1,760,000 Units
(each Unit consisting of (i) one share of Class A Common Stock, par value $0.01
per share, and (ii) one redeemable Class A Warrant to purchase one share of
Class A Common Stock)
HealthCore Medical Solutions, Inc.
Underwriting Agreement
[__], 1997
X.X. Xxxxx Investment Banking Corp.
(as representative of the several underwriters
named in Schedule A attached hereto)
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 10005
HEALTHCORE MEDICAL SOLUTIONS, INC., a Delaware corporation
(the "Company"), proposes to issue and sell to the several underwriters named in
Schedule A attached hereto (collectively, the "Underwriters") for whom you are
acting as representative (the "Representative") pursuant to this Underwriting
Agreement (this "Agreement") an aggregate of One Million Seven Hundred Sixty
Thousand (1,760,000) Units, each unit being hereinafter referred to as a "Unit"
and consisting of (i) one share of class A common stock, par value $0.01 per
share ("Shares"), and (ii) one redeemable class A warrant ("Class A Warrants" or
"Warrants") to purchase one share of class A common stock at a price of Six
Dollars and Fifty Cents ($6.50) from _____, 1997) through [__], 2002. The
Warrants are subject to redemption, in certain instances commencing one (1) year
from the date of this Agreement. In addition, the Company proposes to grant to
the Underwriters the option referred to in Section 2(b) to purchase all or any
part of an aggregate of Two Hundred Sixty Four Thousand (264,000) additional
Units, subject to the right of the Representative to elect, in its sole
discretion, to exercise such option individually, and not as representative of
the several Underwriters. Unless the context otherwise indicates, the term
"Units" shall include the Two Hundred Sixty Four Thousand (264,000) additional
Units referred to above.
The aggregate of One Million Seven Hundred Sixty Thousand
(1,760,000) Units to be sold by the Company, together with all or any part of
the Two Hundred Sixty Four Thousand (264,000) Units which the Underwriters or
the Representative, on an individual basis, as the case may be, have the option
to purchase, and the Shares and the Warrants comprising such Units, are
herein called the "Units". The class A common stock of the Company to be
outstanding after giving effect to the sale of the Shares is herein called the
"Common Stock". The Shares and Warrants included in the Units (including the
Units which the Underwriters or the Representative, on an individual basis, as
the case may be, have the option to purchase) are herein collectively called the
"Securities".
You have advised the Company that you desire to purchase the
Units. The Company confirms the agreements made by it with respect to the
purchase of the Units by you as follows:
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement (File No. 333-28233) on Form SB-2
relating to the public offering of the Units, including a form of prospectus
subject to completion, copies of which have heretofore been delivered to you,
has been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission under the Act
and one or more amendments to such registration statement may have been so
filed. After the execution of this Agreement, the Company will file with the
Commission either (i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the Act,
either (A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Units that shall identify the Preliminary
Prospectus (as hereinafter defined) that it supplements containing such
information as is required or permitted by Rules 434, 430A and 424(b) under the
Act or (B) if the Company does not rely on Rule 434 under the Act, a prospectus
in the form most recently included in an amendment to such registration
statement (or, if no such amendment shall have been filed, in such registration
statement), with such changes or insertions as are required by Rule 430A under
the Act or permitted by Rule 424(b) under the Act and in the case of either
clause (i)(A) or (i)(B) of this sentence, as have been provided to and approved
by the Representative prior to the execution of this Agreement, or (ii) if such
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment has been
furnished to and approved by the Representative prior to the execution of this
Agreement. As used in this Agreement, the term "Registration Statement" means
such registration statement, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and including
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); the term
"Prospectus" means (A) if the Company relies on Rule 434 under the Act, the Term
Sheet relating to the Units that is first filed pursuant to Rule 424(b)(7) under
the Act, together with the Preliminary Prospectus identified therein that such
Term Sheet supplements; (B) if the Company does not rely on Rule 434 under the
Act, the
2
prospectus first filed with the Commission pursuant to Rule 424(b) under the Act
or (C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to said Rule 424(b), such term means
the prospectus included in the Registration Statement; except that if such
registration statement or prospectus is amended or such prospectus is
supplemented, after the effective date of such registration statement and prior
to the Option Closing Date (as hereinafter defined), the terms "Registration
Statement" and "Prospectus" shall include such registration statement and
prospectus as so amended, and the term "Prospectus" shall include the prospectus
as so supplemented, or both, as the case may be; and the term "Term Sheet" means
any term sheet that satisfies the requirements of Rule 434 under the Act. Any
reference to the "date" of a Prospectus that includes a Term Sheet shall mean
the date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. At the time the Registration
Statement becomes effective and at all times subsequent thereto up to and on the
Closing Date (as hereinafter defined) or the Option Closing Date, as the case
may be, (i) the Registration Statement and Prospectus will in all respects
conform to the requirements of the Act and the Rules and Regulations; and (ii)
neither the Registration Statement nor the Prospectus will include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make statements therein not misleading; provided,
however, that the Company makes no representations, warranties or agreements as
to information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Underwriters specifically for
use in the preparation thereof. It is understood that the statements set forth
in the Prospectus on page 2 with respect to stabilization, under the heading
"Risk Factors -- Possible Adverse Effect on the Liquidity of the Company's
Securities Due to Securities and Exchange Commission Investigation of the
Representative and Xxxxx & Co. and Recent Settlement by Xxxxx & Co. with NASD",
the first sentence under the heading "Risk Factors -Possible Restrictions on
Market-Making Activities in Company's Securities", under the heading
"Underwriting" and the identity of counsel to the Underwriters under the heading
"Legal Matters" constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Registration Statement and
Prospectus, as the case may be.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, with full power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus and is
duly qualified to do business as a foreign corporation and is in good standing
in all other jurisdictions in which the nature of its business or the character
or location of its properties requires such qualification, except where failure
to so qualify will not materially affect the Company's business, properties or
financial condition.
(d) The authorized, issued and outstanding capital stock of
the Company as of June 30, 1997 is as set forth in the Prospectus under
"Capitalization"; the shares of issued and outstanding capital stock of the
Company set forth thereunder have been duly authorized, validly issued and are
fully paid and non-assessable; except as set forth in the Prospectus, no
options,
3
warrants, or other rights to purchase, agreements or other obligations to issue,
or agreements or other rights to convert any obligation into, any shares of
capital stock of the Company have been granted or entered into by the Company;
and the capital stock conforms to all statements relating thereto contained in
the Registration Statement and Prospectus.
(e) The Units and the Shares are duly authorized, and when
issued and delivered pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights of
any security holder of the Company. The Warrants have been duly authorized and,
when issued and delivered pursuant to this Agreement, will have been duly
executed, issued and delivered and will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, except as
may be limited by bankruptcy, insolvency, moratorium or similar laws relating to
or affecting creditors' rights generally and by general principles of equity,
and entitled to the benefits provided by the warrant agreement pursuant to which
such Warrants are to be issued (the "Warrant Agreement"), which will be
substantially in the form filed as an exhibit to the Registration Statement. The
shares of Common Stock issuable upon exercise of the Warrants have been reserved
for issuance upon the exercise of the Warrants and when issued in accordance
with the terms of the Warrants and Warrant Agreement, will be duly and validly
authorized, validly issued, fully paid and non-assessable and free of preemptive
rights and no personal liability will attach to the ownership thereof. The
Warrant Agreement has been duly authorized and, when executed and delivered
pursuant to this Agreement, will have been duly executed and delivered and will
constitute the valid and legally binding obligation of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, moratorium or similar laws relating to or affecting creditors'
rights generally and by general principles of equity. The Warrants and the
Warrant Agreement conform to the respective descriptions thereof in the
Registration Statement and Prospectus. The Shares and the Warrants contained in
the Unit Purchase Option (as such term is defined in the Prospectus) have been
duly authorized and, when duly issued and delivered, such Warrants will
constitute valid and legally binding obligations of the Company enforceable in
accordance with their terms, except as may be limited by bankruptcy, insolvency,
moratorium or similar laws relating to or affecting creditors' rights generally
and by general principles of equity, and entitled to the benefits provided by
the Unit Purchase Option. The Shares included in the Unit Purchase Option (and
the shares of Common Stock issuable upon exercise of such Warrants) when issued
and sold in accordance with the terms of the Unit Purchase Option and the
Warrant Agreement, as the case may be, will be duly authorized, validly issued,
fully paid and non-assessable and free of preemptive rights and no personal
liability will attach to the ownership thereof.
(f) This Agreement, the Unit Purchase Option, the M/A
Agreement and the Escrow Agreement have been duly and validly authorized,
executed and delivered by the Company. The Company has full power and lawful
authority to authorize, issue and sell the Units to be sold by it hereunder on
the terms and conditions set forth herein, and no consent, approval,
authorization or other order of any governmental authority is required in
connection with such authorization, execution and delivery or with the
authorization, issue and sale of the Units or the Unit Purchase Option, except
such as may be required under the Act or state securities laws.
4
(g) Except as described in the Prospectus, the Company is not
in violation, breach or default of or under, and consummation of the
transactions herein contemplated and the fulfillment of the terms of this
Agreement will not conflict with, or result in a material breach or violation
of, any of the terms or provisions of, or constitute a material default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any of the property or assets of the Company pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement or other material agreement
or instrument to which the Company is a party or by which the Company may be
bound or to which any of the property or assets of the Company is subject, nor
will such action result in any violation of the provisions of the articles of
incorporation or the by-laws of the Company, as amended, or any statute or any
order, rule or regulation applicable to the Company of any court or of any
regulatory authority or other governmental body having jurisdiction over the
Company.
(h) Subject to the qualifications stated in the Prospectus,
the Company has good and marketable title to all properties and assets described
in the Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as are not materially significant or
important in relation to its business; all of the material leases and subleases
under which the Company is the lessor or sublessor of properties or assets or
under which the Company holds properties or assets as lessee or sublessee as
described in the Prospectus are in full force and effect, and, except as
described in the Prospectus, the Company is not in default in any material
respect with respect to any of the terms or provisions of any of such leases or
subleases, and no claim has been asserted by anyone adverse to rights of the
Company as lessor, sublessor, lessee or sublessee under any of the leases or
subleases mentioned above, or affecting or questioning the right of the Company
to continued possession of the leased or subleased premises or assets under any
such lease or sublease except as described or referred to in the Prospectus; and
the Company owns or leases all such properties described in the Prospectus as
are necessary to its operations as now conducted and, except as otherwise stated
in the Prospectus, as proposed to be conducted as set forth in the Prospectus.
(i) Xxxxxxx X. Xxxxxx & Company, LLP, who have given their
reports on certain financial statements filed and to be filed with the
Commission as a part of the Registration Statement, which are incorporated in
the Prospectus, are with respect to the Company, independent public accountants
as required by the Act and the Rules and Regulations.
(j) The financial statements, together with related notes, set
forth in the Prospectus (or if the Prospectus is not in existence, the most
recent Preliminary Prospectus) or the Registration Statement present fairly the
financial position and results of operations and changes in cash flow position
of the Company on the basis stated in the Registration Statement, at the
respective dates and for the respective periods to which they apply. Said
statements and related notes have been prepared in accordance with generally
accepted accounting principles applied on a basis which is consistent during the
periods involved. The information set forth under the captions "Dilution",
"Capitalization", and "Selected Financial Data" in the Prospectus fairly
present, on the basis stated in the Prospectus in all material respects, the
information included therein.
5
(k) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), the Company has not
incurred any liabilities or obligations, direct or contingent, not in the
ordinary course of business, or entered into any transaction not in the ordinary
course of business, which is material to the business of the Company, and there
has not been any change in the capital stock of, or any incurrence of short-term
or long-term debt by, the Company or any issuance of options, warrants or other
rights to purchase the capital stock of the Company or any adverse change or any
development involving, so far as the Company can now reasonably foresee a
prospective adverse change in the condition (financial or other), net worth,
results of operations, business, key personnel or properties of it which would
be material to the business or financial condition of the Company and the
Company has not become a party to, and neither the business nor the property of
the Company has become the subject of, any material litigation whether or not in
the ordinary course of business.
(l) Except as set forth in the Prospectus, there is not now
pending or, to the knowledge of the Company, threatened, any action, suit or
proceeding to which the Company is a party before or by any court or
governmental agency or body, which might result in any material adverse change
in the condition (financial or other), business prospects, net worth, or
properties of the Company, nor are there any actions, suits or proceedings
related to environmental matters or related to discrimination on the basis of
age, sex, religion or race; and no labor disputes involving the employees of the
Company exist or are imminent which might be expected to adversely affect the
conduct of the business, property or operations or the financial condition or
results of operations of the Company.
(m) Except as disclosed in the Prospectus, the Company has
filed all necessary federal, state and foreign income and franchise tax returns
and has paid all taxes shown as due thereon; and there is no tax deficiency
which has been or to the knowledge of the Company might be asserted against the
Company.
(n) Except as described in the Prospectus, the Company has all
licenses, permits and other governmental authorizations currently required for
the conduct of its business or the ownership of its properties as described in
the Prospectus and is in all material respects complying therewith and owns or
possesses adequate rights to use all material patents, patent applications,
trademarks, copyrights, service marks, trade-names, trademark registrations,
service xxxx registrations, copyrights and licenses necessary for the conduct of
such business and had not received any notice of conflict with the asserted
rights of others in respect thereof. To the best knowledge of the Company, none
of the activities or business of the Company are in violation of, or cause the
Company to violate, any law, rule, regulation or order of the United States, any
state, county or locality, or of any agency or body of the United States or of
any state, county or locality, the violation of which would have a material
adverse impact upon the condition (financial or otherwise), business, property,
prospective results of operations, or net worth of the Company.
(o) The Company has not, directly or indirectly, at any time
(i) made any
6
contributions to any candidate for political office, or failed to disclose fully
any such contribution in violation of law or (ii) made any payment to any state,
federal or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments or contributions
required or allowed by applicable law. The Company's internal accounting
controls and procedures are sufficient to cause the Company to comply in all
material respects with the Foreign Corrupt Practices Act of 1977, as amended.
(p) On the Closing Dates (hereinafter defined) all transfer or
other taxes, (including franchise, capital stock or other tax, other than income
taxes, imposed by any jurisdiction) if any, which are required to be paid in
connection with the sale and transfer of the Units to the Underwriters hereunder
will have been fully paid or provided for by the Company and all laws imposing
such taxes will have been fully complied with.
(q) All contracts and other documents of the Company which
are, under the Rules and Regulations, required to be filed as exhibits to the
Registration Statement have been so filed.
(r) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Units hereby.
(s) The Company has no subsidiaries.
(t) The Company has not entered into any agreement pursuant to
which any person is entitled either directly or indirectly to compensation from
the Company for services as a finder in connection with the proposed public
offering.
(u) Except as previously disclosed in writing by the Company
to the Representative, no officer, director or stockholder of the Company has
any affiliation or association with any member of the National Association of
Securities Dealers Inc. ("NASD").
(v) The Company is not, and upon receipt of the proceeds from
the sale of the Units will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
(w) The Company has not distributed and will not distribute
prior to the First Closing Date any offering material in connection with the
offering and sale of the Units other than the Preliminary Prospectus,
Prospectus, the Registration Statement or the other materials permitted by the
Act, if any.
(x) The conditions for use of Form SB-2, as set forth in the
General Instructions thereto, have been satisfied.
7
(y) There are no business relationships or related-party
transactions of the nature described in Item 404 of Regulation S-B involving the
Company and any person described in such Item that are required to be disclosed
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and that have not been so disclosed.
(z) The Company has complied with all provisions of Section
517.075 Florida Statutes relating to doing business with the government of Cuba
or with any person or affiliate located in Cuba.
2. Purchase, Delivery and Sale of the Units.
(a) Subject to the terms and conditions of this Agreement, and
upon the basis of the representations, warranties, and agreements herein
contained, the Company agrees to issue and sell to the Underwriters, and each
Underwriter agrees, severally and not jointly, to buy from the Company at $[__]
per Unit, at the place and time hereinafter specified, the number of Units set
forth opposite the name of such Underwriter in Schedule A attached hereto (the
"First Units") plus any additional Units which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 9 hereof. The First
Units shall consist of One Million Seven Hundred Sixty Thousand (1,760,000)
Units to be purchased from the Company. Delivery of the First Units against
payment therefor shall take place at the offices of X.X. Xxxxx Investment
Banking Corp., 00 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or at such
other place as may be designated by agreement between you and the Company) at
10:00 a.m., New York time, on [__], 1997, or at such later time and date as you
may designate, such time and date of payment and delivery for the First Units
being herein called the "First Closing Date".
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company hereby grants an option to the Underwriters (or,
at the Representative's option to the Representative, individually) to purchase
all or any part of an aggregate of an additional 264,000 Units at the same price
per Unit as the Underwriters shall pay for the First Units being sold pursuant
to the provisions of subsection (a) of this Section 2 (such additional Units
being referred to herein as the "Option Units"). This option may be exercised
within 45 days after the effective date of the Registration Statement upon
notice by the Representative to the Company advising as to the amount of Option
Units as to which the option is being exercised, the names and denominations in
which the certificates for such Option Units are to be registered and the time
and date when such certificates are to be delivered. Such time and date shall be
determined by the Representative, but shall not be earlier than four nor later
than ten full business days after the exercise of said option, nor in any event
prior to the First Closing Date, and such time and date is referred to herein as
the "Option Closing Date". Delivery of the Option Units against payment therefor
shall take place at the offices of X.X. Xxxxx Investment Banking Corp., 00 Xxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The number of Option Units to be
purchased by each Underwriter, if any, shall bear the same percentage to the
total number of Option Units being purchased by the several Underwriters
pursuant to this subsection (b) as the number of Units such Underwriter is
purchasing bears to the total
8
number of the First Units being purchased pursuant to subsection (a) of this
Section 2, as adjusted, in each case by the Representative in such manner as the
Representative may deem appropriate. The Option granted hereunder may be
exercised only to cover over-allotments in the sale by the Underwriters of First
Units referred to in subsection (a) above. In the event the Company declares or
pays a dividend or distribution on its Common Stock, whether in the form of
cash, shares of Common Stock or any other consideration, prior to the Option
Closing Date, such dividend or distribution shall also be paid on the Option
Units on the Option Closing Date.
(c) The Company will make the certificates for the securities
comprising the Units to be purchased by the Underwriters hereunder available to
you for checking at least two full business days prior to the First Closing Date
or the Option Closing Date (which are collectively referred to herein as the
"Closing Dates"). The certificates shall be in such names and denominations as
you may request, at least two full business days prior to the Closing Dates.
Time shall be of the essence and delivery at the time and place specified in
this Agreement is a further condition to the obligations of the Underwriters.
Definitive certificates in negotiable form for the Units to be purchased by the
Underwriters hereunder will be delivered by the Company to you for the accounts
of the Underwriters against payment of the respective purchase prices by the
Underwriters, by certified or bank cashier's checks or, at the Representative's
option, by wire transfer in New York Clearing House funds, payable to the order
of the Company. In addition, in the event the Underwriters or the
Representative, on an individual basis, as the case may be, exercise the option
to purchase from the Company all or any portion of the Option Units pursuant to
the provisions of subsection (b) above, payment for such Units shall be made to
or upon the order of the Company by certified or bank cashier's checks or, at
the Representative's option, by wire transfer payable in New York Clearing House
funds at the offices of X.X. Xxxxx Investment Banking Corp., 00 Xxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at the time and date of delivery of such Units
as required by the provisions of subsection (b) above, against receipt of the
certificates for such Units by the Representative for the respective accounts of
the Underwriters registered in such names and in such denominations as the
Representative may request. It is understood that you, individually and not as
Representative of the several Underwriters, may (but shall not be obligated to)
make any and all payments required pursuant to this Section 2 on behalf of any
Underwriters whose check or checks shall not have been received by the
Representative at the time of delivery of the Units to be purchased by such
Underwriter or Underwriters. Any such payment by you shall not relieve any such
Underwriter or Underwriters of any of its or their obligations hereunder. It is
also understood that you individually rather than all of the Underwriters may
(but shall not be obligated to) purchase the Option Units referred to in
subsection (b) of this Section 2, but only to cover overallotments. It is
understood that the Underwriters propose to offer the Units to be purchased
hereunder to the public upon the terms and conditions set forth in the
Registration Statement, after the Registration Statement becomes effective.
3. Covenants of the Company. The Company covenants and agrees
with the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement to
9
become effective as promptly as possible. If required, the Company will file the
Prospectus or any Term Sheet that constitutes a part thereof and any amendment
or supplement thereto with the Commission in the manner and within the time
period required by Rules 434 and 424(b) under the Act. Upon notification from
the Commission that the Registration Statement has become effective, the Company
will so advise you and will not at any time, whether before or after the
effective date, file the Prospectus, Term Sheet or any amendment to the
Registration Statement or supplement to the Prospectus of which you shall not
previously have been advised and furnished with a copy or to which you or your
counsel shall have objected in writing or which is not in compliance with the
Act and the Rules and Regulations. At any time prior to the later of (A) the
completion by all of the Underwriters of the distribution of the Units
contemplated hereby (but in no event more than nine months after the date on
which the Registration Statement shall have become or been declared effective)
and (B) 25 days after the date on which the Registration Statement shall have
become or been declared effective, the Company will prepare and file with the
Commission, promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus which, in your opinion, may be necessary or
advisable in connection with the distribution of the Units. As soon as the
Company is advised thereof, the Company will advise you, and confirm the advice
in writing, of the receipt of any comments of the Commission, of the
effectiveness of any post-effective amendment to the Registration Statement, of
the filing of any supplement to the Prospectus or any amended Prospectus, of any
request made by the Commission for amendment of the Registration Statement or
for supplementing of the Prospectus or for additional information with respect
thereto, of the issuance by the Commission or any state or regulatory body of
any stop order or other order or threat thereof suspending the effectiveness of
the Registration Statement or any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the Units
for offering in any jurisdiction, or of the institution of any proceedings for
any of such purposes, and will use its best efforts to prevent the issuance of
any such order, and, if issued, to obtain as soon as possible the lifting
thereof. The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company authorizes
the Underwriters and dealers to use the Prospectus in connection with the sale
of the Units for such period as in the opinion of counsel to the Underwriters
the use thereof is required to comply with the applicable provisions of the Act
and the Rules and Regulations. In case of the happening, at any time within such
period as a Prospectus is required under the Act to be delivered in connection
with sales by an underwriter or dealer of any event of which the Company has
knowledge and which materially affects the Company or the securities of the
Company, or which in the opinion of counsel for the Company or counsel for the
Underwriters should be set forth in an amendment of the Registration Statement
or a supplement to the Prospectus in order to make the statements therein not
then misleading, in light of the circumstances existing at the time the
Prospectus is required to be delivered to a purchaser of the Units or in case it
shall be necessary to amend or supplement the Prospectus to comply with law or
with the Rules and Regulations, the Company will notify you promptly and
forthwith prepare and furnish to you copies of such amended Prospectus or of
such supplement to be attached to the Prospectus, in such quantities as you may
reasonably request, in order that the Prospectus, as so amended or supplemented,
will not contain any untrue statement of a material fact or omit to state any
material facts necessary in order to make the statements in the
10
Prospectus, in the light of the circumstances under which they are made, not
misleading. The preparation and furnishing of any such amendment or supplement
to the Registration Statement or amended Prospectus or supplement to be attached
to the Prospectus shall be without expense to the Underwriters, except that in
case any Underwriter is required, in connection with the sale of the Units to
deliver a Prospectus nine months or more after the effective date of the
Registration Statement, the Company will upon request of and at the expense of
the applicable Underwriter, amend or supplement the Registration Statement and
Prospectus and furnish the applicable Underwriter with reasonable quantities of
prospectuses complying with Section 10(a)(3) of the Act. The Company will comply
with the Act, the Rules and Regulations and the Securities Exchange Act of 1934
and the rules and regulations thereunder in connection with the offering and
issuance of the Units.
(b) The Company will use its best efforts to qualify to
register the Units for sale under the securities or "blue sky" laws of such
jurisdictions as the Representative may designate and will make such
applications and furnish such information as may be required for that purpose
and to comply with such laws, provided the Company shall not be required to
qualify as a foreign corporation or a dealer in securities or to execute a
general consent of service of process in any jurisdiction in any action other
than one arising out of the offering or sale of the Units. The Company will,
from time to time, prepare and file such statements and reports as are or may be
required to continue such qualification in effect for so long a period as the
Representative may reasonably request.
(c) If the sale of the Units provided for herein is not
consummated for any reason caused by the Company, the Company shall pay all
costs and expenses incident to the performance of the Company's obligations
hereunder, including but not limited to, all of the expenses itemized in Section
8, including the accountable out-of-pocket expenses of the Representative.
(d) The Company will use its best efforts to (i) cause a
registration statement under the Securities Exchange Act of 1934 to be declared
effective concurrently with the completion of this offering and will notify the
Representative in writing immediately upon the effectiveness of such
registration statement, and (ii) if requested by the Representative, obtain a
listing on the Nasdaq Small Cap Market and to obtain and keep current a listing
in the Standard & Poors or Xxxxx'x Industrial OTC Manual.
(e) For so long as the Company is a reporting company under
either Section 12(g) or 15(d) of the Securities Exchange Act of 1934, the
Company, at its expense, will furnish to its stockholders an annual report
(including financial statements audited by independent public accountants), in
reasonable detail and at its expense, will furnish to you during the period
ending five (5) years from the date hereof, (i) as soon as practicable after the
end of each fiscal year, a balance sheet of the Company and any of its
subsidiaries as at the end of such fiscal year, together with statements of
income, surplus and cash flow of the Company and any subsidiaries for such
fiscal year, all in reasonable detail and accompanied by a copy of the
certificate or report thereon of independent accountants; (ii) as soon as
practicable after the end of each of the first three fiscal
11
quarters of each fiscal year, consolidated summary financial information of the
Company for such quarter in reasonable detail; (iii) as soon as they are
available, a copy of all reports (financial or other) mailed to security
holders; (iv) as soon as they are available, a copy of all non-confidential
reports and financial statements furnished to or filed with the Commission or
any securities exchange or automated quotation system on which any class of
securities of the Company is listed; and (v) such other information as you may
from time to time reasonably request.
(f) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (e) above will
be on a consolidated basis to the extent the accounts of the Company and its
subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
(g) The Company will deliver to you at or before the First
Closing Date two signed copies of the Registration Statement including all
financial statements and exhibits filed therewith, and of all amendments
thereto, and will deliver to the Underwriters such number of conformed copies of
the Registration Statement, including such financial statements but without
exhibits, and of all amendments thereto, as the Underwriters may reasonably
request. The Company will deliver to or upon the order of the Underwriters, from
time to time until the effective date of the Registration Statement, as many
copies of any Preliminary Prospectus filed with the Commission prior to the
effective date of the Registration Statement as the Underwriters may reasonably
request. The Company will deliver to the Underwriters on the effective date of
the Registration Statement and thereafter for so long as a Prospectus is
required to be delivered under the Act, from time to time, as many copies of the
Prospectus, in final form, or as thereafter amended or supplemented, as the
Underwriters may from time to time reasonably request. The Company, not later
than (i) 5:00 p.m., New York City time, on the date of determination of the
public offering price, if such determination occurred at or prior to 12:00 noon,
New York City time, on such date or (ii) 6:00 p.m., New York City time, on the
business day following the date of determination of the public offering price,
if such determination occurred after 12:00 noon, New York City time, on such
date, will deliver to the Underwriters, without charge, as many copies of the
Prospectus and any amendment or supplement thereto as the Underwriters may
reasonably request for purposes of confirming orders that are expected to settle
on the First Closing Date.
(h) The Company will make generally available to its security
holders and to the registered holders of its Warrants and deliver to you as soon
as it is practicable to do so but in no event later than 90 days after the end
of twelve months after its current fiscal quarter, an earnings statement (which
need not be audited) covering a period of at least twelve (12) consecutive
months beginning after the effective date of the Registration Statement, which
shall satisfy the requirements of Section 11(a) of the Act.
(i) The Company will apply the net proceeds from the sale of
the Units for the purposes set forth under "Use of Proceeds" in the Prospectus,
and will file such reports with the Commission with respect to the sale of the
Units and the application of the proceeds therefrom as may be required pursuant
to Rule 463 under the Act.
12
(j) The Company will, promptly upon your request, prepare and
file with the Commission any amendments or supplements to the Registration
Statement, Preliminary Prospectus or Prospectus and take any other action, which
in the reasonable opinion of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel to
the Underwriters, may be reasonably necessary or advisable in connection with
the distribution of the Units, and will use its best efforts to cause the same
to become effective as promptly as possible.
(k) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Unit Purchase Option outstanding from time to time.
(l) For a period of thirteen (13) months from the First
Closing Date, no officer, director or stockholder of the Company will directly
or indirectly, offer, sell (including any short sale), grant any option for the
sale of, acquire any option to dispose of, or otherwise dispose of any shares of
Common Stock without the prior written consent of the Representative.
(m) Prior to completion of this offering, the Company will
make all filings required, including registration under the Securities Exchange
Act of 1934, to obtain the listing of the Units, Common Stock, and Warrants on
the Nasdaq Small Cap Market (or a listing on such other market or exchange as
the Representative consents to), and will effect and use its best efforts to
maintain such listing for at least five years from the date of this Agreement.
(n) The Company and each of the beneficial owners listed under
the heading "Principal Stockholders" in the Prospectus (the "Principal
Stockholders") represents that it or he has not taken and agree that it or he
will not take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Units, Shares or the Warrants
or to facilitate the sale or resale of the Securities.
(o) On the Closing Date and simultaneously with the delivery
of the Units, the Company shall execute and deliver to you the Unit Purchase
Option. The Unit Purchase Option will be substantially in the form of the Unit
Purchase Option filed as an Exhibit to the Registration Statement.
(p) Without the prior written consent of the Representative,
(i) during the eighteen (18) month period commencing on the date of this
Agreement, the Company will not grant options to purchase shares of Common Stock
at an exercise price less than the greater of (x) the initial public offering
price of the Units (without allocating any value to the Warrants) or (y) the
fair market value of the Common Stock on the date of grant; (ii) during the six
month period commencing on the date of this Agreement, grant options to any
current officer of the Company; (iii) during the three year period commencing on
the date of this Agreement, offer or sell any of its securities pursuant to
Regulation S under the Act; (iv) grant registration rights to any person which
are exercisable sooner than thirteen (13) months from the First Closing Date;
(v) issue any additional securities which have
13
per share voting rights greater than the voting rights of the Shares (or take
any corporate action which would have this effect) or (vi) during the eighteen
(18) month period commencing on the date of this Agreement, enter into any
agreement or arrangement with any investment banking firm other than the
Representative relating to investment banking, corporate finance, merger and
acquisition or other similar advisory or consulting services.
(q) Xxxx X. Xxxxx shall be Chairman and Chief Executive
Officer of the Company on the Closing Dates. The Company has obtained key person
life insurance on the life of Xxxx X. Xxxxx in an amount of not less than Two
Million Dollars ($2,000,000) and will use its best efforts to maintain such
insurance during the five year period commencing with the First Closing Date
unless his employment with the Company is earlier terminated. In such event, the
Company will obtain a comparable policy on the life of his successor for the
balance of the five year period. For a period of thirteen months from the First
Closing Date, the compensation of the executive officers of the Company shall
not be increased from the compensation levels disclosed in the Prospectus.
(r) On the Closing Date and simultaneously with the delivery
of the Units the Company shall execute and deliver to you, individually and not
as representative of the Underwriters, an agreement with you regarding mergers,
acquisitions, joint ventures and certain other forms of transactions, in the
form previously delivered to the Company by you (the "M/A Agreement").
(s) So long as any Warrants are outstanding, the Company shall
use its best efforts to cause post-effective amendments to the Registration
Statement to become effective in compliance with the Act and without any lapse
of time between the effectiveness of any such post-effective amendments and
cause a copy of each Prospectus, as then amended, to be delivered to each holder
of record of a Warrant and to furnish to each Underwriter and dealer as many
copies of each such Prospectus as such Underwriter or dealer may reasonably
request. The Company shall not call for redemption any of the Warrants unless a
registration statement covering the securities underlying the Warrants has been
declared effective by the Commission and remains current at least until the date
fixed for redemption. In addition, for so long as any Warrant is outstanding,
the Company will promptly notify the Representative of any material change in
the business, financial condition or prospects of the Company.
(t) Upon the exercise of any Warrant or Warrants after [__],
1998, the Company will pay X.X. Xxxxx Investment Banking Corp. individually and
not as representative of the Underwriters, a fee of five percent (5%) of the
aggregate exercise price of the Warrants, of which a portion may be reallowed to
the dealer who solicited the exercise (which may also be the X.X. Xxxxx
Investment Banking Corp.) if (i) the market price of the Company's Common Stock
is greater than the exercise price of the Warrants on the date of exercise; (ii)
the exercise of the Warrant was solicited by a member of the National
Association of Securities Dealers, Inc., (iii) the Warrant Holder designates in
writing that the exercise of the Warrant was solicited by a member of the NASD
and designates in writing the broker-dealer to receive compensation for such
exercise; (iv) the Warrant is not held in a discretionary account; (v) the
disclosure of compensation
14
arrangements has been made in documents provided to customers, both as part of
the original offering and at the time of exercise, and (vi) the solicitation of
exercise of the Warrant was not in violation of Regulation M promulgated under
the Securities Exchange Act of 1934, as amended. The Company agrees not to
solicit the exercise of any Warrants other than through the X.X. Xxxxx
Investment Banking Corp. and will not authorize any other dealer to engage in
such solicitation without the prior written consent of the X.X. Xxxxx Investment
Banking Corp..
(u) For a period of five (5) years from the Effective Date the
Company (i) at its expense, shall cause its regularly engaged independent
certified public accountants to review (but not audit) the Company's financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
10-Q quarterly report and the mailing of quarterly financial information to
stockholders and (ii) shall not change its accounting firm without the prior
written consent of the Chairman or the President of the Representative.
(v) As promptly as practicable after the Closing Date, the
Company will prepare, at its own expense, hard cover "bound volumes" relating to
the offering, and will distribute at least four of such volumes to the
individuals designated by the Representative or counsel to the Representative.
(w) For a period of five years from the First Closing Date (i)
the Representative shall have the right, but not the obligation, to designate
one director of the Board of Directors of the Company and (ii) the Company shall
engage a public relations firm acceptable to the Representative.
(x) The Company shall, for a period of six years after date of
this Agreement, submit which reports to the Secretary of the Treasury and to
stockholders, as the Secretary may require, pursuant to Section 1202 of the
Internal Revenue Code, as amended, or regulations promulgated thereunder, in
order for the Company to qualify as a "small business" so that stockholders may
realize special tax treatment with respect to their investment in the Company.
4. Conditions of Underwriters Obligation. The obligations of
the Underwriters to purchase and pay for the Units which it has agreed to
purchase hereunder, are subject to the accuracy (as of the date hereof, and as
of the Closing Dates) of and compliance with the representations and warranties
of the Company herein, to the performance by the Company of its obligations
hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and
you shall have received notice thereof not later than 10:00 A.M., New York time,
on the date on which the amendment to the registration statement originally
filed with respect to the Units or to the Registration Statement, as the case
may be, containing information regarding the initial public offering price of
the Units has been filed with the Commission, or such later time and date as
shall have been agreed to by the Representative; if required, the Prospectus or
any Term Sheet that constitutes a part thereof and any amendment or supplement
thereto shall have been filed with the
15
Commission in the manner and within the time period required by Rule 434 and
424(b) under the Act; on or prior to the Closing Dates no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for that or a similar purpose shall have been instituted or shall be
pending or, to your knowledge or to the knowledge of the Company, shall be
contemplated by the Commission; any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel to the
Underwriters ("PHJ&W");
(b) At the First Closing Date, you shall have received the
opinion, together with copies of such opinion for the Underwriters, dated as of
the First Closing Date, of Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel for the
Company, in form and substance satisfactory to counsel for the Underwriters, to
the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own its properties and
conduct its business as described in the Registration Statement and Prospectus
and is duly qualified or licensed to do business as a foreign corporation and is
in good standing in Missouri and in each other jurisdiction in which the
ownership or leasing of its properties or conduct of its business requires such
qualification, except where the failure to so qualify will not have a material
adverse affect on the business of the Company;
(ii) to the best knowledge of such counsel, (a) the
Company has obtained all licenses, permits and other governmental authorizations
necessary to the conduct of its business as described in the Prospectus, (b)
such licenses, permits and other governmental authorizations obtained are in
full force and effect, and (c) the Company is in all material respects complying
therewith;
(iii) the authorized capitalization of the Company as
of June 30, 1997 is as set forth under "Capitalization" in the Prospectus; all
shares of the Company's outstanding stock requiring authorization for issuance
by the Company's board of directors have been duly authorized, validly issued,
are fully paid and non-assessable and conform to the description thereof
contained in the Prospectus to the best of such counsel's knowledge, the
outstanding shares of Common Stock of the Company have not been issued in
violation of the preemptive rights of any shareholder and the shareholders of
the Company do not have any preemptive rights or other rights to subscribe for
or to purchase, nor are there any restrictions upon the voting or transfer of
any of the Stock; the Common Stock, the Warrants, the Unit Purchase Option and
the Warrant Agreement conform as to legal matters in all material respects to
the respective descriptions thereof contained in the Prospectus; the Shares have
been, and the shares of Common Stock to be issued upon exercise of the Warrants
and the Unit Purchase Option, upon issuance in accordance with the terms of such
Warrants, the Warrant Agreement and Unit Purchase Option have been duly
authorized and, when issued and delivered, will be duly and validly issued,
fully paid, non-assessable, free of preemptive rights and no personal liability
will attach to the ownership thereof; a sufficient number of shares of Common
Stock has been reserved for issuance upon exercise of the Warrants and Unit
Purchase
16
Option and to the best of such counsel's knowledge, neither the filing of the
Registration Statement nor the offering or sale of the Units as contemplated by
this Agreement gives rise to, any registration rights or other rights, other
than those which have been waived or satisfied for or relating to the
registration of any shares of Common Stock;
(iv) this Agreement, the Unit Purchase Option, the
Warrant Agreement and the M/A Agreement have been duly and validly authorized,
executed and delivered by the Company and, assuming due execution by each other
party hereto or thereto, each constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its respective
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law;
(v) the certificates evidencing the shares of Common
Stock are in valid and proper legal form; the Warrants will be exercisable for
shares of Common Stock of the Company in accordance with the terms of the
Warrants and at the prices therein provided for;
(vi) delivery of certificates for the Securities
underlying the Units, upon payment therefor by the Underwriters as provided in
the Underwriting Agreement, will transfer valid title to such Securities to the
Underwriters; and, upon payment for such Securities, the Underwriters will
acquire such Securities free and clear of any liens;
(vii) such counsel knows of no pending or threatened
legal or governmental proceedings to which the Company is a party which could
materially adversely affect the business, property, financial condition or
operations of the Company; or which question the validity of the Securities,
this Agreement, the Warrant Agreement, the Unit Purchase Option or the M/A
Agreement, or of any action taken or to be taken by the Company pursuant to this
Agreement, the Warrant Agreement, the Unit Purchase Option or the M/A Agreement;
and no such proceedings are known to such counsel to be contemplated against the
Company; to such counsel's knowledge there are no governmental proceedings or
regulations required to be described or referred to in the Registration
Statement which are not so described or referred to;
(viii) to such counsel's knowledge the Company is not
in violation of or default under, nor will the execution and delivery of this
Agreement, the Unit Purchase Option, the Warrant Agreement or the M/A Agreement,
and the incurrence of the obligations herein and therein set forth and the
consummation of the transactions herein or therein contemplated, result in a
breach or violation of, or constitute a default under the certificate of
incorporation or by-laws, in the performance or observance of any material
obligations, agreement, covenant or condition contained in any bond, debenture,
note or other evidence of indebtedness or in any material contract, indenture,
mortgage, loan agreement, lease, joint venture or other agreement or instrument
to which the Company is a party or by which it or any of its properties may be
bound or in violation of any material order, rule, regulation, writ, injunction,
or decree of any government, governmental
17
instrumentality or court, domestic or foreign, the effect of which default,
breach or violation would be material to the Company;
(ix) the Registration Statement has become effective
under the Act, and to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for that purpose have been instituted or are pending before, or
threatened by, the Commission; the Registration Statement and the Prospectus
(except for the financial statements and other financial data contained therein,
or omitted therefrom, as to which such counsel need express no opinion) comply
as to form in all material respects with the applicable requirements of the Act
and the Rules and Regulations;
(x) such counsel has participated in the preparation
of the Registration Statement and the Prospectus and, although such counsel did
not independently verify, and are not passing upon and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus, based upon such
participation (relying as to materiality to a large extent upon the certificates
of officers and other representatives of the Company), nothing has come to the
attention of such counsel to cause such counsel to have reason to believe that
the Registration Statement or any amendment thereto at the time it became
effective contained any untrue statement of a material fact required to be
stated therein or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any supplement thereto contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make statements
therein, in light of the circumstances under which they were made, not
misleading (except, in the case of both the Registration Statement and any
amendment thereto and the Prospectus and any supplement thereto, for the (1)
financial statements, notes thereto and other financial information and
schedules contained therein, (2) matters relating to proprietary rights or
intellectual property or (3) matters relating to government regulatory matters
relating to the development and potential marketing and sale of the Company's
products as to all of which such counsel need express no opinion);
(xi) all descriptions in the Registration Statement
and the Prospectus, and any amendment or supplement thereto, of contracts and
other documents are accurate and fairly summarize in all material respects the
information required to be shown, and such counsel is familiar with all
contracts and other documents referred to in the Registration Statement and the
Prospectus and any such amendment or supplement or filed as exhibits to the
Registration Statement, and such counsel does not know of any contracts or
documents of a character required to be summarized or described therein or to be
filed as exhibits thereto which are not so summarized, described or filed;
(xii) no authorization, approval, consent, or license
of any governmental or regulatory authority or agency is necessary in connection
with the authorization, issuance, transfer, sale or delivery of the Units by the
Company, in connection with the execution, delivery and performance of this
Agreement by the Company or in connection with the taking of any action
contemplated herein, or the issuance of the Unit Purchase Option or the
Securities underlying the Unit Purchase Option, other than registrations or
qualifications of the Units under applicable state
18
or foreign securities or Blue Sky laws and registration under the Act;
(xiii) the statements in the Registration Statement
under the captions "Business," "Management," Shares Eligible for Future Sale,"
"Certain Transactions," and "Description of Securities" have been reviewed by
such counsel and insofar as they refer to descriptions of agreements, statements
of law, descriptions of statutes, licenses, rules or regulations or legal
conclusions, are correct in all material respects;
(xiv) based solely upon advice of representatives of
Nasdaq, the Units, the Common Stock and the Warrants have been duly authorized
for quotation on the Nasdaq Small Cap Market; and
(xv) to such counsel's knowledge, there are no
business relationships or related-party transactions of the nature described in
Item 404 of Regulation S-B involving the Company and any person described in
such Item that are required to be disclosed in the Prospectus and which have not
been so disclosed.
Such counsel need express no opinion with respect to the financial statements
and other financial data included in or omitted from the Registration Statement
or Prospectus, nor to matters pertaining to patent or intellectual property law,
nor to matters pertaining to government regulatory matters relating to the
development and potential marketing and sale of the Company's products. Such
opinion shall also cover such matters incident to the transactions contemplated
hereby as the Underwriters or counsel for the Underwriters shall reasonably
request. In rendering such opinion, such counsel may rely upon certificates of
any officer of the Company or public officials as to matters of fact; and may
rely as to all matters of law other than the law of the United States or of the
State of New York upon opinions of counsel satisfactory to you, in which case
the opinion shall state that they have no reason to believe that you and they
are not entitled to so rely.
(c) All corporate proceedings and other legal matters relating
to this Agreement, the Registration Statement, the Prospectus and other related
matters shall be satisfactory to or approved by PHJ&W, counsel to the
Underwriters, and you shall have received from such counsel a signed opinion,
dated as of the First Closing Date, together with copies thereof for each of the
other Underwriters, with respect to the validity of the issuance of the Units,
the form of the Registration Statement and Prospectus (other than the financial
statements and other financial data contained therein), the execution of this
Agreement and other related matters as you may reasonably require. The Company
shall have furnished to counsel for the Underwriters such documents as they may
reasonably request for the purpose of enabling them to render such opinion.
(d) You shall have received a letter prior to the effective
date of the Registration Statement and again on and as of the First Closing Date
from Xxxxxxx X. Xxxxxx & Company, LLP, independent public accountants for the
Company, substantially in the form approved by you, and including estimates of
the Company's revenues and results of operations for the period ending at the
end of the month immediately preceding the effective date and results of the
comparable period
19
during the prior fiscal year.
(e) At the Closing Dates, (i) the representations and
warranties of the Company contained in this Agreement shall be true and correct
with the same effect as if made on and as of the Closing Dates and the Company
shall have performed all of its obligations hereunder and satisfied all the
conditions on its part to be satisfied at or prior to such Closing Date; (ii)
the Registration Statement and the Prospectus and any amendments or supplements
thereto shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all material
respects conform to the requirements thereof, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading; (iii) there shall have been, since the respective dates as of
which information is given, no material adverse change, or any development
involving a prospective material adverse change, in the business, properties,
condition (financial or otherwise), results of operations, capital stock,
long-term or short-term debt or general affairs of the Company from that set
forth in the Registration Statement and the Prospectus, except changes which the
Registration Statement and Prospectus indicate might occur after the effective
date of the Registration Statement, and the Company shall not have incurred any
material liabilities or entered into any agreement not in the ordinary course of
business other than as referred to in the Registration Statement and Prospectus;
and (iv) except as set forth in the Prospectus, no action, suit or proceeding at
law or in equity shall be pending or threatened against the Company which would
be required to be set forth in the Registration Statement, and no proceedings
shall be pending or threatened against the Company before or by any commission,
board or administrative agency in the United States or elsewhere, wherein an
unfavorable decision, ruling or finding would materially and adversely affect
the business, property, condition (financial or otherwise), results of
operations or general affairs of the Company, and (v) you shall have received,
at the First Closing Date, a certificate signed by each of the Chairman of the
Board or the President and the principal financial or accounting officer of the
Company, dated as of the First Closing Date, evidencing compliance with the
provisions of this subsection (e).
(f) Upon exercise of the option provided for in Section 2(b)
hereof, the obligations of the Underwriters (or, at its option, the
Representative individually) to purchase and pay for the Option Units referred
to therein will be subject (as of the date hereof and as of the Option Closing
Date) to the following additional conditions:
(i) The Registration Statement shall remain effective
at the Option Closing Date, and no stop order suspending the effectiveness
thereof shall have been issued and no proceedings for that purpose shall have
been instituted or shall be pending, or, to your knowledge or the knowledge of
the Company, shall be contemplated by the Commission, and any reasonable request
on the part of the Commission for additional information shall have been
complied with to the satisfaction of PHJ&W, counsel to the Underwriters.
(ii) At the Option Closing Date there shall have been
delivered to you the
20
signed opinion of Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel for the Company,
dated as of the Option Closing Date, in form and substance satisfactory to
PHJ&W, counsel to the Underwriters, together with copies of such opinion for the
Underwriters, which opinion shall be substantially the same in scope and
substance as the opinion furnished to you at the First Closing Date pursuant to
Section 4(b) hereof, except that such opinion, where appropriate, shall cover
the Option Units.
(iii) At the Option Closing Date there shall have
been delivered to you a certificate of the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Option Closing Date, in form and substance satisfactory to PHJ&W,
counsel to the Underwriters, substantially the same in scope and substance as
the certificate furnished to you at the First Closing Date pursuant to Section
4(e) hereof.
(iv) At the Option Closing Date there shall have been
delivered to you a letter in form and substance satisfactory to you from Xxxxxxx
X. Xxxxxx & Company, LLP, dated the Option Closing Date and addressed to the
Underwriters confirming the information in their letter referred to in Section
4(d) hereof and stating that nothing has come to their attention during the
period from the ending date of their review referred to in said letter to a date
not more than three business days prior to the Option Closing Date, which would
require any change in said letter if it were required to be dated the Option
Closing Date.
(v) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the Option Units shall
be satisfactory in form and substance to you and PHJ&W, counsel to the
Underwriters, shall have been furnished with all such documents, certificates,
and opinions as you may request in connection with this transaction in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements of the Company or its compliance with any of the covenants or
conditions contained herein.
(g) No action shall have been taken by the Commission or the
NASD the effect of which would make it improper, at any time prior to the
Closing Date, for members of the NASD to execute transactions (as principal or
agent) in the Units, Common Stock or the Warrants and no proceedings for the
taking of such action shall have been instituted or shall be pending, or, to the
knowledge of the Underwriters or the Company, shall be contemplated by the
Commission or the NASD. The Company represents that at the date hereof it has no
knowledge that any such action is in fact contemplated by the Commission or the
NASD. The Company shall have advised the Underwriters of any NASD affiliation of
any of its officers, directors, stockholders or their affiliates.
(h) If any of the conditions herein provided for in this
Section shall not have been fulfilled as of the date indicated, this Agreement
and all obligations of the Underwriters under this Agreement may be canceled at,
or at any time prior to, each Closing Date by the Representative. Any such
cancellation shall be without liability of the Underwriters to the Company.
5. Conditions of the Obligations of the Company. The
obligation of the Company to sell and deliver the Units is subject to the
condition that at the Closing Dates, no stop
21
orders suspending the effectiveness of the Registration Statement shall have
been issued under the Act or any proceedings therefor initiated or threatened by
the Commission. If the condition to the obligations of the Company provided for
in this Section have been fulfilled on the First Closing Date but are not
fulfilled after the First Closing Date and prior to the Option Closing Date,
then only the obligation of the Company to sell and deliver the Units on
exercise of the option provided for in Section 2(b) hereof shall be affected.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all attorneys'
fees), to which such Underwriter or such controlling person may become subject,
under the Act or otherwise, and will reimburse, as incurred, such Underwriter
and such controlling persons for any legal or other expenses reasonably incurred
in connection with investigating, defending against or appearing as a third
party witness in connection with any losses, claims, damages or liabilities,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in (A) the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
(B) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any or all
of the Units under the securities laws thereof (any such application, document
or information being hereinafter called a "Blue Sky Application"), or arise out
of or are based upon the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, Prospectus, or any amendment
or supplement thereto, or in any Blue Sky Application, a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent, but only to the extent, that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Underwriters
specifically for use in the preparation of the Registration Statement or any
such amendment or supplement thereof or any such Blue Sky Application or any
such preliminary Prospectus or the Prospectus or any such amendment or
supplement thereto. This indemnity will be in addition to any liability which
the Company may otherwise have.
(b) Each Underwriter, severally, but not jointly, will
indemnify and hold harmless the Company, each of its directors, each nominee (if
any) for director named in the Prospectus, each of its officers who have signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of the Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include, but not
be limited to, all costs of defense and investigation and all attorneys' fees)
to which the Company or any such director, nominee, officer
22
or controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto (i) in reliance upon and in
conformity with written information furnished to the Company by you or any
Underwriter specifically for use in the preparation thereof and (ii) relates to
the transactions effected by the Underwriters in connection with the offer and
sale of the Units contemplated hereby. This indemnity agreement will be in
addition to any liability which the Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify in writing the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is an Underwriter
or a person who controls an Underwriter within the meaning of the Act, the fees
and expenses of such counsel shall be at the expense of the indemnifying party
if (i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both the Underwriter or such
controlling person and the indemnifying party and in the judgment of the
applicable Underwriter, it is advisable for the applicable Underwriter or
controlling persons to be represented by separate counsel (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the applicable Underwriter or such controlling person, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for the applicable Underwriter and controlling
persons, which firm shall
23
be designated in writing by the applicable Underwriter). No settlement of any
action against an indemnified party shall be made without the consent of the
indemnifying party, which shall not be unreasonably withheld in light of all
factors of importance to such indemnifying party.
7. Contribution. In order to provide for just and equitable
contribution under the Act in any case in which (i) an Underwriter makes claim
for indemnification pursuant to Section 6 hereof but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case, notwithstanding the
fact that the express provisions of Section 6 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
Underwriter, then the Company and each person who controls the Company, in the
aggregate, and any such Underwriter shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees) in either
such case (after contribution from others) in such proportions that all such
Underwriters are only responsible for that portion of such losses, claims,
damages or liabilities represented by the percentage that the underwriting
discount per Unit appearing on the cover page of the Prospectus bears to the
public offering price appearing thereon, and the Company shall be responsible
for the remaining portion, provided, however, that (a) if such allocation is not
permitted by applicable law then the relative fault of the Company and the
applicable Underwriter and controlling persons, in the aggregate, in connection
with the statements or omissions which resulted in such damages and other
relevant equitable considerations shall also be considered. The relative fault
shall be determined by reference to, among other things, whether in the case of
an untrue statement of a material fact or the omission to state a material fact,
such statement or omission relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Underwriters agree (a) that it would not be just and equitable
if the respective obligations of the Company and the Underwriters to contribute
pursuant to this Section 7 were to be determined by pro rata or per capita
allocation of the aggregate damages or by any other method of allocation that
does not take account of the equitable considerations referred to in the first
sentence of this Section 7 and (b) that the contribution of each contributing
Underwriter shall not be in excess of its proportionate share (based on the
ratio of the number of Units purchased by such Underwriter to the number of
Units purchased by all contributing Underwriters) of the portion of such losses,
claims, damages or liabilities for which the Underwriters are responsible. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. As used in this paragraph, the word
"Company" includes any officer, director, or person who controls the Company
within the meaning of Section 15 of the Act. If the full amount of the
contribution specified in this paragraph is not permitted by law, then the
applicable Underwriter and each person who controls the applicable Underwriter
shall be entitled to contribution from the Company, its officers, directors and
controlling persons to the full extent permitted by law. The foregoing
contribution agreement shall in no way affect the contribution liabilities of
any persons having liability under Section 11 of the Act other than the Company
and the Underwriters. No contribution
24
shall be requested with regard to the settlement of any matter from any party
who did not consent to the settlement; provided, however, that such consent
shall not be unreasonably withheld in light of all factors of importance to such
party.
8. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the
sale of the Units to the Underwriters is consummated, the Company will pay all
costs and expenses incident to the performance of this Agreement by the Company
including, but not limited to, the fees and expenses of counsel to the Company
and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the Registration
Statement (including the financial statements therein and all amendments and
exhibits thereto), Preliminary Prospectus and the Prospectus, as amended or
supplemented, or the Term Sheet, the fee of the NASD in connection with the
filing required by the NASD relating to the offering of the Units contemplated
hereby; all expenses, including reasonable fees and disbursements of counsel to
the Underwriters, in connection with the qualification of the Units under the
state securities or blue sky laws which the Representative shall designate; the
cost of printing and furnishing to the Underwriters copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus, this Agreement, the
Agreement Among Underwriters, Selling Agreement, Underwriters' Questionnaire,
and the Blue Sky Memorandum, any fees relating to the listing of the Units,
Common Stock and Warrants on the Nasdaq Small Cap Market or any other securities
exchange, the cost of printing the certificates representing the securities
comprising the Units, the fees of the transfer agent and warrant agent the cost
of publication of at least three "tombstones" of the offering (at least one of
which shall be in national business newspaper and one of which shall be in a
major New York newspaper) and the cost of preparing at least four hard cover
"bound volumes" relating to the offering, in accordance with the
Representative's request. The Company shall pay any and all taxes (including any
transfer, franchise, capital stock or other tax imposed by any jurisdiction) on
sales to the Underwriters hereunder. The Company will also pay all costs and
expenses incident to the furnishing of any amended Prospectus or of any
supplement to be attached to the Prospectus as called for in Section 3(a) of
this Agreement except as otherwise set forth in said Section.
(b) In addition to the foregoing expenses the Company shall at
the First Closing Date pay to the Representative, individually and not as
representative of the Underwriters, a non-accountable expense allowance equal to
three percent (3%) of the gross proceeds derived from the sale of Units offered
hereby, of which Forty Thousand Dollars ($40,000) has been paid. In the event
the over-allotment option is exercised, the Company shall pay to the
Representative at the Option Closing Date an additional amount equal to three
percent (3%) of the gross proceeds received upon exercise of the over-allotment
option. In the event the transactions contemplated hereby are not consummated by
reason of any action by the Underwriters (except if such prevention is based
upon a breach by the Company of any covenant, representation or warranty
contained herein or because any other condition to the Underwriters' obligations
hereunder required to be fulfilled by the Company is not fulfilled) the Company
shall be liable for the accountable out-of-pocket expenses of the
Representative, including "blue sky" legal fees up to a maximum of Forty
Thousand Dollars
25
($40,000). In the event the transactions contemplated hereby are not consummated
by reason of any action of the Company or because of a breach by the Company of
any covenant, representation or warranty herein, the Company shall be liable for
the accountable out-of-pocket expenses of the Representative, including legal
fees, up to a maximum of One Hundred Eighty Thousand Dollars ($180,000).
(c) No person is entitled either directly or indirectly to
compensation from the Company, from the Underwriters or from any other person
for services as a finder in connection with the proposed offering, and the
Company agrees to indemnify and hold harmless the Underwriters and the other
Underwriters, against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys' fees), to
which the Underwriters or person may become subject insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon the claim of any person (other than an employee of the party
claiming indemnity) or entity that he or it is entitled to a finder's fee in
connection with the proposed offering by reason of such person's or entity's
influence or prior contact with the indemnifying party.
9. Substitution of Underwriters. If any Underwriters shall for
any reason not permitted hereunder cancel their obligations to purchase the
First Units hereunder, or shall fail to take up and pay for the number of First
Units set forth opposite their respective names in Schedule A hereto upon tender
of such First Units in accordance with the terms hereof, then:
(a) If the aggregate number of First Units which such
Underwriter or Underwriters agreed but failed to purchase does not exceed ten
percent (10%) of the total number of First Units, the other Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the First Units which such defaulting Underwriter or Underwriters
agreed but failed to purchase.
(b) If any Underwriter or Underwriters so default and the
agreed number of First Units with respect to which such default or defaults
occurs is more than ten percent (10%) of the total number of First Units, the
remaining Underwriters shall have the right to take up and pay for (in such
proportion as may be agreed upon among them) the First Units which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If such
remaining Underwriters do not, at the First Closing Date, take up and pay for
the First Units which the defaulting Underwriter or Underwriters agreed but
failed to purchase, the time for delivery of the First Units shall be extended
to the next business day to allow the several Underwriters the privilege of
substituting within twenty-four hours (including nonbusiness hours) another
underwriter or underwriters satisfactory to the Company. If no such underwriter
or underwriters shall have been substituted as aforesaid, within such
twenty-four hour period, the time of delivery of the First Units may, at the
option of the Company, be again extended to the next following business day, if
necessary, to allow the Company the privilege of finding within twenty-four
hours (including nonbusiness hours) another underwriter or underwriters to
purchase the First Units which the defaulting Underwriter or Underwriters agreed
but failed to purchase. If it shall be arranged for the remaining Underwriters
or substituted
26
Underwriters to take up the First Units of the defaulting Underwriter or
Underwriters as provided in this Section, (i) the Company or the Representative
shall have the right to postpone the time of delivery for the period of not more
than seven business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective numbers of First Units to
be purchased by the remaining Underwriters or substituted Underwriters shall be
taken at the basis of the underwriting obligation for all purposes of this
Agreement. If in the event of a default by one or more Underwriters and the
remaining Underwriters shall not take up and pay for all the First Units agreed
to be purchased by the defaulting Underwriters or substitute another underwriter
or underwriters as aforesaid, the Company shall not find or shall not elect to
seek another underwriter or underwriters for such First Units as aforesaid, then
this Agreement shall terminate.
If, following exercise of the option provided in Section 2(b)
hereof, any Underwriter or Underwriters shall for any reason not permitted
hereunder cancel their obligations to purchase Option Units at the Option
Closing Date, or shall fail to take up and pay for the number of Option Units,
which they become obligated to purchase at the Option Closing Date upon tender
of such Option Units in accordance with the terms hereof, then the remaining
Underwriters or substituted Underwriters may take up and pay for the Option
Units of the defaulting Underwriters in the manner provided in Section 9(b)
hereof. If the remaining Underwriters or substituted Underwriters shall not take
up and pay for all such Option Units, the Underwriters shall be entitled to
purchase the number of Option Units for which there is no default or, at their
election, the option shall terminate, the exercise thereof shall be of no
effect.
As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. In the event of
termination, there shall be no liability on the part of any nondefaulting
Underwriter to the Company, provided that the provisions of this Section 9 shall
to in any event affect the liability of any defaulting Underwriter to the
Company arising out of such default.
10. Effective Date. The Agreement shall become effective upon
its execution except that you may, at your option, delay its effectiveness until
11:00 A.M., New York time on the first full business day following the effective
date of the Registration Statement, or at such earlier time after the effective
date of the Registration Statement as you in your discretion shall first
commence the initial public offering by the Underwriters of any of the Units.
The time of the initial public offering shall mean the time of release by you of
the first newspaper advertisement with respect to the Units, or the time when
the Units are first generally offered by you to dealers by letter or telegram,
whichever shall first occur. This Agreement may be terminated by you at any time
before it becomes effective as provided above, except that Sections 3(c), 6, 7,
8, 13, 14, 15 and 16 shall remain in effect notwithstanding such termination.
11. Termination.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 13, 14,
15 and 16 hereof, may be terminated at any time prior to the First Closing Date,
and the option referred to in Section 2(b) hereof, if exercised, may be canceled
at any time prior to the Option Closing Date, by
27
you if in your judgment it is impracticable to offer for sale or to enforce
contracts made by the Underwriters for the resale of the Units agreed to be
purchased hereunder by reason of (i) the Company having sustained a material
loss, whether or not insured, by reason of fire, earthquake, flood, accident or
other calamity, or from any labor dispute or court or government action, order
or decree; (ii) trading in securities on the New York Stock Exchange, the
American Stock Exchange, the Nasdaq SmallCap Market or the Nasdaq National
Market having been suspended or limited; (iii) material governmental
restrictions having been imposed on trading in securities generally (not in
force and effect on the date hereof); (iv) a banking moratorium having been
declared by federal or New York state authorities; (v) an outbreak of
international hostilities or other national or international calamity or crisis
or change in economic or political conditions having occurred; (vi) a pending or
threatened legal or governmental proceeding or action relating generally to the
Company's business, or a notification having been received by the Company of the
threat of any such proceeding or action, which could materially adversely affect
the Company; (vii) except as contemplated by the Prospectus, the Company is
merged or consolidated into or acquired by another company or group or there
exists a binding legal commitment for the foregoing or any other material change
of ownership or control occurs; (viii) the passage by the Congress of the United
States or by any state legislative body or federal or state agency or other
authority of any act, rule or regulation, measure, or the adoption of any
orders, rules or regulations by any governmental body or any authoritative
accounting institute or board, or any governmental executive, which is
reasonably believed likely by the Representative to have a material impact on
the business, financial condition or financial statements of the Company or the
market for the securities offered pursuant to the Prospectus; (ix) any adverse
change in the financial or securities markets beyond normal market fluctuations
having occurred since the date of this Agreement, or (x) any material adverse
change having occurred, since the respective dates of which information is given
in the Registration Statement and Prospectus, in the earnings, business
prospects or general condition of the Company, financial or otherwise, whether
or not arising in the ordinary course of business.
(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 11 or in
Section 10 hereof, the Company shall be promptly notified by you, by telephone
or telegram, confirmed by letter, in accordance with Section 14 hereof.
12. Unit Purchase Option. At or before the First Closing Date,
the Company will sell to the Representative (for its own account and not as
representative of the Underwriters), or its designees for a consideration of One
Hundred Seventy Six Dollars ($176), and upon the terms and conditions set forth
in the form of Unit Purchase Option annexed as an exhibit to the Registration
Statement, a Unit Purchase Option to purchase an aggregate of One Hundred
Seventy Six Thousand (176,000) Units. In the event of conflict between the terms
of this Agreement and the Unit Purchase Option, the language of the Unit
Purchase Option shall control.
28
13. Representations, Warranties and Agreements to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company or its officers, directors, stockholders or
Principal Stockholders, where appropriate, and the undertakings set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of the Underwriters, the Company or
any of its officers or directors or any controlling person and will survive
delivery of and payment of the Units and the termination of this Agreement.
14. Notice. Any communications specifically required hereunder
to be in writing, if sent to the Underwriters, will be mailed, delivered and
confirmed to the Representative at X.X. Xxxxx Investment Banking Corp., 00 Xxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, with a copy sent to Paul, Hastings,
Xxxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or if sent to
the Company, will be mailed, delivered and confirmed to it at HealthCore Medical
Solutions, Inc., 00000 Xxxx Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, with a
copy sent to Bachner, Tally, Xxxxxxx & Xxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000.
15. Parties in Interest. This Agreement is made solely for the
benefit of the Underwriters, the Representative, on an individual basis, the
Company and, to the extent expressed, the Principal Stockholders, any person
controlling the Company or the Underwriters, directors of the Company, nominees
for directors of the Company (if any) named in the Prospectus, officers of the
Company who have signed the Registration Statement and each of their respective
executors, administrators, successors and assigns and no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser, as such purchaser,
from the Underwriters of the Units. All of the obligations of the Underwriters
hereunder are several and not joint.
16. Applicable Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York applicable to
agreements made and to be entirely performed within New York.
29
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return this agreement, whereupon it will become a
binding agreement between the Company and the Underwriters in accordance with
its terms.
Very truly yours,
HEALTHCORE MEDICAL SOLUTIONS, INC.
By: ________________________________
Name: Xxxx X. Xxxxx
Title: Chairman and
Chief Executive Officer
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
X.X. XXXXX INVESTMENT BANKING CORP.
By: ______________________________
Name: Xxxxxx X. Xxxx
Title: Vice Chairman and
General Counsel
30
We hereby agree to be bound by the provisions of Section 3(l)
and (n) and 13 hereof.
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
31
Schedule A
Number of First Units Number of Option Units
Underwriters to be Purchased to be Purchased
------------ --------------- ---------------
X.X. Xxxxx Investment [__] [__]
Banking Corp.
32
