Exhibit 1.1
1,500,000 Common Shares
▇▇▇▇▇▇.▇▇▇ HOLDING CORPORATION
UNDERWRITING AGREEMENT
New York, New York
__________, 1999
National Securities Corporation
As Representative of the Several Underwriters
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Ladies and Gentlemen:
▇▇▇▇▇▇.▇▇▇ Holding Corporation, a Delaware corporation (the "Company"),
hereby agrees with National Securities Corporation ("National") and each of the
underwriters named in Schedule A hereto (collectively, the "Underwriters," which
term shall also include any underwriter substituted as hereinafter provided in
Section 11), for whom National is acting as representative (in such capacity,
National shall hereinafter be referred to as "you" or the "Representative") with
respect to the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of 1,500,000 shares of common stock, par value $.01
per share (the "Common Stock"), of the Company. Such 1,500,000 shares of Common
Stock shall hereinafter be referred to as the "Firm Shares." In addition, upon
your request, as provided in Section 2(b) of this Agreement, certain
shareholders of the Company (the "Selling Shareholders") hereby agree that they
shall sell to the Underwriters, acting severally and not jointly, up to 225,000
shares of Common Stock, such Common Stock to be sold for the purpose of covering
over-allotments, if any. Such 225,000 shares are hereinafter referred to as the
"Option Shares." The Firm Shares and the Option Shares are hereinafter referred
to collectively as the "Shares." The Company also proposes to issue and sell to
you warrants (the "Representative's Warrants") pursuant to the Representative's
Warrant Agreement (the "Representative's Warrant Agreement") for the purchase of
an additional 150,000 shares of Common Stock. The shares of Common Stock
issuable upon exercise of the Representative's Warrants are hereinafter referred
to as the "Representative's Shares." The Firm Shares, the Option Shares, the
Representative's Warrants and the Representative's Shares are more fully
described in the Registration Statement and the Prospectus referred to below.
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1. Representations and Warranties of the Company and the Selling Shareholders.
A. The Company and the Selling Shareholders represent and warrant to, and
agree with, each of the Underwriters as of the date hereof, and as of the
Closing Date and the Option Closing Date, if any, as follows:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an amendment or
amendments thereto, on Form SB-2 (SEC File No. 333-_____), including any related
preliminary prospectus (the "Preliminary Prospectus"), and a related
registration statement filed with the Commission pursuant to Rule 462(b) of the
Regulations (as defined below) for the registration of the Securities, the
Representative's Warrants and the Representative's Shares (collectively,
hereinafter referred to as the "Registered 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 Regulations (as defined below) of the Commission under the
Act. The Company will not file any other amendment thereto to which the
Underwriters shall have objected in writing after having been furnished with a
copy thereof. Except as the context may otherwise require, such registration
statements as amended, on file with the Commission at the time the registration
statements become effective (including the prospectus, financial statements,
schedules, exhibits and all other documents filed as a part thereof or
incorporated 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), are
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,
"Regulations" mean the rules and regulations adopted by the Commission under
either the Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any of the Preliminary
Prospectus, the Registration Statement or the Prospectus or any part thereof,
and no proceedings for a stop order suspending the effectiveness of the
Registration Statement or any of the Company's securities have been instituted
or are pending or threatened. Each of the Preliminary Prospectus, the
Registration Statement and the Prospectus at the time of filing thereof
conformed in all material respects with the requirements of the Act and the
Regulations, and none of the Preliminary Prospectus, the Registration Statement
or the Prospectus at the time of filing thereof contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, 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.
(c) When the Registration Statement becomes effective and at all times
subsequent thereto up to the Closing Date (as defined in Section 2(c) hereof)
and each Option Closing Date
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(as defined in Section 2(b) hereof), if any, and during such longer period as
the Prospectus may be required to be delivered in connection with sales by the
Underwriters or a dealer, the Registration Statement and the Prospectus, as
amended or supplemented as required, will contain all statements which are
required to be stated therein in accordance with the Act and the Regulations,
and will conform in all material respects to the requirements of the Act and the
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 Underwriter expressly for use in the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto.
(d) The Company and all subsidiaries in which it owns an interest,
direct or indirect (the "Subsidiaries"), have been duly organized and are
validly existing as corporations in good standing under the laws of the
respective states of their incorporation. The Company does not own or control,
directly or indirectly, any corporation, partnership, trust, joint venture or
other business entity other than the subsidiaries listed in Exhibit 21 of the
Registration Statement. Each of the Company and the Subsidiaries is duly
qualified and licensed and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any properties or the
character of its operations require such qualification or licensing. Each of the
Company and the Subsidiaries 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 been doing business in
compliance with all such authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal, state, local and foreign
laws, rules and regulations; and neither the Company nor any of 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 business affairs, operations,
properties, or results of operations of the Company and the Subsidiaries, taken
as a whole. The disclosures in the Registration Statement concerning the effects
of federal, state, local, and foreign laws, rules and regulations on the
Company's and the Subsidiaries' businesses as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under the headings
"Capitalization" and "Description of Securities," and will have the adjusted
capitalization set forth therein on the Closing Date and the Option Closing
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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,
including, but not limited to, any voting trust agreement, stockholders
agreement or other agreement or instrument, affecting the Common Stock or rights
or obligations of security holders of the Company or the Subsidiaries or
providing for any of the Company or the Subsidiaries to issue any capital stock,
rights, warrants, options or other securities, except for this Agreement, the
Representative's Warrant Agreement and as described in the Prospectus. The
Common Stock, the Representative's Warrants and the Representative's Shares and
all other securities issued or issuable by each of the Company or the
Subsidiaries conform or, when issued and paid for, will conform, in all material
respects to all statements with respect thereto contained in the Registration
Statement and the Prospectus. All issued and outstanding shares of capital stock
of the Company or any of the Subsidiaries have been duly authorized and validly
issued and are fully paid and nonassessable. Except as disclosed in or
contemplated by the Prospectus and the financial statements of the Company and
the related notes thereto included in the Prospectus, neither the Company nor
any Subsidiary has outstanding any options to purchase, or any preemptive rights
or other rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's stock option, stock bonus and
other stock plans or arrangements and the options or other rights granted and
exercised thereunder as set forth in the Prospectus conforms in all material
respects with the requirements of the Act. All issued and outstanding securities
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable, 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.
(f) The Registered Securities are not and will not be subject to any
preemptive or other similar rights of any stockholder, have been duly authorized
and, when issued, paid for and delivered in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable and will conform in all
material respects 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 Registered Securities has been duly and validly taken; and the certificates
representing the Registered Securities will be in due and proper form. Upon the
issuance and delivery pursuant to the terms hereof of the Registered Securities
to be sold by the Company hereunder, the Underwriters or the Representative, as
the case may be, will acquire good and marketable title to such Registered
Securities free and clear of any lien, charge, claim, encumbrance, pledge,
security interest, defect, or other restriction or equity of any kind
whatsoever. No stockholder of the Company has any right which has not been
waived in writing to require the Company to register the sale of any shares
owned by such stockholder under the Act in the public offering contemplated by
this Agreement. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the issuance and sale of
the Shares, the Option Shares and the Representative's Warrants to be sold by
the Company as contemplated herein.
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(g) The financial statements of each of the Company and the
Subsidiaries, together with the related notes and schedules thereto, included in
the Registration Statement, each Preliminary Prospectus and the Prospectus
fairly present the financial position, 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 such financial
statements have been prepared in conformity with generally accepted accounting
principles and the Regulations, consistently applied throughout the periods
involved. There has been no material adverse change or development involving a
material prospective change in the condition, financial or otherwise, or in the
business, affairs, operations, properties, or results of operation of the
Company and the Subsidiaries taken as a whole 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 and the
Subsidiaries taken as a whole conform in all 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
-- Summary Combined Financial Information," "Capitalization," "Selected
Financial Data," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," fairly present, on the basis stated in the
Prospectus, the information set forth therein and have been derived from or
compiled on a basis consistent with that of the audited financial statements
included in the Prospectus.
(h) Each of the Company and the Subsidiaries has (i) paid all federal,
state, local, franchise, 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
furnished all information returns it is required to furnish pursuant to the
Code, (ii) established adequate reserves for such taxes which are not due and
payable, and (iii) no tax deficiency or claims outstanding, proposed or assessed
against it.
(i) No transfer tax, stamp duty or other similar tax is payable by or
on behalf of the Underwriters or the Representative in connection with (i) the
issuance by the Company of the Registered Securities, the Representative's
Warrants and the Representative's Shares, (ii) the purchase by the Underwriters
of the Registered Securities from the Company and the purchase by the
Representative of the Representative's Warrants or the Representative's Shares
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 Registered Securities in connection with the distribution
contemplated hereby.
(j) Each of the Company and the Subsidiaries maintains insurance
policies, including, but not limited to, general liability, property and product
liability insurance and surety bonds which insures the Company and the
Subsidiaries and their respective professional staffs against such losses and
risks generally insured against by comparable businesses. Neither the Company
nor any of the Subsidiaries has (A) failed to give notice or present any
insurance claim with respect to any matter, including, but not limited to, the
Company's or any of the Subsidiaries' businesses, property or professional
staff, under any insurance policy or surety bond in a due and timely manner, (B)
any disputes or claims against any underwriter of such
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insurance policies or surety bonds or has failed to pay any premiums due and
payable thereunder, or (C) 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 or any of
the Subsidiaries.
(k) There is no claim, action, suit, proceeding, inquiry, arbitration,
mediation, investigation, litigation, governmental or other proceeding
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, pending or threatened against (or
circumstances that may give rise to the same), or involving the properties or
businesses of, the Company or any of the Subsidiaries which (i) questions the
validity of the capital stock of the Company or any of the Subsidiaries, this
Agreement or the Representative's Warrant Agreement, or of any action taken or
to be taken by the Company or any of the Subsidiaries or any of the Selling
Shareholders pursuant to or in connection with this Agreement or the
Representative's Warrant Agreement, (ii) is required to be disclosed in the
Registration Statement which is not so disclosed (and such proceedings as are
summarized in the Registration Statement are accurately summarized in all
material respects), or (iii) might materially and adversely affect the
condition, financial or otherwise, or the business, affairs, position,
stockholders' equity, operation, properties, or results of operations of the
Company and the Subsidiaries taken as a whole.
(l) The Company has the full legal right, corporate power and authority
to authorize, issue, deliver, and sell the Registered Securities and to enter
into this Agreement and the Representative's Warrant Agreement, and to
consummate the transactions provided for in such agreements; and this Agreement
and the Representative's Warrant Agreement have each been duly and properly
authorized, executed, and delivered by the Company. Each of this Agreement and
the Representative's Warrant Agreement constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with
their respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or equitable,
and except as rights to indemnity or contribution may be limited by applicable
law), and none of the Company's issue and sale of the Registered Securities,
execution, delivery or performance of this Agreement and the Representative's
Warrant Agreement, the consummation of the transactions contemplated herein and
therein, or the conduct by the Company and the Subsidiaries of their businesses
as described in the Registration Statement, the Prospectus, and any amendments
or supplements thereto, conflicts with or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of the Company or any of the Subsidiaries
pursuant to the terms of (i) the certificates of incorporation or bylaws of the
Company or any of the Subsidiaries, as amended and restated, (ii) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement or any other agreement
or instrument to
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which the Company or any of the Subsidiaries is a party or by which any of them
may be bound or to which their properties or assets (tangible or intangible) is
or may be subject, or any indebtedness of either the Company or any of the
Subsidiaries, or (iii) any statute, judgment, decree, order, rule or regulation
applicable to the Company or any of the Subsidiaries 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 of
any of their activities or properties.
(m) No consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other body, domestic or
foreign, is required for the issuance of the Registered Securities pursuant to
the Prospectus and the Registration Statement, the performance of this
Agreement, the Representative's Warrant Agreement, and the transactions
contemplated hereby and thereby, including without limitation, any waiver of any
preemptive, first refusal or other rights that any entity or person may have for
the issue and/or sale of any of the Registered Securities, except such as have
been or may be obtained under the Act or may be required under state securities
or Blue Sky laws in connection with the Underwriters' purchase and distribution
of the Registered Securities to be sold hereunder.
(n) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company or any of the Subsidiaries is a
party or by which any of them may be bound or to which either of their assets,
properties or businesses may be subject have been duly and validly authorized,
executed and delivered by the Company or any of the Subsidiaries, as the case
may be, and constitute the legal, valid and binding agreements of the Company or
any of the Subsidiaries, as the case may be, enforceable against the Company or
any of the Subsidiaries, as the case may be, in accordance with their respective
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law). The descriptions in
the Registration Statement of such 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 no contracts or other
documents which are required by the Act to be described in the Registration
Statement or filed as exhibits to the Registration Statement which are not
described or filed as required, and the exhibits which have been filed are
complete and correct copies of the documents of which they purport to be copies.
(o) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus, neither the Company nor any of the
Subsidiaries (i) has incurred any material liabilities or obligations, indirect,
direct or contingent, or entered into any material verbal or written agreement
or other transaction which is not in the ordinary course of business or which
could result in a material reduction in the future earnings of the Company or
any of the Subsidiaries; (ii) has sustained any material loss or interference
with its business or properties from fire, flood, windstorm, accident or other
calamity, whether or not covered by insurance; (iii)
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has paid or declared any dividends or other distributions with respect to its
capital stock, (iv) is in default in the payment of principal or interest on any
outstanding debt obligations; (v) has had any change in its capital stock (other
than upon the sale of the Firm Shares, the Option Shares and the
Representative's Shares hereunder and upon the exercise of options and warrants
described in the Registration Statement) (other than in the ordinary course of
business) of, or indebtedness material to, the Company or any of the
Subsidiaries; (vi) has issued any securities or incurred any liability or
obligation, primary or contingent, for borrowed money; or (vii) has experienced
any material adverse change in the condition (financial or otherwise) of their
respective businesses, properties, results of operations, or prospects.
(p) Except as disclosed in or specifically contemplated by the
Prospectus, (i) the Company and the Subsidiaries have sufficient trademarks,
trade names, patent rights, copyrights, licenses, approvals and governmental
authorizations to conduct their respective businesses as now conducted; (ii) the
expiration of any trademarks, trade names, patent rights, copyrights, licenses,
approvals or governmental authorizations would not have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company or any of the Subsidiaries; (iii) the
Company has no knowledge of any infringement by it or its subsidiaries of
trademark, trade name rights, patent rights, copyrights, licenses, trade secret
or other similar rights of others; and (iv) there is no claim being made against
the Company or any of the Subsidiaries regarding trademark, trade name, patent,
copyright, license, trade secret or other infringement which could have a
material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company or any of the Subsidiaries.
(q) None of the Company or any of the Subsidiaries are, or with the
giving of notice or lapse of time or both, will be, in violation of or in
default under their respective charters or bylaws, and 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, note, loan or credit
agreement, or any other material agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement or instrument to
which the Company or any of the Subsidiaries is a party or by which the Company
or any of the Subsidiaries may be bound or to which the property or assets
(tangible or intangible) of the Company or any of the Subsidiaries are subject
or affected.
(r) To the Company's knowledge, there are no pending investigations
involving the Company or any of the Subsidiaries by the U.S. Department of
Labor, or any other governmental agency responsible for the enforcement of such
federal, state, local, or foreign laws and regulations. There is no unfair labor
practice charge or complaint against the Company or any of the Subsidiaries
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or to its knowledge threatened
against or involving the Company or any of the Subsidiaries. No representation
question exists respecting the employees of the Company or any of the
Subsidiaries. No collective bargaining agreement, or modification thereof is
currently being negotiated by the Company or any of the Subsidiaries. No
grievance or arbitration proceeding is pending under any expired or existing
collective
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bargaining agreements of the Company or any of the Subsidiaries. No labor
dispute with the employees of the Company or any of the Subsidiaries exists or
is imminent.
(s) Except as described in the Prospectus, neither the Company nor any
of the Subsidiaries maintains, sponsors or contributes to any program or
arrangement that is an "employee pension benefit plan," an "employee welfare
benefit plan," or a "multi-employer 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"). Neither the Company nor any
of the Subsidiaries maintains or contributes 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 or any of the Subsidiaries to any tax penalty on prohibited transactions
and which has not adequately been corrected. Each ERISA Plan is in compliance
with all material reporting, disclosure and other requirements of the Code and
ERISA as they relate to any such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each ERISA Plan which
is intended to comply with Code Section 401(a), stating that such ERISA Plan and
the attendant trust are qualified thereunder. Neither the Company nor any of the
Subsidiaries has ever completely or partially withdrawn from a "multi-employer
plan."
(t) None of the Company, nor any of the Subsidiaries, nor any of their
employees, directors, stockholders, or affiliates (within the meaning of the
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 stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Registered
Securities.
(u) 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 property stated in the Prospectus to be owned or leased by it, free and
clear of all liens, charges, claims, encumbrances, pledges, security interests,
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.
(v) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C. ("▇▇▇▇▇ ▇▇▇▇▇▇▇▇"), 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 Regulations.
(w) There are no claims, payments, 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 Registered Securities hereunder or any other
arrangements, agreements, understandings, payments or issuance with respect to
the Company, the Subsidiaries, or any of their respective officers, directors,
stockholders, employees or affiliates that may affect the Underwriters'
compensation as determined by the Commission and the National Association of
Securities Dealers, Inc. (the "NASD").
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(x) The Registered Securities have been approved for quotation on the
American Stock Exchange subject only to official notice of issuance.
(y) Each of the Company and the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation 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
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) None of the Company, the Subsidiaries, nor any of their respective
officers, employees, agents or any other person acting on behalf of the Company
or any of the Subsidiaries 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 any of the Subsidiaries (or assist the
Company or any of the Subsidiaries in connection with any actual or proposed
transaction) which might subject the Company, the Subsidiaries, or any other
such person to any damage or penalty in any civil, criminal or governmental
litigation or proceeding (domestic or foreign). Each of the Company's and the
Subsidiaries' internal accounting controls are sufficient to cause the Company
and the Subsidiaries to comply with the Foreign Corrupt Practices Act of 1977,
as amended.
(aa) Except as set forth in the Prospectus, no officer, director or
stockholder of the Company, the Subsidiaries, or any "affiliate" or "associate"
(as these terms are defined in Rule 405 promulgated under the Regulations) of
any of the foregoing persons or entities has or has had, either directly or
indirectly, (i) an interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed to be furnished
or sold by the Company or any of the Subsidiaries, or (B) purchases from or
sells or furnishes to the Company or any of the Subsidiaries any goods or
services, or (ii) a beneficiary interest in any contract or agreement to which
the Company or any of the Subsidiaries is a party or by which the Company or any
of the Subsidiaries may be bound or affected. Except as set forth in the
Prospectus there are no existing agreements, arrangements, understandings or
transactions, or proposed agreements, arrangements, understandings or
transactions, between or among the Company, the Subsidiaries, and any officer,
director, principal shareholder (as such term is used in the Prospectus) of the
Company, or any affiliate or associate of any of the foregoing persons or
entities.
(bb) None of the Company or any of the Subsidiaries intends to conduct
their respective businesses in a manner in which it would become an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "1940 Act").
10
(cc) Any certificate signed by any officer of the Company and delivered
to the Underwriters or to the Underwriters' Counsel (as defined in Section 4(d)
herein) shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
(dd) The minute books of each of the Company and the Subsidiaries have
been made available to the Underwriters and contain a complete summary of all
meetings and actions of the directors and stockholders of each of the Company
and the Subsidiaries, since the time of their respective incorporation, and
reflect all transactions referred to in such minutes accurately in all material
respects.
(ee) Neither the Company nor any of the Subsidiaries has distributed
nor will distribute prior to the Closing Date any offering material in
connection with the offering and sale of the Securities in this offering other
than the Prospectus, the Registration Statement and the other materials
permitted by the Act. Except as described in the Prospectus, no holders of any
securities of the Company or any of the Subsidiaries or of any options, warrants
or other convertible or exchangeable securities of the Company or any of the
Subsidiaries have the right to include any securities issued by the Company or
any of the Subsidiaries as part of the Registration Statement or to require the
Company or any of the Subsidiaries 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 or any of the Subsidiaries.
(ff) 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 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 business with Cuba or with any
person or affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as appropriate,
in a form acceptable to the Department.
(gg) The Company has purchased "key man" life insurance on the life of
________ ____________ in the amount of [$ ] and the Company is named as the sole
beneficiary of such insurance policy.
(hh) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which all persons or entities that directly
or beneficially own Common Stock, as of the effective date of the Registration
Statement, have agreed not to, directly or indirectly, offer, offer to sell,
sell, grant any option for the sale of, transfer, assign, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock or securities
convertible into Common Stock, 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 Regulations or otherwise) or dispose of any interest therein
for a period of 12 months from the
11
date of the Prospectus, without the prior written consent of National (the
"Lock-up Agreements"). The Company will cause the Transfer Agent (as defined
herein) to place "stop transfer" orders on the Company's stock ledgers in order
to effect the Lock-up Agreements.
B. Each of the Selling Shareholders represents and warrants to, and agrees
with, each of the Underwriters as of the date hereof, and as of the Option
Closing Date, if any, as follows:
(a) Such Selling Shareholder has (i) caused a certificate or
certificates for the number of shares of Common Stock to be sold by the Selling
Shareholder hereunder to be delivered to ▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇ (in its capacity as
escrow agent, the "Escrow Agent"), duly endorsed in blank or together with blank
stock powers duly executed, with the signature of the Selling Shareholder
appropriately guaranteed, such certificate or certificates to be held in escrow
by the Escrow Agent pursuant to an escrow agreement for delivery, pursuant to
the provisions hereof, on the Option Closing Date, if any, and (ii) granted an
irrevocable power of attorney to the Escrow Agent to purchase all requisite
stock transfer tax stamps, to sign this Agreement (including agreeing on the
price at which the Stock and the Additional Stock are to be sold to the
Underwriters) and thereafter to modify and amend this Agreement, to waive any
condition to the obligations of the Selling Shareholder and to execute all other
instruments and documents and to perform all other acts necessary to carry out
the provisions of this Agreement on behalf of the Selling Shareholder (such
escrow agreement together with such irrevocable powers of attorney being herein
called the "Escrow Agreement").
(b) There is no claim, action, suit proceeding, inquiry, arbitration,
mediation, investigation, litigation, governmental or other proceeding, domestic
or foreign, pending or threatened against such Selling Shareholder or any of
business properties, or assets owned by the Selling Shareholder. The Selling
Shareholder is not in violation of, or in default with respect to, any law rule,
regulation, order judgment, or decree; nor is the Selling Shareholder required
to take any action in order to avoid such violation or default.
(c) Such Selling Shareholder has all the requisite power and authority
to execute, deliver, and perform this Agreement and the Escrow Agreement. This
Agreement and the Escrow Agreement have been duly executed and delivered by the
Selling Shareholder, are the legal, valid, and binding obligations of the
Selling Shareholder and are enforceable as to the Selling Shareholder in
accordance with their respective terms. No consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration or filing
with, any federal, state, local, or other governmental authority or any court or
other tribunal is required by the Selling Shareholder for the execution,
delivery, or performance of this Agreement (except filings under the Act which
have been or will be made before the Closing Date and such consents consisting
only of consents under "blue sky" or securities law which have been obtained at
or prior to the date of this Agreement) or the Escrow Agreement by the Selling
Shareholder. No consent of any party to any contract, agreement, instrument,
lease license, arrangement, or understanding to which the Selling Shareholder is
a party, or to which any of the properties or assets of the Selling Shareholder
are subject, is required for the execution, delivery, or performance of this
Agreement or the escrow Agreement; and the execution, delivery, and performance
of this Agreement and the Escrow Agreement will not violate, result in a breach
of,
12
conflict with, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call default under any such contract,
agreement, instrument, lease, license, arrangement, or understanding, or
violate, result in a breach of, or conflict with, any law, rule, regulation,
order, judgment, or decree binding on the operations, business, properties, or
assets of the Selling Shareholder are subject.
(d) Such Selling Shareholder has good title to the Option Shares to be
sold by him or her pursuant to this Agreement, free and clear of all liens,
security interests, pledges, charges, encumbrances, stockholders' agreements,
and voting trusts (except those created by this Agreement and the Escrow
Agreement), and when delivered in accordance with this Agreement, the
Underwriters will receive good title to the Option Shares purchased by them from
such Selling Shareholder, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and voting trusts.
2. Purchase, Sale and Delivery of the Common Stock and Representative's
Warrants.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter,
severally and not jointly, agrees to purchase from the Company, that aggregate
principal amount of Firm Shares set forth opposite the name of such Underwriter
in Schedule A hereto at a price equal to 90% of the principal amount thereof,
subject to such adjustment as the Representative in its discretion shall make to
eliminate any fractional sales or purchases, plus any additional amount of Firm
Shares which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 11 hereof.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Selling Shareholders hereby grant an option to
the Underwriters, severally and not jointly, to purchase all or any part of an
additional 225,000 shares of Common Stock at a price equal to 90% of the
principal amount thereof from the Closing Date. The maximum number of Option
Shares to be sold by such Selling Shareholders is set forth opposite their
respective names on Schedule B hereof. The option granted hereby will expire 45
days after (i) the date the Registration Statement becomes effective, if the
Company has elected not to rely on Rule 430A under the Regulations, or (ii) the
date of this Agreement if the Company has elected to rely upon Rule 430A under
the Regulations, and may be exercised in whole or in part from time to time only
for the purpose of covering over-allotments which may be made in connection with
the offering and distribution of the Firm Shares upon notice by the
Representative to the Company and the Selling Shareholders setting forth the
aggregate principal amount of Option Shares as to which the several Underwriters
are then exercising the option and the time and date of payment and delivery for
any such Option Shares. Any such time and date of delivery (an "Option Closing
Date") shall be determined by the Representative, but shall not be later than
seven full business days after the exercise of said option, nor in any event
prior to the Closing Date, as hereinafter defined, unless otherwise agreed upon
by the Representative, the Company and the Selling Shareholders. Nothing herein
contained shall obligate the Underwriters to exercise the over-allotment option
described above. No Option Shares shall be delivered unless the Firm
13
Shares shall be simultaneously delivered or shall theretofore have been
delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the offices of National, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or at such other place as shall
be agreed upon by the Representative and the Company. Such delivery and payment
shall be made at 10:00 a.m. (New York time) on ________, 1999 or at such other
time and date as shall be agreed upon by the Representative and the Company, but
no more than four (4) business days after the date hereof (such time and date of
payment and delivery being herein called the "Closing Date"). In addition, in
the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates
for, such Option Shares shall be made at the above mentioned office of National
or at such other place as shall be agreed upon by the Representative, the
Company and the Selling Shareholders on each Option Closing Date as specified in
the notice from the Representative to the Company. Delivery of the certificates
for the Firm Shares and the Option Shares, if any, shall be made to the
Underwriters against payment by the Underwriters, of the purchase price for the
Firm Shares and the Option Shares, if any, to the order of the Company or the
Selling Shareholders, as the case may be. In the event such option is exercised,
each of the Underwriters, acting severally and not jointly, shall purchase that
proportion of the total number of Option Shares then being purchased which the
number of Firm Shares set forth in Schedule A hereto opposite the name of such
Underwriter bears to the total number of Firm Shares, subject in each case to
such adjustments as the Representative in their discretion shall make to
eliminate any sales or purchases of fractional shares. Certificates for the Firm
Shares and the Option Shares, if any, shall be in definitive, fully registered
form, shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Underwriters may request in writing at least
three (3) business days prior to Closing Date or the relevant Option Closing
Date, as the case may be. The certificates for the Firm Shares and the Option
Shares, if any, shall be made available to the Representative at such office or
such other place as the Representative may designate for inspection, checking
and packaging no later than 9:30 a.m. on the last business day prior to Closing
Date or the relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representative the Representative's Warrants at a purchase price of $.0001 per
warrant, which warrants shall entitle the holders thereof to purchase the
Representative's Shares. The Representative's Warrants shall expire five (5)
years after the effective date of the Registration Statement and shall be
exercisable for a period of four (4) years commencing one (1) year from the
effective date of the Registration Statement at an exercise price equal to 120%
of the initial public offering price of the Shares. The Representative's Warrant
Agreement and form of Warrant Certificate shall be substantially in the form
filed as Exhibit 4.2 to the Registration Statement. Payment for the
Representative's Warrants shall be made on the Closing Date.
3. Public Offering of the Firm Shares.
As soon after the Registration Statement becomes effective as the
Representative deem advisable, the Underwriters shall make a public offering of
the Firm Shares (other than to
14
residents of or in any jurisdiction in which qualification of the Firm Shares 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 Firm Shares has
been completed to such extent as the Representative, in its sole discretion,
deems advisable. The Underwriters may enter into one or more agreements as the
Underwriters, in each of their sole discretion, deem advisable with one or more
broker-dealers who shall act as dealers in connection with such public offering.
4. Covenants of the Company and the Selling Shareholders.
The Company and each of the Selling Shareholders covenant and agree
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 Firm Shares 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 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 Registered Securities for offering
or sale in any jurisdiction or of the initiation, or the threatening, of any
proceeding for that purpose, (iv) of the receipt of any comments from the
Commission, and (v) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information. If the Commission or any state securities commission
authority shall enter a stop order or suspend such qualification at any time,
the Company will use its best efforts to obtain promptly the lifting of such
order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representative) in accordance with the requirements of the
Act.
(d) The Company shall give the Representative notice of its intention
to file or prepare any amendment to the Registration Statement (including any
post-effective amendment)
15
or any amendment or supplement to the Prospectus (including any revised
prospectus which the Company proposes for use by the Underwriters in connection
with the offering of the Registered Securities which differs from the
corresponding prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the Regulations), 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 amendment or supplement to which the Representative or
▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC ("Underwriters' Counsel") shall reasonably 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 Registered Securities for offering and sale under the
securities laws of such jurisdictions as the Representative may reasonably
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 become subject 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, as now and hereafter amended, and by
the Regulations, as from time to time in force, so far as necessary to permit
the continuance of sales of or dealings in the Securities in accordance with the
provisions hereof and 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 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 or
supplement 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 Underwriters copies of such amendment or supplement
as soon as available and in such quantities as the Underwriters may request.
(g) As soon as practicable, but in any event not later than 45 days
after the end of the 12-month period beginning on the day after the end of the
fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally
16
available to its security holders, in the manner specified in Rule 158(b) of the
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 Regulations, which statement
need not be audited unless required by the Act, covering a period of at least 12
consecutive months after the effective date of the Registration Statement.
(h) During a period of five (5) years after the date hereof, the
Company will furnish to its security holders, 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;
(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 American
Stock Exchange or any other securities exchange or quotation system;
(v) every press release and every material news item or
article of interest to the financial community in respect of each of the Company
and the Subsidiaries or their respective affairs which was released or prepared
by or on behalf of the Company or any of the Subsidiaries; and
(vi) any additional information of a public nature concerning
the Company or any of the Subsidiaries (and any future subsidiaries) or their
respective businesses which the Representative may reasonably request.
During such five-year period, if the Company has active subsidiaries,
the foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and will
be accompanied by similar financial statements for any significant subsidiary
which is not so consolidated.
(i) The Company will maintain a transfer agent (the "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 the Common
Stock.
17
(j) The Company will furnish to the Representative or on the
Representative's order, without charge, at such place as the Representative may
designate, copies of each Preliminary Prospectus, the Registration Statement and
any pre-effective or post-effective amendments thereto (two of which copies will
be signed and will include all financial statements and exhibits), each
Preliminary Prospectus, the Prospectus, and all amendments and supplements
thereto, including any prospectus prepared after the effective date of the
Registration Statement, in each case as soon as available and in such quantities
as the Representative may reasonably request.
(k) On or before the effective date of the Registration Statement, the
Company shall provide the Representative with true copies of duly executed,
legally binding and enforceable Lock-up Agreements. On or before the Closing
Date, the Company shall deliver instructions to the Transfer Agent authorizing
it to place appropriate stop transfer orders on the Company's ledgers.
(l) The Company shall use its best efforts to cause its officers,
directors, stockholders or affiliates (within the meaning of the Regulations)
not to take, directly or indirectly, any action designed to, or which might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Common Stock substantially in the manner, and subject to the conditions, set
forth under "Use of Proceeds" in the Prospectus.
(n) 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 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 Regulations.
(o) The Company shall cause the Common Stock to be quoted on the
American Stock Exchange and for a period of two (2) years from the date hereof
shall use its best efforts to maintain the quotation of the Common Stock to the
extent outstanding.
(p) For a period of two (2) years from the Closing Date, the Company
shall furnish to the Representative, at the Company's sole expense, daily
consolidated transfer sheets relating to the Common Stock.
(q) For a period of five (5) years after the effective date of the
Registration Statement the Company shall, at the Company's sole expense, take
all necessary and appropriate actions to further qualify the Company's
securities in all jurisdictions of the United States in order to permit
secondary sales of such securities pursuant to the Blue Sky laws of those
jurisdictions which do not require the Company to qualify as a foreign
corporation or to file a general consent to service of process.
18
(r) The Company (i) prior to the effective date of the Registration
Statement, has filed a Form 8-A with the Commission providing for the
registration of the Common Stock under the Exchange Act and (ii) as soon as
practicable, will use its best efforts 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
five (5) years.
(s) The Company agrees that for a period of thirteen (13) months
following the effective date of the Registration Statement it will not, without
the prior written consent of National, offer, issue, sell, contract to sell,
grant any option for the sale of or otherwise dispose of any Common Stock, or
securities convertible into Common Stock, except for the issuance of the Option
Shares, the Representative's Warrants, and shares of Common Stock upon the
exercise of currently outstanding warrants or options issued under any stock
option plan in effect on the Closing Date or options to purchase shares of
Common Stock granted pursuant to any stock option plan in effect on the Closing
Date.
(t) Until the completion of the distribution of the Securities, none of
the Company nor any of the Subsidiaries shall, without the prior written consent
of National or Underwriters' Counsel, issue, directly or indirectly issue any
press release or other communication or hold any press conference with respect
to the Company, any of the Subsidiaries, their respective 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) For a period equal to the lesser of (i) five (5) years from the
date hereof, and (ii) the sale to the public of the Representative's Shares, the
Company will not take any action or actions which may prevent or disqualify the
Company's use of Form S-1 (or other appropriate form) for the registration under
the Act of the Representative's Shares.
(v) The Company agrees that National shall have the right to designate
two persons to attend all meetings of the Board of Directors of the Company, and
all committees thereof, as observers. Such observers shall be entitled to
receive notices of all such meetings, and all correspondence and communications
sent by the Company to members of its Board of Directors and to attend all such
meetings. Such observers shall be entitled to the same compensation paid to
members of the Company's Board of Directors. In addition, at National's
discretion, which may be exercised at any time, in lieu of such right of
observation, National shall have the power to cause the Company to use its best
efforts, which shall include, but shall not be limited to, the solicitation of
proxies, to elect two (2) designees of National to the Company's Board of
Directors for a period of five (5) years following the date of such election,
provided that such designees are reasonably acceptable to the Company.
(w) The Company agrees that within forty-five (45) days after the
Closing it shall retain a public relations firm which is acceptable to National.
The Company shall keep such public relations firm, or any replacement, for a
period of three (3) years from the Closing. Any replacement public relations
firm shall be retained only with the consent of National.
19
(x) The Company agrees that any and all future transactions between the
Company or any of the Subsidiaries and their respective officers, directors,
principal stockholders and the affiliates of the foregoing persons will be on
terms no less favorable to the Company or any of the Subsidiaries than could
reasonably be obtained in arm's length transactions with independent third
parties, and that any such transactions also be approved by a majority of the
Company's or any of the Subsidiaries', as the case may be, outside independent
directors disinterested in the transaction.
(y) The Company shall prepare and deliver, at the Company's sole
expense, to National within the one hundred and twenty (120) day period after
the later of the effective date of the Registration Statement or the latest
Option Closing Date, as the case may be, bound volumes containing all
correspondence with regulatory officials, agreements, documents and all other
materials in connection with the offering as requested by the Underwriters'
Counsel.
(z) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Common Stock in such a manner as
would require the Company or any of the Subsidiaries to register as an
investment company under the 1940 Act.
(aa) Each of the Selling Shareholders shall use the proceeds of the
sale of Option Shares to the Underwriters solely to promptly pay down such
Selling Shareholder's personal bank loans, as described under ________ in the
Prospectus.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and
each Option Closing Date (to the extent not previously paid) 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 and the Representative's Warrant Agreement, including, without
limitation, (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing, filing, delivery and mailing (including the
payment of postage with respect thereto) of the Registration Statement and the
Prospectus and any amendments and supplements thereto and the duplication,
mailing (including the payment of postage with respect thereto) and delivery of
this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement, the Powers of Attorney, and related documents, including the cost of
all copies thereof and of the Preliminary Prospectuses and 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 certificates
representing the Registered Securities, (iv) the qualification of the Registered
Securities under state or foreign securities or Blue Sky laws and determination
of the status of such securities under legal investment laws, including the
costs of printing and mailing the "Preliminary Blue Sky Memorandum," the
"Supplemental Blue Sky Memorandum" and "Legal Investments Survey," if any, and
reasonable disbursements and fees of counsel in connection therewith, (v)
advertising costs and expenses, including but not limited to the costs and
expenses incurred in connection with the "road show," information meetings and
presentations, bound volumes and
20
prospectus memorabilia and "tombstone" advertisement expenses, (vi) fees and
expenses of the transfer agent and registrar, (vii) issue and transfer taxes, if
any, (viii) experts, (ix) the fees payable to the Commission, the NASD and (xi)
the fees and expenses incurred in connection with the listing of the Securities
and the Representative's Shares on the American Stock Exchange and any other
market or exchange.
(b) If this Agreement is terminated by the Underwriters in accordance
with the provisions of Section 6, Section 10(a) or Section 12, the Company shall
reimburse and indemnify the Representative for all of its actual out-of-pocket
expenses on an accountable basis, including the fees and disbursements of
Underwriters' Counsel and all Blue Sky counsel fees and Blue Sky filing fees,
less any amounts already paid pursuant to Section 5(c) hereof.
(c) The Company further agrees, with respect to the Firm Shares, that,
in addition to the expenses payable by the Company pursuant to subsection (a) of
this Section 5, they 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 Shares, [$50,000] of
which has been paid to date. In the event the Representative elects to exercise
the over-allotment option described in Section 2(b) hereof, the Company agrees
to pay to the Representative on the Option Closing Date (by certified or bank
cashier's check or, at the Representative's election, by deduction from the
proceeds of the offering) a non-accountable expense allowance equal to three
percent (3%) of the gross proceeds received by the Selling Shareholders from the
sale of the Option Shares.
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 and the
Selling Shareholders herein as of the date hereof and as of the Closing Date and
each Option Closing Date, if any, as if they had been made on and as of the
Closing Date or each Option Closing Date, if any; the accuracy on and as of the
Closing Date and each Option Closing Date, if any, of the statements of officers
of the Company, or the Selling Shareholders made pursuant to the provisions
hereof; and the performance by the Company and the Selling Shareholders on and
as of the Closing Date and each Option Closing Date, if any, of their respective
covenants and obligations hereunder:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., New York City time, on the date of this Agreement or such later
date and time as shall be consented to in writing by the Representative, and, at
the Closing Date and each Option Closing Date, if any, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of Underwriters' Counsel. If the Company has elected to rely upon
Rule 430A of the Regulations, the price of the Firm 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
21
pursuant to Rule 424(b) of the 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 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 reasonable opinion, is material, or omits to
state a fact which, in the Representative's reasonable 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 Underwriters shall have
received from Underwriters' Counsel such opinion or opinions with respect to the
organization of the Company, the validity of the Registered Securities, the
Registration Statement, the Prospectus and other related matters as the
Representative may request and Underwriters' Counsel shall have received from
the Company such papers and information as they request to enable them to pass
upon such matters.
(d) At the Closing Date, the Underwriters shall have received the
favorable opinion of ▇▇▇▇▇ & ▇▇▇▇▇ Ltd. ("▇▇▇▇▇ & ▇▇▇▇▇") 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) each of the Company and the Subsidiaries (A) has been duly
organized and is validly existing as a 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) to the best of such counsel's
knowledge after due inquiry, 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, the absence of which would have a
material adverse effect on the Company), to own or lease its properties and
conduct its business as described in the Prospectus;
(ii) the Company owns one hundred percent (100%) of the
outstanding capital stock of the Subsidiaries free and clear of any liens,
charges, claims, encumbrances, pledges, security interests, defects or other
restrictions or equities of any kind whatsoever;
22
(iii) except as described in the Prospectus, and to the best
of such counsel's knowledge after due inquiry, neither the Company nor any of
the Subsidiaries owns an interest in any corporation, limited liability company,
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 to the best
of such counsel's knowledge after due inquiry, neither the Company nor any of
the Subsidiaries is a party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock, rights, warrants,
options or other securities, except for this Agreement and the Representative's
Warrant Agreement, and as described in the Prospectus; the Registered
Securities, and all other securities issued or issuable by the Company or any of
the Subsidiaries conform in all material respects to the statements with respect
thereto contained in the Registration Statement and the Prospectus; all issued
and outstanding securities of the Company or any of the Subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable; the
holders thereof are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of the preemptive
rights of any holders of any security of the Company or any of the Subsidiaries,
or to the best of such counsel's knowledge after due inquiry, similar
contractual rights granted by the Company or any of the Subsidiaries or
applicable securities laws; the Registered Securities to be sold by the Company
hereunder and under the Representative's Warrant Agreement are not and will not
be subject to any preemptive or other similar rights of any security holder of
the Company or any of the Subsidiaries; 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 Registered Securities has
been duly and validly taken; the certificates representing the Registered
Securities and the Representative's Warrants are in due and proper form; the
Representative's Warrants constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment therefor, the
number and type of securities of the Company called for thereby (except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law); upon the issuance and
delivery pursuant to this Agreement and the Representative's Warrant Agreement
of the Registered Securities to be sold by the Company hereunder and thereunder,
the Company will convey against payment therefore as provided herein, to the
Underwriters or the Representative, as the case may be, good and marketable
title thereto free and clear of all liens and other encumbrances;
(v) the Registration Statement is effective under the Act; 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 Prospectus or any part of
any thereof or suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or, to the best of such counsel's knowledge, threatened or contemplated
under the Act;
23
(vi) each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or supplements thereto (other
than the financial statements and other financial and statistical data included
therein as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the Regulations. Such
counsel shall state that such counsel has participated in conferences with
officers and other representatives of the Company and the Representative and
representatives of the independent public accountants for the Company, at which
conferences the contents of the Preliminary Prospectus, the Registration
Statement, the Prospectus, and any amendments or supplements thereto were
discussed, and, although such counsel is not passing upon and does not assume
any responsibility for the accuracy, completeness or fairness of the
Registration Statement and Prospectus, and any amendments or supplements
thereto, 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 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, and any amendments or supplements thereto);
(vii) to the best of such counsel's knowledge after due
inquiry, (A) there are no agreements, contracts or other documents required by
the Act to be described in the Registration Statement and the Prospectus and
filed as exhibits to the Registration Statement other than those described in
the Registration Statement and the Prospectus and filed as exhibits thereto; (B)
the descriptions in the Registration Statement and the Prospectus and any
supplement or amendment thereto of contracts and other documents to which the
Company or any of the Subsidiaries is a party or by which any of them is bound
are accurate in all material respects and fairly represent the information
required to be shown by Form SB-2; (C) there is not pending or threatened
against the Company or any of the Subsidiaries any action, arbitration, suit,
proceeding, litigation, governmental or other proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, against the Company or any of the Subsidiaries which (x) is
required to be disclosed in the Registration Statement which is not so disclosed
(and such proceedings as are summarized in the Registration Statement are
accurately summarized in all material respects), (y) questions the validity of
the capital stock of the Company or any of the Subsidiaries or this Agreement or
the Representative's Warrant Agreement, or of any action taken or to be taken by
the Company or any of the Subsidiaries pursuant to or in connection with any of
the foregoing; and (D) there is no action, suit or proceeding pending or
threatened against the Company or any of the Subsidiaries before any court or
arbitrator or governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which may result in a material
adverse change in the financial condition, business, affairs, stockholders'
equity, operations, properties, business or results of operations of the Company
or any of the Subsidiaries, which could adversely affect the present or
prospective ability of the Company to perform its obligations under this
Agreement or the
24
Representative's Warrant Agreement or which in any manner draws into question
the validity or enforceability of this Agreement or the Representative's Warrant
Agreement;
(viii) the Company has the corporate power and authority to
enter into each of this Agreement and the Representative's Warrant Agreement and
to consummate the transactions provided for herein and therein; and each of this
Agreement and the Representative's Warrant Agreement has been duly authorized,
executed and delivered by the Company; each of this Agreement and the
Representative's Warrant Agreement, assuming due authorization, execution and
delivery by each other party thereto, constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms (except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights and the
application of equitable principles in any action, legal or equitable, and
except as rights to indemnity or contribution may be limited by applicable law),
and none of the Company's execution, delivery or performance of this Agreement
and the Representative's Warrant Agreement, its consummation of the transactions
contemplated herein or therein, or the conduct of its business as described in
the Registration Statement, the Prospectus, and any amendments or supplements
thereto conflicts with or results in any breach or violation of any of the terms
or provisions of, or constitutes a default under, or will 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 any of the
Subsidiaries pursuant to the terms of (A) the certificate of incorporation or by
laws of the Company or any of the Subsidiaries, as amended, (B) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement or any other agreement
or instrument known to such counsel to which the Company or any of the
Subsidiaries is a party or by which any of them is bound, or (C) any federal,
state or local statute, rule or regulation applicable to the Company or any of
the Subsidiaries or any judgment, decree or order known to such counsel 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 the Subsidiaries or any of their
activities or properties;
(ix) no consent, approval, authorization or order, and no
filing with, any court, regulatory body, government agency or other body (other
than such as may be required under federal securities or Blue Sky laws, as to
which no opinion need be rendered) is required in connection with the issuance
of the Registered Securities as contemplated by the Prospectus and the
Registration Statement, the performance of the Agreement and the
Representative's Warrant Agreement and the transactions contemplated hereby and
thereby;
(x) to the best of such counsel's knowledge after due inquiry,
the properties and businesses of the Company and the Subsidiaries conform in all
material respects to the description thereof contained in the Registration
Statement and the Prospectus;
25
(xi) to the best knowledge of such counsel, and except as
disclosed in the Registration Statement and the Prospectus, none the Company nor
any of the Subsidiaries is in breach of, or in default under, any term or
provision of any license, contract, indenture, mortgage, installment sale
agreement, deed of trust, lease, voting trust agreement, stockholders'
agreement, note, loan or credit agreement or any other agreement or instrument
evidencing an obligation for borrowed money, or any other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries is bound or to which the property
or assets (tangible or intangible) of the Company or any of the Subsidiaries is
subject; and none the Company nor any of the Subsidiaries is in violation of any
term or provision of its certificate of incorporation or bylaws, as amended, nor
to the best of such counsel's knowledge after due inquiry, in violation of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, which would have a material adverse effect on the Company;
(xii) the statements in the Prospectus under "Dividend Policy"
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;
(xiii) the Common Stock has been approved for listing on the
American Stock Exchange, subject only to official notice of issuance;
(xiv) to the best of such counsel's knowledge and based upon a
review of the outstanding securities and the contracts furnished to such counsel
by the Company, no person, corporation, trust, partnership, association or other
entity has the right to include and/or register any securities of the Company in
the Registration Statement, require the Company to file any registration
statement or, if filed, to include any security in such registration statement;
and
(xv) the Company is not an "investment company" or "promoter"
or "principal underwriter" for or an "affiliated person" of, an "investment
company" as such terms are defined in the 1940 Act.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws, rules and regulations of
the United States and the laws, rules and regulations of the State of Delaware,
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 provided, however, that
if the laws, rules and regulations of jurisdictions other than the United States
and Delaware on which such other counsel opines differ materially from the laws,
rules and regulations of the United States and Delaware, the opinion of such
other counsel shall be modified to contain all provisions customarily included
in such opinions in such jurisdiction; (B) as to matters of fact, to the extent
they deem proper, on certificates and written statements of responsible officers
of the Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided that
26
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel if requested. The opinion of such counsel shall state that
knowledge shall not include the knowledge of a director or officer of the
Company who is affiliated with such firm in his or her capacity as an officer or
director of the Company. The opinion of such counsel for the Company shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel.
(e) At each Option Closing Date, if any, the Underwriters shall have
received the favorable opinion of _____________, counsel to the Selling
Shareholders, dated the Option Closing Date, addressed to the Underwriters and
in form and substance satisfactory to Underwriters' Counsel to the effect that:
(i) each Selling Shareholder has full power and authority to
execute, deliver, and perform this Agreement and the Escrow Agreement. This
Agreement and the Escrow Agreement have been duly executed and delivered by the
Selling Shareholder and are the legal, valid, and binding obligations of the
Selling Shareholder, and (subject to applicable bankruptcy, insolvency, and
other laws affecting the enforceability of creditors' rights generally) are
enforceable as to it in accordance with their respective terms. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal is required by the Selling Shareholder
for the execution, delivery, or performance of this Agreement (except filings
under the Act, all of which have been made, and such consents consisting only of
consents under "blue sky" or securities laws) or the Escrow Agreement by the
Selling Shareholder. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding known to such counsel
to which the Selling Shareholder is a party, or to which the Selling
Shareholder's properties or assets are subject, is required for the execution,
delivery, or performance of this Agreement or the Escrow Agreement; and the
execution, delivery, and performance of this Agreement and the Escrow Agreement
will not violate, result in a breach of, conflict with, or (with or without the
giving of notice or the passage of time or both) entitle any party to terminate
or call a default under any such contract, agreement, instrument, lease,
license, arrangement, or understanding, or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or decree binding on
the Selling Shareholder or to which the Selling Shareholder's operations,
business, properties, or assets are subject; and
(ii) Upon the issuance and delivery pursuant to this Agreement
of the Registered Securities to be sold by each Selling Shareholder, the Selling
Shareholder will convey, against payment therefor as provided herein, to the
Underwriters and the Representative, respectively, good and marketable title to
the Registered Securities free and clear of all liens and other encumbrances.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws other than the laws, rules and regulations of the United
States and the laws, rules and regulations of the State of Delaware, to the
extent such counsel deems proper and to the extent specified in such option, 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 provided, however, that if the laws, rules and
regulations of jurisdictions
27
other than the United States and Delaware on which such other counsel opines
differ materially from the laws, rules and regulations of the United States and
Delaware, the opinion of such other counsel shall be modified to contain all
provisions customarily included in such opinions in such jurisdiction; (B) as to
matters of fact, to the extent they deem proper, on certificates and written
statements of responsible officers of the Company and certificates or other
written statements of officers of department of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to Underwriters' Counsel if requested. The opinion of such counsel
shall state that knowledge shall not include the knowledge of a director or
officer of the Company who is affiliated with such firm in his or her capacity
as an officer or director of the Company. The opinion of such counsel for the
Company shall state that the opinion of any such other counsel is in form
satisfactory to such counsel.
(f) On or prior to each of the Closing Date and the Option Closing
Date, if any, Underwriters' Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6 or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions of the
Company herein contained.
(g) Prior to each of the Closing Date and each Option Closing Date, if
any, (i) there shall have been no material adverse change nor development
involving a prospective change in the condition, financial or otherwise,
prospects, stockholders' equity or the business activities any of the Company
and the Subsidiaries, whether or not in the ordinary course of business, from
the latest dates as of which such condition is set forth in the Registration
Statement and Prospectus; (ii) there shall have been no transaction, not in the
ordinary course of business, entered into by any of the Company or the
Subsidiaries, from the latest date as of which the financial condition of the
Company and the Subsidiaries is set forth in the Registration Statement and
Prospectus which is adverse to the Company and the Subsidiaries taken as a
whole; (iii) none of the Company or the Subsidiaries shall be in default under
any provision of any instrument relating to any outstanding indebtedness which
default has not been waived; (iv) none of the Company or the Subsidiaries shall
have issued any securities (other than Registered Securities) or declared or
paid any dividend or made any distribution in respect of its capital stock of
any class, nor has there been any change in the capital stock, or any material
increase in the debt (long or short term) or liabilities or obligations of any
of the Company or the Subsidiaries (contingent or otherwise); (v) no material
amount of the assets of any of the Company or the Subsidiaries shall have been
pledged or mortgaged, except as set forth in the Registration Statement and
Prospectus; (vi) no action, suit or proceeding, at law or in equity, shall have
been pending or threatened (or circumstances developed giving rise to same)
against any of the Company or the Subsidiaries, or affecting any of their
respective properties or businesses 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 adversely affect the business,
operations, prospects or financial condition or any income of the Company or any
of the Subsidiaries, except as set forth in the Registration Statement and
Prospectus; and (vii) no stop
28
order shall have been issued under the Act and no proceedings therefor shall
have been initiated, threatened or contemplated by the Commission.
(h) At each of the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received a certificate of the Company signed on
behalf of the Company by the principal executive officer of the Company, dated
the Closing Date or Option Closing Date, as the case may be, to the effect that
such executive has carefully examined the Registration Statement, the
Prospectus, this Agreement and the Representative's Warrant Agreement, and that:
(i) The representations and warranties of the Company in this
Agreement and the Representative's Warrant Agreement are true and correct, as if
made on and as of the Closing Date or the Option Closing Date, as the case may
be, and the Company has complied with all agreements and covenants and satisfied
all conditions contained in this Agreement and the Representative's Warrant
Agreement on its part to be performed or satisfied at or prior to such Closing
Date or Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no proceedings
for that purpose have been instituted or are pending or, to the best of each of
such person's knowledge after due inquiry, are contemplated or threatened under
the Act;
(iii) The Registration Statement and the Prospectus and, if
any, each amendment and each supplement thereto, contain all statements and
information required by the Act 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, as of
their respective dates, 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) none
of the Company or the Subsidiaries has incurred up to and including the Closing
Date or the Option Closing Date, as the case may be, other than in the ordinary
course of its business, any material liabilities or obligations, direct or
contingent; (b) none of the Company or the Subsidiaries has paid or declared any
dividends or other distributions on its capital stock; (c) none of the Company
or the Subsidiaries has entered into any transactions not in the ordinary course
of business; (d) there has not been any change in the capital stock or material
increase in long-term debt or any increase in the short-term borrowings (other
than any increase in the short-term borrowings in the ordinary course of
business) of any of the Company or the Subsidiaries, (e) none of the Company or
the Subsidiaries has sustained any loss or damage to its property or assets,
whether or not insured, (f) there is no litigation which is pending or
threatened (or circumstances giving rise to same) against the Company, or any of
the Subsidiaries or any affiliated party of any of the foregoing
29
which is required to be set forth in an amended or supplemented Prospectus which
has not been set forth, and (g) there has occurred no event required to be set
forth in an amended or supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this
subsection (h) are to such documents as amended and supplemented at the date of
such certificate.
(i) At each Option Closing Date, if any, the Underwriters shall have
received a certificate from the Selling Shareholders, dated the Option Closing
Date, to the effect that the Selling Shareholders have carefully examined the
Registration Statement, the Prospectus and this Agreement, and that the
representations and warranties of the Selling Shareholders in this Agreement are
true and correct, as if made on and as of the Option Closing Date, and the
Selling Shareholders have complied with all agreements and covenants and
satisfied all conditions contained in this Agreement on its part to be performed
or satisfied at or prior to such Option Closing Date.
(j) 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.
(k) 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 in all respects (including the non-material nature of the
changes or decreases, if any, referred to in clause (iii) below) to the
Underwriters and Underwriters' Counsel, from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇:
(i) confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
Exchange Act and the applicable Regulations;
(ii) stating that it is their opinion that the financial
statements and supporting schedules of the Company and the Subsidiaries included
in the Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act and the Regulations thereunder
and that the Representative may rely upon the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ with
respect to the financial statements and supporting schedules included in the
Registration Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim financial
statements of the Company and the Subsidiaries (with an indication of the date
of the latest available unaudited interim financial statements), a reading of
the latest available minutes of the stockholders and board of directors and the
various committees of the board of directors of the Company and the
Subsidiaries, consultations with officers and other employees of each of the
Company and the Subsidiaries responsible for financial and accounting matters
and other specified procedures and inquiries, nothing has come to their
attention which would lead them to believe that (A) the unaudited financial
statements and supporting schedules of the Company and the Subsidiaries, if any,
included in the Registration Statement, do not comply as to form in all material
respects with the applicable
30
accounting requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited financial statements
of the Company and the Subsidiaries included in the Registration Statement, or
(B) at a specified date not more than five (5) days prior to the effective date
of the Registration Statement, there has been any change in the capital stock or
material increase in long-term debt any of the Company or the Subsidiaries, or
any material decrease in the stockholders' equity or net current assets or net
assets of the Company as compared with amounts shown in the ____________, 19__,
balance sheet included in the Registration Statement, other than as set forth in
or contemplated by the Registration Statement, or, if there was any change or
decrease, setting forth the amount of such change or decrease;
(iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and other
financial information pertaining to each of the Company and the Subsidiaries 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 each of the Company and the
Subsidiaries and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures do not constitute
an examination in accordance with generally accepted auditing standards) set
forth in the letter and found them to be in agreement; and
(v) statements as to such other material matters incident to
the transaction contemplated hereby as the Representative may reasonably
request.
(l) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ a letter, dated as of the
Closing Date or the Option Closing Date, as the case may be, to the effect that
they reaffirm that statements made in the letter furnished pursuant to
Subsection (i) of this Section 6, except that the specified date referred to
shall be a date not more than five (5) days prior to 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 (iv) of Subsection (k) of this
Section 6 with respect to certain amounts, percentages and financial information
as specified by the Representative and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (iv).
(m) On the Closing Date and each Option Closing Date, if any, there
shall have been duly tendered to the Representative for the several
Underwriters' accounts the appropriate number of Registered Securities.
(n) No order suspending the sale of the Registered Securities in any
jurisdiction designated by the Representative pursuant to subsection (e) of
Section 4 hereof shall have been issued on the Closing Date or each Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
31
(o) 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 4.2 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.
(p) On or before Closing Date, the shares of Common Stock shall have
been duly approved for quotation on the American Stock Exchange.
(q) On or before Closing Date, there shall have been delivered to the
Representative all of the Lock-up Agreements in final form and substance
satisfactory to Underwriters' Counsel.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or the relevant Option Closing Date,
as the case may be, is not so fulfilled, the Representative may terminate this
Agreement or, if the Representative so elects, it may waive any such conditions
which have not been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company and the Selling Shareholders, as of the date hereof and
as of the Option Closing Date, if any, agree 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
loss, liability, claim, damage, and expense whatsoever (including, but not
limited to, reasonable attorneys' fees and any and all reasonable expense
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation provided that the
indemnified persons may not agree to any such settlement without the prior
written consent of the Company), as and when incurred, arising out of, based
upon or in connection with (i) any untrue statement or alleged untrue statement
of a material fact contained (A) in any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time amended and supplemented); or
(B) in any application or other document or communication (in this Section 7
collectively called "application") executed by or on behalf of the Company or
the Selling Shareholders or based upon written information furnished by or on
behalf of the Company or the Selling Shareholders in any jurisdiction in order
to qualify the Registered Securities under the securities laws thereof or filed
with the Commission, any state securities commission or agency, the American
Stock Exchange or any other securities exchange or quotation system; or any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of the Prospectus, in the light of the circumstances under which they were
made), unless such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company with respect to any
Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or
32
Prospectus, or any amendment thereof or supplement thereto, or in any
application, as the case may be; or (ii) any breach of any representation,
warranty, covenant or agreement of the Company or the Selling Shareholders
contained in this Agreement. The indemnity agreement in this subsection (a)
shall be in addition to any liability which the Company or the Selling
Shareholders 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, and the Selling
Shareholders, to the same extent as the foregoing indemnity from the Company and
the Selling Shareholders to the Underwriters but only with respect to statements
or omissions, if any, made in any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement thereto or in any
application made in reliance upon, and in strict conformity with, written
information furnished to the Company with respect to any Underwriter by such
Underwriter or the Representative 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 and each of the Selling Shareholders acknowledge that the statements
with respect to the public offering of the Securities set forth under the
heading "Underwriting" and the stabilization legend in the Prospectus have been
furnished by the Underwriters expressly for use therein and constitute the only
information furnished in writing by or on behalf of the Underwriters or the
Representative 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
liability which it may have otherwise or which it may have under this Section 7,
except to the extent that it has been prejudiced in any material respect by such
failure). In case any such action is brought against any indemnified party, and
it notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably
33
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, based
on the advice of counsel, that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses of one
additional counsel shall be borne by the indemnifying parties. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. Anything in this Section 7 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution in any case
in which (i) an indemnified party makes claim for indemnification pursuant to
this Section 7, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Registered 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 and/or the Selling Shareholders on the one hand, is a
contributing party and the Underwriters on the other hand, are the indemnified
party, the relative benefits received by the Company and the Selling
Shareholders 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 Registered Securities (before deducting expenses other than underwriting
discounts and commissions) 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 and/or the Selling Shareholders on the one
hand, or by the Underwriters on the other hand, 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
34
(or actions in respect thereof) referred to above in this subdivision (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subdivision (d), the
Underwriters shall not be required to contribute any amount in excess of the
underwriting discount applicable to the Registered Securities purchased by the
Underwriters hereunder. No person guilty of fraudulent misrepresentation (within
the meaning of Section 12(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7, each person, if any, who controls the Company within the
meaning of the Act, each officer of the Company who has signed the Registration
Statement, and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to this subparagraph (d). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect to
which a claim for contribution may be made against another party or parties
under this subparagraph (d), notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have hereunder or otherwise than under this
subparagraph (d), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may have at common
law or otherwise.
8. Representations and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Company or the Selling
Shareholders submitted pursuant hereto, shall be deemed to be representations,
warranties and agreements of the Company and the Selling Shareholders at the
Closing Date and as of each Option Closing Date, as the case may be, and such
representations, warranties and agreements of the Company and the respective
indemnity and contribution agreements contained in Section 7 hereof shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company, the Selling Shareholders or any
controlling person of any of the Underwriters or the Company, and shall survive
termination of this Agreement or the issuance and delivery of the Registered
Securities to the Underwriters and the Representative, as the case may be.
9. Effective Date.
This Agreement shall become effective at 4:00 p.m., New York City time,
on the date hereof. 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
Registered Securities for offering or the release by the Representative for
publication of the first newspaper advertisement which is subsequently published
relating to the Registered Securities.
10. Termination.
35
(a) Subject to subsection (b) of this Section 10, the Representative
shall have the right to terminate this Agreement, (i) if any domestic or
international event or act or occurrence has materially disrupted, or in the
Representative's reasonable opinion, will in the immediate future materially
disrupt the financial markets; or (ii) any material adverse change in the
financial markets shall have occurred; or (iii) if trading on the New York Stock
Exchange, the American Stock Exchange, or in the over-the-counter market shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required on
the over-the-counter market by the NASD or by order of the Commission or any
other government authority having jurisdiction; or (iv) if the United States
shall have become involved in a war or major hostilities, or if there shall have
been an escalation in an existing war or major hostilities or a national
emergency shall have been declared in the United States; or (v) if a banking
moratorium has been declared by a state or federal authority; or (vi) if 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 Registered Securities; or (vii) if there shall have been such a
material adverse change in the prospects or conditions of the Company or any of
the Subsidiaries, 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 Registered Securities.
(b) If this Agreement is terminated by the Representative in accordance
with any of the provisions of Section 6, Section 10(a) or Section 12, the
Company and/or the Selling Shareholders shall promptly reimburse and indemnify
the Underwriters pursuant to Section 5(b) hereof. Notwithstanding any contrary
provision contained in this Agreement, any election hereunder or any termination
of this Agreement (including, without limitation, pursuant to Sections 6, 10, 11
and 12 hereof), and whether or not this Agreement is otherwise carried out, the
provisions of Section 5 and Section 7 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
11. Substitution of the Underwriters or the Selling Shareholders.
If one or more of the Underwriters or the Selling Shareholders shall
fail (otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 6, Section 10 or Section 12 hereof) to
purchase the Securities which it or they are obligated to purchase on such date
under this Agreement (the "Defaulted Securities"), the Representative shall have
the right, within 24 hours thereafter, to make arrangement for one or more of
the non-defaulting Underwriters, or any other underwriters, to purchase all, but
not less than all, of the Defaulted Securities in such amounts as may be agreed
upon and upon the terms herein set forth. If, however, the Representative shall
not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
total number of Securities to be purchased on such date, the non-defaulting
Underwriters shall be obligated to
36
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total
number of Securities to be purchased on such date, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Representative shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
12. Default by the Company or the Selling Shareholders.
If the Company or the Selling Shareholders shall fail at the Closing
Date or at any Option Closing Date, as applicable, to sell and deliver the
number of Registered Securities which it is obligated to sell hereunder on such
date, then this Agreement shall terminate (or, if such default shall occur with
respect to any Option Shares to be purchased on an Option Closing Date, the
Underwriters may at the Representative's option, by notice from the
Representative to the Selling Shareholders terminate the Underwriters'
obligation to purchase Option Shares from the Selling Shareholders on such date)
without any liability on the part of any non-defaulting party other than
pursuant to Section 5, Section 7 and Section 10 hereof. No action taken pursuant
to this Section shall relieve the Company or any Selling Shareholder from
liability, if any, in respect of such default.
13. Notices.
All notices and communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be deemed to have been duly
given if mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed to the Representative, c/o
National Securities Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, with a copy, which shall not
constitute notice, ▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Arthur Don. Notices to the Company shall be
directed to the Company at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, with a copy, which shall not constitute
notice, to ▇▇▇▇▇ & ▇▇▇▇▇ Ltd., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. . 14. Parties.
This Agreement shall inure solely to the benefit of and shall be
binding upon the Underwriters, the Company and the Selling Shareholders, and the
controlling persons, directors
37
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 Registered Securities from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
15. Construction.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without giving effect to the
choice of law or conflict of laws principles.
16. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all of which taken together shall
be deemed to be one and the same instrument.
17. 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, the Company and the Selling Shareholders.
If the foregoing correctly sets forth the understanding among the
Underwriters, the Company and the Selling Shareholders, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us.
38
Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Shareholder represents by doing that he has been duly appointed as
Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
▇▇▇▇▇▇.▇▇▇ HOLDING CORPORATION
By:________________________________________
Name:
Title:
SELLING SHAREHOLDERS LISTED ON SCHEDULE B
By:________________________________________
Attorney-in-fact
CONFIRMED AND ACCEPTED AS OF
THE DATE FIRST ABOVE WRITTEN:
NATIONAL SECURITIES CORPORATION
By:________________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman
For itself and as Representative of the Underwriters named in Schedule A hereto.
39
SCHEDULE A
FIRM SHARES
Number of Shares to be Total Number of
Name of Purchased Shares to
Underwriters from the Company be Purchased
------------ ---------------- ------------
National Securities 1,000,000 1,000,000
Corporation
TOTAL
40
SCHEDULE B
SCHEDULE OF SELLING SHAREHOLDERS
Selling Shareholder Option Shares to Be Sold
------------------- ------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Family Trust
41