Exhibit 1.1
GENISYS RESERVATION SYSTEMS, INC.
UNDERWRITING AGREEMENT
900,000 Shares of Common Stock and
2,400,000 Redeemable Warrants
, 1997
▇.▇. ▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Genisys Reservation Systems, Inc., a New Jersey corporation (the "Company"),
confirms its agreement with ▇.▇. ▇▇▇▇▇ & Co., Inc. ("▇.▇. ▇▇▇▇▇") ( the
"Underwriter") with respect to the sale by the Company and the purchase by the
Underwriter of 900,000 shares (the "Shares") of the Company's common stock,
$.0001 par value per share (the "Common Stock"), and 2,400,000 redeemable
warrants to acquire one additional share of Common Stock ("Public Warrants").
The shares of Common Stock and Public Warrants will be immediately separable and
tradeable upon issuance and will not trade as units. The Public Warrants will be
comprised of 1,500,000 Class A Redeemable Warrants (the "Class A Warrants") and
900,000 Class B Redeemable Warrants (the "Class B Warrants"). Each Public
Warrant is exercisable from , 1997 until, , 2002. Each Class A Warrant will have
an initial exercise price of $5.75 for one (1) share of Common Stock, and each
Class B Warrant shall have an initial exercise price of $6.75 for one (1) share
of Common Stock. The Public Warrants will be subject to prior redemption by the
Company as more fully described in the Registration Statement and Prospectus
referred to below. The Shares, Class A Warrants and Class B Warrants are
hereinafter referred to as the "Firm Securities." Upon your request, as provided
in Section 2(b) of this Agreement, the Company shall also issue and sell to you
up to an additional 135,000 Shares and/or 225,000 Class A Warrants and 135,000
Class B Warrants for the purpose of covering over-allotments, if any, in the
sale of the Firm Securities. Such 135,000 Shares and/or 225,000 Class A Warrants
and 135,000 Class B Warrants are hereinafter referred to as the "Option
Securities" The Firm Securities and the Options Securities are hereinafter
collectively referred to as the "Public Offering Securities." The Company also
proposes to issue and sell to you warrants (the "Underwriter's Warrants")
pursuant to the Underwriter's Warrant Agreement dated , 1997 between the
Underwriter and the Company (the "Underwriter's Warrant Agreement") for the
purchase of an additional 90,000 Shares and 150,000 Class A Warrants and 90,000
Class B Warrants.
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The Shares and/or Public Warrants issuable upon exercise of the Underwriter's
Warrants are hereinafter referred to as the "Underwriter's Securities." The
shares of Common Stock issuable upon exercise of the Public Warrants (including
the Public Warrants issuable upon exercise of the Underwriter's Warrants) are
hereinafter sometimes referred to as the "Warrant Shares." The Public Offering
Securities, the Shares, the Public Warrants, the Underwriter's Warrants, the
Underwriter's Securities and the Warrant Shares are more fully described in the
Registration Statement and the Prospectus referred to below.
1. Representations and Warranties. (a) The Company represents and warrants to,
and agrees with, each of the Underwriters as of the date hereof, and as of the
Closing Date (hereinafter defined) and the Option Closing Date (hereinafter
defined), if any, as follows:
(i) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an amendment or
amendments thereto, on Form SB-2 (No. 333 - 15011), including any related
preliminary prospectus ("Preliminary Prospectus"), for the registration of the
Shares, the Public Warrants, the Underwriter's Securities and the Warrant Shares
under the Securities Act of 1933, as amended (the "Act"), which registration
statement and amendment or amendments have been prepared by the Company in
conformity with the requirements of the Act, and the Rules and Regulations of
the Commission thereunder. The Company will promptly file a further amendment to
said registration statement in the form heretofore delivered to the Underwriter
and will not file any other amendment thereto to which the Underwriter shall
have objected in writing after having been furnished with a copy thereof. Except
as the context may otherwise require, such registration statement, as amended,
on file with the Commission at the time the registration statement becomes
effective (including the prospectus, financial statements, schedules, exhibits
and all other documents or information incorporated by reference therein) and
all information deemed to be a part thereof as of such time pursuant to
paragraph (b) of Rule 430(A) of the rules and regulations) is hereinafter called
the "Registration Statement", and the form of prospectus in the form first filed
with the Commission pursuant to Rule 424(b) of the rules and regulations is
hereinafter called the "Prospectus." For purposes hereof, "Rules and
Regulations" mean the rules and regulations adopted by the Commission under
either the Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable.
(ii) Neither the Commission nor any state regulatory authority has issued any
order preventing or suspending the use of any Preliminary Prospectus, the
Registration Statement or Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or threatened. Each of the Preliminary Prospectus, the Registration Statement
and Prospectus at the time of filing thereof conformed with the requirements of
the Acts and the Rules and Regulations, and none of the Preliminary Prospectus,
the Registration Statement or Prospectus at the time of filing thereof contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein and necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to statements made in
reliance upon and in conformity with written information furnished to the
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Company with respect to the Underwriter by or on behalf of the Underwriter
expressly for use in such Preliminary Prospectus, Registration Statement or
Prospectus or any amendment or supplement thereto. It is understood that the
statements set forth in the Prospectus on page 2 with respect to stabilization,
under the heading "Underwriting" and the identity of counsel to the Underwriter
under the heading "Legal Matters" constitute the only information furnished in
writing by or on behalf of the Underwriter for inclusion in the Registration
Statement and Prospectus, as the case may be.
(iii) When the Registration Statement becomes effective and at all times
subsequent thereto up to the Closing Date (hereinafter defined) and each Option
Closing Date (hereinafter defined), if any, and during such longer period as the
Prospectus may be required to be delivered in connection with sales by the
Underwriter or a dealer, the Registration Statement and the Prospectus will
contain all statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations, and will conform to the requirements
of the Act and the Rules and Regulations; neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, contains or will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided, however, that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of the
Underwriter (as set forth in paragraph 1(a)(ii) hereof) expressly for use in the
Preliminary Prospectus, Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
(iv) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its incorporation.
The Company does not own an equity interest in any corporation, partnership,
trust, joint venture or other business entity. The Company is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations require such qualification or licensing except where the failure(s)
to be so qualified, licensed and in good standing, individually or in the
aggregate, would not materially and adversely affect the condition, financial or
otherwise, or the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operations of the Company. The
Company has all requisite power and authority (corporate and other), and has
obtained any and all authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), necessary to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and has been
doing business in compliance with all such authorizations, approvals, orders,
licenses, certificates, franchises and permits and all federal, state, local and
foreign laws, rules and regulations and the Company has not received any notice
of proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs, position, prospects,
value, operations, properties, business, or results of operations of the
Company. The disclosures in the Registration Statement concerning the effects
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of federal, state, local, and foreign laws, rules and regulations on the
Company's business as currently conducted and as contemplated are correct in all
material respects and do not omit to state a material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made.
(v) The Company has a duly authorized, issued and outstanding capitalization as
set forth in the Prospectus, and will have the adjusted capitalization set forth
therein on the Closing Date (hereinafter defined) and the Option Closing Date
(hereinafter defined), if any, based upon the assumptions set forth therein, and
the Company is not a party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock, rights, warrants,
options or other securities, except for this Agreement and as described in the
Prospectus. The Common Stock, the Shares, the Public Warrants, the Underwriter's
Warrants, the Underwriter's Securities and the Warrant Shares (collectively,
hereinafter sometimes referred to as the "Securities") and all other securities
issued or issuable by the Company conform or, when issued and paid for, will
conform, in all respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding securities
of the Company have been duly authorized and validly issued and are fully paid
and non-assessable and the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The Securities are not and will not
be subject to any preemptive or other similar rights of any stockholder, have
been duly authorized and, when issued, paid for and delivered in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable and will
conform to the description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely as such holders; all
corporate action required to be taken for the authorization, issue and sale of
the Securities has been duly and validly taken; and the certificates
representing the Securities are in due and proper form. Upon the issuance and
delivery pursuant to the terms hereof of the Securities to be sold by the
Company hereunder, the Underwriter will acquire good and marketable title to
such Securities free and clear of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any kind whatsoever.
(vi) The financial statements of the Company together with the related notes and
schedules (if any) thereto, included in the Registration Statement, each
Preliminary Prospectus and the Prospectus fairly present the financial position,
income, changes in cash flow, changes in stockholders' equity and the results of
operations of the Company at the respective dates and for the respective periods
to which they apply and the pro forma financial information included in the
Registration Statement, each Preliminary Prospectus and the Prospectus presents
fairly on a basis consistent with that of the audited financial statements
included therein, the Company's pro forma net income or loss per share, as the
case may be, pro forma net tangible book value, and the pro forma capitalization
and such financial statements have been prepared in conformity with generally
accepted accounting principles and the Rules and Regulations, consistently
applied throughout the periods involved. There has been no material adverse
change or development involving a material change in the condition, financial or
otherwise, or in the earnings, business affairs, position,
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prospects, value, operation, properties, business or results of operation of the
Company whether or not arising in the ordinary course of business, since the
date of the financial statements included in the Registration Statement and the
Prospectus, and the outstanding debt, the property, both tangible and
intangible, and the business of the Company conforms in all material respects to
the descriptions thereof contained in the Registration Statement and the
Prospectus.
(vii) The Company (A) has paid all federal, state, local, and foreign taxes for
which it is liable, including, but not limited to, withholding taxes and amounts
payable under Chapters 21 through 24 of the Internal Revenue Code of 1986, as
amended (the "Code"), and has furnished all information returns it is required
to furnish pursuant to the Code, (B) has established adequate reserves for such
taxes which are not due and payable, and (C) does not have any tax deficiency or
claims outstanding, proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is payable by or on
behalf of the Underwriter in connection with (A) the issuance by the Company of
the Securities, (B) the purchase by the Underwriter of the Public Offering
Securities, the Shares, the Public Warrants and the Warrant Shares and the
purchase by the Underwriter of the Underwriter's Warrants from the Company, (C)
the consummation by the Company of any of its obligations under this Agreement,
or (D) resales of the Securities in connection with the distribution
contemplated hereby.
(ix) The Company maintains insurance policies, including, but not limited to,
general liability, product liability and property insurance, which insures the
Company and its employees, against such losses and risks generally insured
against by comparable businesses. The Company (A) has not failed to give notice
or present any insurance claim with respect to any matter, including but not
limited to the Company's business, property or employees, under the insurance
policy or surety bond in a due and timely manner, (B) does not have any disputes
or claims against any underwriter of such insurance policies or surety bonds or
has not failed to pay any premiums due and payable thereunder, or (C) has not
failed to comply with all conditions contained in such insurance policies and
surety bonds. There are no facts or circumstances under any such insurance
policy or surety bond which would relieve any insurer of its obligation to
satisfy in full any valid claim of the company.
(x) There is no action, suit, proceeding, inquiry, arbitration, investigation,
litigation or governmental proceeding (including, without limitation, those
having jurisdiction over environmental or similar matters), domestic or foreign,
pending or threatened against (or circumstances that may give rise to the same),
or involving the properties or business of the Company which (A) questions the
validity of the capital stock of the Company or this Agreement, the
Underwriter's Warrant Agreement, the Warrant Agreement (as defined in Section
1(xxxiii) below) or of any action taken or to be taken by the Company pursuant
to or in connection with this Agreement, the Underwriter's Warrant Agreement, or
the Warrant Agreement, (B) is required to be disclosed in the Registration
Statement which is not so disclosed (and such proceedings as are summarized in
the Registration Statement are accurately summarized in all material respects),
or (C) if adversely determined, might materially and adversely affect the
condition, financial or otherwise, or the business affairs or business
prospects, earnings, liabilities, prospects, stockholders' equity,
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value, properties, business or assets of the Company.
(xi) The Company has full legal right, power and authority to authorize, issue,
deliver and sell the Securities, enter into this Agreement, the Underwriter's
Warrant Agreement and the Warrant Agreement and to consummate the transactions
provided for herein and therein; and each of this Agreement, the Underwriter's
Warrant Agreement and the Warrant Agreement have been duly and properly
authorized, executed and delivered by the Company. This Agreement, the
Underwriter's Warrant Agreement and the Warrant Agreement each constitute a
legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, and neither the Company's issue and sale
of the Securities or execution or delivery of this Agreement, the Underwriter's
Warrant Agreement and the Warrant Agreement or its performance hereunder and
thereunder, its consummation of the transactions contemplated herein and
therein, or the conduct of its business as described in the Registration
Statement, the Prospectus, and any amendments or supplements thereto, conflicts
with or will conflict with or results or will result in any breach or violation
of any of the terms or provisions of, or constitutes or will constitute a
default under, or result in the creation or imposition of any lien, charge,
claim, encumbrance, pledge, security interest, defect or other restriction or
equity of any kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of, (A) the certificate of
incorporation or by- laws of the Company, (B) any license, contract, indenture,
mortgage, deed of trust, voting trust agreement, stockholders agreement, note,
loan or credit agreement or any other agreement or instrument to which the
Company is a party or by which it is or may be bound or which its properties or
assets (tangible or intangible) is or may be subject, or any indebtedness, or
(C) any statute, judgment, decree, order, rule or regulation applicable to the
Company of any arbitrator, court, regulatory body or administrative agency or
other governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or properties, in each
case except for conflicts, breaches, violations, defaults, creations or
impositions which do not and would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs, position,
shareholder's equity, value, operation, properties, business or results of
operations of the Company.
(xii) No consent, approval, authorization or order of, and no filing with, any
court, regulatory body, government agency or other body, domestic or foreign, is
required for the issuance of the Securities pursuant to the Prospectus and the
Registration Statement, the issuance of the Underwriter's Warrants, the
execution, delivery or performance of this Agreement, the Underwriter's Warrant
Agreement and the Warrant Agreement, and the transactions contemplated hereby
and thereby, including, without limitation, any waiver of any preemptive, first
refusal or other rights that any entity or person may have for the issue and/or
sale of any of the Securities, except such as have been or may be obtained under
the Act or may be required under state securities or Blue Sky laws in connection
with the Underwriter's purchase and distribution of the Securities and the
Underwriter's purchase of the Underwriter's Warrants to be sold by the Company
hereunder and thereunder.
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(xiii) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which its assets, properties or business may be subject have been
duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding agreements of the Company, enforceable
against the Company, in accordance with their respective terms. The descriptions
in the Registration Statement of agreements, contracts and other documents and
statutes and regulations are accurate and fairly present the information
required to be shown with respect thereto by Form SB-2, and there are no
contracts or other documents which are required by the Act to be described in
the Registration Statement or filed as exhibits to the Registration Statement
which are not described or filed as required, and the exhibits which have been
filed are complete and correct copies of the documents of which they purport to
be copies.
(xiv) Subsequent to the respective dates as of which information is set forth in
the Registration Statement and Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (A) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, (B) entered into any transaction other than in the ordinary
course of business, or (C) declared or paid any dividend or made any other
distribution on or in respect of its capital stock of any class, and there has
not been any change in the capital stock, or any change in the debt (long or
short term) or liabilities or material change in or affecting the business
affairs or prospects, management, stockholders' equity, properties, business,
financial operations or assets of the Company.
(xv) No default exists in the due performance and observance of any term,
covenant or condition of any license, contract, indenture, mortgage, installment
sale agreement, lease, deed of trust, voting trust agreement, stockholders
agreement, partnership agreement, note, loan or credit agreement, purchase
order, or any other material agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which the property
or assets (tangible or intangible) of the Company is subject or affected, which
default would have a material adverse effect on the condition, financial or
otherwise, earnings, business affairs, position, shareholder's equity, value,
operation, properties, business or results of operations of the Company. (xvi)
The Company has generally enjoyed a satisfactory employer-employee relationship
with its employees and is in compliance in all material respects with all
federal, state, local, and foreign laws and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours. There are no pending investigations involving the Company, by the U.S.
Department of Labor, or any other governmental agency responsible for the
enforcement of such federal, state, local, or foreign laws and regulations.
There is no unfair labor practice charge or complaint against the Company
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened against or
involving the Company, or any predecessor entity, and none has ever occurred. No
representation question exists respecting the employees of the Company and no
collective bargaining agreement or modification
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thereof is currently being negotiated by the Company. No grievance or
arbitration proceeding is pending under any expired or existing collective
bargaining agreements of the Company. No labor dispute with the employees of the
Company exists, or, to the knowledge of the Company is imminent.
(xvii) Except as described in the Prospectus, the Company does not maintain,
sponsor or contribute to any program or arrangement that is an "employee pension
benefit plan," an "employee welfare benefit plan," or a "multiemployer plan" as
such terms are defined in Sections 3(2), 3(1) and 3(37), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") ("ERISA
Plans"). The Company does not maintain or contribute, now or at any time
previously, to a defined benefit plan, as defined in Section 3(35) of ERISA. No
ERISA Plan (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code, which could subject the Company to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each ERISA Plan is in
compliance with all material reporting, disclosure and other requirements of the
Code and ERISA as they relate to any such ERISA Plan. Determination letters have
been received from the Internal Revenue Service with respect to each ERISA Plan
which is intended to comply with Code Section 401(a), stating that such ERISA
Plan and the attendant trust are qualified thereunder. The Company has never
completely or partially withdrawn from a "multiemployer plan."
(xviii) Neither the Company nor any of its employees, directors, stockholders,
or affiliates (within the meaning of the Rules and Regulations) of any of the
foregoing has taken or will take, directly or indirectly, any action designed to
or which has constituted or which might be expected to cause or result in, under
the Exchange Act, or otherwise, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Securities
or otherwise.
(xix) None of the patents, patent applications, trademarks, service marks, trade
names and copyrights, and licenses and rights to the foregoing presently owned
or held by the Company are in dispute or are in any conflict with the right of
any other person or entity. The Company (i) owns or has the license or other
right to use, free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects or other restrictions or equities of any
kind whatsoever, all patents, trademarks, service marks, trade names and
copyrights, technology and licenses and rights with respect to the foregoing,
used in the conduct of its business as now conducted or proposed to be conducted
without infringing upon or otherwise acting adversely to the right or claimed
right of any person, corporation or other entity under or with respect to any of
the foregoing and (ii) except as set forth in the Prospectus, is not obligated
or under any liability whatsoever to make any payments by way of royalties, fees
or otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service ▇▇▇▇, tradename, copyright, know-how, technology or other
intangible asset, with respect to the use thereof or in connection with the
conduct of its business or otherwise.
(xx) The Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any trademark, service ▇▇▇▇, trade
name or copyright or other intangible asset used or held for use by it in
connection with the conduct of its businesses which,
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singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, might have a material adverse effect on the condition, financial or
otherwise, or the business affairs, position, properties, stockholder's equity,
financial operations or assets of the Company.
(xxi) The Company has good and
marketable title to, or valid and enforceable leasehold estates in, all items of
real and personal property stated in the Prospectus, to be owned or leased by it
free and clear of all liens, charges, claims, encumbrances, pledges, security
interest, defects, or other restrictions or equities of any kind whatsoever,
other than those referred to in the Prospectus and liens for taxes not yet due
and payable.
(xxii) Wiss & Company, LLP., Certified Public Accountants, whose report is filed
with the Commission as a part of the Registration Statement, are independent
certified public accountants as required by the Act and the Rules and
Regulations.
(xxiii) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which each of its officers, directors or any
person or entity deemed to be an affiliate of the Company and any stockholders
of the Company has agreed not to, directly or indirectly, offer to sell, sell,
grant any option for the sale of, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock (either pursuant to
Rule 144 of the Rules and Regulations or otherwise) or dispose of any beneficial
interest therein for a period of not less than 18 months following the effective
date of the Registration Statement without the prior written consent of the
Underwriter and that any Common Stock which has been issued and is outstanding
on the effective date of the Registration Statement and is to be sold or
otherwise disposed of pursuant to such Rule 144 with the consent of the
Underwriter shall only be sold or otherwise disposed of through the Underwriter.
The Company will cause the Transfer Agent, as defined below, to ▇▇▇▇ an
appropriate legend on the face of stock certificates representing all of such
securities and to place "stop transfer" orders on the Company's stock ledgers.
(xxiv) There are no claims, payments, issuances, arrangements or understandings,
whether oral or written, for services in the nature of a finder's or origination
fee with respect to the sale of the Securities hereunder or any other
arrangements, agreements, understandings, payments or issuance with respect to
the Company, or any of its officers, directors, stockholders, partners,
employees or affiliates that may affect the Underwriter' compensation, as
determined by the National Association of Securities Dealers, Inc. ("NASD") and
the Company is aware that the Underwriter and each of the Underwriter's shall
compensate any of their respective personnel who may have acted in such
capacities as they shall determine in their sole discretion.
(xxv) The Shares, the Common Stock and the Public Warrants have been approved
for quotation on the Nasdaq SmallCap Market.
(xxvi) Neither the Company, nor any of its officers, employees, agents or any
other person acting on behalf of the Company has, directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business)
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to any customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency (domestic or foreign) or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or other person who was, is, or
may be in a position to help or hinder the business of the Company (or assist
the Company in connection with any actual or proposed transaction) which (A)
might subject the Company, or any other such person to any damage or penalty in
any civil, criminal or governmental litigation or proceeding (domestic or
foreign), (B) if not given in the past, might have had a materially adverse
effect on the assets, business, operations or prospects of the Company, or (C)
if not continued in the future, might adversely affect the assets, business,
operations or prospects of the Company. The Company's internal accounting
controls are sufficient to cause the Company to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(xxvii) Except as set forth in the Prospectus, no officer, director, or
stockholder of the Company, or any "affiliate" or "associate" (as these terms
are defined in Rule 405 promulgated under the Rules and Regulations) of any of
the foregoing persons or entities has or has had, either directly or indirectly,
(A) an interest in any person or entity which (1) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by
the Company, or (2) purchases from or sells or furnishes to the Company any
goods or services, or (B) a beneficiary interest in any contract or agreement to
which the Company is a party or by which it may be bound or affected. Except as
set forth in the Prospectus under "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company, and any officer, director, Principal Security Holder (as such term is
defined in the Prospectus) of the Company, or any partner, affiliate or
associate of any of the foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company and delivered to
the Underwriter or to Scheichet & ▇▇▇▇▇, P.C. ("Underwriter' Counsel") shall be
deemed a representation and warranty by the Company to the Underwriter as to the
matters covered thereby.
(xxix) The minute books of the Company have been made available to the
Underwriter and contain a complete summary of all meetings and actions of the
directors and stockholders of the Company, since the time of its incorporation,
and reflects all transactions referred to in such minutes accurately in all
material respects.
(xxx) Except and to the extent described in the Prospectus, no holders of any
securities of the Company or of any options, warrants or other convertible or
exchangeable securities of the Company have the right to include any securities
issued by the Company in the Registration Statement or any registration
statement under the Act and no person or entity holds any anti-dilution rights
with respect to any securities of the Company.
(xxxi) The Company has as of the effective date of the Registration Statement
(a) entered into employment agreements with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇
providing for annual salaries of $100,000 and $80,000, respectively, each on
terms and conditions satisfactory to the Underwriter,
10
and (ii) purchased "Key-Man" insurance on the life of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ which names
the Company as the sole beneficiary on terms and conditions satisfactory to the
Underwriter.
(xxxii) The Company has entered into a warrant agreement with respect to the
Public Warrants, substantially in the form filed as Exhibit 4.2 to the
Registration Statement ("Warrant Agreement") with Continental Stock Transfer and
Trust Company in form and substance satisfactory to the Underwriter.
(xxxiii) Immediately prior to the effective date of the Registration Statement
there shall be no more than an aggregate of 3,280,594 shares of Common Stock
issued and outstanding (including 280,485 Shares of Common Stock held by
non-management members of the public). Except for the Underwriter's Warrants, an
option held by ▇▇▇▇ ▇▇▇▇▇ to acquire 5,000 shares of Common Stock upon
conversion of a $10,000 promissory note, an option held by ▇▇▇▇ ▇▇▇▇▇▇▇ to
acquire 10,000 shares of Common Stock upon conversion of a $20,000 promissory
note, options held by ▇▇▇▇ ▇▇▇▇▇ to purchase 25,000 shares of the Company's
Common Stock at an exercise price of $.60 per share and 35,000 shares of the
Company's Common Stock at a price of $2.00 per share, an option held by Loeb
Holding Corp., as agent, to acquire up to 30% of the issued and outstanding
shares of Common Stock of the Company upon conversion of a $25,000 promissory
note, a warrant held by an unaffiliated equipment lessor to acquire 13,000
shares of Common Stock at an exercise price of $2.00 per share and 287,500 Class
A Redeemable Warrants to purchase shares of Common Stock to be issued to lenders
in the recent bridge financing of the Company, there are no securities with
equivalent rights as the Common Stock, Common Stock or such equivalent
securities, issuable upon the exercise of options, warrants and other contract
rights, or securities convertible directly or indirectly into Common Stock or
such equivalent securities issued or outstanding.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter, severally and
not jointly, agrees to purchase from the Company at a price of $4.50 per Share,
$.18 per Class A Warrant and $.09 per Class B Warrant, that number of Firm
Securities set forth above, subject to such adjustment as the Underwriter in its
sole discretion shall make to eliminate any sales or purchases of fractional
shares.
(b) In addition, on the basis of the representations, warranties, covenants and
agreements, herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriter to purchase all or
any part of an additional 135,000 Shares at a price of $4.50 per Share and
225,000 Class A Warrants and 135,000 Class B Warrants at a price of $.18 per
Class A Warrant and $.09 per Class B Warrant. The option granted hereby will
expire 45 days after the date the Registration Statement becomes effective and
may be exercised in whole or in part from time to time upon notice by the
Underwriter to the Company setting forth the number of Option Securities as to
which the several Underwriter are then exercising the option and the time and
date of payment and delivery for any such Option Securities. Any such time and
date of delivery (an
11
"Option Closing Date") shall be determined by the Underwriter, but shall not be
later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Date (hereinafter defined), unless otherwise
agreed upon by the Underwriter and the Company. Nothing herein contained shall
obligate the Underwriter to make any over-allotments. No Option Securities shall
be delivered unless the Firm Securities shall be simultaneously delivered or
shall theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates evidencing
the Firm Securities shall be made at the offices of ▇.▇. ▇▇▇▇▇ & Co., Inc. at ▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed
upon by the Underwriter and the Company. Such delivery and payment shall be made
at 10:00 a.m. (New York City time) on , 1997 or at such other time and date as
shall be agreed upon by the Underwriter and the Company, but no less than three
(3) nor more than ten (10) full business days after the effective date of the
Registration Statement (such time and date of payment and delivery being herein
called "Closing Date"). In addition, in the event that any or all of the Option
Securities are purchased by the Underwriter, payment of the purchase price for,
and delivery of certificates for, such Option Securities shall be made at the
above mentioned office of the Underwriter or at such other place as shall be
agreed upon by the Underwriter and the Company on each Option Closing Date as
specified in the notice from the Underwriter to the Company. Delivery of the
certificates for the Firm Securities and the Option Securities if any, shall be
made to the Underwriter against payment by the Underwriter, severally and not
jointly, of the purchase price for the Firm Securities and the Option Securities
if any, to the order of the Company by New York Clearing House Funds. In the
event such option is exercised, the Underwriter shall purchase that number of
Option Securities then being purchased subject to such adjustments as the
Underwriter in its discretion shall make to eliminate any sales or purchases of
fractional shares. Certificates for the Firm Securities and the Option
Securities if any, shall be in definitive, fully registered form, shall bear no
restrictive legends and shall be in such denominations and registered in such
names as the Underwriter may request in writing at least two (2) business days
prior to Closing Date or the relevant Option Closing Date, as the case may be.
The certificates for the Firm Securities and the Option Securities if any, shall
be made available to the Underwriter at such office or such other place as the
Underwriter may designate for inspection, checking and packaging no later than
9:30 a.m. on the last business day prior to Closing Date or the relevant Option
Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the Underwriter the
Underwriter's Warrants at a purchase price of $.0001 per warrant, which warrants
shall entitle the holders thereof to purchase an aggregate of 90,000 Shares and
150,000 Class A Warrants and 90,000 Class B Warrants. The Underwriter's Warrants
shall be exercisable for a period of four (4) years commencing one (1) year from
the Closing Date at a price of $6.00 per Share, $.24 per Class A Warrant and
$.12 per Class B Warrant. The Underwriter's Warrant Agreement and form of
Warrant Certificates with respect to each of the (i) Underwriter's Warrants to
purchase Shares and (ii) Underwriter's Warrants to purchase Public Warrants,
shall be substantially in the form filed as Exhibit 4.3 to the Registration
Statement. Payment for the Underwriter's Warrants shall be made on the Closing
Date.
12
3. Public Offering of the Public Offering Securities. As soon after the
Registration Statement becomes effective as the Underwriter deems advisable, the
Underwriter shall make a public offering of the Firm Securities and such of the
Option Securities as it may determine (other than to residents of or in any
jurisdiction in which qualification of the Shares and Public Warrants are
required and has not become effective) at the price and upon the other terms set
forth in the Prospectus. The Underwriter may from time to time increase or
decrease the public offering price after distribution of the Public Offering
Securities has been completed to such extent as the Underwriter, in its sole
discretion deems advisable. The Underwriter may enter into one or more
agreements as it Underwriter, in its sole discretion, deems advisable with one
or more broker-dealers who shall act as dealers in connection with such public
offering. Investors in the public offering will be required to purchase at least
one Share and one Public Warrant together or in multiples thereof. Such Public
Offering Securities will be immediately separable and tradeable upon issuance
and will not be registered or listed on any market or exchange for trading as
units.
4. Covenants and Agreements of the Company. The Company covenants and agrees
with the Underwriter as follows:
(a) The Company shall use its best efforts to cause the Registration Statement
and any amendments thereto to become effective as promptly as practicable (such
Registration Statement to be in form and substance satisfactory to the
Underwriter and Underwriter's Counsel) and will not at any time, whether before
or after the effective date of the Registration Statement, file any amendment to
the Registration Statement or supplement to the Prospectus or file any document
under the Act or Exchange Act before termination of the offering of the Public
Offering Securities by the Underwriter of which the Underwriter shall not
previously have been advised and furnished with a copy, or to which the
Underwriter shall have objected or which is not in compliance with the Act, the
Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof, the Company
will advise the Underwriter and confirm by notice in writing, (i) when the
Registration Statement, as amended, becomes effective, if the provisions of Rule
430A promulgated under the Act will be relied upon, when the Prospectus has been
filed in accordance with said Rule 430A and when any post- effective amendment
to the Registration Statement becomes effective, (ii) of the issuance by the
Commission of any stop order or of the initiation, or the threatening, of any
proceeding, suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of the Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, or the institution of
proceedings for that purpose (iii) of the issuance by the Commission or by any
state securities commission of any proceedings for the suspension of the
qualification of any of the Securities for offering or sale in any jurisdiction
or of the initiation, or the threatening, of any proceeding for that purpose,
(iv) of the receipt of any comments from the Commission; and (v) of any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information. If the
Commission or any state securities commission authority shall enter a stop order
or suspend such qualification at any time, the Company will make every effort to
obtain promptly the lifting of such order.
13
(c) The Company shall file the Prospectus (in form and substance satisfactory to
the Underwriter and Underwriter's Counsel) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424 (b)(1) (or, if applicable and if consented to by the Underwriter, pursuant
to Rule 424 (b)(47) not later than the Commission's close of business on the
earlier of (i) the second business day following the execution and delivery of
this Agreement and (ii) the fifth business day after the effective date of the
Registration Statement.
(d) The Company will give the Underwriter notice of its intention to file or
prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriter in connection with the offering of the Securities which differs from
the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
and will furnish the Underwriter with copies of any such amendment or supplement
a reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file any such prospectus to which the Underwriter or
Underwriter' Counsel, shall reasonably object.
(e) The Company shall take all action, in cooperation with the Underwriter, at
or prior to the time the Registration Statement becomes effective, to qualify
the Public Offering Securities for offering and sale under the securities laws
of such jurisdictions as the Underwriter may designate to permit the continuance
of sales and dealings therein for as long as may be necessary to complete the
distribution, and shall make such applications, file such documents and furnish
such information as may be required for such purpose; provided, however, the
Company shall not be required to qualify as a foreign corporation or file a
general or limited consent to service of process in any such jurisdiction. In
each jurisdiction where such qualification shall be effected, the Company will,
unless the Underwriter agrees that such action is not at the time necessary or
advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may reasonably be required by the laws of such
jurisdiction to continue such qualification. It is agreed that Underwriter's
Counsel (or its designees) shall perform all such required Blue Sky legal
services.
(f) During the time when a prospectus is required to be delivered under the Act,
the Company shall use all reasonable efforts to comply with all requirements
imposed upon it by the Act and the Exchange Act, as now and hereafter amended
and by the Rules and Regulations, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and the Prospectus, or any amendments or
supplements thereto. If at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event shall have occurred as a
result of which, in the reasonable opinion of counsel for the Company or
Underwriter' Counsel, the Prospectus, as then amended or supplemented, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to amend the Prospectus to comply with the Act and
the Rules and Regulations, the Company will notify the Underwriter promptly and
prepare
14
and file with the Commission an appropriate amendment or supplement in
accordance with Section 10 of the Act, each such amendment or supplement to be
satisfactory to Underwriter' Counsel, and the Company will furnish to the
Underwriter copies of such amendment or supplement as soon as available and in
such quantities as the Underwriter may request.
(g) As soon as practicable, but in any event not later than 45 days after the
end of the 12- month period beginning on the day after the end of the fiscal
quarter of the Company during which the effective date of the Registration
Statement occurs (90 days in the event that the end of such fiscal quarter is
the end of the Company's fiscal year), the Company shall make generally
available to its security holders, in the manner specified in Rule 158(b) of the
Rules and Regulations, and to the Underwriter, an earnings statement which will
be in the detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations, which
statement need not be audited unless required by the Act, covering a period of
at least 12 consecutive months after the effective date of the Registration
Statement.
(i) concurrently with furnishing such quarterly reports to its stockholders,
statements of income of the Company for each quarter in the form furnished to
the Company's stockholders and certified by the Company's principal financial or
accounting officer;
(ii) concurrently with furnishing such annual reports to its stockholders, a
balance sheet of the Company as at the end of the preceding fiscal year,
together with statements of operations, stockholders' equity, and cash flows of
the Company for such fiscal year, accompanied by a copy of the certificate
thereon of independent certified public accountants; (iii) as soon as they are
available, copies of all reports (financial or other) mailed to
stockholders;
(iv) as soon as they are available, copies of all reports and financial
statements furnished to or filed with the Commission, the NASD or any securities
exchange;
(v) every press release and every material news item or article of interest to
the financial community in respect of the Company or its affairs which was
released or prepared by or on behalf of the Company; and
(vi) any additional information of a public nature concerning the Company (and
any future subsidiaries) or its businesses which the Underwriter may reasonably
request.
During such seven-year period, if the Company has active subsidiaries, the
foregoing financial
15
statements will be on a consolidated basis to the extent that the accounts of
the Company and its subsidiaries are consolidated, and will be accompanied by
similar financial statements for any significant subsidiary which is not so
consolidated.
(i) The Company will maintain a Transfer Agent, counsel, accounting firm,
financial printer and, if necessary under the jurisdiction of incorporation of
the Company, a Registrar (which may be the same entity as the Transfer Agent)
for its Public Offering Securities, Common Stock and Public Warrants all of whom
shall be reasonably acceptable to the Underwriter (it being agreed that the
Company's current financial printer and the Transfer Agent, counsel and
accounting firm described in the Prospectus are acceptable to the Underwriter).
Such Transfer Agent shall, for a period of five years following the Closing
Date, deliver to the Underwriter the monthly securities position of the
Company's stockholders of record.
(j) The Company will furnish to the
Underwriter or on the Underwriter's order, without charge, at such place as the
Underwriter may designate, copies of each Preliminary Prospectus, the
Registration Statement any pre-effective or post-effective amendments thereto
(two of which copies will be signed and will include all financial statements
and exhibits), the Prospectus, and all amendments and supplements thereto,
including any Prospectus prepared after the effective date of the Registration
Statement, in each case as soon as available and in such quantities as the
Underwriter may reasonably request.
(k) On or before the effective date of the Registration Statement, the Company
shall provide the Underwriter with true copies of duly executed, legally binding
and enforceable agreements pursuant to which for a period of not less than 18
months after the effective date of the Registration Statement, each holder of
securities issued by the Company and outstanding at the effective date of the
Registration Statement (including securities convertible into Common Stock of
the Company, but excluding 333,216 shares of Common Stock held by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, 200,000 shares of Common Stock held by Loeb Holding Corporation, as
escrow agent, and 280,485 shares of Common Stock held by non-management members
of the public) agrees that it or he or she will not, directly or indirectly,
issue, offer to sell, sell, grant an option for the sale of, assign, transfer,
pledge, hypothecate or otherwise encumber or dispose of any of such securities
(either pursuant to Rule 144 of the Rules and Regulations or otherwise) or
dispose of any beneficial interest therein without the prior written consent of
the Underwriter (collectively, the "Lock-up Agreements"). The Lock-up Agreements
shall also provide that any such securities that may be sold pursuant to Rule
144 (with the Underwriter's consent) shall be executed through the Underwriter.
The commission for any such open market transactions shall not exceed 5% and the
sales price shall be reasonably related to the market. During the three year
period commencing with the effective date of the Registration Statement, the
Company shall not, without the prior written consent of the Underwriter, sell,
contract or offer to sell, issue, transfer, assign, pledge, distribute, or
otherwise dispose of, directly or indirectly, any debt security of the Company
or any shares of Common Stock or any issue of preferred stock of the Company, or
any options, rights or warrants with respect to any shares of Common Stock or
any issue of preferred stock of the Company, (other than upon exercise of the
Underwriter's Warrants). On or before the Closing Date, the Company shall
deliver instructions to
16
the Transfer Agent authorizing it to place appropriate legends on the
certificates representing the securities subject to the Lock-up Agreement and to
place appropriate stop transfer orders on the Company's ledgers.
(l) Neither the Company, nor any of its officers, directors, stockholders or
affiliates (within the meaning of the Rules and Regulations) will take, directly
or indirectly, any action designed to, or which might in the future reasonably
be expected to cause or result in, stabilization or manipulation of the price of
any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the Securities in
the manner, and subject to the conditions, set forth under "Use of Proceeds" in
the Prospectus. No portion of the net proceeds will be used, directly or
indirectly, to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports, forms or other documents as
may be required (including, but not limited to, a Form SR as may be required
pursuant to Rule 463 under the Act) from time to time, under the Act, the
Exchange Act and the Rules and Regulations, and all such reports, forms and
documents filed shall comply as to form and substance with the applicable
requirements under the Act, the Exchange Act and the Rules and Regulations.
(o) The Company shall furnish to the Underwriter as early as practicable prior
to each of the date hereof, the Closing Date and each Option Closing Date, if
any, but no later than two (2) full business days prior thereto, a copy of the
latest available unaudited interim financial statements of the Company (which in
no event shall be as of a date more than thirty (30) days prior to the date of
the Registration Statement) which have been read by the Company's independent
public accountants, as stated in their letters to be furnished pursuant to
Section 6(j) hereof.
(p) The Company shall cause the Shares, the Common Stock and the Public Warrants
to be listed on the Nasdaq SmallCap Market and, upon the request of the
Underwriter after the completion of the offering and provided the Company then
meets the then current listing requirements, to be listed on the BSE, and for a
period of five (5) years from the date hereof, use its best efforts to maintain
such listings of the Shares, the Common Stock and the Public Warrants to the
extent outstanding.
(q) For a period of five (5) years from the Closing Date, the Company shall
furnish to the Underwriter at the Underwriter's request and at the Company's
sole expense, the list of holders of all of the Company's securities. The
Company shall also instruct Depository Trust Company ("DTC") to send to the
Underwriter a copy of the securities positions of all of the security holders of
the Company on DTC's records on a weekly basis for a period of three (3)
calendar months following the effective date, on a monthly basis for a period of
three (3) years following the effective date and, in addition thereto, as
frequently as may be reasonably requested by the Underwriter,
(r) The Company shall as soon as practicable, (i) but in no event more than five
business days before the effective date of the Registration Statement, file a
Form 8-A with the Commission
17
providing for the registration under the Exchange
Act of the Securities and (ii) but in no event more than 30 days from the
effective dated of the Registration Statement, take all necessary and
appropriate actions to be included in Standard and Poor's Corporation
Descriptions or ▇▇▇▇▇'▇ Manual in order to satisfy the requirements for "manual
execmption" in those states where available and to maintain such inclusion
for as long as the Securities are outstanding.
(s) Until the completion of the distribution of the Securities, the Company
shall not without the prior written consent of the Underwriter and Underwriter's
Counsel, issue, directly or indirectly any press release or other communication
or hold any press conference with respect to the Company or its activities or
the offering contemplated hereby, other than trade releases issued in the
ordinary course of the Company's business consistent with past practices with
respect to the Company's operations.
(t) For a period of three (3) years after the effective date of the Registration
Statement, the Underwriter shall have the right to designate, one (1) individual
for election to the Company's Board of Directors ("Board") and the Company shall
cause such individual to be elected to the Board (provided such person is
reasonably qualified and is not an officer, director, employee or principal of
the Underwriter). In the event the Underwriter shall not have designated such
individual at the time of any meeting of the Board or such person is unavailable
to serve, or at the end of the period of three (3) years, the Company shall
notify the Underwriter of each meeting of the Board and an individual designated
by the Underwriter shall be permitted to attend all meetings of the Board and to
receive all notices and other correspondence and communications sent by the
Company to members of the Board for a period of three (3) years after the
effective date. Such individual shall be reimbursed for all actual out-of-pocket
expenses incurred in connection with his or her service on, or attendance at
meetings of, the Board. The Company shall provide its outside directors with
compensation in the form of cash and/or options on its Common Stock as deemed
appropriate and customary for similar companies.
(u) The Company, for a period of three (3) years from the effective date of the
Registration Statement, will consult, and will cause such present or future
subsidiaries to consult with the Underwriter with regard to any such offering or
placement and will offer, or cause any of its present or future subsidiaries to
offer, to the Underwriter the opportunity, on terms not more favorable to the
Company or such present or future subsidiary than they can secure elsewhere, to
purchase or sell any such securities. If the Underwriter fails to accept in
writing such proposal made by the Company or any of its present or future
subsidiaries within fifteen business days after receipt of a notice containing
such notice, then the Underwriter shall have no further claim or right with
respect to the proposal contained in such notice. If, thereafter, such proposal
is materially modified, the Company shall again consult, and cause each present
or future subsidiary to consult, with the Underwriter in connection with such
modification and shall in all respects have the same obligations and adopt the
same procedures with respect to such proposal as are provided hereinabove with
respect to the original proposal.
(v) For a period equal to the lesser of (i) seven (7) years from the date
hereof, and (ii) the date
18
of the sale to the public of the securities issuable upon exercise of the
Underwriter's Securities, the Company will not take any action or actions which
may prevent or disqualify the Company's use of any form otherwise available for
the registration under the Act of the securities issuable upon exercise of the
Underwriter's Securities.
(w) Commencing one year from the date hereof, the Company shall pay the
Underwriter a commission equal to four percent (4%) of the exercise price of the
Public Warrants, payable on the date of the exercise thereof on terms provided
for in the Warrant Agreement. The Company will not solicit the exercise of the
Public Warrants other than through the Underwriter and will not authorize any
other dealer or engage in such solicitation without the Underwriter's prior
written consent.
(x) The Company agrees that, for a period of seven (7) years from the date of
the closing of the public offering of the shares of the Public Offering
Securities (the "Closing"), if the Company intends to file a Registration
Statement or Statements for the public sale of securities for cash (other than a
Form S-8, Form S-4 or comparable Registration Statement), it will notify all of
the holders of the Underwriter's Securities and if so requested it will include
therein material to permit a public offering of the Representative's Securities
at the expense of the Company (excluding fees and expenses of the holder's
counsel and any underwriting or selling commissions), In addition, for a period
of five (5) years from the Closing, upon the written demand of holder(s)
representing a majority of the Representative's Securities, the Company agrees,
on one occasion, to promptly register the Representative's Securities at the
expense of the Company (excluding fees and expenses of the holder's counsel and
any underwriting or selling commissions).
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and the Option
Closing Date (to the extent not paid at the Closing Date) all expenses and fees
(other than fees of Underwriter' Counsel, except as provided in (iv) below)
incident to the performance of the obligations of the Company under this
Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement
including, without limitation, (i) the fees and expenses of accountants and
counsel for the Company, (ii) all costs and expenses incurred in connection with
the preparation, duplication, printing, (including mailing and handling charges)
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments and
supplements thereto and the printing, mailing (including the payment of postage
with respect thereto) and delivery of this Agreement, the Underwriter's Warrant
Agreement, the Warrant Agreement, and related documents, including the cost of
all copies thereof and of the Preliminary Prospectuses and of the Prospectus and
any amendments thereof or supplements thereto supplied to the Underwriter and
such dealers as the Underwriter may request, in quantities as hereinabove
stated, (iii) the printing, engraving, issuance and delivery of the Securities,
including, but not limited to, (x) the purchase by the Underwriter of the
Securities and the purchase by the Underwriter of the Underwriter's Warrants
from the Company, (y) the consummation by the Company of any of its obligations
under this Agreement, the Underwriter's Warrant Agreement, and the Warrant
Agreement, and (z) resale of the Securities by the Underwriter
19
in connection with the distribution contemplated hereby, (iv) the qualification
of the Securities under state or foreign securities or "Blue Sky" laws and
determination of the status of such securities under legal investment laws,
including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum", the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and disbursements and fees of counsel in connection therewith,
provided, however, that the Company's obligation with respect to such "Blue Sky"
fees and disbursement of counsel shall not exceed $30,000 (v) advertising costs
and expenses, including but not limited to costs and expenses in connection with
the "road show", information meetings and presentations, bound volumes and
prospectus memorabilia, tombstones in the Wall Street Journal and other
appropriate publications, (vi) costs, fees and expenses in connection with due
diligence investigations, including but not limited to the costs of background
checks on key management and/or personnel of the Company and the fees of any
independent counsel or consultant retained, (vii) fees and expenses of the
transfer agent, warrant agent, escrow agent, if any, financial public relations
firm, if any, and registrar, if any, (viii) the costs of applications and
listings in securities manuals such as Standard & Poors and Moodys, (ix) the
fees payable to the Commission, Nasdaq and the NASD, and (x) the fees and
expenses incurred in connection with the listing of the Securities on the Nasdaq
SmallCap Market, the BSE and any other exchange.
(b) If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 6, Section 10(a) or Section 12, the Company shall
reimburse and indemnify the Underwriter for all of its actual out-of-pocket
expenses, including the fees and disbursements of Underwriter' Counsel (and in
addition to fees and expenses of Underwriter's Counsel incurred pursuant to
Section 5(a)(iv) above for which the Company shall remain liable), provided,
however, that in the event of a termination pursuant to Section 10(a) hereof
such obligation of the Company shall not exceed $50,000.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 5, it will pay to the Underwriter on
the Closing Date by certified or bank cashier's check or, at the election of the
Underwriter, by deduction from the proceeds of the offering contemplated herein
a non-accountable expense allowance equal to three percent (3%) of the gross
proceeds received by the Company from the sale of the Firm Securities. In the
event the Underwriter elects to exercise the over-allotment option described in
Section 2(b) hereof, the Company further agrees to pay to the Underwriter on
each Option Closing Date (by certified or bank cashier's check or, at the
Underwriter's election, by deduction from the proceeds of the offering) a
non-accountable expense allowance equal to three percent (3%) of the gross
proceeds received by the Company from the sale of the relevant Option
Securities.
(d) The Underwriter shall not be responsible for any expense of the Company or
others or for any charge or claim related to the offering contemplated by
hereunder in the event that the sale of the Securities as contemplated hereunder
is not consummated, except for the fees and disbursements of Underwriter's
Counsel. 6. Conditions of the Underwriter' Obligations. The obligations of the
Underwriter
6. Conditions of the Underwriter' Obigations. The obligations of the
Underwriter
20
hereunder shall be subject to the continuing accuracy of the representations and
warranties of the Company herein as of the date hereof and as of the Closing
Date and each Option Closing Date, if any, as if they had been made on and as of
the Closing Date or each Option Closing Date, as the case may be; the accuracy
on and as of the Closing Date or Option Closing Date, if any, of the statements
of the officers of the Company made pursuant to the provisions hereof; and the
performance by the Company on and as of the Closing Date and each Option Closing
Date, if any, of its covenants and obligations hereunder and to the following
further conditions:
(a) The Registration Statement, which shall be in form and substance
satisfactory to the Underwriter and Underwriter's Counsel, shall have become
effective no later than 12:00 p.m., New York time, on the date of this Agreement
or such later date and time as shall be consented to in writing by the
Underwriter, and, at the Closing Date and each Option Closing Date, if any, no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or
shall be pending or contemplated by the Commission and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of Underwriter's Counsel. If the Company has elected
to rely upon Rule 430A of the Rules and Regulations, the price of the Public
Offering Securities and any price-related information previously omitted from
the effective Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the Rules
and Regulations within the prescribed time period, and prior to the Closing Date
the Company shall have provided evidence satisfactory to the Underwriter of such
timely filing, or a post-effective amendment providing such information shall
have been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the Rules and Regulations.
(b) The Underwriter shall not have advised the Company that the Registration
Statement, or any amendment thereto, contains an untrue statement of fact which,
in the Underwriter's opinion, is material, or omits to state a fact which, in
the Underwriter's opinion, is material and is required to be stated therein or
is necessary to make the statements therein not misleading, or that the
Prospectus, or any supplement thereto, contains an untrue statement of fact
which, in the Underwriter's opinion, is material and is required to be stated
therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. (c) On or prior to the
Closing Date, the Underwriter shall have received from Underwriter's
Counsel, such opinion or opinions with respect to the organization of the
Company, the validity of the Securities, the Underwriter's Warrants, the
Registration Statement, the Prospectus and other related matters as the
Underwriter may request and Underwriter's Counsel shall have received such
papers and information as they request to enable them to pass upon such matters.
(d) On the Closing Date, the Underwriter shall have received the favorable
opinion of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to the Company, dated the Closing
Date, addressed to the Underwriter and in form and substance satisfactory to
Underwriter's Counsel, to the effect that:
21
(i) the Company (A) has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction, and (B) has all
requisite corporate power and authority, and has obtained any and all
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over environmental or
similar matters), to own or lease its properties and conduct its business as
described in the Prospectus; the Company is duly qualified and licensed and in
good standing as a foreign corporation in each jurisdiction in which its
ownership or leasing of any properties or the character of its operations
requires such qualification or licensing; to such counsel's knowledge, the
Company has not received any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license, certificate,
franchise, or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially adversely affect the
business, operations, condition, financial or otherwise, or the earnings,
business affairs or prospects, properties, business, assets or results of
operations of the Company. The disclosures in the Registration Statement
concerning the effects of federal, state and local laws, rules and regulations
on the Company's business as currently conducted and as contemplated are correct
in all material respects and do not omit to state a fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made.
(ii) to such counsel's knowledge, the Company does not own an equity interest in
any other corporation, partnership, joint venture, trust or other business
entity other than as described in the Prospectus;
(iii) the Company has a duly authorized, issued and outstanding capitalization
as set forth in the Prospectus, and any amendment or supplement thereto, under
"Description of Securities" and "Certain Transactions," and, to such counsel's
knowledge, after due inquiry, the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this Agreement,
the Underwriter's Warrant Agreement, the Warrant Agreement and as described in
the Prospectus. The Securities, and all other securities issued or issuable by
the Company, conform in all material respects to all statements with respect
thereto contained in the Registration Statement and the Prospectus. All issued
and outstanding securities of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; the holders thereof have no rights
of rescission with respect thereto, and are not subject to personal liability
under the laws of the State of New Jersey as currently in effect by reason of
being such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company. The Securities
to be sold by the Company hereunder and under the Underwriter's Warrant
Agreement are not and will not be subject to any preemptive or other similar
rights of any stockholder, have been duly authorized and, when issued, paid for
and delivered in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable and conform to the description thereof contained in the
Prospectus; the holders thereof will not be subject to any liability solely as
such holders; all corporate action required to be taken for the authorization,
issue and sale of the Securities has been duly and validly taken; and the
certificates representing the Securities are in due and proper form.
22
The Public Warrants and the Underwriter's Warrants constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
therefore the number and type of securities of the Company called for thereby.
Upon the issuance and delivery pursuant to this Agreement of the Securities to
be sold by the Company, the Underwriter and the Underwriter will acquire good
and marketable title to the Securities free and clear of any pledge, lien,
charge, claim, encumbrance, pledge, security interest, or other restriction or
equity of any kind whatsoever. No transfer tax is payable by or on behalf of the
Underwriter in connection with (A) the issuance by the Company of the
Securities, (B) the purchase by the Underwriter and the Underwriter of the
Securities from the Company, (C) consummation by the Company of any of its
obligations under this Agreement, or (D) resales of the Securities in connection
with the distribution contemplated hereby.
(iv) the Registration Statement is effective under the Act, and, if applicable,
filing of all pricing information has been timely made in the appropriate form
under Rule 430A, and, to such counsel's knowledge, after due inquiry no stop
order suspending the use of the Preliminary Prospectus, the Registration
Statement or Prospectus or any part of any thereof or suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending, threatened or contemplated
under the Act;
(v) each of the Preliminary Prospectus, the Registration Statement, and the
Prospectus and any amendments or supplement thereto (other than the financial
statements and other financial and statistical data included therein, as to
which no opinion need be rendered) comply as to form in all material respects
with the requirements of the Act and the Rules and Regulations. (vi) to the best
of such counsel's knowledge, (A) there are no agreements, contracts or other
documents required by the Act to be described in the Registration Statement and
the Prospectus and filed as exhibits to the Registration Statement other than
those described in the Registration Statement (or required to be filed under the
Exchange Act if upon such filing they would be incorporated, in whole or in
part, by reference therein) and the Prospectus and filed as exhibits thereto,
and the exhibits which have been filed are correct copies of the documents of
which they purport to be copies; (B) the descriptions in the Registration
Statement and the Prospectus and any supplement or amendment thereto of
contracts and other documents to which the Company is a party or by which it is
bound, including any document to which the Company is a party or by which it is
bound, incorporated by reference into the Prospectus and any supplement or
amendment thereto, are accurate in all material respects and fairly represent
the information required to be shown under the Act and the Rules and Regulations
of the Commission thereunder; (C) except as disclosed in the Prospectus, there
is not pending or threatened against the Company any action, arbitration, suit,
proceeding, inquiry, investigation, litigation, governmental or other proceeding
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, pending or threatened against (or
circumstances that may give rise to the same), or involving the properties or
business of the Company which (1) is required to be disclosed in the
Registration Statement which is not so disclosed (and such proceedings as are
summarized in the Registration Statement are accurately summarized in all
respects), (2) questions the validity of the capital stock
23
of the Company or this Agreement or of any action taken or to be taken by the
Company pursuant to or in connection with any of the foregoing; (D) no statute
or regulation or legal or governmental proceeding required to be described in
the Prospectus is not described as required; and (E) except as disclosed in the
Prospectus, there is no action, suit or proceeding pending, or threatened,
against or affecting the Company before any court or arbitrator or governmental
body, agency or official (or any basis thereof known to such counsel) in which
an adverse decision which may result in a material adverse change in the
condition, financial or otherwise, or the earnings, position, prospects,
stockholders' equity, value, operation, properties, business or results of
operations of the Company, could adversely affect the present or prospective
ability of the Company to perform its obligations under this Agreement, the
Underwriter's Warrant Agreement or the Warrant Agreement or which in any manner
draws into question the validity or enforceability of this Agreement, the
Underwriter's Warrant Agreement or the Warrant Agreement;
(vii) the Company has full legal right, power and authority to enter into this
Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement and to
consummate the transactions provided for therein; and this Agreement, the
Underwriter's Warrant Agreement and the Warrant Agreement has been duly
authorized, executed and delivered by the Company. This Agreement, the
Underwriter's Warrant Agreement and the Warrant Agreement assuming due
authorization, execution and delivery by each other party hereto and thereto
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or contribution may be
limited by applicable law), and neither the Company's execution or delivery of
this Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement,
its performance hereunder or thereunder, its consummation of the transactions
contemplated herein or therein, or the conduct of its business as described in
the Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or will
constitute a default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company pursuant to the terms of, (A) the
certificate of incorporation or by-laws of the Company, (B) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (C) any statute, judgment, decree, order, rule
or regulation applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or body (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or any of
its activities or properties, except for conflicts, breaches, violations,
defaults, creations or impositions which do not and would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs, position, shareholder's equity, value, operations,
24
properties, business or results of operations of the Company.
(viii) except as described in the Prospectus, no consent, approval,
authorization or order, and no filing with, any court, regulatory body,
government agency or other body (other than such as may be required under Blue
Sky laws, as to which no opinion need be rendered) is required in connection
with the issuance of the Securities pursuant to the Prospectus and the
Registration Statement, the issuance of the Underwriter's Warrants, the
performance of this Agreement, the Underwriter's Warrant Agreement and the
Warrant Agreement and the transactions contemplated hereby and thereby;
(ix) the Company is not in breach of, or in default under, any term or provision
of any license, contract, indenture, mortgage, installment sale agreement, deed
of trust, lease, voting trust agreement, stockholders' agreement, partnership
agreement, note, loan or credit agreement or any other agreement or instrument
evidencing an obligation for borrowed money, or any other agreement or
instrument to which the Company is a party or by which the Company may be bound
or to which the property or assets (tangible or intangible) of the Company is
subject or affected, which could materially adversely affect the Company; and
the Company is not in violation of any term or provision of its Certificate of
Incorporation or By-Laws, or in violation of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation the result of which would
materially and adversely affect the condition, financial or otherwise, or the
earnings, business affairs, position, shareholders' equity, value operation,
properties, business or results of operations of the Company.
(x) the Company owns or possesses, free and clear of all liens or encumbrances
and rights thereto or therein by third parties, the requisite licenses or other
rights to use all trademarks, service marks, copyrights, service names, trade
names, patents, patent applications and licenses necessary to conduct its
business (including, without limitation any such licenses or rights described in
the Prospectus as being owned or possessed by the Company), and to the best of
such counsel's knowledge after reasonable investigation, there is no claim or
action by any person pertaining to, or proceeding, pending, or threatened, which
challenges the exclusive rights of the Company with respect to any trademarks,
service marks, copyrights, service names, trade names, patents, patent
applications and licenses used in the conduct of the Company's business
(including, without limitations, any such licenses or rights described in the
Prospectus as being owned or possessed by the Company).
(xi) the Company does not maintain, sponsor, or contribute to any ERISA Plans or
defined benefit plans, as defined in Section 3(35) of ERISA,
(xii) the Company's Registration Statement on Form 8-A under the Exchange Act
has become effective.
(xiii) such counsel has no information leading it to believe that the persons
listed under the caption "Principal Stockholders" in the Prospectus are not the
respective "beneficial owners" (as such phrase is defined in regulation 13d-3
under the Exchange Act) of the securities set forth
25
opposite their respective names thereunder as and to the extent set forth
therein;
(xiv) to such counsel's knowledge, except as described in the Prospectus, no
person, corporation, trust, partnership, association or other entity has the
right to include and/or register any securities of the Company in the
Registration Statement, require the Company to file any registration statement
or, if filed, to include any security in such registration statement;
(xv) to such counsel's knowledge, except as described in the Prospectus, there
are no claims, payments, issuances, arrangements or understandings for services
in the nature of a finder's or origination fee with respect to the sale of the
Public Offering Securities hereunder or the financial consulting arrangement
between the Underwriter and the Company, if any, or any other arrangements,
agreements, understandings, payments or issuances that may affect the
Underwriter' compensation, as determined by the NASD;
(xvi) the Lock-up Agreements are legal, valid and binding obligations of the
parties thereto, enforceable against each such party and any subsequent holder
of the securities subject thereto in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable); and
(xvii) all action under the Act necessary to make the public offering and
consummate the sale of the Securities as provided in this Agreement has been
taken by the Company. The provisions of the Certificate of Incorporation and
By-laws of the Company comply as to form in all material respects with the Act
and the Rules and Regulations.
Such counsel shall state that such counsel has participated in conferences with
officers and other representatives of the Company and representatives of the
independent public accountants for the Company, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Preliminary Prospectus, the Registration
Statement, the Prospectus, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which
leads counsel to believe that either the Registration Statement or any amendment
thereto, at the time such Registration Statement or amendment became effective
or the Preliminary Prospectus or Prospectus or amendment or supplement thereto
as of the date of such opinion contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or Prospectus).
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of
26
laws other than the laws of the United States and jurisdictions in which they
are admitted, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in form and
substance satisfactory to Underwriter's Counsel) of other counsel acceptable to
Underwriter's Counsel, familiar with the applicable laws; (B) as to matters of
fact, to the extent they deem proper, on certificates and written statements of
responsible officers of the Company and certificates or other written statements
of officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to
Underwriter's Counsel if requested. The opinion of such counsel for the Company
shall state that the opinion of any such other counsel is in form satisfactory
to such counsel and that the Underwriter and they are justified in relying
thereon.
At each Option Closing Date, if any, the Underwriter shall have received the
favorable opinion of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to the Company, dated the
Option Closing Date, addressed to the Underwriter and in form and substance
satisfactory to Underwriter's Counsel confirming as of such Option Closing Date
the statements made in its opinion delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing Date, if any,
Underwriter's Counsel shall have been furnished such documents, certificates and
opinions as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in subsection (c) of this Section 6,
or in order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or covenants of the Company herein contained.
(f) Prior to each of Closing Date and each Option Closing Date, if any, (i)
there shall have been no adverse change nor development involving a prospective
change in the condition, financial or otherwise, prospects, stockholders' equity
or the business activities of the Company, whether or not in the ordinary course
of business, from the latest dates as of which such condition is set forth in
the Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, (iii) the Company shall not be in default under any provision of any
instrument relating to any outstanding indebtedness; (iv) the Company shall not
have issued any securities (other than the Securities) or declared or paid any
dividend or made any distribution in respect of its capital stock of any class
and there shall not have been any change in the capital or any change in the
debt (long or short term) or liabilities or obligations of the Company
(contingent or otherwise); (v) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus (vi) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened (or circumstances giving rise to
same) against the Company, or affecting any of its properties or business before
or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
adversely affect the business, operations, management prospects or financial
condition or assets of the Company, except as set forth in the Registration
Statement and Prospectus: and (vii) no stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission.
27
(g) At each of the Closing Date and each Option Closing Date, if any, the
Underwriter shall have received a certificate of the principal executive officer
and the chief financial or chief accounting officer of the Company, dated the
Closing Date or Option Closing Date, as the case may be, to the effect that each
of such persons has carefully examined the Registration Statement, the
Prospectus and this Agreement, and that:
(i) The representations and warranties in this Agreement of the Company are true
and correct, as if made on and as of the Closing Date or the Option Closing
Date, as the case may be, and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this Agreement on its part
to be performed or satisfied at or prior to such Closing Date or Option Closing
Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration Statement or
any part thereof has been issued, and no proceedings for that purpose have been
instituted or are pending or, are contemplated or threatened under the Act;
(iii) The Registration Statement and the Prospectus and, if any, each amendment
and each supplement thereto, contain all statements and information required to
be included therein, and none of the Registration Statement, the Prospectus nor
any amendment or supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and neither the
Preliminary Prospectus or any supplement thereto included any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(iv) Since the dates as of which information is given in the Registration
Statement and the Prospectus, (A) there has not been any material change in the
shares of Common Stock or liabilities of the Company except as set forth in or
contemplated by the Prospectus; (B) there has not been any material adverse
change in the general affairs, management, business, financial condition or
results of operations of the Company, whether or not arising from transactions
in the ordinary course of business, as set forth in or contemplated by the
Prospectus; (C) the Company has not sustained any material loss or interference
with its business from any court or from legislative or other governmental
action, order or decree, whether foreign or domestic, or from any other
occurrence, not described in the Registration Statement and Prospectus; (D)
there has not occurred any event that makes untrue or incorrect in any material
respect any statement or information contained in the Registration Statement or
Prospectus or that is not reflected in the Registration Statement or Prospectus
but should be reflected therein in order to make the statements or information
therein, in light of the circumstances in which they were made, not misleading
in any material respect; (E) the Company has not incurred up to and including
the Closing Date or the Option Closing Date, as the case may be, other than in
the ordinary course of its business, any material liabilities or obligations,
direct or contingent; (F) the Company has not paid or declared any dividends or
other distributions on its capital stock; (G) the Company has not entered into
any transactions not in the ordinary course of business; (H) there has not been
any change in the capital stock or long-term debt
28
or any increase in the short-term borrowings (other than any increase in the
short-terms borrowings in the ordinary course of business) of the Company; (I)
the Company has not sustained any material loss or damage to its property or
assets, whether or not insured; and (J) there has occurred no event required to
be set forth in an amended or supplemented Prospectus which has not been set
forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(h) By the Closing Date, the Underwriter will have received clearance from the
NASD as to the amount of compensation allowable or payable to the Underwriter,
as described in the Registration Statement.
(i) At the time this Agreement is executed, the Underwriter shall have received
a letter, dated such date, addressed to the Underwriter in form and substance
satisfactory (including the non- material nature of the changes or decreases, if
any, referred to in clause (iii) below) in all respects to the Underwriter and
Underwriter's Counsel, from Wiss & Company, LLP:
(i) confirming that they are independent accountants with respect to the Company
within the meaning of the Act and the applicable Rules and Regulations;
(ii) stating that it is their opinion that the financial statements of the
Company included in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the Rules
and Regulations thereunder and that the Underwriter may rely upon the opinion of
Wiss & Company, LLP, with respect to the financial statements and supporting
schedules included in the Registration Statement;
(iii) stating that, on the basis of a limited review which included a reading of
the latest available unaudited interim financial statements of the Company (with
an indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders and
board of directors and the various committees of the boards of directors of the
Company, consultations with officers and other employees of the Company
responsible for financial and accounting matters and other specified procedures
and inquiries, nothing has come to their attention which would lead them to
believe that (A) the unaudited financial statements, if any, of the Company
included in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the Rules
and Regulations or are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements of the Company included in the
Registration Statement, or (B) at a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there has been any
change in the capital stock or long- term debt of the Company, or any decrease
in the stockholders' equity or net current assets or net assets of the Company
as compared with amounts shown in the September 30, 1996 balance sheet included
in the Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any change or decrease, setting forth
the amount of such change or
29
decrease;
(iv) setting forth, at a date not later than five (5) days prior to the date of
the Registration Statement, the amount of liabilities of the Company (including
a breakdown of commercial paper and notes payable to banks);
(v) stating that they have compared specific dollar amounts, numbers of shares,
percentages of revenues and earnings, statements and other financial information
pertaining to the Company set forth in the Prospectus in each case to the extent
that such amounts, numbers, percentages, statements and information may be
derived from the general accounting records, including work sheets, of the
Company and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures do not constitute
an examination in accordance with generally accepted auditing standards) set
forth in the letter and found them to be in agreement;
(vi) stating that they have in addition carried out certain specified
procedures, not constituting an audit, with respect to certain pro forma
financial information which is included in the Registration Statement and the
Prospectus and that nothing has come to their attention as a result of such
procedures that caused them to believe such unaudited pro forma financial
information does not comply in form in all respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of that information;
(vii) stating that they have not during the immediately preceding five (5) year
period brought to the attention of any of the Company's management any
"weakness," as defined in Statement of Auditing Standard No. 60 "Communication
of Internal Control Structure Related Matters Noted in an Audit," in any of the
Company's internal controls; and
(viii) statements as to such other matters incident to the transaction
contemplated hereby as the Underwriter may request.
(j) On or prior to the Closing Date and each Option Closing Date, if any, the
Underwriter shall have received from Wiss & Company, LLP, a letter, dated as of
the Closing Date or the Option Closing Date, as the case may be, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
subsection (i) of this Section, except that the specified date in the referred
to shall be a date not more than five days prior to the Closing Date or the
Option Closing Date, as the case may be, and, if the Company has elected to rely
on Rule 430A of the Rules and Regulations, to the further effect that they have
carried out procedures as specified in clause (v) of subsection (i) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Underwriter and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (v).
30
(k) On each of Closing Date and Option Closing Date, if any, there shall have
been duly tendered to the Underwriter for the several Underwriter's accounts the
appropriate number of Securities.
(l) No order suspending the sale of the Securities in any jurisdiction
designated by the Underwriter pursuant to subsection (e) of Section 4 hereof
shall have been issued on either the Closing Date or the Option Closing Date, if
any, and no proceedings for that purpose shall have been instituted or shall be
contemplated.
(m) On or before Closing Date, the Shares, the Common Stock and the Public
Warrants shall have been approved for quotation on the Nasdaq SmallCap Market
and shall have been authorized upon official notice of issuance for trading on
the BSE.
(n) On or before Closing Date, there shall have been delivered to the
Underwriter the Lock- up Agreements, in form and substance satisfactory to the
Underwriter.
(o) On or before the Closing Date, the Company shall have executed the
Underwriter's Warrant Agreement and the Warrant Agreement together with the
applicable Warrant Certificates, each in form and substance satisfactory to the
Underwriter.
(p) On or before the Closing Date the Underwriter shall have received executed
copies of the employment agreements and insurance policies referred to in
Section 1 (a) (xxxi) hereof, each to the satisfaction of the Underwriter.
If any condition to the Underwriter's obligations hereunder to be fulfilled
prior to or at the Closing Date or the relevant Option Closing Date, as the case
may be, is not so fulfilled, the Underwriter may terminate this Agreement or, if
the Underwriter so elects, it may waive any such conditions which have not been
fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of the Underwriter
(for purposes of this Section 7 "Underwriter" shall include the officers,
directors, partners, employees, agents and counsel of the Underwriter, including
specifically each person who may be substituted for an Underwriter as provided
in Section 11 hereof), and each person, if any, who controls the Underwriter
("controlling person") within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several (and actions in respect thereof),
whatsoever (including but not limited to any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever), as such are
incurred, to which the Underwriter or such controlling person may become subject
under the Act, the Exchange Act, or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
(i) in any
31
Preliminary Prospectus, the Registration Statement or the Prospectus (as from
time to time amended and supplemented); (ii) in any post-effective amendment or
amendments or any time new registration statement and prospectus in which is
included securities of the Company issued or issuable upon exercise of the
Securities; or (iii) in any application or other document or written
communication (in this Section 7 collectively called "Application") executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any securities commission or agency,
Nasdaq, the BSE or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to any Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment thereof or supplement thereto, or in
any Application, as the case may be. The indemnity agreement in this subsection
(a) shall be in addition to any liability which the Company may have at common
law or otherwise.
(b) the Underwriter agrees to indemnify and hold harmless the Company, each of
its directors, each of its officers who has signed the Registration Statement,
and each other person, if any, who controls the Company within the meaning of
the Act, to the same extent as the foregoing indemnity from the Company to the
Underwriter but only with respect to statements or omissions, if any, made in
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any Application made in reliance
upon, and in strict conformity with, written information furnished to the
Company with respect to the Underwriter by such Underwriter expressly for use in
such Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any such Application, provided
that such written information or omissions only pertain to disclosures in the
Preliminary Prospectus, the Registration Statement or Prospectus directly
relating to the transactions effected by the Underwriter in connection with this
offering. The Company acknowledges that the statements with respect to the
public offering of the Securities set forth under the heading "Underwriting" and
the stabilization legend in the Prospectus have been furnished by the
Underwriter expressly for use therein and constitute the only information
furnished in writing by or on behalf of the Underwriter for inclusion in the
Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, suit or proceeding, such indemnified
party shall, if a claim in respect thereof is to be made against one or more
indemnifying parties under this Section 7, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party or parties
of the commencement thereof, the indemnifying party or parties will be entitled
to participate therein, and to the extent it may elect
32
by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party. Notwithstanding
the foregoing, the indemnified party or parties shall have the right to employ
its or their own counsel in any such case but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties unless (i)
the employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action at the
expense of the indemnifying party, (ii) the indemnifying parties shall not have
employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses of one additional
counsel shall be borne by the indemnifying parties. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 7 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution in any case in which
(i) an indemnified party makes claim for indemnification pursuant to this
Section 7, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
this Section 7 provide for indemnification in such case, or (ii) contribution
under the Act may be required on the part of any indemnified party, then each
indemnifying party shall contribute to the amount paid as a result of such
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
(A) in such proportion as is appropriate to reflect the relative benefits
received by each of the contributing parties, on the one hand, and the party to
be indemnified on the other hand, from the offering of the Securities or (B) if
the allocation provided by clause (A) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is a contributing party
and the Underwriter are the indemnified party, the relative benefits received by
the Company, on the one hand, and the Underwriter, on the other, shall be deemed
to be in the same proportion as the total net proceeds from the offering of the
Public Offering Securities (before deducting expenses) bear to the total
underwriting discounts received by the Underwriter hereunder, in each case as
set forth in the table in the cover page of the Prospectus. Relative fault shall
be determined by reference to, among other
33
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, or by the Underwriter, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, expenses or liabilities (or
actions in respect thereof) referred to above in this subdivision (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subdivision (d) the Underwriter
shall not be required to contribute any amount in excess of the underwriting
discount applicable to the Securities purchased by the Underwriter hereunder. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 7,
each person, if any, who controls the Company within the meaning of the Act,
each officer of the Company who has signed the Registration Statement, and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to this subparagraph (d), Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect to which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have hereunder or otherwise than under this subparagraph (d), or to
the extent that such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto shall be
deemed to be representations, warranties and agreements at the Closing Date and
any Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the respective indemnity agreements
contained in Section 7 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter,
the Company, any controlling person of any Underwriter or the Company, and shall
survive termination of this Agreement or the issuance and deliver of the
Securities to the Underwriter and the Underwriter, as the case may be, for a
period of seven (7) years from the date hereof, except for Section 4(v), in
which case the period shall be eight (8) years.
9. Effective Date. This Agreement shall become effective at 10:00 a.m., New York
City time, on the next full business day following the date hereof, or at such
earlier time after the Registration Statement becomes effective as the
Underwriter, in it's discretion, shall release the Securities for the sale to
the public; provided, however, that the provisions of Sections 5, 7 and 10 of
this Agreement shall at all times be effective. For purposes of this Section 9,
the Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Underwriter of telegrams to
securities dealers releasing such shares for offering or the release by the
Underwriter
34
for publication of the first newspaper advertisement which is subsequently
published relating to the Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the Underwriter shall have the
right to terminate this Agreement, (i) if any domestic or international event or
act or occurrence has disrupted, or in the Underwriter's opinion will in the
immediate future disrupt the financial markets; or (ii) any material adverse
change in the financial markets shall have occurred; or (iii) if trading on the
New York Stock Exchange, the American Stock Exchange, or in the over-the-counter
market shall have been suspended, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required on the over-the-counter market by the NASD or by order of the
Commission or any other government authority having jurisdiction; or (iv) if the
United States shall have become involved in a war or major hostilities, or if
there shall have been an escalation in an existing war or major hostilities or a
national emergency shall have been declared in the United States; or (v) if a
banking moratorium has been declared by a state or federal authority; or (vi) if
a moratorium in foreign exchange trading has been declared; or (vii) if the
Company, shall have sustained a loss material or substantial to the Company by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall have been insured, will,
in the Underwriter's opinion, make it inadvisable to proceed with the delivery
of the Securities; or (vii) if there shall have been such a material adverse
change in the condition (financial or otherwise), business affairs or prospects
of the Company, whether or not arising in the ordinary course of business, which
would render, in the Underwriter's judgment, either of such parties unable to
perform satisfactorily its respective obligations as contemplated by this
Agreement or the Registration Statement, or such material adverse change in the
general market, political or economic conditions, in the United States or
elsewhere as in the Underwriter's judgment would make it inadvisable to proceed
with the offering, sale and/or delivery of the Securities.
(b) If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 10(a), the Company shall promptly reimburse and indemnify
the Underwriter for all of its actual out-of-pocket expenses, including the fees
and disbursements of counsel for the Underwriter in an amount not to exceed
$50,000 (less amounts previously paid pursuant to Section 5(c) above).
Notwithstanding any contrary provision contained in this Agreement, if this
Agreement shall not be carried out within the time specified herein, or any
extension thereof granted to the Underwriter, by reason of any failure on the
part of the Company to perform an undertaking or satisfy any condition of this
Agreement to be performed or satisfied by the Company (including, without
limitation, pursuant to Section 6 or Section 12) then, the Company shall
promptly reimburse and indemnify the Underwriter for all of its actual
out-of-pocket expenses, including the fees and disbursements of counsel for the
Underwriter (less amounts previously paid pursuant to Section 5 (c) above). In
addition, the Company shall remain liable for all Blue Sky counsel fees and
expenses and Blue Sky filing fees. Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any termination of this
Agreement (including, without limitation, pursuant to Sections
35
6, 10, 11 and 12 hereof), and whether or not this Agreement is otherwise carried
out, the provisions of Section 5 and Section 7 shall not be in any way affected
by such election or termination or failure to carry out the terms of this
Agreement or any part hereof.
11. Omitted
12. Default by the Company. If the Company shall fail at the Closing Date or any
Option Closing Date, as applicable, to sell and deliver the number of Public
Offering Securities which it is obligated to sell hereunder on such date, then
this Agreement shall terminate (or, if such default shall occur with respect to
any Option Securities to be purchased on any Option Closing Date, the
Underwriter may at the Underwriter's option, by notice from the Underwriter to
the Company, terminate the Underwriter's obligation to purchase Option
Securities from the Company on such date) without any liability on the part of
any non-defaulting party other than pursuant to Section 5, Section 7 and Section
10 hereof. No action taken pursuant to this Section shall relieve the Company
from liability, if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed to the
Underwriter at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, President, with a copy to Scheichet & ▇▇▇▇▇, P.C.,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. Notices
to the Company shall be directed to the Company at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President, with a copy to
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and shall be
binding upon, the Underwriter, the Company and the controlling persons,
directors and officers referred to in Section 7 hereof, and their respective
successors, legal Underwriter and assigns and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York without giving effect to
the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which taken together
shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement, the Underwriter's Warrant
Agreement and the Warrant Agreement constitute the entire agreement of the
parties hereto and supersede all
36
prior written or oral agreements, understandings and negotiations with respect
to the subject matter hereof. This Agreement may not be amended except in a
writing, signed by the Underwriter and the Company.
If the foregoing correctly sets forth the understanding between the Underwriter
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
GENISYS RESERVATION SYSTEMS, INC.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Confirmed and accepted as of
the date first above written
▇.▇. ▇▇▇▇▇ & Co., Inc.
By: ▇▇▇▇▇ ▇▇▇▇▇▇, Chairman