EXHIBIT 1(i)
1,100,000 Shares of Common Stock,
OMNICORDER TECHNOLOGIES, INC.
UNDERWRITING AGREEMENT
Stony Brook, New York
[ ], 1999
CAMBRIDGE CAPITAL, LLC
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Ladies and Gentlemen:
Omnicorder Technologies, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to Cambridge Capital, LLC (the
"Underwriter") 1,100,000 shares (the "Firm Shares") of Common Stock, $[.01] par
value (such class of stock being herein called the "Common Stock"), of the
Company. In addition, the Company will grant to the Underwriter an option to
purchase up to an additional 165,000 shares of Common Stock (the "Option
Shares") for the purpose of covering over-allotments in connection with the sale
of Firm Shares. The Firm Shares and any Option Shares purchased pursuant to this
Underwriting Agreement are herein called "Shares."
The Company also proposes to issue and sell to the Underwriter
warrants (the "Underwriter's Warrants") pursuant to the Underwriter's Warrant
Agreement (the "Underwriter's Warrant Agreement") for the purchase of an
additional aggregate 110,000 shares of Common Stock. The shares of Common Stock
issuable upon exercise of the Underwriter's Warrants are hereinafter referred to
as the "Underwriter's Shares." The Firm Shares, the Option Shares, the
Underwriter's Warrants and the Underwriter's Shares (collectively, hereinafter
referred to as the "Securities") are more fully described in the Registration
Statement and the Prospectus referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriter as of the date
hereof, and as of the Closing Date (hereinafter defined) and the Option Closing
Date (hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a registration statement,
and an amendment or amendments thereto, on Form SB-2 (No. ), including any
related preliminary prospectus included therein ("Preliminary Prospectus"), for
the registration of the Securities under the Securities Act of 1933, as amended
(the "Act"), which registration statement and amendment or amendments have been
prepared by the Company in conformity with the requirements of the Act, and the
rules and regulations (the "Regulations") of the Commission under the Act. The
Company will promptly file a further amendment to said registration statement in
the form heretofore delivered to the Underwriter, and will not file any other
amendment thereto to which the Underwriter shall have objected to in writing
after having been furnished with a copy thereof. Except as the context may
otherwise require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, schedules, exhibits and all other
documents filed as a part thereof or incorporated therein (including, but not
limited to, those documents or information filed with the Commission pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act") and
incorporated by reference into any part or portion thereof) and all information
deemed to be a part thereof as of such time pursuant to paragraph (b) of Rule
430(A) of the Regulations), is hereinafter called the "Registration Statement,"
and the form of prospectus in the form first filed with the Commission pursuant
to Rule 424(b) of the Regulations, is hereinafter called the "Prospectus;"
provided, however, that if the Company files any documents with the Commission
pursuant to the 1934 Act after the time that the Registration Statement becomes
effective and before the termination of the offering of Shares by the
Underwriter, the term "Prospectus" shall refer to such Prospectus as
supplemented by the documents so filed from and after the time such documents
are filed with the Commission. For purposes hereof, "Rules and Regulations" mean
the rules and regulations adopted by the Commission under either the Act or the
1934 Act, as applicable.
(b) Neither the Commission nor any state regulatory
authority has issued any order preventing or suspending the use of any
Preliminary Prospectus, the Registration Statement or the Prospectus or any part
of any thereof and no proceedings for a stop order suspending the effectiveness
of the Registration Statement or any of the Company's securities have been
instituted or are pending or to the Company's knowledge, threatened. Each of the
Preliminary Prospectus, Registration Statement and Prospectus at the time of
filing thereof conformed with the requirements of the Act and the Rules and
Regulations, and none of the Preliminary Prospectus, Registration Statement or
Prospectus at the time of filing thereof contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
and necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, provided, however, that this
representation and warranty does not apply to statements made or statements
omitted in reliance upon and in conformity with written information furnished to
the Company with respect to the Underwriter by or on behalf of the Underwriter
expressly for use in such Preliminary Prospectus, Registration Statement or
Prospectus.
(c) When the Registration Statement becomes effective
and at all times subsequent thereto, the Registration Statement and the
Prospectus (including the information
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incorporated by reference therein) will contain all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations, and will conform to the requirements of the Act and the Rules and
Regulations; neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, provided, however, that this
representation and warranty does not apply to statements made or statements
omitted in reliance upon and in conformity with written information furnished to
the Company with respect to the Underwriter by or on behalf of the Underwriter
expressly for use in the Preliminary Prospectus, Registration Statement or
Prospectus or any amendment thereof or supplement thereto.
(d) (i) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its organization. The Company does not own an interest in any
corporation, limited liability company, partnership, trust, joint venture or
other business entity, except as described in the Registration Statement. The
Company is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such qualification or
licensing. The Company has all requisite corporate power and authority, and the
Company has obtained any and all necessary authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all governmental or
regulatory officials and bodies (including, without limitation, those having
jurisdiction over environmental or similar matters), to own or lease its
properties and conduct its business as described in the Prospectus, except as
otherwise expressly disclosed in the Prospectus; the Company is and has been
doing business in compliance with all such authorizations, approvals, orders,
licenses, certificates, franchises and permits and all applicable federal, state
and local laws, rules and regulations; and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, prospects, operation, properties,
business or results of operations of the Company. The disclosures in the
Registration Statement concerning the effects of federal, state and local laws,
rules and regulations on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made.
(ii) The Company is not party to any joint venture or
partnership agreement ("Joint Venture") except as set forth in the Registration
Statement. Each Joint Venture has all requisite corporate power and authority,
and has obtained any and all necessary authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all governmental or
regulatory officials and bodies (including, without limitation, those having
jurisdiction over environmental or similar matters), to own or lease its
properties and conduct its business as described in the Prospectus; each Joint
Venture is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and
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all applicable national and local laws, rules and regulations; and no Joint
Venture has received any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license, certificate,
franchise, or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, position, prospects,
value, operation, properties, business or results of operations of the Joint
Venture, taken as a whole. The disclosures in the Registration Statement
concerning the effects of national and local laws, rules and regulations on the
Joint Venture business as currently conducted and as contemplated are correct in
all material respects and do not omit to state a material fact necessary to make
the statements contained therein not misleading in light of the circumstances in
which they were made.
(e) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, under
"Capitalization" and "Description of Securities" and will have the adjusted
capitalization set forth therein on the Closing Date and the Option Closing
Date, if any, based upon the assumptions set forth therein, and the Company is
not a party to or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Underwriter's Warrant Agreement and
as described in the Prospectus. The Securities and all other securities issued
or issuable by the Company conform or, when issued and paid for, will conform,
in all respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding securities
of the Company have been duly authorized and validly issued and are fully paid
and non-assessable and the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The Securities are not and will not
be subject to any preemptive or other similar rights of any stockholder, have
been duly authorized and, when issued, paid for and delivered in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable and will
conform to the description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely by reason of being such
holders; all corporate action required to be taken for the authorization, issue
and sale of the Securities has been duly and validly taken; and the certificates
representing the Securities will be in due and proper form. Upon the issuance
and delivery pursuant to the terms hereof of the Securities to be sold by the
Company hereunder, the Underwriter will acquire good and marketable title to
such Securities free and clear of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any kind whatsoever.
(f) PricewaterhouseCoopers LLP, the accountants who
have certified the annual financial statements filed and to be filed with the
Commission as part of the Registration Statement, each Preliminary Prospectus
and the Prospectus, are independent public accountants within the meaning of the
Act and the Regulations. The financial statements, including the related notes
and schedules thereto, included in the Registration Statement, each Preliminary
Prospectus and the Prospectus fairly present the financial position, the results
of operations, changes in cash flow, and changes in stockholders' equity, of the
Company at
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the respective dates and for the respective periods to which they apply and the
pro forma financial information included in the Registration Statement and
Prospectus presents fairly, on a basis consistent with that of the audited
financial statements included therein, what the Company's pro forma
capitalization would have been for the respective periods and as of the
respective dates to which they apply after giving effect to the adjustments
described therein. Such financial statements have been prepared in conformity
with generally accepted accounting principles and the Regulations, consistently
applied throughout the periods involved. There has been no material adverse
change or development in the condition, financial or otherwise, or in the
earnings, position, prospects, value, operation, properties, business, or
results of operations of the Company, whether or not arising in the ordinary
course of business, since the date of the financial statements included in the
Registration Statement and the Prospectus, and the outstanding debt, the
property, both tangible and intangible, and the business of the Company conform
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. Financial information set forth in
the Prospectus under the headings "Summary of Financial Information,"
"Capitalization," and "Management's Discussion and Analysis of Financial
Condition and Results of Operation," fairly present, on the basis stated in the
Prospectus, the information set forth therein, have been derived from or
compiled on a basis consistent with that of the audited financial statements
included in the Prospectus.
(g) The Company (i) has paid all federal, state,
local, and foreign taxes for which it is liable and for which payment is due,
including, but not limited to, withholding taxes and amounts payable under
Chapters 21 through 24 of the Internal Revenue Code of 1986 (the "Code"), and
has furnished all information returns it is required to furnish pursuant to the
Code, (ii) has established adequate reserves for such taxes which are not due
and payable, and (iii) does not have any tax deficiency or claims outstanding,
proposed or assessed against it.
(h) No transfer tax, stamp duty or other similar tax
is payable by or on behalf of the Underwriter in connection with (i) the
issuance by the Company of the Securities, (ii) the purchase by the Underwriter
of the Securities to be sold by the Company hereunder and the purchase by the
Underwriter of the Underwriter's Warrants from the Company, (iii) the
consummation by the Company of any of its obligations under this Agreement or
the Underwriter's Warrant Agreement, as the case may be, or (iv) resales of the
Shares in connection with the distribution contemplated hereby.
(i) The Company maintains insurance policies,
including, but not limited to, general liability, product liability and property
insurance, which insures the Company and its employees against such losses and
risks generally insured against by comparable businesses. The Company (A) has
not failed to give notice or present any insurance claim with respect to any
matter, including but not limited to the Company's business, property or
employees, under the insurance policy or surety bond in a due and timely manner,
(B) does not have any disputes or claims against any underwriter of such
insurance policies or surety bonds or has not failed to pay any premiums due and
payable thereunder, or (C) has not failed to comply with all conditions
contained in such insurance policies and surety bonds. There are no facts or
circumstances under any such insurance policy or surety bond which would relieve
any insurer of its obligation to satisfy in full any valid claim of the Company.
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(j) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or, to the best knowledge of the Company,
threatened against (or circumstances that may give rise to the same), or
involving the properties or business of, the Company which (i) questions the
validity of the capital stock of the Company, this Agreement or the
Underwriter's Warrant Agreement or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement or the Underwriter's
Warrant Agreement, (ii) is required to be disclosed in the Registration
Statement which is not so disclosed (and such proceedings as are summarized in
the Registration Statement are accurately summarized in all material respects),
or (iii) except for matters disclosed in the Prospectus, might materially and
adversely affect the condition, financial or otherwise, or the earnings,
prospects, stockholders' equity, operation, properties, business or results of
operations of the Company.
(k) The Company has full legal right, corporate power
and authority to authorize, issue, deliver and sell the Securities, enter into
this Agreement and the Underwriter's Warrant Agreement and to consummate the
transactions provided for in such agreements; and this Agreement and the
Underwriter's Warrant Agreement have each been duly and properly authorized,
executed and delivered by the Company. Each of this Agreement and the
Underwriter's Warrant Agreement constitutes a legal, valid and binding agreement
of the Company enforceable against the Company in accordance with its terms,
except (i) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
affecting creditors' rights generally, (ii) as enforceability of any
indemnification or contribution provisions may be limited under applicable laws
or the public policies underlying such laws and (iii) that the remedies of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceedings may be brought. None of the Company's issue and sale of the
Securities, execution or delivery of this Agreement or the Underwriter's Warrant
Agreement, its performance hereunder and thereunder, its consummation of the
transactions contemplated herein and therein, or the conduct of its business as
described in the Registration Statement, the Prospectus, and any amendments or
supplements thereto, conflicts with or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of the Company pursuant to the terms of, (i)
the certificate of incorporation or by-laws of the Company, (ii) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over the Company or
any of its activities or properties.
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(l) Except as described in the Prospectus, no
consent, approval, authorization or order of, and no filing with, any court,
regulatory body, government agency or other body, domestic or foreign, is
required for the issuance of the Shares pursuant to the Prospectus and the
Registration Statement, the issuance of the Underwriter's Warrants, the
performance of this Agreement and the Underwriter's Warrant Agreement and the
transactions contemplated hereby and thereby, including without limitation, any
waiver of any preemptive, first refusal or other rights that any entity or
person may have for the issue and/or sale of any of the Shares or the
Underwriter's Warrants, except such as have been or may be obtained under the
Act or may be required under state securities or Blue Sky laws in connection
with the Underwriter's purchase and distribution of the Shares, and the
Underwriter's Warrants to be sold by the Company hereunder and under the
Underwriter's Warrant Agreement.
(m) All executed agreements, contracts or other
documents or copies of executed agreements, contracts or other documents filed
as exhibits to the Registration Statement to which the Company is a party or by
which it may be bound or to which any of its assets, properties or business may
be subject have been duly and validly authorized, executed and delivered by the
Company, and constitute the legal, valid and binding agreements of the Company,
enforceable against the Company, in accordance with their respective terms. The
descriptions in the Registration Statement of agreements, contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown with respect thereto on Form SB-2, and there
are no contracts or other documents which are required by the Act to be
described in the Registration Statement or filed as exhibits to the Registration
Statement which are not described or filed as required, and, except for redacted
portions being filed separately with the Commission, the exhibits which have
been filed are in all material respects complete and correct copies of the
documents of which they purport to be copies.
(n) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus, and
except as may otherwise be indicated or contemplated herein or therein, the
Company has not (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, (ii) entered into any
transaction other than in the ordinary course of business, or (iii) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock of any class, and there has not been any change in the capital stock, or
any material change in the debt (long or short term) or liabilities or material
adverse change in or affecting the general affairs, management, financial
operations, stockholders' equity or results of operations of the Company.
(o) No material default exists in the due performance
and observance of any term, covenant or condition of any material license,
contract, indenture, mortgage, installment sale agreement, lease, deed of trust,
voting trust agreement, stockholders agreement, partnership agreement, note,
loan or credit agreement, purchase order, or any other agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which the Company is a party or by which the Company may be bound
or to which the property or assets (tangible or intangible) of the Company is
subject or affected.
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(p) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance with all
federal, state, local, and foreign laws and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours. There are no pending investigations involving the Company by the U.S.
Department of Labor, or any other governmental agency responsible for the
enforcement of such federal, state, local, or foreign laws and regulations,
which are required to be disclosed in the Registration Statement and are not so
disclosed. There is no unfair labor practice charge or complaint against the
Company pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the Company, or any predecessor entity, and none has ever occurred.
No 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
under any expired or existing collective bargaining agreements of the Company.
No labor dispute with the employees of the Company exists, or is imminent.
(q) Except as described in the Prospectus, the
Company does not maintain, sponsor or contribute to any program or arrangement
that is an "employee pension benefit plan," an "employee welfare benefit plan,"
or a "multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("ERISA Plans"). The Company does not maintain or contribute,
now or at any time previously, to a defined benefit plan, as defined in Section
3(35) of ERISA. No ERISA Plan (or any trust created thereunder) has engaged in a
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code, which could subject the Company to any tax penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all reporting, disclosure and other requirements of
the Code and ERISA as they relate to any such ERISA Plan. The Company has never
completely or partially withdrawn from a "multiemployer plan."
(r) Neither the Company nor its officers or
directors, nor any of its employees, stockholders, partners, or affiliates
(within the meaning of the Rules and Regulations) has taken, directly or
indirectly, any action designed to or which has constituted or which might be
expected to cause or result in, under the 1934 Act, or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities or otherwise.
(s) To the best of the Company's knowledge, and
except as disclosed in the Prospectus, none of the patents, patent applications,
trademarks, service marks, service names, trade names and copyrights, and none
of the licenses and rights to the foregoing presently owned or held by the
Company are in dispute or are in any conflict with the right of any other person
or entity. To the best of the Company's knowledge, and except as disclosed in
the Prospectus, the Company (i) owns or has the right to use, free and clear of
all liens, charges, claims, encumbrances, pledges, security interests, defects
or other restrictions or equities of any kind whatsoever, all patents, patent
applications, trademarks, service marks, service names, trade names and
copyrights, technology and licenses and rights with respect to the foregoing,
used in the conduct of its business as now conducted or proposed to be conducted
(collectively, the "Intellectual Property") without infringing upon or otherwise
acting adversely to the right or claimed right of any person,
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corporation or other entity under or with respect to any of the foregoing and
(ii) is not obligated or under any liability whatsoever to make any payment by
way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, patent application, trademark, service ▇▇▇▇, service
name, trade name, copyright, know-how, technology or other intangible asset,
with respect to the use thereof or in connection with the conduct of its
business or otherwise; provided, however, that the Company represents and
warrants that for a period of forty-two (42) months from the Effective Date, if
any claim, cause of action, suit or proceeding (collectively, "Claims") is
brought or instituted alleging that any Intellectual Property utilized by the
Company infringes the rights of any third party, the Company shall indemnify and
hold harmless the Underwriter with respect to any out-of-pocket payments the
Underwriter may incur as a result of such Claims, including but not limited to,
payments incurred in favor of any stockholder of the Company, the party alleging
having suffered the infringement or any other party, as well as payments of all
attorneys' fees and costs in connection therewith.
(t) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental or other proceeding,
domestic or foreign, pending or, to the best of the Company's knowledge,
threatened (or circumstances that may give rise to the same) against the Company
which challenges the exclusive rights of the Company with respect to any
trademarks, trade names, service marks, service names, copyrights, patents,
patent applications or licenses or rights to the foregoing used in the conduct
of its business, or which challenge the right of the Company to use any
technology presently used or contemplated to be used in the conduct of its
business.
(u) Except as disclosed in the Prospectus, the
Company owns and has the unrestricted right to use all trade secrets, know-how
(including all other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), inventions, technology, designs, processes,
works of authorship, computer programs and technical data and information
(collectively herein "intellectual property") that are material to the
development, manufacture, operation and sale of all products and services sold
or proposed to be sold by the Company, free and clear of and without violating
any right, lien, or claim of others, including without limitation, former
employers of its employees. The Company is not aware of any such development of
similar or identical trade secrets or technical information by others.
(v) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property stated in the Prospectus, to be owned or leased by it free and clear of
all liens, charges, claims, encumbrances, pledges, security interests, defects,
or other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus, taxes, lessor's interests and liens for taxes not
yet due and payable.
(w) The Company has caused to be duly executed
legally binding and enforceable agreements pursuant to which the Company's
officers and directors, holders of 10% or more of the Company's outstanding
Common Stock as of the date of the Prospectus, the Company's private placement
shareholders and stock option plan optionholders have agreed not to, directly or
indirectly, offer to sell, sell, grant any option for the sale of, assign,
transfer, pledge, hypothecate, distribute or otherwise encumber or dispose of
any shares of Common Stock or securities convertible into, exercisable or
exchangeable for or evidencing any right to purchase or subscribe for any shares
of Common Stock (either pursuant to Rule 144 of the Rules and Regulations or
otherwise) or dispose of any beneficial interest therein (subject to certain
permitted exceptions) for at least six (6) months following the effective date
of the Registration Statement without the prior consent of the Underwriter,
subject to certain permitted exceptions.
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(x) Except as described in the Prospectus under
"Underwriting," there are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company or any of its officers, directors, stockholders,
partners, employees or affiliates that may affect the Underwriter's
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
(y) The Shares and the Underwriter's Shares have been
approved for listing on The Nasdaq Small Cap Market ("Nasdaq Small Cap Market"),
pending notice of issuance.
(z) The Company nor any of its officers, employees,
agents, or any other person acting on behalf of the Company, has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency (domestic or foreign) or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is, or may be in a
position to help or hinder the business of the Company (or assist the Company in
connection with any actual or proposed transaction) which (a) might subject the
Company, or any other such person to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or foreign), (b) if
not given in the past, might have had a materially adverse effect on the assets,
business or operations of the Company, or (c) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company. The Company's internal accounting controls are sufficient to cause the
Company to comply with the Foreign Corrupt Practices Act of 1977, as amended.
(aa) Except as set forth in the Prospectus, no
officer, director or stockholder of the Company, or any "affiliate" or
"associate" (as these terms are defined in Rule 405 promulgated under the
Regulations) of any of the foregoing persons or entities has or has had, either
directly or indirectly, (i) an interest in any person or entity which (A)
furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Company, or (B) purchases from or sells
or furnishes to the Company any goods or
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services, or (ii) a beneficial interest in any contract or agreement to which
the Company is a party or by which it may be bound or affected. Except as set
forth in the Prospectus under "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company and any officer or director of the Company, or any partner, affiliate or
associate of any of the foregoing persons or entities.
(bb) Any certificate signed by any officer of the
Company, and delivered to the Underwriter or to Underwriter's Counsel (as
defined herein) shall be deemed a representation and warranty by the Company to
the Underwriter as to the matters covered thereby.
(cc) The minute books of the Company have been made
available to the Underwriter and contain a complete summary of all meetings and
actions of the directors, stockholders, audit committee, compensation committee
and any other committee of the Board of Directors of the Company, since the time
of its incorporation, and reflects all transactions referred to in such minutes
accurately in all material respects.
(dd) Except and to the extent described in the
Prospectus and except for the Underwriter with respect to the Underwriter's
Warrants, no holders of any securities of the Company or of any options,
warrants or other convertible or exchangeable securities of the Company have the
right to include any securities issued by the Company in the Registration
Statement or any registration statement to be filed by the Company or to require
the Company to file a registration statement under the Act and no person or
entity holds any anti-dilution rights with respect to any securities of the
Company.
2. Purchase, Sale and Delivery of the Securities and
Underwriter's Warrants.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, and subject to the terms and
conditions herein set forth the Company agrees to sell to the Underwriter, and
the Underwriter, agrees to purchase from the Company at a price of [$ ] per
share, the Firm Shares.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants an option to the
Underwriter, to purchase all or any part of the Option Shares. The option
granted hereby will expire 45 days after (i) the date the Registration Statement
becomes effective, if the Company has elected not to rely on Rule 430A under the
Rules and Regulations, or (ii) the date of this Agreement if the Company has
elected to rely upon Rule 430A under the Rules and Regulations, and may be
exercised on one occasion in whole or in part only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Shares upon notice by the Underwriter to the Company
setting forth the number of Option Shares as to which the Underwriter is
exercising the option and the time and date of payment and delivery for any such
Option Shares. Any such time and date of delivery (the "Option Closing Date")
shall be determined by the
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Underwriter, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Date, as
hereinafter defined, unless otherwise agreed upon by the Underwriter and the
Company. Nothing herein contained shall obligate the Underwriter to make any
over-allotments. No Option Shares shall be delivered unless the Firm Shares
shall be simultaneously delivered or shall theretofore have been delivered as
herein provided.
(c) Payment of the purchase price for, and delivery
of certificates for, the Firm Shares shall be made at the offices of Cambridge
Capital, LLC, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or
at such other place as shall be agreed upon by the Underwriter and the Company.
Such delivery and payment shall be made at 10:00 a.m. (New York City time) on [
], 1999 or at such other time and date as shall be agreed upon by the
Underwriter and the Company, but not less than three (3) nor more than ten (10)
full business days after the effective date of the Registration Statement (such
time and date of payment and delivery being herein called the "Closing Date").
In addition, in the event that any or all of the Option Shares are purchased by
the Underwriter, payment of the purchase price for, and delivery of certificates
for, such Option Shares shall be made at the above-mentioned office of the
Underwriter or at such other place as shall be agreed upon by the Underwriter
and the Company on the Option Closing Date as specified in the notice from the
Underwriter to the Company.
(d) Delivery of the certificates for the Firm Shares
and the Option Shares, if any, shall be made to the Underwriter against payment
by the Underwriter, severally and not jointly, of the purchase price for the
Firm Shares and the Option Shares, if any, to the order of the Company for the
Firm Shares and the Option Shares, if any, by New York Clearing House funds. In
the event such option is exercised, the Underwriter shall purchase the Option
Shares. The certificates for the Firm Shares and the Option Shares, if any,
shall be made available to the Underwriter at such office or such other place as
the Underwriter may designate for inspection, checking and packaging no later
than 9:30 a.m. on the last business day prior to Closing Date or the Option
Closing Date, as the case may be.
(e) On the Closing Date, the Company shall issue and
sell to the Underwriters, one or more Underwriter's Warrants at a purchase price
of $.0001 per warrant, which warrants shall entitle the holders thereof to
purchase an aggregate of 110,000 shares of Common Stock. The Underwriter's
Warrants shall be exercisable for a period of four years commencing one year
from the effective date of the Registration Statement at a price equaling one
hundred twenty percent (120%) of the initial public offering price of the Firm
Shares. The Underwriter's Warrant Agreement and form of Warrant Certificate
shall be substantially in the form filed as Exhibit 4.2 to the Registration
Statement. Payment for the Underwriter's Warrants shall be made by the
Underwriters on the Closing Date.
3. Public Offering of the Shares. As soon after the
Registration Statement becomes effective as the Underwriter deems advisable, the
Underwriter shall, subject to the terms and conditions hereof, make a public
offering of the Firm Shares and such of the Option Shares as it may determine
(other than to residents of or in any jurisdiction in which qualification of the
Shares is required and has not become effective) at the price and upon the
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other terms set forth in the Prospectus. The Underwriter may enter into one or
more agreements as the Underwriter, in its sole discretion, deems advisable with
one or more broker-dealers who shall act as dealers in connection with such
public offering.
4. Covenants and Agreements of the Company.
(a) The Company covenants and agrees with the
Underwriter as follows:
i) The Company shall use its best
efforts to cause the Registration Statement and any
amendments thereto to become effective as promptly as
practicable and will not at any time, whether before
or after the effective date of the Registration
Statement, file any amendment to the Registration
Statement or supplement to the Prospectus or file any
document under the Act or 1934 Act before termination
of the offering of the Shares by the Underwriter of
which the Underwriter shall not previously have been
advised and furnished with a copy, or to which the
Underwriter shall have objected or which is not in
compliance with the Act, the 1934 Act or the
Regulations.
ii) As soon as the Company is
advised or obtains knowledge thereof, the Company
will advise the Underwriter and confirm the notice in
writing, (i) when the Registration Statement, as
amended, becomes effective, or if the provisions of
Rule 430A promulgated under the Act will be relied
upon, when the Prospectus has been filed in
accordance with said Rule 430A and when any
post-effective amendment to the Registration
Statement becomes effective, (ii) of the issuance by
the Commission of any stop order or of the
initiation, or the threatening, of any proceeding,
suspending the effectiveness of the Registration
Statement or any order preventing or suspending the
use of the Preliminary Prospectus or the Prospectus,
or any amendment or supplement thereto, or the
institution of proceedings for that purpose, (iii) of
the issuance by the Commission or by any state
securities commission of any proceedings for the
suspension of the qualification of any of the
Securities for offering or sale in any jurisdiction
or of the initiation, or the threatening, of any
proceeding for that purpose, (iv) of the receipt of
any comments from the Commission; and (v) of any
request by the Commission for any amendment to the
Registration Statement or any amendment or supplement
to the Prospectus or for additional information. If
the Commission or any state securities commission
authority shall enter a stop order or suspend such
qualification at any time, the Company will make
every effort to obtain promptly the lifting of such
order.
iii) The Company shall file the
Prospectus (in form and substance satisfactory to the
Underwriters) or transmit the Prospectus by
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a means reasonably calculated to result in filing
with the Commission pursuant to Rule 424(b)(1) (or,
if applicable and if consented to by the
Underwriters, pursuant to Rule 424(b)(4)) not later
than the Commission's close of business on the
earlier of (i) the second business day following the
execution and delivery of this Agreement and (ii) the
fifteenth business day after the effective date of
the Registration Statement.
iv) The Company will give the
Underwriter notice of its intention to file or
prepare any amendment to the Registration Statement
(including any post-effective amendment) or any
amendment or supplement to the Prospectus (including
any revised prospectus which the Company proposes for
use by the Underwriter in connection with the
offering of the Securities which differs from the
corresponding prospectus on file at the Commission at
the time the Registration Statement becomes
effective, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) of the
Regulations) or any document that will be
incorporated by reference into the Prospectus, and
will furnish the Underwriter with copies of any such
amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may
be, and will not file any such prospectus to which
the Underwriter or ▇▇▇▇▇▇▇ Breed ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
("Underwriter's Counsel") shall object.
v) The Company shall endeavor in
good faith, in cooperation with the Underwriter, at
or prior to the time the Registration Statement
becomes effective, to qualify the Securities for
offering and sale under the securities laws of such
jurisdictions as the Underwriter may designate to
permit the continuance of sales and dealings therein
for as long as may be necessary to complete the
distribution, and shall make such applications, file
such documents and furnish such information as may be
required for such purpose; provided, however, the
Company shall not be required to qualify as a foreign
corporation or file a general or limited consent to
service of process in any such jurisdiction. In each
jurisdiction where such qualification shall be
effected, the Company will, unless the Underwriter
agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and
make such statements or reports at such times as are
or may reasonably be required by the laws of such
jurisdiction to continue such qualification.
vi) During the time when a
prospectus is required to be delivered under the Act,
the Company shall use all reasonable efforts to
comply with all requirements imposed upon it by the
Act and the 1934 Act, as now and 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 Securities in
accordance with the provisions hereof and
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the Prospectus, or any amendments or supplements
thereto. If at any time when a prospectus relating to
the Securities is required to be delivered under the
Act, any event shall have occurred as a result of
which, in the opinion of counsel for the Company or
Underwriter's Counsel, the Prospectus, as then
amended or supplemented, includes an untrue statement
of a material fact or omits to state any material
fact required to be stated therein or necessary to
make the statements therein, in light of the
circumstances under which they were made, not
misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the
Company will notify the Underwriter promptly and
prepare and file with the Commission an appropriate
amendment or supplement in accordance with Section 10
of the Act, each such amendment or supplement to be
satisfactory to Underwriter's Counsel, and the
Company will furnish to the Underwriter copies of
such amendment or supplement as soon as available and
in such quantities as the Underwriter may request.
vii) As soon as practicable, but in
any event not later than 45 days after the end of the
12-month period beginning on the day after the end of
the fiscal quarter of the Company during which the
effective date of the Registration Statement occurs
(90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the
Company shall make generally available to its
security holders, in the manner specified in Rule
158(b) of the Regulations, and to the Underwriter, an
earnings statement which will be in the detail
required by, and will otherwise comply with, the
provisions of Section 11(a) of the Act and Rule
158(a) of the Regulations, which statement need not
be audited unless required by the Act, covering a
period of at least 12 consecutive months after the
effective date of the Registration Statement.
viii) During a period of three (3)
years after the date hereof, the Company will furnish
to its stockholders annual reports (including
financial statements audited by independent public
accountants) and will deliver to the Underwriter:
(a) concurrently with
furnishing any quarterly reports to its
stockholders, statements of operations of
the Company for each quarter in the form
furnished to the Company's stockholders and
certified by the Company's principal
financial or accounting officer;
(b) concurrently with
furnishing such annual reports to its
stockholders, a balance sheet of the Company
as at the end of the preceding fiscal year,
together with the related statements of
operations, stockholders' equity, and cash
flows for
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such fiscal year, accompanied by a copy of
the report thereon of independent certified
public accountants;
(c) as soon as they are
available, copies of all reports (financial
or other) mailed to stockholders;
(d) as soon as they are
available, copies of all reports and
financial statements furnished to or filed
with the Commission, the NASD or any
securities exchange;
(e) every press release and
every material news item or article of
interest to the financial community in
respect of the Company, or its affairs which
was released or prepared by or on behalf of
the Company; and
(f) any additional
information of a public nature concerning
the Company (and any future subsidiary) or
its businesses which the Underwriter may
request.
During such three (3) year period,
if the Company has an active subsidiary, the
foregoing financial statements will be on a
consolidated basis to the extent that the accounts of
the Company and its subsidiary are consolidated, and
will be accompanied by similar financial statements
for any significant subsidiary which is not so
consolidated.
ix) The Company will maintain a
Transfer Agent and, if necessary under the
jurisdiction of incorporation of the Company, a
Registrar (which may be the same entity as the
Transfer Agent) for its Common Stock.
x) The Company will furnish to the
Underwriter or on the Underwriter's order, without
charge, at such place as the Underwriter may
designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or
post-effective amendments thereto (two of which
copies will be signed and will include all financial
statements and exhibits), the Prospectus, and all
amendments and supplements thereto, including any
prospectus prepared after the effective date of the
Registration Statement, in each case as soon as
available and in such quantities as the Underwriter
may reasonably request.
xi) From the date of such agreements
through the end of the two year period following the
effective date of the Registration Statement (the
"Effective Date"), the Company shall not, without the
prior consent of the Underwriter, sell, contract or
offer to sell, issue, transfer, assign, pledge,
distribute, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any
options, rights or warrants with respect to any
shares of Common Stock, other than the Securities
-16-
pursuant hereto, other than up to [ ] shares of
Common Stock reserved for issuance upon the exercise
of options under the Company's Stock Option Plan as
described in the Prospectus and other than up to [ ]
shares of Common Stock issued in connection with
financings in the minimum aggregate amount of
$20,000,000 completed at no less than (2) two times
the valuation of the Offering or in connection with
acquisitions in which shares of Common Stock
constitute the mode of payment, and such shares are
valued at no less than two (2) times the per share
price of the Offering.
xii) Neither the Company, nor any of
its officers or directors, will take, directly or
indirectly, any action designed to, or which might in
the future reasonably be expected to cause or result
in, stabilization or manipulation of the price of any
securities of the Company.
xiii) The Company shall apply the
net proceeds from the sale of the Securities in the
manner, and subject to the conditions, set forth
under "Use of Proceeds" in the Prospectus. Except as
described in the Prospectus, no portion of the net
proceeds will be used, directly or indirectly, to
acquire any securities issued by the Company.
xiv) The Company shall file timely
all such reports, forms or other documents as may be
required from time to time, under the Act, the 1934
Act, and the Rules and Regulations, and all such
reports, forms and documents filed will comply as to
form and substance with the applicable requirements
under the Act, the 1934 Act, and the Rules and
Regulations.
xv) The Company shall furnish to the
Underwriter as early as practicable prior to each of
the date hereof, the Closing Date and the Option
Closing Date, if any, but no later than two (2) full
business days prior thereto, a copy of the latest
available unaudited interim financial statements of
the Company (which in no event shall be as of a date
more than thirty (30) days prior to the date of the
Registration Statement) which have been read by the
Company's independent public accountants, as stated
in their letter to be furnished pursuant to Section
6(l) hereof.
xvi) The Company shall cause the
Common Stock to be quoted on the Nasdaq Small Cap
Market or a National Securities exchange and for a
period of seven (7) years from the date hereof, and
use its best efforts to maintain the Nasdaq Small Cap
Market listing or exchange listing of the Common
Stock to the extent outstanding.
xvii) The Company shall file, within
ten (10) Business Days following the Closing Date,
all documents necessary to register with the Standard
& Poor's Manual and to effect the Company's listing
therein.
xviii) For a period of 18 months
from the Closing Date, the Company shall furnish to
the Underwriter at the Company's sole expense, (i)
upon the Underwriter's request, on a daily basis,
consolidated transfer sheets relating to the Common
Stock, (ii) on a monthly basis, the list of holders
of all of the Company's securities and (iii) a Blue
Sky "Trading Survey" for secondary sales of the
Company's securities prepared by counsel to the
Underwriter.
-17-
xix) Except to the extent required
by law, until the completion of the distribution of
the Shares, and for 25 days thereafter, the Company
shall not, without the prior written consent of the
Underwriter and Underwriter's Counsel, issue,
directly or indirectly, any press release or other
communication or hold any press conference with
respect to the Company or its activities or the
offering contemplated hereby.
xx) The Company shall grant to the
Underwriter a right of first refusal for a period of
thirty (30) months after the Closing Date (the "Right
of First Refusal Period") for any (i) equity or debt
offerings by the Company or any subsidiaries, whether
public or private in which the utilization of
investment banking services has been authorized, and
(ii) transactions relating to (A) the purchase by or
sale to the Company or any subsidiary of stock or
substantially by all the assets, or (B) the formation
of any joint venture, any corporate reorganization or
other transaction utilizing investment banking
services. The Company shall first notify the
Underwriter in writing, during the Right of First
Refusal Period, of its intention to close a
transaction, as described herein, and shall annex
thereto the terms and conditions of another
investment banker, whose services the Company would
otherwise engage but for this provision. Such right
may only be exercised by written notice from the
Underwriter to the effect that it is ready, willing
and able to complete the transaction on the same
terms and conditions as set forth on the Company's
notification, and the Underwriter shall have thirty
(30) days from the date of receipt of the Company's
notification to submit such notice, but shall use its
reasonable best efforts to respond earlier. If the
Underwriter elects not to submit such notice to the
Company within such time period, it shall be deemed
to have waived its right of first refusal with
respect to such transaction.
xxi) For a period of twenty-four
(24) months after the Closing Date, the Underwriter
shall have the right to designate one person to serve
on the Company's Board of Directors in the event that
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the Company's Board of Directors consists of eight or
less directors, and two persons, in the event that
the Company's Board of Directors consists of more
than eight directors. The Company shall nominate and
support the election of such person or persons as
directors of the Company. The Company shall reimburse
such designee(s) for his or her reasonable
out-of-pocket expenses incurred in connection with
his or her attendance of such meetings.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the
Closing Date and the Option Closing Date (to the extent not paid at the Closing
Date) all expenses and fees (other than fees of Underwriter's Counsel, except as
provided in (iv) below) incident to the performance of the obligations of the
Company under this Agreement and the Underwriter's Warrant Agreement, including,
without limitation, (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing (including mailing and handling charges),
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments and
supplements thereto and the printing, mailing (including the payment of postage
with respect thereto) and delivery of this Agreement, the Selected Dealer
Agreements, and related documents, including the cost of all copies thereof and
of the Preliminary Prospectuses and of the Prospectus and any amendments thereof
or supplements thereto supplied to the Underwriter and such dealers as the
Underwriter may request, in quantities as hereinabove stated, (iii) the
printing, engraving, issuance and delivery of the Securities including, but not
limited to, (x) the purchase by the Underwriter of the Shares and the purchase
by the Underwriter of the Underwriter's Warrants from the Company, (y) the
consummation by the Company of any of its obligations under this Agreement and,
with respect to the Company, its obligations under the Underwriter's Warrant
Agreement, and (z) resale of the Shares by the Underwriter in connection with
the distribution contemplated hereby, (iv) the qualification of the Securities
under state or foreign securities or "Blue Sky" laws and determination of the
status of such securities under legal investment laws, including the costs of
printing and mailing the "Preliminary Blue Sky Memorandum," the "Supplemental
Blue Sky Memorandum" and "Legal Investments Survey," if any, and reasonable
disbursements and reasonable fees of counsel in connection therewith, (v) costs
and expenses in connection with due diligence investigations, including but not
limited to the fees of any independent counsel or consultant retained, (vi) fees
and expenses of the transfer agent and registrar, (vii) the fees payable to the
Commission and the NASD, and (viii) the fees and expenses incurred in connection
with the listing of the Securities on the Nasdaq Small Cap Market and any other
exchange. Notwithstanding any other provision of this Agreement, whether or not
the offering contemplated hereby is successfully completed, it shall be the
Company's obligation to bear all expenses in connection with the proposed
offering, including, but not limited to, the following: filing fees, printing
and duplicating costs, all postage and mailing expenses with respect to the
transmission of prospectuses, registrar and transfer agent fees, costs and
expenses related to "Tombstone" advertisements, the Company's "road show" and
information meetings and presentation costs, its own counsel and accounting
fees, costs of due diligence investigations,
-19-
bound volumes, prospectus memorabilia, issue and transfer taxes, if any, and
"Blue Sky" filing fees, counsel fees and expenses. The preceding to the contrary
notwithstanding, nothing herein shall (i) require the Company to pay the fees
for Underwriter's counsel other than fees and disbursements in connection with
"Blue Sky" matters, or (ii) require the Company to pay Underwriter's counsel
with respect to any due diligence investigations.
(b) If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 6 or Section 11, the
Company shall reimburse and indemnify the Underwriter for all of its actual
out-of-pocket expenses (including the fees and disbursements of Underwriter's
Counsel), less any amounts already paid pursuant to Section 5(c) hereof.
(c) The Company further agrees that, in addition to
the expenses payable pursuant to subsection (a) of this Section 5, it will pay
to the Underwriter on the Closing Date by certified or bank cashier's check or,
at the election of the Underwriter, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance equal to
[___________ dollars] ([$______]), twenty-five thousand dollars ($25,000) of
which has been paid to date.
6. Conditions of the Underwriter's Obligations. The
obligations of the Underwriter hereunder shall be subject to the continuing
accuracy in all material respects of each of the representations and warranties
of the Company contained herein as of the date hereof and as of the Closing Date
and Option Closing Date, if any, as if it had been made on and as of the Closing
Date or Option Closing Date, as the case may be; the accuracy on and as of the
Closing Date or Option Closing Date, if any, of the statements of the officers
of the Company made pursuant to the provisions hereof; and the performance by
the Company on and as of the Closing Date and each Option Closing Date, if any,
of their respective covenants and obligations hereunder and to the following
further conditions:
(a) The Registration Statement shall have become
effective not later than 12:00 Noon, New York time, on the date of this
Agreement or such later date and time as shall be consented to in writing by the
Underwriter, and, at the Closing Date and Option Closing Date, if any, no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending or contemplated by the Commission and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Underwriter's Counsel. If the Company has elected to
rely upon Rule 430A of the Regulations, the price of the Shares and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to the Closing Date the Company
shall have provided evidence satisfactory to the Underwriter of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Rules and Regulations.
(b) The Underwriter shall not have advised the
Company that the Registration Statement, or any amendment thereto, contains an
untrue statement of fact which,
-20-
in the Underwriter's opinion, is material, or omits to state a fact which, in
the Underwriter's opinion, is material and is required to be stated therein or
is necessary to make the statements therein not misleading, or that the
Prospectus, or any supplement thereto, contains an untrue statement of fact
which, in the Underwriter's opinion, is material, or omits to state a fact
which, in the Underwriter's opinion, is material and is required to be stated
therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Underwriter
shall have received from Underwriter's Counsel, such opinion or opinions with
respect to the organization of the Company, the validity of the Securities, the
Underwriter's Warrants, the Registration Statement, the Prospectus and other
related matters as the Underwriter request and Underwriter's Counsel shall have
received such papers and information as they request to enable them to pass upon
such matters.
(d) At Closing Date, the Underwriter shall have
received the favorable opinion of ▇▇▇▇▇▇▇, Lippe, Goldstein, Wolf & ▇▇▇▇▇▇▇▇▇,
P.C., counsel to the Company, dated the Closing Date, addressed to the
Underwriter and in form and substance satisfactory to Underwriter's Counsel, to
the effect that:
(i) the Company (A) has been duly organized and
based upon certificates of good standing or authorization or
the like received from the State of Delaware, is validly
existing as a corporation in good standing under the laws of
the State of Delaware, (B) is duly qualified and in good
standing as a foreign corporation in each jurisdiction in
which its ownership or leasing of any properties or the
character of its operations requires such qualification or
licensing, except where the failure to be so qualified and in
good standing is likely to have no material adverse effect on
the Company, and (C) except as disclosed in the Prospectus,
has all requisite corporate power and authority to own and
operate its properties and to carry on its business as set
forth in the Registration Statement and Prospectus; and except
as disclosed in the Prospectus, the Company has obtained any
and all necessary Federal and New York State authorizations,
approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials
and bodies, to own or lease its properties and conduct its
business as described in the Prospectus, the failure to obtain
which is likely to have a material adverse effect on the
Company. Except as disclosed in the Prospectus, and except as
to matters described in item (ix) below, the disclosures in
the Registration Statement concerning the effects of federal,
and New York State laws, rules and regulations on the
Company's business as currently conducted and as contemplated
are correct in all material respects;
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(ii) to the best of such counsel's knowledge, after
reasonable inquiry, the Company has a duly authorized, issued
and outstanding capitalization as set forth in the Prospectus,
and any amendment or supplement thereto, under
"Capitalization" and "Description of Capital Stock", and, to
the best of such counsel's knowledge, after reasonably
inquiry, is not a party to or bound by any instrument,
agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities,
except for this Agreement, the Underwriter's Warrant Agreement
and as described in the Prospectus. The Securities, and all
other securities issued or issuable by the Company, conform in
all material respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus.
All issued and outstanding securities of the Company have been
duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have, to such counsel's
knowledge, no rights of rescission with respect thereto, and
are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation
of the preemptive rights of any holders of any security of the
Company. The Shares, the Underwriter's Warrants and the
Underwriter's Shares to be sold by the Company hereunder and
under the Underwriter's Warrant Agreement are not and will not
be subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid
for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable and conform to
the description thereof contained in the Prospectus; the
holders thereof will not be subject to any liability solely in
their capacity as such holders; all corporate action required
to be taken for the authorization, issue and sale of the
Shares, the Underwriter's Warrants and the Underwriter's
Shares has been duly and validly taken, and the certificates
representing the Shares and the Underwriter's Warrants are in
due and proper form. The Underwriter's Warrants constitute
valid and binding obligations of the Company to issue and
sell, upon exercise thereof and payment therefor, the number
and type of securities of the Company called for thereby. Upon
the issuance and delivery, pursuant to this Agreement, and the
Underwriter's Warrant Agreement of the Shares and the
Underwriter's Warrants, respectively, to be sold by the
Company, the Underwriter will acquire good and marketable
title to the Shares and the Underwriter's Warrants free and
clear of any pledge, lien, charge, claim, encumbrance,
security interest, or other restriction or equity of any kind
whatsoever except as stated in the Underwriter's Warrant
Agreement. Other than pursuant to Section 270.2 of the New
York State Tax Law, no transfer tax is payable by or on behalf
of the Underwriter in connection with (A) the issuance by the
Company of the Shares, (B) the purchase by the Underwriter of
the Shares and the Underwriter's Warrants, respectively, from
the Company, (C) the consummation by the Company of any of its
obligations under this Agreement or the Underwriter's Warrant
Agreement, or (D) resales of the Shares in connection with the
distribution contemplated thereby;
(iii) the Registration Statement is effective under
the Act, and, if applicable, filing of all pricing information
has been timely made in the appropriate form under Rule 430A,
and to the knowledge of such counsel, no stop order suspending
the use of the Preliminary Prospectus, the Registration
Statement or Prospectus or any part of any thereof or
suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been
instituted or are pending or, to the best of such counsel's
knowledge, threatened or contemplated under the Act;
-22-
(iv) each of the Preliminary Prospectus, the
Registration Statement, and the Prospectus and any amendments
or supplements thereto (other than the financial statements
and related notes and other financial and statistical data
included therein, as to which no opinion need be rendered)
comply as to form in all material respects with the
requirements of the Act and the Regulations;
(v) to the best of such counsel's knowledge, (A)
there are no agreements, contracts or other documents required
by the Act to be described in the Registration Statement and
the Prospectus and filed as exhibits to the Registration
Statement other than those described in the Registration
Statement (or required to be filed under the 1934 Act if upon
such filing they would be incorporated, in whole or in part,
by reference therein) and the Prospectus and filed as exhibits
thereto, and except for redacted portions, the exhibits which
have been filed are correct copies of the documents of which
they purport to be copies; (B) the descriptions in the
Registration Statement and the Prospectus and any supplement
or amendment thereto of contracts and other documents to which
the Company is a party or by which it is bound, including any
document to which the Company is a party or by which it is
bound, incorporated by reference into the Prospectus and any
supplement or amendment thereto, are accurate in all material
respects and fairly represent the information required to be
shown by Form SB-2; (C) there is not pending or overtly
threatened against the Company any action, arbitration, suit,
proceeding, inquiry, investigation, litigation, governmental
or other proceeding (including, without limitation, those
having jurisdiction over environmental or similar matters),
domestic or foreign, pending or overtly threatened against, or
involving the properties or business of the Company which (x)
is required to be disclosed in the Registration Statement
which is not so disclosed, (and such proceedings as are
summarized in the Registration Statement are accurately
summarized in all material respects), or (y) questions
the validity of the capital stock of the Company or this
Agreement or the Underwriter's Warrant Agreement, or of any
action taken or to be taken by the Company pursuant to or in
connection with any of the foregoing; (D) except as to matters
described in item (ix) below, no Federal or New York State
statute or regulation or legal or governmental proceeding
required to be described in the Prospectus is not described as
required; and (E) except as described in the Prospectus, there
is no action, suit or proceeding pending, or threatened,
against or affecting the Company before any court or
arbitrator or governmental body, agency or official in which
there is a reasonable possibility of an adverse decision which
may result in a material adverse change in the condition,
financial or otherwise, or results of operations of the
Company, which could materially adversely affect the present
or prospective ability of the Company to perform its
obligations under this Agreement or the Underwriter's Warrant
Agreement or which in any manner draws into question the
validity or enforceability of this Agreement or the
Underwriter's Warrant Agreement;
-23-
(vi) the Company has full legal right, power and
authority to enter into each of this Agreement and the
Underwriter's Warrant Agreement and to consummate the
transactions provided for herein and therein; and each of this
Agreement and the Underwriter's Warrant Agreement has been
duly authorized, executed and delivered by the Company. Each
of this Agreement and the Underwriter's Warrant Agreement,
assuming due authorization, execution and delivery by each
other party thereto, constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms (except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any
action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law), and none of
the Company's execution or delivery of this Agreement and the
Underwriter's Warrant Agreement, its performance hereunder or
thereunder, its consummation of the transactions contemplated
herein or therein, or the conduct of its business as described
in the Registration Statement, the Prospectus and any
amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or
violation of any of the terms or provisions of, or constitutes
or will constitute a default under, or result in the creation
or imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of
any kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of (A) the
certificate of incorporation or by-laws of the Company, (B) to
such counsel's knowledge , any license, contract, indenture,
mortgage, deed of trust, voting trust agreement, stockholders
agreement, note, loan or credit agreement or any other
agreement or instrument (collectively, "Obligations") to which
the Company is a party or by which it is or may be bound or to
which any of its respective properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, to the
extent such Obligations or indebtedness are described
generally in the Prospectus or otherwise identified in a
certification by ▇▇. ▇▇▇▇▇, or (C) to such counsel's
knowledge, and without independent investigation, except as to
matters described in item (ix) below, any Federal or New York
State statute, judgment, decree, order, rule or regulation
applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or
body, domestic or foreign, having jurisdiction over the
Company, or any of its activities or properties;
vii) except as described in the Prospectus, no
consent, approval, authorization or order of, and no filing
with, any court, regulatory body, Federal or New York State
agency or other body (other than such as may be required under
Blue Sky laws, as to which no opinion is being rendered) is
required in connection with the issuance of the Shares
pursuant to the Prospectus, the issuance of the Underwriter's
Warrants, the performance of this Agreement and the
Underwriter's Warrant Agreement and the transactions
contemplated hereby and thereby;
-24-
viii) to counsel's knowledge, and based solely on
such documents and agreements described in the Prospectus or
otherwise identified in a certification by ▇▇. ▇▇▇▇▇, the
Company is not in breach of, or in default under, any term or
provision of any license, contract, indenture, mortgage,
installment sale agreement, deed of trust, lease, voting trust
agreement stockholders' agreement, partnership agreement,
note, loan or credit agreement or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is a party
or by which the Company may be bound or to which the property
or assets (tangible or intangible) of the Company is subject
or affected, the breach of which would have a material adverse
effect on the Company ; and the Company is not in violation of
any term or provision of its certificate of incorporation or
by-laws, or to such counsel's knowledge, and without
independent investigation, in violation of any franchise,
license, permit, judgment, decree, order, statute, rule or
regulation (except as to matters discussed in (ix) below), a
violation of which would have a material adverse effect on the
Company;
ix) the statements in the Prospectus under the
sections entitled "Risk Factors - Regulation" and "Business
Regulation" have been reviewed by such counsel, and insofar as
they refer to statements of law, descriptions of statutes,
licenses, rules or regulations or legal conclusions, are
correct in all material respects;
x) the Shares and the Underwriter's Shares have been
accepted for listing on the Nasdaq Small Cap Market;
xi) except as described in the Prospectus, no
person, corporation, trust, partnership, association or other
entity has the right to include and/or register any securities
of the Company in the Registration Statement, require the
Company to file any registration statement or, if filed, to
include any security in such registration statement; and
xii) assuming due execution by the parties thereto
other than the Company, the Lock-Up Agreements are legal,
valid and binding obligations of parties thereto, enforceable
against the party and any subsequent holder of the securities
subject thereto in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles
in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law).
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement and the Prospectus; and related matters were discussed
and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Preliminary Prospectus, the Registration Statement and
Prospectus, on the basis of the foregoing, no facts have come to the attention
of such counsel which lead them to believe that either the Registration
Statement or any amendment thereto, at the time such Registration Statement or
amendment became effective or the Prospectus or amendment or supplement thereto
as of the date of such opinion contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or Prospectus).
-25-
In rendering such opinion (including, without limitation, as
to the matters described in paragraph (ix) above), such counsel may rely (A) as
to matters involving the application of the laws, rules and regulations of the
United States Food and Drug Administration, state or local laws covering
comparable subject matter, or laws relating to franchising, or laws other than
the laws of the United States and jurisdictions in which they are admitted, to
the extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance
satisfactory to Underwriter's Counsel) of other counsel acceptable to
Underwriter's Counsel, familiar with such applicable laws, rules and
regulations, (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company, and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriter's Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and that the Underwriter
and they are justified in relying thereon. Such opinion shall also state that
Underwriter's Counsel is entitled to rely thereon.
(e) At the Option Closing Date, if any, the
Underwriter shall have received the favorable opinion of ▇▇▇▇▇▇▇, Lippe,
Goldstein, Wolf & ▇▇▇▇▇▇▇▇▇, P.C., or other counsel acceptable to the
Underwriter and counsel of the Company, dated the Option Closing Date, addressed
to the Underwriter and in form and substance satisfactory to Underwriter's
Counsel confirming as of the Option Closing Date the statements made by ▇▇▇▇▇▇▇,
Lippe, Goldstein, Wolf & ▇▇▇▇▇▇▇▇▇, P.C., or other counsel acceptable to the
Underwriter, in its opinion delivered on the Closing Date.
(f) On or prior to each of the Closing Date and the
Option Closing Date, if any, Underwriter's Counsel shall have been furnished
such documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of the Company, or herein contained.
(g) Prior to each of the Closing Date and the Option
Closing Date, if any, (i) there shall have been no material adverse change nor
development involving a prospective change in the condition, financial or
otherwise, prospects, stockholders' equity or the business activities of the
Company, whether or not in the ordinary course of business, from the latest
dates as of which such condition is set forth in the Registration Statement and
Prospectus; (ii) there shall have been no transaction, not in the ordinary
course of business, entered into by the Company, from the latest date as of
which the financial condition of the Company is set forth in the Registration
Statement and Prospectus, which is materially adverse to the Company; (iii) the
Company shall not be in default under any provision of any instrument relating
to any outstanding indebtedness; (iv) the Company shall not have issued any
securities (other than the Securities or options described as outstanding in the
Prospectus); the Company shall not have declared or paid any dividend or made
any distribution in respect of its capital
-26-
stock of any class; and there shall not have been any change in the capital
stock of the Company, or any material change in the debt (long or short term) or
liabilities or obligations of the Company (contingent or otherwise); (v) no
material amount of the assets of the Company shall have been pledged or
mortgaged, except as set forth in the Registration Statement and Prospectus;
(vi) no action, suit or proceeding, at law or in equity, shall have been pending
or, to the best knowledge of the Company, threatened (or circumstances giving
rise to same) against the Company, or affecting any of its properties or
business before or by any court or federal, state or foreign commission, board
or other administrative agency wherein an unfavorable decision, ruling or
finding may reasonably be expected to materially and adversely affect the
business, operations, prospects or financial condition or income of the Company,
except as set forth in the Registration Statement and Prospectus; and (vii) no
stop order shall have been issued under the Act and no proceedings therefor
shall have been initiated, to the best knowledge of the Company, threatened or
contemplated by the Commission.
(h) At each of the Closing Date and the Option
Closing Date, if any, the Underwriter shall have received a certificate of the
Company signed by the principal executive officer and by the chief financial or
chief accounting officer of the Company, dated the Closing Date or Option
Closing Date, as the case may be, to the effect that each of such persons has
carefully examined the Registration Statement, the Prospectus and this
Agreement, and that:
i) The representations and warranties of the Company
in this Agreement are true and correct as if made on and as of
the Closing Date or the Option Closing Date, as the case may
be, and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior
to such Closing Date or Option Closing Date, as the case may
be;
ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued,
and no proceedings for that purpose have been instituted or
are pending or, to the best of each of such person's
knowledge, after due inquiry, are contemplated or threatened
under the Act;
iii) The Registration Statement and the Prospectus
and, if any, each amendment and each supplement thereto,
contain all statements and information required to be included
therein, and none of the Registration Statement, the
Prospectus nor any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading and neither the
Preliminary Prospectus nor any supplement thereto included any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading; and
-27-
iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus and except as disclosed in the Prospectus, (a) the
Company has not incurred up to and including the Closing Date
or the Option Closing Date, as the case may be, other than in
the ordinary course of its business, any material liabilities
or obligations, direct or contingent; (b) the Company has not
paid or declared any dividends or other distributions on its
capital stock; (c) the Company has not entered into any
material transactions not in the ordinary course of business;
(d) there has not been any change in the capital stock of the
Company or any material change in the debt (long or
short-term) of the Company; (e) the Company has not sustained
any material loss or damage to its property or assets, whether
or not insured; (g) there is no litigation which is pending
or, to the best knowledge of the Company, threatened (or
circumstances giving rise to same) against the Company, or any
affiliated party of any of the foregoing, which is required to
be set forth in an amended or supplemented Prospectus which
has not been set forth; and (h) there has occurred no event
required to be set forth in an amended or supplemented
Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this subsection
(h) are to such documents as amended and supplemented at the date of such
certificate.
(i) By the Closing Date, the Underwriter will have
received clearance from the NASD as to the amount of compensation allowable or
payable to the Underwriter, as described in the Registration Statement.
(j) At the time this Agreement is executed, the
Underwriter shall have received a letter, dated such date, addressed to the
Underwriter in form and substance satisfactory (including the non-material
nature of the changes or decreases, if any, referred to in clause (iii) below)
in all respects to the Underwriter and Underwriter's Counsel, from
PricewaterhouseCoopers LLP;
i) confirming that they are independent public
accountants with respect to the Company within the meaning of
the Act and the applicable Regulations;
ii) stating that it is their opinion that the
financial statements and supporting schedules of the Company
included in the Registration Statement comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Regulations thereunder and
that the Underwriters may rely upon the opinion of
PricewaterhouseCoopers LLP with respect to such financial
statements and supporting schedules included in the
Registration Statement;
iii) stating that, on the basis of a limited review
which included a reading of the latest available unaudited
interim financial statements of the
-28-
Company, a reading of the latest available minutes of the
stockholders and Board of Directors and the various committees
of the Board of Directors of the Company, consultations with
officers and other employees of the Company responsible for
financial and accounting matters and other specified
procedures and inquiries, nothing has come to their attention
which would lead them to believe that (A) the unaudited
financial statements and supporting schedules of the Company
included in the Registration Statement do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with
that of the audited financial statements of the Company
included in the Registration Statement, or (B) at a specified
date not more than five (5) days prior to the effective date
of the Registration Statement, there has been any change in
the capital stock of the Company, any increase in the
long-term debt of the Company, or any decrease in the
stockholders' equity of the Company or any decrease in the net
current assets or net assets of the Company or any material
increase in inventory of the Company as compared with amounts
shown in the [September 30], 1998 balance sheet included in
the Registration Statement, other than as set forth in or
contemplated by the Registration Statement, or, if there was
any change or decrease, setting forth the amount of such
change or decrease, and (C) during the period from [October
1], 1998 to a specified date not more than five (5) days prior
to the effective date of the Registration Statement, there was
any decrease in net revenues or net earnings of the Company or
decrease in net earnings per common share of the Company, in
each case as compared with the corresponding period in the
prior year other than as set forth in or contemplated by the
Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
iv) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and
earnings, statements and other financial information
pertaining to the Company set forth in the Prospectus in each
case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general
accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of
specified readings, inquiries and other appropriate procedures
(which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set
forth in the letter and found them to be in agreement; and
v) statements as to such other matters incident to
the transaction contemplated hereby as the Underwriter may
reasonably request.
(k) At the Closing Date and the Option Closing Date,
if any, the Underwriter shall have received from PricewaterhouseCoopers LLP a
letter, dated as of the Closing Date or the Option Closing Date, as the case may
be, to the effect that they reaffirm the
-29-
statements made in the letter furnished pursuant to subsection (j) of this
Section 6 hereof except that the specified date referred to shall be a date not
more than five days prior to the Closing Date or the Option Closing Date, as the
case may be, and, if the Company has elected to rely on Rule 430A of the Rules
and Regulations, to the further effect that they have carried out procedures as
specified in clause (v) of subsection (j) of this Section 6 with respect to
certain amounts, percentages and financial information as specified by the
Underwriter and deemed to be a part of the Registration Statement pursuant to
Rule 430A(b) and have found such amounts, percentages and financial information
to be in agreement with the records specified in such clause (v).
(l) At the Closing Date and Option Closing Date, if
any, the Underwriter shall have received a letter, dated such date, addressed to
the Underwriter in form and substance satisfactory in all respects to the
Underwriter and counsel to the Underwriter, from PricewaterhouseCoopers LLP
containing statements and information of the type ordinarily included in
accountant's "comfort letters" to underwriters with respect to financial
information contained in the Registration Statement and the Prospectus.
(m) The Company shall have delivered to the
Underwriter a letter from PricewaterhouseCoopers LLP addressed to the Company
stating that they have not during the immediately preceding two-year period
brought to the attention of the Company's management any "weakness" as defined
in Statement of Auditing Standards No. 60 "Communication of Internal Control
Structure Related Matters Noted in an Audit," in any of the Company's internal
controls.
(n) On each of the Closing Date and the Option
Closing Date, if any, there shall have been duly tendered to the Underwriter for
their respective accounts the appropriate number of Shares.
(o) No order suspending the sale of the Securities
in any jurisdiction designated by the Underwriter pursuant to subsection (a)(v)
of Section 4 hereof shall have been issued on either the Closing Date or the
Option Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(p) On or before the Closing Date, the Company shall
have executed and delivered to the Underwriter, (i) the Underwriter's Warrant
Agreement substantially in the form filed as Exhibit 4.2 to the Registration
Statement in final form and substance satisfactory to the Underwriter, and (ii)
the Underwriter's Warrants in such denominations and to such designees as shall
have been provided to the Company
(q) On or before the Closing Date, the Shares shall
have been duly approved for listing on the Nasdaq Small Cap Market, subject to
official notice of issuance.
(r) On or before the Closing Date, there shall have
been delivered to the Underwriter all of the Lock-up Agreements, in form and
substance satisfactory to Underwriter's Counsel.
-30-
If any condition to the Underwriter's obligations hereunder to
be fulfilled prior to or at the Closing Date or the Option Closing Date, as the
case may be, is not so fulfilled, the Underwriter may terminate this Agreement
or, if the Underwriter so elect, it may waive any such conditions which have not
been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) Subject to the provisions of Section 1(s) above,
the Company agrees to indemnify and hold harmless the Underwriter (for purposes
of this Section 7 "Underwriter" shall include the officers, directors, partners,
employees, agents and counsel of the Underwriter, and each person, if any, who
controls the Underwriter ("controlling person") within the meaning of Section 15
of the Act or Section 20(a) of the 1934 Act), from and against any and all
losses, claims, damages, expenses or liabilities, joint or several (and actions,
proceedings, investigations, inquiries, and suits in respect thereof),
whatsoever (including but not limited to any and all costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
such action, proceeding, investigation, inquiry or suit, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Underwriter or such controlling person may become subject under the Act, the
1934 Act or any other statute or at common law or otherwise or under the laws of
foreign countries, arising out of or based upon (A) any untrue statement or
alleged untrue statement of a material fact contained (i) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as from time to time
amended and supplemented); (ii) in any post-effective amendment or amendments or
any new registration statement and prospectus in which is included securities of
the Company issued or issuable upon exercise of the Securities; or (iii) in any
application or other document or written communication (in this Section 7
collectively called "application") executed by the Company or based upon written
information furnished by the Company filed, delivered or used in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any state securities commission or agency,
the Nasdaq Small Cap Market or any other securities exchange, (B) the omission
or alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading (in the case of the
Prospectus, in the light of the circumstances under which they were made), or
(C) any material breach of any representation, warranty, covenant or agreement
of the Company contained herein or in any certificate by or on behalf of the
Company or any of its officers delivered pursuant hereto unless, in the case of
clause (A) or (B) above, such statement or omission was made in reliance upon
and in conformity with written information furnished to the Company with respect
to any Underwriter by or on behalf of the Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or any Prospectus, or any
amendment thereof or supplement thereto, or in any application, as the case may
be.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company may have at common law or otherwise.
(b) The Underwriter agrees to indemnify and hold
harmless the Company, each of the Company's directors, each of the Company's
officers, and each other person, if any, who controls the Company within the
meaning of the Act, to the same extent as
-31-
the foregoing indemnity from the Company to the Underwriter but only with
respect to any breach of the Underwriter's obligations or representations set
forth in this Underwriting Agreement, statements or omissions or alleged
omissions, if any, made in any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement thereto or in any
application made in reliance upon, and in strict conformity with, written
information furnished to the Company with respect to the Underwriter by the
Underwriter expressly for use in such Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement thereto or in any
such application, provided that such written information or omissions only
pertain to disclosures in the Preliminary Prospectus, the Registration Statement
or Prospectus directly relating to the transactions effected by the Underwriter
in connection with this Offering. The Company acknowledges that the statements
with respect to the public offering of the Securities set forth under the
heading "Underwriting", the statements set forth in the risk factor entitled
"Lack of Experience of the Underwriter" and the stabilization legend in the
Prospectus have been furnished by the Underwriter expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriter for inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which the Underwriter may have at common law or
otherwise.
(c) Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action, suit or
proceeding, such indemnified party shall, if a claim in respect thereof is to be
made against one or more indemnifying parties under this Section 7, notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this Section 7 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may have otherwise). In case any such
action, investigation, inquiry, suit or proceeding is brought against any
indemnified party, and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties will be entitled to
participate therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action at the expense of the indemnifying
party, (ii) the indemnifying parties shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action, investigation, inquiry, suit or proceeding on behalf of
the indemnified party or parties), in any of which events such fees and expenses
of one additional counsel shall be borne by the indemnifying parties. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for
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all indemnified parties in connection with any one action, investigation,
inquiry, suit or proceeding or separate but similar or related actions,
investigations, inquiries, suits or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances. Anything in this Section 7
to the contrary notwithstanding, an indemnifying party shall not be liable for
any settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, investigation, inquiry,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 7, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Section 7 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions, investigations, inquiries, suits or proceedings in respect thereof) (A)
in such proportion as is appropriate to reflect the relative benefits received
by each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the Securities or (B) if the
allocation provided by clause (A) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (A) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is the contributing
party and the Underwriter is the indemnified party, the relative benefits
received by the Company, on the one hand, and the Underwriter, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Shares (before deducting expenses) bear to the total
underwriting discounts received by the Underwriter hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriter, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions, investigations, inquiries,
suits or proceedings in respect thereof) referred to above in this subdivision
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating
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or defending any such action, claim, investigation, inquiry, suit or proceeding.
Notwithstanding the provisions of this subdivision (d), the Underwriter shall
not be required to contribute any amount in excess of the underwriting discount
applicable to the Securities purchased by the Underwriter hereunder. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7, each person,
if any, who controls the Company within the meaning of the Act, each officer of
the Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, as the case
may be, subject in each case to this subparagraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit, inquiry, investigation or proceeding against such party in respect
to which a claim for contribution may be made against another party or parties
under this subparagraph (d), notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have hereunder or otherwise than under this
subparagraph (d), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may have at common
law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall be deemed to be representations, warranties and agreements at the Closing
Date and the Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the indemnity agreements contained
in Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company, any controlling person of the Underwriter, the Company, and shall
survive termination of this Agreement or the issuance, sale and delivery of the
Securities to the Underwriter.
9. Effective Date.
(a) This Agreement shall become effective at 10:00
a.m., New York City time, on the next full business day following the date
hereof, or at such earlier time after the Registration Statement becomes
effective as the Underwriter, in its discretion, shall release the Securities
for sale to the public; provided, however, that the provisions of Sections 5, 7
and 10 of this Agreement shall at all times be effective. For purposes of this
Section 9, the Shares to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Underwriter of telegrams to
securities dealers releasing such shares for offering or the release by the
Underwriter for publication of the first newspaper advertisement which is
subsequently published relating to the Shares.
10. Termination.
(a) Subject to subsection (b) of this Section 10,
the Underwriter shall have the right to terminate this Agreement, after the date
hereof, (i) if any domestic or
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international event or act or occurrence has materially disrupted, or in the
Underwriter's opinion will in the immediate future materially adversely disrupt
the financial markets; or (ii) any material adverse change in the financial
markets shall have occurred; or (iii) if trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Boston Stock Exchange, the Commission or any other
government authority having jurisdiction; or (iv) if trading of any of the
securities of the Company shall have been suspended, or any of the securities of
the Company shall have been delisted, on any exchange or in any over-the-counter
market; or (v) if the United States shall have become involved in a war or major
hostilities, or if there shall have been an escalation in an existing war or
major hostilities or a national emergency shall have been declared in the United
States; or (vi) if a banking moratorium has been declared by a state or federal
authority; or (vii) if a moratorium in foreign exchange trading has been
declared; or (viii) if the Company shall have sustained a loss material or
substantial to the Company by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in the Underwriter's opinion, make it
inadvisable to proceed with the delivery of the Securities; or (viii) if there
shall have occurred any outbreak or escalation of hostilities or any calamity or
crisis or there shall have been such a material adverse change in the conditions
or prospects of the Company, or such material adverse change in the general
market, political or economic conditions, in the United States or elsewhere as
in the Underwriter's reasonable judgment would make it inadvisable to proceed
with the offering, sale and/or delivery of the Securities or (ix) if ▇▇▇▇ ▇▇▇▇▇
and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall no longer serve the Company in their present
capacities or in the capacities set forth in the Prospectus.
(b) If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 10(a) the Company shall
promptly reimburse and indemnify the Underwriter for all of its actual
out-of-pocket expenses other than fees and disbursements of counsel for the
Underwriter. Notwithstanding any contrary provision contained in this
Agreement, if this Agreement shall not be carried out within the time specified
herein, or any extension thereof granted to the Underwriter, by reason of any
failure on the part of the Company to perform any undertaking or satisfy any
condition of this Agreement by it to be performed or satisfied (including,
without limitation, pursuant to Section 6 or Section 11), then the Company shall
promptly reimburse and indemnify the Underwriter for all of its actual
out-of-pocket expenses, including the fees and disbursements of counsel for the
Underwriter (less amounts previously paid pursuant to Section 5(c) above).
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement (including, without limitation,
pursuant to Sections 6, 10, 11 and 12 hereof), and whether or not this Agreement
is otherwise carried out, the provisions of Section 5 and Section 7 shall not be
in any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
11. Default by the Company. If the Company shall fail at the
Closing Date or at the Option Closing Date, as applicable, to sell and deliver
the number of Shares which it is obligated to sell hereunder on such date, then
this Agreement shall terminate (or, if such default shall occur with respect to
the Option Shares to be purchased on the Option Closing
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Date, the Underwriter may at the Underwriter's option, by notice from the
Underwriter to the Company, terminate the Underwriter's obligation to purchase
Option Shares from the Company on such date) without any liability on the part
of any non-defaulting party other than pursuant to Section 5, Section 7 and
Section 10 hereof. No action taken pursuant to this Section 11 shall relieve the
Company from liability, if any, in respect of such default.
12. Representations of the Underwriter. The Underwriter is
registered as a broker-dealer with, and is a member in good standing of, the
National Association of Securities Dealers, Inc. and has all legal and
regulatory authority required to enter into this Underwriting Agreement and
perform its obligations hereunder. The Underwriter has all required authority
under its operating agreement to enter into this Underwriting Agreement and
perform its obligations hereunder and the performance of the Underwriter's
obligations hereunder will not cause or result in any material breach of any
agreement to which it is bound or any law or regulation to which it is subject.
13. Notices. All notices and communications hereunder, except
as herein otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed to Cambridge
Capital, LLC, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ Breed ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq. Notices to
the Company shall be directed to the Company at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, President, with a copy to ▇▇▇▇▇▇▇,
Lippe, Goldstein, Wolf & ▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
14. Parties. This Agreement shall inure solely to the benefit
of and shall be binding upon the Underwriter, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained. No purchaser of Securities from the Underwriter shall be deemed to be
a successor by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the choice of law or conflicts of law principles.
16. Counterparts. This Agreement may be executed (including by
facsimile transmission) in any number of counterparts, each of which shall be
deemed to be an original, and all of which taken together shall be deemed to be
one and the same instrument.
17. Entire Agreement; Amendments. This Agreement and the
Underwriter's Warrant Agreement constitute the entire agreement of the parties
hereto and supersede all prior written or oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may not
be amended except in a writing, signed by the Underwriter and the Company.
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If the foregoing correctly sets forth the understanding
between the Underwriter and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
OMNICORDER TECHNOLOGIES, INC.
By:
-----------------------------------
Name:
Title:
Confirmed and accepted as of the date first above written.
CAMBRIDGE CAPITAL, LLC
By:
-------------------------------
Name:
Title:
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