Exhibit 1.1
2,000,000 Shares
LIFE CRITICAL CARE CORPORATION
UNDERWRITING AGREEMENT
_______________ ___, 1996
▇.▇. ▇▇▇▇▇▇ & Co., Inc.
(as Representative of the Several
Underwriters named in Schedule I hereto)
▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
LIFE CRITICAL CARE CORPORATION, a Delaware corporation (the
"Company"), proposes to issue and sell to the Underwriters named in Schedule I
hereto (the "Underwriters") pursuant to this Underwriting Agreement (the
"Agreement"), an aggregate of 2,000,000 shares (the "Shares") of Common Stock of
the Company, $.01 par value per share (the "Common Stock").
In addition, the Company and certain stockholders of the Company
(the "Selling Stockholders") propose to grant to the Underwriters the option
referred to in Section 2(c) to purchase all or any part of an aggregate of
300,000 additional Shares to cover over-allotments. Unless the context otherwise
indicates, the term "Shares" shall include the additional Shares referred to
above and the Shares issuable upon exercise of the Representative's Warrant
described below.
Simultaneously with the closing on the Firm Shares (as hereinafter
defined) by the Underwriters, (i) each of the Acquired Companies (as hereinafter
defined) will be acquired (collectively, the "Acquisitions"), the consideration
for which will be a combination of cash and shares of the Company's Common Stock
as described in the Registration Statement (as hereinafter defined) and (ii)
there will be a closing of a credit facility obtained by the Company (the
"Credit Facility"), a portion of the proceeds of which will be used for the
Acquisitions.
You have advised the Company that the Underwriters desire to
purchase the Shares, and that you have been authorized to execute this Agreement
as the Representative of the Underwriters (the "Representative"). The Company
confirms the agreements made by it with respect to the purchase of the Shares by
the Underwriters, as follows:
1A. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, each Underwriter that:
(a) Registration Statement and Prospectus. A
registration statement (File No. 333-14755) on Form SB-2 relating to the
public offering of the Shares (the "Offering"), including a preliminary form of
prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission under the Act.
As used herein, the term "Preliminary Prospectus" shall mean each prospectus
filed pursuant to Rule 430 or Rule 424(a) of the Rules and
Regulations. The registration statement (including all financial statements,
schedules and exhibits) as amended at the time it becomes effective and the
final prospectus included therein are respectively referred to herein as the
"Registration Statement" and the "Prospectus," except that (i) if the prospectus
first filed by the Company pursuant to Rule 424(b) or Rule 430A of the Rules and
Regulations or otherwise utilized and required to be so filed shall differ from
said prospectus as then amended, the term "Prospectus" shall mean the prospectus
first filed pursuant to said Rule 424(b) or Rule 430A or so utilized from and
after the date on which it shall have been filed or utilized, and (ii) if such
registration statement or prospectus is amended or such prospectus is
supplemented after the effective date of such registration statement and prior
to the Option Closing Date (as defined in Section 2(c)), the term "Registration
Statement" shall include such registration statement as so amended, and the term
"Prospectus" shall include the prospectus as so amended or supplemented, or
both, as the case may be.
(b) Contents of Registration Statement. At the
time the Registration Statement becomes effective (the "Effective Date") and
at all times subsequent thereto for so long as the delivery of a
prospectus is required in connection with the offering or sale of any of the
Shares, (i) the Registration Statement and Prospectus will in all respects
conform to the requirements of the Act and the Rules and Regulations; and (ii)
neither the Registration Statement nor the Prospectus shall include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company makes no representations, warranties or
agreements as to the information contained in or omitted from the Registration
Statement or Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter
specifically for use in the preparation thereof. It is understood that the
statements set forth in the Prospectus with respect to stabilization, the
material set forth under the heading "UNDERWRITING", and the identity of
Underwriters' counsel under the heading "LEGAL MATTERS" constitute the only
information furnished in writing by or on behalf of any Underwriter for
inclusion in the Registration Statement and Prospectus, as the case may be.
(c) Organization and Good Standing. The Company
and each of Blue Water Medical Supply, Inc., Blue Water Industrial Products,
Inc., Great Lakes Home Medical, Inc. and ABC Medical Supply, Inc. (each,
an "Acquired Company" and collectively, the "Acquired Companies") have been
duly incorporated and are validly existing as corporations in good standing
under the laws of the jurisdiction of their incorporation, with full power and
authority (corporate and other) to own their properties and conduct their
business as described in the Prospectus, and are duly qualified or licensed to
do business as foreign corporations and are in good standing in all other
jurisdictions in which the nature of their business or the character or
location of their properties requires such qualification, except where failure
to so qualify will not materially affect the Company's or any of the Acquired
Companies' business, properties or financial condition.
(d) Capitalization. The authorized capital
stock of the Company as of the Effective Date will be, as set forth under the
heading "DESCRIPTION OF CAPITAL STOCK" in the Prospectus, (i) 10,000,000
shares of Common Stock, par value $.01 per share, of which not more than
2,000,000 shares will be issued and outstanding as of the Effective Date, and
(ii) 500,000 shares of Preferred Stock, par value $.01 per share, of which no
shares will be issued and outstanding on the Effective Date. The shares of
issued and outstanding capital stock of the Company set forth thereunder have
been duly authorized, validly issued and are fully paid and non-assessable; no
options, warrants or other rights to purchase, agreements or other obligations
to issue or agreements or other rights to convert any obligation into, any
shares of capital stock of the Company have been granted or entered into by the
Company, except for up to 350,000 shares of Common Stock reserved for issuance
to the President and the Chief Financial Officer of the Company pursuant to
options which are subject to a performance earn-out and an additional 250,000
shares of Common Stock reserved for issuance (but not yet granted) under the
Company's 1996 Stock and Incentive Plan and the Non-Employee Directors Stock
Option Plan. The shares conform to all statements relating thereto contained in
the Registration Statement and Prospectus.
(e) Securities Authorized. The Shares and the
Representative's Warrant (as defined in Section 12) are duly authorized and,
when issued, delivered and paid for pursuant to this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable and
free of pre-emptive rights of any security holder of the Company. Neither
the filing of the Registration Statement nor the offering or sale of the
Shares or the Representative's Warrant as contemplated in this Agreement
gives rise to any rights, other than those which have been waived in writing or
satisfied, for or relating to the registration of any shares of capital
stock, except as described in the Registration Statement.
(f) Authority and Enforceability of Agreements.
This Agreement, the Representative's Warrant, the Financial Consulting
Agreement (as defined in Section 3A(r)), the Merger and Acquisition Agreement
(as defined in Section 3A(s)) and the Stock Escrow Agreement (as defined
in Section 3A(t)) have been duly and validly authorized, executed and
delivered by the Company, and assuming due execution by the other party or
parties hereto and thereto, constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency or
other laws affecting the rights of creditors generally. The Company has full
right, power and lawful authority to authorize, issue and sell the Shares and
the Representative's Warrant to be sold by it hereunder on the terms and
conditions set forth herein, and no consent, approval, authorization or other
order of any governmental authority is required in connection with such
authorization, execution and delivery or with the authorization, issue and sale
of the Shares or the Representative's Warrant, except such as may be required
under the Act, state securities laws or the rules of the National Association of
Securities Dealers, Inc. ("NASD").
(g) No Conflicts. Except as described in the
Prospectus, the Company and each of the Acquired Companies are not in
violation, breach or default of or under, and consummation of the
transactions herein contemplated and the fulfillment of the terms of this
Agreement will not conflict with or result in a breach of, any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance pursuant to the terms of, any
material contract, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of the Acquired Companies is
a party or by which the Company or any of the Acquired Companies may be bound or
to which any of the property or assets of the Company or any of the Acquired
Companies are subject, nor will such action result in any violation of the
provisions of the certificate of incorporation or the by-laws of the Company, as
amended, or any statute or any order, rule or regulation applicable to the
Company or any of the Acquired Companies of any court or of any regulatory
authority or other governmental body having jurisdiction over the Company or any
of the Acquired Companies.
(h) Title to Assets. Subject to the
qualifications stated in the Prospectus, the Company has good and marketable
title to all properties and assets described in the Prospectus as owned by
it, including without limitation intellectual property, free and clear of all
liens, charges, encumbrances, equities, claims or restrictions, except such
as are not materially significant or important in relation to its business; all
of the material leases and subleases under which the Company is the lessor or
sublessor of properties or assets or under which the Company holds properties or
assets as lessee or sublessee as described in the Prospectus are in full
force and effect, and, except as described in the Prospectus, the Company is not
in default in any material respect with respect to any of the terms or
provisions of any of such leases or subleases, and no claim has been asserted by
anyone adverse to rights of the Company as lessor, sublessor, lessee or
sublessee under any of the leases or subleases mentioned above, or affecting or
questioning the right of the Company to continued possession of the leased or
subleased premises or assets under any such leases or sublease except as
described or referred to in the Prospectus; and the Company owns or leases all
such properties described in the Prospectus as are necessary to its operations
as now conducted and, except as otherwise stated in the Prospectus, as proposed
to be conducted as set forth in the Prospectus. As of the First Closing Date (as
defined in Section 2(b) hereof), after giving effect to the Acquisitions, all of
the assets of each of the Acquired Companies will be owned by the Company free
and clear of all liens, charges, encumbrances, equities, claims and
restrictions.
(i) Independent Accountants. Ernst & Young LLP
("E&Y"), who have examined and certified and given their report on certain
financial statements filed and to be filed with the Commission as a part of the
Registration Statement, which are included in the Prospectus, are independent
public accountants within the meaning of the Act and the Rules and Regulations.
(j) Financial Statements. The financial
statements, together with the related notes set forth in the Registration
Statement and the Prospectus, present fairly the financial position,
results of operations, changes in stockholders' equity and cash flows of the
Company and each Acquired Company on the basis stated in the Registration
Statement, at the respective dates and for the respective periods to which they
apply. Such financial statements and related notes have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the entire period involved, except to the extent disclosed
therein. The financial information for each of the periods presented in the
Registration Statement and the Prospectus present a true and complete statement
of the financial position of the Company and each Acquired Company at the dates
indicated and the results of their operations for the periods then ended. The
selected historical financial information set forth under the headings "SUMMARY
FINANCIAL INFORMATION" and "SELECTED FINANCIAL DATA" included in the
Registration Statement and the Prospectus present fairly the information shown
therein and have been prepared on a basis consistent with that of the audited
financial statements included in the Registration Statement and the Prospectus.
The pro forma condensed consolidated financial statements of the Company, and
the related notes thereto, set forth in the Registration Statement and the
Prospectus, have been prepared in conformity with the requirements of the Act
and the Rules and Regulations and present fairly the pro forma information shown
therein; and the pro forma adjustments on such pro forma financial statements
have been properly applied on the basis described in the related notes thereto
and the assumptions used in preparing such adjustments are reasonable. The pro
forma financial data set forth in the Prospectus under the headings "SUMMARY
FINANCIAL DATA" and "SELECTED FINANCIAL DATA" have been prepared on a basis
consistent with the pro forma consolidated financial statements of the Company.
(k) No Material Change. Except as described in
the Prospectus, subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, neither the Company nor any
of the Acquired Companies has incurred any liabilities or obligations,
direct or contingent, not in the ordinary course of business, or entered into
any transaction not in the ordinary course of business, which is material to
the business of the Company or any such Acquired Company; and there has not
been any change in the capital stock of, or any incurrence of long-term debt
by, the Company or any of the Acquired Companies or any issuance of
options, warrants or other rights to purchase the capital stock of the Company
or any adverse change or any development involving, so far as the Company can
now reasonably foresee, a prospective adverse change in the condition (financial
or other), net worth, results of operations, earnings, business, key personnel
or properties of the Company or any of the Acquired Companies which would be
material to the business or financial condition of the Company or any such
Acquired Company; and neither the Company nor any of the Acquired Companies has
become party to, and neither the business nor the property of the Company or any
of the Acquired Companies has become the subject of, any material litigation,
whether or not in the ordinary course of business.
(l) Environmental Compliance. The property,
assets and operations of the Company and each of the Acquired Companies
comply in all material respects with all applicable federal, state or local
laws, rules, orders, decrees, judgments, injunctions, licenses, permits or
regulations relating to environmental matters (the "Environmental Laws"),
except to the extent that failure to comply with such Environmental Laws would
not result in any material adverse change in the condition (financial or
other), business, prospects, revenues, net worth or properties of the Company or
any of the Acquired Companies. None of the Company's nor any of the Acquired
Companies' property, assets or operations is the subject of any federal, state
or local investigation evaluating whether any remedial action is needed to
respond to a release of any substance regulated by or form the basis of
liability under any Environmental Laws (a "Hazardous Material") into the
environment or is in contravention of any federal, state, local or foreign law,
order or regulation that would result in any material adverse change in the
condition (financial or other), business, prospects, revenues, net worth or
properties of the Company or any of the Acquired Companies. Neither the Company
nor any of the Acquired Companies has received any notice or claim, nor are
there pending threatened or reasonably anticipated lawsuits against it with
respect to violations of an Environmental Law or in connection with the release
of any Hazardous Material into the environment. Neither the Company nor any of
the Acquired Companies has any material contingent liability in connection with
any release of Hazardous Material into the environment.
(m) Internal Controls. The Company 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; (ii) 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.
(n) Litigation. Except as set forth in the
Prospectus, there is not now pending nor, to the best knowledge of the
Company, threatened, any action, suit or proceeding (including those related to
environmental matters or discrimination on the basis of age, sex, religion
or race), whether or not in the ordinary course of business, to which the
Company, any of the Acquired Companies, the sellers of the Acquired Companies
or their respective property is subject or affected before or by any court or
governmental agency or body, which might result in any material adverse change
in the condition (financial or other), business prospects, revenues, net worth
or properties of the Company or any of the Acquired Companies; and no labor
disputes involving the employees of the Company or any of the Acquired
Companies exist which might be expected to materially adversely affect the
conduct of the business, property, operations or the condition (financial or
otherwise) or earnings of the Company or any such Acquired Company.
(o) Taxes. Except as disclosed in the
Prospectus, the Company and each of the Acquired Companies have filed all
necessary federal, state, local and foreign income and franchise tax returns
and has paid all taxes shown as due thereon; and there is no tax
deficiency which has been asserted against the Company or any of the Acquired
Companies or, to the best knowledge of the Company, any basis for asserting a
tax deficiency against the Company or any of the Acquired Companies.
(p) Licenses and Permits. Each of the Company
and the Acquired Companies has all material licenses (including without
limitation all necessary Medicare and Medicaid licenses), permits and other
governmental authorizations currently required for the conduct of its business
or the ownership of its property as described in the Prospectus, has current
Medicare provider numbers and is in all material respects complying therewith
and owns or possesses adequate rights to use all material patents, patent
applications, trademarks, service-▇▇▇▇▇, ▇▇▇▇ registrations, copyrights and
licenses necessary for the conduct of such business and, except as described in
the Prospectus, has not received any notice of conflict with the asserted
rights of others in respect thereof. To the best knowledge of the Company, none
of the activities or business of the Company or of any of the Acquired Companies
is in violation of, or causes the Company or any of the Acquired Companies to
violate, any law, rule, regulation or order of the United States, any state,
county or locality, or of any foreign agency or locality, the violation of which
would have a material adverse impact upon the condition (financial or
otherwise), business, property, prospective results of operations or net worth
of the Company or any such Acquired Company.
(q) Insurance. Each of the Company and the
Acquired Companies maintains insurance of the types and in amounts which it
reasonably believes to be adequate for its business, in such amounts and with
such deductible as is customary for companies in the same or similar
business, all of which insurance is in full force and effect. The Company
has no reason to believe that it will not be able to renew the existing
insurance coverage for the Acquired Companies as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business upon completion of the Acquisitions.
(r) No Prohibited Payments. The Company has
not, directly or indirectly, at any time (i) made any contributions to any
candidate for political office, or if made, failed to disclose fully any
such contribution made in violation of law, or (ii) made any payment to any
state, federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments or
contributions required or allowed by applicable law. The Company's internal
accounting controls and procedures are sufficient to cause the Company to comply
in all material respects with the Foreign Corrupt Practices Act of 1988, as
amended.
(s) Transfer Taxes. On the Closing Dates (as
defined in Section 2(d)), all transfer or other taxes (including franchise,
capital stock or other tax, other than income taxes imposed by any
jurisdiction), if any, which are required to be paid in connection with
the sale and transfer of the Shares to the Underwriters hereunder will
have been fully paid or provided for by the Company and all laws imposing such
taxes will have been fully complied with.
(t) Exhibits. All contracts and other
documents of the Company which are, under the Rules and Regulations,
required to be described in, or filed as exhibits to, the Registration
Statement have been so described or filed.
(u) Stabilization Activities. Each of the
Company and its directors and officers has not taken and will not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Shares to facilitate the sale
or resale of the Shares hereunder.
(v) No Subsidiaries. The Company has no
subsidiaries.
(w) No Finders. The Company has not entered into
any agreement pursuant to which any person is entitled either directly or
indirectly to compensation from the Company for services as a finder in
connection with the proposed Offering.
(x) No Unlawful Prospectuses. The Company has
not distributed any prospectus or other offering material in connection with the
Offering contemplated herein, other than any Preliminary Prospectus, the
Prospectus or other material permitted by the Act and the Rules and Regulations.
(y) Shareholder Agreements; Registration
Rights. Except as described in the Prospectus, no security holder of the
Company has any rights with respect to the purchase, sale or registration
of any securities of the Company and all registration rights with respect to
the Offering have been waived.
(z) Lock-Up Agreements. The Company has obtained
from all of its directors, officers, shareholders and holders of options or
warrants to purchase Common Stock and from the sellers of the Acquired
Companies, written agreements in favor of the Representative restricting
the sale, pledge or other transfer of shares of Common Stock for a period of
eighteen (18) months from the Effective Date without the prior written consent
of the Representative, which consent shall not be unreasonably withheld.
1B. Representations and Warranties of the Selling
Stockholders. Each Selling Stockholder represents and warrants to each
Underwriter that:
(a) Title to Assets. Such Selling Stockholder
now has, and on any Option Closing Date will have, valid and unencumbered
title to the Shares to be sold by such Selling Stockholder, free and clear of
any lien, claim, security interest or other encumbrance, including,
without limitation, any restriction on transfer or other defect in title
except for any lien, claim, security interest, encumbrance or restriction on
transfer created pursuant hereto.
(b) Right to Assign Shares. Such Selling
Stockholder now has, and on any Option Closing Date will have, full legal right,
power and authorization to sell, assign, transfer and deliver such Shares in
the manner provided in this Agreement, and upon delivery of and payment for
such Shares hereunder, the several Underwriters will acquire valid and
marketable title to such Shares hereunder, the several Underwriters will
acquire valid and marketable title to such Shares, free and clear of any lien,
claim, security interest, or other encumbrance, restriction on transfer or other
defect in title.
(c) Authority and Enforceability of Agreements.
This Agreement and the Custody Agreement (as defined below) have been duly
authorized, and in the case of this Agreement, when executed and delivered on
behalf of such Selling Stockholder in accordance with the Custody Agreement,
have been duly executed and delivered by or on behalf of such Selling
Stockholder and are the valid and binding agreements of such Selling
Stockholder enforceable against such Selling Stockholder in accordance with
their respective terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or principles of
public policy and except as enforcement hereof and thereof may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.
(d) No Governmental Approval; No Conflicts.
Neither the execution and delivery of this Agreement or the Custody Agreement
by or on behalf of such Selling Stockholder nor the consummation of the
transactions herein or therein contemplated by or on behalf of such Selling
Stockholder requires any consent, approval, authorization or order of, or
filing or registration with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except such as may be
required under the Act, state securities laws governing the purchase and
distribution of the Shares or by the rules of the NASD) or any other
approval or conflicts or will conflict with or constitutes or will
constitute a breach of, or default under, or violates or will violate, any
agreement, indenture or other instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder is or may be bound or to which any of
such Selling Stockholder's property or assets is subject, or any statute, law,
rule, regulation, ruling, judgment, injunction, order or decree applicable to
such Selling Stockholder or to any property or assets of such Selling
Stockholder.
(e) Contents of Registration Statement. Such
Selling Stockholder has reviewed the Registration Statement and the
Prospectus. The Registration Statement does not contain an untrue statement
of a material fact with respect to such Selling Stockholder or omit to state a
material fact with respect to such Selling Stockholder required to be stated
therein or necessary to make the statements therein with respect to such Selling
Stockholder not misleading and the Prospectus does not contain an untrue
statement of a material fact with respect to such Selling Stockholder or omit
to state a material fact with respect to such Selling Stockholder necessary to
make the statements therein with respect to such Selling Stockholder, in
light of the circumstances under which they were made, not misleading and,
except as disclosed in the Registration Statement and the Prospectus, such
Selling Stockholder knows of no material adverse information concerning the
current or prospective operations of the Company.
(f) Representations and Warranties. The
representations and warranties of such Selling Stockholder in the Custody
Agreement are, and on any Option Closing Date will be, true and correct.
(g) Stabilization Activities. Such Selling
Stockholder has not taken, directly or indirectly, any action designed to
or that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares, except for the lock-up arrangements described in the
Prospectus.
2. Purchase, Delivery and Sale of the Shares.
(a) Purchase Price for Shares. The Shares shall
be sold to and purchased by the Underwriters hereunder at the purchase price
of $_____ per Share [the initial public offering price of the Shares of $_____
less an underwriting discount of nine percent (9%)] (the "Purchase Price").
(b) Firm Shares. Subject to the terms and
conditions of this Agreement, and upon the basis of the representations,
warranties and agreements herein contained, the Company agrees to issue and sell
to the Underwriters, and the Underwriters agree to buy from the Company at
the Purchase Price at the place and time hereinafter specified, the number of
Shares set forth opposite each Underwriter's name in Schedule I hereto (the
"Firm Shares").
Delivery of the Firm Shares against payment therefor shall take
place at the offices of ▇.▇. ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or at such other place as may be designated by
agreement between you and the Company) at 10:00 a.m. New York time on
____________ ___, 1996, or at such later time and date, not later than ten (10)
banking days after the Effective Date, as you may designate, such time and date
of payment and delivery for the Firm Shares being herein called the "First
Closing Date." Time shall be of the essence and delivery at the time and place
specified in this subsection (a) is a further condition to the obligations of
the Underwriters hereunder.
(c) Over-Allotment Option. The Company and the
Selling Stockholders also agree, subject to all the terms and conditions
of this Agreement and to such adjustments as you may determine in order to
avoid fractional shares, to issue (in the case of the Company) and sell
to the Underwriters, and, upon the basis of the representations,
warranties and agreements of the Company and the Selling Stockholders
herein contained and subject to all the terms and conditions set forth herein,
the Underwriters shall have the right to purchase from the Company and the
Selling Stockholders, at the same price per Share as the Underwriters shall
pay for the Firm Shares being sold pursuant to this Agreement (such
additional Shares being referred to herein as the "Option Shares"), pursuant to
an option (the "Over-Allotment Option") which may be exercised, in whole or in
part, within thirty (30) calendar days after the Effective Date (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange is open for trading), up to an
aggregate of 300,000 Option Shares, of which up to an aggregate of [50,000]
Option Shares may be purchased from the Selling Stockholders and of which up to
an aggregate of [240,000] Option Shares may be purchased from the Company. The
maximum number of Option Shares subject to sale by each Selling Stockholder
shall be as set forth opposite the name of such Selling Shareholder on Schedule
II hereto. If the Underwriters exercise all or part of the Over-Allotment
Option, Option Shares will be purchased by the Underwriters pro rata from the
Selling Stockholders and the Company in proportion to the maximum number of
Option Shares which each of them has agreed to sell. Upon any exercise of the
Over-Allotment Option, each Underwriter, severally and not jointly, agrees to
purchase from the Company and each Selling Stockholder the number of Option
Shares (subject to such adjustments as you may determine in order to avoid
fractional shares) which bears the same proportion to the number of Option
Shares to be sold by the Company or such Selling Stockholder as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto
(or such number of Firm Shares increased as set forth in Section 9 hereof) bears
to the aggregate number of Firm Shares to be sold by the Company.
This Over-Allotment Option may be exercised by the Underwriters upon
notice by you to the Company and the Attorneys-in-Fact (as defined below)
advising it as to the amount of Option Shares as to which the Over-Allotment
Option is being exercised, the names and denominations in which the certificates
for such Option Shares are to be registered and the time and date when such
certificates are to be delivered. Such time and date shall be determined by you
but shall not be earlier than four (4) and not later than ten (10) full business
days after the exercise of said option, nor in any event prior to the First
Closing Date, and such time and date is referred to herein as the "Option
Closing Date." Delivery of the Option Shares against payment therefor shall take
place at the offices of ▇.▇. ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Time shall be of the essence, and delivery at the
time and place specified in this subsection (c) is a further condition to the
obligations of the Underwriters hereunder.
Certificates in transferable form for the Option Shares that each of
the Selling Stockholders agrees to sell pursuant to this Agreement have been
placed in custody with ___________________ (the "Custodian") for delivery under
this Agreement pursuant to a Custody Agreement and Power of Attorney (the
"Custody Agreement") executed by each of the Selling Stockholders appointing
__________________________ as agents and attorneys-in-fact (the
"Attorneys-in-Fact"). Each Selling Stockholder agrees that (i) the Shares
represented by the certificates held in custody pursuant to the Custody
Agreement are subject to the interests of the Underwriters, the Company and each
other Selling Stockholder, (ii) the arrangements made by the Selling
Stockholders for such custody are, except as specifically provided in the
Custody Agreement, irrevocable and (iii) the obligations of the Selling
Stockholders hereunder and under the Custody Agreement shall not be terminated
by any act of such Selling Stockholder or by operation of law, whether by the
death or incapacity of any Selling Stockholder or the occurrence of any other
event. If any Selling Stockholder shall die or be incapacitated or if any other
event shall occur before the delivery of the Shares hereunder, certificates for
the Shares to be sold by such Selling Stockholder shall be delivered to the
Underwriters by the Attorneys-in-Fact in accordance with the terms and
conditions of this Agreement and the Custody Agreement as if such death or
incapacity or other event had not occurred, regardless of whether or not the
Attorneys-in-Fact of any Underwriter shall have received notice of such death,
incapacity or other event. Each Attorney-in-Fact represents that he is
authorized, on behalf of each of the Selling Stockholders, to execute this
Agreement and any other documents necessary or desirable in connection with the
sale of the Shares to be sold hereunder by such Selling Stockholder, to make
delivery of the certificates for such Shares, to receive the proceeds of the
sale of such Shares, to give receipts for such proceeds, to pay therefrom any
expenses to be borne by such Selling Stockholder in connection with the sale and
public offering of such Shares, to distribute the balance thereof to such
Selling Stockholder and to take such other actions as may be necessary or
desirable in connection with the transactions contemplated by this Agreement.
Each Attorney-in-Fact agrees to perform his duties under the Custody Agreement.
The Over-Allotment Option granted hereunder may be exercised only to
cover over-allotments in the sale by the Underwriters of Firm Shares referred to
in subsection (a) above. No Option Shares shall be sold or delivered unless all
of the Firm Shares previously have been, or simultaneously are, sold and
delivered.
(d) Inspection of Certificates. The Company (and
the Selling Stockholders, if the Over-Allotment Option is exercised) will make
the certificates for the Shares to be purchased by the Underwriters hereunder
available to you for checking at least two (2) full business days prior to
the First Closing Date or the Option Closing Date (which are collectively
referred to herein as the "Closing Dates" and individually as a "Closing Date"),
as the case may be. The certificates shall be in such names and denominations as
you may request, at least three (3) full business days prior to the relevant
Closing Dates. Time shall be of the essence, and the availability of the
certificates at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
Definitive engraved certificates in negotiable form for the Shares
to be purchased by the Underwriters hereunder will be delivered by the Company
(and the Selling Stockholders, if the Over-Allotment Option is exercised) to you
for the several accounts of the Underwriters against payment of the purchase
price by you, for the several accounts of the Underwriters, at your option, by
certified or bank cashier's checks in New York Clearing House funds or by wire
transfer, payable to the order of the Company and the Selling Stockholders.
In addition, in the event the Underwriters exercise the option to
purchase from the Company and the Selling Stockholders all or any portion of the
Option Shares pursuant to the provisions of subsection (c) above, payment for
such Option Shares shall be made, at your option, to or upon the order of the
Company and the Selling Stockholders by certified or bank cashier's checks
payable in New York Clearing House funds or by wire transfer, at the offices of
▇.▇. ▇▇▇▇▇▇ & Co., Inc. at the time and date of delivery of such Option Shares
as required by the provisions of subsection (c) above, against receipt of the
certificates for such Option Shares by you for the several accounts of the
Underwriters, registered in such names and in such denominations as you may
request.
It is understood that the Underwriters propose to offer the Shares
to be purchased hereunder to the public upon the terms and conditions set forth
in the Registration Statement, after the Registration Statement becomes
effective.
3A. Covenants of the Company. The Company covenants and
agrees with the Underwriters that:
(a) Effectiveness of Registration Statement.
(i) The Company will use its best efforts to cause the Registration Statement
to become effective and, upon notification from the Commission that the
Registration Statement has become effective, will so advise you and will not at
any time, whether before or after the Effective Date, file any amendment to
the Registration Statement or supplement to the Prospectus of which you shall
not previously have been advised and furnished with a copy or to which you or
your counsel shall have objected in writing or which is not in compliance
with the Act and the Rules and Regulations. At any time prior to the later of
(A) the completion by the Underwriters of the distribution of the Shares
contemplated hereby (but in no event more than nine (9) months after the
Effective Date), and (B) twenty-five (25) days after the Effective Date, the
Company will prepare and file with the Commission, promptly upon your request,
any amendments or supplements to the Registration Statement or Prospectus which,
in your reasonable opinion, may be necessary or advisable in connection with the
distribution of the Shares.
(ii) Promptly after you or the Company is advised
thereof, you will advise the Company or the Company will advise you, as the
case may be, and confirm the advice in writing, of the receipt of any
comments of the Commission, of the effectiveness of any post-effective
amendment to the Registration Statement, of the filing of any supplement to
the Prospectus or any amended Prospectus, of any request made by the
Commission for amendment of the Registration Statement or for amending or
supplementing the Prospectus or for additional information with respect thereto,
or of the issuance by the Commission or any state or regulatory body of any stop
orders or other order suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of any Preliminary Prospectus, or
of the suspension of the qualification of the Shares for offering in any
jurisdiction, or the institution of any proceedings for any of such purposes, or
otherwise preventing or impairing the offering of Shares, and will use its best
efforts to prevent the issuance of any such order and, if issued, to obtain as
soon as possible the lifting thereof. The Company and you shall not acquiesce in
such order or proceeding, and shall instead use its best efforts to defend such
order or proceeding, unless the Company and you agree in writing to such
acquiescence.
(iii) The Company has caused to be delivered to you
copies of each Preliminary Prospectus, and the Company has consented and
hereby consents to the use of such copies for the purposes permitted by
the Act. The Company authorizes the Underwriters and selected dealers to
use the Prospectus in connection with the sale of the Shares for such period as
in the opinion of counsel for the Underwriters the use thereof is required
to comply with the applicable provisions of the Act and the Rules and
Regulations. In case of the happening, at any time within such period as a
Prospectus is required under the Act to be delivered in connection with sales by
an underwriter or dealer, of any event of which the Company has knowledge and
which materially affects the Company or the Shares, or which in the opinion of
counsel for the Company or counsel for the Underwriters should be set forth in
an amendment to the Registration Statement or a supplement to the Prospectus in
order to make the statements therein not then misleading, in light of the
circumstances existing at the time the Prospectus is required to be delivered to
a purchaser of the Shares, or in case it shall be necessary to amend or
supplement the Prospectus to comply with the Act or with the Rules and
Regulations, the Company will notify you promptly and forthwith prepare and
furnish to you copies of such amended Prospectus or such supplement to be
attached to the Prospectus, in such quantities as you may reasonably request, in
order that the Prospectus, as so amended or supplemented, shall not contain any
untrue statement of a material fact or omit to state any material facts
necessary in order to make the statements in the Prospectus, in the light of the
circumstances under which they are made, not misleading. The preparation and
furnishing of any such amendment or supplement to the Registration Statement or
amended Prospectus or supplement to be attached to the Prospectus shall be
without expense to the Underwriters, except that in case the Underwriters are
required, in connection with the sale of the Shares, to deliver a Prospectus
nine (9) months or more after the Effective Date, the Company will, upon request
of and at the expense of the Underwriters, amend or supplement the Registration
Statement and Prospectus and furnish the Underwriters with reasonable quantities
of prospectuses complying with Section 10(a)(3) of the Act.
(iv) The Company will comply with the Act, the Rules and
Regulations and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder in connection with the
Offering.
(b) Blue Sky. The Company will use its best
efforts to qualify the Shares for sale under the securities or "blue sky" laws
of such jurisdictions as you may designate and furnish such information to
Underwriters' counsel as may be required for registration and to comply with
such laws; provided, however, that the Company shall not be required to qualify
as a foreign corporation or a dealer in securities or to execute a general
consent to service of process in any jurisdiction in any action other than one
arising out of the offering or sale of the Shares. The Company shall, from
time to time, prepare and file such statements and reports as are or may be
required to continue such qualification in effect for so long a period as you
may reasonably request. Legal fees of Underwriter's counsel for such
qualifications shall not exceed $35,000.00, exclusive of filing fees. The
Company shall promptly pay all filing fees in connection with the registration
or qualification of the Shares. After each Closing Date, the Company shall, at
its own expense, from time to time prepare and file such statements and reports
as may be required to continue each such qualification in effect for so long a
period as the Underwriters may reasonably request.
(c) Exchange Act Registration. The Company
shall, at its own expense, prepare and file with the Commission a
registration statement (on Form 8-A or Form 10) under Section 12(b) of the
Exchange Act, and shall use its best efforts to cause such registration
statement to be declared effective concurrently with the Registration Statement
being declared effective and maintained in effect for at least five (5) years
from the Effective Date (unless otherwise agreed in writing by the
Underwriters).
(d) Prospectus Copies. The Company shall
deliver to you at or before the First Closing Date two (2) signed copies of
the Registration Statement including all financial statements and exhibits
filed therewith, and of all amendments thereto. The Company shall deliver to
or upon your order, from time to time until the Effective Date, as many
copies of any Preliminary Prospectus filed with the Commission prior to the
Effective Date as you may reasonably request. The Company shall deliver to you
on the Effective Date and thereafter for as long as a Prospectus is required to
be delivered under the Act, from time to time, as many copies of the Prospectus,
in final form, or as thereafter amended or supplemented, as you may from time to
time reasonably request.
(e) Amendments and Supplements. The Company
shall, promptly upon your request, prepare and file with the Commission any
amendments to the Registration Statement, and any amendments or supplements to
the Preliminary Prospectus or the Prospectus, and take any other action
which in the reasonable opinions of the Company's counsel and the
Underwriters' counsel may be reasonably necessary or advisable in connection
with the distribution of the Shares, and shall use its best efforts to cause the
same to become effective as promptly as possible.
(f) [NASDAQ National Market Listing, etc.
The Company shall, upon the initial filing of the Registration
Statement, make all filings required to obtain approval for the quotation of
the Shares on the NASDAQ National Market of The Nasdaq Stock Market and shall,
unless otherwise agreed to in writing by the Underwriters, use its best
efforts to effect and maintain the aforesaid approval for at least five (5)
years from the date of this Agreement. In addition, the Company shall use its
best efforts to cause the Common Stock to be accepted for listing on the Pacific
Stock Exchange or other exchange acceptable to the Representative, if such
listing has not occurred prior to the Effective Date. Within ten (10) days after
the Effective Date, the Company shall cause the Company to be listed in ▇▇▇▇▇'▇
OTC Industrial Manual, Standard & Poor's or other recognized securities manual
acceptable to the Representative and cause such listing to be maintained for
five (5) years from the date of this Agreement.]
(g) Certain Market Practices. The Company
represents that it has not taken, and agrees that it will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in the stabilization or manipulation
of the price of the Shares, or to facilitate the sale or resale of the Shares.
(h) Certain Representations. Neither the Company
nor any representative of the Company shall make any written or oral
representation in connection with the offering and sale of the Shares or the
Representative's Warrant which is not contained in the Prospectus or which
shall constitute a violation of the Act, the Rules and Regulations, the Exchange
Act or the rules and regulations promulgated under the Exchange Act.
(i) Use of Proceeds. The Company will apply the
net proceeds from the sale of the Shares substantially for the purposes set
forth under the heading "USE OF PROCEEDS" in the Prospectus and shall file such
reports with the Commission with respect to the sale of the Shares and the
application of the proceeds therefrom as may be required pursuant to Rule 463 of
the Rules and Regulations.
(j) Twelve Months' Earnings Statement. The
Company will make generally available to its security holders and deliver
to you as soon as it is practicable to do so, but in no event later than
ninety (90) days after the end of twelve (12) months after its current fiscal
quarter, an earnings statement (which need not be audited) covering a
period of at least twelve (12) consecutive months beginning after the Effective
Date which shall satisfy the requirements of Section 11(a) of the Act.
(k) Lock-Up. Prior to the Effective Date, the
Company shall use its best efforts to cause all members of management, all
officers and directors of the Company, and all holders of the outstanding
securities of the Company (including the Sellers of the Acquired Companies),
to execute agreements in the form previously delivered, to the effect that
for a period of eighteen (18) months from the First Closing Date, such
persons shall not sell, assign, hypothecate or pledge or otherwise dispose of,
directly or indirectly, any shares of Common Stock of the Company, whether
currently owned or subsequently acquired through the exercise of any option,
warrant or right or through the conversion of any convertible security without
your prior written consent, which consent shall not be unreasonably withheld,
and agreeing to permit all certificates evidencing such shares to be endorsed
with the appropriate restrictive legends, and consent to the placement of
appropriate stop transfer orders with the transfer agent for the Company, and to
note such restrictions on the transfer books and records of the Company.
(l) Periodic Reports. For so long as the Company
is a reporting company under Section 12(b), 12(g) or Section 15(d) of the
Exchange Act, the Company shall, at its own expense, furnish to its
shareholders an annual report (including financial statements audited by
certified public accountants) in reasonable detail. In addition, during the
period ending five (5) years from the date hereof, the Company shall, at its own
expense, furnish to you: (i) within ninety (90) days of the end of each
fiscal year, a balance sheet of the Company and its Subsidiaries as at the end
of such fiscal year, together with statements of income, stockholders'
equity and cash flows of the Company and its Subsidiaries as at the end of such
fiscal year, all in reasonable detail and accompanied by a copy of the
certificate or report thereon of certified public accountants; (ii) as soon as
they are available, a copy of all reports (financial or otherwise) distributed
to security holders; (iii) as soon as they are available, a copy of all
non-confidential reports and financial statements furnished to or filed with the
Commission; and (iv) such other information as you may from time to time
reasonably request. The financial statements referred to herein shall be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its shareholders
generally.
(m) Option Grants Below Offering Price. During
the 90-day period commencing as of the First Closing Date, the Company will
not, without your prior written consent, grant options to purchase shares of
Common Stock at a price less than the initial public offering price of the
Shares.
(n) Form S-8 Registrations. For a period of one
year following the First Closing Date, the Company shall not register or
otherwise facilitate the registration of any of its securities issuable
upon the exercise of options, warrants (other than the Representative's
Warrant) or other rights, whether by means of a Registration Statement on Form
S-8 or otherwise, without your prior written consent.
(o) Future Sales. During the period of the
Offering and for a period of twelve (12) months from the Effective Date, the
Company will not sell or otherwise dispose of any securities of the Company
(except for shares of Common Stock issued pursuant to the exercise of
options, warrants or other convertible securities outstanding prior to the
Effective Date), without the prior written consent of the Underwriters, which
consent shall not be unreasonably withheld. For a period of twenty-four (24)
months from the Effective Date, the Company will not sell or otherwise
issue any securities pursuant to Regulation S under the Act, without the
Underwriters' prior written consent, which consent shall not be unreasonably
withheld.
(p) Available Shares. The Company shall reserve
and at all times keep available that maximum number of its authorized but
unexercised issued shares which are issuable upon exercise of the
Representative's Warrant, taking into account the anti-dilution provisions
thereof.
(q) Management. Prior to the Effective Date,
the Company will have in place key person life insurance on the life of ▇▇▇▇▇▇
▇. ▇▇▇▇▇, the President of the Company, for so long as such individual
remains an officer of the Company, in the amount of $1,000,000, on terms, and
with an insurance company, mutually agreed upon by the Company and you.
(r) Financial Consulting Agreement. On the
First Closing Date and simultaneously with the delivery of the Firm Shares,
the Company shall execute and deliver to you an agreement with you, in the form
previously delivered to the Company by you, regarding your services as a
financial consultant to the Company (the "Financial Consulting Agreement").
(s) Merger and Acquisition Agreement. On the
First Closing Date and simultaneously with the delivery of the Firm Shares, the
Company will execute and deliver to you an agreement with you regarding
mergers, acquisitions and certain other forms of transactions in the form
previously delivered to the Company by you (the "Merger and Acquisition
Agreement").
(t) Stock Escrow Agreement. On or before
the Effective Date, the Company shall, and shall cause certain of its
current stockholders to, execute and deliver to you an agreement with
________________ (or other escrow agent mutually acceptable to the Company and
you), in the form previously delivered to the Company by you, regarding the
escrow of an aggregate of 600,000 shares of Common Stock owned by such
stockholders (the "Stock Escrow Agreement"); in addition, the Company shall
deliver to you copies of the option agreements between the Company and all
optionees, which contain provisions conditioning accelerated vesting on
achieving certain performance earn-out criteria.
(u) Agreement of Management and Principal
Stockholders. On or before the Effective Date, the Company shall cause the
parties named therein to execute and deliver to you an agreement, in the
form previously delivered to the Company by you, regarding certain
undertakings by such parties in connection with the Offering (the
"Agreement of Management and Principal Stockholders").
(v) Board of Directors Observer. For a period of
thirty-six (36) months from the First Closing Date, the Company shall allow
an observer designated by the Representative and acceptable to the Company
to receive notice of and to attend all meetings of the Board of Directors of the
Company. Such observer shall have no voting rights, and shall be reimbursed
for all out-of-pocket expenses incurred in attending such meetings. The
Company shall hold at least four (4) meetings per year, and the observer will be
indemnified by the Company against any claims arising out of his participation
at Board meetings.
(w) Consent to Future Issuances of Preferred
Stock. The Company agrees to obtain the Representative's written consent
prior to the issuance of any shares of preferred stock of any class or series
of the Company during the period of thirty-six (36) months from the First
Closing Date.
(x) DTC Transfer Sheets. The Company will supply
the Representative with DTC Stock Transfer sheets on a weekly basis for the
first six (6) weeks after the Effective Date and a monthly basis for one (1)
year thereafter.
(y) Bound Volumes. Within ninety (90) days from
the First Closing Date, the Company shall deliver to you, at the Company's
expense, three bound volumes in form and content acceptable to you,
containing the Registration Statement and all exhibits filed therewith, and
all amendments thereto, and all other correspondence, filings, certificates
and other documents filed and/or delivered in connection with the Offering.
(z) Public Relations. At least five (5) days
prior to the Effective Date, the Company shall retain a public relations
firm acceptable to you and on such terms as are acceptable to you, and shall
continue to retain such firm, or any alternate firm acceptable to you, for a
period of twenty-four (24) months following the Effective Date.
(aa) Right of First Refusal. During the
three (3) year period from the Effective Date, the Representative
shall have the right of first refusal to act as underwriter or agent for any
public or private offering or sale of the securities of the Company or any
successor to the Company or any of the officers or directors of the Company. In
addition, the Company shall use its best efforts to assure that for a period of
three (3) years following the Effective Date, the Representative shall have the
right of first refusal to act as underwriter or agent for any public or
private offering or sale of the securities of the Company or any successor
to the Company made by any other stockholder owning beneficially at least
five percent (5%) of the Company's Common Stock, not including the sellers of
the Acquired Companies.
(bb) Rule 144 Sales. The Representative shall
have the right for a three-year period after the First Closing Date, to
purchase as principal or sell as agent any of the Company's securities sold
pursuant to Rule 144 of the Rules and Regulations by any officer or director.
The Company shall use its best efforts to cause each of the other stockholders
owning beneficially at least five percent (5%) of the Company's Common Stock,
not including the sellers of the Acquired Companies, to provide you the right,
for a three-year period following the First Closing Date, to purchase as
principal or sell as agent any of the Company's securities sold pursuant to
Rule 144 of the Rules and Regulations.
(cc) Acquisitions. The Company will (i) use
its best efforts to satisfy all conditions to the consummation of the
Acquisitions as set forth in the agreements with respect thereto, (ii) use
its best efforts to cause each other party to such agreements to satisfy all
conditions to the consummation of the Acquisitions, and (iii) promptly
notify the Underwriters of the occurrence of any event which may result in the
non-consummation of any of the Acquisitions on the Closing Date.
3B. Covenants of the Selling Stockholders. Each of the
Selling Stockholders agrees with the several Underwriters as follows:
(a) Effectiveness of Registration Statement.
Such Selling Stockholder will cooperate to the extent reasonably necessary to
cause the Registration Statement and any post-effective amendment thereto to
become effective at the earliest possible time.
(b) Transfer Taxes. Such Selling Stockholder
will pay all federal and other taxes, if any, on the transfer or sale of any
Option Shares that are sold by such Selling Stockholder to the Underwriters.
(c) Performance of Conditions Precedent. Such
Selling Stockholder will do or perform all things required to be done or
performed by such Selling Stockholder prior to the Option Closing Date to
satisfy all conditions precedent to the deliver of the Option Shares by such
Selling Stockholder pursuant to this Agreement.
(d) Sale of Common Stock. Such Selling
Stockholder shall not sell, assign, hypothecate or pledge or otherwise
dispose of, directly or indirectly, any shares of Common Stock of the Company
beneficially owned by such Selling Stockholder for a period of eighteen (18)
months from the First Closing Date without the prior written consent of the
Representative, except for shares of Common Stock to be sold by such Selling
Stockholder to the Underwriters upon exercise of the Over-Allotment Option.
(e) Stabilization Activities. Except as stated
in this Agreement and in the Preliminary Prospectus and the Prospectus, such
Selling Stockholder will not take, directly or indirectly, any action designed
to or that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Option Shares.
(f) Change in Information. Such Selling
Stockholder will advise you promptly, and if requested by you, will confirm
such advice in writing, within the period of time referred to in Section
3A(a)(iii) hereof, of any change in information relating to such Selling
Stockholder and of any change in the Company's condition (financial or other),
business, prospects, properties, net worth or results of operations or any other
information relating to the Company or relating to any matter stated in the
Prospectus or any amendment or supplement thereto that comes to the attention of
such Selling Stockholder that suggests that any statement made in the
Registration Statement or the Prospectus (as then amended or supplemented, if
amended or supplemented) is or may be untrue in any material respect or that the
Registration Statement or Prospectus (as then amended or supplemented, if
amended or supplemented) omits or may omit to state a material fact necessary to
be stated therein in order to make the statements therein not misleading in any
material respect.
(g) Agreement of Management and Principal
Stockholders. On or before the Effective Date, the Selling Stockholders
shall execute and deliver to you the Agreement of Management and Principal
Stockholders.
(h) Delivery of Form W-9. In order to document
the Underwriters' compliance with the reporting and withholding provisions
of the Tax Equity and Fiscal Responsibility Act of 1982, as amended, with
respect to the transactions herein contemplated, such Selling Stockholder
agrees to deliver to you prior to or on the Option Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
4. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters to purchase and pay for
the Shares which they have agreed to purchase hereunder are subject to the
accuracy (as of the date hereof, and as of each Closing Date) of and compliance
with the representations and warranties of the Company contained herein, the
performance by the Company of its obligations hereunder, and to the following
conditions:
(a) Effective Registration Statement; No Stop
Order. The Registration Statement shall have become effective and you shall
have received notice thereof not later than 6:00 p.m., New York time, on the
date of this Agreement, or at such later time or on such later date as to
which you may agree in writing. In addition, on each Closing Date, (i) no
stop order denying or suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for that or any similar
purpose shall have been instituted or shall be pending or, to your
knowledge or to the knowledge of the Company, shall be contemplated by the
Commission, and (ii) all requests on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
Shereff, Friedman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, counsel for the Underwriters
("SFH&G").
(b) Opinion of Company Counsel. On the First
Closing Date, you shall have received the opinion, dated as of the First
Closing Date, of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Preston L.L.P., counsel for the Company
("WT&P"), in form and substance satisfactory to Underwriters' counsel, to
the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation with full corporate power and
authority to own its properties and conduct its business as described
in the Prospectus, and, after giving effect to the Acquisitions, is
duly qualified or licensed to do business as a foreign corporation and
is in good standing in each jurisdiction in which the business requires
such qualification and in which it owns or leases property;
(ii) to the best knowledge of such counsel: (A) the
Company and each of the Acquired Companies has obtained, or is in the
process of obtaining, all necessary licenses, permits and other
governmental authorizations currently required for the conduct of its
business or the ownership of its property, as described in the
Prospectus; (B) such obtained licenses, permits and other governmental
authorizations are in full force and effect; and (C) the Company and
each of the Acquired Companies is in all material respects complying
therewith;
(iii) (A) the authorized capitalization of the
Company as of the date of the Prospectus was as set forth under the
heading "CAPITALIZATION" in the Prospectus; (B) all of the shares of
the Company's Common Stock now outstanding have been duly authorized
and validly issued, are fully paid and non-assessable and conform to
the description thereof contained in the Prospectus, have not been
issued in violation of the pre-emptive rights of any stockholder and,
except as described in the Prospectus, to the best knowledge of such
counsel, are not subject to any restrictions upon the voting or
transfer thereof; the Shares and the Representative's Warrant conform
to the respective descriptions thereof contained in the Prospectus; (C)
the Shares and the Representative's Warrant to be issued as
contemplated in the Registration Statement have been duly authorized
and, when issued and delivered against payment therefor as provided
herein, will be validly issued, fully paid and nonassessable, will not
have been issued in violation of the pre-emptive rights of any
stockholder, and no personal liability will attach to the ownership
thereof; (D) except as described in the Prospectus, the security
holders of the Company do not have any pre-emptive rights or other
rights to subscribe for or purchase, and there are no restrictions upon
the voting or transfer of, any shares of Common Stock owned by them,
except for transfer restrictions imposed by federal or state securities
laws or contained in lock-up agreements; (E) the Shares and the
Representative's Warrant conform in all material respects to the
respective descriptions thereof contained in the Prospectus; (F) all
prior sales of the Company's securities have been made in compliance
with, or under an exemption from, the Act and applicable state
securities laws; (G) a sufficient number of shares of Common Stock has
been reserved for issuance upon exercise of the Representative's
Warrant; and (H) to the best of such counsel's knowledge, except as
described in the Prospectus, neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any registration rights or other rights,
other than those which have been waived or satisfied or described in
the Prospectus, for or relating to the registration of any securities
of the Company;
(iv) this Agreement, the Representative's Warrant,
the Financial Consulting Agreement, the Stock Escrow Agreement and the
Merger and Acquisition Agreement have been duly and validly authorized,
executed and delivered by the Company, and assuming due execution and
delivery by you, all of such agreements are, or when duly executed will
be, the valid and legally binding obligations of the Company; provided,
however, that no opinion need be expressed as to the enforceability of
the indemnity provisions contained in Section 6 or the contribution
provisions contained in Section 7 of this Agreement;
(v) the certificates or instruments evidencing the
Shares and the Representative's Warrant are in valid and proper legal
form; and the Representative's Warrant will be exercisable for shares
of Common Stock of the Company in accordance with the terms of the
Representative's Warrant and at the prices therein provided for;
(vi) to the best knowledge of such counsel, except as
required to be described in the Prospectus: (A) there is no pending or
threatened legal or governmental proceeding affecting the Company or
any Acquired Company or any seller of an Acquired Company which could
materially and adversely affect the business, property, operations,
condition (financial or otherwise) or results of operations of the
Company or such Acquired Company, or which questions the validity of
the Shares, this Agreement, the Representative's Warrant, the Financial
Consulting Agreement, the Stock Escrow Agreement, the Agreement of
Management and Principal Stockholders or the Merger and Acquisition
Agreement, or any action taken or to be taken by the Company pursuant
thereto; and (B) there is no legal or governmental proceeding or
regulation required to be described or referred to in the Registration
Statement which is not so described or referred to;
(vii) to the best knowledge of such counsel: (A) the
Company is not in violation of or default under this Agreement, the
Representative's Warrant, the Financial Consulting Agreement, the Stock
Escrow Agreement or the Merger and Acquisition Agreement; and (B) and
the execution and delivery hereof and thereof and the incurrence of the
obligations herein and therein set forth and the consummation of the
transactions herein or therein contemplated will not result in a
violation of, or constitute a default under, the Certificate of
Incorporation or By-laws of the Company, or any material obligation,
agreement, covenant or condition contained in any bond, debenture, note
or other evidence of indebtedness or in any material contract,
indenture, mortgage, loan agreement, lease, joint venture, other
agreement or instrument filed as an exhibit to the Registration
Statement and to which the Company is a party or by which its assets
are bound or any material order, rule, regulation, writ, injunction or
decree of any government, governmental instrumentality or court,
domestic or foreign;
(viii) the Registration Statement has become
effective under the Act, and to the best of such counsel's knowledge,
no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for that or any similar
purpose have been instituted or are pending before, or threatened by,
the Commission;
(ix) the Registration Statement and the Prospectus
(except for the financial statements and other financial data contained
therein, or omitted therefrom, as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act and the Rules and Regulations;
(x) all descriptions contained in the Registration
Statement and the Prospectus, and any amendment or supplement thereto,
of contracts and other documents are accurate and fairly present the
information required to be described, and such counsel is familiar with
all contracts and other documents referred to in the Registration
Statement and the Prospectus and any such amendment or supplement, or
filed as exhibits to the Registration Statement, and such counsel does
not know of any contracts, documents, licenses or permits of a
character required to be summarized or described therein or to be filed
as exhibits thereto which are not so summarized, described or filed;
(xi) no authorization, approval, consent or license
of any governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale or delivery
of the Shares by the Company, in connection with the execution,
delivery and performance of this Agreement by the Company or in
connection with the taking of any action contemplated herein, or the
issuance of the Representative's Warrant or the Shares underlying the
Representative's Warrant, other than registration or qualification of
the Shares under applicable state or foreign securities or blue sky
laws and registration under the Act; and
(xii) the statements in the Prospectus under the
headings "RISK FACTORS," "BUSINESS," "USE OF PROCEEDS," "MANAGEMENT,"
"DESCRIPTION OF CAPITAL STOCK" and "SHARES ELIGIBLE FOR FUTURE SALE"
have been reviewed by such counsel and insofar as they refer to
descriptions of agreements, statements of laws, descriptions of
statutes, licenses, rules or regulations or legal conclusions, are
correct in all material respects.
(xiii) Each of the agreements with respect to the
Acquisitions (which have been filed with the Commission as exhibits to
the Registration Statement) has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding
obligation of the Company.
Such opinion shall also state that the examination by Company's
counsel of the Registration Statement and its discussions with the Company and
its independent auditors did not disclose any information which gives Company's
counsel reason to believe that the Registration Statement (other than the
financial statements and other financial and statistical information as to which
counsel need not express an opinion) at the time it became effective contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus (other than the schedules, financial
statements and other financial and statistical information as to which no view
is expressed) at the time it became effective and as of each Closing Date
contained or contains any untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus (other than
the financial statements and other financial and statistical information as to
which counsel need not express an opinion) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
In addition, such opinion shall also cover such matters incident to
the transactions contemplated hereby as you or your counsel shall reasonably
request. In rendering such opinion, such counsel may rely upon certificates of
any officer of the Company or public officials as to matters of fact; and may
rely as to all matters of law other than the law of the United States or the
State of Delaware upon opinions of counsel satisfactory to you, in which case
the opinion shall state that they have no reason to believe that you and they
are not entitled to so rely.
(c) Corporate Proceedings. All corporate
proceedings and other legal matters relating to this Agreement, the
Registration Statement, the Prospectus, and other related matters shall be
satisfactory to or approved by SFH&G, and you shall have received from such
counsel a signed opinion, dated as of the First Closing Date, with respect to
the validity of the issuance of the Shares, the form of the Registration
Statement and Prospectus (other than the financial statements and other
financial data contained therein), the execution of this Agreement and other
related matters. The Company shall have furnished to Underwriters' counsel such
documents as they may reasonably request for the purpose of enabling them to
render such opinion.
(d) Comfort Letter. You shall have received a
letter on and as of the Effective Date and again on and as of the First
Closing Date, from E&Y, certified public accountants for the Company, in
each instance describing the procedures carried out to a date within five (5)
days of the date of the letter and substantially in the form approved by you.
(e) Bring Down. At each of the Closing Dates,
(i) the representations and warranties of the Company contained in this
Agreement shall be true and correct with the same effect as if made on and as of
such Closing Date, and the Company shall have performed all of its obligations
hereunder and satisfied all the conditions on its part to be satisfied at or
prior to such Closing Date; (ii) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all
material respects conform to the requirements thereof, and neither the
Registration Statement nor the Prospectus shall contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; (iii) there shall
have been, since the respective dates of which information is given, no material
adverse change in the business, properties, condition (financial or otherwise),
results of operations, capital stock, long-term or short-term debt or general
affairs or operations of the Company from that set forth in the Registration
Statement and the Prospectus, except changes which the Registration Statement
and Prospectus indicate might occur after the Effective Date, and the Company
shall not have incurred any material liabilities nor entered into any agreement
not in the ordinary course of business other than as referred to in the
Registration Statement and Prospectus; and (iv) except as set forth in the
Prospectus, no action, suit or proceeding at law or at equity shall be pending
or threatened against the Company which would be required to be disclosed in the
Registration Statement, and no proceedings shall be pending or threatened
against the Company before or by any commission, board or administrative agency
in the United States or elsewhere, wherein an unfavorable decision, ruling or
finding would materially and adversely affect the business, property, condition
(financial or otherwise), results of operations or general affairs of the
Company. In addition, you shall have received at the First Closing Date, a
certificate signed by the principal executive officer and the principal
financial or accounting officer of the Company, dated as of the First Closing
Date, evidencing compliance with the provisions of this Section 4(e).
(f) Transfer Agent. The Company shall have
appointed Continental Stock Transfer and Trust Company (or other agent
mutually acceptable to the Company and you), as its transfer agent and warrant
agent to transfer all of the Shares issued in the Offering, as well as to
transfer other shares of the Common Stock outstanding from time to time.
(g) Certain Further Matters. On each Closing Date,
Underwriters' counsel shall have been furnished with all such other documents
and certificates as they may reasonably request for the purpose of enabling them
to render their legal opinion to the Underwriters and in order to evidence
the accuracy and completeness of any of the representations,
warranties or statements, the performance of any of the covenants, or
the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company on or prior to each of the Closing Dates in
connection with the authorization, issuance and sale of the Shares as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to Underwriters' counsel.
(h) Over-Allotment Option. Upon exercise of
the option provided for in Section 2(c) hereof, the obligations of the
several Underwriters to purchase and pay for the Option Shares referred to
therein will be subject (as of the date hereof and as of the Option Closing
Date) to the following additional conditions:
(i) The Registration Statement shall remain effective
at the Option Closing Date, no stop order suspending the effectiveness
thereof shall have been issued, and no proceedings for that or any
similar purpose shall have been instituted or shall be pending, or, to
your knowledge or the knowledge of the Company, shall be contemplated
by the Commission, and any reasonable request on the part of the
Commission for additional information shall have been complied with to
the satisfaction of SFH&G.
(ii) On the Option Closing Date, there shall have
been delivered to you the signed opinion of WT&P, dated as of the
Option Closing Date, in form and substance satisfactory to SFH&G, which
opinion shall be substantially the same in scope and substance as the
opinion furnished to you at the First Closing Date pursuant to Section
4(b) hereof, except that such opinion, where appropriate, shall cover
the Option Shares rather than the Firm Shares and include the opinions
as set forth below. If the First Closing Date is the same as the Option
Closing Date, such opinions may be combined.
(A) This Agreement and the Custody Agreement
have each been duly executed and delivered by or on behalf of
each of the Selling Stockholders and are valid and binding
agreements of each Selling Stockholder enforceable against
each Selling Stockholder in accordance with their respective
terms, except (A) as enforcement of rights to indemnity and
contribution hereunder and thereunder may be limited by
federal or state securities laws or principles of public
policy and (B) subject to the qualification that the
enforceability of each of their obligations hereunder and
thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and
by general equitable principles;
(B) To the knowledge of such counsel, each
Selling Stockholder has full legal right, power and
authorization to sell, assign, transfer and deliver valid and
unencumbered title to the Option Shares such Selling
Stockholder has agreed to sell pursuant to this Agreement; and
upon delivery of such Option Shares pursuant this Agreement
and payment therefor as contemplated herein and assuming that
the several Underwriters are bona fide purchasers within the
meaning of the Uniform Commercial Code as in effect in the
State of New York (the "UCC"), the Underwriters will acquire
valid and unencumbered title to such Shares free and clear of
any adverse claim (within the meaning of Section 8-302 of the
U.C.C.); and
(C) To the knowledge of such counsel, the
execution and delivery of this Agreement and the Custody
Agreement by the Selling Stockholders and the consummation of
the transactions contemplated hereby and thereby will not
conflict with, violate, result in a breach of or constitute a
default under the terms or provisions of any material
agreement, indenture, mortgage or other instrument to which
any Selling Stockholder is a party or by which any of them or
any of their respective assets or property is bound, or any
court order or decree or any law, rule, or regulation known to
such counsel applicable to any Selling Stockholder or to any
of the respective material property or assets of any Selling
Stockholder.
(iii) On the Option Closing Date, there shall have
been delivered to you a certificate of the principal executive officer
and the principal financial or accounting officer of the Company dated
the Option Closing Date, in form and substance satisfactory to SFH&G,
substantially the same in scope and substance as the certificate
furnished to you at the First Closing Date pursuant to Section 4(e)
hereof.
(iv) On the Option Closing Date, there shall have
been delivered to you a letter in form and substance satisfactory to
you from E&Y dated the Option Closing Date and addressed to you,
confirming the information in their letter referred to in Section 4(d)
hereof as of the date thereof and stating that, without any additional
investigation required, nothing has come to their attention during the
period from the ending date of their review referred to in said letter
to a date not more than five (5) days prior to the Option Closing Date
which would require any change in said letter if it were required to be
dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the Option
Shares shall be satisfactory in form and substance to you, and you and
SFH&G, shall have been furnished with all such documents, certificates
and opinions as you may request in connection with this transaction in
order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company or its
compliance with any of the covenants or conditions contained therein.
(i) Closing of the Acquisitions. Each of the
Acquisitions shall have been completed upon the terms set forth in the
Prospectus simultaneously with the closing of the purchase of the Firm Shares by
the Underwriters.
(j) Closing of the Credit Facility. The Credit
Facility shall have been completed simultaneously with the closing of the
purchase of the Firm Shares by the Underwriters.
If any of the conditions provided for in this Section shall not have
been completely fulfilled as of the date indicated, this Agreement and all
obligations of the several Underwriters under this Agreement may be canceled at,
or at any time prior to, each Closing Date by your notifying the Company of such
cancellation in writing or by telegram at or prior to the applicable Closing
Date. Any such cancellation shall be without liability of any Underwriter to the
Company, except as otherwise provided herein.
5. Conditions of the Obligations of the Company.
The obligation of the Company to sell and deliver the Shares is
subject to the following conditions:
(a) Registration Statement Effective. The
Registration Statement shall have become effective not later than 6:00 p.m. New
York time, on the date of this Agreement, or at such later time on such later
date as the Company and you may agree in writing.
(b) No Stop Order. On each applicable
Closing Date, no stop order denying or suspending the effectiveness of
the Registration Statement shall have been issued under the Act or any
proceedings therefor initiated or threatened by the Commission.
(c) Payment for Shares. On each applicable
Closing Date, you shall have made payment, for the several accounts of the
Underwriters, of the aggregate Purchase Price for the Shares then being
purchased, by certified or bank cashier's checks payable in next-day funds to
the order of the Company or the Selling Stockholders, as the case may be.
If the conditions to the obligations of the Company provided for in
this Section have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the Option Closing Date, then only the
obligation of the Company and the Selling Stockholders to sell and deliver the
Option Shares upon exercise of the Over-Allotment Option shall be affected.
6. Indemnification.
(a) Indemnification by Company. As used in this
Agreement, the term "Liabilities" shall mean any and all losses, claims,
damages and liabilities, and actions and proceedings in respect thereof
(including without limitation all reasonable costs of defense and
investigation and all attorneys' fees) including without limitation those
asserted by any party to this Agreement against any other party to this
Agreement. The Company hereby indemnifies and holds harmless each Underwriter
and each person, if any, who controls such Underwriter, within the meaning of
the Act, from and against any Liabilities, joint and several, to which such
Underwriter or such controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement
of any material fact contained in (A) the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment thereof or
supplement thereto, or (B) any "blue sky" application or other document
executed by the Company specifically for that purpose or based upon
written information furnished by the Company filed in any state or
other jurisdiction in order to qualify any or all of the Shares and the
Representative's Warrant under the securities laws thereof (any such
application, document or information being hereinafter called a "Blue
Sky Application"); or
(ii) the omission or alleged omission to state in the
Registration Statement, or any amendment thereto, or the Prospectus or
any Preliminary Prospectus, or any amendment or supplement thereto, or
in any Blue Sky Application, a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the Company shall not be liable in any such case to the
extent, but only to the extent, that any such Liabilities arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company through you by or on behalf of any
Underwriter specifically for use in the preparation of the Registration
Statement, or any amendment thereto, or the Prospectus or any Preliminary
Prospectus, or any amendment or supplement thereto, or any such Blue Sky
Application; and provided, further, that the Company shall not be liable in any
such case with respect to any Preliminary Prospectus to the extent that any such
loss, claim, damage or liability of each Underwriter results from the fact that
such Underwriter sold shares of Common Stock to a person to whom there was not
sent or given, at or prior to the time that such person was sent or given a
written confirmation of such sale, a copy of the Prospectus if the Company had
previously furnished copies thereof to such Underwriter and the untrue statement
or omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus. The foregoing indemnity will be in addition to any
liability which the Company may otherwise have.
(b) Indemnification by Selling Stockholders.
Each of the Selling Stockholders agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act to the same extent as the indemnity from the Company
to each Underwriter set forth in Section 6(a) hereof (but only with respect
to information relating to such Selling Stockholder contained in any
Preliminary Prospectus or in the Registration Statement or the Prospectus or any
amendment or supplement thereto); provided, however, that the indemnification
contained in this paragraph (b) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Option Shares by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the several Underwriters in requisite quantity on a
timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which each of the Selling
Stockholders may otherwise have.
(c) Indemnification by Underwriters. Each
Underwriter, severally but not jointly, hereby indemnifies and holds harmless
the Company, each of its directors, each nominee (if any) for director named in
the Prospectus, each of the officers who have signed the Registration
Statement, each person, if any, who signed the Registration Statement,
the Selling Stockholders and each person, if any, who controls the Company,
within the meaning of the Act, from and against any Liabilities to which the
Company or any such director, nominee, officer or controlling person or
Selling Stockholder may become subject under the Act or otherwise, insofar as
such Liabilities arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, or the Prospectus or Preliminary Prospectus,
or any amendment or supplement thereto, or (ii) the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent that such Liabilities arise out of or are based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement or any amendment thereto, the
Prospectus or Preliminary Prospectus, or any amendment or supplement thereto, or
any Blue Sky Application, or any amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company through
you by or on behalf of any Underwriter specifically for use in preparation
thereof. In no event shall any Underwriter be liable under this Section 6(c) for
any amount in excess of the compensation received by such Underwriter in the
form of underwriting discounts or otherwise, pursuant to this Agreement or any
other agreement contemplated hereby. The foregoing indemnity will be in addition
to any liability which any Underwriter may otherwise have.
(d) Procedures for Claims. Promptly after
receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this Section
6, notify in writing the indemnifying party of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, subject to the provisions herein stated, with counsel
reasonably satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified party;
provided, however, that if the indemnified party is any Underwriter or a person
who controls any Underwriter within the meaning of the Act, the fees and
expenses of such counsel shall be at the expense of the indemnifying party if
(i) the employment of such counsel has been specifically authorized in writing
by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both such Underwriter or such
controlling person and the indemnifying party, and in the judgment of such
Underwriter, it is advisable for such Underwriter or such controlling persons to
be represented by separate counsel (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnified party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnified party.
7. Contribution.
In order to provide for just and equitable contribution under the
Act in any case in which (a) any indemnified party makes claims for
indemnification pursuant to Section 6 hereof but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case, notwithstanding the fact
that the express provisions of Section 6 provide for indemnification in such
case, or (b) contribution under the Act may be required on the part of any
indemnified party, then such indemnified party and each indemnifying party (if
more than one) shall contribute to the aggregate Liabilities to which they may
be subject, in either such case (after contribution from others) in such
proportions that such Underwriter is responsible in the aggregate for that
portion of such Liabilities represented by the percentage that the underwriting
discount per Share appearing on the cover page of the Prospectus bears to the
public offering price per Share appearing thereon, and the Company shall be
responsible for the remaining portion provided that in the event that the
Underwriters shall have purchased any Option Shares hereunder, any determination
of the Liabilities of the Company, the Selling Stockholders and the Underwriters
to which they may be subject shall include the proceeds (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and each of the Selling Stockholders and the underwriting discounts and
commissions attributable to the sale of the shares of Common Stock by the
Company or such Seller Stockholders from the sale of such Option Shares, in each
case computed on the basis of the respective amounts set forth on the cover page
of this Prospectus. If such allocation is not permitted by applicable law, then
the relative fault of the Company and such Underwriter and controlling persons,
in the aggregate, in connection with the statements or omissions which resulted
in such damages and other relevant equitable considerations shall also be
considered. Notwithstanding the foregoing, there shall be subtracted from such
aggregate Liabilities suffered by the Company and any Selling Stockholder, as
the case may be, any contribution received by the Company or any such Selling
Stockholder from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company, within the meaning
of Section 15 of the Act, officers of the Company who signed the Registration
Statement and directors of the Company, and there shall be subtracted from such
aggregate Liabilities suffered by the Underwriters any contribution received by
the Underwriter from persons, other than the Company (including persons who
control the Company within the meaning of Section 15 of the Act, officers of the
Company who signed the Registration Statement and directors of the Company), who
may also be liable for contribution, including persons who control the
Underwriter within the meaning of Section 15 of the Act.
The relative fault shall be determined by reference to, among other
things, whether in the case of an untrue statement of a material fact or the
omission to state a material fact, such statement or omission relates to
information supplied by the Company, its officers or directors, the Selling
Stockholders or the Underwriter and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if the respective
obligations of the Company, the Selling Stockholders and the Underwriters to
contribute pursuant to this Section 7 were to be determined by pro rata or per
capita allocation of the aggregate Liabilities (even if the Underwriters have to
be treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in this
Section 7. In addition, the contribution of any Underwriter shall not be in
excess of its proportionate share of the portion of such Liabilities for which
such Underwriter is responsible. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. As used in this Section 7, the word "Company" includes any
officer, director or person who controls the Company within the meaning of
Section 15 of the Act. Each Underwriter's obligations under this Section 7 to
contribute are several in proportion to their respective underwriting
obligations and not joint. If the full amount of the contribution specified in
this paragraph is not permitted by law, then each Underwriter and each person
who controls such Underwriter shall be entitled to contribution from the Company
and the Selling Stockholders to the full extent permitted by law.
Notwithstanding any other provision of this Section 7, the liability of any
Selling Stockholder for contribution under this Section 7 shall not exceed an
amount equal to the number of Option Shares sold by such Selling Stockholder
hereunder multiplied by the Price to Public per share set forth on the cover
page of the Prospectus. The foregoing contribution agreement shall in no way
affect the contribution liabilities of any persons having liability under
Section 11 of the Act other than the Company, the Selling Stockholders and the
Underwriters. No contribution shall be requested with regard to the settlement
of any matter from any party who did not consent to the settlement; provided,
however, that such consent shall not be unreasonably withheld in light of all
factors of importance to such party.
8. Costs and Expenses.
(a) Payment of Expenses. Whether or not this
Agreement becomes effective or the sale of the Shares to the Underwriters is
consummated, the Company shall pay all costs and expenses incident to the
issuance, offering, sale and delivery of the Shares and the Representative's
Warrant and the performance of this Agreement, including without
limitation: (i) all fees and expenses of the Company's counsel and
accountants; (ii) $46,315.79 payable to the Representative's counsel as
reimbursement for its fees in connection with the representation of an
underwriter in a proposed offering that was not completed; (iii) all costs and
expenses incident to the preparation, printing, filing and distribution of the
Registration Statement (including the financial statements therein and all
exhibits and amendments thereto), each Preliminary Prospectus and the
Prospectus, each as amended or supplemented, this Agreement and the other
agreements and documents referred to herein, each in such quantities as you
shall deem necessary; (iv) all fees required by the NASD to be paid in
connection with the filing to be made with the NASD by the Representative with
respect to the Offering; (v) all expenses, including fees (but not in excess of
$35,000) and disbursements of counsel to the Underwriters, in connection with
the qualifications of the Shares under the state securities or "Blue Sky" laws
which you shall designate; (vi) all costs and expenses of printing the
certificates representing the Shares; (vii) the expense (which shall not exceed
$10,000) of placing one or more "tombstone" advertisements as directed by you;
(viii) all costs and expenses of the Company and its employees (but not of the
Representative or its employees) associated with due diligence meetings and
presentations; (ix) any and all taxes (including without limitation any
transfer, franchise, capital stock or other tax imposed by any jurisdiction) on
sales of the Shares to the Underwriters hereunder; and (x) all costs and
expenses incident to the furnishing of any amended Prospectus or of any
supplement to be attached to the Prospectus as called for in Section 3A(a) of
this Agreement except as otherwise set forth in said Section.
(b) Expense Allowance. In addition to the
foregoing expenses, the Company shall on the First Closing Date pay to you the
balance of a non-accountable expense allowance (which shall include fees of
Underwriter's counsel, exclusive of the fees referred to in Section 3(b))
of $330,000 (that being an amount equal to three percent (3%) of the gross
proceeds received upon sale of the Firm Shares) of which $30,000 has been paid
to you prior to the date hereof. In the event the Over-Allotment Option is
exercised, the Company and the Selling Stockholders shall pay to you at the
Option Closing Date an additional amount equal to three percent (3%) of the
gross proceeds received by the Company and the Selling Stockholders upon
exercise of the Over-Allotment Option. In the event that the transactions
contemplated hereby fail to be consummated for any reason, then you shall return
to the Company that portion of the $30,000 heretofore paid by the Company to the
extent that it has not been utilized by you in connection with the proposed
offering for accountable out-of-pocket expenses; provided, however, that if such
failure is due to a breach by the Company of any covenant, representation or
warranty contained herein or because any other condition to the Underwriters'
obligations hereunder required to be fulfilled by the Company or any is not
fulfilled, then the Company shall be liable for your accountable out-of-pocket
expenses to the full extent thereof (with credit given to the $30,000 paid).
(c) No Finders. No person is entitled either
directly or indirectly to compensation from the Company, from any Underwriter
or from any other person for services as a finder in connection with the
proposed offering, and the Company hereby agrees to indemnify and hold
harmless each Underwriter, and each Underwriter hereby agrees to indemnify and
hold harmless the Company from and against any losses, claims, damages or
liabilities, joint or several (which shall, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all attorneys' fees), to which the indemnified party may
become subject insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon the claim of any
person (other than an employee of the party claiming indemnity) or entity that
he or it is entitled to a finder's fee in connection with the proposed offering
by reason of such person's or entity's influence or prior contact with the
indemnifying party.
9. Substitution of Underwriters.
If any Underwriter defaults in its obligation to purchase the number
of Shares which it has agreed to purchase under this Agreement, you shall be
obligated to purchase all of the Shares not purchased by the defaulting
Underwriter unless such purchase shall cause you to be in violation of the net
capital requirements of Rule 15c3-1 of the Exchange Act, in which case you, and
any other underwriters satisfactory to you who so agree, shall have the right,
but shall not be obligated, to purchase (in such proportions as may be agreed
upon among them) all of the Shares. If any Underwriter or Underwriters default
in their obligations to purchase Shares hereunder and the aggregate number of
Shares that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of the total number of Shares, you
may make arrangements satisfactory to the Company for the purchase of such
Shares by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the Shares that such defaulting Underwriters agreed but failed to
purchase. If you or the other Underwriters satisfactory to you do not elect to
purchase the Shares which the defaulting Underwriter or Underwriters agreed but
failed to purchase, then this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter or the Company except for the payment of
expenses to be borne by the Company and the Underwriters as provided in Section
8(a), the payment by the Company of accountable expenses as provided by Section
8(b), and the indemnity and contribution agreements of the Company and the
Underwriters contained in Sections 6 and 7 hereof.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have for damages caused by its default. If the other
Underwriters satisfactory to you are obligated or agree to purchase the Shares
of a defaulting Underwriter, either you or the Company may postpone the First
Closing Date for up to seven (7) banking days in order to affect any changes
that may be necessary in the Registration Statement, the Prospectus or in any
other document or agreement, and to file promptly any amendments or any
supplements to the Registration Statement and the Prospectus which in your
opinion may thereby be made necessary.
10. Effective Date.
This Agreement shall become effective upon its execution, except
that you may, at your option, delay its effectiveness until 10:00 a.m., New York
time, on the first full business day following the Effective Date, or at such
earlier time after the Effective Date as you in your discretion shall first
commence the initial public offering by the Underwriter of any of the Shares.
The time of the initial public offering shall mean the time of release by you of
the first newspaper advertisement with respect to the Shares, or the time when
the Shares are first generally offered by you to dealers by letter or telegram,
whichever shall first occur. This Agreement may be terminated by you at any time
before it becomes effective as provided above, except that Sections 3A(a),
3B(a), 6, 7, 8, 13, 14, 15 and 16 shall remain in effect notwithstanding such
termination.
11. Termination.
(a) Grounds for Termination. This Agreement,
except for Sections 3A(a)(iii), 6, 7, 8, 13, 14, 15 and 16, may be terminated
at any time prior to the First Closing Date, and the option referred to in
Section 2(c), if exercised, may be canceled at any time prior to the Option
Closing Date, by you if in your sole judgment it is impracticable to offer
for sale or to enforce contracts made by the Underwriters for the resale of the
Shares agreed to be purchased hereunder, by reason of: (i) the Company,
including assuming the closing of the Acquisitions, having sustained a
material loss, whether or not insured, by reason of fire, earthquake,
flood, accident or other calamity, or from any labor dispute or court or
governmental action, order or decree; (ii) trading in securities on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq National Market
having been suspended or limited; (iii) material governmental
restrictions having been imposed on trading in securities generally which are
not in force and effect on the date hereof; (iv) a banking moratorium having
been declared by federal or New York State authorities; (v) an outbreak or
significant escalation of major international hostilities or other national or
international calamity having occurred; (vi) the passage by the Congress of the
United States or by any state legislative body of similar impact, of any act or
measure, or the adoption of any order, rule or regulation by any governmental
body or any authoritative accounting institute or board, or any governmental
executive, which is reasonably believed likely by you to have material adverse
effect on the business, property, operations, condition (financial or otherwise)
or earnings of the Company; (vii) any material adverse change in the financial
or securities markets beyond normal fluctuations in the United States having
occurred since the date of this Agreement; or (viii) any material adverse change
having occurred, since the respective dates for which information is given in
the Registration Statement and Prospectus, in the business, property,
operations, condition (financial or otherwise), earnings or business prospects
of the Company, whether or not arising in the ordinary course of business.
(b) Notification. If you elect to prevent this
Agreement from becoming effective or to terminate this Agreement as provided
in this Section 11 or in Section 10, the Company shall be promptly notified by
you, by telephone, facsimile or telegram, confirmed by letter.
12. Representative's Warrant.
On the First Closing Date, the Company will issue and sell to you,
for a total purchase price of $5.00, and upon the terms and conditions set forth
in the form of Representative's Warrant filed as an exhibit to the Registration
Statement, a warrant entitling you to purchase 200,000 Shares (the
"Representative's Warrant"). In the event of conflict in the terms of this
Agreement and the Representative's Warrant, the language of the Representative's
Warrant shall control.
13. Representations, Warranties and Agreements to Survive
Delivery.
The respective indemnities, agreements, representations, warranties,
covenants and other statements of the Company and the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect
regardless of any investigation made by or on behalf of the Underwriters, the
Company, or any of its officers or directors or any controlling persons, and
will survive delivery of and payment for the Shares and the termination of this
Agreement.
14. Notice.
All communications hereunder will be in writing and, except as
otherwise expressly provided herein, if sent to any Underwriter, will be mailed,
sent by facsimile transmission or overnight courier service, delivered or
telegraphed and confirmed to it at ▇.▇. ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, with a copy sent to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.,
Shereff, Friedman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or if sent to the Company, will be mailed, sent by facsimile transmission
or overnight courier service, delivered or telegraphed and confirmed to it at
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy sent to ▇▇▇▇▇▇
▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
15. Parties In Interest.
This Agreement herein set forth is made solely for the benefit of
the Underwriters, the Company and, to the extent expressed, any person
controlling the Company, or any Underwriter, as the case may be, and directors
of the Company, nominees for directors of the Company (if any) named in the
Prospectus, the officers of the Company who have signed the Registration
Statement, and their respective executors, administrators, successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" shall not include any
purchaser, as such, from any Underwriter of the Shares.
16. Applicable Law.
This Agreement will be governed by, and construed in accordance
with, the laws of the State of New York applicable to agreements made and to be
entirely performed within such state.
17. Counterparts.
This Agreement may be executed in two or more counterpart copies,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Underwriting Agreement, whereupon it will
become a binding agreement between the Company and you in accordance with its
terms.
Yours very truly,
LIFE CRITICAL CARE CORPORATION
By:________________________________
Name:
Title:
Dated:_______________, 1996
EACH OF THE SELLING STOCKHOLDERS
NAMED IN SCHEDULE II HERETO
By:________________________________
On his own behalf and as
Attorney-in-Fact
Dated:_______________, 1996
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
▇.▇. ▇▇▇▇▇▇ & CO., INC.
By:_______________________________
Title:____________________________
Dated:_______________, 1996
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
▇.▇. ▇▇▇▇▇▇ & Co., Inc.
Total 2,000,000
SCHEDULE II
Selling Stockholders Number of Option Shares
-------------------- -----------------------
Total 50,000