1,050,000 Units
NEW YORK HEALTH CARE, INC.
UNDERWRITING AGREEMENT
, 1996
RAS Securities Corp.
As Representative of the
Several Underwriters listed on Schedule A hereto
▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
New York Health Care, Inc., a New York corporation (the "Company") confirms
its agreement with RAS Securities Corp. ("RAS") and each of the underwriters
named in Schedule A hereto (collectively, the "Underwriters," which term shall
also include any underwriter substituted as hereinafter provided in Section 11),
for whom RAS is acting as representative (in such capacity, RAS shall
hereinafter be referred to as "you" or the "Representative"), with respect to
the sale by the Company and the purchase by the Underwriters, acting severally
and not jointly, of the respective numbers of units set forth in said Schedule
A, each unit consisting of one share ("Shares") of the Company's common stock,
$.01 par value per share ("Common Stock"), and two warrants to acquire one
additional share of Common Stock ("Public Warrant"). The shares of Common Stock
and Public Warrants comprising the units will be immediately separable and
tradeable upon issuance and will not trade as units. The Public Warrants are
exercisable, in pairs only, from ______________________, 1997 until ___________,
2001, at an initial exercise price of $4.00 for one share of Common Stock,
subject to prior redemption by the Company as more fully described in the
Registration Statement and Prospectus referred to below. Such 1,050,000 units
are hereinafter referred to as the "Firm Units." Upon your request, as provided
in Section 2(b) of this Agreement, the Company shall also issue and sell to you
up to an additional 157,500 Shares and/or 315,000 Public Warrants for the
purpose of covering over-allotments, if any, in the sale of the Firm Units. Such
157,500 Shares and/or 315,000 Public Warrants are hereinafter referred to as the
"Option Securities." The Firm Units and the Options Securities are hereinafter
collectively referred to as the "Units." The Company also proposes to issue and
sell to you warrants (the "Representative's Warrants") pursuant to the
Representative's Warrant Agreement dated _________________, 1996 between the
Representative and the Company (the "Representative's Warrant Agreement") for
the purchase of an additional 105,000 Shares and/or 210,000 Public Warrants. The
Shares and/or Public Warrants issuable upon exercise of the Representative's
Warrants are hereinafter referred to as the "Representative's Securities." The
shares
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of Common Stock issuable upon exercise of the Public Warrants (including the
Public Warrants issuable upon exercise of the Representative's Warrants) are
hereinafter sometimes referred to as the "Warrant Shares." The Units, the
Shares, the Public Warrants, the Representative's Warrants, the Representative's
Securities and the Warrant Shares are more fully described in the Registration
Statement and the Prospectus referred to below.
1. Representations and Warranties. (a) The Company represents and warrants
to, and agrees with, each of the Underwriters as of the date hereof, and as of
the Closing Date (hereinafter defined) and the Option Closing Date (hereinafter
defined), if any, as follows:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form SB-2 (No. 333-08155), including
any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Shares, the Public Warrants, the Representative's
Securities and the Warrant Shares 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
thereunder. The Company will promptly file a further amendment to said
registration statement in the form heretofore delivered to the Underwriters
and will not file any other amendment thereto to which the Underwriters
shall have objected in writing after having been furnished with a copy
thereof. Except as the context may otherwise require, such registration
statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus,
financial statements, schedules, exhibits and all other documents or
information incorporated by reference therein) and all information deemed
to be a part thereof as of such time pursuant to paragraph (b) of Rule
430(A) of the rules and regulations) is hereinafter called the
"Registration Statement", and the form of prospectus in the form first
filed with the Commission pursuant to Rule 424(b) of the rules and
regulations 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.
(ii) 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 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 Prospectus at the time of filing
thereof conformed with the requirements of the Acts and the Rules and
Regulations, and none of the Preliminary Prospectus, the Registration
Statement or Prospectus at the time of filing thereof contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein and necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, except
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 expressly for use in such Preliminary Prospectus, Registration
Statement or Prospectus
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or any amendment or supplement thereto. It is understood that the
statements set forth in the Prospectus on page 2 with respect to
stabilization, under the heading "Underwriting" and the identity of counsel
to the Underwriters under the heading "Legal Matters" constitute the only
information furnished in writing by or on behalf of the several
Underwriters for inclusion in the Registration Statement and Prospectus, as
the case may be.
(iii) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (hereinafter defined) and
each Option Closing Date (hereinafter defined), 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; neither the Registration Statement nor the Prospectus, nor
any amendment or supplement thereto, contains or will contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, provided,
however, that this representation and warranty does not apply to statements
made or statements omitted in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of any
Underwriter (as set forth in paragraph 1(a)(ii) hereof) expressly for use
in the Preliminary Prospectus, Registration Statement or Prospectus or any
amendment thereof or supplement thereto.
(iv) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its
incorporation. The Company does not own an equity interest in any
corporation, partnership, trust, joint venture or other business entity.
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 except where the failure(s) to be so qualified,
licensed and in good standing, individually or in the aggregate, would not
materially and adversely affect the condition, financial or otherwise, or
the earnings, business affairs, position, prospects, value, operation,
properties, business or results of operations of the Company. The Company
has all requisite power and authority (corporate and other), and has
obtained any and all 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), necessary 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 with
all such authorizations, approvals, orders, licenses, certificates,
franchises and permits and all federal, state, local and foreign laws,
rules and regulations and the Company has not received any notice of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs,
position prospects, value, operations, properties, business, or results of
operations of the Company. The disclosures in the Registration Statement
concerning the effects of federal, state, local, and foreign laws, rules
and regulations on the
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Company's business as currently conducted and as contemplated are correct
in all material respects and do not omit to state a material fact necessary
to make the statements contained therein not misleading in light of the
circumstances in which they were made.
(v) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and will have the adjusted
capitalization set forth therein on the Closing Date (hereinafter defined)
and the Option Closing Date (hereinafter defined), 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 and as described in the Prospectus. The Common Stock,
the Shares, the Public Warrants, the Representative's Warrants, the
Representative's Securities and the Warrant Shares (collectively,
hereinafter sometimes referred to as the "Securities") and all other
securities issued or issuable by the Company conform or, when issued and
paid for, will conform, in all respects, to all statements with respect
thereto contained in the Registration Statement and the Prospectus. All
issued and outstanding securities of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and the holders
thereof have no rights of rescission with respect thereto and are not
subject to personal liability by reason of being such holders; and none of
such securities were issued in violation of the preemptive rights of any
holders of any security of the Company or similar contractual rights
granted by the Company. The Securities are not and will not be subject to
any preemptive or other similar rights of any stockholder, have been duly
authorized and, when issued, paid for and delivered in accordance with the
terms hereof, will be validly issued, fully paid and non-assessable and
will conform to the description thereof contained in the Prospectus; the
holders thereof will not be subject to any liability solely 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. Upon
the issuance and delivery pursuant to the terms hereof of the Securities to
be sold by the Company hereunder, the Underwriters or the Representative,
as the case may be, 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.
(vi) The financial statements of the Company together with the related
notes and schedules (if any) 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 and the
pro forma financial information included in the Registration Statement,
each Preliminary Prospectus and the Prospectus presents fairly on a basis
consistent with that of the audited financial statements included therein,
the Company's pro forma net income or loss per share, as the case may be,
pro forma net tangible book value, and the pro forma capitalization and
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 material adverse
change or development involving a material change in the condition,
financial or otherwise, or in the earnings, business affairs, position,
4
prospects, value, operation, properties, business or results of operation
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 conforms in all
material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(vii) The Company (A) 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, (B) has
established adequate reserves for such taxes which are not due and payable,
and (C) does not have any tax deficiency or claims outstanding, proposed or
assessed against it.
(viii) No transfer tax, stamp duty or other similar 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
Units, the Shares, the Public Warrants and the Warrant Shares and the
purchase by the Representative of the Representative's Warrants from the
Company, (C) the consummation by the Company of any of its obligations
under this Agreement, or (D) resales of the Securities in connection with
the distribution contemplated hereby.
(ix) The Company maintains insurance policies, including, but not
limited to, general liability, product liability and property insurance,
which insures the Company and its employees, against such losses and risks
generally insured against by comparable businesses. The Company (A) has not
failed to give notice or present any insurance claim with respect to any
matter, including but not limited to the Company's business, property or
employees, under the insurance policy or surety bond in a due and timely
manner, (B) does not have any disputes or claims against any underwriter of
such insurance policies or surety bonds or has not failed to pay any
premiums due and payable thereunder, or (C) has not failed to comply with
all conditions contained in such insurance policies and surety bonds. There
are no facts or circumstances under any such insurance policy or surety
bond which would relieve any insurer of its obligation to satisfy in full
any valid claim of the company.
(x) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or
circumstances that may give rise to the same), or involving the properties
or business of the Company which (A) questions the validity of the capital
stock of the Company or this Agreement, the Representative's Warrant
Agreement, the Warrant Agreement (as defined in Section 1(xxxiii) below) or
of any action taken or to be taken by the Company pursuant to or in
connection with this Agreement, the Representative's Warrant Agreement, or
the Warrant Agreement, (B) is required to be disclosed in the Registration
Statement which is not so disclosed (and such proceedings as are summarized
in the Registration Statement are accurately summarized in all material
respects), or (C) if adversely determined, might materially and adversely
affect the condition, financial or otherwise,
5
or the business affairs or business prospects, earnings, liabilities,
prospects, stockholders' equity, value, properties, business or assets of
the Company.
(xi) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, enter into this
Agreement, the Representative's Warrant Agreement and the Warrant Agreement
and to consummate the transactions provided for herein and therein; and
each of this Agreement, the Representative's Warrant Agreement and the
Warrant Agreement have been duly and properly authorized, executed and
delivered by the Company. This Agreement, the Representative's Warrant
Agreement and the Warrant Agreement each constitute a legal, valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, and neither the Company's issue and sale of the
Securities or execution or delivery of this Agreement, the Representative's
Warrant Agreement and the Warrant Agreement or its performance hereunder
and thereunder, its consummation of the transactions contemplated herein
and therein, or the conduct of its business as described in the
Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation
or imposition of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever
upon, any property or assets (tangible or intangible) of the Company
pursuant to the terms of, (A) the certificate of incorporation or by-laws
of the Company, (B) any license, contract, indenture, mortgage, deed of
trust, voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the Company is a
party or by which it is or may be bound or the which is properties or
assets (tangible or intangible) is or may be subject, or any indebtedness,
or (C) any statute, judgment, decree, order, rule or regulation applicable
to the Company of any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body (including, without limitation,
those having jurisdiction over environmental or similar matters), domestic
or foreign, having jurisdiction over the Company or any of its activities
or properties, in each case except for conflicts, breaches, violations,
defaults, creations or impositions which do not and would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs, position, shareholder's equity, value,
operation, properties, business or results of operations of the Company.
(xii) Other than as set forth in the Prospectus, no consent, approval,
authorization or order of, and no filing with, any court, regulatory body,
government agency or other body, domestic or foreign, is required for the
issuance of the Securities pursuant to the Prospectus and the Registration
Statement, the issuance of the Representative's Warrants, the execution,
delivery or performance of this Agreement, the Representative's Warrant
Agreement and the Warrant Agreement, and the transactions contemplated
hereby and thereby, including, without limitation, any waiver of any
preemptive, first refusal or other rights that any entity or person may
have for the issue and/or sale of any of the Securities, except such as
have been or may be obtained under the Act or may be required under state
securities or Blue Sky laws in connection with the Underwriters' purchase
and distribution of the Securities and the Representative's purchase of the
Representative's Warrants to be sold by the Company hereunder and
thereunder.
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(xiii) 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 its assets, properties or business may be subject
have been duly and validly authorized, executed and delivered by the
Company and constitute the legal, valid and binding agreements of the
Company, enforceable against the Company, in accordance with their
respective terms. The descriptions in the Registration Statement of
agreements, contracts and other documents and statutes and regulations are
accurate and fairly present the information required to be shown with
respect thereto by Form SB-2, and there are no contracts or other documents
which are required by the Act to be described in the Registration Statement
or filed as exhibits to the Registration Statement which are not described
or filed as required, and the exhibits which have been filed are complete
and correct copies of the documents of which they purport to be copies.
(xiv) Subsequent to the respective dates as of which information is
set forth in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has
not (A) issued any securities or incurred any liability or obligation,
direct or contingent, for borrowed money, (B) entered into any transaction
other than in the ordinary course of business, or (C) declared or paid any
dividend or made any other distribution on or in respect of its capital
stock of any class, and there has not been any change in the capital stock,
or any change in the debt (long or short term) or liabilities or material
change in or affecting the business affairs or prospects, management,
stockholders' equity, properties, business, financial operations or assets
of the Company.
(xv) 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,
stockholders agreement, partnership agreement, note, loan or credit
agreement, purchase order, or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the
Company may be bound or to which the property or assets (tangible or
intangible) of the Company is subject or affected, which default would have
a material adverse effect on the condition, financial or otherwise,
earnings, business affairs, position, shareholder's equity, value,
operation, properties, business or results of operations of the Company.
(xvi) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance in
all material respects with all federal, state, local, and foreign laws and
regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours. There are no pending
investigations involving the Company, by the U.S. Department of Labor, or
any other governmental agency responsible for the enforcement of such
federal, state, local, or foreign laws and regulations. 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
7
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, to the knowledge of the
Company is imminent.
(xvii) Except as described in the Prospectus, the Company does not
maintain, sponsor or contribute to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") ("ERISA Plans"). The Company does not maintain
or contribute, now or at any time previously, to a defined benefit plan, as
defined in Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code, which could subject the
Company to any tax penalty on prohibited transactions and which has not
adequately been corrected. Each ERISA Plan is in compliance with all
material 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."
(xviii) Neither the Company nor any of its employees, directors,
stockholders, or affiliates (within the meaning of the Rules and
Regulations) of any of the foregoing 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,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities or otherwise.
(xix) None of the patents, patent applications, trademarks, service
marks, trade names and copyrights, and licenses and rights to the foregoing
presently owned or held by the Company are in dispute or are in any
conflict with the right of any other person or entity. The Company (A) owns
or has the license or other right to use, free and clear of all liens,
charges, claims, encumbrances, pledges, security interests, defects or
other restrictions or equities of any kind whatsoever, all patents,
trademarks, service marks, trade names and copyrights, technology and
licenses and rights with respect to the foregoing, used in the conduct of
its business as now conducted or proposed to be conducted 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 (B) except as set forth in the Prospectus, 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 claimant
to, any patent, trademark, service ▇▇▇▇, tradename, copyright, know-how,
technology or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise.
(xx) The Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any trademark,
service ▇▇▇▇, trade name or copyright or other
8
intangible asset used or held for use by it in connection with the conduct
of its businesses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might have a material adverse
effect on the condition, financial or otherwise, or the business affairs,
position, properties, stockholder's equity, financial operations or assets
of the Company.
(xxi) 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 interest, 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.
(xxii) ▇. ▇. ▇▇▇▇▇▇ & Co. LLP., Certified Public Accountants, whose
report is 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.
(xxiii) The Company has caused to be duly executed legally binding and
enforceable agreements (collectively, the "Lock-up Agreements") pursuant to
which each of its officers, directors or any person or entity deemed to be
an affiliate of the Company and any stockholders of the Company has agreed
(i) that for a period of 24 months from the effective date of the
Registration Statement, he or she will not, directly or indirectly, issue,
offer to sell, sell, grant an option for the sale of, transfer, assign,
pledge, hypothecate or otherwise encumber or dispose of (either pursuant to
Rule 144 of the Rules and Regulations or otherwise) any shares of Common
Stock or other securities issued by the Company, whether registered in the
name of or beneficially owned by such persons or entities, or dispose of
any beneficial interest therein, without the prior written consent of the
Representative, other than transfers or dispositions to immediate family
members, or trusts for their benefit, or recognized charitable
organizations (a "Permitted Transferee"), so long as any such Permitted
Transferee shall execute a Lock-up Agreement in favor of the Representative
with respect to any such securities with the same terms and conditions as
set forth herein (other than as to Permitted Transferees) and (ii) that any
Common Stock which has been issued and is outstanding on the effective date
of the Registration Statement and is to be sold or otherwise disposed of
pursuant to such Rule 144 with the consent of the Representative shall only
be sold or otherwise disposed of through the Representative. The Company
will cause the Transfer Agent, as defined below, to ▇▇▇▇ an appropriate
legend on the face of stock certificates representing all of such
securities and to place "stop transfer" orders on the Company's stock
ledgers.
(xxiv) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities
hereunder or any other arrangements, agreements, understandings, payments
or issuance with respect to the Company, or any of its officers, directors,
stockholders, partners, employees or affiliates that may affect the
Underwriters' compensation, as determined by the National Association of
Securities Dealers, Inc. ("NASD") and the Company is aware that the
Representative and each of the Underwriter's shall compensate any of their
respective personnel who may have acted in such capacities as they shall
determine in their sole discretion.
9
(xxv) The Shares, the Common Stock and the Public Warrants have been
approved for quotation on the Nasdaq SmallCap Market and, upon notice of
issuance, listing on the Boston Stock Exchange ("BSE").
(xxvi) Neither the Company, nor any of its officers, employees, agents
or any other person acting on behalf of the Company has, directly or
indirectly, given or agreed to give any money, gift or similar benefit
(other than legal price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other
person who was, is, or may be in a position to help or hinder the business
of the Company (or assist the Company in connection with any actual or
proposed transaction) which (A) might subject the Company, or any other
such person to any damage or penalty in any civil, criminal or governmental
litigation or proceeding (domestic or foreign), (B) if not given in the
past, might have had a materially adverse effect on the assets, business,
operations or prospects of the Company, or (C) if not continued in the
future, might adversely affect the assets, business, operations or
prospects of the Company. The Company's internal accounting controls are
sufficient to cause the Company to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(xxvii) Except as set forth in the Prospectus, no officer, director,
or stockholder of the Company, or any "affiliate" or "associate" (as these
terms are defined in Rule 405 promulgated under the Rules and Regulations)
of any of the foregoing persons or entities has or has had, either directly
or indirectly, (A) an interest in any person or entity which (1) furnishes
or sells services or products which are furnished or sold or are proposed
to be furnished or sold by the Company, or (2) purchases from or sells or
furnishes to the Company any goods or services, or (B) a beneficiary
interest in any contract or agreement to which the Company is a party or by
which it may be bound or affected. Except as set forth in the Prospectus
under "Certain Transactions," there are no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among the Company,
and any officer, director, Principal Security Holder (as such term is
defined in the Prospectus) of the Company, or any partner, affiliate or
associate of any of the foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP ("
Underwriters' Counsel") shall be deemed a representation and warranty by
the Company to the Underwriters as to the matters covered thereby.
(xxix) The minute books of the Company have been made available to the
Underwriters and contain a complete summary of all meetings and actions of
the directors and stockholders of the Company, since the time of its
incorporation and reflects all transactions referred to in such minutes
accurately in all material respects.
10
(xxx) Except and to the extent described in the Prospectus, no holders
of any securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right to
include any securities issued by the Company in the Registration Statement
or any registration statement under the Act and no person or entity holds
any anti-dilution rights with respect to any securities of the Company.
(xxxi) The Company has as of the effective date of the Registration
Statement (A) entered into employment agreements with ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ providing for annual salaries of $175,000 and $140,000
respectively, each on terms and conditions satisfactory to the
Representative, and (B) purchased "key-man" insurance on the lives of ▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ which name the Company as the sole beneficiary on
terms and conditions satisfactory to the Representative.
(xxxii) The Company has entered into a warrant agreement with respect
to the Public Warrants, substantially in the form filed as Exhibit 4.3 to
the Registration Statement ("Warrant Agreement") with Continental Stock
Transfer and Trust Company in form and substance satisfactory to the
Representative.
(xxxiii) Immediately prior to the effective date of the Registration
Statement there shall be no more than an aggregate of 2,831,250 shares of
Common Stock issued and outstanding (including any and all (A) securities
with equivalent rights as the Common Stock, (B) Common Stock or such
equivalent securities, issuable upon the exercise of options, warrants and
other contract rights, and (C) securities convertible directly or
indirectly into Common Stock or such equivalent securities, and excluding
the Representative's Warrants).
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,
severally and not jointly, agrees to purchase from the Company at a price of
$3.78 per Unit, that number of Firm Units set forth in Schedule A opposite the
name of such Underwriter, subject to such adjustment as the Representative in
its 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 11 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, severally
and not jointly, to purchase all or any part of an additional 157,500 Shares at
a price of $3.60 per Share and/or 315,000 Public Warrants at a price of $.09 per
Public Warrant. The option granted hereby will expire 30 days after the date the
Registration Statement becomes effective and may be exercised in whole or in
part from time to time upon notice by the Representative to the Company setting
forth the number of Option Securities as to which the
11
several Underwriters are then exercising the option and the time and date of
payment and delivery for any such Option Securities. Any such time and date of
delivery (an "Option Closing Date") shall be determined by the Representative,
but shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Date (hereinafter defined), unless
otherwise agreed upon by the Representative and the Company. Nothing herein
contained shall obligate the Underwriters to make any over-allotments. No Option
Securities 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
evidencing the Firm Units shall be made at the offices of RAS Securities Corp.
at ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be
agreed upon by the Representative and the Company. Such delivery and payment
shall be made at 10:00 a.m. (New York City time) on _____________, 1996 or at
such other time and date as shall be agreed upon by the Representative and the
Company, but no less than three (3) nor more than ten (10) full business days
after the effective date of the Registration Statement (such time and date of
payment and delivery being herein called "Closing Date"). In addition, in the
event that any or all of the Option Securities are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates
for, such Option Securities shall be made at the above mentioned office of the
Representative or at such other place as shall be agreed upon by the
Representative and the Company on each Option Closing Date as specified in the
notice from the Representative to the Company. Delivery of the certificates for
the Firm Units and the Option Securities if any, shall be made to the
Underwriters against payment by the Underwriters, severally and not jointly, of
the purchase price for the Firm Units and the Option Securities if any, to the
order of the Company by New York Clearing House Funds. In the event such option
is exercised, each of the Underwriters, acting severally and not jointly, shall
purchase that proportion of the total number of Option Securities then being
purchased which the number of Firm Units set forth in Schedule A hereto opposite
the name of such Underwriter bears to the total number of Firm Units, subject in
each case to such adjustments as the Representative in its discretion shall make
to eliminate any sales or purchases of fractional shares. Certificates for the
Firm Units and the Option Securities 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 Closing Date or the relevant
Option Closing Date, as the case may be. The certificates for the Firm Units and
the Option Securities if any, shall be made available to the Representative at
such office or such other place as the Representative may designate for
inspection, checking and packaging no later than 9:30 a.m. on the last business
day prior to Closing Date or the relevant Option Closing Date, as the case may
be.
(d) On the Closing Date, the Company shall issue and sell to the
Representative the Representative's Warrants at a purchase price of $.0001 per
warrant, which warrants shall entitle the holders thereof to purchase an
aggregate of 105,000 Shares and/or 210,000 Public Warrants. The Representative's
Warrants shall be exercisable for a period of four (4) years commencing one (1)
year from the Closing Date at a price of $4.80 per Share and $.12 per Public
Warrant. The Representative's Warrant Agreement and form of Warrant Certificates
with respect to each of the
12
(i) Representative's Warrants to purchase Shares and (ii) Representative's
Warrants to purchase Public Warrants, shall be substantially in the form filed
as Exhibit 4.2 to the Registration Statement. Payment for the Representative's
Warrants shall be made on the Closing Date.
3. Public Offering of the Units. As soon after the Registration Statement
becomes effective as the Representative deems advisable, the Underwriters shall
make a public offering of the Firm Units and such of the Option Securities as
they may determine (other than to residents of or in any jurisdiction in which
qualification of the Shares and Public Warrants are required and has not become
effective) at the price and upon the other terms set forth in the Prospectus.
The Representative 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 Representative, in its sole discretion deems advisable. The Underwriters
may enter into one or more agreements as the Underwriters, in each of their sole
discretion, deem advisable with one or more broker-dealers who shall act as
dealers in connection with such public offering. Investors in the public
offering will be required to purchase one Share and two Public Warrants together
or multiples thereof. Such units of Securities will however be immediately
separable and tradeable upon issuance and will not be registered or listed on
any exchange for trading as units.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with each of 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 (such Registration Statement to be in form and substance
satisfactory to the Representative and Underwriters' Counsel) 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 Exchange Act before termination
of the offering of the Units by the Underwriters of which the Representative
shall not previously have been advised and furnished with a copy, or to which
the Representative shall have objected or which is not in compliance with the
Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof, the
Company will advise the Representative and confirm by notice in writing, (i)
when the Registration Statement, as amended, becomes effective, if the
provisions of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective, (ii)
of the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto, or the
institution of proceedings for that purpose (iii) of the issuance by the
Commission or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the receipt of any comments from the Commission; and (v)
of
13
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information. If
the Commission or any state securities commission authority shall enter a stop
order or suspend such qualification at any time, the Company will make every
effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representative and Underwriters' Counsel) or transmit the
Prospectus by a means reasonably calculated to result in filing with the
Commission pursuant to Rule 424 (b)(1) (or, if applicable and if consented to by
the Representative, pursuant to Rule 424 (b)(47) not later than the Commission's
close of business on the earlier of (i) the second business day following the
execution and delivery of this Agreement and (ii) the fifth business day after
the effective date of the Registration Statement.
(d) The Company will give the Representative 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
Underwriters in connection with the offering of the Securities which differs
from the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
and will furnish the Representative with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such prospectus to which the
Representative or Underwriters' Counsel, shall reasonably object.
(e) The Company shall take all action, in cooperation with the
Representative, at or prior to the time the Registration Statement becomes
effective, to qualify the Units for offering and sale under the securities laws
of such jurisdictions as the Representative may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such documents
and furnish such information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a foreign corporation
or file a general or limited consent to service of process in any such
jurisdiction. In each jurisdiction where such qualification shall be effected,
the Company will, unless the Representative agrees that such action is not at
the time necessary or advisable, use all reasonable efforts to file and make
such statements or reports at such times as are or may reasonably be required by
the laws of such jurisdiction to continue such qualification. It is agreed that
Underwriters' Counsel (or its designees) shall perform all such required Blue
Sky legal services.
(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 and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when a prospectus relating
to the Securities is required to be
14
delivered under the Act, any event shall have occurred as a result of which, in
the reasonable 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 any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act and the Rules and Regulations, the
Company will notify the Representative 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 Underwriters copies
of such amendment or supplement as soon as available and in such quantities as
the Underwriters may request.
(g) As soon as practicable, but in any event not later than 45 days after
the end of the 12- month period beginning on the day after the end of the fiscal
quarter of the Company during which the effective date of the Registration
Statement occurs (90 days in the event that the end of such fiscal quarter is
the end of the Company's fiscal year), the Company shall make generally
available to its security holders, in the manner specified in Rule 158(b) of the
Rules and Regulations, and to the Representative, 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 12 consecutive months after the effective date of
the Registration Statement.
(h) During a period of seven 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 reports of earnings, and will deliver to the Representative:
(i) concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company for each quarter in the form
furnished to the Company's stockholders and certified by the Company's principal
financial or accounting officer;
(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 certificate
thereon of 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;
15
(v) every press release and every material news item or article of interest
to the financial community in respect of the Company or its affairs which was
released or prepared by or on behalf of the Company; and
(vi) any additional information of a public nature concerning the Company
(and any future subsidiaries) or its businesses which the Representative may
reasonably 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 Agent, counsel, accounting firm,
financial printer and, if necessary under the jurisdiction of incorporation of
the Company, a Registrar (which may be the same entity as the Transfer Agent)
for its Units, Common Stock and Public Warrants all of whom shall be reasonably
acceptable to the Representative. Such Transfer Agent shall, for a period of
five years following the Closing Date, deliver to the Representative the monthly
securities position of the Company's stockholders of record.
(j) The Company will furnish to the Representative or on the
Representative's order, without charge, at such place as the Representative may
designate, copies of each Preliminary Prospectus, the Registration Statement any
pre-effective or post-effective amendments thereto (two of which copies will be
signed and will include all financial statements and exhibits), the Prospectus,
and all amendments and supplements thereto, including any Prospectus prepared
after the effective date of the Registration Statement, in each case as soon as
available and in such quantities as the Representative may reasonably request.
(k) On or before the effective date of the Registration Statement, the
Company shall provide the Representative with true copies of legally binding and
enforceable Lock-up Agreements duly executed by each of its officers, directors
or any person or entity deemed to be an affiliate of the Company and any
stockholders of the Company . The commission for any open market transactions
made pursuant to Rule 144 through the Representative in accordance with the
terms of the Lock-up Agreements shall not exceed 5% and the sales price shall be
reasonably related to the market. During the three year period commencing with
the effective date of the Registration Statement, the Company shall not issue
any securities under Regulation S and not, without the prior written consent of
the Representative, (other than as set forth in the succeeding sentence), sell,
contract or offer to sell, issue, transfer, assign, pledge, distribute, or
otherwise dispose of, directly or indirectly, any debt security of the Company
or any shares of Common Stock or any issue of preferred stock of the Company, or
any options, rights or warrants with respect to any shares of Common Stock or
any issue of preferred stock of the Company, (other than upon exercise of (i)
the Representative's Warrants (ii) options granted to ▇▇▇▇▇ ▇▇▇▇▇ to purchase up
to 75,000 shares of Common Stock at $3.00 per share (iii) options granted
pursuant to an incentive stock option plan of the Company in effect prior to the
filing of the initial Registration Statement, such plan to provide that the
Board of Directors of the
16
Company shall have the power to grant, at its discretion, options to eligible
individuals, to purchase up to an aggregate amount of 262,500 shares of Common
Stock; provided that, for a period of three (3) years commencing on the
effective date of the Registration Statement, the exercise price of options
granted pursuant to the Option Plan or otherwise during such period cannot be
less than the greater of the fair market value per share of Common Stock on the
date of grant or $4.00 per share, such plan to otherwise be on terms and
conditions satisfactory to the Representative and (iv) options granted pursuant
to any further qualified option plan of the Company, approved by the Company's
shareholders pursuant to a proxy after the Closing Date, which in any event
shall not provide for options to purchase more than an additional 262,500 shares
of Common Stock per year for each of two additional years; provided, however,
that for a period of three (3) years commencing on the date of such an increase,
the exercise price of options granted cannot be less than the greater of the
fair market value per share of Common Stock on the date of grant or $4.00 per
share, and shall otherwise be on terms and conditions satisfactory to the
Representative). Notwithstanding the foregoing sentence, commencing one (1) year
after the effective date of the Registration Statement, the Company may, without
the further consent of the Representative, issue an aggregate of 500,000 shares
of Common Stock for its own account; provided, however, that such issuance shall
not be made to (i) employees or current stockholders of affiliates of the
Company (except that such persons may acquire shares on a public offering of the
Company's securities), (ii) pursuant to Regulation S or (iii) in a private
placement pursuant to Regulation D or otherwise at a price (or valuation, in the
event of a transaction other than for cash) less than the prevailing market
price at the date of such issuance. On or before the Closing Date, the Company
shall deliver instructions to the Transfer Agent authorizing it to place
appropriate legends on the certificates representing the securities subject to
the Lock-up Agreements and to place appropriate stop transfer orders on the
Company's ledgers.
(l) 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, or which might in the future
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "Use of
Proceeds" in the Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form SR as may be
required pursuant to 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 filed shall comply as to form and substance with the applicable
requirements under the Act, the Exchange Act and the Rules and Regulations.
(o) The Company shall furnish to the Representative 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 of the Registration Statement) which have been read by the Company's
independent public accountants, as stated in their letters to be furnished
pursuant to Section 6(j) hereof.
(p) The Company shall cause the Shares, the Common Stock and the Public
Warrants to be listed on the Nasdaq SmallCap Market and upon the request of the
Representative to be listed on the BSE, and for a period of seven (7) years from
the date hereof, use its best efforts to maintain such listings of the Shares,
the Common Stock and the Public Warrants to the extent outstanding.
17
(q) For a period of five (5) years from the Closing Date, the Company shall
furnish to the Representative at the Representative's request and at the
Company's sole expense, (i) the list of holders of all of the Company's
securities and (ii) a Blue Sky "Trading Survey" for secondary sales of the
Company's securities prepared by counsel to the Company.
(r) The Company shall as soon as practicable, (i) but in no event more than
five business days before the effective date of the Registration Statement, file
a Form 8-A with the Commission providing for the registration under the Exchange
Act of the Securities and (ii) but in no event more than 30 days from the
effective date of the Registration Statement, take all necessary and appropriate
actions to be included in Standard and Poor's Corporation Descriptions and
▇▇▇▇▇'▇ Manual in order to satisfy the requirements for "manual exemption" in
those states where available and to maintain such inclusion for as long as the
Securities are outstanding.
(s) Until the completion of the distribution of the Securities, the Company
shall not without the prior written consent of the Representative and
Underwriters' Counsel, issue, directly or indirectly any press release or other
communication or hold any press conference with respect to the Company or its
activities or the offering contemplated hereby, 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.
(t) For a period of three (3) years after the effective date of the
Registration Statement, the Representative shall have the right to designate one
(1) individual for election to the Company's Board of Directors ("Board") and
the Company shall cause such individual to be elected to the Board. In the event
the Representative shall not have designated such individual at the time of any
meeting of the Board or such person is unavailable to serve, the Company shall
notify the Representative of each meeting of the Board and an individual
designated by the Representative 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. Such individual shall be reimbursed
for all out-of-pocket expenses incurred in connection with his or her service
on, or attendance at meetings of, the Board. The Company shall provide its
outside directors with compensation in the form of cash and/or options on its
Common Stock as deemed appropriate and customary for similar companies.
(u) For a period equal to the lesser of (i) seven (7) years from the date
hereof, and (ii) the date of the sale to the public of the securities issuable
upon exercise of the Representative's Securities, the Company will not take any
action or actions which may prevent or disqualify the Company's use of any form
otherwise available for the registration under the Act of the securities
issuable upon exercise of the Representative's Securities.
(v) Commencing one year from the date hereof, the Company shall pay the
Representative a commission equal to five percent (5%) of the exercise price of
the Public Warrants, payable on the date of the exercise thereof on terms
provided for in the Warrant Agreement. The Company will not solicit the exercise
of the Public Warrants other than through the Representative and will not
18
authorize any other dealer or engage in such solicitation without the
Representative's prior written consent.
(w) On or before the effective date of the Registration Statement, the
Company shall have retained a financial public relations firm reasonably
satisfactory to the Representative, which shall be continuously engaged from
such engagement date to a date twelve (12) months from the Closing Date.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and the
Option Closing Date (to the extent not paid at the Closing Date) all expenses
and fees (other than fees of Underwriters' Counsel, except as provided in (iv)
below) incident to the performance of the obligations of the Company under this
Agreement, the Representative's 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 with respect
thereto) of the Registration Statement and the Prospectus and any amendments and
supplements thereto and the printing, mailing (including the payment of postage
with respect thereto) and delivery of this Agreement, the Representative's
Warrant Agreement, the Warrant Agreement, and related documents, including the
cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
Underwriters and such dealers as the Underwriters may request, in quantities as
hereinabove stated, (iii) the printing, engraving, issuance and delivery of the
Securities, including, but not limited to, (x) the purchase by the Underwriters
of the Securities and the purchase by the Representative of the Representative's
Warrants from the Company, (y) the consummation by the Company of any of its
obligations under this Agreement, the Representative's Warrant Agreement, and
the Warrant Agreement, and (z) resale of the Securities by the Underwriters in
connection with the distribution contemplated hereby, (iv) the qualification of
the Securities under state or foreign securities or "Blue Sky" laws and
determination of the status of such securities under legal investment laws,
including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum", the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and disbursements and fees of counsel in connection therewith,
provided, however, that the Company's obligation with respect to such "Blue Sky"
fees and disbursement of counsel shall not exceed $30,000 (v) advertising costs
and expenses, including but not limited to costs and expenses in connection with
the "road show", information meetings and presentations, bound volumes and
prospectus memorabilia, tombstones in the Wall Street Journal and other
appropriate publications, (vi) costs, fees and expenses in connection with due
diligence investigations, including but not limited to the costs of background
checks on key management and/or personnel of the Company and the fees of any
independent counsel or consultant retained, (vii) fees and expenses of the
transfer agent, warrant agent, escrow agent, if any, and registrar, (viii)
applications for assignments of a rating of the Securities by qualified rating
agencies, (ix) the fees payable to the Commission, Nasdaq
19
and the NASD, and (x) the fees and expenses incurred in connection with the
listing of the Securities on the Nasdaq SmallCap Market, the BSE and 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, the Company shall
reimburse and indemnify the Representative for all of its actual out-of-pocket
expenses, including the fees and disbursements of Underwriters' Counsel (and in
addition to fees and expenses of Underwriter's Counsel incurred pursuant to
Section 5(a)(iv) above for which the Company shall remain liable), provided,
however, that in the event of a termination pursuant to Section 10(a) hereof
such obligation of the Company shall not exceed $50,000.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 5, it will pay to the Representative
on the Closing Date by certified or bank cashier's check or, at the election of
the Representative, by deduction from the proceeds of the offering contemplated
herein a non-accountable expense allowance equal to three percent (3%) of the
gross proceeds received by the Company from the sale of the Firm Units. In the
event the Representative elects to exercise the over-allotment option described
in Section 2(b) hereof, the Company further agrees to pay to the Representative
on each Option Closing Date (by certified or bank cashier's check or, at the
Representative's election, by deduction from the proceeds of the offering) a
non-accountable expense allowance equal to three percent (3%) of the gross
proceeds received by the Company from the sale of the relevant Option
Securities.
(d) The Underwriters shall not be responsible for any expense of the
Company or others or for any charge or claim related to the offering
contemplated by hereunder in the event that the sale of the Securities as
contemplated hereunder is not consummated.
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 or each Option Closing Date, as the case may
be; the accuracy on and as of the Closing Date or Option Closing Date, if any,
of the statements of the officers of the Company made pursuant to the provisions
hereof; and the performance by the Company on and as of the Closing Date and
each Option Closing Date, if any, of its covenants and obligations hereunder and
to the following further conditions:
(a) The Registration Statement, which shall be in form and substance
satisfactory to the Representative and Underwriter's Counsel, shall have
become effective no 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 Representative 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
20
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
Representative 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 Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Representative's opinion, is material, or
omits to state a fact which, in the Representative's opinion, is material
and is required to be stated therein or is necessary to make the statements
therein not misleading, or that the Prospectus, or any supplement thereto,
contains an untrue statement of fact which, in the Representative's
opinion, is material and is required to be stated therein or is necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(c) On or prior to the Closing Date, the Representative shall have
received from Underwriters' Counsel, such opinion or opinions with respect
to the organization of the Company, the validity of the Securities, the
Representative's Warrants, the Registration Statement, the Prospectus and
other related matters as the Representative may request and Underwriters'
Counsel shall have received such papers and information as they request to
enable them to pass upon such matters.
(d) On the Closing Date, the Underwriters shall have received the
favorable opinion of Scheichet & ▇▇▇▇▇, P.C., counsel to the Company, dated
the Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) the Company (A) has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction, and (B) has all requisite corporate power and authority,
and has obtained any and all 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 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; to such counsel's knowledge, 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
adversely affect the business, operations, condition, financial or
otherwise, or the earnings, business affairs or prospects, properties,
business, assets or results of operations of the Company. The
disclosures in the Registration Statement concerning the effects of
federal, state and local laws, rules and regulations on the Company's
business as currently conducted and as contemplated are correct in all
material respects and do not omit to state a fact
21
necessary to make the statements contained therein not misleading in
light of the circumstances in which they were made.
(ii) to such counsel's knowledge, the Company does not own an
equity interest in any other 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, to such counsel's
knowledge, after due inquiry, 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 Representative's Warrant
Agreement, the Warrant Agreement and as described in the Prospectus.
The Securities, and all other securities issued or issuable by the
Company, conform in all material respects to all statements with
respect thereto contained in the Registration Statement and the
Prospectus. All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability under the
laws of the State of New York as currently in effect by reason of
being such holders; and none of such securities were issued in
violation of the preemptive rights of any holders of any security of
the Company. The Securities to be sold by the Company hereunder and
under the Representative's Warrant Agreement are not and will not be
subject to any preemptive or other similar rights of any stockholder,
have been duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof, will be validly issued, fully paid
and non-assessable and conform to the description thereof contained in
the Prospectus; the holders thereof will not be subject to any
liability solely 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 Public Warrants and the
Representative's Warrants constitute valid and binding obligations of
the Company to issue and sell, upon exercise thereof and payment
therefore the number and type of securities of the Company called for
thereby. Upon the issuance and delivery pursuant to this Agreement of
the Securities to be sold by the Company, the Underwriters and the
Representative will acquire good and marketable title to the
Securities free and clear of any pledge, lien, charge, claim,
encumbrance, pledge, security interest, 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 and the
Representative of the Securities from the Company, (C) consummation by
the Company of any of its obligations under this Agreement, or (D)
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, to such counsel's
knowledge, after due inquiry no stop order suspending the use of the
Preliminary Prospectus, the Registration Statement or Prospectus or
any part of any thereof or suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending, threatened or
contemplated under the Act;
22
(v) each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or supplement thereto
(other than the financial statements 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) to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be
described in the Registration Statement and the Prospectus and filed
as exhibits to the Registration Statement other than those described
in the Registration Statement (or required to be filed under the
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 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 contracts and other documents to
which the Company is a party or by which it is bound, including any
document to which the Company is a party or by which it is bound,
incorporated by reference into the Prospectus and any supplement or
amendment thereto, are accurate in all material respects and fairly
represent the information required to be shown under the Act and the
Rules and Regulations of the Commission thereunder; (C) there is not
pending or threatened against the Company any action, arbitration,
suit, proceeding, inquiry, investigation, litigation, governmental or
other proceeding (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or
foreign, pending or threatened against (or circumstances that may give
rise to the same), or involving the properties or business of the
Company which (1) 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), (2) questions the validity of the capital stock of the
Company or this 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)
except as disclosed in the Prospectus, there is no action, suit or
proceeding pending, or threatened, against or affecting the Company
before any court or arbitrator or governmental body, agency or
official (or any basis thereof known to such counsel) in which an
adverse decision which may result in a material adverse change in the
condition, financial or otherwise, or the earnings, position,
prospects, stockholders' equity, value, operation, properties,
business or results of operations of the Company, could adversely
affect the present or prospective ability of the Company to perform
its obligations under this Agreement, the Representative's Warrant
Agreement or the Warrant Agreement or which in any manner draws into
question the validity or enforceability of this Agreement, the
Representative's Warrant Agreement or the Warrant Agreement;
(vii) the Company has full legal right, power and authority to
enter into this Agreement, the Representative's Warrant Agreement and
the Warrant Agreement and to consummate the transactions provided for
therein; and this Agreement, the Representative's Warrant Agreement
and the Warrant Agreement has been duly authorized, executed and
delivered by the Company. This Agreement, the Representative's Warrant
Agreement and the Warrant Agreement assuming due authorization,
execution and delivery by each other party hereto and thereto
constitutes a legal, valid
23
and binding agreement of the Company enforceable against the Company
in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as
rights to indemnity or contribution may be limited by applicable law),
and neither the Company's execution or delivery of this Agreement, the
Representative's Warrant Agreement and the Warrant Agreement, its
performance hereunder or thereunder, its consummation of the
transactions contemplated herein or therein, or the conduct of its
business as described in the Registration Statement, the Prospectus,
and any amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or violation of
any of the terms or provisions of, or constitutes or will constitute a
default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or
assets (tangible or intangible) of the Company pursuant to the terms
of, (A) the certificate of incorporation or by-laws of the Company,
(B) any license, contract, indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the Company is
a party or by which it is or may be bound or to which any of its
properties or assets (tangible or intangible) is or may be subject, or
any indebtedness, or (C) any statute, judgment, decree, order, rule or
regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency
or body (including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or properties,
except for conflicts, breaches, violations, defaults, creations or
impositions which do not and would not have a material adverse effect
on the condition, financial or otherwise, or the earnings, business
affairs, position, shareholder's equity, value, operations,
properties, business or results of operations of the Company.
(viii) except as described in the Prospectus, no consent,
approval, authorization or order, and no filing with, any court,
regulatory body, government agency or other body (other than such as
may be required under Blue Sky laws, as to which no opinion need be
rendered) is required in connection with the issuance of the
Securities pursuant to the Prospectus and the Registration Statement,
the issuance of the Representative's Warrants, the performance of this
Agreement, the Representative's 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;
(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, deed of trust, lease, voting trust
agreement, stockholders' agreement, partnership agreement, note, loan
or credit agreement or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to
which the Company is a party or by which the Company may be bound or
to which the property or assets (tangible or intangible) of the
Company is subject or affected, which could
24
materially adversely affect the Company; and the Company is not in
violation of any term or provision of its Certificate of Incorporation
or By-Laws, or in violation of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation the result of
which would materially and adversely affect the condition, financial
or otherwise, or the earnings, business affairs, position,
shareholders' equity, value operation, properties, business or results
of operations of the Company.
(xi) the Company owns or possesses, free and clear of all liens
or encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service
marks, copyrights, service names, trade names, 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 to
the best of such counsel's knowledge after reasonable investigation,
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 limitations, any such licenses or rights described in the
Prospectus as being owned or possessed by the Company).
(xii) except as described in the Prospectus, the Company does not
(A) maintain, sponsor, or contribute to any 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
(xiii) the Securities have been approved for listing on the
Nasdaq SmallCap Market and the BSE, and the Company's Registration
Statement on Form 8-A under the Exchange Act has become effective.
(xiv) to such counsel's knowledge, the persons listed under the
caption "PRINCIPAL SECURITY HOLDERS" in the Prospectus are the
respective "beneficial owners" (as such phrase is defined in
Regulation 13d-3 under the Exchange Act) of the securities set forth
opposite their respective names thereunder as and to the extent set
forth therein;
(xv) to such counsel's knowledge, except as described in the
Prospectus, no person, corporation, trust, partnership, association or
other entity has the right to include and/or register any securities
of the Company in the Registration Statement, require the Company to
file any registration statement or, if filed, to include any security
in such registration statement;
(xvi) to such counsel's knowledge, except as described in the
Prospectus, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination
fee with respect to the sale of the Units hereunder or the financial
consulting arrangement between the Representative and the Company, if
any, or any other arrangements, agreements, understandings, payments
or issuances that may affect the Underwriters' compensation, as
determined by the NASD;
25
(xvii) the Lock-up Agreements are legal, valid and binding
obligations of the parties thereto, enforceable against each such
party and any subsequent holder of the securities subject thereto in
accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable); and
(xviii) all action under the Act necessary to make the public
offering and consummate the sale of the Securities as provided in this
Agreement has been taken by the Company. The provisions of the
Certificate of Incorporation and By-laws of the Company comply as to
form in all material respects with the Act and the Rules and
Regulations.
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 were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which
leads counsel 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 Prospectus or amendment or supplement thereto
as of the date of such opinion contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or Prospectus).
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; (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of responsible officers of the Company and certificates
or other written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such statements or certificates
shall be delivered to Underwriters' Counsel if requested; and (C) as to
regulatory matters, to the extent specified in such opinion and to the extent
reliance is reasonable, on the opinion of special regulatory counsel to the
Company. 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 Representative and they are justified in relying thereon.
26
At each Option Closing Date, if any, the Underwriters shall have received
the favorable opinion of Scheichet & ▇▇▇▇▇, P.C., counsel to the Company, dated
the Option Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel confirming as of such Option Closing Date
the statements made in its opinion delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing Date, if
any, Underwriters' Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or covenants of the
Company herein contained.
(f) Prior to each of Closing Date and each Option Closing Date, if any, (i)
there shall have been no adverse change nor development involving a prospective
change in the condition, financial or otherwise, prospects, stockholders' equity
or the business activities of the Company, whether or not in the ordinary course
of business, from the latest dates as of which such condition is set forth in
the Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, (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 or any change in the
debt (long or short term) or liabilities or obligations of the Company
(contingent or otherwise); (v) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus (vi) no action, suit or proceeding, at law or in
equity, shall have been pending or 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
adversely affect the business, operations, management prospects or financial
condition or assets of the Company, except as set forth in the Registration
Statement and Prospectus: and (vii) no stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission.
(g) At each of the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received a certificate of the principal executive
officer and the chief financial or chief accounting officer of the Company,
dated the Closing Date or Option Closing Date, as the case may be, to the effect
that each of such persons has carefully examined the Registration Statement, the
Prospectus and this Agreement, and that:
(i) The representations and warranties in this Agreement of the
Company 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;
27
(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, are contemplated or
threatened under the Act;
(iii) The Registration Statement and the Prospectus and, if any, each
amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading and neither the Preliminary Prospectus or any supplement
thereto included any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and
(iv) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (A) there has not been any
material change in the shares of Common Stock or liabilities of the Company
except as set forth in or contemplated by the Prospectus; (B) there has not
been any material adverse change in the general affairs, management,
business, financial condition or results of operations of the Company,
whether or not arising from transactions in the ordinary course of
business, as set forth in or contemplated by the Prospectus; (C) the
Company has not sustained any material loss or interference with its
business from any court or from legislative or other governmental action,
order or decree, whether foreign or domestic, or from any other occurrence,
not described in the Registration Statement and Prospectus; (D) there has
not occurred any event that makes untrue or incorrect in any material
respect any statement or information contained in the Registration
Statement or Prospectus or that is not reflected in the Registration
Statement or Prospectus but should be reflected therein in order to make
the statements or information therein, in light of the circumstances in
which they were made, not misleading in any material respect; (E) the
Company has not incurred up to and including the Closing Date or the Option
Closing Date, as the case may be, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent;
(F) the Company has not paid or declared any dividends or other
distributions on its capital stock; (G) the Company has not entered into
any transactions not in the ordinary course of business; (H) 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 the short-terms
borrowings in the ordinary course of business) of the Company; (I) the
Company has not sustained any material loss or damage to its property or
assets, whether or not insured; and (J) there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has
not been set forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(h) 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.
28
(i) At the time this Agreement is executed, the Underwriters shall have
received a letter, dated such date, addressed to the Underwriters in form and
substance satisfactory (including the non- material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriters and Underwriters' Counsel, from ▇. ▇. ▇▇▇▇▇▇ & Co. LLP,:
(i) confirming that they are independent accountants with respect to
the Company within the meaning of the Act and the applicable Rules and
Regulations;
(ii) stating that it is their opinion that the financial statements of
the Company included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act
and the Rules and Regulations thereunder and that the Representative may
rely upon the opinion of ▇.▇. ▇▇▇▇▇▇ & Co. LLP, with respect to the
financial statements and supporting schedules included in the Registration
Statement;
(iii) stating that, on the basis of a limited review which included a
reading of the latest available unaudited interim financial statements of
the Company (with an indication of the date of the latest available
unaudited interim financial statements), a reading of the latest available
minutes of the stockholders and board of directors and the various
committees of the boards of directors of the Company, consultations with
officers and other employees of the Company responsible for financial and
accounting matters and other specified procedures and inquiries, nothing
has come to their attention which would lead them to believe that (A) the
unaudited financial statements, if any, 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 substantially consistent
with that of the audited financial statements of the Company included in
the Registration Statement, or (B) at a specified date not more than five
(5) days prior to the effective date of the Registration Statement, there
has been any change in the capital stock 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 September 30,
1996 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;
(iv) setting forth, at a date not later than five (5) days prior to
the date of the Registration Statement, the amount of liabilities of the
Company (including a breakdown 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 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
29
procedures (which procedures do not constitute an examination in accordance
with generally accepted auditing standards) set forth in the letter and
found them to be in agreement;
(vi) stating that they have in addition carried out certain specified
procedures, not constituting an audit, with respect to certain pro forma
financial information which is included in the Registration Statement and
the Prospectus and that nothing has come to their attention as a result of
such procedures that caused them to believe such unaudited pro forma
financial information does not comply in form in all respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or that
the pro forma adjustments have not been properly applied to the historical
amounts in the compilation of that information;
(vii) stating that they have not during the immediately preceding five
(5) year period brought to the attention of any of the Company's management
any "weakness," as defined in Statement of Auditing Standard No. 60
"Communication of Internal Control Structure Related Matters Noted in an
Audit," in any of the Company's internal controls; and
(viii) statements as to such other matters incident to the transaction
contemplated hereby as the Representative may request.
(j) On or prior to the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received from ▇.▇. ▇▇▇▇▇▇ & Co. LLP, a letter, dated
as of the Closing Date or the Option Closing Date, as the case may be, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (i) of this Section, except that the specified date in the
referred to shall be a date not more than five days prior to the Closing Date or
the Option Closing Date, as the case may be, and, if the Company has elected to
rely on Rule 430A of the Rules and Regulations, to the further effect that they
have carried out procedures as specified in clause (v) of subsection (i) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Representative 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).
(k) On each of Closing Date and Option Closing Date, if any, there shall
have been duly tendered to the Representative for the several Underwriters'
accounts the appropriate number of Securities.
(l) No order suspending the sale of the Securities in any jurisdiction
designated by the Representative pursuant to subsection (e) of Section 4 hereof
shall have been issued on either the Closing Date or the Option Closing Date, if
any, and no proceedings for that purpose shall have been instituted or shall be
contemplated.
(m) On or before Closing Date, the Shares, the Common Stock and the Public
Warrants shall have been approved for quotation on the Nasdaq SmallCap Market
and shall have been authorized upon official notice of issuance for trading on
the BSE.
30
(n) On or before Closing Date, there shall have been delivered to the
Representative the Lock-up Agreements, in form and substance satisfactory to the
Representative.
(o) On or before the Closing Date, the Company shall have executed a
mergers and acquisition agreement with the Representative in form and substance
satisfactory to the Representative.
(p) On or before the Closing Date, the Company shall have executed the
Representative's Warrant Agreement and the Warrant Agreement together with the
applicable Warrant Certificates, each in form and substance satisfactory to the
Representative.
(q) On or before the Closing Date the Representative shall have received
executed copies of the employment agreements and insurance policies referred to
in Section 1 (a) (xxxi) hereof, each to the satisfaction of the Representative.
(r) Each of the employee bonus pool plan and incentive stock option plan of
the Company shall be in effect as of the Closing Date, shall be in accordance
with terms of the Letter Agreement dated March 6, 1996 between the Company and
RAS and shall otherwise be on terms and conditions satisfactory to the
Representative.
(s) On or before the Closing Date, the Company shall have obtained officers
and directors liability insurance, the terms and conditions of which shall be
reasonably satisfactory to the Representative, and shall keep such insurance in
place for a period of five years from the Closing Date.
If any condition to the Underwriters' obligations hereunder to be fulfilled
prior to or at the Closing Date or the relevant Option Closing Date, as the case
may be, is not so fulfilled, the Representative may terminate this Agreement or,
if the Representative so elects, it 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 of the
Underwriters (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the Underwriter,
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 in
respect thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, 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
31
or based upon 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 time new registration statement
and prospectus in which is included securities of the Company issued or issuable
upon exercise of the Securities; or (iii) in any application or other document
or written communication (in this Section 7 collectively called "Application")
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Securities under the
securities laws thereof or filed with the Commission, any securities commission
or agency, Nasdaq, the BSE or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of the
Prospectus, in the light of the circumstances under which they were made),
unless 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 Prospectus, or any
amendment thereof or supplement thereto, or in any Application, as the case may
be.
The indemnity agreement in this subsection (a) shall be in addition to any
liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each other 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 the Underwriters but only with
respect to statements or omissions, if any, made in any Preliminary Prospectus,
the Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any Application made in reliance upon, and in strict conformity
with, written information furnished to the Company with respect to 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 Prospectus directly relating to the
transactions effected by the Underwriters in connection with this offering. The
Company acknowledges that the statements with respect to the public offering of
the Securities set forth under the heading "Underwriting" and the stabilization
legend in the Prospectus have been furnished by the Underwriters expressly for
use therein and constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, suit or proceeding, such indemnified
party shall, if a claim in respect thereof is to be made against one or more
indemnifying parties under this Section 7, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such
32
failure or from any liability which it may have otherwise). In case any such
action is brought against any indemnified party, and it notifies an indemnifying
party or parties of the commencement thereof, the indemnifying party or parties
will be entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action at the
expense of the indemnifying party, (ii) the indemnifying parties shall not have
employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action 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 or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 7 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution in any case in
which (i) an indemnified party makes claim for indemnification pursuant to this
Section 7, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
this Section 7 provide for indemnification in such case, or (ii) contribution
under the Act may be required on the part of any indemnified party, then each
indemnifying party shall contribute to the amount paid as a result of such
losses, claims, damages, expenses or liabilities (or actions 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 (i) 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
33
from the offering of the Units (before deducting expenses) bear to the total
underwriting discounts received by the Underwriters hereunder, in each case as
set forth in the table in 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 or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions in respect thereof)
referred to above in this subdivision (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by the Underwriters hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Act, each officer of the
Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subparagraph (d), Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this subparagraph (d), notify
such party or parties from whom contribution may be sought, but the omission so
to notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this subparagraph (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution agreement
set forth above shall be in addition to any liabilities which any indemnifying
party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto, shall be
deemed to be representations, warranties and agreements at the Closing Date and
any Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the respective indemnity agreements
contained in Section 7 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter,
the Company, any controlling person of any Underwriter or the Company, and shall
survive termination of this Agreement or the issuance and deliver of the
Securities to the Underwriters and the Representative, as the case may be.
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
Representative, in it's discretion, shall release the Securities for the sale to
the public; provided, however, that the provisions of Sections 5, 7 and 10 of
this Agreement shall at all times be effective. For purposes of this Section 9,
the Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the
34
Representative of telegrams to securities dealers releasing such shares for
offering or the release by the Representative for publication of the first
newspaper advertisement which is subsequently published relating to the
Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the Representative shall
have the right to terminate this Agreement, (i) if any domestic or international
event or act or occurrence has disrupted, or in the Representative's opinion
will in the immediate future disrupt the financial markets; or (ii) any material
adverse change in the financial markets shall have occurred; or (iii) if trading
on the New York Stock Exchange, the American Stock Exchange, or in the
over-the-counter market shall have been suspended, or minimum or maximum prices
for trading shall have been fixed, or maximum ranges for prices for securities
shall have been required on the over-the-counter market by the NASD or by order
of the Commission or any other government authority having jurisdiction; or (iv)
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 (v) if a banking moratorium has been declared by a state or federal
authority; or (vi) if a moratorium in foreign exchange trading has been
declared; or (vii) if the Company, shall have sustained a loss material or
substantial to the Company by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the delivery of the Securities; or (vii) if there
shall have been such a material adverse change in the condition (financial or
otherwise), business affairs or prospects of the Company, whether or not arising
in the ordinary course of business, which would render, in the Representative's
judgment, either of such parties unable to perform satisfactorily its respective
obligations as contemplated by this Agreement or the Registration Statement, or
such material adverse change in the general market, political or economic
conditions, in the United States or elsewhere as in the Representative's
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 Representative in accordance
with the provisions of Section 10(a), the Company shall promptly reimburse and
indemnify the Representative for all of its actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriters in an
amount not to exceed $50,000 (less amounts previously paid pursuant to Section
5(c) above). 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 Representative, by reason of any failure on
the part of the Company to perform an undertaking or satisfy any condition of
this Agreement to be performed or satisfied by the Company (including, without
limitation, pursuant to Section 6 or Section 12) then, the Company shall
promptly reimburse and indemnify the Representative for all of its 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 Blue Sky counsel fees and
expenses and Blue Sky filing fees. Notwithstanding any contrary provision
contained in this Agreement, any
35
election hereunder or any termination of this Agreement (including, without
limitation, pursuant to Sections 6, 10, 11 and 12 hereof), and whether or not
this Agreement is otherwise carried out, the provisions of Section 5 and Section
7 shall not be in any way affected by such election or termination or failure to
carry out the terms of this Agreement or any part hereof.
11. Substitution of the 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 Representative
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
Representative 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.
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 Representative shall have the right to postpone the Closing
Date for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents.
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
Units 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
Securities to be purchased on any Option Closing Date, the Underwriters may at
the Representative's option, by notice from the Representative to the Company,
terminate the Underwriters' obligation to purchase Option Securities 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 shall relieve the Company from liability,
if any, in respect of such default.
36
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
Representative at ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Chairman of the Board, with a copy to Bachner, Tally, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq. Notices to the Company shall be directed to the Company at New York Health
Care, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇, with a
copy to Scheichet & ▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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 Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or 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.
37
17. Entire Agreement; Amendments. This Agreement, the Representative's
Warrant Agreement and the Warrant Agreement constitute the entire agreement of
the parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Representative
and the Company.
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 among
us.
Very truly yours,
NEW YORK HEALTH CARE, INC.
By:_______________________
▇▇▇▇▇ ▇▇▇▇▇, President
Confirmed and accepted as of
the date first above written
RAS SECURITIES CORP.
For itself and as Representative of the several
Underwriters named in Schedule A hereto
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman
38
SCHEDULE A
Name of Underwriters Number of Firm
Securities to
be purchased
TOTAL...............................................
==========
39