OH&S DRAFT
2/22/00
4,000,000 UNITS, EACH UNIT CONSISTING OF
ONE SHARE OF COMMON STOCK AND
ONE REDEEMABLE WARRANT
▇▇▇▇▇▇▇.▇▇▇, INC.
UNDERWRITING AGREEMENT
New York, New York
___________, 2000
▇▇▇▇▇ & COMPANY, INC.
▇▇▇▇▇ SECURITIES CORPORATION
As Representatives of the
Several Underwriters listed
on Schedule A hereto
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company") confirms its
agreement with ▇▇▇▇▇ & Company, Inc. ("▇▇▇▇▇"), ▇▇▇▇▇ Securities Corporation
("▇▇▇▇▇") and each of the several underwriters named in Schedule A hereto
(collectively, the "Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 12) for whom ▇▇▇▇▇
and ▇▇▇▇▇ are acting as representatives (in such capacity, ▇▇▇▇▇ and ▇▇▇▇▇
shall be collectively hereinafter referred to as "you" or the
"Representatives"), with respect to the sale by the Company, and the purchase
by the Underwriters, acting severally and not jointly, of the respective number
of units (the "Units") set forth in Schedule A hereto. Each Unit consists of
one (1) share of the Company's common stock, $.001 par value (the "Common
Stock") and one (1) redeemable warrant (the "Redeemable Warrants"). The shares
of Common Stock issuable upon exercise of the Redeemable Warrants are
hereinafter referred to as the "Warrant Shares."
Each Redeemable Warrant is exercisable for one share of Common Stock. The
Common Stock and Redeemable Warrants comprising the Units will be separately
tradeable twelve (12) months after the effective date (the "Effective Date") of
the Registration Statement (as defined herein), or such earlier date as the
Company and the Representatives may agree. The Redeemable Warrants are
exercisable commencing twelve (12) months after the Effective Date. The initial
exercise price of the Redeemable Warrants is $___ per share [150% of the
initial public offering
price of the Firm Units per share of common stock], subject to adjustment. The
Redeemable Warrants may be redeemed by the Company, in whole, and not in part,
at a redemption price of ten cents ($.10) per Redeemable Warrant at any time
commencing eighteen (18) months after the Effective Date on 30 days' prior
written notice provided that the average closing sales price of the Common
Stock equals or exceeds 200% of the initial public offering price of the Units
(subject to adjustment) for any twenty (20) trading days within a period of
thirty (30) consecutive trading days ending on the fifth day prior to the date
of the notice of redemption, all in accordance with the terms and conditions of
the Warrant Agreement (defined herein).
Upon the Representatives' request, as provided in Section 2(b) of this
Agreement, the Company shall also issue and sell to the Underwriters up to an
additional 600,000 Units for the purpose of covering over-allotments, if any.
Such 600,000 Units are hereinafter collectively referred to as the "Option
Units." The Company also proposes to issue and sell to the Representatives or
their designees warrants (the "Representatives' Warrants"), pursuant to the
representatives' warrant agreement (the "Representatives' Warrant Agreement"),
for the purchase of an additional 400,000 Units. The common stock purchase
warrants issuable upon exercise of the Representatives' Warrants are
hereinafter sometimes referred to herein as the "Representatives' Underlying
Warrants." The shares of Common Stock issuable upon exercise of the
Representatives' Warrants and the shares of Common Stock issuable upon exercise
of the Representatives' Underlying Warrants are hereinafter collectively
referred to as the "Representatives' Shares." The Representatives' Underlying
Warrants and the Representative's Shares are sometimes referred to herein as
the "Representatives' Securities."
The Firm Units, the Option Units, the Representatives' Warrants, the
Representatives' Underlying Warrants, the Representatives' Shares, the
Redeemable Warrants and the Warrant Shares are hereinafter collectively
referred to as the "Securities" and are more fully described in the
Registration Statement and the Prospectus referred to below.
1. Representations and Warranties of the Company. The Company represents
and warrants to, and covenants and agrees with, the Underwriters as of the date
hereof, and as of the Closing Date (hereinafter defined) and each Option
Closing Date (hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and amendments thereto,
on Form S-1 (Registration No. 333-88065), including any related preliminary
prospectus or prospectuses (each a "Preliminary Prospectus"), for the
registration of the Securities, under the Securities Act of 1933, as amended
(the "Act"), which registration statement and amendment or amendments have been
prepared by the Company in conformity with the requirements of the Act, and the
rules and regulations of the Commission under the Act. The Company will not
file any other amendment to such registration statement which the
Representatives shall have objected to in writing after having been furnished
with a copy thereof. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time it
becomes effective (including the prospectus, financial statements, schedules,
exhibits and all other documents filed as a part thereof or incorporated
therein (including, but not limited to, those documents or that information
incorporated by reference therein) and all information deemed to be a part
thereof as of such time
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pursuant to paragraph (b) of Rule 430A of the rules and regulations under the
Act), is hereinafter called the "Registration Statement," and the form of
prospectus in the form first filed with the Commission pursuant to Rule 424(b)
of the rules and regulations under the Act is hereinafter called the
"Prospectus." For purposes hereof, "Rules and Regulations" mean the rules and
regulations adopted by the Commission under either the Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority has issued
any order preventing or suspending the use of any Preliminary Prospectus, the
Registration Statement or the Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are
pending or threatened. Each of the Preliminary Prospectus, the Registration
Statement and the Prospectus, at the time of filing thereof, conformed with the
requirements of the Act and the Rules and Regulations, and none of the
Preliminary Prospectus, the Registration Statement nor the Prospectus, at the
time of filing thereof, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that this representation and
warranty does not apply to statements made in reliance upon and in conformity
with written information furnished to the Company with respect to the
Underwriters by or on behalf of the Underwriters furnished in writing to the
Company expressly for use in such Preliminary Prospectus, the Registration
Statement or the Prospectus. The Company has filed all reports, forms or other
documents required to be filed under the Act and the Exchange Act and the
respective Rules and Regulations thereunder, and all such reports, forms or
other documents, when so filed or as subsequently amended, complied in all
material respects with the Act and the Exchange Act and the respective Rules
and Regulations thereunder.
(c) When the Registration Statement becomes effective and at all times
subsequent thereto up to the Closing Date and each Option Closing Date, if any,
and during such longer period as the Prospectus may be required to be delivered
in connection with sales by the Underwriters or a dealer, the Registration
Statement and the Prospectus will contain all statements which are required to
be stated therein in accordance with the Act and the Rules and Regulations, and
will conform to the requirements of the Act and the Rules and Regulations; and,
at and through such dates, neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
this representation and warranty does not apply to statements made or
statements omitted in reliance upon and in conformity with written information
furnished to the Company with respect to the Underwriters expressly for use in
the Registration Statement or the Prospectus or any amendment thereof or
supplement thereto.
(d) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation. The Company is duly qualified and licensed and in good standing
as a foreign corporation in each jurisdiction in which its ownership or leasing
of any properties or the character of its operations require such qualification
or licensing. The Company does not own, directly or indirectly, an interest in
any
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corporation, partnership, trust, joint venture or other business entity. The
Company has all requisite power and authority (corporate and other), and has
obtained any and all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or regulatory
officials and bodies (including, without limitation, those having jurisdiction
over environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and has
been doing business in compliance in with all such authorizations, approvals,
orders, licenses, certificates, franchises and permits and with all federal,
state, local and foreign laws, rules and regulations to which it is subject;
and the Company has not received any notice of proceedings relating to the
revocation or modification of any such authorization, approval, order, license,
certificate, franchise or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the earnings,
prospects, stockholders' equity, value, operations, properties, business or
results of operations of the Company. The disclosure in the Registration
Statement concerning the effects of federal, state, local and foreign laws,
rules and regulations on the Company's business as currently conducted and as
contemplated are correct in all respects and do not omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under "Capitalization" and
"Description of Securities" and will have the adjusted capitalization set forth
therein on the Closing Date and the Option Closing Date, if any, based upon the
assumptions set forth therein, and the Company is not a party to or bound by
any instrument, agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities, except for this
Agreement, the Representatives' Warrant Agreement and the Warrant Agreement (as
defined in Section 1(gg) hereof of this Agreement) and as described in the
Prospectus. The Securities and all other securities issued or issuable by the
Company on or prior to the Closing Date and each Option Closing Date, if any,
conform or, when issued and paid for, will conform, in all respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus. All issued and outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and non-assessable; the
holders thereof have no rights of rescission with respect thereto and are not
subject to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holder of
any security of the Company or any similar contractual right granted by the
Company. The Securities to be sold by the Company hereunder and pursuant to the
Representatives' Warrant Agreement and the Warrant Agreement are not and will
not be subject to any preemptive or other similar rights of any stockholder,
have been duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof and thereof, will be validly issued, fully
paid and non-assessable and conform to the descriptions thereof contained in
the Prospectus; the holders thereof will not be subject to any liability solely
as such holders; all corporate action required to be taken for the
authorization, issue and sale of the Securities has been duly and validly
taken; and the certificates representing the Securities, when delivered by the
Company, will be in due and proper form. Upon the issuance and delivery
pursuant to the terms hereof and the Representatives' Warrant Agreement and the
Warrant Agreement of the Securities to be sold by the Company hereunder and
thereunder to the Underwriters, the Underwriters will acquire good and
marketable title to such Securities, free and clear of any lien, charge, claim,
4
encumbrance, pledge, security interest, defect or other restriction or equity
of any kind whatsoever asserted against the Company or any affiliate (within
the meaning of the Rules and Regulations) of the Company.
(f) The financial statements of the Company and the notes thereto included
in the Registration Statement, each Preliminary Prospectus and the Prospectus
fairly present the financial position, income, changes in cash flow, changes in
stockholders' equity and the results of operations of the Company at the
respective dates and for the respective periods to which they apply. Such
financial statements have been examined by ▇▇▇▇▇▇ & Company, L.L.C., who are
independent certified public accountants within the meaning of the Act and the
Rules and Regulations, as indicated in their reports filed herewith. Such
financial statements have been prepared in conformity with generally accepted
accounting principles and the Rules and Regulations, consistently applied
throughout the periods involved. There has been no change or development
involving a material adverse prospective change in the condition, financial or
otherwise, or in the earnings, position, prospects, stockholders' equity,
value, operations, properties, business or results of operations of the
Company, whether or not arising in the ordinary course of business, since the
date of the financial statements included in the Registration Statement and the
Prospectus; and the outstanding debt, the property, both tangible and
intangible, and the business of the Company conform in all respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus. The financial information (including, without limitation, any pro
forma financial information) set forth in the Prospectus under the headings
"Prospectus Summary," "Capitalization," "Selected Financial Data" and
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" fairly presents, on the basis stated in the Prospectus, the
information set forth therein and such financial information has been derived
from or compiled on a basis consistent with that of the audited financial
statements included in the Prospectus; and in the case of pro forma
information, if any, the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions and circumstances referred to therein.
(g) The Company (i) has paid all federal, state, local and foreign taxes
for which it is liable, including, but not limited to, withholding taxes and
amounts payable under Chapters 21 through 24 of the Internal Revenue Code of
1986, as amended (the "Code"), and has furnished all information returns it is
required to furnish pursuant to the Code, (ii) has established adequate
reserves for such taxes which are not due and payable, and (iii) does not have
any tax deficiency or claims outstanding, proposed or assessed against it.
(h) No transfer tax, stamp duty or other similar tax is payable by or on
behalf of the Underwriters in connection with (i) the issuance by the Company
of the Securities, (ii) the purchase by the Underwriters of the Securities from
the Company, (iii) the consummation by the Company of any of its obligations
under this Agreement or the Representatives' Warrant Agreement, or (iv) resales
of the Securities in connection with the distribution contemplated hereby.
(i) The Company maintains insurance policies, including, but not limited
to, general liability, property, personal and product liability insurance, and
surety bonds which insure the Company and its employees against such losses and
risks generally insured against by
5
comparable businesses. The Company (i) has not failed to give notice or present
any insurance claim with respect to any matter, including but not limited to
the Company's business, property or employees, under any insurance policy or
surety bond in a due and timely manner, (ii) does not have any disputes or
claims against any underwriter of such insurance policies or surety bonds, nor
has the Company failed to pay any premiums due and payable thereunder, or (iii)
has not failed to comply with all conditions contained in such insurance
policies and surety bonds. There are no facts or circumstances under any such
insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company.
(j) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those pertaining to environmental or similar matters), domestic or
foreign, pending or threatened against (or circumstances that may give rise to
the same), or involving the properties or business of, the Company which (i)
questions the validity of the capital stock of the Company, this Agreement, the
Representatives' Warrant Agreement or the Warrant Agreement or of any action
taken or to be taken by the Company pursuant to or in connection with this
Agreement, the Representatives' Warrant Agreement or the Warrant Agreement,
(ii) is required to be disclosed in the Registration Statement which is not so
disclosed (and such proceedings as are summarized in the Registration Statement
are accurately summarized in all respects), or (iii) might materially and
adversely affect the condition, financial or otherwise, earnings, prospects,
stockholders' equity, value, operations, properties, business or results of
operations of the Company.
(k) The Company has full legal right, power and authority to authorize,
issue, deliver and sell the Securities, to enter into this Agreement, the
Representatives' Warrant Agreement and the Warrant Agreement and to consummate
the transactions provided for in such agreements; and each of this Agreement,
the Representatives' Warrant Agreement and the Warrant Agreement have been duly
and properly authorized, executed and delivered by the Company. Each of this
Agreement, the Representatives' Warrant Agreement and the Warrant Agreement
constitutes a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms. None of the Company's issue
and sale of the Securities, execution or delivery of this Agreement, the
Representatives' Warrant Agreement or the Warrant Agreement, its performance
hereunder and thereunder, its consummation of the transactions contemplated
herein and therein, or the conduct of its business as described in the
Registration Statement and the Prospectus and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or
will constitute a default under, or result in the creation or imposition of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company pursuant to the terms of (i) the
articles of incorporation or by-laws of the Company, (ii) any license,
contract, indenture, mortgage, lease, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement or other agreement or
instrument evidencing an obligation for borrowed money, or any other agreement
or instrument to which the Company is a party or by which it is or may be bound
or to which its properties or assets (tangible or intangible) are or may be
subject, or (iii) any statute, judgment, decree, order, rule or regulation
applicable to the Company of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign,
6
having jurisdiction over the Company or any of its activities or properties.
(l) No consent, approval, authorization or order of, and no filing with,
any arbitrator, court, regulatory body, administrative agency, government
agency or other body, domestic or foreign, is required for the issuance of the
Securities pursuant to the Prospectus and the Registration Statement, this
Agreement, the Representatives' Warrant Agreement and the Warrant Agreement,
the performance of this Agreement, the Representatives' Warrant Agreement and
the Warrant Agreement and the transactions contemplated hereby and thereby,
including without limitation, any waiver of any preemptive right, first refusal
or other rights that any entity or person may have for the issue and/or sale of
any of the Securities, except such as have been obtained under the Act, state
securities laws and the rules of the National Association of Securities
Dealers, Inc. (the "NASD") in connection with the Underwriters' purchase and
distribution of the Securities.
(m) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which any of its assets, properties or business may be subject have
been duly and validly authorized, executed and delivered by the Company, and
constitute legal, valid and binding agreements of the Company, enforceable
against the Company in accordance with their respective terms. The descriptions
in the Registration Statement of agreements, contracts and other documents are
accurate and fairly present the information required to be shown with respect
thereto by Form S-1; and there are no agreements, contracts or other documents
which are required by the Act to be described in the Registration Statement or
filed as exhibits to the Registration Statement which are not described or
filed as required; and the exhibits which have been filed are complete and
correct copies of the documents of which they purport to be copies.
(n) Subsequent to the respective dates as of which information is set
forth in the Registration Statement and the Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not
(i) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, (ii) entered into any transaction other than in
the ordinary course of business, or (iii) declared or paid any dividend or made
any other distribution on or in respect of any class of its capital stock; and,
subsequent to such dates, and except as may otherwise be disclosed in the
Prospectus, there has not been any change in the capital stock, debt (long or
short term) or liabilities of the Company or any material adverse change in the
condition, financial or otherwise, earnings, prospects, stockholders' equity,
value, operations, properties, business or results of operations of the
Company.
(o) No default exists in the due performance and observance of any term,
covenant or condition of any license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust agreement,
partnership agreement, stockholders' agreement, note, loan or credit agreement
or any other agreement or instrument evidencing an obligation for borrowed
money, or any other agreement or instrument to which the Company is a party or
by which the Company is or may be bound or to which the property or assets
(tangible or intangible) of the Company is or may be subject.
(p) The Company has generally enjoyed a satisfactory employer-employee
7
relationship and the Company is in compliance with all federal, state, local
and foreign laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours. There are no
pending investigations involving the Company by the United States Department of
Labor or any other governmental agency responsible for the enforcement of any
federal, state, local or foreign laws, rules and regulations relating to
employment. There is no unfair labor practice charge or complaint against the
Company pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the Company, or any predecessor entity, and none has ever
occurred. No representation question exists respecting the employees of the
Company, and no collective bargaining agreement or modification thereof is
currently being negotiated by the Company. No grievance or arbitration
proceeding is pending under any expired or existing collective bargaining
agreements of the Company. No labor dispute with the employees of the Company
exists or is imminent.
(q) The Company does not maintain, sponsor or contribute to any program or
arrangement that is an "employee pension benefit plan," an "employee welfare
benefit plan" or a "multiemployer plan," as such terms are defined in Sections
3(2), 3(l) and 3(37), respectively, of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") ("ERISA Plans"). The Company does not
maintain or contribute, now or at any time previously, to a defined benefit
plan, as defined in Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code which could subject the
Company to any tax penalty on prohibited transactions and which has not
adequately been corrected. Each ERISA Plan is in compliance with all reporting,
disclosure and other requirements of the Code and ERISA as they relate to any
such ERISA Plan. Determination letters have been received from the Internal
Revenue Service with respect to each ERISA Plan which is intended to comply
with Code Section 401(a), stating that such ERISA Plan and the attendant trust
are qualified thereunder. The Company has never completely or partially
withdrawn from a "multiemployer plan."
(r) Neither the Company nor any of its employees, directors, stockholders
or affiliates (within the meaning of the Rules and Regulations), has taken or
will take, directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in, under the
Exchange Act or otherwise, the stabilization or manipulation of the price of
any security of the Company, whether to facilitate the sale or resale of the
Securities or otherwise.
(s) None of the trademarks, trade names, service marks, service names,
copyrights, patents and patent applications, and none of the licenses and
rights to the foregoing, presently owned or held by the Company are in dispute
or are in conflict with the right of any other person or entity. The Company
(i) owns or has the right to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever, all trademarks, trade names, service marks,
service names, copyrights, patents and patent applications, and licenses and
rights with respect to the foregoing, used in the conduct of its business as
now conducted or proposed to be conducted without infringing upon or otherwise
acting adversely to the right or claimed right of any person, corporation or
other entity under or with respect to any of the foregoing and (ii) is not
obligated or under any liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner or licensee of, or other
8
claimant to, any trademark, trade name, service ▇▇▇▇, service name, copyright,
patent, patent application, know how, technology or other intangible asset.
There is no action, suit, proceeding, inquiry, arbitration, investigation,
litigation or governmental or other proceeding, domestic or foreign, pending or
threatened (or circumstances that may give rise to the same) against the
Company which challenges the exclusive rights of the Company with respect to
any trademarks, trade names, service marks, service names, copyrights, patents,
patent applications or licenses or rights to the foregoing used in the conduct
of its business, or which challenge the right of the Company to use any
technology presently used or contemplated to be used in the conduct of its
business.
(t) The Company owns and has the unrestricted right to use all trade
secrets, know-how (including all unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), inventions, technology,
designs, processes, works of authorship, computer programs and technical data
and information that are material to the development, manufacture, operation
and sale of all products and services sold or proposed to be sold by the
Company, free and clear of and without violating any right, lien, or claim of
others, including, without limitation, former employers of its employees.
(u) The Company has good and marketable title to, or valid and enforceable
leasehold estates in, all items of real and personal property stated in the
Prospectus to be owned or leased by it, free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects or other
restrictions or equities of any kind whatsoever, other than liens for taxes not
yet due and payable.
(v) ▇▇▇▇▇▇ & Company, L.L.C., whose reports are filed with the Commission
as a part of the Registration Statement, are independent certified public
accountants as required by the Act and the Rules and Regulations.
(w) All officers and directors and holders of "restricted" securities of
the Company have executed an agreement (collectively, the "Lock-Up Agreements")
pursuant to which he, she or it has agreed (i) for a period extending 180 days
following the effective date of the Registration Statement, not to, directly or
indirectly, offer, offer to sell, sell, grant an option for the purchase or
sale of, transfer, assign, pledge, hypothecate or otherwise encumber (whether
pursuant to Rule 144 of the Rules and Regulations or otherwise) any securities
issued or issuable by the Company, whether or not owned by or registered in the
name of such persons, or dispose of any interest therein, without the prior
written consent of the Representatives and the Company, and (ii) for a period
extending twelve (12) months following the Effective Date, that all sales of
such securities issued by the Company shall be made through the Representatives
in accordance with their customary brokerage policies. The Company will cause
its transfer agent to ▇▇▇▇ an appropriate legend on the face of stock
certificates representing all of such securities and place "stop transfer"
orders on the Company's stock ledgers.
(x) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities
hereunder or any other arrangements, agreements, understandings, payments or
issuances that may affect the Underwriters' compensation, as determined by the
NASD.
9
(y) The Units, the Common Stock, and the Redeemable Warrants have been
approved for quotation on The Nasdaq National Market.
(z) Neither the Company nor any of its directors, officers, stockholders,
employees, agents or any other person acting on behalf of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or any official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or any other
person who was, is or may be in a position to help or hinder the business of
the Company (or assist the Company in connection with any actual or proposed
transaction) which (i) might subject the Company or any other such person to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (ii) if not given in the past, might have had
a material and adverse effect on the condition, financial or otherwise, or the
earnings, business affairs, prospects, stockholders' equity, value, operations,
properties, business or results of operations of the Company, or (iii) if not
continued in the future, might materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs, prospects,
stockholders' equity, value, operations, properties, business or results of
operations of the Company. The Company's internal accounting controls are
sufficient to cause the Company to comply with the Foreign Corrupt Practices
Act of 1977, as amended.
(aa) The Company confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act
Relating to Disclosure of Doing Business with Cuba, and the Company further
agrees that if it or any affiliate commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after the
date the Registration Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported or
incorporated by reference in the Prospectus, if any, concerning the Company's,
or any affiliate's, business with Cuba or with any person or affiliate located
in Cuba changes in any material way, the Company will provide the Department
notice of such business or change, as appropriate, in a form acceptable to the
Department.
(bb) Except as set forth in the Prospectus, no officer,
director or stockholder of the Company, and no affiliate or associate (as these
terms are defined in the Rules and Regulations) of any of the foregoing persons
or entities, has or has had, either directly or indirectly, (i) an interest in
any person or entity which (A) furnishes or sells services or products which are
furnished or sold or are proposed to be furnished or sold by the Company, or (B)
purchases from or sells or furnishes to the Company any goods or services, or
(ii) a beneficial interest in any contract or agreement to which the Company is
a party or by which the Company may be bound. Except as set forth in the
Prospectus under "Certain Transactions," there are no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among the Company and
any officer, director or any person listed in the "Principal Stockholders"
section of the Prospectus or any affiliate or associate of any of the foregoing
persons or entities.
10
(cc) The minute books of the Company have been made available to the
Underwriters, contain a complete summary of all meetings and actions of the
directors and stockholders of the Company since the time of its incorporation,
and reflect all transactions referred to in such minutes accurately in all
respects.
(dd) Except and to the extent described in the Prospectus, no holder of
any securities of the Company or of any options, warrants or other convertible
or exchangeable securities of the Company has the right to include any
securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company or to require the Company to
file a registration statement. No person or entity holds any anti-dilution
rights with respect to any securities of the Company.
(ee) Any certificate signed by any officer of the Company and delivered to
the Representatives or to Underwriters' Counsel (as defined in Section 5(d)
herein), shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
(ff) The Company has as of the effective date of the Registration
Statement (i) entered into employment agreements with ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
Warner ▇. ▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, in the forms filed as
Exhibits to the Registration Statement on terms and conditions reasonably
satisfactory to the Representatives and (ii) purchased "key-man" life insurance
on ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇, of which the Company is the sole
beneficiary, on terms and conditions reasonably satisfactory to the
Representatives.
(gg) The Company has entered into a warrant agreement, substantially in
the form filed as Exhibit __ to the Registration Statement (the "Warrant
Agreement"), with Atlas Stock Transfer Corporation, in form and substance
satisfactory to the Representatives, with respect to the Redeemable Warrants
and providing for the payment of warrant solicitation fees contemplated
therein. The Warrant Agreement has been duly and validly authorized by the
Company and, assuming due execution by the parties thereto other than the
Company, constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting the enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as obligations to
indemnify or contribute to losses may be limited by applicable law).
(hh) The Company has filed a Form 8-A with the Commission providing for
the registration under the Exchange Act of the Securities and such Form 8-A has
been declared effective by the Commission.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter
agrees to purchase from the Company, at a price equal to $_____ per Unit [90%
of the public offering price], that number of Firm Units as set forth
11
in Schedule A opposite the name of such Underwriter, subject to adjustment as
the Representatives in their sole discretion shall make to eliminate any sales
or purchases of fractional shares, plus any additional number of Firm Units
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section [12] hereof.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters to purchase all or any part of the Option Units at a price equal
to $______ per Unit [90% of the public offering price]. The option granted
hereby will expire forty-five (45) days after (i) the date the Registration
Statement becomes effective, if the Company has elected not to rely on Rule
430A under the Rules and Regulations, or (ii) the date of this Agreement if the
Company has elected to rely upon Rule 430A under the Rules and Regulations, and
may be exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Firm Units upon notice by the Representatives to the
Company setting forth the number of Option Units as to which the Underwriters
are then exercising the option and the time and date of payment and delivery
for any such Option Units. Any such time and date of delivery (an "Option
Closing Date") shall be determined by the Representatives, but shall not be
later than seven (7) full business days after the exercise of said option, nor
in any event prior to the Closing Date, unless otherwise agreed upon by the
Representatives and the Company. Nothing herein contained shall obligate the
Underwriters to exercise the option granted hereby. No Option Units shall be
delivered unless the Firm Units shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates for,
the Firm Units shall be made at the offices of ▇▇▇▇▇ at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed
upon by the Representatives and the Company. Such delivery and payment shall be
made at 10:00 a.m. (New York City time) on _________, 2000 or at such other
time and date as shall be agreed upon by the Representatives and the Company
but not less than three (3) nor more than seven (7) full business days after
the effective date of the Registration Statement (such time and date of payment
and delivery being herein called the "Closing Date"). In addition, in the event
that any or all of the Option Units are purchased by the Underwriters, payment
of the purchase price for, and delivery of certificates for, such Option Units
shall be made at the above mentioned office of the ▇▇▇▇▇ or at such other place
as shall be agreed upon by the Representatives and the Company on each Option
Closing Date as specified in the notice from the Representatives to the
Company. Delivery of the certificates for the Firm Units and the Option Units,
if any, shall be made to the Underwriters against payment by the Underwriters
of the purchase price for the Firm Units and the Option Units, if any, to the
order of the Company by New York Clearing House funds. Certificates for the
Firm Units and the Option Units, if any, shall be in definitive, fully
registered form, shall bear no restrictive legends and shall be in such
denominations and registered in such names as the Underwriters may request in
writing at least two (2) business days prior to the Closing Date or the
relevant Option Closing Date, as the case may be. The certificates for the Firm
Units and the Option Units, if any, shall be made available to the
Representatives at such offices or such other place as the Representatives may
designate for inspection, checking and packaging no later than 9:30 a.m. on the
last business day prior to the Closing Date or the relevant Option Closing
Date, as the case may be.
12
(d) On the Closing Date, the Company shall issue and sell to the
Representatives or their designees the Representatives' Warrants for an
aggregate purchase price of $.0001 per warrant, which Representatives' Warrants
shall entitle the holders thereof to purchase an aggregate of an additional
400,000 Units. The Representatives' Warrants shall be exercisable for a period
of forty-eight (48) months commencing twelve (12) months from the Effective
Date at a price equaling one hundred and twenty percent (120%) of the initial
public offering price of the Units. The Representatives' Underlying Warrants
are identical to the Redeemable Warrants, except they are not redeemable. The
Representatives' Warrant Agreement and the form of the certificates for the
Representatives' Warrant shall be substantially in the form filed as Exhibit
_____ to the Registration Statement. Payment for the Representatives' Warrants
shall be made on the Closing Date.
3. Public Offering of the Units. As soon after the Registration Statement
becomes effective as the Representatives deem advisable, the Underwriters shall
make a public offering of the Firm Units and such of the Option Units as the
Representatives may determine (other than to residents of or in any
jurisdiction in which qualification of the Units is required and has not become
effective) at the price and upon the other terms set forth in the Prospectus.
The Representatives may from time to time increase or decrease the public
offering price after distribution of the Units has been completed to such
extent as the Representatives, in their sole discretion, deem advisable. The
Underwriters may enter into one or more agreements as the Underwriters, in
their sole discretion, deem advisable with one or more broker-dealers who shall
act as dealers in connection with such public offering.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with the Underwriters as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable and will not at any time, whether before or after the effective
date of the Registration Statement, file any amendment to the Registration
Statement or supplement to the Prospectus or file any document under the Act or
the Exchange Act before termination of the offering of the Securities to the
public by the Underwriters of which the Representatives shall not previously
have been advised and furnished with a copy, or to which the Representatives
shall have objected or which is not in compliance with the Act, the Exchange
Act and the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof, the
Company will advise the Representatives and confirm the same in writing, (i)
when the Registration Statement, as amended, becomes effective, when any
post-effective amendment to the Registration Statement becomes effective and,
if the provisions of Rule 430A promulgated under the Act will be relied upon,
when the Prospectus has been filed in accordance with said Rule 430A, (ii) of
the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding the outcome of which may result in the
suspension of the effectiveness of the Registration Statement or any order
preventing or suspending the use of the Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, or the institution of any
proceedings for that purpose, (iii) of the issuance by the Commission or by any
state securities commission of
13
any proceedings for the suspension of the qualification of any of the
Securities for offering or sale in any jurisdiction or of the initiation, or
the threatening, of any proceeding for that purpose, (iv) of the receipt of any
comments from the Commission, and (v) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information. If the Commission or any state
securities regulatory authority shall enter a stop order or suspend such
qualification at any time, the Company will make every effort to obtain
promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representatives) with the Commission, or transmit the
Prospectus by a means reasonably calculated to result in filing the same with
the Commission, pursuant to Rule 424(b)(1) of the Rules and Regulations (or, if
applicable and if consented to by the Representatives, pursuant to Rule
424(b)(4) of the Rules and Regulations) within the time period specified in
Rule 424(b)(1) (or, if applicable and if consented to by the Underwriters, Rule
424(b)(4)).
(d) The Company will give the Representatives notice of its intention to
file or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Representatives in connection with the offering of any of the Securities which
differs from the corresponding prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Rules and
Regulations), and will furnish the Representatives with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement to which the Representatives or ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP,
its counsel ("Underwriters' Counsel"), shall object.
(e) The Company shall endeavor in good faith, in cooperation with the
Representatives, at or prior to the time the Registration Statement becomes
effective, to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as the Representatives may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution contemplated hereby, and shall make such
applications, file such documents and furnish such information as may be
required for such purpose; provided, however, the Company shall not be required
to qualify as a foreign corporation or file a general or limited consent to
service of process in any such jurisdiction. In each jurisdiction where such
qualification shall be effected, the Company will, unless the Representatives
agree that such action is not at the time necessary or advisable, use all
reasonable efforts to file and make such statements or reports at such times as
are or may reasonably be required by the laws of such jurisdiction to continue
such qualification.
(f) During the time when a prospectus is required to be delivered under
the Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act, the Exchange Act and the Rules and
Regulations so far as necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and the
Prospectus, or any amendments or supplements thereto. If, at any time when a
prospectus relating to the Securities is required to be delivered under the
Act, any event shall have occurred as
14
a result of which, in the opinion of counsel for the Company or Underwriters'
Counsel, the Prospectus, as then amended or supplemented, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, or if it is necessary at
any time to amend or supplement the Prospectus to comply with the Act, the
Company will notify the Representatives promptly and prepare and file with the
Commission an appropriate amendment or supplement in accordance with Section 10
of the Act, each such amendment or supplement to be satisfactory to
Underwriters' Counsel and the Company will furnish to the Representatives
copies of such amendment or supplement as soon as available and in such
quantities as the Representatives may request.
(g) As soon as practicable, but in any event not later than forty five
(45) days after the end of the 12-month period beginning on the day after the
end of the fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (ninety (90) days in the event that the end of
such fiscal quarter is the end of the Company's fiscal year), the Company shall
make generally available to its security holders, in the manner specified in
Rule 158(b) of the Rules and Regulations, and to the Representatives, an
earnings statement which will be in the detail required by, and will otherwise
comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the
Rules and Regulations, which statement need not be audited unless required by
the Act, covering a period of at least twelve (12) consecutive months after the
effective date of the Registration Statement.
(h) During a period of seven (7) years after the date hereof, the Company
will furnish to its stockholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly report of earnings and will deliver to the Representatives:
i) concurrently with furnishing such quarterly reports to the
Commission statements of income of the Company for such quarter in the
form furnished to the Company's stockholders and certified by the
Company's principal financial and accounting officer;
ii) concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company as at the end of the
preceding fiscal year, together with statements of operations,
stockholders' equity and cash flows of the Company for such fiscal year,
accompanied by a copy of the report thereon of the Company's independent
certified public accountants;
iii) as soon as they are available, copies of all reports (financial
or other) mailed to stockholders;
iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD
or any securities exchange;
v) every press release and every material news item or article of
interest
15
to the financial community in respect of the Company or its affairs which
was released or prepared by or on behalf of the Company; and
vi) any additional information of a public nature concerning the
Company (and any future subsidiaries) or its business which the
Representatives may request.
During such seven-year period, if the Company has active subsidiaries, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and
will be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(i) The Company will maintain a transfer and warrant agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for the Units, the Common
Stock and the Redeemable Warrants.
(j) The Company will furnish to the Representatives, without charge and at
such place as the Representatives may designate, copies of each Preliminary
Prospectus, the Registration Statement and any pre-effective or post-effective
amendments thereto (one of which will be signed and will include all financial
statements and exhibits), the Prospectus, and all amendments and supplements
thereto, including any prospectus prepared after the effective date of the
Registration Statement, in each case as soon as available and in such
quantities as the Representatives may reasonably request.
(k) On or before the effective date of the Registration Statement, the
Company shall provide the Representatives with originally-executed copies of
duly executed, legally binding and enforceable Lock-Up Agreements which are in
form and substance satisfactory to the Underwriters. On or before the Closing
Date, the Company shall deliver instructions to its transfer agent authorizing
such transfer agent to place appropriate legends on the certificates
representing the securities of the Company subject to the Lock-Up Agreements
and to place appropriate stop transfer orders on the Company's ledgers.
(l) The Company agrees that, for a period of twelve (12) months commencing
on the effective date of the Registration Statement, and except as contemplated
by this Agreement, it and its present and future subsidiaries will not, without
the prior written consent of the Representatives issue, sell, contract or offer
to sell, grant an option for the purchase or sale of, assign, transfer, pledge,
distribute or otherwise dispose of, directly or indirectly, any securities or
any option, right or warrant with respect to any securities for cash at less
than the greater of the initial public offering price of the Units or the fair
market value of such Units, except pursuant to stock options or
Representatives' Warrants issued on the date hereof.
(m) Neither the Company nor any of its officers, directors, stockholders
or affiliates (within the meaning of the Rules and Regulations) will take,
directly or indirectly, any action designed to stabilize or manipulate the
price of any securities of the Company, or which might in the future reasonably
be expected to cause or result in the stabilization or manipulation of the
price of any such securities.
16
(n) The Company shall apply the net proceeds from the sale of the
Securities offered to the public in the manner, and subject to the conditions,
set forth under "Use of Proceeds" in the Prospectus. No portion of the net
proceeds will be used, directly or indirectly, to acquire any securities issued
by the Company.
(o) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, any Form SR
required by Rule 463 under the Act) from time to time under the Act, the
Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents will comply as to form and substance with the applicable requirements
under the Act, the Exchange Act and the Rules and Regulations.
(p) The Company shall furnish to the Representatives as early as
practicable prior to each of the date hereof, the Closing Date and each Option
Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date hereof, the Closing Date or the relevant Option Closing
Date, as the case may be) which have been read by the Company's independent
public accountants, as stated in their letters to be furnished pursuant to
Section 7(k) hereof.
(q) The Company shall cause the Units, the Common Stock and the Redeemable
Warrants to be quoted on the Nasdaq National Market and, for a period of seven
(7) years from the date hereof, use its best efforts to maintain the Nasdaq
National Market quotation of the Units, the Common Stock and the Redeemable
Warrants to the extent outstanding.
(r) For a period of five (5) years from the Closing Date, the Company
shall at the request of the Representatives, furnish or cause to be furnished
to the Representatives and at the Company's sole expense, (i) daily
consolidated transfer sheets relating to the Units, the Common Stock and the
Redeemable Warrants, and (ii) a list of holders of all of the Company's
securities.
(s) For a period of five (5) years from the Closing Date, the Company
shall, at the Company's sole expense, (i) promptly provide the Underwriters
upon any and all requests of the Underwriters, with a "blue sky trading survey"
for secondary sales of the Company's securities, prepared by counsel to the
Company, and (ii) take all necessary and appropriate actions to further qualify
the Company's securities in all jurisdictions of the United States in order to
permit secondary sales of such securities pursuant to the "blue sky" laws of
those jurisdictions, provided that such jurisdictions do not require the
Company to qualify as a foreign corporation.
(t) As soon as practicable, but in no event more than thirty (30) days
after the effective date of the Registration Statement, the Company agrees to
take all necessary and appropriate actions to be included in the Standard and
Poor's Corporation Descriptions and ▇▇▇▇▇'▇ OTC Manual and to continue such
inclusion for a period of not less than seven (7) years.
(u) Until the completion of the distribution of the Units to the public
and during any period during which a prospectus is required to be delivered,
the Company shall not, without the prior written consent of the Underwriters,
issue, directly or indirectly, any press release or other
17
communication or hold any press conference with respect to the Company or its
activities or the offering contemplated hereby, other than trade releases
issued in the ordinary course of the Company's business consistent with past
practices with respect to the Company's operations.
(v) For a period of five (5) years after the effective date of the
Registration Statement, the Company shall cause one (1) individual selected by
▇▇▇▇▇, subject to the good faith approval of the Company, to be elected to the
Board of Directors of the Company (the "Board"), if requested by ▇▇▇▇▇. In the
event ▇▇▇▇▇ shall not have designated such individual at the time of any
meeting of the Board or such person has not been elected or is unavailable to
serve, the Company shall notify ▇▇▇▇▇ of each meeting of the Board. An
individual selected by ▇▇▇▇▇ shall be permitted to attend all meetings of the
Board and to receive all notices and other correspondence and communications
sent by the Company to members of the Board. The Company shall reimburse
▇▇▇▇▇'▇ designee for his or her out-of-pocket expenses reasonably incurred in
connection with his or her attendance of the Board meetings.
(w) Commencing one year from the date hereof, to pay the Underwriters a
warrant solicitation fee equal to five percent (5%) of the exercise price of
the Redeemable Warrants, payable on the date of the exercise thereof on terms
provided in the Warrant Agreement. The Company will not solicit the exercise of
the Redeemable Warrants through any solicitation agent other than the
Underwriters. The Underwriters will not be entitled to any warrant solicitation
fee unless the Underwriters provides bona fide services in connection with any
warrant solicitation and the investor designates, in writing, that the
Underwriters is entitled to such fee.
(x) For a period equal to the lesser of (i) seven (7) years from the date
hereof, and (ii) the sale to the public of the Representatives' Securities, the
Company will not take any action or actions which may prevent or disqualify the
Company's use of Forms SB-2 or S-1 (or other appropriate form) for the
registration under the Act of the Underwriters' Securities.
(y) For a period of twenty four (24) months after the effective date of
the Registration Statement, the Company shall not restate, amend or alter any
term of any written employment, consulting or similar agreement entered into
between the Company and any officer, director or key employee as of the
effective date of the Registration Statement in a manner which is more
favorable to such officer, director or key employee, without the prior written
consent of the Representatives.
(z) The Company will use its best efforts to maintain the effectiveness of
the Registration Statement for a period of five years after the date hereof.
(aa) For a period of three (3) years following the Effective Date, the
Company, any subsidiaries and any affiliates thereof grant a right of first
refusal to ▇▇▇▇▇ for any sale of securities to be made by the Company, any
affiliates and any subsidiaries.
(bb) For a period of twelve (12) months following the Effective Date, the
Company, any subsidiaries and any affiliates thereof shall not sell or offer
for sale any of their securities for cash at less than the greater of the
initial public offering price of the Units or the then market value of such
Units commencing on the Effective Date and for a period of twelve (12)
18
months following the Effective Date, except pursuant to options of the Company
existing on the Effective Date, without the written consent of the
Representatives, as adjusted for consolidations and stock splits.
5. Payment of Expenses.
(a) The Company hereby agrees to pay (such payment to be made, at the
discretion of the Underwriters, on the Closing Date and any Option Closing Date
(to the extent not paid on the Closing Date or a previous Option Closing Date))
all expenses and fees (other than fees of Underwriters' Counsel) incident to
the performance of the obligations of the Company under this Agreement, the
Representatives' Warrant Agreement and the Warrant Agreement, including,
without limitation, (i) the fees and expenses of accountants and counsel for
the Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing, (including mailing and handling charges)
filing, delivery and mailing (including the payment of postage, overnight
delivery or courier charges with respect thereto) of the Registration Statement
and the Prospectus and any amendments and supplements thereto and the printing,
mailing (including the payment of postage, overnight delivery or courier
charges with respect thereto) and delivery of this Agreement, the
Representatives' Warrant Agreement, the Warrant Agreement, and agreements with
selected dealers, and related documents, including the cost of all copies
thereof and of each Preliminary Prospectus and of the Prospectus and any
amendments thereof or supplements thereto supplied to the Underwriters and such
dealers as the Underwriters may request, in such quantities as the Underwriters
may reasonably request, (iii) the printing, engraving, issuance and delivery of
the Securities, including transfer taxes, if any, (iv) the qualification of the
Securities under state or foreign securities or "blue sky" laws and
determination of the status of such securities under legal investment laws,
including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum," the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and disbursements and fees of counsel in connection therewith,
(v) advertising costs and expenses, including, but not limited to costs and
expenses in connection with "road shows," information meetings and
presentations, bound volumes and prospectus memorabilia and "tombstone"
advertisement expenses, (vi) costs and expenses in connection with due
diligence investigations, including, but not limited to, the fees of any
independent counsel or consultants, (vii) fees and expenses of a transfer and
warrant agent and registrar for the Securities, (viii) applications for
assignments of a rating of the Securities by qualified rating agencies, (ix)
the fees payable to the Commission and the NASD, and (x) the fees and expenses
incurred in connection with the quotation of the Securities on the Nasdaq
National Market and/or any other exchange.
(b) If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 6, Section 10(a) or Section 12 hereof, the Company
shall reimburse and indemnify the Underwriters for all of their actual
out-of-pocket expenses, including the fees and disbursements of Underwriters'
Counsel, less any amounts already paid pursuant to Section 5(c) hereof.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to Section 4(a) hereof, it will pay to the Underwriters on the Closing
Date by certified or bank cashier's check, or, at the election of the
Underwriters, by deduction from the proceeds of the offering of the Firm Units,
a non-accountable expense allowance equal to three percent (3%) of the
19
gross proceeds received by the Company from the sale of the Firm Units, fifty
thousand dollars ($50,000) of which has been paid to date by the Company. In
the event the Underwriters elect to exercise the over-allotment option
described in Section 2(b) hereof, the Company further agrees to pay to the
Underwriters on each Option Closing Date, by certified or bank cashier's check,
or, at the Underwriters' election, by deduction from the proceeds of the Option
Units purchased on such Option Closing Date, a non-accountable expense
allowance equal to three percent (3%) of the gross proceeds received by the
Company from the sale of such Option Units.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any, as if they had
been made on and as of the Closing Date and each Option Closing Date, as the
case may be; the accuracy on and as of the Closing Date and each Option Closing
Date, if any, of the statements of officers of the Company made pursuant to the
provisions hereof; the performance by the Company on and as of the Closing Date
and each Option Closing Date, if any, of its covenants and obligations
hereunder; and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
12:00 p.m., New York time, on the date of this Agreement or such later date and
time as shall be consented to in writing by the Representatives, and, at the
Closing Date and each Option Closing Date, if any, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of Underwriters' Counsel. If the Company has elected to rely upon
Rule 430A of the Rules and Regulations, the price of the Units and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to the Closing Date the Company
shall have provided evidence satisfactory to the Representatives of such timely
filing, or a post-effective amendment providing such information shall have
been promptly filed and declared effective in accordance with the requirements
of Rule 430A of the Rules and Regulations.
(b) The Representatives shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representatives' opinion, is material, or omits to state
a fact which, in the Representatives' opinion, is material and is required to
be stated therein or is necessary to make the statements therein, in light of
the circumstances in which they were made not misleading, or that the
Prospectus, or any supplement thereto, contains an untrue statement of fact
which, in the Representatives' opinion, is material, or omits to state a fact
which, in the Representatives' opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(c) On or prior to the Closing Date, the Representatives shall have
received from Underwriters' Counsel such opinion or opinions with respect to
the organization of the Company, the validity of the Securities, the
Registration Statement, the Prospectus and such other
20
related matters as the Representatives may request and Underwriters' Counsel
shall have received such papers and information as they may request in order to
enable them to pass upon such matters.
(d) The Underwriters shall have received the favorable opinion of Stairs
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, dated the Closing Date,
addressed to the Underwriters, in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
i) the Company (A) has been duly organized and is a validly existing
corporation in good standing under the laws of its jurisdiction of
incorporation, (B) is duly qualified and licensed and in good standing as
a foreign corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations requires such
qualification or licensing, and (C) has all requisite power and authority
(corporate and other) and has obtained any and all necessary
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and
has been doing business in compliance in with all such authorizations,
approvals, orders, licenses, certificates and permits obtained by it from
governmental or regulatory officials and agencies and all federal, state,
local and foreign laws, rules and regulations to which it is subject; and
the Company has not received any notice of proceedings relating to the
revocation or modification of any such authorization, approval, order,
license, certificate, franchise or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would materially and adversely affect the condition, financial or
otherwise, or the earnings, prospects, stockholders' equity, value,
operations, properties, business or results of operations of the Company.
The disclosure in the Registration Statement concerning the effects of
federal, state, local and foreign laws, rules and regulations on the
Company's business as currently conducted and as contemplated is correct
in all respects and does not omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading;
ii) the Company does not own, directly or indirectly, an interest in
any corporation, partnership, joint venture, trust or other business
entity;
iii) the Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and any amendment or
supplement thereto, under "Capitalization" and "Description of Securities"
and except as set forth in the Prospectus, the Company is not a party to
or bound by any instrument, agreement or other arrangement providing for
it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Representatives' Warrant
Agreement and the Warrant Agreement and as described in the Prospectus.
The Securities and all other securities issued or issuable by the Company
conform, or when issued and paid for, will conform, in all respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus. All issued and
21
outstanding securities of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; the holders thereof
have no rights of rescission with respect thereto and are not subject to
personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any
holders of any security of the Company or any similar contractual right
granted by the Company. The Securities to be sold by the Company hereunder
and under the Representatives' Warrant Agreement and the Warrant Agreement
are not and will not be subject to any preemptive or other similar rights
of any stockholder, have been duly authorized and, when issued, paid for
and delivered in accordance with the terms hereof and thereof, will be
validly issued, fully paid and non-assessable and conform to the
descriptions thereof contained in the Prospectus; the holders thereof will
not be subject to any liability solely as such holders; all corporate
action required to be taken for the authorization, issue and sale of the
Securities has been duly and validly taken; and the certificates
representing the Securities are in due and proper form. The Redeemable
Warrants and Representatives' Warrants constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and
payment therefor, the number and type of securities of the Company called
for thereby. Upon the issuance and delivery pursuant to this Agreement,
the Representatives' Warrant Agreement and the Warrant Agreement of the
Securities to be sold by the Company hereunder and thereunder, the
Underwriters will acquire good and marketable title to such Securities,
free and clear of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever. No
transfer tax is payable by or on behalf of the Underwriters in connection
with (A) the issuance by the Company of the Securities, (B) the purchase
by the Underwriters of the Securities from the Company, (D) the
consummation by the Company of any of its obligations under this
Agreement, the Representatives' Warrant Agreement or the Warrant
Agreement, or (E) resales of the Securities in connection with the
distribution contemplated hereby;
iv) the Registration Statement is effective under the Act, and, if
applicable, filing of all pricing information has been timely made in the
appropriate form under Rule 430A, and no stop order suspending the use of
the Preliminary Prospectus, the Registration Statement or the Prospectus
or any part of any thereof or suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending, threatened or, to the counsel's
knowledge, contemplated under the Act;
v) each of the Preliminary Prospectus, the Registration Statement,
and the Prospectus and any amendments or supplements thereto (other than
the financial statements and schedules and other financial and statistical
data included therein, as to which no opinion need be rendered) comply as
to form in all material respects with the requirements of the Act and the
Rules and Regulations;
vi) (A) there are no agreements, contracts or other documents
required by the Act to be described in the Registration Statement (or
required to be filed
22
under the Exchange Act if upon such filing they would be incorporated, in
whole or in part, by reference therein) and the Prospectus and filed as
exhibits to the Registration Statement other than those described in the
Registration Statement and the Prospectus and filed as exhibits thereto,
and the exhibits which have been filed are correct copies of the documents
of which they purport to be copies; (B) the descriptions in the
Registration Statement and the Prospectus and any supplement or amendment
thereto of agreements, contracts and other documents to which the Company
is a party or by which it is bound are accurate and fairly represent the
information required to be shown by Form S-1; (C) there is no action,
suit, proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding (including, without limitation, those pertaining
to environmental or similar matters), domestic or foreign, pending or
threatened against (or circumstances that may give rise to the same) or
involving the properties or business of, the Company which (I) is required
to be disclosed in the Registration Statement which is not so disclosed
(and such proceedings as are summarized in the Registration Statement are
accurately summarized in all respects), or (II) questions the validity of
the capital stock of the Company or of this Agreement, the
Representatives' Warrant Agreement or the Warrant Agreement or of any
action taken or to be taken by the Company pursuant to or in connection
with any of the foregoing; (D) no statute or regulation or legal or
governmental proceeding required to be described in the Prospectus is not
described as required; and (E) there is no action, suit or proceeding
pending or threatened against or affecting the Company before any court,
arbitrator or governmental body, agency or official (or any basis thereof
known to such counsel) in which there is a reasonable possibility of a
decision which may result in a material adverse change in the condition,
financial or otherwise, or the earnings, prospects, stockholders' equity,
value, operation, properties, business or results of operations of the
Company, which could adversely affect the present or prospective ability
of the Company to perform its obligations under this Agreement, the
Representatives' Warrant Agreement or the Warrant Agreement or which in
any manner draws into question the validity or enforceability of this
Agreement, the Representatives' Warrant Agreement or the Warrant
Agreement;
vii) the Company has full legal right, power and authority to enter
into each of this Agreement, the Representatives' Warrant Agreement and
the Warrant Agreement and to consummate the transactions provided for
herein and therein; and each of this Agreement, the Representatives'
Warrant Agreement and the Warrant Agreement has been duly authorized,
executed and delivered by the Company. Each of this Agreement, the
Representatives' Warrant Agreement and the Warrant Agreement, assuming due
authorization, execution and delivery by each other party thereto,
constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating
to or affecting the enforcement of creditors' rights and the application
of equitable principles in any action, legal or equitable, and except as
obligations to indemnify or contribute to losses may be limited by
applicable law). None of the Company's execution or
23
delivery of this Agreement, the Representatives' Warrant Agreement and the
Warrant Agreement, its performance hereunder and thereunder, its
consummation of the transactions contemplated herein and therein, or the
conduct of its business as described in the Registration Statement and the
Prospectus and any amendments or supplements thereto, conflicts with or
will conflict with or results or will result in any breach or violation of
any of the terms or provisions of, or constitutes or will constitute a
default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company pursuant to the terms of (A) the
certificate of incorporation or bylaws of the Company, (B) any license,
contract, indenture, mortgage, lease, deed of trust, voting trust
agreement, stockholders' agreement, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for borrowed money,
or any other agreement or instrument to which the Company is a party or by
which it is or may be bound or to which its properties or assets (tangible
or intangible) are or may be subject, (C) any statute applicable to the
Company or (D) any judgment, decree, order, rule or regulation applicable
to the Company of any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body (including, without
limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or any
of their activities or properties;
viii) no consent, approval, authorization or order of, and no filing
with, any arbitrator, court, regulatory body, administrative agency,
government agency or other body, domestic or foreign (other than such as
may be required under "blue sky" laws and the rules of the NASD, as to
which no opinion need be rendered), is required in connection with the
issuance of the Securities pursuant to the Prospectus, the Registration
Statement, this Agreement, the Representatives' Warrant Agreement and the
Warrant Agreement, or the performance of this Agreement, the
Representatives' Warrant Agreement and the Warrant Agreement and the
transactions contemplated hereby and thereby;
ix) the properties and business of the Company conform to the
description thereof contained in the Registration Statement and the
Prospectus; and the Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property
stated in the Prospectus to be owned or leased by it, in each case free
and clear of all liens, charges, claims, encumbrances, pledges, security
interests, defects or other restrictions or equities of any kind
whatsoever, other than those referred to in the Prospectus and liens for
taxes not yet due and payable;
x) the Company is not in breach of, or in default under, any term or
provision of any license, contract, indenture, mortgage, installment sale
agreement, lease, deed of trust, voting trust agreement, stockholders'
agreement, partnership agreement, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for borrowed money,
or any other agreement or instrument
24
to which the Company is a party or by which it is or may be bound or to
which its property or assets (tangible or intangible) are or may be
subject; and the Company is not in violation of any term or provision of
(A) its certificate of incorporation or by-laws, (B) any authorization,
approval, order, license, certificate, franchise or permit of any
governmental or regulatory official or body, or (C) any judgement, decree,
order, statute, rule or regulation to which it is subject;
xi) the Units, the Common Stock and the Redeemable Warrants have been
accepted for quotation on the Nasdaq National Market;
xi) the statements in the Prospectus under "Prospectus Summary,"
"Risk Factors," "Business," "Management," "Principal Stockholders,"
"Related Party Transactions," "Shares Eligible For Future Sale," and
"Description of Securities" have been reviewed by such counsel, and
insofar as they refer to statements of law, descriptions of statutes,
licenses, rules or regulations or legal conclusions, are correct in all
material respects;
xii) the persons listed under the caption "Principal Stockholders" in
the Prospectus are the respective "beneficial owners" (as such phrase is
defined in Rule 13d-3 under the Exchange Act) of the securities set forth
opposite their respective names thereunder as and to the extent set forth
therein;
xiv) the Company owns or possess, free and clear of all liens or
encumbrances and right thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, tradenames, patents, patent applications and licenses
necessary to conduct its business (including without limitation any such
licenses or rights described in the Prospectus as being owned or possessed
by the Company) and there is no claim or action by any person pertaining
to, or proceeding, pending or threatened, which challenges the exclusive
rights of the Company with respect to any trademarks, service marks,
copyrights, service names, trade names, patents, patent applications and
licenses used in the conduct of the Company's business (including, without
limitation, any such licenses or rights described in the Prospectus as
being owned or possessed by the Company);
xv) neither the Company nor any of their respective directors,
officers, stockholders, employees, agents or any other person acting on
behalf of the Company has, directly or indirectly, given or agreed to give
any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or any official or employee
of any governmental agency or instrumentality of any government (domestic
or foreign) or any political party or candidate for office (domestic or
foreign) or other person who was, is or may be in a position to help or
hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) which (A) might subject the Company or any
such person to any damage or penalty in any civil, criminal or
governmental litigation or
25
proceeding (domestic or foreign), (B) if not given in the past, might have
had material and adverse effect on the condition, financial or otherwise,
or the earnings, prospects, stockholders' equity, value, operations,
properties, business or results of operations of the Company taken as a
whole, or (C) if not continued in the future, might materially and
adversely affect the condition, financial or otherwise, or the earnings,
prospects, stockholders' equity, value, operations, properties, business
or results of operations of the Company taken as a whole;
xvi) there are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities
hereunder or financial consulting arrangement or any other arrangements,
agreements, understandings, payments or issuances that may affect the
Representatives' compensation, as determined by the NASD;
xvii) the minute books of the Company contain a complete summary of
all meetings and actions of the directors and stockholders of the Company
since the time of its incorporation and reflect all transactions referred
to in such minutes accurately in all material respects;
xviii) no person, corporation, trust, partnership, association or
other entity has the right to include and/or register any securities of
the Company in the Registration Statement, require the Company to file any
registration statement or, if filed, to include any security in such
registration statement;
xix) assuming due authorization, execution and delivery by the
parties thereto, the Lock-Up Agreements are legal, valid and binding
obligations of the parties thereto, enforceable against such parties and
any subsequent holder of the securities subject thereto in accordance with
their terms;
xx) except as described in the Prospectus, the Company does not (A)
maintain, sponsor or contribute to an ERISA Plans, (B) maintain or
contribute, now or at any time previously, to a defined benefit plan, as
defined in Section 3(35) of ERISA, and (C) has never completely or
partially withdrawn from a "multiemployer plan"; and
xxi) none of the Company or an of its affiliates shall be subject to
the requirements of or shall be deemed an "Investment Company," pursuant
to and as defined under, respectively, the Investment Company Act.
Such counsel shall state that such counsel has participated in conferences
with officers and other representatives of the Company and representatives of
the independent public accountants for the Company, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Preliminary Prospectus, the Registration
Statement, the Prospectus and related matters and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of
26
the statements contained in the Preliminary Prospectus, the Registration
Statement or the Prospectus, on the basis of the foregoing, no facts have come
to the attention of such counsel which lead them to believe that either the
Registration Statement or any amendment thereto, at the time such Registration
Statement or amendment became effective, or the Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, as of the date of the
Preliminary Prospectus and the Prospectus, and as of the date of such opinion,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading
(it being understood that such counsel need express no opinion with respect to
the financial statements and schedules and other financial and statistical data
included in the Preliminary Prospectus, the Registration Statement or the
Prospectus, or any supplements or amendments thereto).
In rendering such opinion, such counsel may rely (a) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; and (b) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company and
certificates or other written statements of officers of departments of
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel, if requested. Such
opinion shall not state that it is to be governed or qualified by, or that it
is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991) or any comparable state
accord. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel is in form satisfactory to such counsel and
that the Underwriters and they are justified in relying thereon. Such opinion
shall also state that Underwriters' Counsel is entitled to rely thereon.
(e) The Underwriters shall have received the favorable opinion of ▇▇▇▇▇▇▇
Berlin Shereff ▇▇▇▇▇▇▇▇ LLP, regulatory counsel to the Company, dated the
Closing Date, addressed to the Underwriters, in form and substance satisfactory
to Underwriters' Counsel. In addition, at each Option Closing Date, if any, the
Underwriters shall have received the favorable opinions of Stairs ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, and ▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇
LLP, regulatory counsel to the Company, dated the relevant Option Closing Date,
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel confirming, as of the Option Closing Date, the statements
made by Stairs ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇
LLP, in their respective opinions delivered at the Closing Date.
(f) On or prior to each of the Closing Date and each Option Closing Date,
if any, Underwriters' Counsel shall have been furnished with such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in Section 6(c)
hereof, or in order to evidence the accuracy, completeness or satisfaction of
any of the representations, warranties or conditions of the Company herein
contained.
27
(g) Prior to the Closing Date and each Option Closing Date, if any, (i)
there shall have been no material adverse change or development involving a
prospective adverse change in the condition, financial or otherwise, or the
earnings, stockholders' equity, value, operations, properties, prospects,
business or results of operations of the Company, whether or not in the
ordinary course of business, from the latest dates as of which such matters are
set forth in the Registration Statement and the Prospectus; (ii) there shall
have been no transaction, not in the ordinary course of business, entered into
by the Company from the latest date as of which the financial condition of the
Company is set forth in the Registration Statement and the Prospectus; (iii)
the Company shall not be in default under any provision of any instrument
relating to any outstanding indebtedness; (iv) the Company shall not have
issued any securities (other than the Securities) or declared or paid any
dividend or made any distribution in respect of its capital stock of any class
and there shall not have been any change in the capital stock, debt (long or
short term) or liabilities or obligations of the Company (contingent or
otherwise) from the latest dates as of which such matters are set forth in the
Registration Statement and the Prospectus; (v) no material amount of the assets
of the Company shall have been pledged or mortgaged, except as set forth in the
Registration Statement and the Prospectus; (vi) no action, suit, proceeding,
inquiry, arbitration, investigation, litigation or governmental or other
proceeding, domestic or foreign, shall be pending or threatened (or
circumstances giving rise to same) against the Company or affecting any of its
properties or business before or by any court or federal, state or foreign
commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may materially and adversely affect the condition,
financial or otherwise, or the earnings, stockholders' equity, value,
operations, properties, business or results of operations of the Company,
except as set forth in the Registration Statement and Prospectus; and (vii) no
stop order shall have been issued under the Act with respect to the
Registration Statement and no proceedings therefor shall have been initiated,
threatened or contemplated by the Commission.
(h) At the Closing Date and each Option Closing Date, if any, the
Representatives shall have received a certificate of the Company signed by the
principal executive officer and by the chief financial or chief accounting
officer of the Company, dated the Closing Date or the relevant Option Closing
Date, as the case may be, to the effect that each of such persons has carefully
examined the Registration Statement, the Prospectus and this Agreement, and
that:
i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date
or the Option Closing Date, as the case may be, and the Company has
complied with all agreements and covenants and satisfied all conditions
contained in this Agreement on its part to be performed or satisfied at or
prior to such Closing Date or Option Closing Date, as the case may be;
ii) No stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the best of each of
such person's knowledge, are contemplated or threatened under the Act;
iii) The Registration Statement and the Prospectus and, if any, each
amendment and each supplement thereto contain all statements and
information required to be included therein, and none of the Registration
Statement, the Prospectus or any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading and neither the Preliminary Prospectus nor any supplement
thereto included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were
made, not misleading; and
iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) the Company
has not incurred any material liabilities or obligations, direct or
contingent; (B) the Company has not paid or declared any dividends or
other distributions on its capital stock; (C) the Company has not entered
into any transactions not in the ordinary course of business; (D) there
has not been any change in the capital stock or long-term debt or any
increase in the short-term borrowings (other than any increase in
short-term borrowings in the ordinary course of business) of the Company;
(E) the Company has not sustained any material loss or damage to its
property or assets, whether or not insured; (F) there is no litigation
which is pending or threatened (or circumstances giving rise to same)
against the Company or any affiliate (within the meaning of the Rules and
Regulations) of the foregoing which is required to be set forth in an
amended or supplemented Prospectus which has not been set forth; and (G)
there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this Section
6(h) are to such documents as amended and supplemented at the date of such
certificate.
(i) By the Closing Date, the Underwriters will have received clearance
from the NASD as to the amount of compensation allowable or payable to the
Underwriters, as described in the Registration Statement.
(j) At the time this Agreement is executed, the Underwriters shall have
received a letter, dated such date, addressed to the Underwriters and in form
and substance satisfactory in all respects (including the non-material nature
of the changes or decreases, if any, referred to in clause (iii) below) to the
Underwriters and Underwriters' Counsel, from ▇▇▇▇▇▇ & Company, L.L.C:
i) confirming that they are independent certified public accountants
with respect to the Company within the meaning of the Act and the Rules
and Regulations;
ii) stating that it is their opinion that the financial statements
and supporting schedules of the Company included in the Registration
Statement comply as to form in all material respects with the applicable
accounting
29
requirements of the Act and the Rules and Regulations and that the
Underwriters may rely upon the opinion of ▇▇▇▇▇▇ & Company, L.L.C. with
respect to such financial statements and supporting schedules included in
the Registration Statement;
iii) stating that, on the basis of a limited review which included a
reading of the latest unaudited interim financial statements of the
Company, a reading of the latest available minutes of the stockholders and
board of directors and the various committees of the board of directors of
the Company, consultations with officers and other employees of the
Company responsible for financial and accounting matters and other
specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that (A) the pro forma financial
information contained in the Registration Statement and Prospectus does
not company as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations or is not
fairly presented in conformity with generally accepted accounting
principles applied on basis consistent with that that of the audited
financial statements of the Company, (B) the unaudited financial
statements and supporting schedules of the Company included in the
Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Rules and
Regulations or are not fairly presented in conformity with generally
accepted accounting principles applied on a basis consistent with that of
the audited financial statements of the Company included in the
Registration Statement, or (C) at a specified date nor more than five (5)
days prior to the effective date of the Registration Statement, there has
been any change in the capital stock or long-term debt of the Company, or
any decrease in the stockholders' equity or net current assets or net
assets of the Company as compared with amounts shown in the ______, 1999
balance sheet included in the Registration Statement, other than as set
forth in or contemplated by the Registration Statement, or, if there was
any change or decrease, setting forth the amount of such change or
decrease, and (C) during the period from ______, 1999 to a specified date
not more than five (5) days prior to the effective date of the
Registration Statement, there was any decrease in net revenues, net
earnings or net earnings per share of Common Stock, in each case as
compared with the corresponding period beginning _______, 1998, other than
as set forth in or contemplated by the Registration Statement, or, if
there was any such decrease, setting forth the amount of such decrease;
iv) setting forth, at a date not later than five (5) days prior to
the effective date of the Registration Statement, the amount of
liabilities of the Company (including a break-down of commercial paper and
notes payable to banks);
v) stating that they have compared specific dollar amounts, numbers
of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the
Prospectus, in each case to the extent that such amounts, numbers,
percentages, statements and information
30
may be derived from the general accounting records, including work sheets,
of the Company and excluding any questions requiring an interpretation by
legal counsel, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which procedures do
not constitute an audit in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in agreement; and
vi) statements as to such other matters incident to the transaction
contemplated hereby as the Underwriters may request.
(k) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from ▇▇▇▇▇▇ & Company, L.L.C. a letter, dated
as of the Closing Date or the relevant Option Closing Date, as the case may be,
to the effect that (i) it reaffirms the statements made in the letter furnished
pursuant to Section 6(j), (ii) if the Company has elected to rely on Rule 430A
of the Rules and Regulations, to the further effect that ▇▇▇▇▇▇ & Company,
L.L.C. has carried out procedures as specified in clause (v) of Section 6(j)
hereof with respect to certain amounts, percentages and financial information
as specified by the Underwriters and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (v).
(l) On each of Closing Date and Option Closing Date, if any, there shall
have been duly tendered to the Representatives the appropriate number of
Securities.
(m) No order suspending the sale of the Securities in any jurisdiction
designated by the Underwriters pursuant to Section 4(e) hereof shall have been
issued on either the Closing Date or the Option Closing Date, if any, and no
proceedings for that purpose shall have been instituted or shall be
contemplated.
(n) On or before the effective date of the Registration Statement, the
Company shall have executed and delivered to the Representatives the
Representatives' Warrant Agreement, substantially in the form filed as Exhibit
____ to the Registration Statement. On or before the Closing Date, the Company
shall have executed and delivered to the Representatives, the Representatives'
Warrants in such denominations and to such designees as shall have been
provided to the Company.
(o) On or before Closing Date, the Securities shall have been duly
approved for quotation on the Nasdaq National Market, subject to official
notice of issuance.
(p) On or before Closing Date, there shall have been delivered to the
Underwriters all of the Lock-Up Agreements, in form and substance satisfactory
to Underwriters' Counsel.
(q) On or before the effective date of the Registration Statement, the
Company and American Stock Transfer & Trust Company shall have executed and
delivered to the Underwriters the Warrant Agreement, substantially in the form
filed as Exhibit ____ to the Registration Statement.
31
(r) At least two (2) full business days prior to the date hereof, the
Closing Date and each Option Closing Date, if any, the Company shall have
delivered to the Underwriters the unaudited interim financial statements
required to be so delivered pursuant to Section 4(p) of this Agreement.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or at any Option Closing Date, as the
case may be, is not so fulfilled, the Underwriters may terminate this Agreement
or, if the Underwriters so elect, they may waive any such conditions which have
not been fulfilled or extend the time for their fulfillment.
7. Indemnification
(a) The Company agrees to indemnify and hold harmless each Underwriter
(for purposes of this Section 7, "Underwriter" shall include the officers,
directors, partners, employees, agents and counsel of the Underwriters,
including specifically each person who may be substituted for an Underwriter as
provided in Section 11 hereof), and each person, if any, who controls the
Underwriter ("controlling person") within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions,
proceedings, investigations, inquiries and suits in respect thereof),
whatsoever (including but not limited to any and all costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
such action, proceeding, investigation, inquiry or suit, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon (A) any untrue
statement or alleged untrue statement of a material fact contained (i) in any
Preliminary Prospectus, the Registration Statement or the Prospectus (as from
time to time amended and supplemented); (ii) in any post-effective amendment or
amendments or any new registration statement and prospectus in which is
included securities of the Company issued or issuable upon exercise of the
Securities; or (iii) in any application or other document or written
communication (in this Section 7, collectively referred to as "applications")
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Securities under the
securities laws thereof or filed with the Commission, any state securities
commission or agency, the NASD, Nasdaq or any securities exchange; (B) the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of the Prospectus, in light of the circumstances in which they were made); or
(C) any breach of any representation, warranty, covenant or agreement of the
Company contained herein or in any certificate by or on behalf of the Company
or any of its officers delivered pursuant hereto, unless, in the case of clause
(A) or (B) above, such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company with respect to
any Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or any Prospectus, or any
amendment thereof or supplement thereto, or in any application, as the case may
be. The indemnity agreement in this Section 7(a) shall be in addition to any
liability which the Company may have at common law or otherwise.
32
(b) Each of the Underwriters agree severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors and officers who
has signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act, to the same extent as the foregoing
indemnity from the Company to each Underwriter but only with respect to
statements or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in strict conformity
with, written information furnished to the Company with respect to any
Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof
or supplement thereto or in any such application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or the Prospectus directly relating to
the transactions effected by the Underwriter in connection with the offering
contemplated hereby. The Company acknowledges that the statements with respect
to the public offering of the Securities set forth under the heading
"Underwriting" and the stabilization legend in the Prospectus have been
furnished by the Underwriter expressly for use therein and constitute the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in any Preliminary Prospectus, the Registration Statement or the
Prospectus. The indemnity agreement in this Section 7(b) shall be in addition
to any liability which the Underwriter may have at common law or otherwise.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against one or more indemnifying parties
under this Section 7, notify each party against whom indemnification is to be
sought in writing of the commencement thereof (but the failure to so notify an
indemnifying party shall not relieve it from any liability which it may have
under this Section 7 (except to the extent that it has been prejudiced in any
material respect by such failure) or from any liability which it may have
otherwise). In case any such action, investigation, inquiry, suit or proceeding
is brought against any indemnified party, and it notifies an indemnifying party
or parties of the commencement thereof, the indemnifying party or parties will
be entitled to participate therein, and to the extent it or they may elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party. Notwithstanding
the foregoing, an indemnified party shall have the right to employ its own
counsel in any such case but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying parties in connection
with the defense of such action, investigation, inquiry, suit or proceeding at
the expense of the indemnifying party, (ii) the indemnifying parties shall not
have employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party shall have
reasonably concluded that there may be defenses available to it which are
different from or additional to those available to one or all of the
indemnifying parties (in which event the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses of one
additional counsel shall be borne by the indemnifying parties. In no event
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action,
33
investigation, inquiry, suit or proceeding or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle, compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action, investigation, inquiry, suit or proceeding),
unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such claim,
action, investigation, suit or proceeding and (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party. Anything in this Section 7 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its written consent.
(d) In order to provide for just and equitable contribution in any case in
which (i) an indemnified party makes a claim for indemnification pursuant to
this Section 7, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions, investigation, inquiry, suit or proceeding in respect thereof) (A) in
such proportion as is appropriate to reflect the relative benefits received by
each of the contributing parties, on the one hand, and the party to be
indemnified, on the other hand, from the offering of the Securities or (B) if
the allocation provided by clause (A) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (A) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified, on the
other hand, in connection with the statements or omissions that resulted in
such losses, claims, damages, expenses or liabilities, as well as any other
relevant equitable considerations. In any case where the Company is a
contributing party and the Underwriters are the indemnified party, the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Securities (before deducting expenses) bear to the
total underwriting discounts received by the Underwriters hereunder, in each
case as set forth in the table on the cover page of the Prospectus. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or by the Underwriters, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages, expenses or liabilities (or actions,
investigation, inquiry, suit or proceeding in respect thereof) referred to in
the first (1st) sentence of this Section 7(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), the Underwriters shall not
be required to contribute any amount in excess of the underwriting discount
applicable to the Securities purchased by the Underwriter hereunder. No person
guilty of fraudulent misrepresentation (within the meaning of Section 12(f) of
the Act) shall be entitled to
34
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(d), each person, if any, who
controls the Company or the Underwriters within the meaning of the Act, each
officer of the Company who has signed the Registration Statement and director
of the Company shall have the same rights to contribution as the the Company or
the Underwriters, as the case may be, subject in each case to this Section
7(d). Any party entitled to contribution will, promptly after receipt of notice
of commencement of any action, investigation, inquiry, suit or proceeding
against such party in respect to which a claim for contribution may be made
against another party or parties under this Section 7(d), notify such party or
parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this Section 7(d), or to the extent that such party or
parties were not adversely affected by such omission. Notwithstanding anything
in this Section 7 to the contrary, no party will be liable for contribution
with respect to the settlement of any action, investigation, inquiry, suit or
proceeding effected without its written consent. The contribution agreement set
forth above shall be in addition to any liabilities which any indemnifying
party may have at common law or otherwise.
8. Representations, Warranties, Covenants and Agreements to Survive
Delivery. All representations, warranties, covenants and agreements of the
Company contained in this Agreement, or contained in certificates of officers
of the Company submitted pursuant hereto, shall be deemed to be
representations, warranties, covenants and agreements at the Closing Date and
each Option Closing Date, if any, and such representations, warranties,
covenants and agreements of the Company, and the respective indemnity and
contribution agreements contained in Section 7 hereof, shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Underwriter, the Company, any controlling person of any
Underwriter or the Company, and shall survive the termination of this Agreement
or the issuance and delivery of the Securities to the Underwriters.
9. Effective Date. This Agreement shall become effective at 10:00 a.m.,
New York City time, on the next full business day following the date hereof, or
at such earlier time after the Registration Statement becomes effective as the
Representatives, in their discretion, shall release the Securities for sale to
the public; provided, however, that the provisions of Sections 5, 7 and 9 of
this Agreement shall at all times be effective. For purposes of this Section 9,
the Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Representatives of telegrams to
securities dealers releasing such shares for offering or the release by the
Representatives for publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
35
10. Termination.
(a) Subject to Section 10(b) hereof, the Representatives shall have the
right to terminate this Agreement: (i) if any domestic or international event
or act or occurrence has materially adversely disrupted, or in the
Representatives' opinion will in the immediate future materially adversely
disrupt, the financial markets; or (ii) if any material adverse change in the
financial markets shall have occurred; or (iii) if trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the NASD, the Boston
Stock Exchange, Chicago Board of Trade, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Commission or any governmental authority
having jurisdiction over such matters; or (iv) if trading of any of the
securities of the Company shall have been suspended, or if any of the
securities of the Company shall have been delisted, on any exchange or in any
over-the-counter market; or (v) if the United States shall have become involved
in a war or major hostilities, or if there shall have been an escalation in an
existing war or major hostilities, or a national emergency shall have been
declared in the United States; or (vi) if a banking moratorium shall have been
declared by any state or federal authority; or (vii) if a moratorium in foreign
exchange trading shall have been declared; or (viii) if the Company shall have
sustained a material or substantial loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether
or not such loss shall have been insured, will, in the Representatives'
opinion, make it inadvisable to proceed with the delivery of the Securities; or
(ix) if there shall have been such a material adverse change in the conditions
or prospects of the Company, or if there shall have occurred any outbreak or
escalation of hostilities or any calamity or crisis or there shall have been
such a material adverse change in the general market, political or economic
conditions, in the United States or elsewhere, as in the Representatives'
judgment would make it inadvisable to proceed with the offering, sale and/or
delivery of the Securities.
(b) If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 6 or Section 10(a) hereof, the Company shall
promptly reimburse and indemnify the Underwriters for all their actual
out-of-pocket expenses, including the reasonable fees and disbursements of
Underwriters' Counsel, less amounts previously paid pursuant to Section 5(c)
hereof. Notwithstanding any contrary provision contained in this Agreement, if
this Agreement shall not be carried out within the time specified herein, or
any extension thereof granted to the Representatives, by reason of any failure
on the part of the Company to perform any undertaking or satisfy any condition
of this Agreement by it to be performed or satisfied (including, without
limitation, pursuant to Section 6 or Section 12) then, the Company shall
promptly reimburse and indemnify the Underwriters for all of their actual
out-of-pocket expenses, including the fees and disbursements of counsel for the
Underwriters (less amounts previously paid pursuant to Section 5(c) above). In
addition, the Company shall remain liable for all reasonable "blue sky" counsel
fees and expenses and "blue sky" filing fees. In addition, the Company shall
remain liable for all "blue sky" counsel fees and expenses and "blue sky"
filing fees. Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement
(including, without limitation, pursuant to Sections 6 and 10(a) hereof), and
whether or not this Agreement is otherwise carried out, the provisions of
Section 4 and Section 6 shall not be in any way be affected by such election or
termination or failure to carry out the terms of this
36
Agreement or any part hereof.
11. Substitution of Underwriters. If one or more of the Underwriters shall
fail otherwise than for a reason sufficient to justify the termination of this
Agreement (under the provisions of Section 6, Section 10 or Section 12 hereof)
to purchase the Securities which it or they are obligated to purchase on such
date under this Agreement (the "Defaulted Securities"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangement for one
or more of the non-defaulting Underwriters, or any other Underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the total
number of Firm Units to be purchased on such date, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total number
of Firm Units, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriters (or, if such default shall occur with respect
to any Option Units to be purchased on an Option Closing Date, the Underwriters
may at the Representatives' option, by notice from the Representatives to the
Company, terminate the Underwriters' obligation to purchase Option Units from
the Company on such date).
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement. In the event of any such default which does not result in a
termination of this Agreement, the Representatives shall have the right to
postpone the Closing Date for a period not exceeding seven (7) days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
12. Default by the Company. If the Company shall fail at the Closing Date
or any Option Closing Date, as applicable, to sell and deliver the number of
Securities which it is obligated to sell hereunder on such date, then this
Agreement shall terminate (or, if such default shall occur with respect to any
Option Units to be purchased on an Option Closing Date, the Representatives
may, at their option, by notice from the Representatives to the Company,
terminate the Underwriters' obligation to purchase Option Units from the
Company on such date) without any liability on the part of any non-defaulting
party other than pursuant to Section 5, Section 7 and Section 10 hereof. No
action taken pursuant to this Section 12 shall relieve the Company from
liability, if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representatives at ▇▇▇▇▇ & Company, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ &
37
Sutcliffe, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Esq. Notices to the Company shall be directed to the Company at
▇▇▇▇▇▇▇.▇▇▇, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Chairman and Chief Executive Officer, with a copy to
Stairs ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇.
14. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or
claim under or in respect of or by virtue of this Agreement or any provisions
herein contained. No purchaser of Units from the Underwriters shall be deemed
to be a successor by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving
effect to choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement and the Representatives'
Warrant Agreement constitute the entire agreement of the parties hereto and
supersede all prior written or oral agreements, understandings and negotiations
with respect to the subject matter hereof and thereof. This Agreement may not
be amended except in a writing signed by the Representatives and the Company.
38
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
▇▇▇▇▇▇▇.▇▇▇, INC.
By:
-------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
Confirmed and accepted as of the date first above written.
▇▇▇▇▇ & COMPANY, INC.
▇▇▇▇▇ SECURITIES CORPORATION
Acting on their own behalf and
as the Representatives of the several
Underwriters named on Schedule A
hereto
BY: ▇▇▇▇▇ & COMPANY, INC.
By:_______________________________________
Name:
Title:
39
Schedule A
Underwriters
NAME NUMBER OF UNITS
----------------------------------- ---------------------------------------
▇▇▇▇▇ & Company, Inc.
▇▇▇▇▇ Securities Corporation
Total 4,000,0000
40