Exhibit 1.1
1,100,000 Common Shares
IT STAFFING LTD.
UNDERWRITING AGREEMENT
May __, 1999
STRASBOURGER ▇▇▇▇▇▇▇ TULCIN ▇▇▇▇▇ INCORPORATED
WIN CAPITAL CORP.
NUTMEG SECURITIES, LTD.
▇▇▇▇▇ ▇▇▇▇ & CO., INC.
as Representatives of the several Underwriters
named in Schedule I attached hereto
c/o Strasbourger ▇▇▇▇▇▇▇ Tulcin ▇▇▇▇▇ Incorporated
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
c/o Win Capital Corp.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, IT Staffing Ltd., an Ontario corporation (the
"Company"), hereby confirms its agreement with Strasbourger ▇▇▇▇▇▇▇ Tulcin ▇▇▇▇▇
Incorporated ("Strasbourger"), Win Capital Corp., Nutmeg Securities, Ltd. and
▇▇▇▇▇ ▇▇▇▇ & Co., Inc. as representatives (the "Representatives") of the several
underwriters named in Schedule I hereto (the "Underwriters"), and the
Underwriters as follows:
1. Introduction.
(a) The Company proposes to issue and sell to the Underwriters
an aggregate of 1,100,000 common shares, no par value, of the Company (the
"Common Shares"). Such Common Shares are hereinafter referred to as the "Firm
Stock."
(b) Solely for the purpose of covering over-allotments, if
any, the Company proposes to grant to the Underwriters an option (the
"Over-allotment Option") to purchase from it, in the aggregate, up to an
additional 165,000 Common Shares. Such Common Shares are hereinafter referred to
as the "Additional Stock." The Firm Stock and the Additional Stock are
hereinafter referred to as the "Stock."
(c) In consideration of the services to be provided under the
Financial Advisory Agreement (as defined herein), the Company proposes to sell
to the Representatives
warrants (the "Representatives' Warrants") to purchase up to an aggregate of
110,000 Common Shares (the "Warrant Shares") for an aggregate purchase price of
$110.00. The Representatives' Warrants shall be substantially in the form filed
as an exhibit to the Registration Statement (as hereinafter defined). The
Representatives' Warrants and the Warrant Shares are hereinafter referred to
collectively as the "Representatives' Securities." The Stock and the
Representatives' Securities are hereinafter referred to collectively as the
"Securities."
2. Representations and Warranties. The Company represents and warrants
to, and agrees with, the several Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form SB-2
(Registration No. 333-63909), and may have filed one or more amendments thereto
and a Rule 462(b) Registration Statement (as hereinafter defined) in accordance
with Rule 462(b) under the Securities Act, including in such registration
statement and each such amendment a related preliminary prospectus, for the
registration of the Securities under the Securities Act of 1933, as amended (the
"Securities Act"). As used in this Agreement, the term "Registration Statement"
shall refer to such registration statement referred to in the first sentence of
this Section 2(a), as amended, on file with the Commission at the time such
registration statement is declared by the Commission to be effective under the
Securities Act (including the prospectus, financial statements, and exhibits
filed as a part thereof, provided, however, that such registration statement, at
the time it is declared by the Commission to be effective under the Securities
Act, may omit such information as is permitted to be omitted from such
registration statement when it becomes effective under the Securities Act
pursuant to Rule 430A of the General Rules and Regulations of the Commission
under the Securities Act (the "Regulations"), which information (the "Rule 430A
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 Regulations and includes any Rule 462(b)
Registration Statement); the term "Preliminary Prospectus" shall refer to each
prospectus included in the Registration Statement, or any amendments thereto,
before the Registration Statement is declared by the Commission to be effective
under the Securities Act, the form of prospectus omitting Rule 430A Information
included in the Registration Statement when the Registration Statement becomes
effective under the Securities Act, if applicable (the "Rule 430A Prospectus"),
and any prospectus filed by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Regulations; and the term "Prospectus" shall
refer to the final prospectus forming a part of the Registration Statement in
the form first filed with the Commission pursuant to Rule 424(b)(1) or (4) of
the Regulations or, if no such filing is required, the form of final prospectus
forming a part of the Registration Statement. As used in this Agreement, the
term "Rule 462(b) Registration Statement" means the registration statement and
any amendments thereto filed pursuant to Rule 462(b) of the Regulations relating
to the offering covered by the Initial Registration Statement.
(b) When the Registration Statement becomes effective under
the Securities Act, and at all times subsequent thereto up to and including the
Closing Date (as defined in Section 3(a) hereof) and each Additional Closing
Date (as defined in Section 3(b) hereof), and during such longer period as the
Prospectus may be required to be delivered in connection with
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sales by the Underwriters or a dealer, and during such longer period until any
post-effective amendment thereto shall become effective under the Securities
Act, 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 statements which are required to be stated
therein in accordance with the Securities Act and the Regulations, will comply
with the Securities Act and the Regulations, 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 is declared by the
Commission to be effective under the Securities Act, the Prospectus filed
pursuant to Rules 430A and 424(b)(1) or (4) of the Regulations will contain all
Rule 430A Information and all statements which are required to be stated therein
in accordance with the Securities Act or the Regulations, will comply with the
Securities Act and the Regulations, 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, contained all statements
required to be stated therein in accordance with the Securities Act and the
Regulations, complied with the Securities Act and the Regulations, and did 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; except that no representation or warranty is made in this
Section 2(a)(2) with respect to statements or omissions made in reliance upon,
and in conformity with, written information furnished to the Company as stated
in Section 8(b) with respect to any Underwriter by, or on behalf of, such
Underwriter through the Representatives expressly for inclusion in the
Registration Statement, any Preliminary Prospectus, or the Prospectus, or any
amendment or supplement thereto.
(c) Neither the Commission nor, to the best knowledge of the
Company, the "blue sky" or securities authority of any jurisdiction has issued
an order (a "Stop Order") suspending the effectiveness of, or preventing or
suspending the use of, the Registration Statement, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto, refusing to permit the
effectiveness of the Registration Statement, or suspending the registration or
qualification of the Securities, nor has any of such authorities instituted or
threatened to institute any proceedings with respect to a Stop Order.
(d) Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the Prospectus has
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 the Registration Statement.
(e) The following corporations are the only subsidiaries (as
defined in the Regulations) of the Company: Systemsearch Consulting, Inc., an
Ontario corporation ("SCI"), Systems PS Inc., an Ontario corporation ("SPS"),
and International Career Specialists Ltd., an
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Ontario corporation ("ICS," and collectively with SCI and SPS, the
"Subsidiaries"). The Company and each of the Subsidiaries is a corporation duly
organized, validly existing, and in good standing under the laws of its
respective jurisdiction of incorporation, with full power and authority, and all
necessary consents, authorizations, approvals, orders, licenses, certificates,
and permits of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other tribunals, to
own, lease, license, and use its properties and assets and to conduct its
business in the manner described in the Prospectus. The Company and each
Subsidiary is duly qualified to do business as a foreign corporation and is in
good standing as such in every jurisdiction in which its ownership, leasing,
licensing, or use of property and assets or the conduct of its business makes
such qualification necessary, except where the failure to so qualify will not
have a material adverse effect on the Company's business, properties, or
financial condition on a consolidated basis.
(f) The authorized capital stock of the Company consists of
15,000,000 Common Shares, of which 1,677,875 shares are outstanding prior to
this offering, and 1,000,000 shares of preferred stock, no par value, of which
none are outstanding. Each outstanding Common Share is validly authorized and
issued, fully paid, and nonassessable, without any personal liability attaching
to the ownership thereof, has not been issued and is not owned or held in
violation of any preemptive or similar rights of shareholders. Each share of
capital stock of each Subsidiary is owned of record and beneficially by the
Company. 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 any Subsidiary or any security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock of the Company, except as may be properly
described in the Prospectus. There is outstanding no security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock of the Company or any Subsidiary, except as may
be properly described in the Prospectus. The certificates evidencing the Common
Shares are in due and proper form.
(g) The consolidated financial statements of the Company and
each of the Subsidiaries included in the Registration Statement and the
Prospectus fairly present in all material respects, with respect to the Company,
the financial position, the results of operations, the cash flows, and the other
information purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
(except to the extent that certain footnote disclosures regarding any stub
period may have been omitted in accordance with the applicable rules of the
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) consistently applied throughout the periods involved, are correct and
complete in all material respects, and are in accordance with the books and
records of the Company. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the accountants whose reports
on the audited consolidated financial statements for the years ended and at
December 31, 1996 and 1997, are filed with the Commission as a part of the
Registration Statement, is, and during the periods covered by their reports
included in the Registration Statement and the Prospectus was, independent
certified public accountants with respect to the Company and each of the
Subsidiaries within the meaning of the Securities Act and the Regulations. No
other financial
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statements are required by Form SB-2 or otherwise to be included in the
Registration Statement or the Prospectus. There has at no time been a material
adverse change in the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company on a
consolidated basis from the latest information set forth in the Registration
Statement or the Prospectus, except as may be properly described in the
Prospectus.
(h) There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or investigation pending, threatened,
or, to the best knowledge of the Company, in prospect (or any basis therefor)
with respect to the Company, any Subsidiary, or any of their respective
operations, businesses, properties, or assets, except as may be properly
described in the Prospectus or such as individually or in the aggregate do not
now have, and will not in the future have, a material adverse effect upon the
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company and the Subsidiaries taken as a
whole. To the best knowledge of the Company, neither the Company nor any
Subsidiary is in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree, except as may be properly described in
the Prospectus or such as in the aggregate do not now have, and will not in the
future have, a material adverse effect upon the operations, business,
properties, or assets of the Company and the Subsidiaries taken as a whole; nor
is the Company or any Subsidiary currently required to take any action in order
to avoid any such violation or default.
(i) The Company and each Subsidiary has good and marketable
title to all properties and assets which the Prospectus indicates are owned by
it, free and clear of all liens, security interests, pledges, charges,
encumbrances, and mortgages, except as may be properly described in the
Prospectus or as are not material to the Company and the Subsidiaries taken as a
whole. No real property owned, leased, licensed, or used by the Company or any
Subsidiary lies in an area which is, or to the knowledge of the Company 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, 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 and the Subsidiaries, each as presently conducted or as
the Prospectus indicates it contemplates conducting, except as may be properly
described in the Prospectus.
(j) Neither the Company or any Subsidiary nor, to the
knowledge of the Company, any other party, is now, or is expected by the Company
to be, in violation or breach of, or in default with respect to, any provision
of any contract, agreement, instrument, lease, license, arrangement, or
understanding which is material to the Company and the Subsidiaries taken as a
whole, and each such contract, agreement, instrument, lease, license,
arrangement, and understanding is in full force and effect and is the legal,
valid, and binding obligation of the parties thereto and is enforceable as to
them in accordance with its respective terms. The Company and each Subsidiary
enjoys peaceful and undisturbed possession under all leases and licenses under
which it is operating. Except as described in the Prospectus, neither the
Company nor any Subsidiary 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
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may in the future have, a material adverse effect on the financial condition,
results of operations, business, properties, assets, liabilities, or future
prospects of the Company and the Subsidiaries taken as a whole. Neither the
Company nor any Subsidiary is in violation or breach of, or in default with
respect to, any term of its respective certificate of incorporation (or other
charter document) or by-laws.
(k) The Company and each Subsidiary owns or possesses adequate
rights to use all patents, patent rights, inventions, trade secrets, licenses,
know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names, and copyrights described or referred to
in the Prospectus as owned or used by it or which are necessary for the conduct
of its business as currently conducted as described in the Prospectus and, to
the best knowledge of the Company, its business as contemplated as described in
the Prospectus. To the best knowledge of the Company, all such patents, patent
rights, licenses, trademarks, service marks, and copyrights are (i) valid and
enforceable, (ii) not being infringed by any third parties which infringement
could, singly or in the aggregate, materially and adversely affect the business,
properties, operations, condition (financial or otherwise), results of
operations, income, or business prospects of the Company and the Subsidiaries
taken as a whole, as presently being conducted or as proposed to be conducted as
described in the Prospectus, and (iii) are uncontested by any third party. The
Company has no knowledge of, nor has it received any notice of, infringement of,
or conflict with, asserted rights of others with respect to any patents, patent
rights, inventions, trade secrets, licenses, know-how, proprietary techniques,
including processes and substances, trademarks, service marks, trade names, or
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling, or finding could materially and adversely affect the business,
properties, operations, condition (financial or otherwise), results of
operations, income, or business prospects of the Company and the Subsidiaries
taken as a whole, as presently being conducted or as proposed to be conducted as
described in the Prospectus.
(l) Neither the Company or any Subsidiary, nor, to the best
knowledge of the Company, any director, officer, agent, employee, or other
person associated with, or acting on behalf of, the Company or any Subsidiary,
has, directly or indirectly: used any corporate funds 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; violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment. The Company's internal accounting controls
and procedures are sufficient to cause the Company and each of the Subsidiaries
to comply in all respects with the Foreign Corrupt Practices Act of 1977, as
amended.
(m) The Company has all requisite power and authority to
execute, deliver, and perform each of this Agreement, the financial advisory
agreement, between the Company and the Representatives, a form of which has been
filed as an Exhibit to the Registration Statement (the "Financial Advisory
Agreement"), and the Representatives' Warrants. All necessary corporate
proceedings of the Company have been duly taken to authorize the
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execution, delivery, and performance by the Company of this Agreement, the
Financial Advisory Agreement, and the Representatives' Warrants. This Agreement
has been duly authorized, executed, and delivered by the Company and is the
legal, valid, and binding obligation of the Company. The Financial Advisory
Agreement and the Representatives' Warrants have been duly authorized by the
Company and, when executed and delivered by the Company, will be legal, valid,
and binding obligations of the Company, each enforceable as to the Company in
accordance with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal is
required by the Company or any Subsidiary for the execution, delivery, or
performance by the Company of this Agreement, the Financial Advisory Agreement,
or the Representatives' Warrants, except filings under the Securities Act which
have been or will be made before the Closing Date, and consents consisting only
of consents under "blue sky" or securities laws which have been obtained at or
prior to the date of this Agreement. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
the Company or any Subsidiary is a party, or to which any of their respective
properties or assets are subject, is required for the execution, delivery, or
performance of this Agreement, the Financial Advisory Agreement, and the
Representatives' Warrants; and the execution, delivery, and performance of this
Agreement, the Financial Advisory Agreement, and the Representatives' Warrants
will not violate, result in a breach of, conflict with, result in the creation
or imposition of any lien, charge, or encumbrance upon any properties or assets
of the Company or any Subsidiary pursuant to the terms of, 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, or violate, result in a breach
of, or conflict with any term of the certificate of incorporation (or other
charter document) or by-laws of the Company, or violate, result in a breach of,
or conflict with, any law, rule, regulation, order, judgment, or decree binding
on the Company or any Subsidiary or to which any of their respective operations,
businesses, properties, or assets are subject.
(n) The Firm Stock is validly authorized and, when issued 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 or similar rights
of shareholders, and the Underwriters will receive good title to the shares of
Firm Stock purchased by them, respectively, free and clear of all liens,
security interests, pledges, charges, encumbrances, shareholders' agreements,
and voting trusts. The Additional Stock is validly authorized and, when issued
in accordance with the terms hereof, 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 or similar rights
of shareholders. The Additional Stock has been duly and validly reserved for
issuance. The Stock conforms to all statements relating thereto contained in the
Registration Statement and the Prospectus.
(o) The Warrant Stock is validly authorized and has been duly
and validly reserved for issuance and, when issued and delivered upon exercise
of the Representatives' Warrants in accordance with the terms thereof, will be
validly issued, fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and will not be
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issued in violation of any preemptive or similar rights of shareholders; and the
holders of the Representatives' Warrants will receive good title to the
securities purchased by them upon the exercise of the Representatives' Warrants,
free and clear of all liens, security interests, pledges, charges, encumbrances,
shareholders' agreements, and voting trusts. The Representatives' Securities
conform to all statements relating thereto contained in the Registration
Statement and the Prospectus.
(p) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except as may
otherwise be properly described in the Prospectus, neither the Company nor any
Subsidiary has (i) issued any securities or incurred any material liability or
material obligation, primary or contingent, for borrowed money, (ii) entered
into any material transaction not in the ordinary course of business, (iii)
declared or paid any dividend on its capital stock, except dividends by a
Subsidiary to the Company or another Subsidiary, or (iv) experienced any adverse
changes or any development which may materially adversely effect the condition
(financial or otherwise), net assets or shareholders' equity, results of
operations, business, key personnel, assets, or properties of the Company and
the Subsidiaries taken as a whole.
(q) Neither the Company or any Subsidiary nor any of their
respective officers, directors, or affiliates (as defined in the Regulations),
has taken or will take, directly or indirectly, prior to the termination of the
offering 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 Firm Stock or the
Additional Stock.
(r) The Company has obtained from each of its directors,
officers, and shareholders a written agreement, in form and substance
satisfactory to counsel for the Underwriters, that, for a period of 18 months
from the date on which the Registration Statement is declared by the Commission
to be effective under the Securities Act, he, she, or it will not, without the
prior written consent of Strasbourger, publicly offer, pledge, sell, contract to
sell, grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any Common Shares or any security or other instrument which by its
terms is convertible into, or exercisable or exchangeable for, Common Shares or
other securities of the Company, including, without limitation, any Common
Shares issuable pursuant to the terms of any employee stock options.
(s) The Company is not, and does not intend to conduct its
business in a manner in which it would be required to register as, an
"investment company" as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations
promulgated thereunder.
(t) No person or entity has the right to require registration
of Common Shares or other securities of the Company because of the filing or
effectiveness of the Registration Statement, which right has not been waived.
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(u) Except as may be set forth in the Prospectus, the Company
has not incurred any liability for a fee, commission, or other compensation on
account of the employment of a broker or finder in connection with the
transactions contemplated by this Agreement.
(v) Neither the Company or any Subsidiary, nor any of their
respective affiliates, is presently doing business with the government of Cuba
or with any person or affiliate located in Cuba. If, at any time after the date
on which the Registration Statement is declared by the Commission to be
effective under the Securities Act or with the Florida Department of Banking and
Finance (the "Florida Department"), whichever is later, and prior to the end of
the period referred to in the first clause of Section 2(b) hereof, the Company
and any Subsidiary commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba, the Company will so inform the
Florida Department within 90 days after such commencement of business in Cuba,
and, during the period referred to in Section 2(2) hereof, will inform the
Florida Department within 90 days after any change occurs with respect to
previously reported information.
(w) No officer, director, or shareholder of the Company has
any affiliation or association with the National Association of Securities
Dealers, Inc. (the "NASD") or any member thereof, except that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
who is a consultant to the Company and after the Closing Date (as herein
defined) will be a shareholder and Director of the Company, is the brother of an
employee of one of the Representatives.
(x) Except as disclosed in the Prospectus, the Company, each
of the Subsidiaries, and all shareholders of the Company have filed all
necessary federal, state, provincial, local, and foreign income and franchise
tax returns and other reports required to be filed and has paid all taxes shown
as due thereon; and there is no tax deficiency which has been, or, to the
knowledge of the Company, might be, asserted against the Company or any
Subsidiary.
(y) To the best knowledge of the Company, none of the
activities or business of the Company or any Subsidiary is in violation of, or
will cause the Company or any Subsidiary to violate, any law, rule, regulation,
or order of the United States, any state, county, or locality, or of any agency
or body of the United States or of any state, county, or locality, the violation
of which would have a material adverse effect upon the financial condition,
results of operations, business, properties, assets, liabilities, or future
prospects of the Company and the Subsidiaries taken as a whole.
(z) The Common Shares have been approved for quotation on the
Nasdaq SmallCap Market and the Boston Stock Exchange (the "Stock Exchange").
(aa) The Company is in compliance with all U.S. and Canadian
federal, state, provincial, local, and foreign laws and regulations respecting
employment and employment practices, terms and conditions of employment, and
wages and hours. There are no pending investigations involving the Company, by
the U.S. Department of Labor, or any other U.S. or Canadian governmental agency
responsible for the enforcement of such federal, state, local, or
9
foreign laws and regulations. There is no unfair labor practice charge or
complaint against either the Company pending before the National Labor
Regulations Board or its Canadian counterpart or any strike, picketing, boycott,
dispute, slowdown or stoppage pending or, to the best knowledge of the Company,
threatened against or involving the Company or any predecessor entity, and none
has ever occurred. No representation question exists respecting the employees of
the Company, and no collective bargaining agreement or modification thereof is
currently being negotiated by the Company. No grievance or arbitration
proceeding is pending or threatened under any expired or existing collective
bargaining agreements of the Company. No labor dispute with the employees of the
Company exists, or, is imminent.
(ab) Except as described in the Prospectus, the Company does
not maintain, sponsor or contribute to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a "multi
employer plan" as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA" Plans"). The Company does not maintain or contribute, now or
at any time previously, to a defined benefit plan, as defined in Section 3(35)
of ERISA. No "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than
events with respect to which the 30-day notice under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan which could
reasonably be expected to have a material adverse effect of the business,
prospects, financial condition, or results of operations of the Company. No
ERISA Plan (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code, which could subject the Company to any tax penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all material reporting, disclosure and other
requirements of the Internal Revenue Code of 1986, as amended (the "Code") and
ERISA as they relate to any such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each ERISA Plan which
is intended to comply with Code Section 401(a), stating that such ERISA Plan and
the attendant trust are qualified thereunder. The Company has never completely
or partially withdrawn from a "multi employer plan."
(ac) The Company has not been notified nor is otherwise aware
that it is potentially liable, or is considered potentially liable, under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or any similar law ("Environmental Laws"). To the best knowledge of the
Company, the Company is in compliance with all applicable existing Environmental
Laws, except for such instances of non-compliance which would not have a
material adverse effect on the business, prospects, financial condition, or
results of operations. The term "Hazardous Material" means (i) any "hazardous
substance" as defined by the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or
petroleum product, (iv) any polychlorinated biphenyl, and (v) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulation under or within the meaning of any other Environmental Law.
To the best knowledge of the Company, no disposal, release or discharge of
Hazardous Material has occurred on, in, at or about any of the facilities or
properties of the Company except
10
for those instances which are in compliance with Environmental Laws or in the
aggregate would not have a material adverse effect on the business, prospects,
financial condition, or results of operations of the Company. Except as
described in the Prospectus, to the best knowledge of the Company: (i) there has
been no storage, disposal, generation, transportation, handling or treatment of
Hazardous Material by the Company (or to the knowledge of the Company, and of
its predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action which has not been taken, under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for such
violations and failures to take remedial action which would not result in,
singularly or in the aggregate, a material adverse effect on the business,
prospects, financial condition, or results of operations of the Company; and
(ii) there has been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or into the
environmental surrounding such property by the Company of any Hazardous
Material, except for such spills, discharge, leaks, emissions, injections,
escapes, dumping or releases which are in compliance with Environmental Laws or
would not result in, singularly or in the aggregate, a material adverse effect
the business, prospects, financial condition, or results of operations of the
Company.
(ad) None of the proceeds of the sale of the Securities will
be used, directly or indirectly, for the purpose of purchasing or carrying any
margin security, for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Securities or Warrants to be
considered a "purpose credit" within the meanings of Regulation G, T, U or X of
the Board of Governors of the Federal Reserve Board.
3. Purchase, Sale, and Delivery of the Stock and the Representatives'
Warrants.
(a) On the basis of the representations, warranties,
covenants, and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
the several Underwriters, and, the Underwriters, severally and not jointly,
agree to purchase from the Company, the numbers of shares of Firm Stock set
forth opposite the respective names of the Underwriters in Schedule I hereto.
The purchase price per share of the Firm Stock to be paid by
the several Underwriters shall be $4.50. The initial public offering price per
share of the Firm Stock shall be $5.00.
Payment for the Firm Stock by the Underwriters shall be made
by wire transfer of immediately available funds to an account designated by, the
Company, at the offices of Strasbourger ▇▇▇▇▇▇▇ Tulcin ▇▇▇▇▇ Incorporated, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place in the New York City
metropolitan area as the Representatives shall determine and advise the Company
by at least two full days' notice in writing, upon delivery of the Firm Stock to
the Representatives for the respective accounts of the Underwriters. Such
delivery and payment shall be made at 9:00 a.m., New York City local time, on
the third business
11
day following the time of the initial public offering, as defined in Section
11(a) hereof (unless such time and date is postponed in accordance with the
provisions of Section 9(c) hereof), or at such other time as shall be agreed
upon between the Representatives and the Company. The time and date of such
delivery and payment are hereinafter referred to as the "Closing Date."
Certificates representing the Firm Stock shall be registered
in such name or names and in such authorized denominations as the
Representatives may request in writing at least two full business days prior to
the Closing Date. The Company shall permit the Representatives to examine and
package such certificates for delivery at least one full business day prior to
the Closing Date.
(b) The Company hereby grants to the Underwriters' the
Over-allotment Option to purchase up to an aggregate of 165,000 Common Shares,
as may be necessary to cover over-allotments, at the same purchase price per
share to be paid by the several Underwriters to the Company for the Firm Stock
as provided for in this Section 3 hereof. The Over-allotment Options may be
exercised only to cover over-allotments in the sale of shares by Underwriters'
and shall be exercised pro rata to the numbers of Common Shares set forth
opposite the names of such Underwriters in Schedule I hereto. The Over-allotment
Option may be exercised by the Underwriters on the basis of the representations,
warranties, covenants, and agreements of the Company herein contained, but
subject to the terms and conditions herein set forth, at any time and from time
to time on or before the forty-fifth day following the date on which the
Registration Statement becomes effective under the Securities Act, by written
notice by the Representatives to the Company. Such notice shall set forth the
aggregate number of shares of Additional Stock as to which the Over-allotment
Option is being exercised, the name or names in which the certificates
representing the Additional Stock are to be registered, the authorized
denominations in which the Additional Stock is to be registered, and the time
and date, as determined by the Representatives, when such shares of Additional
Stock are to be delivered (each such time and date are hereinafter referred to
as an "Additional Closing Date"); provided, however, that no Additional Closing
Date shall be earlier than the Closing Date nor earlier than the second business
day after the date on which the notice of the exercise of the Over-allotment
Option shall have been given nor later than the eighth business day after the
date on which such notice shall have been given.
In the event the Company declares or pays a dividend or a
distribution on the Common Shares, whether in the form of cash, Common Shares,
or other consideration, prior to the Additional Closing Date, such dividend or
distribution shall also be paid on the Additional Stock on the later of the
Additional Closing Date and the date on which such dividend or distribution is
payable.
Payment for the shares of Additional Stock by the Underwriters
shall be made by wire transfer of immediately available funds to an account
designated by the Company at the offices of Strasbourger ▇▇▇▇▇▇▇ Tulcin ▇▇▇▇▇
Incorporated, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place in
the New York City metropolitan area as the Representatives shall determine and
advise the Company by at least two full days' notice in writing, upon delivery
of the shares of Additional Stock to the Underwriters' for their respective
accounts.
12
Certificates for the shares of Additional Stock shall be
registered in such name or names and in such authorized denominations as the
Representatives may request in writing at least two full business days prior to
the Additional Closing Date with respect thereto. The Company shall permit the
Representatives to examine and package such certificates for delivery at least
one full business day prior to the Additional Closing Date with respect thereto.
(c) The Company hereby agrees to issue and sell to the
Representatives (individually and in consideration of the services to be
provided under the Financial Advisory Agreement and not as the representatives
of the several Underwriters) and/or their designees on the Closing Date the
Representatives' Warrants to purchase the Warrant Shares for an aggregate
purchase price of $110.00.
Delivery and payment for the Representatives' Warrants shall
be made on the Closing Date. The Company shall deliver to the Representatives
upon payment therefor, certificates representing the Representatives' Warrants
in the name or names and in such authorized denominations as the Representatives
may request. The Representatives' Warrants shall be exercisable for a period of
four years commencing one year from the date on which the Registration Statement
was declared effective under the Securities Act at an initial exercise price per
Warrant Share equal to $8.25.
(d) It is understood that the Representatives may (but shall
not be obligated to) make any and all the payments required pursuant to this
Section 3 on behalf of any Underwriters whose check or checks shall not have
been received by the Representatives at the time of delivery of the Stock to be
purchased by such Underwriter or Underwriters. Any such payment by the
Representatives shall not relieve any such Underwriter or Underwriters of any of
its or their obligations hereunder.
4. Offering.
(a) The Underwriters are to make a public offering of the Firm
Stock as soon, on or after the date on which the Registration Statement becomes
effective under the Securities Act, as the Representatives deem it advisable so
to do. The Firm Stock is to be initially offered to the public at the initial
public offering price as provided for in Section 3(a) (such price being
hereinafter referred to as the "public offering price"). After the initial
public offering, the Representatives may from time to time increase or decrease
the public offering price, in the sole discretion of the Representatives, by
reason of changes in general market conditions or otherwise.
(b) Until the later of the Closing Date and the completion of
the distribution of the Firm Stock and Additional Stock, the Underwriters will
not offer, sell or deliver the Firm Stock and Additional Stock, directly or
indirectly, in Canada or to or for the benefit of any person who the
Underwriters know or have reasonable grounds for believing is a resident thereof
in violation of the securities laws of Canada or any province or territory of
Canada.
13
5. Covenants. The Company covenants that it will:
(a) Use its best efforts to cause the Registration Statement
to become effective under the Securities Act as promptly as possible and notify
the Representatives and counsel to the Underwriters immediately, and confirm
such notice in writing, (i) when the Registration Statement and any
post-effective amendment thereto become effective under the Securities Act, (ii)
of the receipt of any comments from the Commission or the "blue sky" or
securities authority of any jurisdiction regarding the Registration Statement,
any post-effective amendment thereto, the Prospectus, or any amendment or
supplement thereto, (iii) of the filing with the Commission of any supplement to
the Prospectus, and (iv) of the receipt of any notification with respect to a
Stop Order or the initiation or threatening of any proceeding with respect to a
Stop Order. The Company will use its best efforts to prevent the issuance of any
Stop Order and, if any Stop Order is issued, to obtain the lifting thereof as
promptly as possible. If the Registration Statement has become or becomes
effective under the Securities Act with a form of prospectus omitting Rule 430A
Information, or filing of the Prospectus with the Commission is otherwise
required under Rule 424(b) of the Regulations, the Company will file with the
Commission the Prospectus, properly completed, pursuant to Rule 424(b) of the
Regulations within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing.
(b) During the time when a prospectus relating to the Firm
Stock or the Additional Stock is required to be delivered hereunder or under the
Securities Act or the Regulations, comply with all requirements imposed upon it
by the Securities Act, as now existing and as hereafter amended, and by the
Regulations, as from time to time in force, so far as necessary to permit the
continuance of sales of, or dealings in, the Stock in accordance with the
provisions hereof and the Prospectus. If, at any time when a prospectus relating
to the Firm Stock or the Additional Stock is required to be delivered hereunder
or under the Securities Act or the Regulations, any event shall have occurred as
a result of which, in the reasonable opinion of counsel for the Company or
counsel for the Underwriters, the Registration Statement or the Prospectus as
then amended or supplemented contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or if, in the opinion of either of
such counsel, it is necessary at any time to amend or supplement the
Registration Statement or the Prospectus to comply with the Securities Act or
the Regulations, the Company will immediately notify the Representatives and
promptly prepare and file with the Commission an appropriate amendment or
supplement (in form and substance satisfactory to the Representatives and
counsel to the Underwriters) which will correct such statement or omission or
which will effect such compliance and will use its best efforts to have any such
amendment declared effective under the Securities Act as soon as possible.
(c) Deliver without charge to each of the several Underwriters
such number of copies of each Preliminary Prospectus as may reasonably be
requested by the Underwriters and, as soon as the Registration Statement, or any
amendment thereto, becomes effective under the Securities Act or a supplement is
filed with the Commission, deliver without charge to the Representatives two
signed copies of the Registration Statement, including exhibits, or such
14
amendment thereto, as the case may be, and two copies of any supplement thereto,
and deliver without charge to each of the several Underwriters such number of
copies of the Prospectus, the Registration Statement, and amendments and
supplements thereto, if any, without exhibits, as the Representatives may
reasonably request for the purposes contemplated by the Securities Act.
(d) Endeavor in good faith, in cooperation with the
Representatives, at or prior to the time the Registration Statement becomes
effective under the Securities Act, to qualify the Securities for offering and
sale under the "blue sky" or securities laws of such jurisdictions as may be
designated by the Representatives; provided, however, that no such qualification
shall be required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction to which it is not then subject.
In each jurisdiction where such qualification shall be effected, the Company
will, unless the Representatives agree in writing that such action is not at the
time necessary or advisable, file and make such statements or reports at such
times as are or may be required by the laws of such jurisdiction.
(e) Make generally available, within the meaning of Section
11(a) of the Securities Act and the Regulations, to its security holders as soon
as practicable, but not later than forty-five (45) days after the end of its
fiscal quarter in which the first anniversary date of the effective date of the
Registration Statement occurs, an earnings statement, which need not be
certified by independent certified public accountants unless required by the
Securities Act or the Regulations, but which shall satisfy the provisions of
Section 11(a) of the Securities Act and the Regulations, covering a period of at
least 12 months beginning after the date on which the Registration Statement was
declared effective under the Securities Act.
(f) For a period of 18 months after the date of the
Prospectus, not, without the prior written consent of Strasbourger, offer,
issue, sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any Common Shares or other securities of the
Company, or any security or other instrument which by its terms is convertible
into, or exercisable or exchangeable for, Common Shares, except as contemplated
by Section 3 hereof and except for (i) the issuance of stock options, or Common
Shares issuable upon the exercise thereof, which have been or may be granted
pursuant to the Company's 1998 Stock Option Plan, up to an aggregate of 435,000
Common Shares, all as properly described in the Prospectus, (ii) upon the
exercise of warrants outstanding on the date hereof, as properly described in
the Prospectus, (iii) the issuance of shares of Warrant Stock issuable upon
exercise of the Representatives' Warrants, and (iv) the issuance of Common
Shares in connection with acquisitions by the Company.
(g) For a period of five years after the date on which the
Registration Statement was declared effective under the Securities Act furnish
the Representatives without charge, the following:
(1) within 90 days after the end of each fiscal
year, one copy of financial statements certified by independent certified public
accountants, including a balance sheet, statement of operations, and statement
cash flows of the Company and its then existing
15
subsidiaries, if any, with supporting schedules, prepared in accordance with
generally accepted accounting principles, as at the end of such fiscal year and
for the 12 months then ended, which may be on a consolidated basis;
(2) as soon as practicable after they have been sent
to shareholders of the Company or filed with, or furnished to, the Commission,
the NASD, or the Exchange one copy of each annual and interim financial and
other report or communication sent by the Company to its shareholders or filed
with, or furnished to, the Commission, the NASD, or the Exchange;
(3) as soon as practicable, one copy of every press
release and every material news item and article in respect of the Company, any
Subsidiary, or their respective affairs which was released by the Company or any
such Subsidiary; and
(4) such additional documents and information with
respect to the Company, any Subsidiary, and their respective affairs, as the
Representatives may from time to time reasonably request; provided, however,
that such additional documents and information shall be received by the
Representatives on a confidential basis, unless otherwise disclosed to the
public, and shall not be used in violation of the federal securities laws and
the rules and regulations promulgated thereunder.
(h) Apply the net proceeds received by the Company from the
offering contemplated by this Agreement in the manner set forth under the
heading "Use of Proceeds" in the Prospectus.
(i) Furnish to the Representatives as early as practicable
prior to the Closing Date and each Additional Closing Date, if any, as the case
may be, but not less than two full business days prior thereto, a copy of the
latest available unaudited interim financial statements of the Company which
have been read by the Company's independent certified public accountants, as
stated in their letters to be furnished pursuant to Section 7(f) hereof.
(j) File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the date on which
the Registration Statement was declared effective under the Securities Act,
unless such filing shall comply with the Securities Act and the Regulations and
unless the Representatives shall previously have been advised of such filing and
furnished with a copy thereof, and the Representatives shall have approved such
filing in writing. Until the later of (i) the completion by the Underwriters of
the distribution of the Stock (but in no event more than nine months after the
date on which the Registration Statement shall have been declared effective
under the Securities Act) and (ii) 25 days after the date on which the
Registration Statement shall have been declared effective under the Securities
Act, the Company will prepare and file with the Commission, promptly upon the
Representatives' request, any amendments or supplements to the Registration
Statement or the Prospectus which, in the sole opinion of the Representatives,
may be necessary or advisable in connection with the distribution of the Stock.
(k) File timely with the Commission an appropriate form to
register the
16
Common Shares, including the Stock, pursuant to Section 12(b) of the Exchange
Act and comply with all registration, filing, and reporting requirements of the
Exchange Act, which may from time to time be applicable to the Company.
(l) Comply with all provisions of all undertakings contained
in the Registration Statement.
(m) Prior to the later of (A) the date referred to in the
second sentence of clause (j) of this Section 5, and (B) any Additional Closing
Date, issue no press release or other communication, directly or indirectly, and
hold no press conference with respect to the Company, the financial condition,
results of operations, business, properties, assets, liabilities of any the
Company or any Subsidiary, or this offering, without the prior written consent
of the Representatives.
(n) Make all filings required to maintain the inclusion of the
Common Shares on the Nasdaq SmallCap Market and the Exchange for at least five
years from the date of this Agreement.
(o) On the Closing Date, sell to the Representatives,
individually and not as Representatives of the several Underwriters, at the
price of $.001 per warrant, warrants to purchase the Warrant Stock, which
Representatives' Warrants shall be substantially in the form set forth as an
exhibit to the Registration Statement. On the Closing Date, execute and deliver
to the Representatives the Financial Advisory Agreement.
(p) Until expiration of the Representatives' Warrants, keep
reserved sufficient Common Shares for issuance upon exercise of the
Representatives' Warrants.
(q) Deliver to the Representatives, without charge, within a
reasonable period after the last Additional Closing Date or the expiration of
the period during which the Representatives may exercise the Over-allotment
Options, five sets of leather bound volumes of the Registration Statement and
all related materials to the individuals designated by the Representatives or
counsel to the Underwriters.
(r) For a period of three years after the effective date on
which the Registration Statement is declared effective under the Securities Act,
provide, at its sole expense, to the Representatives copies of the Company's
daily transfer sheets, if so requested by the Representatives.
(s) Maintain key-person life insurance payable to the Company
on the life of ▇▇. ▇▇▇▇▇▇ ▇. French, the President, Chairman of the Board of
Directors, and Chief Executive Officer of the Company, in the amount of at least
$200,000 for the period of time equal to the longer of three years from the date
on which the Registration Statement becomes effective under the Securities Act
and the term of the employment agreement between the Company and such officer.
17
(t) For a period of three years from the date on which the
Registration Statement becomes effective under the Securities Act, the
Representatives shall have the right to designate a director or appoint a
designee as an observer of the Company's Board of Directors. Such director or
observer will have the right to attend all meetings of the Board of Directors.
Such director or observer shall be entitled to receive reimbursement for all
out-of-pocket expenses incurred in attending such meetings, including, but not
limited to, food, lodging, transportation, and any fees paid to directors for
attending meetings. The Representatives shall be given notice of such meetings
at the same time and in the same manner as directors of the Company are
informed. The Representatives and such director or observer shall be indemnified
to the same extent as the other directors. The Company will purchase directors
and officers insurance in an amount of not less than $2,000,000, provided,
however, that the Company shall not be required to pay more than $50,000 per
year in order to maintain such insurance, and if insurance in such amount is not
available at such cost, the Company shall purchase that amount of such insurance
which is available at a cost of $50,000 per year.
(u) For a period of three years from the date on which the
Registration Statement becomes effective under the Securities Act, retain a
transfer agent reasonably acceptable to the Representatives.
6. Payment of Expenses. The Company hereby agrees to pay all expenses
(other than fees of counsel for the Underwriters, except as provided in Section
6(c)) in connection with (a) the preparation, printing, filing, distribution,
and mailing of the Registration Statement and the Prospectus and the printing,
filing, distribution, and mailing of this Agreement and the Agreement Among
Underwriters, any Selected Dealer Agreement and related documents, including the
cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments or supplements thereto supplied to the
Underwriters in quantities as hereinabove stated, (b) the issuance, sale,
transfer, and delivery (as applicable) of the Securities, including, without
limitation, the purchase from the Company of the Stock by the Underwriters, the
purchase by the Representatives of the Representatives' Warrants, the
consummation by the Company of any of its obligations under the this Agreement,
the Financial Advisory Agreement, or under the Representatives' Warrants, the
resale of the Stock by the Underwriters in connection with the distribution
contemplated by this Agreement, and any transfer or other taxes payable thereon,
(c) the qualification of the Securities under state or foreign "blue sky" or
securities laws, including the costs of printing and mailing the preliminary and
final "Blue Sky Survey" and the fees of counsel for the Underwriters (up to
$35,000) and the disbursements in connection therewith, (d) the filing fees
payable to the Commission, the NASD, NASD Regulation, Inc. ("NASDR"), and the
jurisdictions in which such qualification is sought, (e) any fees relating to
the listing of the Common Shares on the Exchange and any other stock market or
exchange, (f) the cost of printing or engraving certificates representing the
Securities, (g) the fees of the transfer agent for the Securities, (h)
advertising costs and expenses, including, but not limited to, costs and
expenses relating to the "road show," information meetings and presentations
(including travel and hotel), bound volumes, prospectus memorabilia, and
expenses relating to tombstone advertisements, (i) a non-accountable expense
allowance equal to three percent of the gross proceeds of the sale of the Firm
Stock and the Additional Stock (less $75,000 previously paid to the
Representatives by the Company in respect of such non-accountable expense
18
allowance) to the Representatives on the Closing Date, (j) fees and expenses of
counsel to, and independent certified public accountants of, the Company, and
(k) costs and expenses in connection with due diligence investigations,
including, but not limited to, fees of any consultant retained by the
Underwriters. Notwithstanding the foregoing, if the offering contemplated hereby
should be terminated, the Company agrees to pay the Representatives only the
out-of-pocket expenses incurred by the Underwriters in connection with this
Agreement or the proposed offer, sale, and delivery of the Securities.
7. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Stock and the Additional
Stock, as provided herein, and the obligation of the Representatives,
individually and not as representatives of the several Underwriters, to purchase
and pay for the Representatives' Warrants, each as provided herein, shall be
subject, in the discretion of the Representatives, 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
the Underwriters, as of the date hereof and as of the Closing Date (or any
Additional Closing Date, as the case may be), to the performance by the Company
of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective
under the Securities Act not later than 6:00 P.M., New York City local time, on
the date of this Agreement or such later date and time as shall be consented to
in writing by the Representatives, on or prior to the Closing Date, or any
Additional Closing Date, as the case may be, no Stop Order shall have been
issued and no proceeding shall have been initiated or threatened with respect to
a Stop Order; and any request by the Commission for additional information shall
have been complied with by the Company to the reasonable satisfaction of counsel
for the Underwriters. If required, the Prospectus shall have been filed with the
Commission in the manner and within the time period required by Rule 424(b)
under the Securities Act.
(b) (i) At the Closing Date and any Additional Closing Date,
as the case may be, you shall have received the opinion of Gersten, Savage,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP, United Stated counsel for the Company, dated the
date of delivery, addressed to the Underwriters, and in form and scope
satisfactory to counsel for the Underwriters, with reproduced copies or signed
counterparts thereof for each of the Underwriters.
(ii) At the Closing Date and any Additional Closing Date,
as the case may be, you shall have received the opinion of ▇▇▇▇▇▇▇▇ Binch,
Canadian counsel for the Company, dated the date of delivery, addressed to the
Underwriters, and in form and scope satisfactory to counsel for the
Underwriters, with reproduced copies or signed counterparts thereof for each of
the Underwriters.
(c) On or prior to the Closing Date and any Additional Closing
Date, as the case may be, the Underwriters shall have been furnished such
information, documents, certificates, and opinions as they may reasonably
require for the purpose of enabling them to review the matters referred to in
Section 7(b), and in order to evidence the accuracy, completeness, or
satisfaction of any of the representations, warranties, covenants, agreements,
or
19
conditions herein contained, or as the Representatives may reasonably request.
(d) At the Closing Date or any Additional Closing Date, as the
case may be, (i) 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 Securities Act and the
Regulations, and in all material respects conform to the requirements thereof,
and neither the Registration Statement nor the Prospectus nor 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, (ii) 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, or any development involving a
prospective material adverse change, in the business, properties, or condition
(financial or otherwise), results of operations, capital stock, long-term or
short-term debt, or general affairs of the Company or any Subsidiary from that
set forth in the Registration Statement and the Prospectus, except changes which
the Registration Statement and Prospectus indicate might occur after the date on
which the Registration Statement becomes effective under the Securities Act, and
neither the Company nor any Subsidiary shall have incurred any material
liabilities or entered into any agreements not in the ordinary course of
business other than as referred to in the Registration Statement and Prospectus,
(iii) except as set forth in the Prospectus, no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation shall be
pending, threatened, or in prospect (or any basis therefor) with respect to the
Company or any Subsidiary or any of their respective operations, businesses,
properties, or assets which would be required to be set forth in the
Registration Statement, wherein an unfavorable decision, ruling, or finding
would materially adversely affect the business, property, condition (financial
or otherwise), results of operations, or general affairs of the Company or such
Subsidiary, and (iv) the Stock be listed upon the Nasdaq SmallCap Market and the
Exchange.
(e) At the Closing Date and any Additional Closing Date, as
the case may be, you shall have received a certificate of the Chief Executive
Officer and the Chief Financial Officer of the Company, dated the Closing Date
or such Additional Closing Date, as the case may be, to the effect, among other
things, that (i) the conditions set forth in Sections 7(a) and 7(d) have been
satisfied, (ii) as of the date of this Agreement and as of the Closing Date or
such Additional Closing Date, as the case may be, the representations and
warranties of the Company contained herein were and are accurate and correct in
all material respects, and (iii) as of the Closing Date or such Additional
Closing Date, as the case may be, the obligations to be performed by the Company
hereunder on or prior to such time have been fully performed.
(f) At the time this Agreement is executed and at the Closing
Date and any Additional Closing Date, as the case may be, you shall have
received a letter, addressed to the Underwriters, and in form and substance
satisfactory to the Representatives, with reproduced copies or signed
counterparts thereof for each of the Underwriters, from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, independent certified public accountants for the Company and each of
the Subsidiaries, dated the date of delivery, in form and substance satisfactory
to the Representatives and counsel to the Underwriters.
20
(g) All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Securities shall be satisfactory in form and
substance to the Representatives and to counsel for the Underwriters, and the
Underwriters shall have received from such counsel for the Underwriters the
opinion, dated as of the Closing Date and the Additional Closing Date, as the
case may be, with respect to such of the matters set forth under Section 7(b),
and with respect to such other related matters, as the Representatives may
reasonably request.
(h) NASDR, upon review of the terms of the public offering of
the Stock shall not have objected to the Underwriters' participation in such
offering.
(i) Prior to or on the Closing Date, the Company shall have
entered into the Financial Advisory Agreement and the Representatives' Warrants
with the Representatives.
(j) Prior to or on the Closing Date, the Company shall have
provided to you copies of the agreements referred to in Section 2(r).
Any certificate or other document signed by any officer of the Company
and delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company hereunder to the
Underwriters as to the statements made therein. If any condition to the
Underwriters' obligations hereunder to be fulfilled prior to or at the Closing
Date or any Additional Closing Date, as the case may be, is not so fulfilled,
the Representatives may, on behalf of the several Underwriters, terminate this
Agreement or, if the Representatives so elect, in writing waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
8. Indemnification and Contribution.
(a) Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless each Underwriter, its officers, directors,
partners, employees, agents, and counsel, and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the Securities 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 8, but not be limited to, reasonable attorneys' fees and any and all
reasonable expense 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 in (A) the Registration
Statement, any Preliminary Prospectus, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto or (B) any
application or other document or communication (for purposes of this Section 8,
collectively referred to as 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 Securities under the
"blue sky" or securities laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be
21
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 8(b)
with respect to any Underwriter by, or on behalf of, such Underwriter through
the Representatives expressly for inclusion in the Registration Statement, any
Preliminary Prospectus, or the Prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, 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 an Underwriter or any of its
respective officers, directors, partners, employees, agents, or counsel, or any
controlling persons of an Underwriter (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 other than pursuant to
this Section 8(a)) and the Company shall promptly assume the defense of such
action, including, without limitation, the employment of counsel 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 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 satisfactory
to such indemnified party or parties to have charge of the defense of such
action or such indemnified party or parties shall have 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 in addition 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 written consent,
which consent shall not be unreasonably withheld. The Company shall not, without
the prior written consent of each indemnified party that is not released as
described in this sentence, settle or compromise any action, or permit a default
or consent to the entry of judgment or otherwise seek to terminate any pending
or threatened action, in respect of which indemnity may be sought hereunder
(whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify the Underwriters 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 Securities, the Registration
Statement, any Preliminary Prospectus, or the Prospectus, or any amendment or
supplement thereto, or any application.
(b) Each Underwriter severally agrees 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
22
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, to the same extent as the foregoing indemnity from the Company to the
several Underwriters in Section 8(a), but only with respect to statements or
omissions, if any, made in the Registration Statement, any Preliminary
Prospectus, 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 as stated
in this Section 8(b) with respect to any Underwriter by, or on behalf of, such
Underwriter through the Representatives expressly for inclusion in the
Registration Statement, any Preliminary Prospectus, or the Prospectus, or any
amendment or supplement thereto, or on any application, as the case may be;
provided, however, that the obligation of each Underwriter to provide indemnity
under the provisions of this Section 8(b) shall be limited to the amount which
represents the product of (i) the number of shares of Stock underwritten by such
Underwriter hereunder and the (ii) the underwriting discount per Common Share
set forth on the cover page of the Prospectus. For all purposes of this
Agreement, the amounts of the selling concession and reallowance and the name of
each of the Underwriters, and the number of shares of Firm Stock purchased by
each of the Underwriters set forth in the Prospectus constitute the only
information furnished in writing by, or on behalf of, such Underwriter expressly
for inclusion in the Registration Statement, any Preliminary Prospectus, 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 on
the Registration Statement, any Preliminary Prospectus, or the Prospectus, or
any amendment or supplement thereto, or in any application, and in respect of
which indemnity may be sought against any Underwriter pursuant to this Section
8(b), such Underwriter 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 8(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 8(a) or
8(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 Securities 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 the Underwriters (including for this purpose any contribution by, or
on behalf of, an indemnified party) 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 the Underwriters, in the aggregate, are responsible
for the proportion thereof equal to the percentage which the underwriting
discount per Common Share set forth on the cover page of the Prospectus
represents of the initial public offering price per Common Share set forth on
the cover page of the Prospectus and the Company is responsible for the
remaining portion; 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 the Underwriters 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
23
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 the Underwriters, 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 the Underwriters agree
that it would be unjust and inequitable if the respective obligations of the
Company and the Underwriters for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities, claims, damages, and
expenses (even if the Underwriters and the other indemnified parties were
treated as one entity for such purpose) or by any other method of allocation
that does not reflect the equitable considerations referred to in this Section
8(c). No person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. For purposes of
this Section 8(c), each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
and each officer, director, partner, employee, agent, and counsel of any
Underwriter shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities 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 8(c). Anything in this Section
8(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 8(c) is intended to supersede any right to
contribution under the Securities Act, the Exchange Act, or otherwise.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Stock or Additional Stock hereunder, and if
the number of shares of Firm Stock or Additional Stock to which the defaults of
all Underwriters in the aggregate relate does not exceed 10% of the number of
shares of Firm Stock or Additional Stock, as the case may be, which all
Underwriters have agreed to purchase hereunder, then such shares of Firm Stock
or Additional Stock to which such defaults relate shall be purchased by the
non-defaulting Underwriters in proportion to their respective commitments
hereunder.
(b) If such defaults exceed in the aggregate 10% of the number
of shares of Firm Stock or Additional Stock, as the case may be, which all
Underwriters have agreed to purchase hereunder, the Representatives may, in
their discretion, arrange to purchase itself or for another party or parties to
purchase such shares of Firm Stock or Additional Stock, as the case may be, to
which such default relates on the terms contained herein. If the Representatives
do not arrange for the purchase of such shares of Firm Stock or Additional
Stock, as the case may be, within one business day after the occurrence of
defaults relating to in excess of 10% of the Firm Stock or the Additional Stock,
as the case may be, then the Company shall be entitled to a further period of
one business day within which to procure another party or parties satisfactory
to the Representatives to purchase such shares of Firm Stock or Additional
Stock, as the case may be,
24
on such terms. If the Representatives or the Company does not arrange for the
purchase of the shares of Firm Stock or Additional Stock, as the case may be, to
which such defaults relate as provided in this Section 9(b), this Agreement may
be terminated by the Representatives or by the Company without liability on the
part of the Company (except that the provisions of Sections 5(a)(1), 6, 8, 10,
and 13 shall survive such termination) or the several Underwriters, but nothing
in this Agreement shall relieve a defaulting Underwriter of its liability, if
any, to the other several Underwriters and to the Company for any damages
occasioned by its default hereunder.
(c) If the shares of Firm Stock or Additional Stock to which
such defaults relate are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, the
Representatives or the Company shall have the right to postpone the Closing Date
or the Additional Closing Date, as the case may be, for a reasonable period but
not in any event more than seven business days in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements with respect to the Firm
Stock or the Additional Stock, and the Company agrees to prepare and file
promptly any amendment or supplement to the Registration Statement or the
Prospectus which in the opinion of counsel for the Underwriters may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any party substituted under this Section 9 as if such party had originally been
a party to this Agreement and had been allocated the number of shares of Firm
Stock and Additional Stock actually purchased by it as a result of its original
commitment to purchase Firm Stock and Additional Stock and its purchase of
shares of Firm Stock or Additional Stock pursuant to this Section 9.
10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by, or on behalf of, any Underwriter or any indemnified
person, or by, or on behalf of, the Company or any person or entity which is
entitled to be indemnified under Section 8(b), and shall survive termination of
this Agreement or the delivery of the Firm Stock and the Additional Stock, if
any, to the several Underwriters. In addition, the provisions of Sections
5(a)(1), 6, 8, 10, 11, and 13 shall survive termination of this Agreement,
whether such termination occurs before or after the Closing Date or any
Additional Closing Date. Notwithstanding anything in the second sentence of
Section 6 hereof to the contrary, and in addition to the obligations assumed by
the Company pursuant to the first sentence of Section 6 hereof, if the offering
should be terminated, the Company shall be liable to the Underwriters only for
out-of-pocket expenses incurred by the Underwriters in connection with this
Agreement or the proposed, offer, sale, and delivery of the Securities.
11. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective at 9:30 A.M., New
York City local time, on the first full business day following the day on which
the Registration Statement
25
becomes effective under the Securities Act or at the time of the initial public
offering by the Underwriters of the Firm Stock, whichever is earlier. The time
of the initial public offering shall mean the time, after the Registration
Statement becomes effective under the Securities Act, of the release by the
Representatives for publication of the first newspaper advertisement which is
subsequently published relating to the Firm Stock or the time, after the
Registration Statement becomes effective under the Securities Act, when the Firm
Stock is first released by the Representatives for offering by the Underwriters
or dealers by letter or telegram, whichever shall first occur. The
Representatives 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 11, by giving the notice indicated in Section 11(d) before
the time this Agreement becomes effective under the Securities Act.
(b) If the purchase price of the Firm Stock has not been
determined as provided for in Section 3 prior to 4:30 p.m., New York City local
time, on the fifth full business day after the date on which the Registration
Statement becomes effective under the Securities Act, this Agreement may be
terminated at any time thereafter either by the Representatives or by the
Company by giving notice to the other unless before such termination the
purchase price for the Firm Stock has been so determined. If the purchase price
of the Firm Stock has not been so determined prior to 4:30 p.m., New York City
local time, on the tenth full business day after the date on which the
Registration Statement becomes effective under the Securities Act, this
Agreement shall automatically terminate forthwith.
(c) In addition to the right to terminate this Agreement
pursuant to Sections 7 and 9 hereof, the Representatives shall have the right to
terminate this Agreement at any time prior to the Closing Date or any Additional
Closing Date, as the case may be, by giving notice to the Company, and, if
exercised, the Over-allotment Option, at any time prior to any Additional
Closing Date, by giving notice to the Company, (i) if there shall have been a
general suspension of, or a general limitation on prices for, trading in the
Common Shares or in securities generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market; or (ii) if there
shall have been an outbreak or increase in the level of major hostilities or
other national or international calamity; or (iii) if a banking moratorium has
been declared by a state or federal authority; or (iv) if a moratorium in
foreign exchange trading by major international banks or persons has been
declared; or (v) if there shall have been a material interruption in the mail
service or other means of communication within the United States; or (vi) if the
Company shall have sustained a material or substantial loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage, or other calamity or malicious
act, whether or not such loss shall have been insured, or from any labor dispute
or court or government action, order, or decree, which will, in the opinion of
the Representatives, make it inadvisable to proceed with the offering, sale, or
delivery of the Firm Stock or the Additional Stock, as the case may be; or (vii)
if any material governmental restrictions shall have been imposed on trading in
securities in general, which restrictions are not in effect on the date hereof;
or (viii) if there shall be passed by the Congress of the United States or by
any state legislature any act or measure, or adopted by any governmental body or
authoritative accounting institute or board, or any governmental executive, any
orders, rules, or regulations, which the Representatives believe likely to have
a material adverse effect on the business, financial condition, or financial
statements of the
26
Company or the market for the Common Shares; or (ix) if the obligations of the
Company set forth in Section 7 hereof have not been performed, satisfied, or
waived or the Company shall have failed, refused, or been unable to perform all
obligations and satisfy all conditions on its part to be satisfied or performed
hereunder prior thereto; (x) there shall have been a material adverse effect, or
any development involving a prospective material adverse effect, in the
business, prospects, financial condition, or results of operations of the
Company, or any executive officer of the Company shall have suffered any injury
or disability of a nature that materially adversely affects his ability to
function in his or her respective capacities for the Company for more than six
months, or any material action, suit, or proceeding shall be threatened,
instituted, or pending, at law or in equity, against the Company or any of its
directors or executive officers, by any person or by any federal, state, or
other governmental body or entity.
(d) If the Representatives elect to prevent this Agreement
from becoming effective, as provided in this Section 11, or to terminate this
Agreement pursuant to Section 7 of this Agreement or this Section 11, the
Representatives shall notify the Company promptly by telephone, telex, or
telegram, confirmed by letter. If, as so provided, the Company elects to prevent
this Agreement from becoming effective or to terminate this Agreement, the
Company shall notify the Representatives promptly by telephone, telex, or
telegram, confirmed by letter.
(e) Anything in this Agreement to the contrary notwithstanding
other than Section 11(f), if this Agreement shall not become effective by reason
of an election pursuant to this Section 11 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 the several Underwriters, in addition to
the obligations the Company assumed pursuant to the first sentence of Section 6,
will be to reimburse the several Underwriters for such 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 Securities, and, upon demand, the Company agrees to pay
promptly the full amount thereof to the Representatives for the respective
accounts of the Underwriters. Anything in this Agreement to the contrary
notwithstanding other than Section 11(f), if this Agreement shall not be carried
out within the time specified herein for any reason other than the 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 Company
shall have no liability to the several Underwriters other than for obligations
assumed by the Company pursuant to Section 6.
(f) Notwithstanding any election hereunder or any termination
of this Agreement, and whether or not this Agreement is otherwise carried out,
the provisions of Sections 5(a)(1), 6, 8, 10, and 13 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. Notwithstanding anything in the second
sentence of Section 6 hereof to the contrary, and in addition to the obligations
assumed by the Company pursuant to the first sentence of Section 6 hereof, if
the offering should be terminated, the Company shall be liable to the several
Underwriters only for out-of-pocket
27
expenses incurred by the several Underwriters in connection with this Agreement
or the proposed, offer, sale, and delivery of the Securities.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
by letter, to such Underwriter, c/o Strasbourger ▇▇▇▇▇▇▇ Tulcin ▇▇▇▇▇
Incorporated, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇, and Win Capital Corp., ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Al ▇▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.; or if sent to the Company,
shall be mailed, delivered, or telexed or telegraphed and confirmed by letter,
to the Company, IT Staffing Ltd., ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. French, with a copy to Gersten, Savage, ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. All notices hereunder shall be
effective upon receipt by the party to which it is addressed.
13. Parties. Each Representative, individually and not as the
representative of the several Underwriters, represents that it is authorized to
act as the Representative on behalf of the several Underwriters named in
Schedule I hereto, and the Company shall be entitled to act and rely on any
request, notice, consent, waiver, or agreement purportedly given on behalf of
the Underwriters when the same shall have been given by the Representative on
such behalf. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the several Underwriters, the Company, and the persons and
entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any buyer, as such, of the Firm Stock or the
Additional Stock), and no other person shall have, or be construed to have, any
legal or equitable right, remedy, or claim under, in respect of, or by virtue of
this Agreement or any provision herein contained. Notwithstanding anything
contained in this Agreement to the contrary, all of the obligations of the
Underwriters hereunder are several and not joint.
14. Construction. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
conflict of laws. Time is of the essence in this Agreement.
15. Consent to Jurisdiction. The Company irrevocably consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action or proceeding arising out
of, or relating to, this Agreement, any document or instrument delivered
pursuant to, in connection with, or simultaneously with this Agreement, or a
breach of this Agreement or any such document or instrument. In any such action
or proceeding, the Company waives personal service of any summons, complaint, or
other process and agrees that service thereof may be made in accordance with
Section 12. Within 30 days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding, the Company shall appear or answer such summons, complaint, or
other process. Should the Company fail to appear or answer within such 30-day
period or such extended period, as the case may be, the Company shall be deemed
in default and
28
judgment may be entered against the Company for the amount as demanded in any
summons, complaint, or other process so served. The Company hereby irrevocably
appoints Gersten, Savage, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP, United States counsel to
the Company, as the Company's agent to receive service of process in any action
against the Company in any federal or state court of the State of New York
arising out of this offering.
29
If the foregoing correctly sets forth the understandings among the
Representatives and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
IT STAFFING LTD.
By:
---------------------------------
Name:
Title:
Accepted as of the date first above
written in New York, New York
STRASBOURGER ▇▇▇▇▇▇▇ TULCIN
▇▇▇▇▇ INCORPORATED
WIN CAPITAL CORP.
NUTMEG SECURITIES, LTD.
▇▇▇▇▇ ▇▇▇▇ & CO., INC.
On behalf of themselves and the
other several Underwriters named
in Schedule I hereto.
STRASBOURGER ▇▇▇▇▇▇▇ TULCIN
▇▇▇▇▇ INCORPORATED
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
WIN CAPITAL CORP.
By:
---------------------------------
Name: Al ▇▇▇▇▇▇▇
Title: Vice Chairman
30
SCHEDULE I
Total
Number
of Shares
to be
Underwriter Purchased
----------- ---------
Strasbourger ▇▇▇▇▇▇▇ Tulcin ▇▇▇▇▇ Incorporated
Win Capital Corp.
Nutmeg Securities, Ltd.
▇▇▇▇▇ ▇▇▇▇ & Co., Inc.
Total 1,100,000
=========