Exhibit 1.0
-----------
425,000 UNITS, EACH UNIT CONSISTING OF
ONE SHARE OF COMMON STOCK AND
ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT
LASIK AMERICA, INC.
UNDERWRITING AGREEMENT
Westlake Village, CA.
___________, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ Securities Corp.
As Representative of the
Several Underwriters listed
on Schedule A hereto
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
LASIK America, Inc., a Nevada corporation (the "Company")
confirms its agreement with West America Securities Corp. ("West America") and
each of the several underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 11) for whom West America is acting as
representative (in such capacity, West America shall hereinafter be referred to
as "you" or the "Representative"), with respect to the offer and sale by the
Company and the placement, on a best efforts basis, by the Underwriters, acting
severally and not jointly as placement agents, of the respective number of units
("Units") set forth in Schedule A hereto, each Unit consisting of one (1) share
of the Company's Common Stock, $0.001 par value ("Common Stock") and one (1)
redeemable common stock purchase warrant (the "Redeemable Warrants"). Each
Redeemable Warrant is exercisable for one share of Common Stock. The Common
Stock and Redeemable Warrants comprising the Units will be separately tradable
after the effective date of this offering and are hereinafter referred to as the
"Firm Securities." Each Redeemable Warrant is exercisable commencing on
[____________], 2002 [twelve months after the date of the Prospectus] until
[______________], 2007 [five years after the date of the Prospectus], unless
previously redeemed by the Company, at an initial exercise price of $7.20 per
share [120% of the initial public offering price of the Common Stock]. The
Redeemable Warrants may be redeemed by the Company, in whole but not in part, at
a redemption price of $.10 per warrant at any time commencing [__________], 2002
[six months after the date of the Prospectus] on thirty (30) days' prior written
notice, provided that the average closing sale price of the Common Stock as
reported on the Over-The-Counter Electronic Bulletin Board market equals or
1.0 - 1
exceeds $9.00 [150% of the IPO price of the Common Stock] per share, for any
twenty (20) days prior to the date of the notice of redemption, all in
accordance with the terms and conditions of the Warrant Agreement (herein
defined).
The shares of Common Stock issuable upon exercise of the Redeemable
Warrants are hereinafter referred to as the "Warrant Securities." The Company
also proposes to issue and sell warrants to the Representative (the
"Representative's Warrants") pursuant to the Representative's Warrant Agreement
(the "Representative's Warrant Agreement") for the purchase of up to an
additional 42,500 Shares of Common Stock and/or 42,500 Redeemable Warrants, or
ten percent (10%) of the number of Units placed by the Underwriters, whichever
is greater. The redeemable Common Stock purchase warrants issuable upon exercise
of the Representative's Warrants are hereinafter sometimes referred to herein as
the "Representative's Redeemable Warrants." The Representative's Redeemable
Warrants are identical to the Redeemable Warrants. The shares of Common Stock
issuable upon exercise of the Representative's Warrants and the shares of Common
Stock issuable upon exercise of the Representative's Redeemable Warrants and the
Representative's Redeemable Warrants are sometimes collectively referred to
herein as the "Representative's Securities." The Firm Securities, the
Representative's Warrants, the Representative's Redeemable Warrants, the
Representative's Securities (collectively, hereinafter referred to as the
"Securities") are more fully described in the Registration Statement and the
Prospectus referred to below.
All funds received from subscribers of the Units will be deposited in a
segregated account at __________ ("Bank"), _____________, California, pursuant
to an escrow agreement among you, the Company and the Bank ("Escrow Agreement").
The Company will determine, in its sole discretion, to accept or reject
subscriptions for Units within five days following receipt hereof. Funds of an
investor whose subscription is rejected will be promptly returned directly to
such person by the Bank, without interest thereon or deduction therefrom,
pursuant to the terms of the Escrow Agreement.
The offering of the Units to the public by the Underwriters shall
continue from the Effective Date of the Registration Statement until 90 days
after the Effective Date, at which time the offer and sale of Units shall be
terminated, unless the offering period is extended, in the discretion of the
Representative, for an additional period of 60 days. All investor funds received
into the Escrow Account may be immediately transferred to the Company after
acceptance of the subscription agreement applicable to such funds. The Company
reserves the right to refuse to sell Units to any person at any time.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to, and agrees with,
the Representative as of the date hereof, and as of the Closing Date
(hereinafter defined) 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. 333-68942), including any related preliminary prospectus
1.0 - 2
("Preliminary Prospectus"), for the registration of the Firm
Securities under the Securities Act of 1933, as amended (the
"Act"), which registration statement and amendment or amendments
have been prepared by the Company in conformity with the
requirements of the Act, and the rules and regulations (the
"Regulations") of the Commission under the Act. The Company will
not file any other amendment to said registration statement which
the Representative shall have objected to in writing after having
been furnished with a copy thereof. Except as the context may
otherwise require, such registration statement, as amended, on
file with the Commission at the time the registration statement
becomes effective (including the prospectus, financial statements,
schedules, exhibits and all other documents filed as a part
thereof or incorporated therein (including, but not limited to
those documents or information 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 Regulations), is
hereinafter called the "Registration Statement", and the form of
prospectus in the form first filed with the Commission pursuant to
Rule 424(b) of the Regulations, is hereinafter called the
"Prospectus." 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 the
Prospectus or any part of any thereof and no proceedings for a
stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted
or are pending or to the Company's knowledge, threatened. Each of
the Preliminary Prospectus, Registration Statement and Prospectus
at the time of filing thereof conformed with the requirements of
the Act and the Rules and Regulations, and none of the Preliminary
Prospectus, Registration Statement or Prospectus at the time of
filing thereof contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein and
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, 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. The Company has
filed all reports, forms or other documents required to be filed
under the Act or the Exchange Act and the respective Rules and
Regulations thereunder, and all such reports, forms or other
documents, when so filed or as subsequently amended, complied in
all material respects with the Act and the Exchange Act and the
respective rules and regulations thereunder.
(iii) When the Registration Statement becomes effective
and at all times subsequent thereto up to the Closing Date, if
1.0 - 3
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, 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 Underwriters 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 corporation in good standing under the laws of the
state of its incorporation. The Company is duly qualified and
licensed and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any properties
or the character of its operations requires such qualification or
licensing. Any and all of the Company shares have been validly
issued, are fully paid and non-assessable, were not issued in
violation of any preemptive rights, and except as set forth in the
Prospectus, are owned free and clear of any liens, charges,
claims, encumbrances, pledges, security interests, defects or
other restrictions or equities of any kind whatsoever. The Company
has all requisite corporate power and authority, and has obtained
any and all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental
or regulatory officials and bodies (including, without limitation,
those having jurisdiction over environmental or similar matters),
to own or lease its properties and conduct its business as
described in the Prospectus; 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 and local laws, rules and regulations; and the
Company has not received any notice of proceedings relating to the
revocation or modification of any such authorization, approval,
order, license, certificate, franchise, or permit which, singly or
in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, position,
prospects, value, operation, properties, business or results of
operations of the Company. The disclosures in the Registration
Statement concerning the effects of federal, state and local laws,
rules and regulations on the Company's business as currently
conducted and as contemplated are correct in all material respects
1.0 - 4
and do not omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances in
which they were made, not misleading.
(v) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, under
"Capitalization" and "Description of Securities" and will have the
adjusted capitalization set forth therein on the Closing Date and
the Option Closing Date, if any, based upon the assumptions set
forth therein, and the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Representative's
Warrant Agreement and the Warrant Agreement (as defined in Section
1(a)(xxxiii) of this Agreement) and as described in the
Prospectus. The Securities and all other securities issued or
issuable by the Company conform or, when issued and paid for, will
conform, in all respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus. All
issued and outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and
non-assessable and the holders thereof have no rights of
rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of
any holders of any security of the Company or similar contractual
rights granted by the Company. The Securities to be sold by the
Company hereunder and pursuant to the Representative's Warrant
Agreement and the Warrant Agreement are not and will not be
subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid for
and delivered in accordance with the terms hereof, 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
will be in due and proper form. Upon the issuance and delivery
pursuant to the terms hereof and the Representative's Warrant
Agreement of the Securities to be sold by the Company hereunder,
the Underwriters will acquire good and marketable title to such
Securities free and clear of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity
of any kind whatsoever asserted against the Company or any
affiliate of the Company.
(vi) The financial statements of the Company, together with
the related notes and schedules 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 and the Subsidiaries at the respective
dates and for the respective periods to which they apply and the
1.0 - 5
pro forma and the as-adjusted financial information included in
the Registration Statement and Prospectus presents fairly on a
basis consistent with that of the audited financial statements
included therein, what the Company's pro forma and as-adjusted
capitalization would have been for the respective periods and as
of the respective dates to which they apply after giving effect to
the adjustments described therein. Such financial statements have
been prepared in conformity with generally accepted accounting
principles and the Rules and Regulations, consistently applied
throughout the periods involved. There has been no adverse change
or development involving a material prospective change in the
condition, financial or otherwise, or in the earnings, position,
prospects, stockholders' equity, value, operation, properties,
business, or results of operations of the Company, whether or not
arising in the ordinary course of business, since the date of the
financial statements included in the Registration Statement and
the Prospectus and the outstanding debt, the property, both
tangible and intangible, and the business of the Company conform
in all material respects to the descriptions thereof contained in
the Registration Statement and the Prospectus. Financial
information set forth in the Prospectus under the headings
"Prospectus Summary," "Selected Consolidated Financial Data,"
"Capitalization," "Dilution" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," fairly
presents, on the basis stated in the Prospectus, the information
set forth therein, have been derived from or compiled on a basis
consistent with that of the audited financial statements included
in the Prospectus.
(vii) The Company (i) has paid all federal, state, local,
and foreign taxes for which it is liable, including, but not
limited to, withholding taxes and amounts payable under Chapters
21 through 24 of the Internal Revenue Code of 1986, as amended
(the "Code"), and has furnished all information returns it is
required to furnish pursuant to the Code, (ii) has established
adequate reserves for such taxes which are not due and payable,
and (iii) does not have any tax deficiency or claims outstanding,
proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriters in connection with (i)
the issuance by the Company of the Securities, (ii) the purchase
by the Underwriters of the Firm Securities from the Company, and
the purchase by the Representative of the Representative's
Warrants from the Company, (iii) the consummation by the Company
of any of its obligations under this Agreement or the
Representative's Warrant Agreement, or (iv) resales of the Firm
Securities in connection with the distribution contemplated
hereby.
(ix) The Company maintains insurance policies, including,
but not limited to, general liability and property insurance,
which insures the Company against such losses and risks generally
1.0 - 6
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 (i)questions the validity of the capital stock of the
Company, this Agreement, the Representative's Warrant Agreement or
the Warrant Agreement or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement, the
Representative's Warrant Agreement or the Warrant Agreement, (ii)
is required to be disclosed in the Registration Statement which is
not so disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all material
respects), or (iii) might materially and adversely affect the
condition, financial or otherwise, or the earnings, position,
prospects, stockholders' equity, value, operation, properties,
business or results of operations of the Company taken as a whole.
(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
in such agreements; and this Agreement, the Representative's
Warrant Agreement and the Warrant Agreement have each been duly
and properly authorized, executed and delivered by the Company.
Each of this Agreement, the Representative's Warrant Agreement and
the Warrant Agreement constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms, except (i) as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting
creditors' rights generally, (ii) as enforceability of any
indemnification or contribution provisions may be limited under
applicable laws or the public policies underlying such laws and
(iii) that the remedies of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
1.0 - 7
proceedings may be brought. None of the Company's issue and sale
of the Securities, execution or delivery of this Agreement, the
Representative's Warrant Agreement or the Warrant Agreement, its
performance hereunder and thereunder, its consummation of the
transactions contemplated herein and therein, or the conduct of
its business as described in the Registration Statement and the
Prospectus, and any amendments or supplements thereto, conflicts
with or will conflict with or results or will result in any breach
or violation of any of the terms or provisions of, or constitutes
or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim,encumbrance, pledge,
security interest, defect or other restriction or equity of any
kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of, (i) the
certificate of incorporation or by-laws of the Company, (ii) any
license, contract, indenture, mortgage, lease, deed of trust,
voting trust agreement, stockholders agreement,note, loan or
credit agreement or other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or
instrument to which the Company is a party or by which it is or
may be bound or to which any of its properties or assets (tangible
or intangible) is or may be subject, or any indebtedness, or (iii)
any statute, judgment, decree, order, rule or regulation
applicable to the Company of any arbitrator, court,regulatory body
or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or
properties.
(xii) No consent, approval, authorization or order of, and
no filing with, any arbitrator, court, regulatory body,
administrative agency, government agency or other body, domestic
or foreign, is required for the issuance of the Securities
pursuant to the Prospectus and the Registration Statement, this
Agreement, the Representative's Warrant Agreement and the Public
Warrant Agreement, the 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 and the rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection
with the Underwriters' purchase and distribution of the Securities
and the Representative's Warrants to be sold by the Company
hereunder.
(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
1.0 - 8
the Company is a party or by which it may be bound or to which any
of its assets, properties or business may be subject have been
duly and validly authorized, executed and delivered by the Company
or the Subsidiaries, and constitute the legal, valid and binding
agreements of the Company enforceable against each of them in
accordance with their respective terms. The descriptions in the
Registration Statement of agreements, contracts and other
documents are accurate in all material respects and fairly present
the information required to be shown with respect thereto by Form
SB-2, and there are not agreements, contracts or other documents
which are required by the Act to be described in the Registration
Statement or filed as exhibits to the Registration Statement which
are not described or filed as required, and the exhibits which
have been filed are in all material respects 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 the
Prospectus, and except as may otherwise be indicated or
contemplated herein or therein, the Company has not(i) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money, (ii) entered into any transaction
other than in the ordinary course of business, or (iii) declared
or paid any dividend or made any other distribution on or in
respect of its capital stock of any class, and there has not been
any change in the capital stock, or any material change in the
debt (long or short term) or liabilities or material adverse
change in or affecting the condition, financial or otherwise,
earnings, prospects, stockholders' equity, value, operations,
properties, business or results of operations 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 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.
(xvi) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in
compliance with all federal, state, local, and foreign laws and
regulations respecting employment and employment practices, terms
and conditions of employment and wages and hours. There are no
pending investigations involving the Company by the U.S.
Department of Labor, or any other governmental agency responsible
for the enforcement of such federal, state, local, or foreign laws
and regulations. There is no unfair labor practice charge or
complaint of the Company pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute,
slowdown or stoppage pending or threatened against or involving
1.0 - 9
the Company or any predecessor entity, and none has ever occurred.
No representation question exists respecting the employees of the
Company and no collective bargaining agreement or modification
thereof is currently being negotiated by the Company. No grievance
or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company. No labor dispute
with the employees of the Company exists, or is imminent.
(xvii) The Company does not now 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. Any ERISA Plan is in
compliance with all reporting, disclosure and other requirements
of the Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal Revenue
Service with respect to each ERISA Plan which is intended to
comply with Code Section 401(a), stating that such ERISA Plan and
the attendant trust are qualified thereunder. The Company has
never completely or partially withdrawn from a "multiemployer
plan."
(xviii) Neither the Company, nor any of its employees,
directors, stockholders, partners, 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, service names, trade names and copyrights and none
of the licenses and rights to the foregoing presently owned or
held by the Company, are in dispute or are in any conflict with
the right of any other person or entity. The Company (i) owns or
has the right to use, free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects or
other restrictions or equities of any kind whatsoever, all
patents, patent applications, trademarks, service marks, service
names, trade names and copyrights, technology and licenses and
rights with respect to the foregoing, used in the conduct of its
business as now conducted or proposed to be conducted without
infringing upon or otherwise acting adversely to the right or
claimed right of any person, corporation or other entity under or
1.0 - 10
with respect to any of the foregoing and (ii) is not obligated or
under any liability whatsoever to make any payment by way of
royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, patent application, trademark, service
▇▇▇▇, service names, trade name, copyright, know-how, technology
or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise. There is
no action, suit, proceeding, inquiry, arbitration, investigation,
litigation or governmental or other proceeding, domestic or
foreign, pending or threatened (or circumstances that may give
rise to the same) against the Company which challenges the
exclusive rights of the Company and the Subsidiaries with respect
to any trademarks, trade names, service marks, service names,
copyrights, patents, patent applications or licenses or rights to
the foregoing used in the conduct of its business, or which
challenge the right of the Company and the Subsidiaries to use any
technology presently used or contemplated to be used in the
conduct of its business.
(xx) The Company owns and has the unrestricted right to use
all trade secrets, know-how (including all other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), inventions, technology, designs, processes, works of
authorship, computer programs and technical data and information
(collectively herein "intellectual property") that are material to
the development, manufacture, operation and sale of all products
and services sold or proposed to be sold by any of the Company,
free and clear of and without violating any right, lien, or claim
of others, including without limitation, former employers of its
employees; provided, however, that the possibility exists that
other persons or entities.
(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 interests, defects, or other restrictions or
equities of any kind whatsoever, other than those referred to in
the Prospectus and liens for taxes not yet due and payable.
(xxii) Pannel ▇▇▇▇ ▇▇▇▇▇▇▇, Certified Public Accountants, A
Professional Corporation ("Pannel ▇▇▇▇ ▇▇▇▇▇▇▇"), 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 ("Lock-Up Agreement") pursuant
to which all of the officers and directors of the Company, holders
of Common Stock and holders of securities exchangeable or
exercisable for or convertible into shares of Common Stock have
agreed (i) not to, directly or indirectly, offer, sell, grant any
option for the sale of, assign, transfer, pledge, hypothecate,
1.0 - 11
distribute or otherwise encumber or dispose of any shares of
Common Stock or securities convertible into, exercisable or
exchangeable for or evidencing any right to purchase or subscribe
for any shares of Common Stock (either pursuant to Rule 144 of the
Rules and Regulations or otherwise) or dispose of any beneficial
interest therein for a period of not less than twelve (12) months
following the effective date of the Registration Statement without
the prior written consent of the Representative and the Company,
and, (ii) for a period extending twelve (12) months following the
effective date of the Registration Statement, that all sales of
such securities issued by the Company shall be made through the
Underwriter in accordance with its customary brokerage policies.
In addition, the Company shall not sell or offer for sale any of
its securities for a period of twelve (12) months from the
effective date of the Registration Statement without the consent
of the Representative except pursuant to options and warrants
issued on the effective date of the Registration Statement. 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 or their respective
officers, directors, stockholders, partners, employees or
affiliates that may affect the Underwriters' compensation, as
determined by the NASD.
(xxv) The Common Stock and the Redeemable Warrants have
been approved for quotation on the Over-the-Counter Electronic
Bulletin Board maintained by the NASD.
(xxvi) Neither the Company, nor any of its directors,
officers, employees, agents, or any other persons 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 any of the Company in connection with any actual or
proposed transaction) which (a) might subject the Company, or any
other such person to any damage or penalty in any civil, criminal
or governmental litigation or proceeding (domestic or foreign),
(b) if not given in the past, might have had a materially adverse
effect on the assets, business or operations of any of the
Company, or (c) if not continued in the future, might adversely
1.0 - 12
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) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business
with Cuba, and the Company further agrees that if it or any
affiliate commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the
date the Registration Statement becomes or has become effective
with the Commission or with the Florida Department of Banking and
Finance (the "Department"), whichever date is later, or if the
information reported or incorporated by reference in the
Prospectus, if any, concerning the Company's, or any affiliate's,
business with Cuba or with any person of affiliate located in Cuba
changes in any material way, the Company will provide the
Department notice of such business or change, as appropriate, in a
form acceptable to the Department.
(xxviii) Except as set forth in the Prospectus, no officer,
director or stockholder of any 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, either directly or indirectly, (i) an interest in
any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be
furnished or sold by the Company, or (B) purchases from or sells
or furnishes to the Company any goods or services, or (ii) a
beneficial interest in any contract or agreement to which the
Company is a party or by which 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, or Principal Stockholder (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.
(xxix) Any certificate signed by any officer of the
Company, and delivered to the Representative or to Underwriters'
Counsel (as defined herein) shall be deemed a representation and
warranty by the Company to the Representative as to the matters
covered thereby.
(xxx) The minute book of the Company has been made
available to the Representative and contain a complete summary of
all meetings and actions of the directors, stockholders, audit
committee, compensation committee and any other committee of the
Board of Directors of the Company, since the time of its
incorporation, and reflects all transactions referred to in such
minutes accurately in all material respects.
1.0 - 13
(xxxi) 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 to be filed by the Company or to require the Company to
file a registration statement under the Act and no person or
entity holds any anti-dilution rights with respect to any
securities of the Company.
(xxxii) The Company has entered into a warrant agreement,
substantially in the form filed as Exhibit 1.3 to the Registration
Statement (the "Warrant Agreement"), with Corporate Stock
Transfer, in form and substance satisfactory to the Underwriter,
with respect to the Redeemable Warrants and providing for the
payment of warrant solicitation fees. The Warrant Agreement has
been duly and validly authorized by the Company and, assuming due
execution by the parties thereto other than the Company,
constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms
(except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles in
any action, legal or equitable, and except as obligations to
indemnify or contribute to losses may be limited by applicable
law).
(xxxiii) The Company is not, and upon the issuance and sale
of the Securities as herein contemplated and the application of
the net proceeds therefrom as described in the Prospectus under
the caption "Use of Proceeds" will not be, an "investment company"
or an entity "controlled" by an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxxiv) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparations of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES AND REPRESENTATIVE'S
WARRANTS.
(a) On the basis of the covenants, representations, and warranties
herein contained and subject to the terms and conditions herein set forth:
1.0 - 14
(i) The Company hereby engages you as its exclusive agent
to solicit subscriptions for the Units in accordance with the
terms of the Registration Statement, the Prospectus and this
Agreement, and you agree to use your best efforts to procure such
subscriptions. You may, however, discharge your responsibilities
under this Agreement by acting as the Representative of several
placement agents and by forming a group of securities dealers
acting as additional placement agents, including you, to procure
subscribers for the Units. Any agreement between you and a
securities dealer pursuant to which such securities dealer
becomes an Underwriter shall require such dealer to represent and
warrant that it will conduct the Offering and sale of the Units
in the manner set forth herein. The allocation of Units among you
and the Underwriters shall be made by you.
(ii) Subject to the terms and condition set forth herein,
in consideration of your execution of this Agreement and
performance of your obligations hereunder, the Company agrees
that, at each Closing (as defined herein), you shall receive (i)
selling commissions in an amount equal to 10% of the aggregate
purchase price of the Units sold by you (or any Underwriter and
(ii) a non-accountable expense allowance equal to 3% of the
aggregate purchase price of the Units sold by you (or any
Underwriter). The aggregate commissions and expense allowance
payable in connection with the sale of Units will be disbursed to
you, as provided herein and in Escrow Agreement; thereupon, you
shall pay to each of the other Underwriters, if any, in such
amount (which shall not exceed commissions and expense allowance
in the amounts of 10% and 3%, respectively, of the aggregate
purchase price of the Units placed by such Underwriter), at such
times and upon such terms and conditions as shall have been
agreed upon between you and such Underwriter, that portion of the
aggregate commissions to which such Underwriter is entitled.
(c) As additional consideration for the Representative's services
rendered pursuant to this Agreement, on the final Closing Date ( as hereinafter
defined), the Company will sell to you or your designees, at a price of $0.001
per warrant ("Warrant Price"), common stock purchase warrants ("Underwriter's
Warrants") to purchase Units, under the following terms and conditions:
(i) The aggregate number of Units subject to Underwriter's
Warrants will be equal to 10% of the Units sold by you (or any
Underwriter) pursuant to this Agreement.
(ii) The Underwriter's Warrants may not be sold, hypothecated,
exercised, assigned or transferred for a period of one year
after the initial effective date of the Registration
Statement, except to partners or officers of the Underwriters
(including the Representative).
(iii) Underwriter's Warrants shall be exercisable during the
4-year period commencing on the first anniversary of the final
Closing Date ("Warrant Exercise Term"), at any time and from
1.0 - 15
time to time, in whole or in part, during the said Warrant
Exercise Term, and shall grant to the holder the right to
purchase one Unit for each Underwriter's Warrant at a price
per Unit exercise price equal to 165% of the initial public
offering price of the Units.
(iv) The Underwriter's Warrants shall contain such other terms
and conditions as are satisfactory, in form and substance to
you Underwriter's Counsel, including without limitation,
adjustment and exercise provisions.
(d) Each subscriber for the Units must (i) complete and execute
a subscription agreement (in the form included as an Exhibit to the Registration
Statement ("Subscription Agreement") and any other documents which may be
required by the Representative or the Company in connection with such
subscription (collectively, "Subscription Documents") and (ii) tender payment in
full for the Units subscribed for ("Subscription Payment"); checks representing
Subscription Payments should be made payable to "LASIK America, Inc. Escrow
Account"; the Representative shall deliver Subscription Payments received by you
to the Escrow Agent, at ▇▇▇▇▇ Fargo Bank, N.A., Los Angeles, California, by
12:00, noon, on the business day following such receipt by the Representative,
together with a schedule setting forth the amount of each such Subscription
Payment and the name, mailing address and state of residence of the subscriber.
Concurrently with the delivery of each Subscription Payment to the Escrow Agent,
the Representative shall forward to the Company executed originals of all
related Subscription Documents, retaining copies of all such Subscription
Documents for your records.
(e) Within five (5) days following receipt by it of executed
Subscription Documents, the Company shall determine to accept or reject each
subscription and shall notify the Representative and the Escrow Agent orally (to
be confirmed in writing). If the Company elects to reject a subscription, the
related Subscription Payment shall, upon receipt by the Escrow Agent of oral
notice (to be confirmed in writing) from the Company of such rejection, promptly
be returned directly to the rejected subscriber by the Escrow Agent, without
interest thereon or deduction therefrom.
(f) Subject to the terms hereof and of the Escrow Agreement, the
first disbursement of subscription proceeds (including disbursement of amounts
due to the Representative hereunder) shall take place not less than two (2)
business days following the date upon which cleared funds representing the first
$100,000 in Subscription Payments have been received by the Escrow Agent under
the terms of the Escrow Agreement; such initial disbursement is referred to
herein as the "Initial Closing," and the date thereof is referred to as the
"Initial Closing Date." Following the Initial Closing, subscription proceeds
shall be disbursed from time to time as agreed among the Representative, the
Company and the Escrow Agent; each such further disbursement of subscription
proceeds is referred to herein as an "Additional Closing," and the date thereof
1.0 - 16
as an "Additional Closing Date." The Initial Closing and Additional Closings are
sometimes referred to herein as a "Closing" or "Closings"; and the Initial
Closing Date and Additional Closing Dates are sometimes referred to herein as a
"Closing Date" or "Closing Dates."
(g) Each Closing shall take place at the offices of the Escrow
Agent, in Los Angeles, California, or, at the Representative's option, at such
other place as may be agreed upon in writing with the Company. After the final
Closing Date, the Representative will not be considered to have any continuing
or future duty or obligation of any kind to the Company.
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 Securities as the
Representative may determine (other than to residents of or in any jurisdiction
in which qualification of the Units is required and has not become effective) at
the price and upon the other terms set forth in the Prospectus. The
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 discretion deems advisable. The Underwriters may enter
into one of 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.
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 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 the 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)
1.0 - 17
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional information.
If the Commission or any state securities regulatory authority shall enter a
stop order or suspend such qualification at any time, the Company will make
every effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and
substance satisfactory to the Representative) 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)(4)) not later than the Commission's close of business on
the earlier of (i) the second business day following the execution and delivery
of this Agreement and (ii) the fifteenth business day after the effective date
of the Registration Statement.
(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 Representative 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 "Underwriters' Counsel"), shall object.
(e) The Company shall endeavor in good faith, in cooperation
with the Representative, at or prior to the time the Registration Statement
becomes effective, to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as the 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.
(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 delivered under the Act, any event shall
have occurred as a result of which, in the opinion of counsel for the Company or
Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes
an untrue statement of a material fact or omits to state any material fact
1.0 - 18
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, 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 Representative copies
of such amendment or supplement as soon as available and in such quantities as
the Representative 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 twelve (12) consecutive months after the effective
date of the Registration Statement.
(h) During a period of seven (7) years after the date hereof,
the Company will furnish to its stockholders, as soon as practicable, annual
reports (including financial statements audited by independent public
accountants) and unaudited quarterly 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;
(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
1.0 - 19
(vi) any additional information of a public nature
concerning the Company, or its businesses which the Representative
may request.
(vii) During such seven-year period, if the Company has an
active subsidiary, the foregoing financial statements will be on a
consolidated basis to the extent that the accounts of the Company
and its subsidiary(ies) 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 and Warrant
Agent ("Transfer Agent") and, if necessary under the jurisdiction of
incorporation of the Company, a Registrar (which may be the same entity as the
Transfer Agent) for its Common Stock and Redeemable Warrants.
(j) The Company will furnish to the Representative or on
Representative's order, without charge, at such place as the Representative may
designate, copies of each Preliminary Prospectus, the Registration Statement and
any pre-effective or post-effective amendments thereto (two of which copies will
be signed and will include all financial statements and exhibits), the
Prospectus, and all amendments and supplements thereto, including any prospectus
prepared after the effective date of the Registration Statement, in each case as
soon as available and in such quantities as the Representative may request.
(k) On or before the effective date of the Registration
Statement, the Company shall provide the Underwriter with originally-executed
copies of duly executed, legally binding and enforceable Lock-Up Agreements
which are in form and substance satisfactory to the Underwriter. On or before
the Closing Date, the Company shall deliver instructions to its transfer agent
authorizing such transfer agent to place appropriate legends on the certificates
representing the securities of the Company subject to the Lock-Up Agreements and
to place appropriate stop transfer orders on the Company's ledgers.
(l) The Company agrees that, for a period of twelve (12)
months commencing on the effective date of the Registration Statement, and
except as contemplated by this Agreement, it and its future Subsidiaries will
not, without the prior written consent of the Underwriter issue, sell, contract
or offer to sell, grant an option for the purchase or sale of, assign, transfer,
pledge, distribute or otherwise dispose of, directly or indirectly, any shares
of Common Stock or any option, right or warrant with respect to any shares of
Common Stock or any type of capital stock having voting or dividend rights on a
parity with or superior to the Common Stock, except pursuant to stock options or
warrants issued on the date hereof, for cash at less than the greater of the
initial public offering price of shares of Common Stock or the then market value
of such shares.
(m) Neither the Company, nor any of its or their officers,
directors, stockholders, nor any of their respective 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.
1.0 - 20
(n) The Company shall apply the net proceeds from the sale of
the Securities in the manner, and subject to the conditions, set forth under
"Use of Proceeds" in the Prospectus. Except as described in the Prospectus, no
portion of the net proceeds will be used, directly or indirectly, to acquire any
securities issued by the Company.
(o) The Company shall timely file all such reports, forms or
other documents as may be required from time to time, under the Act, the
Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Act, the Exchange Act, and the Rules and Regulations.
(p) The Company shall furnish to the Representative as early
as practicable prior to each of the date hereof, the Closing Date, 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 its letter to be furnished pursuant to Section 6(j) hereof.
(q) The Company shall cause the Common Stock and the
Redeemable Warrants to be quoted on the Over-the-Counter Electronic Bulletin
Board, use its best efforts to maintain the listing of the Units, if the
securities underlying the Units are not separately tradable, the Common Stock
and the Redeemable Warrants to the extent outstanding.
(r) For a period of five (5) years from the Closing Date, the
Company shall furnish to the Representative at the Representative's request and
at the Company's sole expense, (i) daily consolidated transfer sheets relating
to the Units, the Common Stock and the Redeemable Warrants (ii) the list of
holders of all of the Company's securities and (iii) a Blue Sky "Trading Survey"
for secondary sales of the Company's securities prepared by counsel to the
Company.
(s) As soon as practicable, but in no event more than thirty
(30) days from the effective date of the Registration Statement, the Company
agrees to take all necessary and appropriate actions to be included in Standard
and Poor's Corporation Descriptions and ▇▇▇▇▇'▇ OTC Manual and to continue such
inclusion for a period of not less than seven (7) years.
(t) Until the completion of the distribution of the Firm
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.
(u) Commencing one year from the date hereof, to pay the
Underwriter a warrant solicitation fee equal to five percent (5%) of the
exercise price of the Redeemable Warrants, payable on the date of the exercise
thereof on terms provided in the Public Warrant Agreement. The Company will not
solicit the exercise of the Redeemable Warrants through any solicitation agent
other than the Underwriter. The Underwriter will not be entitled to any warrant
1.0 - 21
solicitation fee unless the Underwriter provides bona fide services in
connection with any warrant solicitation and the investor designates, in
writing, that the Underwriter is entitled to such fee.
(v) For a period equal to the lesser of (i) three (3) years
from the date hereof, and (ii) the sale to the public of the Representative's
Securities, the Company will not take any action or actions which may prevent or
disqualify the Company's use of Form SB-2 or Form S-1 (or other appropriate
form) for the registration under the Act of the Representative's Securities.
(w) For a period of five (5) years after the effective date of
the Registration Statement, the Representative shall have the right to designate
for election one (1) individual to the Company's Board of Directors (the
"Board"). Such person shall be mutually acceptable to the Company and the
Representative. In the event the Representative elects not to exercise such
right, then it may designate one (1) individual to attend meetings of the
Company's Board. The Company shall notify the Representative of each meeting of
the Board and the Company shall send to such individual 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 attendance of meetings of the Board.
(x) For a period of twenty-four (24) months after the
effective date of the Registration Statement, the Company shall not restate,
amend or alter any term of any written employment, consulting or similar
agreement entered into between the Company and any officer, director or key
employee as of the effective date of the Registration Statement in a manner
which is more favorable to such officer, director or key employee, without the
prior written consent of the Representative.
(y) For a period of three (3) years after the effective date
of the Registration Statement, the Company, any subsidiaries and any affiliates
hereby grant a thirty-day (30) right of first refusal for any sale of securities
to be made by the Company, any affiliates and any subsidiaries.
(aa) The Company will use its best efforts to maintain the
effectiveness of the Registration Statement for a period of five years after the
date hereof.
5. PAYMENT OF EXPENSES.
(a) The Company hereby agrees to pay on 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, overnight delivery or courier charges with respect thereto) of the
Registration Statement and the Prospectus and any amendments and supplements
thereto and the printing, mailing (including the payment of postage with respect
thereto) and delivery of this Agreement, the Representative's Warrant agreement,
1.0 - 22
the Warrant Agreement, agreements with selected dealers, 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 Firm Securities and the Option 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 and
the Representative's Warrant Agreement, and (z) resale of the Firm Securities
and the Option 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, (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 and "tomb-stone" advertisement expenses, (vi) costs and expenses in
connection with due diligence investigations, including but not limited to the
fees of any independent counsel or consultant retained, (vii) fees and expenses
of the transfer agent and registrar, (viii) applications for assignments of a
rating of the Securities by qualified rating agencies, (ix) the fees payable to
the Commission and the NASD, and (x) the fees and expenses incurred in
connection with the quotation of the Securities on the Over-the-Counter
Electronic Bulletin Board and any other exchange.
(b) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 6 or Section 11, (i) 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, less
any amounts already paid pursuant to Section 5(c) hereof.
(c) The Company further agrees that, in addition to the
expenses payable pursuant to subsection (a) of this Section 5, it will pay to
the 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 Securities.
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 with respect to the Company as if it had been made on and
as of the Closing Date; the accuracy on and as of the 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, of its
covenants and obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 12:00 Noon, New York time, on the date of this Agreement or such
1.0 - 23
later date and time as shall be consented to in writing by the Representative,
and, at the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or contemplated by the
Commission and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
Underwriters' Counsel. If the Company has elected to rely upon Rule 430A of the
Rules and Regulations, the price of the Shares and any price-related information
previously omitted from the effective Registration Statement pursuant to such
Rule 430A shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) of the Rules and Regulations within the prescribed time period, and
prior to 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, 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, 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) At Closing Date, the Underwriter shall have received the
favorable opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., 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 a
validly existing corporation in good standing under the laws of
its jurisdiction of incorporation, (B) is duly qualified and
licensed and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any properties
or the character of its operations requires such qualification or
licensing, and (C) has all requisite power and authority
(corporate and other) and has obtained any and all necessary
authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory
officials and bodies (including, without limitation, those having
jurisdiction over environmental or similar matters), to own or
lease its properties and conduct its business as described in the
Prospectus; each of the Company and the Subsidiaries is and has
1.0 - 24
been doing business in compliance in with all such
authorizations, approvals, orders, licenses, certificates and
permits obtained by it from governmental or regulatory officials
and agencies and all federal, state, local and foreign laws,
rules and regulations to which it is subject; and, none of the
Company nor the Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any
such authorization, approval, order, license, certificate,
franchise or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the condition, financial or
otherwise, or the earnings, prospects, stockholders' equity,
value, operations, properties, business or results of operations
of the Company and the Subsidiaries taken as a whole. The
disclosure in the Registration Statement concerning the effects
of federal, state, local and foreign laws, rules and regulations
on each of the Company's and the Subsidiaries businesses as
currently conducted and as contemplated is correct in all
respects and does not omit to state a material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not
misleading;
(ii) all of the outstanding shares of the Company's common
stock have been validly issued, are fully paid and
non-assessable, were not issued in violation of any preemptive
rights, and except as set forth in the Prospectus, are owned free
and clear of any liens, charges, claims, encumbrances, pledges,
security interests, defects or other restrictions or equities of
any kind whatsoever;
(iii) except as described in the Prospectus, the
Company does not own an interest in any other corporation,
partnership, joint venture, trust or other business entity;
(iv) the Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and
any amendment or supplement thereto, under "Capitalization" and
"Description of Securities" and except as set forth in the
Prospectus, the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Representative's
Warrant Agreement and the Warrant Agreement and as described in
the Prospectus. The Securities and all other securities issued or
issuable by the Company conform, or when issued and paid for,
will conform, in all respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. All
issued and outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission
with respect thereto and are not subject to personal liability by
reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of
1.0 - 25
any security of the Company or any similar contractual right
granted by the Company. The Securities to be sold by the Company
hereunder and under the Representative's Warrant Agreement and
the Warrant Agreement are not and will not be subject to any
preemptive or other similar rights of any stockholder, have been
duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof and thereof, will be validly
issued, fully paid and non-assessable and conform to the
descriptions thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely as such
holders; all corporate action required to be taken for the
authorization, issue and sale of the Securities has been duly and
validly taken; and the certificates representing the Securities
are in due and proper form. The Redeemable Warrants and
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, the Representative's Warrant
Agreement and the Warrant Agreement of the Securities to be sold
by the Company hereunder and thereunder, the Underwriters will
acquire good and marketable title to such Securities, free and
clear of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind
whatsoever. No transfer tax is payable by or on behalf of the
Underwriters in connection with (A) the issuance by the Company
of the Securities, (B) the purchase by the Underwriters of the
Securities from the Company, (C) the consummation by the Company
of any of its obligations under this Agreement, the
Representative's Warrant Agreement or the Warrant Agreement, or
(D) resales of the Securities in connection with the distribution
contemplated hereby;
(v) the Registration Statement is effective under the Act,
and, if applicable, filing of all pricing information has been
timely made in the appropriate form under Rule 430A, and no stop
order suspending the use of the Preliminary Prospectus, the
Registration Statement or the Prospectus or any part of any
thereof or suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are pending, threatened or contemplated
under the Act;
(vi) each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or supplements
thereto (other than the financial statements and schedules and
other financial and statistical data included therein, as to
which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the Rules
and Regulations;
(vii) (A) there are no agreements, contracts or other
documents required by the Act to be described in the Registration
Statement (or required to be filed under the Exchange Act if upon
such filing they would be incorporated, in whole or in part, by
1.0 - 26
reference therein) and the Prospectus and filed as exhibits to
the Registration Statement other than those described in the
Registration Statement and the Prospectus and filed as exhibits
thereto, and the exhibits which have been filed are correct
copies of the documents of which they purport to be copies; (B)
the descriptions in the Registration Statement and the Prospectus
and any supplement or amendment thereto of agreements, contracts
and other documents to which the Company is a party or by which
it is bound are accurate and fairly represent the information
required to be shown by Form SB-2; (C) there is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding (including, without limitation, those
pertaining to environmental or similar matters), domestic or
foreign, pending or threatened against (or circumstances that may
give rise to the same) or involving the properties or business
of, any of the Company which (I) is required to be disclosed in
the Registration Statement which is not so disclosed (and such
proceedings as are summarized in the Registration Statement are
accurately summarized in all respects), or (II) questions the
validity of the capital stock of the Company or of this
Agreement, the Representative's Warrant Agreement or the Warrant
Agreement or of any action taken or to be taken by the Company
pursuant to or in connection with any of the foregoing; (D) no
statute or regulation or legal or governmental proceeding
required to be described in the Prospectus is not described as
required; and (E) there is no action, suit or proceeding pending
or threatened against or affecting any of the Company or the
Subsidiaries before any court, arbitrator or governmental body,
agency or official (or any basis thereof known to such counsel)
in which there is a reasonable possibility of a decision which
may result in a material adverse change in the condition,
financial or otherwise, or the earnings, prospects, stockholders'
equity, value, operation, properties, business or results of
operations of any of the Company or the Subsidiaries, which 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;
(viii) the Company has full legal right, power and
authority to enter into each of 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 has been duly authorized,
executed and delivered by the Company. Each of the
Representative's Warrant Agreement and the Warrant Agreement
certain provisions of this Agreement assuming due authorization,
execution and delivery by each other party thereto, constitutes a
legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy,
1.0 - 27
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles in
any action, legal or equitable, and except as obligations to
indemnify or contribute to losses may be limited by applicable
law). None of the Company's execution or delivery of this
Agreement, the Representative's Warrant Agreement and the Warrant
Agreement, its performance hereunder and thereunder, its
consummation of the transactions contemplated herein and therein,
or the conduct of its business as described in the Registration
Statement and the Prospectus and any amendments or supplements
thereto, conflicts with or will conflict with or results or will
result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under,
or result in the creation or imposition of any lien, charge,
claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of the Company or the
Subsidiaries pursuant to the terms of (A) the certificate of
incorporation or bylaws of the Company, (B) any license,
contract, indenture, mortgage, lease, deed of trust, voting trust
agreement, stockholders' agreement, note, loan or credit
agreement or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or
instrument to which any of the Company or the Subsidiaries is a
party or by which it is or may be bound or to which its
properties or assets (tangible or intangible) are or may be
subject, (C) any statute applicable to any of the Company or
Subsidiaries or (D) any judgment, decree, order, rule or
regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental
agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or
foreign, having jurisdiction over any of the Company or the
Subsidiaries or any of their activities or properties;
(ix) no consent, approval, authorization or order of, and
no filing with, any arbitrator, court, regulatory body,
administrative agency, government agency or other body, domestic
or foreign (other than such as may be required under "blue sky"
laws and the rules of the NASD, as to which no opinion need be
rendered), is required in connection with the issuance of the
Securities pursuant to the Prospectus, the Registration
Statement, this Agreement, the Representative's Warrant Agreement
and the Warrant Agreement, or the performance of this Agreement,
the Representative's Warrant Agreement and the Warrant Agreement
and the transactions contemplated hereby and thereby;
(x) the properties and business of each of the Company
conform to the description thereof contained in the Registration
Statement and the Prospectus; and each of the Company and the
Subsidiaries has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal
1.0 - 28
property stated in the Prospectus to be owned or leased by it, in
each case free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other
restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus and liens for taxes not yet due and
payable;
(xi) the Company is not in breach of, or in default under,
any term or provision of any license, contract, indenture,
mortgage, lease, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for
borrowed money, or any other agreement or instrument to which any
of the Company is a party or by which it is or may be bound or to
which its property or assets (tangible or intangible) are or may
be subject; and the Company is not in violation of any term or
provision of (A) its certificate of incorporation or by-laws, (B)
any authorization, approval, order, license, certificate,
franchise or permit of any governmental or regulatory official or
body, or (C) any judgment, decree, order, statute, rule or
regulation to which it is subject;
(xii) the Common Stock and the Redeemable Warrants have
been accepted for quotation on the Over-the-Counter Electronic
Bulletin Board maintained by the NASD;
(xiii) the statements in the Prospectus under "Prospectus
Summary," "Risk Factors," "Business," "Management," "Principal
Stockholders," "Certain Transactions," "Shares Eligible For
Future Sale," and "Description of Securities" have been reviewed
by such counsel, and insofar as they refer to statements of law,
descriptions of statutes, licenses, rules or regulations or legal
conclusions, are correct in all material respects;
(xiv) the persons listed under the caption "Principal
Stockholders" in the Prospectus are the respective "beneficial
owners" (as such phrase is defined in Rule 13d-3 under the
Exchange Act) of the securities set forth opposite their
respective names thereunder as and to the extent set forth
therein;
(xv) The Company owns or possesses, free and clear of all
liens or encumbrances and right thereto or therein by third
parties, the requisite licenses or other rights to use all
trademarks, service marks, copyrights, service names, tradenames,
patents, patent applications and licenses necessary to conduct
its business (including without limitation any such licenses or
rights described in the Prospectus as being owned or possessed by
the Company) and there is no claim or action by any person
pertaining to, or proceeding, pending or threatened, which
challenges the exclusive rights of the Company with respect to
any trademarks, service marks, copyrights, service names, trade
names, patents, patent applications and licenses used in the
conduct of the Company's businesses (including, without
1.0 - 29
limitation, any such licenses or rights described in the
Prospectus as being owned or possessed by any of the Company);
(xvi) neither the Company, nor any of its directors,
officers, stockholders, employees, agents or any other person
acting on behalf of the Company has, directly or indirectly,
given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a
customer or supplier, or any official or employee of any
governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is or may
be in a position to help or hinder the business of the Company
(or assist it in connection with any actual or proposed
transaction) which (A) might subject any of the Company or any
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 material and adverse
effect on the condition, financial or otherwise, or the earnings,
prospects, stockholders' equity, value, operations, properties,
business or results of operations of the Company taken as a
whole, or (C) if not continued in the future, might materially
and adversely affect the condition, financial or otherwise, or
the earnings, prospects, stockholders' equity, value, operations,
properties, business or results of operations of the Company
taken as a whole;
(xvii) there are no claims, payments, issuances,
arrangements or understandings, whether oral or written, for
services in the nature of a finder's or origination fee with
respect to the sale of the Securities hereunder or financial
consulting arrangement or any other arrangements, agreements,
understandings, payments or issuances that may affect the
Underwriters' compensation, as determined by the NASD;
(xviii) the minute books of the Company contain a complete
summary of all meetings and actions of the directors and
stockholders of each of the Company since the time of its
incorporation and reflect all transactions referred to in such
minutes accurately in all material respects;
(xix) 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;
(xx) assuming due authorization, execution and delivery by
the parties thereto, the Lock-Up Agreements are legal, valid and
binding obligations of the parties thereto, enforceable against
such parties and any subsequent holder of the securities subject
thereto in accordance with their terms;
1.0 - 30
(xxi) 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
(xxii) neither the Company nor or any of its affiliates
shall be subject to the requirements of or shall be deemed an
"Investment Company," pursuant to and as defined under,
respectively, the Investment Company Act.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement, the Prospectus, and related matters were discussed and,
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which lead
them to believe that either the Registration Statement or any amendment thereto,
at the time such Registration Statement or amendment became effective or the
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), or any supplements or
amendments thereto.
Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written policy
or other document relating to legal opinions, including, without limitation, the
Legal Opinion Accord of the ABA Section of Business Law (1991), or any
comparable State bar accord.
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 each of the
Company and the Subsidiaries, 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 and the
Subsidiaries, provided that copies of any such statements or certificates shall
be delivered to Underwriters' Counsel if requested. The opinion shall also state
that the Underwriters' Counsel is entitled to rely thereon. The opinion of such
1.0 - 31
counsel for the Company and the Subsidiaries shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and that the
Underwriters and they are justified in relying thereon.
(e) On or prior to the Closing Date, 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 conditions of the Company, or herein contained.
(f) Prior to the Closing Date, (i) there shall have been no
material adverse change or development involving a prospective adverse change in
the condition, financial or otherwise, or the earnings, stockholders' equity,
value, operations, properties, prospects, business or results of operations of
the Company, whether or not in the ordinary course of business, from the latest
dates as of which such matters are set forth in the Registration Statement and
the Prospectus; (ii) there shall have been no transaction, not in the ordinary
course of business, entered into by the Company from the latest date as of which
the financial condition of the Company is set forth in the Registration
Statement and the Prospectus; (iii) the Company shall be in default under any
provision of any instrument relating to any outstanding indebtedness; (iv) none
of the Company nor the Subsidiaries shall have issued any securities (other than
the Securities) or declared or paid any dividend or made any distribution in
respect of its capital stock of any class and there shall not have been any
change in the capital stock, debt (long or short term) or liabilities or
obligations of the Company (contingent or otherwise) from the latest dates as of
which such matters are set forth in the Registration Statement and the
Prospectus; (v) no material amount of the assets of the Company shall have been
pledged or mortgaged, except as set forth in the Registration Statement and the
Prospectus; (vi) no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental or other proceeding, domestic or
foreign, shall be pending or threatened (or circumstances giving rise to same)
against the Company affecting any of its properties or business before or by any
court or federal, state or foreign commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding may materially and
adversely affect the condition, financial or otherwise, or the earnings,
stockholders' equity, value, operations, properties, business or results of
operations of the any of the Company or the Subsidiaries, except as set forth in
the Registration Statement and Prospectus; and (vii) no stop order shall have
been issued under the Act with respect to the Registration Statement and no
proceedings therefore shall have been initiated, threatened or contemplated by
the Commission.
(g) At the Closing Date, if any, the Underwriters shall have
received a certificate of the Company signed by the principal executive officer
and by the chief financial or chief accounting officer of the Company, dated the
Closing Date, to the effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that:
(i) The representations and warranties of the Company in
this Agreement are true and correct, as if made on and as of the
Closing Date, 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
the Closing Date;
1.0 - 32
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and
no proceedings for that purpose have been instituted or are
pending or, to the best of each of such person's knowledge, after
due inquiry are contemplated or threatened under the Act;
(iii) The Registration Statement and the Prospectus and,
if any, each amendment and each supplement thereto, contain all
statements and information required to be included therein, and
none of the Registration Statement, the Prospectus nor any
amendment or supplement thereto includes any untrue statement of
a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading and neither the Preliminary Prospectus 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) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (a) the Company has not incurred up to and including
the Closing Date, other than in the ordinary course of its
business, any material liabilities or obligations, direct or
contingent; (b) the Company has not paid or declared any
dividends or other distributions on its capital stock; (c) the
Company has not entered into any transactions not in the ordinary
course of business; (d) there has not been any change in the
capital stock of any of the Company or any material change in the
debt (long or short-term) of any of the Company; (e) the Company
has not sustained any material loss or damage to its property or
assets, whether or not insured; (g) there is no litigation which
is pending or threatened (or circumstances giving rise to same)
against the Company, or any affiliated party of any of the
foregoing which is required to be set forth in an amended or
supplemented Prospectus which has not been set forth; and (h)
there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this
subsection (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.
(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 Pannel ▇▇▇▇ ▇▇▇▇▇▇▇,
Certified Public Accountants, A Professional Corporation;
1.0 - 33
(i) confirming that they are independent certified public
accountants with respect to the Company and the Subsidiaries
within the meaning of the Act and the applicable Rules and
Regulations;
(ii) stating that it is their opinion that the financial
statements and supporting schedules of the Company included in
the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act
and the Rules and Regulations thereunder and that the
Underwriters may rely upon the opinion of Pannel ▇▇▇▇ ▇▇▇▇▇▇▇,
Certified Public Accountants, A Professional Corporation, with
respect to such financial statements and supporting schedules
included in the Registration Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim
financial statements of the Company, a reading of the latest
available minutes of the stockholders and board of directors and
the various committees of the boards of directors each the
Company, consultations with officers and other employees each of
the Company responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to
their attention which would lead them to believe that (A) the pro
forma and as-adjusted financial information contained in the
Registration Statement and Prospectus does not comply as to form
in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations or is not
fairly presented in conformity with generally accepted accounting
principles applied on a basis consistent with that of the audited
financial statements of the Company or the unaudited pro forma or
as-adjusted financial information included in the Registration
Statement, (B) the unaudited financial statements and supporting
schedules of the Company and the Subsidiaries 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 (C) at a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there
has been any change in the capital stock of the Company, any
change in the long-term debt of the Company, or any decrease in
the stockholders' equity of the Company or any decrease in the
net current assets or net assets of the Company as compared with
amounts shown in the July 31, 2001 balance sheets included in the
Registration Statement, other than as set forth in or
contemplated by the Registration Statement, or, if there was any
change or decrease, setting forth the amount of such change or
decrease, and (D) during the period from July 31, 2001 to a
specified date not more than five (5) days prior to the effective
date of the Registration Statement, there was any decrease in net
revenues or net earnings of the Company or increase in net
1.0 - 34
earnings per common share of the Company, other than as set forth
in or contemplated by the Registration Statement, or, if there
was any such decrease, setting forth the amount of such decrease;
(iv) setting forth, at a date not later than five (5) days
prior to the effective date of the Registration Statement, the
amount of liabilities of the Company (including a break-down of
commercial paper and notes payable to banks);
(v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings,
statements and other financial information pertaining to the
Company set forth in the Prospectus in each case to the extent
that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records,
including work sheets, of the Company and excluding any questions
requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries
and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted
auditing standards) set forth in the letter and found them to be
in agreement; and
(vi) statements as to such other matters incident to the
transaction contemplated hereby as the Underwriters may request.
(j) At the Closing Date, the Underwriters shall have received
from Pannel ▇▇▇▇ ▇▇▇▇▇▇▇, Certified Public Accountants, A Professional
Corporation, a letter, dated as of the Closing Date, to the effect that they
reaffirm the statements made in the letter furnished pursuant to SUBSECTION (j)
of this Section hereof except that the specified date referred to shall be a
date not more than five days prior to the Closing Date or the Option Closing
Date, as the case may be, and, if the Company has elected to rely on Rule 430A
of the Rules and Regulations, to the further effect that they have carried out
procedures as specified in clause (v) of SUBSECTION (j) of this Section with
respect to certain amounts, percentages and financial information as specified
by the Underwriters and deemed to be a part of the Registration Statement
pursuant to Rule 430A(b) and have found such amounts, percentages and financial
information to be in agreement with the records specified in such clause (v).
(k) The Company shall have delivered to the Representative a
letter from Pannel ▇▇▇▇ ▇▇▇▇▇▇▇ addressed to the Company stating that they have
not during the immediately preceding two year period brought to the attention of
the Company's management any "weakness" as defined in Statement of Auditing
Standards No. 60 "Communication of Internal Control Structure Related Matters
Noted in an Audit," in any of the Company's internal controls.
(l) On the Closing Date, there shall be duly tendered to the
Representative the appropriate number of Securities.
(m) 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 the Closing Date, and no proceedings
for that purpose shall have been instituted or shall be contemplated.
1.0 - 35
(n) On or before the Closing Date, the Company shall have
executed and delivered to the Representative, (i) the Representative's Warrant
Agreement substantially in the form filed as Exhibit 1.2 to the Registration
Statement in final form and substance satisfactory to the Representative, and
(ii) the Representative's Warrants in such denominations and to such designees
as shall have been provided to the Company.
(o) On or before the Closing Date, the Common Stock and the
Redeemable Warrants shall have been duly approved for quotation on the
Over-the-Counter Electronic Bulletin Board maintained by the NASD, subject to
official notice of issuance.
(p) On or before the Closing Date, there shall have been
delivered to the Representative all of the Lock-up Agreements, in form and
substance satisfactory to Representative's Counsel.
(q) On or before the effective date of the Registration
Statement, the Company and Corporate Stock Transfer, as the Warrant agent, shall
have executed and delivered to the Underwriter the Warrant Agreement,
substantially in the form filed as Exhibit 1.3 to the Registration Statement.
(r) At least two (2) full business days prior to the date
hereof, the Closing Date, the Company shall have delivered to the Underwriter
the unaudited interim financial statements required to be so delivered pursuant
to SECTION 4(p) of this Agreement.
If any condition to the Representative's obligations hereunder
to be fulfilled prior to or at the Closing Date, 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, "Underwriters" shall include
the officers, directors, partners, employees, agents and counsel of the
Underwriters, including specifically each person who may be substituted for an
Underwriter as provided in Section 11 hereof), and each person, if any, who
controls the Underwriter ("controlling person") within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, from and against any and all
losses, claims, damages, expenses or liabilities, joint or several (and actions,
proceedings, investigations, inquiries, and suits in respect thereof),
whatsoever (including but not limited to any and all costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
such action, proceeding, investigation, inquiry or suit, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon (A) any untrue statement
or alleged untrue statement of a material fact contained (i) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as from time to time
amended and supplemented); (ii) in any post-effective amendment or amendments or
any new registration statement and prospectus in which is included securities of
the Company issued or issuable upon exercise of the Securities; or (iii) in any
1.0 - 36
application or other document or written communication (in this Section 7
collectively called "application") executed by the Company or based upon written
information furnished by the Company filed, delivered or used in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any state securities commission or agency,
the Over-the-Counter Electronic Bulletin Board maintained by the NASD or any
other securities exchange, (B) the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of the Prospectus, in the light of the
circumstances under which they were made), or (C) any breach of any
representation, warranty, covenant or agreement of the Company contained herein
or in any certificate by or on behalf of the Company or any of its officers
delivered pursuant hereto unless, in the case of clause (A) or (B) above, such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to any Underwriter by or on
behalf of such Underwriters expressly for use in any Preliminary Prospectus, the
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto, or in any application, as the case may be.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company may have at common law or otherwise.
(b) 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 Underwriter 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 Underwriter expressly for
use therein and constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which the Underwriters may have at common law or
otherwise.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure to so notify an indemnifying party shall not relieve it from any
1.0 - 37
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action, investigation,
inquiry, suit or proceeding is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such case
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action, investigation, inquiry, suit or proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses of one
additional counsel shall be borne by the indemnifying parties. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action, investigation,
inquiry, suit or proceeding or separate but similar or related actions,
investigations, inquiries, suits or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances. Anything in this Section 7
to the contrary notwithstanding, an indemnifying party shall not be liable for
any settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, investigation, inquiry,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party form all
liability arising out of such claim, action, suit or proceeding and (ii) doe
snot include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes claim for indemnification
pursuant to this Section 7, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
1.0 - 38
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions, investigations, inquiries, suits or proceedings in respect thereof) (A)
in such proportion as is appropriate to reflect the relative benefits received
by each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the Securities or (B) if the
allocation provided by clause (A) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (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 the contributing
party and the Underwriters are the indemnified party, the relative benefits
received by the Company on the one hand, and the Underwriters, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) bear to the total
underwriting discounts received by the Underwriters hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions, investigations, inquiries,
suits or proceedings in respect thereof) referred to above in this subdivision
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action, claim, investigation, inquiry, suit or proceeding. 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, inquiry,
investigation or proceeding against such party in respect to which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have hereunder or otherwise than under this subparagraph (d), or to
the extent that such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto,
1.0 - 39
shall be deemed to be representations, warranties and agreements at the Closing
Date, and such representations, warranties and agreements of the Company and the
indemnity agreements contained in Section 7 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
any Underwriter, the Company, any controlling person of any Underwriter or the
Company, and shall survive termination of this Agreement or the issuance and
delivery of the Securities to the Underwriters.
9. EFFECTIVE DATE.
(a) This Agreement shall become effective at 10:00 a.m., New
York City time, on the next full business day following the date hereof, or at
such earlier time after the Registration Statement becomes effective as the
Representative, in its discretion, shall release the Securities for sale to the
public; provided, however, that the provisions of Sections 5, 7 and 10 of this
Agreement shall at all times be effective. For purposes of this Section 9, the
Securities to be purchased hereunder shall be deemed to have been so released
upon the earlier of dispatch by the 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, after the date
hereof, (i) if any domestic or international event or act or occurrence has
materially disrupted, or in the Representative's opinion will in the immediate
future materially adversely disrupt the financial markets; or (ii) any material
adverse change in the financial markets shall have occurred; or (iii) if trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Boston Stock Exchange, the
Chicago Board of Trade, the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange, the Commission or any other government authority having
jurisdiction; or (iv) if trading of any of the securities of the Company shall
have been suspended, or any of the securities of the Company shall have been
delisted, on any exchange or in any over-the-counter market; or (v) if the
United States shall have become involved in a war or major hostilities, or if
there shall have been an escalation in an existing war or major hostilities or a
national emergency shall have been declared in the United States; or (vi) if a
banking moratorium has been declared by a state or federal authority; or (vii)
if a moratorium in foreign exchange trading has been declared; or (viii) if the
Company shall have sustained a loss material or substantial to the Company by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall have been insured, will,
in the Representative's opinion, make it inadvisable to proceed with the
delivery of the Securities; or (viii) if there shall have occurred any outbreak
or escalation of hostilities or any calamity or crisis or there shall have been
such a material adverse change in the conditions or prospects of the Company, or
such material adverse change in the general market, political or economic
conditions, in the United States or elsewhere as in the Representative's
judgment would make it inadvisable to proceed with the offering, sale and/or
delivery of the Securities.
1.0 - 40
(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
(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 any undertaking or satisfy any condition of this Agreement by
it to be performed or satisfied (including, without limitation, pursuant to
Section 6 or Section 12) then, the Company shall promptly reimburse and
indemnify the Underwriter for all of their actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriter (less
amounts previously paid pursuant to Section 5(c) above). In addition, the
Company shall remain liable for all Blue Sky counsel fees and expenses and
filing fees. Notwithstanding any contrary provision contained in this Agreement,
any election hereunder or any termination of this Agreement (including, without
limitation, pursuant to Sections 6, 10 and 12 hereof), and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 and Section 7
shall not be in any way affected by such election or termination or failure to
carry out the terms of this Agreement or any part hereof.
11. DEFAULT BY THE COMPANY. If the Company shall fail at the Closing
Date, to sell and deliver the number of Securities which it is obligated to sell
hereunder on such date, then this Agreement shall terminate 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.
12. NOTICES. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed to the
Underwriter at West America Corp., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, with a copy to
Underwriter's Counsel, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq. Notices to the Company
shall be directed to the Company at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer, with
a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
13. 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 the Underwriters shall be deemed to
be a successor by reason merely of such purchase.
14. CONSTRUCTION. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada without giving
effect to the choice of law or conflict of laws principles.
1.0 - 41
15. 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.
16. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Representative's Warrant Agreement constitute the entire agreement of the
parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the 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,
LASIK AMERICA, INC.
By: ________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
Confirmed and accepted as of
the date first above written.
WEST AMERICA SECURITIES CORP.
By:___________________________________
Name:
Title:
1.0 - 42
SCHEDULE A
----------
Underwriter Number of Units
----------- ---------------
West America & Company, Inc.
TOTAL 425,000
1.0 - 43