a whole. All such
consents, authorizations, approvals, orders, licenses,
certificates, declarations, permits and filings are in full
force and effect and the Company and/or its subsidiaries, are
in all material respects complying therewith. The Company and
its subsidiaries are duly registered or qualified to do
business as foreign corporations and are in good standing in
each other jurisdiction in which their ownership, leasing,
licensing, or use of property and assets or the conduct of
their respective businesses require such registration or
qualification, except where the failure to be so qualified
does not have a material adverse effect on the business,
properties or financial condition of the Company and its
subsidiaries, taken as a whole.
(d) The authorized capital stock of the Company consists of
____________ shares of Common Stock, of which _____________
shares are outstanding and ____________ shares of Preferred
Stock, of which _____________ shares are outstanding. Each
outstanding share of capital stock of the Company and each
subsidiary of the Company, is duly authorized, validly issued,
fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and has not been issued
and is not owned or held in violation of any preemptive rights
of stockholders. There is no commitment, plan or arrangement
to issue, and no outstanding option, warrant or other right
calling for the issuance of, any share of capital stock of the
Company, or that of any of its subsidiaries or any security or
other instrument which by its terms is convertible into,
exercisable for, or exchangeable for capital stock of the
Company or that of any of its subsidiaries, except as
disclosed in the Prospectus. There is outstanding no security
or other instrument which by its terms is convertible into or
exchangeable for capital stock of the Company or that of any
of its subsidiaries, except as disclosed in the Prospectus.
(e) The financial statements of the Company and its subsidiaries,
together with the related notes and schedules, included in the
Registration Statement and the Prospectus fairly present the
financial position, the results of operations and the other
information purported to be shown therein at the respective
dates and for the respective periods to which they apply.
Such financial statements have been prepared in accordance
with generally accepted accounting principles and are prepared
in accordance with the books and records of the Company and
its subsidiaries. The accountants whose reports on the
audited financial statements are filed with the Commission as
a part of the Registration Statement are, and as of the
dates of their report(s) included in the
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Registration Statement and the Prospectus were, independent
certified public accountants with respect to the Company and
its subsidiaries within the meaning of the Act. No other
financial statements are required by Form SB-2 or otherwise to
be included in the Registration Statement or the Prospectus.
Except as disclosed in the Prospectus, there has at no time
been a material adverse change in the condition (financial or
otherwise), results of operations, business, property, assets,
liabilities or prospects of the Company or any of its
subsidiaries from the latest information set forth in the
Registration Statement or the Prospectus.
(f) There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation
pending or threatened (or any basis therefor known to the
Company or any of its subsidiaries) with respect to or
affecting the Company or any of its subsidiaries, their
operation, businesses, property or assets, or related to the
offer for sale or the offer of franchises for the operation of
a ▇▇▇▇▇▇▇▇'▇ Original Old World Bagels or Sammy's New York
Bagels facility, except as disclosed in the Prospectus or such
as individually or in the aggregate do not now have and are
not expected to have a material adverse effect upon the
operations, businesses, property, assets, condition (financial
or otherwise) or prospects of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries
are in violation of, or in default with respect to, any law,
rule, regulation, order, judgment, or decree, except as
disclosed in the Prospectus or such as individually or in the
aggregate do not now have and are not expected to have a
material adverse effect upon the operations, businesses,
property, assets, condition (financial or otherwise) or
prospects of the Company or any of its subsidiaries; nor is
the Company or any of its subsidiaries required to take any
action in order to avoid any such violation or default. At
all times since the Company and its subsidiaries began
offering for sale franchises for the operation of ▇▇▇▇▇▇▇▇'▇
Original Old World Bagels or Sammy's New York Bagels
facilities, the Company and its subsidiaries have been, and
currently are, in compliance with all material requirements of
all laws, rules and regulations applicable to the offer for
sale or sale of franchises in all jurisdictions in which the
Company and its subsidiaries have offered for sale or sold, or
are offering for sale or proposes to offer or to sell
franchises for the operation of a ▇▇▇▇▇▇▇▇'▇ Original Old
World Bagels or Sammy's New York Bagels facility.
(g) The Company and its subsidiaries have good and marketable
title in fee simple absolute to all real properties and good
title to all other properties and assets which the Prospectus
indicates are owned by them, free and clear of all liens,
security interests, pledges, charges, mortgages and other
encumbrances (except as disclosed in the Prospectus or which
are not material in amount). The properties held under lease
by the Company and its subsidiaries are held by it under valid
and enforceable leases and the interests of the Company and
its subsidiaries in such leases are free and clear of all
liens, encumbrances and defects, except as disclosed in the
Prospectus or which are not material in amount, and the
Company and its subsidiaries are in full compliance with all
material terms and conditions thereunder and such leases are
in full force and effect. No real property owned, leased,
licensed or used by the Company or its subsidiaries is
situated in an area which is, or to the knowledge of the
Company or its subsidiaries will be, subject to zoning, use,
or building code restrictions which would prohibit (and no
state of facts relating to the actions or inaction of another
person or entity or his or its ownership,
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leasing, licensing, or use of any real or personal property
exists or will exist which would prevent) the continued
effective ownership, leasing, licensing, or use of such real
property in the business of the Company or its subsidiaries as
presently conducted or as the Prospectus indicates any of them
contemplate conducting (except as disclosed in the
Prospectus).
(h) Neither the Company nor any of its subsidiaries nor any other
party is now or, to the knowledge of the Company, is expected
by the Company or any of its subsidiaries to be in violation
or breach of, or in default with respect to complying with,
any material provision of any indenture, mortgage, deed of
trust, debenture, note or other evidence of indebtedness,
contract, agreement, instrument, lease or license, or
arrangement or understanding which is material to the Company
and its subsidiaries, taken as a whole, and each such
indenture, mortgage, deed of trust, debenture, note or other
evidence of indebtedness, contract, agreement, instrument,
lease or license is in full force and is the legal, valid and
binding obligation of the Company and/or its subsidiaries, and
to the knowledge of the Company and its subsidiaries, of the
other contracting party and is enforceable as to them in
accordance with its terms. The Company and its subsidiaries
enjoy peaceful and undisturbed possession under all leases and
licenses under which they are operating. Neither the Company
nor any of its subsidiaries is a party to or bound by any
contract, agreement, instrument, lease, license, arrangement
or understanding, or subject to any charter or other
restriction, which has had or is expected in the future to
have a material adverse effect on the condition (financial or
otherwise), results of operations, businesses, property,
assets or liabilities of the Company and its subsidiaries,
taken as a whole. Neither the Company nor any of its
subsidiaries is in violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation or
By-laws.
(i) Goldberg's Original Old World Bagels and Sammy's New York
Bagels are trademarks of the Company. Except for said
trademarks, neither the Company nor any of its subsidiaries
owns or has any licensed rights to, in or under any patents,
patent applications, trademarks, trademark applications, trade
names, service marks, copyrights, technology, know-how or
other intangible properties or assets (all of the foregoing
being herein called "Intangibles") that are material to the
business of the Company and its subsidiaries, taken as a
whole. There is no right under any Intangibles of the Company
or its subsidiaries necessary to the business of the Company
and its subsidiaries as presently conducted or as proposed to
be conducted as indicated in the Prospectus, except as
disclosed in the Prospectus. Neither the Company nor any of
its subsidiaries has received notice of infringement with
respect to asserted Intangibles of others. To the knowledge
of the Company and its subsidiaries, there is no infringement
by others of Intangibles of the Company or its subsidiaries.
To the knowledge of the Company and its subsidiaries, there is
no Intangible of others which has had or may in the future
have a materially adverse effect on the condition (financial
or otherwise), results of operations, businesses, property,
assets, liabilities or prospects of the Company and its
subsidiaries, taken as a whole.
(j) Neither the Company, its subsidiaries, any director or officer
of the Company or its subsidiaries, or to the knowledge of the
Company and its subsidiaries, any agent,
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employee, or other person authorized to act on behalf of the
Company or its subsidiaries has, directly or indirectly: used
any corporate funds of the Company or its subsidiaries for
unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any
unlawful payment to foreign or domestic government officials
or employees or to foreign or domestic political parties or
campaigns from corporate funds of the Company or its
subsidiaries; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, as relates to the business
of the Company and its subsidiaries; or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful
payment in connection with the business of the Company or its
subsidiaries.
(k) The material terms of any contract, agreement, instrument,
lease or license required to be described in the Registration
Statement or the Prospectus have been properly described
therein. Any contract, agreement, instrument, lease or
license required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to
or has been incorporated as an exhibit by reference into the
Registration Statement.
(l) The Company has all requisite corporate power and authority to
execute, deliver and perform under the terms and conditions of
this Agreement and the Underwriter's Warrants. All necessary
corporate proceedings of the Company have been duly taken to
authorize the execution, delivery and performance by the
Company of this Agreement and the Underwriter's Warrants. This
Agreement has been duly authorized, executed and delivered by
the Company, is a legal, valid, and binding agreement of the
Company, and is enforceable as to the Company in accordance
with its terms. The Underwriter's Warrants have been duly
authorized by the Company and, when executed and delivered by
the Company, assuming the due execution and delivery thereof
by the other parties thereto, will be a legal, valid and
binding agreement of the Company, enforceable against the
Company in accordance with its terms. No consent,
authorization, approval, order, license, certificate,
declaration or permit of or from, or filing with, any
governmental or regulatory authority, agent, board or other
body is required for the issue and sale of the Shares by the
Company and the execution, delivery or performance by the
Company of this Agreement or the Underwriter's Warrants (except
filings with and orders of the Commission pursuant to the Act
which have been or will be made or obtained prior to the
Closing Date, and such filings, consents or permits as are
required under Blue Sky or securities laws in connection with
the transactions contemplated by this Agreement). No consent
of any party to any contract, agreement, instrument, lease,
license, arrangement or understanding to which the Company or
any of its subsidiaries are a party, or to which any of their
properties or assets are subject, is required for the
execution, delivery or performance of this Agreement or the
Underwriter's Warrants; and the execution, delivery and
performance of this Agreement and the Underwriter's Warrants
will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default
under any such contract, agreement, instrument, lease,
license, arrangement or understanding, result in the creation
or imposition of, any lien, security interest, pledge, charge,
or other encumbrance upon any of the property or assets of the
Company or its subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan or credit agreement,
lease or other 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 is bound or to which any
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of the property or assets of the Company or any of its
subsidiaries are subject or violate or result in a breach of
any term of the Certificate of Incorporation or By-laws of the
Company or any of its subsidiaries, or violate, result in a
breach of, or conflict with any law, rule, regulation, order,
judgment or decree binding on the Company or any of its
subsidiaries or to which any of their operations, businesses,
properties or assets are subject.
(m) The Shares are duly authorized, and when issued, paid for and
delivered in accordance with this Agreement, will be validly
issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be
issued in violation of any preemptive rights of stockholders.
You will receive good title to the Shares and R.T.G. ▇▇▇▇▇▇▇▇
will receive good title to the Underwriter's Warrants purchased
by it, upon payment of the purchase price therefor in
accordance with the provisions thereof and of this Agreement,
free and clear of all liens, security interests, pledges,
charges, encumbrances, stockholders' agreements and
votingtrusts (collectively, "Encumbrances").
(n) The Underwriter's Warrants Shares are duly authorized and
validly reserved for issuance and, when issued, paid for and
delivered upon exercise of the Underwriter's Warrants, in
accordance with the provisions thereof and of this Agreement
will be validly issued, fully paid and nonassessable and will
not be issued in violation of any preemptive rights of
stockholders; and the holders of the Underwriter's Warrants
Shares will receive good title to them, free and clear of all
Encumbrances.
(o) The Shares and the Underwriter's Warrants conform to all
statements relating thereto contained in the Registration
Statement and the Prospectus.
(p) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as
otherwise may be stated therein, (i) neither the Company, nor
its subsidiaries have entered into any transaction or incurred
any liability or obligation, contingent or otherwise, which is
material to the Company and its subsidiaries, taken as a
whole, except in the ordinary course of business, (ii) there
has not been any change in the outstanding capital stock of
the Company or its subsidiaries, or any issuance of options,
warrants or rights to purchase the capital stock of the
Company or its subsidiaries, or any material increase in the
long-term debt of the Company or its subsidiaries, or any
material adverse change in the business, condition (financial
or otherwise) or results of operations of the Company or its
subsidiaries, (iii) no loss or damage (whether or not insured)
to the properties of the Company or its subsidiaries has been
sustained which is material to the Company and its
subsidiaries, taken as a whole, (iv) neither the Company nor
its subsidiaries have paid or declared any dividend or other
distribution with respect to their stock, and (v) there has
not been any change, contingent or otherwise, in the direct or
indirect control of the Company or its subsidiaries nor, to
the best knowledge of the Company and its subsidiaries, do
there exist any circumstances which would likely result in
such a change.
(q) Neither the Company, its subsidiaries, nor any officers or
directors of the Company or its subsidiaries or Affiliates (as
defined in Rule 405 of the Rules and Regulations), has taken
or will take, directly or indirectly, prior to the termination
of the offering
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contemplated by this Agreement, any action designed to
stabilize or manipulate the price of any security of the
Company, or which has caused or resulted in, or which might in
the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of
the Company, to facilitate the sale or resale of any of the
Shares.
(r) Neither the Company nor its subsidiaries, have incurred,
directly or indirectly, any liability for a fee, commission or
other compensation on account of the employment of a broker or
finder in connection with the offering of the Shares
contemplated by this Agreement.
(s) The Company is not conducting, and does not intend to conduct,
its business in a manner in which it would become an
"investment company" as defined in Section 3(a) of the
Investment Company Act.
(t) The Company has obtained, or prior to the Closing Date will
obtain the Lock-up Letters, as contemplated by Section 4(k)
hereof.
(u) The Company has retained, or prior to or on the Closing Date
shall have retained, R.T.G. ▇▇▇▇▇▇▇▇ in a financial consulting
capacity, as contemplated by Section 4(bb) hereof.
(v) The Company and R.T.G. ▇▇▇▇▇▇▇▇ have entered into, or prior
to or on the Closing Date shall have entered into, the Merger
and Acquisition Agreement contemplated by Section 4(cc) hereof
(w) The Company has retained a public relations firm as
contemplated by Section 4 (ff) hereof.
(x) Except as disclosed in the Prospectus, no person or entity has
the right to require registration of shares of Common Stock or
other securities of the Company because of the filing or
effectiveness of the Registration Statement who has not waived
such right.
(y) The Company and its subsidiaries have adequately insured their
properties against loss or damage by fire, maintain adequate
insurance against liability for negligence and maintain such
other insurance as is usually maintained by companies engaged
in the same or similar businesses, including product liability
insurance.
(z) The Company and its subsidiaries have filed all federal, state
and local tax returns required to be filed (or have obtained
extensions therefor) and have paid all taxes shown on such
returns and all assessments received by it to the extent that
payment has become due, except federal payroll taxes in the
approximate amount of $________________ . The Company and its
subsidiaries have made adequate accruals for all taxes which
may be owed by them but have not been paid.
(aa) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, who have certified certain financial
statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder.
(bb) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability;
(iii) access to cash and cash equivalents is permitted only in
accordance with management's general or specific
authorization; and (iv) the recorded accountability for cash
and cash equivalents is compared with the existing cash and
cash equivalents at reasonable intervals and appropriate
action is taken with respect to any differences.
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(cc) There are no business relationships or related party
transactions of the nature described in Item 404 of Regulation
S-B of the Rules and Regulations involving the Company, any of
its subsidiaries and any person referred to in Items 401 or
404, except as required to be described in the Prospectus and
as so described.
6. INDEMNIFICATION AND CONTRIBUTION:
(a) The Company agrees to indemnify and hold harmless you, your
officers, directors, partners, employees, agents and counsel,
and each person, if any, who controls you within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage, and
expense whatsoever (which shall include, for all purposes of
this Section 6, but not be limited to, attorneys' fees and any
and all expense whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts
paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i)
any untrue statement or alleged untrue statement of a material
fact contained (1) in any Preliminary Prospectus, the Rule
430A Prospectus, the Registration Statement, or the Prospectus
(as from time to time amended and supplemented), or any
amendment or supplement thereto, or (2) in any application or
other document or communication (in this Section 6
collectively called an "application") executed by or on behalf
of the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order
to qualify the Shares under the Blue Sky or securities laws
thereof (or the rules and regulations promulgated thereunder)
or filed with the Commission or any securities exchange or
automated quotation system; or any omission or alleged
omission to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon and in conformity with written information
furnished to the Company as stated in Section 6(b) by you for
inclusion in any Preliminary Prospectus, the Rule 430A
Prospectus, the Registration Statement, of the Prospectus, or
any amendment or supplement thereto, or in any application, as
the case may be, provided that the Company will not be liable
pursuant hereto with respect to any such statement or omission
made in any Preliminary Prospectus that is corrected in the
Prospectus (or and amendment or supplement thereto) if the
person asserting such loss, liability, damage, claim or
expense purchased shares from you but was not sent or given a
copy of the Prospectus (as amended or supplemented) at or
prior to the written confirmation of the sale of the Shares to
such person in any case where such delivery is required by the
Act, unless such failure to deliver was the result of
noncompliance, by the Company, with Section 4(f) hereof, or
(ii) any breach of any representation, warranty, covenant or
agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including
liabilities arising under this Agreement.
If any action is brought against you or any of its officers,
directors, partners, employees, agents or counsel, or any
controlling persons of you (each, an "indemnified party") in
respect of which indemnity may be sought against the Company
pursuant to the foregoing paragraph, such indemnified party or
parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall
not relieve the Company from any liability it may have
pursuant to this Section
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6(a)) and the Company shall promptly assume the defense of such
action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment
of expenses. Such 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 sole
expense of such indemnified party or parties, unless the
employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such
action or the Company shall not have promptly employed counsel
reasonably satisfactory to such indemnified party or parties
to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded
that there may be one or more legal defenses available to it
or them or to other indemnified parties which are different
from or additional to those available to the Company, in any
of which events such fees and expenses shall be borne by the
Company and the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or
parties. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its
prior written consent. The Company agrees promptly to notify
you of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in
connection with the sale of the Shares, any Preliminary
Prospectus, the Rule 430A Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement
thereto, or any application.
(b) You agree to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall
have signed the Registration Statement, and each other person,
if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, and each
Selling Shareholder, to the same extent as the foregoing
indemnity from the Company to you in Section 6(a), but only
with respect to statements or omissions, if any, made in any
Preliminary Prospectus, the Rule 430A Prospectus, the
Registration Statement, or the Prospectus (as from time to
time amended and supplemented), or any amendment or supplement
thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company
by you expressly for inclusion in any Preliminary Prospectus,
the Rule 430A Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be. For all purposes of this
Agreement, the public offering price, the amounts of the
selling concession and re-allowance set forth in the
Prospectus and the information as to the stabilization set
forth on the inside front cover, under the heading "Risk
Factors - Inexperience of Underwriter" and in the ___________
paragraph under "Underwriting" constitute the only information
furnished in writing by or on behalf of you expressly for
inclusion in any Preliminary Prospectus, the Rule 430A
Prospectus, the Registration Statement or the Prospectus (as
from time to time amended or supplemented), or any amendment
or supplement thereto, or in any application, as the case may
be. If any action shall be brought against the Company or any
other person so indemnified based upon any Preliminary
Prospectus, the Rule 430A Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement
thereto, or any application, and in respect of which indemnity
may be sought against you pursuant to this Section 6(b), you
shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the
provisions of Section 6(a).
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(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant
to Section 6(a) or 6(b) (subject to the limitations thereof)
but it is found in a final judicial determination, not subject
to further appeal, that such indemnification may not be
enforced in such case, even though this Agreement expressly
provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the
Act, the Exchange Act, or otherwise, then the Company
(including for this purpose any contribution made by or on
behalf of any director of the Company, any officer of the
Company who signed the Registration Statement, and any
controlling person of the Company), as one entity, and you
(including for this purpose any contribution made by or on
behalf of any directors, officers, partners, employees, agents
or controlling persons of you), as a second entity, shall
contribute to the losses, liabilities, claims, damages and
expenses whatsoever to which any of them may be subject, so
that you are responsible for the proportion thereof equal to
the percentage which the aggregate underwriting discount set
forth on the cover page of the Prospectus represents of the
initial public offering price of the Shares set forth on the
cover page of the Prospectus and the Company is responsible
for the remaining portion, in proportion to the net proceeds
from the offering received by them; provided, however, that if
applicable law does not permit such allocation, then other
relevant equitable considerations such as the relative fault
of the Company and you in the aggregate in connection with the
facts which resulted in such losses, liabilities, claims,
damages and expenses shall also be considered. The relative
fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined
by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to
information supplied by the Company or by you, and the
parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement, alleged
statement, omission or alleged omission. The Company and you
agree that it would be unjust and inequitable if the
respective obligations of the Company and you for contribution
were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages and expenses or
by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 6(c). No
person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this Section
6(c), each person, if any, who controls you within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act,
each officer of the Company who shall have 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 the provisions of this Section 6(c). Anything
in this Section 6(c) to the contrary notwithstanding, no party
shall be liable for contribution with respect to the
settlement of any claim or action effected without its written
consent. This Section 6(c) is intended to supersede any right
to contribution under the Act, the Exchange Act, or otherwise.
7. CONDITIONS OF YOUR OBLIGATIONS: Your obligations hereunder are
subject to the continuing accuracy of the representations and warranties of the
Company contained herein and in each certificate and document contemplated
under this Agreement to be delivered to you, as of the date hereof, as of the
Closing Date, and each Optional Closing Date, as the case may be, to the
performance by the Company of its obligations hereunder, and to the following
additional conditions:
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(a) Notification that the Registration Statement has become
effective shall be received by you not later than 6:30 p.m.,
New York City time, on the date of this Agreement or at such
later date and time as shall be consented to in writing by
you. If the Company has elected to rely upon Rule 430A of the
Rules and Regulations, the price of the Shares and any
price-related information previously omitted from the
effective Registration Statement pursuant to such Rule 430A
shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) of the Rules and Regulations within
the prescribed time period, and prior to the Closing Date the
Company shall have provided evidence reasonably satisfactory
to you 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 Commission shall not have issued a Stop Order and no Blue
Sky or securities authority of any jurisdiction shall have
issued an order suspending the registration or qualification
of the Securities, and no proceedings for such purpose shall
have been instituted or shall be pending, or to the knowledge
of the Company, be threatened or contemplated by the
Commission or the Blue Sky or securities authorities of any
such jurisdiction.
(c) You shall have received an opinion, dated the Closing Date and
satisfactory in form and substance to counsel for you from
Venable, Baetjer, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel to the
Company and its subsidiaries, to the effect that:
(1) The Company is a corporation validly existing in good
standing under the laws of New Jersey, its
jurisdiction of incorporation, with full corporate
power and authority to own its property and conduct
its business in the manner described in the
Prospectus. Each subsidiary of the Company is
validly existing and in good standing in its
jurisdiction of incorporation, with full corporate
power and authority to own its property and conduct
its business. To the knowledge of such counsel,
after reasonable investigation, the Company and its
subsidiaries have obtained all necessary consents,
authorizations, approvals, orders, licenses,
certificates, declarations and permits of and from,
and have made all required filings with, all federal,
state, local and other governmental authorities and
all courts and other tribunals, to own, lease,
license and use their respective properties and
assets and to carry on their respective businesses in
the manner described in the Prospectus, except where
the failure to do so will not have a material adverse
effect on the business, properties or financial
condition of the Company and its subsidiaries,
considered as a single enterprise. The Company and
its subsidiaries are duly registered or qualified to
do business as foreign corporations and are in good
standing in the States of ___________________________
___________ , which, to the knowledge of such
counsel, after reasonable investigation, are the
only jurisdictions in which their ownership, leasing,
licensing, or use of property and assets or the
conduct of their respective businesses require such
registration or qualification.
(2) The authorized capital stock of the Company consists
of ___________ shares of Common Stock, of which
_______ ___ shares are outstanding and ___________
shares of Preferred Stock, of which ___________
shares
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of Preferred Stock, of which _________________ shares
are outstanding. Each outstanding share of such
capital stock is duly authorized, validly issued,
fully paid, and nonassessable, with no personal
liability attaching to the ownership thereof, has not
been issued and is not owned or held in violation of
any preemptive right of stockholders. To the
knowledge of such counsel, after reasonable
investigation, there is no commitment, plan or
arrangement to issue, and no outstanding option,
warrant or other right calling for the issuance of,
any share of capital stock of the Company, or its
subsidiaries, or any security or other instrument
which by its terms is convertible into, exercisable
for, or exchangeable for capital stock of the Company
or its subsidiaries, except as disclosed in the
Prospectus. To the knowledge of such counsel, after
reasonable investigation, there is outstanding no
security or other instrument which by its terms is
convertible into or exchangeable for capital stock of
the Company or its subsidiaries, except as disclosed
in the Prospectus.
(3) To the knowledge of such counsel, after reasonable
investigation, there is no litigation, arbitration,
claim, governmental or other proceeding (formal or
informal), or investigation pending or threatened,
with respect to the Company, its subsidiaries, or any
of their operations, businesses, property or assets,
or related to the offer for sale or the sale of
franchises for the operation of a ▇▇▇▇▇▇▇▇'▇
Original Old World Bagels and Sammy's New York Bagels
facility, except as disclosed in the Prospectus or
such as individually or in the aggregate do not now
have and are not expected to have a material adverse
effect on the operations, business, property, assets
or condition (financial or otherwise) of the Company
and subsidiaries, considered as a single enterprise.
To the knowledge of such counsel, after reasonable
investigation, neither the Company nor its
subsidiaries are in violation of, or in default with
respect to, any law, rule, regulation, order,
judgment or decree, except as disclosed in the
Prospectus or such as individually or in the
aggregate do not now have and are not expected to
have a material adverse effect on the operations,
businesses, property, assets or condition (financial
or otherwise) of the Company and its subsidiaries,
considered as a single enterprise; nor is the
Company, or its subsidiaries, required to take any
action in order to avoid any such violation or
default.
(4) To the knowledge of such counsel, after reasonable
investigation, except as disclosed in the Prospectus,
neither the Company, its subsidiaries, nor any other
party is now in violation or breach of, or in default
with respect to complying with, any material
provision of any indenture, mortgage, deed of trust,
debenture, note or other evidence of indebtedness,
contract, agreement, instrument, lease or license, or
arrangement or understanding which is material to the
Company and its subsidiaries, considered as a single
enterprise and each such indenture, mortgage, deed of
trust, debenture, note or other evidence of
indebtedness, contract, agreement, instrument, lease
or license is in full and force and is the legal,
valid and binding obligation of the Company or its
subsidiaries.
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(5) Neither the Company nor its subsidiaries are in
violation or breach of, or in default with respect
to, any term of their respective Certificates of
Incorporation or By-laws.
(6) The Company has all requisite corporate power and
authority to execute, deliver and perform this
Agreement and the Underwriter's Warrants. All
necessary corporate proceedings of the Company have
been taken to authorize the execution, delivery, and
performance by the Company of this Agreement and the
Underwriter's Warrants. This Agreement and the
Underwriter's Warrants have been duly authorized,
executed and delivered by the Company, constitute
legal, valid, and binding agreements of the Company,
and (subject to applicable bankruptcy, insolvency,
reorganization and other laws affecting the
enforceability of creditors' rights generally, and
the application of equitable principles affecting the
enforceability of remedies in the nature of specific
enforcement, and except as the enforceability of the
indemnification and contribution provisions of this
Agreement and the Underwriter's Warrants may be
limited under applicable securities laws) is
enforceable as to the Company in accordance with its
terms. The Underwriter's Warrants have been duly
authorized by the Company and, when executed, issued
and delivered by the Company and paid for by R.T.G.
▇▇▇▇▇▇▇▇ in accordance with the provisions thereof
and of this Agreement, will be a legal, valid and
binding obligation of the Company, enforceable
against the Company in accordance with the terms
hereof and thereof, except as may be limited by
applicable bankruptcy, insolvency, registration and
other laws affecting the enforceability of creditors'
rights generally and the application of equitable
principles affecting the availability of remedies in
the nature of specific enforcement.
(7) All legally required proceedings in connection with
the authorization, issue and sale of the Shares by
the Company in accordance with the provisions of this
Agreement have been taken, and, to the knowledge of
such counsel, after reasonable investigation, no
consent, authorization, approval, order, license,
certificate, declaration or permit of or from, or
filing with, any governmental or regulatory
authority, agency, board, bureau or other body or is
required for the execution, delivery or performance
by the Company of this Agreement and the
Underwriter's Warrants (except filings with and orders
of the Commission pursuant to the Act which have been
made or received and matters under Blue Sky or state
securities laws, rules or regulations, as to which
such counsel need not express an opinion).
(8) No consent of any party to any material contract,
agreement, instrument, lease or license, or
arrangement or understanding known to such counsel,
to which the Company or its subsidiaries are a party,
or to which any of the property or assets of the
Company or its subsidiaries are subject, is required
for the execution, delivery or performance of this
Agreement or the Underwriter's Warrants; and the
execution, delivery and performance of this Agreement
and the Underwriter's Warrants will not violate,
result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time
or both) entitle any party to terminate or call a
default under any such contract, agreement,
instrument, lease, license,
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arrangement or understanding, result in the creation
or imposition of any lien, security interest, pledge,
charge or other encumbrance upon any of the property
or assets of the Company or its subsidiaries pursuant
to the terms of any indenture, mortgage, deed of
trust, loan or credit agreement, lease or other
agreement or instrument to which the Company or its
subsidiaries are a party or by which the Company or
its subsidiaries are bound or to which any of the
property or assets of the Company or its subsidiaries
are subject, known to such counsel, or violate or
result in a breach of any term of the Certificate of
Incorporation or By-laws of the Company or its
subsidiaries, or violate, result in a breach of, or
conflict with any law, rule, regulation, order,
judgment or decree binding on the Company or its
subsidiaries or to which any of the operations,
businesses, property or assets of the Company or its
subsidiaries are subject.
(9) The Shares are duly authorized. Upon payment of the
purchase price therefor in accordance with the
provisions thereof and of this Agreement, the
Underwriter's Warrants will be duly delivered. The
Shares, when issued, paid for and delivered in
accordance with the provisions of this Agreement,
will be duly issued, fully paid and nonassessable,
without any personal liability attaching to the
ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders.
Upon payment of the purchase price therefor in
accordance with the provisions thereof and of this
Agreement, you will receive good title to the Shares
and the Underwriter's Warrants purchased by it from
the Company, free and clear of all Liens.
(10) The Underwriter's Warrants Shares are duly authorized
and have been validly reserved for issuance, and when
issued, paid for and delivered upon exercise of the
Underwriter's Warrants in accordance with the
provisions of the Underwriter's Warrants will be duly
authorized, duly issued, fully paid, and
nonassessable, with no personal liability attaching
to the ownership thereof, and will not have been
issued in violation of any preemptive rights of
stockholders, and the holders of the Underwriter's
Warrants Shares will receive good title to them, free
and clear of all Encumbrances.
(11) The Shares and the Underwriter's Warrants Shares
conform to all statements relating thereto contained
in the Registration Statement and the Prospectus.
(12) To the knowledge of such counsel, any contract,
agreement, instrument, lease or license required to
be described in the Registration Statement or the
Prospectus has been properly described therein. To
the knowledge of such counsel, any contract,
agreement, instrument, lease, or license required to
be filed as an exhibit to the Registration Statement
has been filed with the Commission as an exhibit to
or has been incorporated as an exhibit by reference
into the Registration Statement.
(13) The Shares are duly authorized for listing as the
Nasdaq SmallCap market, subject to notice of
issuance.
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(14) To the knowledge of such counsel, except as disclosed
in the Prospectus, no person or entity has the right
to require registration of shares of Common Stock or
other securities of the Company or its subsidiaries
because of the filing or effectiveness of the
Registration Statement who has not waived such right.
(15) Neither the Company nor its subsidiaries are an
"investment company" by reason of its assets and
operations as defined in Section 3(a) of the
Investment Company Act.
(16) All shares of Common Stock outstanding as of the date
hereof have been duly authorized and validly issued,
and are fully paid and non-assessable, with no
personal liability attaching to the ownership
thereof, and have not been issued in violation of any
preemptive rights of stockholders.
(17) The statements in the Prospectus under captions
"Business", "Risk Factors", "Use of Proceeds",
"Management" and "Description of Capital Stock" have
been reviewed by such counsel and insofar as such
statements refer to descriptions of agreements,
instruments, leases or franchises, summarize the
status of litigation or other proceedings, or the
provisions of orders, judgments or decrees, or
constitute statements of law, descriptions of
statutes, rules or regulations, or conclusions of
law, such statements fairly present the information
called for and are accurate and complete in all
material respects.
(18) At all times during which the Company or its
subsidiaries offered for sale franchises for the
operation of a ▇▇▇▇▇▇▇▇'▇ Original Old World Bagels
and Sammy's New York Bagels facility, the Company and
its subsidiaries were in compliance with all material
requirements of all laws, rules and regulations
applicable to the offer for sale or sale of
franchises in all jurisdictions in which the Company
or its subsidiaries have offered for sale or sold,
franchises for the operation of a ▇▇▇▇▇▇▇▇'▇ Original
Old World Bagels and Sammy's New York Bagels
facility;
(19) (i) except for liabilities and obligations incurred
in the ordinary course of business, to the knowledge
of such counsel, after due inquiry, there are no
claims (absolute, accrued, contingent or otherwise),
against the Company or its subsidiaries related to
the offer for sale or the sale of franchises for the
operation of ▇▇▇▇▇▇▇▇'▇ Original Old World Bagels and
Sammy's New York Bagels, except as disclosed in the
Prospectus or such as individually or in the
aggregate do not have and are not expected to have a
material adverse effect upon the operations,
businesses, property, assets or condition (financial
or otherwise) of the Company or its subsidiaries;
(ii) no franchisee has a cause of action against the
Company or its subsidiaries under applicable federal
or state laws, rules and regulations governing the
offer and sale of franchises arising out of the offer
and sale by the Company or its subsidiaries of the
franchise(s) purchased by such franchisee; and (iii)
neither the Company nor its subsidiaries have been
charged with any violation of any state or other
applicable law or administrative regulation in
respect of the offer for sale or sale of such
franchises; and
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(20) The Registration Statement has become effective under
the Act, and to the knowledge of such counsel, no
Stop Order has been issued and no proceedings for
that purpose have been instituted or threatened.
(21) The Registration Statement, any Rule 430A Prospectus,
and the Prospectus, and any amendment or supplement
thereto (except for the financial statements and the
notes and schedules related thereto, and other
financial information and statistical data contained
therein or omitted therefrom, as to which such
counsel need express no opinion), comply as to form
in all material respects with the applicable
requirements of the Act.
(22) Such counsel has participated in conferences with
officers and other representatives of the Company,
its subsidiaries, representatives of the independent
certified public accountants for the Company and its
subsidiaries and representatives of you at which the
contents of the Registration Statement and Prospectus
and related matters were discussed and, although such
counsel has not verified and is not passing upon and
does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained
in the Registration Statement and Prospectus, or any
amendment or supplement thereto, on the basis of the
foregoing, no facts have come to the attention of
such counsel which lead them to believe that either
the Registration Statement or any amendment thereto
at the time such Registration Statement or such
amendment became effective or the Prospectus as of
its date or any amendment or supplement thereto as of
its date contained an untrue statement of a material
fact or omitted to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading (it being understood that such
counsel need express no comment with respect to the
financial statements, and the notes and schedules
related thereto, and other financial information and
statistical data included in the Registration
Statement or Prospectus).
(23) To the knowledge of such counsel, since the effective
date of the Registration Statement, no event has
occurred which should have been set forth in an
amendment or supplement to the Registration Statement
or the Prospectus which has not been set forth in
such an amendment or supplement.
In rendering such opinion, counsel for the Company may rely (i) as to
matters involving the application of laws other than the laws of the United
States to the extent counsel for the Company deems proper and to the extent
specified in such opinion, upon an opinion or opinions of local counsel (in
form and substance reasonably satisfactory to counsel for you) acceptable to
counsel for you, familiar with the applicable laws, in which case the opinion
of counsel for the Company shall state that the opinion or opinions of such
other counsel are satisfactory in scope, form and substance to counsel for the
Company and that reliance thereon by counsel for the Company is reasonable;
(ii) as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company; and (iii) to the extent they deem proper,
upon written statements or certificates of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to counsel for you.
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(d) You shall have received letters addressed to you and dated the
date hereof and the Closing Date from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
independent certified public accountants for the Company and
its subsidiaries, addressed to you, and in form and substance
satisfactory to you, to the effect that:
(1) Such accountants are independent public accountants
as required by the Act and the rules and regulations
of the Commission thereunder and no information need
be supplied with respect to them in answer to Item 13
of Form SB-2.
(2) In their opinion, the financial statements and
related notes and schedules of the Company and its
subsidiaries examined by them, at all dates and for
all periods referred to in their report therein, and
included in the Registration Statement and the
Prospectus on their authority as experts comply as to
form in all material respects with the applicable
accounting requirements of the Act and the Rules and
Regulations of the Commission promulgated thereunder.
(3) On the basis of limited procedures not constituting
an audit, including a reading of the latest available
unaudited interim financial statements of the Company
and its subsidiaries and the financial data and
accounting records of the Company and its
subsidiaries, inquiries of officials of the Company
and its subsidiaries and others responsible for
financial and accounting matters, a reading of the
minute books of the Company and its subsidiaries,
including without limitation the minutes (if any) of
meetings or consents in lieu of meetings of the
stockholders and of the Board of Directors (and any
executive committee, audit committee or other
committees thereof) of the Company and its
subsidiaries, and other specified procedures and
inquiries requested by you, if any, nothing has come
to their attention which causes them to believe that:
(i) the unaudited financial statements of the
Company and its subsidiaries contained in the
Registration Statement and the Prospectus (if
any) do not comply as to form in all material
respects with the applicable accounting
requirements of the Act and the Rules and
Regulations of the Commission promulgated
thereunder or were not prepared in conformity
with generally accepted accounting principles
applied on a basis consistent, in all
material respects, with those followed in the
preparation of the audited financial
statements therein;
(ii) except as disclosed in, or as contemplated by
the Registration Statement or the Prospectus,
during the period from the date of the last
audited balance sheet of the Company and its
subsidiaries included in the Registration
Statement and the Prospectus to a specified
date not more than five (5) days prior to the
date of such letter there were any decreases,
as compared with the corresponding period of
the preceding year, in net sales and
revenues, cost of sales, selling general and
administrative expenses, income (loss) from
operations, the total or per share amounts of
net income, or weighted number of shares
outstanding;
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(iii) except as disclosed in or contemplated by the
Registration Statement and the Prospectus,
during the period from the date of the last
audited balance sheet of the Company and its
subsidiaries included in the Registration
Statement and Prospectus to a specified date
not more than five (5) days prior to the date
of such letter, there has been any change in
the capital stock or other securities of the
Company and its subsidiaries or any payment
or declaration of any dividend or other
distribution in respect thereof or in
exchange therefor, or any increase in the
long-term debt of the Company and its
subsidiaries or any decrease in the net
current assets or net assets of the Company
and its subsidiaries as compared with the
amounts shown on the last audited balance
sheet of the Company and its subsidiaries,
included in the Registration Statement and
the Prospectus (other than in the ordinary
course of business); and
(iv) On the basis of their examinations referred
to in their report and consent included in
the Registration Statement and Prospectus and
the indicated procedures and inquiries
referred to above, nothing has come to their
attention which, in their judgment, would
cause them to believe or indicate that the
financial statements and related notes and
schedules of the Company and its subsidiaries
included in the Registration Statement and
Prospectus do not present fairly the
financial position and results of operations
of the Company and its subsidiaries, as at
the dates and for the periods indicated, in
conformity with generally accepted accounting
principles applied on a consistent basis, and
are not in all material respects a fair
presentation of the information purported to
be shown.
(4) In addition to their examination referred to in their
report included in the Registration Statement and the
Prospectus and the inquiries and limited procedures
referred to in clause (iii) of this Section 7(d),
they have performed other procedures, not
constituting an audit, with respect to the numerical
data, percentages, dollar amounts and other financial
information appearing in the Registration Statement
and the Prospectus, which are derived from the
general accounting records of the Company and its
subsidiaries, and have compared certain of such data
and information with the accounting records of the
Company and its subsidiaries and found them to be in
agreement.
(5) Such other matters as you may have reasonably
requested.
(e) The representations and warranties of the Company in this
Agreement shall be true and correct with the same effect as if
made on and as of the Closing Date and the Company shall have
complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the
Closing Date.
(f) The Registration Statement and the Prospectus and any
amendments or supplements thereto shall contain all statements
which are required to be stated therein in accordance with the
Act and the Rules and Regulations, and shall in all material
respects conform to the requirements thereof, and neither the
Registration Statement nor the Prospectus nor
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any amendment or supplement thereto shall contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(g) There shall have been, since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, no material adverse change in the business,
property, condition (financial or otherwise), results of
operations, capital stock, long-term or short-term debt or
general affairs of the Company and its subsidiaries, taken as
a whole, except changes which the Registration Statement and
the Prospectus indicate might occur after the effective date
of the Registration Statement, and neither the Company nor its
subsidiaries shall have incurred any material liabilities or
entered into any agreements not in the ordinary course of
business, except as disclosed in the Registration Statement
and the Prospectus.
(h) No action, suit or proceeding, at law or in equity, shall be
pending or threatened against the Company or its subsidiaries
which would be required to be set forth in the Registration
Statement, and no proceedings shall be pending or threatened
against the Company or its subsidiaries before or by any
commission, board or administrative agency in the United
States or elsewhere, wherein an unfavorable decision, ruling
or finding would have a materially adverse affect on the
business, property, condition (financial or otherwise),
results of operations or general affairs of the Company or its
subsidiaries.
(i) The Company shall have furnished to you or caused to be
furnished to you at the Closing Date, certificates of the
President and chief financial officer of the Company in form
and substance reasonably satisfactory to you, as to the
accuracy of the representations and warranties of the Company
herein at and as of the Closing Date and as to the performance
by the Company of all of its obligations hereunder to be
performed at or prior to the Closing Date and the Company
shall have furnished to you a certificate of the President and
chief financial officer of the Company reasonably satisfactory
to you as to the matters set forth in Sections 7(a) and (b)
above.
(j) The NASDR, upon review of the terms of the public offering of
the Shares, shall have indicated that it has no objections to
the underwriting arrangements pertaining to the sale of the
Shares and the participation by you in the sale of the Shares.
(k) Prior to or on the Closing Date, the Company shall have
executed and delivered the Underwriter's Warrants to
R.T.G ▇▇▇▇▇▇▇▇.
(l) Prior to or on the Closing Date, the Company shall have
delivered to you executed copies of the Lock-up Letters.
(m) Prior to or on the Closing Date, the Company shall have
retained R.T.G. ▇▇▇▇▇▇▇▇ in a financial consulting capacity,
as contemplated by Section 4(bb) hereof.
(n) Prior to or on the Closing Date, the Company and R.T.G.
▇▇▇▇▇▇▇▇ shall have entered into the Merger and Acquisition
Agreement contemplated by Section 4(cc) hereof.
(o) The Company shall have retained a public relations firm as
contemplated by Section 4 (ff) hereof.
(p) The compensation arrangements applicable to the Company's
executive officers shall be reasonably acceptable to you.
(q) Immediately prior to the date on which the Registration
Statement becomes effective, the Company shall have had
outstanding no more than 1,867,661 Shares of Common Stock, no
par value, after a one for two reverse stock split to be
effected prior to such effective date.
(r) Subsequent to the date hereof, there shall not have occurred
any change, or any development involving a prospective change,
in or affecting particularly the business or financial affairs
of the Company which, in your reasonable opinion, would
materially and adversely affect the market for the Shares.
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(s) Subsequent to the date hereof, no executive officer of the
Company listed as such in the Prospectus shall have died,
become physically or mentally disabled, resigned or have been
removed or discharged.
(t) The Company shall furnish you with such further certificates
and documents as you or its counsel shall have reasonably
requested.
All opinions, certificates, letters and other documents required by
this Section 7 to be delivered to you by the Company will be in compliance with
the provisions hereof only if they are satisfactory in form and substance to
you and your counsel. The Company will furnish you with such conformed copies
of such opinions, certificates, letters and other documents as you shall
reasonably request.
(u) Upon the exercise, in whole or in part, by you of the option
to purchase the Additional Shares, referred to in Section 2
hereof, your obligations to purchase and pay for the
Additional Shares will be subject to the continuing accuracy
of the representations and warranties of the Company contained
herein and in each certificate and document contemplated under
this Agreement to be delivered to you, as of the date hereof
and as of each Optional Closing Date, to the performance by
the Company of its obligations hereunder, and the following
additional conditions:
(1) The Registration Statement shall remain effective at
the Optional Closing Date, and no Stop Order shall
have been issued by the Commission and no proceedings
for that purpose shall have been instituted or shall
be pending, or to your knowledge or the knowledge of
the Company, shall be contemplated by the Commission,
and any reasonable request on the part of the
Commission for additional information shall have been
complied with to the satisfaction of ▇▇▇▇▇▇ & Eilen,
counsel to you.
(2) You shall have received an opinion, dated the
Optional Closing Date and satisfactory in form and
substance to counsel to you, from Venable, Baetjer,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel to the Company,
which opinion shall be substantially the same in
scope and substance as the opinion furnished to you
on the Closing Date pursuant to Section 7(c) hereof,
except that such opinion, where appropriate, shall
cover the Additional Shares.
(3) You shall have received a letter in form and
substance satisfactory to you from ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, independent certified public accountants
for the Company, dated the Optional Closing Date and
addressed to you confirming the information in their
letter referred to in Section 7(e) hereof and stating
that nothing has come to their attention during the
period from the ending date of their review referred
to in said letter to a date not more than five (5)
days prior to the Optional Closing Date, which would
require any change in said letter if it were required
to be dated the Optional Closing Date.
(4) You shall have received a certificate of the
President and chief financial officer of the Company,
dated the Optional Closing Date, in form and
substance satisfac-
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tory to you, substantially the same in scope and
substance as the certificate furnished to you on the
Closing Date pursuant to Section 7(j) hereof.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations of the
Company to sell and deliver the Shares as and when specified by this Agreement
are subject to the condition that at the Closing Date or any Optional Closing
Date, as the case may be, the Registration Statement or any post-amendment
thereto shall have been declared effective and a no Stop Order suspending the
effectiveness thereof shall have been issued and remain in effect or
proceedings therefor initiated or threatened.
9. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective at 9:30 A.M., New York
City time, on the first full business day following the day on
which the Registration Statement becomes effective or at the
time of the initial public offering by you of the Shares,
whichever is earlier. The time of the initial public offering
shall mean the time, after the Registration Statement becomes
effective, of the release by you for publication of the first
newspaper advertisement which is subsequently published
relating to the Shares or the time, after the Registration
Statement becomes effective, when the Shares are first
released by you for offering by you or dealers by letter or
telegram, whichever shall first occur. you or the Company may
prevent this Agreement from becoming effective without
liability of any party to any other party, except as noted
below in this Section 9, by giving the notice indicated in
Section 9(c) before the time this Agreement becomes effective.
(b) In addition to the right to terminate this Agreement
pursuant to Section 7 hereof by reason of the Company's
failure, refusal or inability to perform all obligations and
satisfy all conditions on its part to be performed or
satisfied hereunder prior to the Closing Date or Optional
Closing Date, as the case may be, you shall have the right to
terminate this Agreement at any time prior to the Closing Date
or any Optional Closing Date, as the case may be, by giving
notice to the Company, if the Company shall have sustained a
material adverse loss or material adverse interference with
its business or properties from fire, flood, accident,
hurricane, earthquake, theft, sabotage, or other calamity or
malicious act, including the death or disability of ▇▇.
▇▇▇▇▇▇▇▇, whether or not covered by insurance, or from any
labor dispute or any court or governmental action, order or
decree, of such a character as to have a material adverse
effect with the conduct of the business and operations of the
Company; or if there shall have been a general suspension of,
or a general limitation on prices for, trading in securities
on the New York Stock Exchange, the American Stock Exchange or
in the over-the-counter market; or if a banking moratorium has
been declared by a state or federal authority; or if there
shall have been an outbreak of major hostilities between the
United States and any foreign power, or any other
insurrection, armed conflict or national calamity, which in
the judgment of a majority-in-interest of the underwriters,
makes it impracticable or inadvisable to proceed with the
offering, sale or delivery of the Firm Shares or the
Additional Shares, as the case may be.
(c) If you elect to prevent this Agreement from becoming effective
as provided in this Section 9, or to terminate this Agreement
pursuant to Section 7, or this Section 9, you shall notify the
Company promptly by telephone, facsimile, telex, or telegram,
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confirmed by letter. If, as so provided in this Section 9,
the Company elects to prevent this Agreement from becoming
effective, the Company shall notify you promptly by telephone,
facsimile, telex, or telegram, confirmed by letter.
(d) Anything in this Agreement to the contrary notwithstanding
other than Section 9(e), if this Agreement shall not become
effective by reason of an election pursuant to this Section 9
or if this Agreement shall terminate or shall otherwise not be
carried out within the time specified herein by reason of any
failure on the part of the Company to perform any covenant or
agreement or satisfy any condition of this Agreement by it to
be performed or satisfied, the sole liability of the Company
to you, in addition to the obligations the Company assumed
pursuant to Section 4(g), will be to reimburse you for such
reasonable out-of-pocket expenses (including the fees and
disbursements of their counsel) as shall have been incurred by
them in connection with this Agreement or the proposed offer,
sale, and delivery of the Shares, and upon demand the Company
agrees to pay promptly the full amount thereof to you.
(e) Notwithstanding any election hereunder or any termination of
this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 4(b), 4(g), 6, 10(b)
and 10(c) 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.
10. MISCELLANEOUS.
(a) Notices required to be in writing shall be mailed or delivered
(i) to the Company at its office at ▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman & CEO,
with copies to Venable, Baetjer, ▇▇▇▇▇▇ & Civiletti, LLP, ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. or (ii) to you c/o R.T.G. ▇▇▇▇▇▇▇▇ and
Company, Inc. at its office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇, Director of Corporate Finance, with copies to ▇▇▇▇▇▇ &
Eilen, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq., and shall be
deemed given when received. Any notice not required to be in
writing, including but not limited to notices under Section
7(a) or 8 hereof, may be made by telex, facsimile or
telephone and shall be deemed given at the time the telex, or
facsimile communication is received or the telephone call is
made, but if so made shall be subsequently confirmed in
writing.
(b) The representations, warranties, covenants and agreements of
the Company, and the indemnity and contribution agreements,
contained in Sections 4, 5 and 6 of this Agreement will remain
in full force and effect, regardless of any investigation made
by or on behalf of you, the Company or any of its officers or
directors or any controlling persons of you or the Company and
will survive acceptance of and payment for any of the Shares
and the termination of this Agreement.
(c) This Agreement has been and is made solely for the benefit of
you and the Company and the controlling persons, directors and
officers referred to in Section 6 hereof and their respective
successors and assigns, and no other person shall acquire or
have any right
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under or by virtue of this Agreement. The term "successors
and assigns" as used in this Agreement shall not include a
purchaser, as such purchaser, of Shares from you.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, applicable
to contracts made and to be performed entirely with such
State, without regard to conflict of laws provisions thereof.
Please confirm that the foregoing correctly sets forth the agreement among the
Company and you.
Very truly yours,
ALL AMERICAN FOOD GROUP, INC.
By:
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President,
Chairman & CEO
Confirmed, as of the date first above mentioned.
R.T.G. ▇▇▇▇▇▇▇▇ & COMPANY, INC.
By:
---------------------------
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SCHEDULE I
Underwriting Agreement, dated _____________, 1996
Underwriter Number of Firm Shares
----------- ---------------------
R.T.G. ▇▇▇▇▇▇▇▇ & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ________ shares
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100,000 shares
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