BW ACQUISITION CORP.
800,000 Units
Each Unit Consisting of One Share of Class A Common Stock
and
One Redeemable Class A Common Stock Purchase Warrant
and
150,000 Shares of Class B Exchangeable Common Stock
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UNDERWRITING AGREEMENT
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November __, 1997
▇.▇. ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
As representative of the several Underwriters
Ladies and Gentlemen:
BW ACQUISITION CORP., a Delaware corporation (the "Company"), proposes to
issue and sell to the one or more underwriters named in Schedule I hereto (the
"Underwriters"), including ▇.▇. ▇▇▇▇▇▇ & Co., Inc. (▇.▇. ▇▇▇▇▇▇) (the
"Representative" or "you"), the representative of the several Underwriters,
pursuant to this Underwriting Agreement (this "Agreement"):
(1) an aggregate of 800,000 Units (the "Units"), each consisting of
one share of Class A Common Stock, $.01 par value, of the Company (the
"Class A Stock"), and one Class A Warrant (the "Warrants"), each
exercisable to purchase one share of Class A Stock at any time 90 days
after the date of a business combination (the "Business Combination"), or
any earlier date on or after the date of a Business Combination that ▇.▇.
▇▇▇▇▇▇ in its sole discretion so elects, and ending on the fifth
anniversary of the effective date of the Registration Statement (the
"Effective Date"); and
(2) an aggregate of 150,000 Shares of Class B Exchangeable Common
Stock (the "Class B Stock"), each entitling the holder thereof to receive
two Units in exchange therefor 90 days after the date of a Business
Combination or any earlier date on or after the date of a Business
Combination that ▇.▇. ▇▇▇▇▇▇ in its sole discretion so elects.
The Warrant exercise price, subject to adjustment as described in the agreement
providing for the Warrants (the "Warrant Agreement"), shall be $9.00 per share.
In addition, the Company proposes to grant to the Underwriters the
Over-Allotment Option, referred to and defined in Section 2(c), to purchase all
or any part of an aggregate of 120,000 additional Units and 22,500 shares of
Class B Stock, and to issue to you the Representative's Warrant, referred to and
defined in Section 12, to purchase certain further additional Units and shares
of Class B Stock.
The 800,000 shares of Class A Stock comprising the Units, together with the
120,000 additional shares of Class A Stock comprising the Units that are the
subject of the Over-Allotment Option, are herein collectively called the "Class
A Shares." The 150,000 shares of Class B Stock, together with the 22,500 shares
of Class B Stock that are the subject of the Over-Allotment Option, are herein
collectively called the "Class B Shares." The Units, the Class A Shares, the
Class B Shares, the Warrants (including the additional Warrants comprising the
Units that are the subject of the Over-Allotment Option and the Warrants
issuable upon exercise of the Representative's Warrant), the Class A Shares
issuable upon exercise of the Warrants and the Class A Shares issuable upon
exercise of the Representative's Warrant, are herein collectively called the
"Securities." The term "Representative's Counsel" shall mean the firm of ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Representative, and the term "Company Counsel"
shall mean the firm of Crummy, Del Deo, Dolan, Griffinger & ▇▇▇▇▇▇▇▇▇, P.C.,
counsel to the Company. Unless the context otherwise requires, all references
herein to a "Section" shall mean the appropriate Section of this Agreement.
You have advised the Company that the Underwriters desire to purchase the
Units and the Class B Shares as herein provided, and that you have been
authorized to execute this Agreement as representative of the Underwriters. The
Company confirms the agreements made by it with respect to the purchase of the
Units and the Class B Shares by the Underwriters, as follows:
1. REPRESENTATIONS AND WARRANTIES.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to, and agrees with, each Underwriter that:
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(a) Registration Statement; Prospectus. A registration statement (File
No. 333-_____) on Form SB-2 relating to the public offering of the
Securities (the "Offering"), including a preliminary form of prospectus,
copies of which have heretofore been delivered to you, has been prepared by
the Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations of the
Securities and Exchange Commission (the "Commission") promulgated
thereunder (the "Rules and Regulations"), and has been filed with the
Commission under the Act. As used herein, the term "Preliminary Prospectus"
shall mean each prospectus filed pursuant to Rule 430 or Rule 424(a) of the
Rules and Regulations. The Preliminary Prospectus bore the legend required
by Item 501 of Regulation S-K under the Act and the Rules and Regulations.
Such registration statement (including all financial statements, schedules
and exhibits) as amended at the time it becomes effective and the final
prospectus included therein are herein respectively called the
"Registration Statement" and the "Prospectus," except that (i) if the
prospectus first filed by the Company pursuant to Rule 424(b) or Rule 430A
of the Rules and Regulations shall differ from such final prospectus as
then amended, then the term "Prospectus" shall instead mean the prospectus
first filed pursuant to said Rule 424(b) or Rule 430A, and (ii) if such
registration statement is amended or such prospectus is amended or
supplemented after the effective date of such registration statement and
prior to the Option Closing Date (as defined in Section 2(c)), then (unless
the context necessarily requires otherwise) the term "Registration
Statement" shall include such registration statement as so amended, and the
term "Prospectus" shall include such prospectus as so amended or
supplemented, as the case may be.
(b) Contents of Registration Statement. On the Effective Date, and at
all times subsequent thereto for so long as the delivery of a prospectus is
required in connection with the offering or sale of any of the Securities,
(i) the Registration Statement and the Prospectus shall in all respects
conform to the requirements of the Act and the Rules and Regulations, and
(ii) neither the Registration Statement nor the Prospectus shall include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make statements therein not
misleading; provided, however, that the Company makes no representations,
warranties or agreements as to information contained in or omitted from the
Registration Statement or Prospectus in reliance upon, and in conformity
with, written information furnished to the Company by or on behalf of the
Underwriters specifically for use in the preparation thereof. It is
understood that the statements set forth in the Prospectus with respect to
stabilization, the material set forth under the caption "UNDERWRITING," and
the identity of counsel to the Representative under the caption "LEGAL
MATTERS," constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Registration Statement and
Prospectus, as the case may be.
(c) Organization, Standing, Etc. The Company and each subsidiary of
the Company (a "Subsidiary") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with full power and corporate authority to own its properties and
conduct its business as described in the Prospectus, and is duly qualified
or licensed to do business as a foreign corporation and is in good standing
in
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each other jurisdiction in which the nature of its business or the
character or location of its properties requires such qualification, except
where failure to so qualify will not materially affect the business,
properties or financial condition of the Company or such Subsidiary, as the
case may be.
(d) Capitalization. The authorized, issued and outstanding capital
stock of the Company as of the date of the Prospectus is as set forth in
the Prospectus under the caption "CAPITALIZATION". The Class A Shares and
Class B Shares issued and outstanding on the Effective Date have been duly
authorized, validly issued and are fully paid and non-assessable. No
options, warrants or other rights to purchase, agreements or other
obligations to issue, or agreements or other rights to convert any
obligation into, any shares of capital stock of the Company or any
Subsidiary have been granted or entered into by the Company or such
Subsidiary, except as expressly described in the Prospectus. The Securities
conform to all statements relating thereto contained in the Registration
Statement or the Prospectus.
(e) Securities. The Securities and the Representative's Warrant have
been duly authorized and, when issued and delivered against payment
therefor pursuant to this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights of any
security holder of the Company. Neither the filing of the Registration
Statement nor the offering or sale of any of the Securities or the
Representative's Warrant as contemplated by this Agreement gives rise to
any rights, other than those which have been waived or satisfied, for or
relating to the registration of any securities of the Company, except as
described in the Registration Statement.
(f) Authority, Etc. This Agreement, the Warrant Agreement, the
Representative's Warrant, the Stock Escrow Agreement, and the M & A
Agreement, (each as hereinafter defined), have been duly and validly
authorized, executed and delivered by the Company and, assuming due
execution of this Agreement and such other agreements by the other party or
parties hereto and thereto, constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms. The Company has full right, power and lawful authority to authorize,
issue and sell the Securities and the Representative's Warrant on the terms
and conditions set forth herein. All consents, approvals, authorizations
and orders of any court or governmental authority which are required in
connection with the authorization, execution and delivery of such
agreements, the authorization, issue and sale of the Securities and the
Representative's Warrant, and the consummation of the transactions
contemplated hereby have been obtained.
(g) No Conflict. Except as described in the Prospectus, neither the
Company nor any Subsidiary is in violation, breach or default of or under,
and consummation of the transactions hereby contemplated and fulfillment of
the terms of this Agreement will not conflict with or result in a breach
of, any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance
pursuant to the terms of, any contract, indenture, mortgage, deed of trust,
loan agreement or
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other material agreement or instrument to which the Company or such
Subsidiary is a party or by which the Company or such Subsidiary may be
bound or to which any of the property or assets of the Company or such
Subsidiary are subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or the By-laws of the
Company or any Subsidiary, or any statute, order, rule or regulation
applicable to the Company or any Subsidiary of any court or governmental
authority.
(h) Assets. Subject to the qualifications stated in the Prospectus:
(i) the Company and each Subsidiary, as the case may be, has good and
marketable title to all properties and assets described in the Prospectus
as owned by it, including without limitation intellectual property, free
and clear of all liens, charges, encumbrances or restrictions, except such
as are not materially significant or important in relation to its business;
(ii) all of the material leases and subleases under which the Company or
any Subsidiary is the lessor or sublessor of properties or assets or under
which the Company or any Subsidiary holds properties or assets as lessee or
sublessee, as described in the Prospectus, are in full force and effect
and, except as described in the Prospectus, neither the Company nor any
Subsidiary is in default in any material respect with respect to any of the
terms or provisions of any of such leases or subleases, and no claim has
been asserted by any party adverse to the rights of the Company or such
Subsidiary as lessor, sublessor, lessee or sublessee under any such lease
or sublease, or affecting or questioning the right of the Company or such
Subsidiary to continued possession of the leased or subleased premises or
assets under any such lease or sublease, except as described or referred to
in the Prospectus; and (iii) the Company and each Subsidiary, as the case
may be, owns or leases all such properties, described in the Prospectus, as
are necessary to its operations as now conducted and, except as otherwise
stated in the Prospectus, as proposed to be conducted as set forth in the
Prospectus.
(i) Independent Accountants. BDO ▇▇▇▇▇▇▇, LLP, who have given their
report on certain financial statements filed or to be filed with the
Commission as a part of the Registration Statement, and which are included
in the Prospectus, are with respect to the Company, independent public
accountants as required by the Act and the Rules and Regulations.
(j) Financial Statements. The financial statements and schedules,
together with related notes, set forth in the Registration Statement and
the Prospectus present fairly the financial position, results of operations
and cash flows of the Company and the Predecessor on the basis stated in
the Registration Statement, at the respective dates and for the respective
periods to which they apply. Such financial statements, schedules and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the entire
period involved, except to the extent disclosed therein. The financial
information for each of the periods presented in the Registration Statement
and the Prospectus present a true and complete statement of the financial
position of the Company and the Predecessor at the dates indicated and the
results of their operations for the periods then ended. The Summary
Financial Information and Selected Financial Data included in the
Registration Statement and the Prospectus present fairly the information
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shown therein and have been prepared on a basis consistent with that of the
audited financial statements included in the Registration Statement and the
Prospectus.
(k) No Material Change. Except as otherwise set forth in the
Prospectus, subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the Company
nor any Subsidiary has: (i) incurred any liability or obligation, direct or
contingent, or entered into any transaction, which is material to its
business; (ii) effected or experienced any change in its capital stock;
(iii) issued any options, warrants or other rights to acquire its capital
stock; (iv) declared, paid or made any dividend or distribution of any kind
on its capital stock; or (v) effected or experienced any material adverse
change, or development involving a prospective material adverse change, in
its business, property, operations, condition (financial or otherwise) or
earnings.
(l) Litigation. Except as set forth in the Prospectus, there is not
now pending nor, to the best knowledge of the Company, threatened, any
action, suit or proceeding (including any related to environmental matters
or discrimination on the basis of age, sex, religion or race), whether or
not in the ordinary course of business, to which the Company or any
Subsidiary is a party or its business or property is subject, before or by
any court or governmental authority, which might result in any material
adverse change in the business, property, operations, condition (financial
or otherwise) or earnings of the Company or such Subsidiary; and no labor
disputes involving the employees of the Company or any Subsidiary exist
which might be expected to affect materially adversely the business,
property, operations, condition (financial or otherwise) or earnings of the
Company or such Subsidiary.
(m) No Unlawful Prospectuses. The Company has not distributed any
prospectus or other offering material in connection with the Offering
contemplated herein, other than any Preliminary Prospectus, the Prospectus
or other material permitted by the Act and the Rules and Regulations.
(n) Taxes. Except as disclosed in the Prospectus, the Company and each
Subsidiary has filed all necessary federal, state, local and foreign income
and franchise tax returns and has paid all taxes shown as due thereon; and
there is no tax deficiency which has been or, to the best knowledge of the
Company, might be asserted against the Company or any Subsidiary.
(o) Licenses, Etc. The Company and each Subsidiary has in effect all
necessary licenses, permits and other governmental authorizations currently
required for the conduct of its business or the ownership of its property,
as described in the Prospectus, and is in all material respects in
compliance therewith. The Company owns or possesses adequate rights to use
all material patents, patent applications, trademarks, ▇▇▇▇ registrations,
copyrights and licenses disclosed in the Prospectus and/or which are
necessary for the conduct of such business, and except as disclosed in the
Prospectus has not received any notice of conflict with the asserted rights
of others in respect thereof. To the best knowledge
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of the Company, none of the activities or business of the Company or any
Subsidiary is in violation of, or would cause the Company or such
Subsidiary to violate, any law, rule, regulation or order of the United
States, any state, county or locality, the violation of which would have a
material adverse effect upon the business, property, operations, condition
(financial or otherwise) or earnings of the Company or such Subsidiary.
(p) No Prohibited Payments. Neither the Company nor any Subsidiary nor
the Predecessor have, directly or indirectly at any time: (i) made any
contribution to any candidate for political office, or failed to disclose
fully any such contribution in violation of law; or (ii) made any payment
to any federal, state, local or foreign governmental officer or official,
or other person charged with similar public or quasi-public duties, other
than payments or contributions required or allowed by applicable law. The
Company's internal accounting controls and procedures are sufficient to
cause the Company to comply in all material respects with the Foreign
Corrupt Practices Act of 1977, as amended.
(q) Transfer Taxes. On the Closing Dates (as defined in Section 2(d)),
all transfer and other taxes (including franchise, capital stock and other
tax, other than income taxes, imposed by any jurisdiction), if any, which
are required to be paid in connection with the sale and transfer of the
Units and Class B Shares to the Underwriters hereunder shall have been
fully paid or provided for by the Company, and all laws imposing such taxes
shall have been fully complied with.
(r) Exhibits. All contracts and other documents of the Company or any
Subsidiary which are, under the Rules and Regulations, required to be filed
as exhibits to the Registration Statement have been so filed.
(s) Subsidiaries. Except as described in the Prospectus, the Company
has no Subsidiaries. All of the capital stock of each Subsidiary is owned
by the Company.
(t) Shareholder Agreements, Registration Rights. Except as described
in the Prospectus, no security holder of the Company has any rights with
respect to the purchase, sale or registration of any Securities, and all
registration rights with respect to the Offering have been effectively
waived.
(u) Investment Company Status. The Company is in compliance or has
secured a suitable exemption from the Investment Company Act of 1940.
(v) Securities Act Rule 419. The Company is exempt from the provisions
of Rule 419 of the Securities Act.
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2. PURCHASE, DELIVERY AND SALE OF UNITS.
(a) Purchase Price for Units. The Units and Class B Shares shall be sold to
and purchased by the Underwriters hereunder at the purchase price of $9.40 per
Unit (that being the public offering price of $10.00 per Unit less an
underwriting discount of 6 percent) and $9.00 per share of Class B Stock (that
being the public offering price of $10.00 per share of Class B Stock less an
underwriting discount of 10 percent) (respectively the "Purchase Price").
(b) Firm Units.
(i) Subject to the terms and conditions of this Agreement, and on the basis
of the representations, warranties and agreements herein contained the Company
agrees to issue and sell to the Underwriters, severally and not jointly, and
each of the Underwriters agrees, severally and not jointly, to buy from the
Company at the Purchase Price, the number of Units and Class B Shares set forth
opposite such Underwriter's name in Schedule I hereto (collectively the "Firm
Units").
(ii) Delivery of the Firm Units against payment therefor shall take place
at the offices of ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(the "Representative's Offices") (or at such other place as may be designated by
agreement between you and the Company) at 10:00 a.m., New York time, on
____________, 1997, or at such later time and date, not later than ten banking
days after the Effective Date, as you may designate (such time and date of
payment and delivery for the Firm Units being herein called the "First Closing
Date"). Time shall be of the essence and delivery of the Firm Units at the time
and place specified in this Section 2(b)(ii) is a further condition to the
obligations of the Underwriters hereunder.
(c) Option Units.
(i) In addition, subject to the terms and conditions of this Agree- ment,
and on the basis of the representations, warranties and agreements herein
contained, the Company hereby grants to the Underwriters an option (the
"Over-Allotment Option") to purchase from the Company all or any part of an
aggregate of an additional 120,000 Units and 22,500 Class B Shares at the
Purchase Price (collectively the "Option Units"). In the event that the
Over-Allotment Option is exercised by the Underwriters in whole or in part, each
Underwriter shall purchase Option Units in the same proportion as the number of
Firm Units purchased by it bore to the total number of Firm Units, unless you
and the other Underwriters shall otherwise agree.
(ii) The Over-Allotment Option may be exercised by the Underwrit- ers, in
whole or in part, within 30 days after the Effective Date, upon notice by you to
the Company advising it of the number of Option Units as to which the
Over-Allotment Option is being exercised, the names and denominations in which
the certificates for the Class A
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Shares, Class B Shares and the Warrants comprising such Option Units are to be
registered, and the time and date when such certificates are to be delivered.
Such time and date shall be determined by you but shall not be less than four
nor more than ten banking days after exercise of the Over-Allotment Option, nor
in any event prior to the First Closing Date (such time and date being herein
called the "Option Closing Date"). Delivery of the Option Units against payment
therefor shall take place at the Representative's Offices. Time shall be of the
essence and delivery at the time and place specified in this Section 2(c)(ii) is
a further condition to the obligations of the Underwriters hereunder.
(iii) The Over-Allotment Option may be exercised only to cover
over-allotments in the sale by the Underwriters of Firm Units.
(d) Delivery of Certificates; Payment.
(i) The Company shall make the certificates for the Class A Shares, Class B
Shares and the Warrants comprising the Units to be purchased hereunder available
to you for checking at least one banking day prior to the First Closing Date or
the Option Closing Date (each, a "Closing Date"), as the case may be. The
certificates shall be in such names and denominations as you may request at
least two banking days prior to the relevant Closing Date. Time shall be of the
essence and the availability of the certificates at the time and place specified
in this Section 2(d)(i) is a further condition to the obligations of the
Underwriters hereunder.
(ii) On the First Closing Date, the Company shall deliver to you for the
several accounts of the Underwriters definitive engraved certificates in
negotiable form representing all of the Class A Shares, Class B Shares and the
Warrants comprising the Firm Units to be sold by the Company, against payment of
the Purchase Price therefor by you for the several accounts of the Underwriters,
by certified or bank cashier's checks payable in next day funds to the order of
the Company.
(iii) In addition, if and to the extent that the Underwriters exercise the
Over-Allotment Option, then on the Option Closing Date, the Company shall
deliver to you for the several accounts of the Underwriters definitive engraved
certificates in negotiable form representing the Units, Class A Shares, Class B
Shares and the Warrants comprising the Option Units to be sold by the Company,
against payment of the Purchase Price therefor by you for the several accounts
of the Underwriters, by certified or bank cashier's checks payable in next day
funds to the order of the Company.
(iv) It is understood that the Underwriters propose to offer the Units and
the Class B Shares to be purchased hereunder to the public, upon the terms and
conditions set forth in the Registration Statement, after the Registration
Statement becomes effective.
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3. COVENANTS.
COVENANTS OF THE COMPANY. The Company covenants and agrees with each
Underwriter that:
(a) Registration.
(i) The Company shall use its best efforts to cause the Registration
Statement to become effective and, upon notification from the Commission
that the Registration Statement has become effective, shall so advise you
and shall not at any time, whether before or after the Effective Date, file
any amendment to the Registration Statement or any amendment or supplement
to the Prospectus of which you shall not previously have been advised and
furnished with a copy, or to which you or Representative's Counsel shall
have objected in writing, or which is not in compliance with the Act and
the Rules and Regulations. At any time prior to the later of (A) the
completion by the Underwriters of the distribution of the Units and Class B
Shares contemplated hereby (but in no event more than nine months after the
Effective Date), and (B) 25 days after the Effective Date, the Company
shall prepare and file with the Commission, promptly upon your request, any
amendments to the Registration Statement or any amendments or supplements
to the Prospectus which, in your reasonable opinion, may be necessary or
advisable in connection with the distribution of the Units and Class B
Shares.
(ii) Promptly after you or the Company shall have been advised
thereof, you shall advise the Company or the Company shall advise you, as
the case may be, and confirm such advice in writing, of (A) the receipt of
any comments of the Commission, (B) the effectiveness of any post-effective
amendment to the Registration Statement, (C) the filing of any supplement
to the Prospectus or any amended Prospectus, (D) any request made by the
Commission for amendment of the Registration Statement or amendment or
supplementing of the Prospectus, or for additional information with respect
thereto, or (E) the issuance by the Commission or any state or regulatory
body of any stop order or other order denying or suspending the
effectiveness of the Registration Statement, or preventing or suspending
the use of any Preliminary Prospectus, or suspending the qualification of
the Securities for offering in any jurisdiction, or otherwise preventing or
impairing the Offering, or the institution or threat of any proceeding for
any of such purposes. The Company and you shall not acquiesce in such order
or proceeding, and shall instead actively defend such order or proceeding,
unless the Company and you agree in writing to such acquiescence.
(iii) The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents
to the use of such copies for the purposes permitted by the Act. The
Company authorizes the Underwriters and selected dealers to use the
Prospectus in connection with the sale of the Units and Class B Shares for
such period as in the opinion of Representative's Counsel the use thereof
is required to comply with the applicable provisions of the Act and the
Rules and Regulations. In case of the happening, at any time within such
period as a prospectus is required
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under the Act to be delivered in connection with sales by an underwriter or
dealer, of any event of which the Company has knowledge and which
materially affects the Company or the Securities, or which in the opinion
of Company Counsel or of Representative's Counsel should be set forth in an
amendment to the Registration Statement or an amendment or supplement to
the Prospectus in order to make the statements made therein not then
misleading, in light of the circumstances existing at the time the
Prospectus is required to be delivered to a purchaser of the Units or Class
B Shares, or in case it shall be necessary to amend or supplement the
Prospectus to comply with the Act or the Rules and Regulations, the Company
shall notify you promptly and forthwith prepare and furnish to the
Underwriters copies of such amended Prospectus or of such supplement to be
attached to the Prospectus, in such quantities as you may reasonably
request, in order that the Prospectus, as so amended or supplemented, shall
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements in the Prospectus,
in the light of the circumstances under which they are made, not
misleading. The preparation and furnishing of each such amendment to the
Registration Statement, amended Prospectus or supplement to be attached to
the Prospectus shall be without expense to the Underwriters, except that in
the case that the Underwriters are required, in connection with the sale of
the Units or Class B Shares, to deliver a prospectus nine months or more
after the Effective Date, the Company shall upon your request and at the
expense of the Underwriters, amend the Registration Statement and amend or
supplement the Prospectus, or file a new registration statement on Form
SB-2 (if applicable) or Form S-1, if necessary, and furnish the
Underwriters with reasonable quantities of prospectuses complying with
section 10(a)(3) of the Act.
(iv) The Company shall comply with the Act, the Rules and Regu-
lations, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder in connection
with the offering and issuance of the Securities.
(b) Blue Sky. The Company shall, at its own expense, use its best efforts
to qualify or register the Securities for sale under the securities or "blue
sky" laws of such jurisdictions as you may designate, and shall make such
applications and furnish such information to Representative's Counsel as may be
required for that purpose, and shall comply with such laws; provided, however,
that the Company shall not be required to qualify as a foreign corporation or a
dealer in securities or to execute a general consent to service of process in
any jurisdiction in any action other than one arising out of the offering or
sale of the Units. The Company shall bear all of the expense of such
qualifications and registrations, including without limitation the legal fees
and disbursements of Representative's Counsel, which fees, exclusive of
disbursements, shall not exceed $35,000 (unless otherwise agreed). After each
Closing Date the Company shall, at its own expense, from time to time prepare
and file such statements and reports as may be required to continue each such
qualification in effect for so long a period as you may reasonably request.
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(c) Exchange Act Registration. The Company shall, at its own expense,
prepare and file with the Commission a registration statement (on Form 8-A or
Form 10) under section 12(g) of the Exchange Act concurrently with the
completion of the Offering or promptly thereafter, but in no event later than 45
days from the Effective Date, and shall use its best efforts to cause such
registration statement to be declared effective and maintained in effect for at
least five years from the Effective Date.
(d) Prospectus Copies. The Company shall deliver to you on or before the
First Closing Date two signed copies of the Registration Statement including all
financial statements, schedules and exhibits filed therewith, and of all
amendments thereto. The Company shall deliver to or on the order of the
Underwriters, from time to time until the Effective Date, as many copies of any
Preliminary Prospectus filed with the Commission prior to the Effective Date as
the Underwriters may reasonably request. The Company shall deliver to the
Underwriters on the Effective Date, and thereafter for so long as a prospectus
is required to be delivered under the Act, from time to time, as many copies of
the Prospectus, in final form, or as thereafter amended or supplemented, as the
Underwriters may from time to time reasonably request.
(e) Amendments and Supplements. The Company shall, promptly upon your
request, prepare and file with the Commission any amendments to the Registration
Statement, and any amendments or supplements to the Preliminary Prospectus or
the Prospectus, and take any other action which in the reasonable opinion of
Representative's Counsel may be reasonably necessary or advisable in connection
with the distribution of the Units and Class B Shares, and shall use its best
efforts to cause the same to become effective as promptly as possible.
(f) Certain Market Practices. The Company has not taken, and shall not
take, directly or indirectly, any action designed, or which might reasonably be
expected, to cause or result in, or which has constituted, the stabilization or
manipulation of the price of the Securities to facilitate the sale or resale
thereof.
(g) Certain Representations. Neither the Company nor any representative of
the Company has made or shall make any written or oral representation in
connection with the Offering and sale of the Securities or the Representative's
Warrant which is not contained in the Prospectus, which is otherwise
inconsistent with or in contravention of any thing contained in the Prospectus,
or which shall constitute a violation of the Act, the Rules and Regulations, the
Exchange Act or the rules and regulations promulgated under the Exchange Act.
(h) Continuing Registration of Warrants and Underlying Common Stock. For so
long as any Warrant is outstanding, the Company shall, at its own expense: (i)
use its best efforts to cause post-effective amendments to the Registration
Statement, or new registration statements (which may be on Forms ▇▇-▇, ▇-▇ or
S-3, as the case may be) relating to the Warrants and the Class A Shares
underlying the Warrants to become effective in compli-
- 12 -
ance with the Act and without any lapse of time between the effectiveness of the
Registration Statement and of any such post-effective amendment or new
registration statement; (ii) cause a copy of each Prospectus, as then amended,
to be delivered to each holder of record of a Warrant; (iii) furnish to the
Underwriters and dealers as many copies of each such Prospectus as the
Underwriters or dealers may reasonably request; and (iv) maintain the "blue sky"
qualification or registration of the Warrants and the Class A Shares underlying
the Warrants, or have a currently available exemption therefrom, in each
jurisdiction in which the Securities were so qualified or registered for
purposes of the Offering. In addition, for so long as any Warrant is
outstanding, the Company shall promptly notify you of any material change in the
business, financial condition or prospects of the Company.
(i) Use of Proceeds. The Company shall apply the net proceeds from the sale
of the Units substantially for the purposes set forth in the Prospectus under
the caption "USE OF PROCEEDS," and shall file such reports with the Commission
with respect to the sale of the Units and the application of the proceeds
therefrom as may be required pursuant to Rule 463 of the Rules and Regulations.
(j) Twelve Months' Earnings Statement. The Company shall make generally
available to its security holders and deliver to you as soon as it is
practicable so to do, but in no event later than 90 days after the end of twelve
months after the close of its current fiscal quarter, an earnings statement
(which need not be audited) covering a period of at least twelve consecutive
months beginning after the Effective Date, which shall satisfy the requirements
of section 11(a) of the Act.
(k) NASDAQ, Exchange Listings, Etc. Within 10 days after the Effective
Date, the Company shall also use its best efforts to list itself in ▇▇▇▇▇'▇ OTC
Industrial Manual or Standard & Poor's Corporation Records and to cause such
listing to be maintained for two years. After the Business Combination, the
Company shall immediately make all filings required to seek approval for the
quotation of the Securities on The Nasdaq Stock Market ("NASDAQ"), the
NASDAQ-NNM or the New York Stock Exchange ("NYSE"), and shall use its best
efforts to effect and maintain such approval for at least two years.
(l) Board of Directors. The Company shall maintain a Board of Directors
comprised of a size and structure as the Company and Underwriters jointly agree
until completion of the Business Combination.
(m) Periodic Reports. For so long as the Company is a reporting company
under section 12(g) or section 15(d) of the Exchange Act, the Company shall, at
its own expense, furnish to its shareholders an annual report (including
financial statements audited by certified public accountants) in reasonable
detail. In addition, during the period ending five years from the date hereof,
the Company shall, at its own expense, furnish to you: (i) within 90 days of the
end of each fiscal year, a balance sheet of the Company and its Subsidiaries as
at the end of such fiscal year, together with statements of income,
stock-holders' equity and cash flows of the Company and its Subsidiaries as at
the end of such
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fiscal year, all in reasonable detail and accompanied by a copy of the
certificate or report thereon of certified public accountants; (ii) as soon as
they are available, a copy of all reports (financial or otherwise) distributed
to security holders; (iii) as soon as they are available, a copy of all
non-confidential reports and financial statements furnished to or filed with the
Commission; and (iv) such other information as you may from time to time
reasonably request. The financial statements referred to herein shall be on a
consolidated basis to the extent the accounts of the Company and its
Subsidiaries are consolidated in reports furnished to its shareholders
generally. In addition, during the period ending one year from the date hereof,
the company shall, at its own expense, furnish you monthly with Depository Trust
Company stock transfer sheets.
(n) Certain Options. For a period of 90 days following the First Closing
Date, the Company shall not, without your prior written consent, grant any
options, warrants or other rights to purchase Class A Shares at a price less
than the initial public Offering price of the Class A Shares comprising the
Units.
(o) Warrant Solicitation. Upon the exercise of any Warrants on or after the
first anniversary of the Effective Date or any solicitation by you of the
exercise of any Warrants, the Company shall pay you a commission of 10 percent
of the aggregate exercise price of such Warrants, 8 percent of which may be
reallowed by you to the dealer who solicited the exercise (which may also be
you), if: (i) the market price of the Class A Shares is greater than the
exercise price of the Warrant on the date of exercise; (ii) the exercise of the
Warrant was solicited by a member of the National Association of Securities
Dealers, Inc. ("NASD"); (iii) the Warrant is not held in a discretionary
account; (iv) the disclosure of the compensation arrangements has been made in
documents provided to customers, both as part of the Offering and at the time of
exercise; and (v) the solicitation of the Warrant was not in violation of
Regulation M promulgated under the Exchange Act. The Company agrees not to
solicit the exercise of any Warrant other than through you, and shall not
authorize any other dealer to engage in such solicitation without your prior
written consent. No commission shall be paid to you on any Warrant exercised
prior to the first anniversary of the Effective Date, or on any Warrant
exercised at any time without solicitation by you.
(p) Available Shares. The Company shall reserve and at all times keep
available that maximum number of its authorized but unissued Securities which
are issuable upon exercise of the Warrants, the Representative's Warrant, and
the Warrants issuable upon exercise of the Representative's Warrant, in each
case taking into account the anti-dilution provisions thereof.
(q) Investment Banking Advisor. The Company shall engage an investment
banking firm satisfactory to you to advise the Company concerning potential
business combinations.
(r) Stock Escrow Agreement. On or before the Effective Date, the Company
shall, and shall cause all of its current shareholders to, execute and deliver
to you
- 14 -
an agreement with American Stock Transfer & Trust Company (or other escrow agent
mutually acceptable to the Company and you), in the form previously delivered to
the Company by you, regarding the escrow of all Class A Shares and Series A
Preferred Stock owned by such shareholders (the "Stock Escrow Agreement").
(s) Public Relations. Prior to the Effective Date the Company shall have
retained a public relations firm acceptable to you, and shall continue to retain
such firm, or an alternate firm acceptable to you, for a period of two years.
(t) Bound Volumes. Within 90 days from the First Closing Date, the Company
shall deliver to you, at the Company's expense, three bound volumes in form and
content acceptable to you, containing the Registration Statement and all
exhibits filed therewith and all amendments thereto, and all other agreements,
correspondence, filings, certificates and other documents filed and/or delivered
in connection with the Offering.
(u) M/A Agreement. On the First Closing Date and simultaneously with the
delivery of the Firm Units, the Company shall execute and deliver to you an
agreement with you, in the form previously delivered to the Company by you,
regarding mergers, acquisitions, joint ventures and certain other forms of
transactions (the "M/A Agreement").
(v) Board of Directors Seat/Observer. For a period of thirty-six (36)
months from the closing of the Offering, you shall have the option to either:
(i) select an observer designated by you and acceptable to the Company, to
receive notice of and to attend all meetings of the Board of Directors of the
Company (the "Observer"); or (ii) appoint a member of the Company's Board of
Directors (a "Director"). In the event you elect to appoint an Observer, such
Observer shall have no voting rights, and shall be reimbursed for all
out-of-pocket expenses incurred in attending meetings of the Board of Directors.
In the event you elect to appoint a Director, such Director shall have full
voting rights and such other rights as the Company's other Directors, without
limitation. Such Director shall receive the same reimbursement and compensation
as the Company's other Directors. The Company shall hold at least four (4)
meetings of the Board of Directors per year. If you elect to appoint an
Observer, the Observer will be indemnified by the Company against any claims
arising out of his participation at Board meetings. If you appoint a Director,
such Director shall specifically be covered by the Company's Officers and
Directors insurance policy.
(w) Officers and Directors Insurance. Three days prior to the First Closing
Date, the Company shall have obtained Officers and Directors insurance
satisfactory to you with a minimum face value of one million dollars
($1,000,000).
(x) Stock Transfer Sheets. The Company shall supply you with DTC Stock
Transfer sheets on a weekly basis for the first six weeks following the First
Closing Date, and for six weeks following the Option Closing Date, and on a
monthly basis thereafter.
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4. CONDITIONS TO UNDERWRITERS' OBLIGATIONS. The obligations of the several
Underwriters to purchase and pay for the Units which they have agreed to
purchase hereunder are subject to the accuracy (as of the date hereof and as of
each Closing Date) of and compliance with the representations and warranties of
the Company contained herein, the performance by the Company of all of their
obligations hereunder, the execution, delivery and performance by each of the
parties thereto of all of their obligations under the Stock Escrow Agreement,
and the following further conditions:
(a) Effective Registration Statement; No Stop Order. The Registration
Statement shall have become effective and you shall have received notice
thereof not later than 6:00 p.m., New York time, on the date of this
Agreement, or at such later time or on such later date as to which you may
agree in writing. In addition, on each Closing Date (i) no stop order
denying or suspending the effectiveness of the Registration Statement shall
be in effect, and no proceedings for that or any similar purpose shall have
been instituted or shall be pending or, to your knowledge or to the
knowledge of the Company, shall be contemplated by the Commission, and (ii)
all requests on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of Representative's
Counsel.
(b) Opinion of Company Counsel. On the First Closing Date, you shall
have received the opinion, dated as of the First Closing Date, of Company
Counsel, in form and substance satisfactory to Representative's Counsel, to
the effect that:
(i) the Company and each Subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with full power and corporate authority
to own its properties and conduct its business as described in the
Prospectus, and is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each other jurisdiction
in which the nature of its business or the character or location of
its properties requires such qualification, except where failure so to
qualify will not materially affect the business, properties or
financial condition of the Company or such Subsidiary;
(ii) to the best knowledge of such counsel, (A) the Company and
each Subsidiary has obtained, or is in the process of obtaining, all
necessary licenses, permits and other governmental authorizations
currently required for the conduct of its business or the ownership of
its property, as described in the Prospectus, (B) such obtained
licenses, permits and other governmental authorizations are in full
force and effect, and (C) the Company and each Subsidiary is, in all
material respects, in compliance therewith;
(iii) (A) the authorized capitalization of the Company as of the
date of the Prospectus was as is set forth in the Prospectus under the
caption "CAPITALIZATION;" (B) all of the Class A Shares and Class B
- 16 -
Shares now outstanding have been duly authorized and validly issued,
are fully paid and non-assessable, conform to the description thereof
contained in the Prospectus, have not been issued in violation of the
preemptive rights of any shareholder and, except as described in the
Prospectus, are not subject to any restrictions upon the voting or
transfer thereof; (C) all of the Class A Shares and all of the
Warrants comprising the Units have been duly authorized and, when paid
for as provided herein, shall be validly issued, fully paid and
non-assessable, shall not have been issued in violation of the
preemptive rights of any shareholder, and no personal liability shall
attach to the ownership thereof; (D) the shareholders of the Company
do not have any preemptive rights or other rights to subscribe for or
purchase, and there are no restrictions upon the voting or transfer
of, any of the Securities; (E) the Class A Shares and the Warrants
comprising the Units, the Warrant Agreement and the Representative's
Warrant conform to the respective descriptions thereof contained in
the Prospectus; (F) all prior sales of the Company's securities have
been made in compliance with, or under an exemption from, the Act and
applicable state securities laws; (G) a sufficient number of Class A
Shares has been reserved, for all times when any of the Warrants
(including the Warrants issuable upon exercise of the Representative's
Warrant) are outstanding, for issuance upon exercise of all of the
Warrants; and (H) to the best knowledge of such counsel, neither the
filing of the Registration Statement nor the offering or sale of the
Units or Class B Shares as contemplated by this Agreement gives rise
to any registration rights or other rights, other than those which
have been effectively waived or satisfied, for or relating to the
registration of any securities of the Company;
(iv) the certificates evidencing the Units, the Class A Shares,
Class B Shares and the Warrants are each in valid and proper legal
form; and the Warrants are exercisable for Class A Shares in
accordance with the terms of the Warrants and at the prices therein
provided for;
(v) this Agreement, the Warrant Agreement, the Representative's
Warrant, the Stock Escrow Agreement and the M & A Agreement have been
duly and validly authorized, executed and delivered by the Company and
(assuming due execution and delivery thereof by the Representative
and/or American Stock Transfer & Trust Company, as the case may be)
all of such agreements are, or when duly executed shall be, the valid
and legally binding obligations of the Company, enforceable in
accordance with their respective terms (except as enforceability may
be limited by bankruptcy, insolvency or other laws affecting the
rights of creditors generally); provided, however, that no opinion
need be expressed as to the enforceability of the indemnity provisions
contained in Section 6 or the contribution provisions contained in
Section 7;
- 17 -
(vi) to the best knowledge of such counsel, (A) there is no
pending, threatened or contemplated legal or governmental proceeding
affecting the Company or any Subsidiary which could materially and
adversely affect the business, property, operations, condition
(financial or otherwise) or earnings of the Company or such
Subsidiary, or which questions the validity of the Offering, the
Securities, this Agreement, the Warrant Agreement, the
Representative's Warrant, the Stock Escrow Agreement or the M & A
Agreement or of any action taken or to be taken by the Company
pursuant thereto; and (B) there is no legal or governmental proceeding
or regulation required to be described or referred to in the
Registration Statement which is not so described or referred to;
(vii) to the best knowledge of such counsel, (A) the Company is
not in violation of or default under this Agreement, the Warrant
Agreement, the Representative's Warrant, the Stock Escrow Agreement,
or the M & A Agreement; and (B) the execution and delivery hereof and
thereof and the incurrence of the obligations herein and therein set
forth and the consummation of the transactions herein or therein
contemplated shall not result in a violation of, or constitute a
default under, the Certificate of Incorporation or By-laws of the
Company, or any material obligation, agreement, covenant or condition
contained in any bond, debenture, note or other evidence of
indebtedness, or in any material contract, indenture, mortgage, loan
agreement, lease, joint venture or other agreement or instrument to
which the Company is a party or by which its assets are bound, or any
material order, rule, regulation, writ, injunction or decree of any
government, governmental instrumentality or court;
(viii) the Registration Statement has become effective under the
Act, and to the best knowledge of such counsel, no stop order denying
or suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for that or any similar purpose have been
instituted or are pending before or threatened by the Commission;
(ix) the Registration Statement and the Prospectus (except for
the financial statements, notes thereto and other financial
information and statistical data contained therein, as to which no
opinion need be rendered), comply as to form in all material respects
with the Act and the Rules and Regulations;
(x) all descriptions contained in the Registration Statement or
the Prospectus of contracts and other documents are accurate and
fairly present the information required to be described, and such
counsel is familiar with all contracts and other documents referred to
in the Registration Statement and the Prospectus or filed as exhibits
to the Registration Statement and, to the best knowledge of such
counsel, no contract or document of a character required to
- 18 -
be summarized or described therein or to be filed as an exhibit
thereto is not so summarized, described or filed;
(xi) the descriptions contained in the Registration Statement and
the Prospectus which purport to summarize the provisions of statutes,
rules and regulations are accurate summaries in all respects, and such
descriptions fairly present in all respects the information shown, and
the descriptions contained in the Registration Statement and the
Prospectus that concern matters of law or legal conclusions have been
reviewed by such counsel and are correct;
(xii) the Stock Escrow Agreement has been duly and validly
executed and delivered by each party thereto (other than American
Stock Transfer & Trust Company); and
(xiii) except for registration under the Act and registration or
qualification of the Securities under applicable state or foreign
securities or blue sky laws, no authorization, approval, consent or
license of any governmental or regulatory authority or agency is
necessary in connection with: (A) the authorization, issuance, sale,
transfer or delivery of the Securities by the Company; (B) the
execution, delivery and performance of this Agreement by the Company
or the taking of any action contemplated herein; (C) the issuance of
the Representative's Warrant or the Securities issuable upon exercise
thereof; or (D) the execution, delivery and performance of this
Agreement by the Company or the taking of any action contemplated
herein.
Such opinion shall also state that such counsel has participated in the
preparation of the Registration Statement and the Prospectus, and nothing has
come to the attention of such counsel to cause such counsel to have reason to
believe that the Registration Statement at the time it became effective
contained 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 not misleading, or that the Prospectus contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except, in the case of both the Registration Statement and the
Prospectus, for the financial statements, notes thereto and other financial
information and statistical data contained therein, as to which no need be. Such
opinion shall also cover such matters incident to the transactions contemplated
hereby as you or Representative's Counsel shall reasonably request. In rendering
such opinion, Company Counsel may rely as to matters of fact upon certificates
of officers of the Company, and of public officials, and may rely as to all
matters of law other than the law of the United States or the State of Delaware
upon opinions of counsel satisfactory to you, in which case the opinion shall
state that they have no reason to believe that you and they are not entitled so
to rely.
- 19 -
(c) Corporate Proceedings. All corporate proceedings and other legal
matters relating to this Agreement, the Registration Statement, the Prospectus
and other related matters shall be reasonably satisfactory to or approved by
Representative's Counsel, and you shall have received from such counsel a signed
opinion, dated as of the First Closing Date, with respect to the validity of the
issuance of the Units, the form of the Registration Statement and Prospectus
(other than the financial statements and other financial or statistical data
contained therein), the execution of this Agreement and other related matters as
you may reasonably require. The Company shall have furnished to Representative's
Counsel such documents as they may reasonably request for the purpose of
enabling them to render such opinion.
(d) Comfort Letter. Prior to the Effective Date, and again on and as of the
First Closing Date, you shall have received a letter from BDO ▇▇▇▇▇▇▇, LLP,
certified public accountants for the Company, substantially in the form approved
by you.
(e) Bring Down. At each of the Closing Dates, (i) the representations and
warranties of the Company contained in this Agreement shall be true and correct
with the same effect as if made on and as of such Closing Date, and the Company
shall have performed all of their obligations hereunder and satisfied all the
conditions on their parts to be satisfied at or prior to such Closing Date; (ii)
the Registration Statement and the Prospectus shall contain all statements which
are required to be stated therein in accordance with the Act and the Rules and
Regulations, and shall in all material respects conform to the requirements of
the Act and the Rules and Regulations, and neither the Registration Statement
nor the Prospectus shall contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; (iii) there shall have been,
since the respective dates as of which information is given, no material adverse
change in the business, property, operations, condition (financial or
otherwise), earnings, capital stock, long-term or short-term debt or general
affairs of the Company from that set forth in the Registration Statement and the
Prospectus, except changes which the Registration Statement and Prospectus
indicate might occur after the Effective Date, and the Company shall not have
incurred any material liabilities nor entered into any material agreement other
than as referred to in the Registration Statement and Prospectus; and (iv)
except as set forth in the Prospectus, no action, suit or proceeding shall be
pending or threatened against the Company which would be required to be
disclosed in the Registration Statement, and no proceedings shall be pending or
threatened against the Company before or by any commission, board or
administrative agency in the United States or elsewhere, wherein an unfavorable
decision, ruling or finding would materially adversely affect the business,
property, operations, condition (financial or otherwise), earnings or general
affairs of the Company. In addition, you shall have received, at the First
Closing Date, a certificate signed by the principal executive officer and by the
principal financial officer of the Company, dated as of the First Closing Date,
evidencing compliance with the provisions of this Section 4(e).
- 20 -
(f) Transfer and Warrant Agent. On or before the Effective Date, the
Company shall have appointed American Stock Transfer & Trust Company (or other
agent mutually acceptable to the Company and you), as its transfer agent and
warrant agent to transfer all of the Class A Shares, Class B Shares and Warrants
issued in the Offering, as well as to transfer other shares of the Common Stock
outstanding from time to time.
(g) Certain Further Matters. On each Closing Date, Representative's Counsel
shall have been furnished with all such other documents and certificates as they
may reasonably request for the purpose of enabling them to render their legal
opinion to the Underwriter and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements, the
performance of any of the covenants, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company on or
prior to each of the Closing Dates in connection with the authorization,
issuance and sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to you and to Representative's Counsel.
(h) Additional Conditions. Upon exercise of the Over-Allotment Option, the
Underwriters' obligations to purchase and pay for the Option Units shall be
subject (as of the date hereof and as of the Option Closing Date) to the
following additional conditions:
(i) The Registration Statement shall remain effective at the Option
Closing Date, no stop order denying or suspending the effectiveness thereof
shall have been issued, and no proceedings for that or any similar purpose
shall have been instituted or shall be pending or, to your knowledge or the
knowledge of the Company, shall be contemplated by the Commission, and all
reasonable requests on the part of the Commission for additional
information shall have been complied with to the satisfaction of
Representative's Counsel.
(ii) On the Option Closing Date there shall have been delivered to you
the signed opinion of Company Counsel, dated as of the Option Closing Date,
in form and substance satisfactory to Representative's Counsel, which
opinion shall be substantially the same in scope and substance as the
opinion furnished to you on the First Closing Date pursuant to Section
4(b), except that such opinion, where appropriate, shall cover the Option
Units rather than the Firm Units. If the First Closing Date is the same as
the Option Closing Date, such opinions may be combined.
(iii) All proceedings taken at or prior to the Option Closing Date in
connection with the sale and issuance of the Option Units shall be
satisfactory in form and substance to you, and you and Representative's
Counsel shall have been furnished with all such documents, certificates and
opinions as you may request in connection with this transaction in order to
evidence the accuracy and completeness of any of the representations,
warranties or statements of the Company or its compliance with any of the
covenants or conditions contained herein.
- 21 -
(iv) On the Option Closing Date there shall have been delivered to you
a letter in form and substance satisfactory to you from BDO ▇▇▇▇▇▇▇, LLP,
dated the Option Closing Date and addressed to you, confirming the
information in their letter referred to in Section 4(d) as of the date
thereof and stating that, without any additional investigation required,
nothing has come to their attention during the period from the ending date
of their review referred to in such letter to a date not more than five
banking days prior to the Option Closing Date which would require any
change in such letter if it were required to be dated the Option Closing
Date.
(v) On the Option Closing Date there shall have been delivered to you
a certificate signed by the principal executive officer and by the
principal financial or accounting officer of the Company, dated the Option
Closing Date, in form and substance satisfactory to Representative's
Counsel, substantially the same in scope and substance as the certificate
furnished to you on the First Closing Date pursuant to Section 4(e).
(i) Cancellation. If any of the conditions provided by this Section 4 shall
not have been completely fulfilled as of the date indicated, then this Agreement
and all obligations of the Underwriters hereunder may be cancelled at, or at any
time prior to, either Closing Date by your notifying the Company of such
cancellation in writing or by telegram at or prior to the applicable Closing
Date. Any such cancellation shall be without liability of the Underwriters to
the Company, except as otherwise provided herein.
5. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell and deliver the Units and Class B Shares are subject to the
following conditions:
(a) Effective Registration Statement. The Registration Statement shall
have become effective not later than 6:00 p.m. New York time, on the date
of this Agreement, or at such later time or on such later date as the
Company and you may agree in writing.
(b) No Stop Order. On the applicable Closing Date, no stop order
denying or suspending the effectiveness of the Registration Statement shall
have been issued under the Act or any proceedings therefor initiated or
threatened by the Commission.
(c) Payment for Units. On the applicable Closing Date, you shall have
made payment, for the several accounts of the Underwriters, of the
aggregate Purchase Price for the Units then being purchased, by certified
or bank cashier's checks payable in next day funds to the order of the
Company.
If the conditions to the obligations of the Company provided by this Section 5
have been fulfilled on the First Closing Date but are not fulfilled after the
First Closing Date and prior
- 22 -
to the Option Closing Date, then only the obligation of the Company to sell and
deliver the Option Units upon exercise of the Over-Allotment Option shall be
affected.
6. INDEMNIFICATION.
(a) Indemnification by the Company. As used in this Agreement, the term
"Liabilities" shall mean any and all losses, claims, damages and liabilities,
and actions and proceedings in respect thereof (including without limitation all
reasonable costs of defense and investigation and all attorneys' fees) including
without limitation those asserted by any party to this Agreement against any
other party to this Agreement. The Company hereby indemnifies and holds harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act, from and against all Liabilities, joint or several, to
which such Underwriter or such controlling person may become subject, under the
Act or otherwise, insofar as such Liabilities arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material fact
contained in (A) the Registration Statement or any amendment thereto, or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or (B) any "blue sky" application or other document executed by the
Company specifically for that purpose, or based upon written information
furnished by the Company, filed in any state or other jurisdiction in order to
qualify any or all of the Securities under the securities laws thereof (any such
application, document or information being herein called a "Blue Sky
Application"); or (ii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto, or in any Blue
Sky Application, a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that the Company
shall not be liable in any such case to the extent, but only to the extent, that
any such Liabilities arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company through you
by or on behalf of any Underwriter specifically for use in the preparation of
the Registration Statement or any such amendment thereto, or the Prospectus or
any such Preliminary Prospectus, or any such amendment or supplement thereto, or
any such Blue Sky Application. The foregoing indemnity shall be in addition to
any other liability which the Company may otherwise have.
(b) Indemnification by Underwriters. Each Underwriter, severally and not
jointly, hereby indemnifies and holds harmless the Company, each of its
directors, each nominee (if any) for director named in the Prospectus, each of
its officers who have signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of the Act, from and against
all Liabilities to which the Company or any such director, nominee, officer or
controlling person may become subject under the Act or otherwise, insofar as
such Liabilities arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, or the Prospectus or any Preliminary
Prospectus, or any amendment
- 23 -
or supplement thereto, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that any such Liabilities arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement or any amendment thereto, or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company through you,
by or on behalf of such Underwriter, specifically for use in the preparation
thereof. In no event shall any Underwriter be liable or responsible for any
amount in excess of the compensation received by such Underwriter, in the form
of underwriting discounts or otherwise, pursuant to this Agreement or any other
agreement contemplated hereby. The foregoing indemnity shall be in addition to
any other liability which any Underwriter may otherwise have.
(c) Procedure. Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 6, notify in writing the indemnifying party of the
commencement thereof, but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 6. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, subject to the provisions
hereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 6 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. The indemnified
party shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided, however, that if the indemnified party is any
Underwriter or a person who controls any Underwriter within the meaning of the
Act, the fees and expenses of such counsel shall be at the expense of the
indemnifying party if (i) the employment of such counsel has been specifically
authorized in writing by the indemnifying party, or (ii) the named parties to
any such action (including any impleaded parties) include both such Underwriter
or such controlling person and the indemnifying party and, in your judgment, it
is advisable for such Underwriter or controlling person to be represented by
separate counsel (in which case the indemnifying party shall not have the right
to assume the defense of such action on behalf of such Underwriter or such
controlling person, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys). No settlement of any
action against an indem-
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nified party shall be made without the consent of the indemnified party, which
shall not be unreasonably withheld in light of all factors of importance to such
indemnified party.
7. CONTRIBUTION. In order to provide for just and equitable contribution
under the Act in any case in which (a) any indemnified party makes claims for
indemnification pursuant to Section 6 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 Section 6 provide for indemnification in such
case, or (b) contribution under the Act may be required on the part of any
indemnified party, then such indemnified party and each indemnifying party (if
more than one) shall contribute to the aggregate Liabilities to which it may be
subject, in either such case (after contribution from others) in such
proportions that the Underwriters are responsible in the aggregate for that
portion of such Liabilities represented by the percentage that the underwriting
discount per Unit appearing on the cover page of the Prospectus bears to the
public Offering price per Unit appearing thereon, and the Company shall be
responsible for the remaining portion; provided, however, that if such
allocation is not permitted by applicable law, then the relative fault of the
Company and the Underwriters in connection with the statements or omissions
which resulted in such Liabilities and other relevant equitable considerations
shall also be considered. The relative fault shall be determined by reference
to, among other things, whether in the case of an untrue statement of a material
fact or the omission to state a material fact, such statement or omission
relates to information supplied by the Company or the Underwriters, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if the respective
obligations of the Company and the Underwriters to contribute pursuant to this
Section 7 were to be determined by pro rata or per capita allocation of the
aggregate Liabilities (even if the Underwriters were to be treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this Section 7. In addition, the contribution of any Underwriter shall not be in
excess of its proportionate share of the portion of such Liabilities for which
such Underwriter is responsible. No person guilty of a fraudulent
misrepresentation (within the meaning of section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. As used in this Section 7, the term "Company" shall include
any officer, director or person who controls the Company within the meaning of
section 15 of the Act. The Underwriters' obligations under this Section 7 to
contribute are several in proportion to their respective underwriting
obligations and not joint. If the full amount of the contribution specified in
this Section 7 is not permitted by law, then each indemnified party and each
person who controls an indemnified party shall be entitled to contribution from
each indemnifying party to the full extent permitted by law. The foregoing
contribution agreement shall in no way affect the contribution liabilities of
any persons having liability under section 11 of the Act other than the Company
and the Underwriters. No contribution shall be requested with regard to the
settlement of any matter from any party
- 25 -
who did not consent to the settlement; provided, however, that such consent
shall not be unreasonably withheld in light of all factors of importance to such
party.
8. COSTS AND EXPENSES.
(a) Certain Costs and Expenses. Whether or not this Agreement becomes
effective or the sale of the Units to the Underwriters is consummated, the
Company shall pay all costs and expenses incident to the issuance, offering,
sale and delivery of the Units and the performance of its obligations under this
Agreement, including without limitation: (i) all fees and expenses of the
Company's legal counsel and accountants; (ii) all costs and expenses incident to
the preparation, printing, filing and distribution of the Registration Statement
(including the financial statements contained therein and all exhibits and
amendments thereto), each Preliminary Prospectus and the Prospectus, each as
amended or supplemented, this Agreement and the other agreements and documents
referred to herein, each in such quantities as you shall deem necessary; (iii)
all fees of NASD required in connection with the filing required by NASD to be
made by the Representative with respect to the Offering; (iv) all expenses,
including fees (but not in excess of the amount set forth in Section 3(b)) and
disbursements of Representative's Counsel in connection with the qualification
of the Securities under the "blue sky" laws which you shall designate; (v) all
costs and expenses of printing the respective certificates representing the
Shares and the Warrants; (vi) the expense of placing one or more "tombstone"
advertisements or promotional materials as directed by you (provided, however,
that the aggregate amount thereof shall not exceed $10,000); (vii) all costs and
expenses of the Company and its employees (but not of the Representative or its
employees) associated with due diligence meetings and presentations; (viii) all
costs and expenses associated with the preparation of a seven to ten minute
professional video presentation concerning the Company, its products and its
management for broker due diligence purposes; (ix) any and all taxes (including
without limitation any transfer, franchise, capital stock or other tax imposed
by any jurisdiction) on sales of the Units to the Underwriters hereunder; and
(x) all costs and expenses incident to the furnishing of any amended Prospectus
or any supplement to be attached to the Prospectus as required by Sections 3(a)
and 3(d), except as otherwise provided by said Sections.
(b) Representative's Expense Allowance. In addition to the expenses
described in Section 8(a), the Company shall on the First Closing Date pay to
you the balance of a non-accountable expense allowance (which shall include fees
of Representative's Counsel exclusive of the fees referred to in Section 3(b))
of $294,000 (that being an amount equal to 3 percent of the gross proceeds
received upon sale of the Firm Units), of which $20,000 has been paid to you
prior to the date hereof. In the event that the Over-Allotment Option is
exercised, then the Company shall on the Option Closing Date pay to you an
additional amount equal to 3 percent of the gross proceeds received upon sale of
any of the Option Units. In the event that the transactions contemplated hereby
fail to be consummated for any reason, then you shall return to the Company that
portion of the $20,000 heretofore paid by the Company to the extent that it has
not been utilized by you in connection with the Offering for accountable
out-of-pocket expenses; provided, however, that if such failure is
- 26 -
due to a breach by the Company of any covenant, representation or warranty
contained herein or because any other condition to the Underwriters' obligations
hereunder required to be fulfilled by the Company is not fulfilled, then the
Company shall be liable for your accountable out-of-pocket expenses to the full
extent thereof (with credit given to the $20,000 paid).
(c) No Finders. No person is entitled either directly or indirectly to
compensation from the Company, the Underwriters or any other person for services
as a finder in connection with the Offering, and the Company hereby indemnify
and hold harmless the Underwriters, and the Underwriters hereby indemnify and
hold harmless the Company from and against all Liabilities, joint or several, to
which the indemnified party may become subject insofar as such Liabilities arise
out of or are based upon the claim of any person (other than an employee of the
party claiming indemnity) or entity that he or it is entitled to a finder's fee
in connection with the Offering by reason of such person's or entity's influence
or prior contact with the indemnifying party.
9. SUBSTITUTION OF UNDERWRITERS.
(a) Substitution. If any Underwriter defaults in its obligation to purchase
the numbers of Units which it has agreed to purchase under this Agreement, you
shall be obligated to purchase all of the Units not purchased by the defaulting
Underwriter unless such purchase shall cause you to be in violation of the net
capital requirements of Rule 15c3- 1 of the Exchange Act, in which case you, and
any other Underwriters satisfactory to you who so agree, shall have the right,
but shall not be obligated, to purchase (in such proportions as may be agreed
upon among them) all of the Units. If you or the other Underwriters satisfactory
to you do not elect to purchase the Units which the defaulting Underwriter or
Underwriters agreed but failed to purchase, then this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or the Company,
except for (i) the payment by the Company of expenses as provided by Section
8(a), (ii) the payment by the Company of accountable expenses as provided by
Section 8(b), and (iii) the indemnity and contribution agreements of the Company
and the Underwriters provided by Sections 6 and 7.
(b) Further Matters. Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have for damages caused by its default. If
the other Underwriters satisfactory to you are obligated or agree to purchase
the Units of a defaulting Underwriter, either you or the Company may postpone
the First Closing Date for up to seven banking days in order to effect any
changes that may be necessary in the Registration Statement, any Preliminary
Prospectus or the Prospectus or in any other document or agreement, and to file
promptly any amendments to the Registration Statement, or any amendments or
supplements to any Preliminary Prospectus or the Prospectus, which in your
opinion may thereby be made necessary.
- 27 -
10. EFFECTIVE DATE. The Agreement shall become effective upon its
execution, except that you may, at your option, delay its effectiveness until
10:00 a.m., New York time, on the first full business day following the
Effective Date, or at such earlier time after the Effective Date as you in your
discretion shall first commence the initial public Offering by the Underwriters
of any of the Units. The time of the initial public Offering shall mean the time
of release by you of the first newspaper advertisement with respect to the
Units, or the time when the Units are first generally offered by you to dealers
by letter or telegram, whichever shall first occur. This Agreement may be
terminated by you at any time before it becomes effective as provided above,
except that the provisions of Sections 6, 7, 8, 13, 14, 15 and 16 shall remain
in effect notwithstanding such termination.
11. TERMINATION.
(a) Grounds for Termination. This Agreement, except for Sections 6, 7, 8,
13, 14, 15 and 16, may be terminated at any time prior to the First Closing
Date, and the Over-Allotment Option, if exercised, may be cancelled at any time
prior to the Option Closing Date, by you if in your sole judgment it is
impracticable to offer for sale or to enforce contracts made by the Underwriters
for the resale of the Units agreed to be purchased hereunder, by reason of: (i)
the Company having sustained a material loss, whether or not insured, by reason
of fire, earthquake, flood, accident or other calamity, or from any labor
dispute or court or government action, order or decree; (ii) trading in
securities on the New York Stock Exchange or the American Stock Exchange having
been suspended or limited; (iii) material governmental restrictions having been
imposed on trading in securities generally which are not in force and effect on
the date hereof; (iv) a banking moratorium having been declared by federal or
New York State authorities; (v) an outbreak or significant escalation of major
international hostilities or other national or international calamity having
occurred; (vi) the passage by the Congress of the United States or by any state
legislature, of any act or measure, or the adoption of any order, rule or
regulation by any governmental body or any authoritative accounting institute or
board, or any governmental executive, which is reasonably believed by you likely
to have a material adverse effect on the business, property, operations,
condition (financial or otherwise) or earnings of the Company; (vii) any
material adverse change in the financial or securities markets beyond normal
fluctuations in the United States having occurred since the date of this
Agreement; or (viii) any material adverse change having occurred since the
respective dates for which information is given in the Registration Statement
and Prospectus, in the business, property, operations, condition (financial or
otherwise), earnings or business prospects of the Company, whether or not
arising in the ordinary course of business.
(b) Notification. If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided by this Section 11 or by
Section 10, the Company shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
- 28 -
12. REPRESENTATIVE'S WARRANT. On the First Closing Date, the Company shall
issue and sell to you, for a total purchase price of $5.00, and upon the terms
and conditions set forth in the form of Representative's Warrant filed as an
exhibit to the Registration Statement, a warrant entitling you to purchase
80,000 Units and 15,000 Class B Shares (the "Representative's Warrant"). In the
event of conflict in the terms of this Agreement and the Representative's
Warrant, the terms and conditions of the Representative's Warrant shall control.
13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company and the Underwriters set forth in or made
pursuant to this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any other party, and shall survive
delivery of and payment for the Units and the termination of this Agreement. The
Company hereby indemnifies and holds harmless the Underwriters from and against
all Liabilities, joint or several, to which the Underwriters may become subject
insofar as such Liabilities arise out of or are based upon the breach or failure
of any representation, warranty or covenant of the Company contained in this
Agreement.
14. NOTICES. All communications hereunder shall be in writing and, except
as otherwise expressly provided herein, if sent to you, shall be mailed,
delivered or telegraphed and confirmed to you at ▇.▇. ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇
▇▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, with a copy sent to ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇; or if sent to the Company, shall be mailed, delivered, or telegraphed and
confirmed to it at BW Acquisition Corp., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, with a copy sent to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., Crummy, Del Deo,
Dolan, Griffinger & ▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
15. PARTIES IN INTEREST. This Agreement is made solely for the benefit of
the Underwriters, the Company and, to the extent expressed, any person
controlling the Company or an Underwriter, as the case may be, and the directors
of the Company, nominees for directors of the Company (if any) named in the
Prospectus, officers of the Company who have signed the Registration Statement,
and their respective executors, administrators, successors and assigns; and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, as
such, from an Underwriter of the Units.
16. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely within such State.
- 29 -
17. COUNTERPARTS. This Agreement may be executed in two or more counterpart
copies, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return this Agreement, whereupon it will become a binding
agreement between the Company and the Underwriters in accordance with its terms.
Yours very truly,
BW ACQUISITION CORP.
______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
▇.▇. ▇▇▇▇▇▇ & CO., INC.
AS REPRESENTATIVE OF THE
SEVERAL UNDERWRITERS NAMED
IN SCHEDULE I HERETO
______________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Director Corporate Finance
- 30 -
Schedule I
Underwriting Agreement dated ___________, 1997
NUMBER OF CLASS B
NUMBER OF UNITS SHARES TO BE
UNDERWRITER TO BE PURCHASED PURCHASED
▇.▇. ▇▇▇▇▇▇ & Co., Inc.
------- -------
TOTAL 800,000 150,000
- 31 -