1,400,000 Shares of Common Stock
1,400,000 Class A Redeemable Warrants
AMPLIDYNE, INC.
UNDERWRITING AGREEMENT
December , 1996
Xxxxxxxxx Xxxxxx, Inc.
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
AMPLIDYNE, INC. a Delaware corporation (the "Company"),
proposes to issue and sell to you, the Underwriter, (the "Underwriter")
pursuant to this Underwriting Agreement (the "Agreement"), an aggregate of
1,400,000 shares of Common Stock ("Shares") and 1,400,000 Class A Redeemable
Warrants ("Warrants") to purchase a Share at a price of $6.00 per share for a
four year period commencing one year from the Effective Date as defined herein.
The Shares and the Warrants shall be sold together on the basis of one Share
and one Warrant and the Shares and Warrants are together referred to as the
"Securities".
In addition, the Company proposes to grant to the
Underwriter the option referred to in Section 2(b) to purchase all or any part
of an aggregate of 210,000 additional Shares and 210,000 Warrants. Unless the
context otherwise indicates, the term "Securities" shall include the 210,000
additional Securities referred to above.
You have advised the Company that the Underwriter desires to
purchase the Securities and that you are authorized to execute this Agreement
on behalf of the Underwriter. The Company confirms the Agreement made by it
with respect to the sale of the Securities as follows:
1. Representations and Warranties.
The Company represents and warrants to, and agrees with, the
Underwriter that:
(a) A registration statement (File No. 333-11015) on Form SB-2
relating to the public offering of the Securities, including a preliminary form
of prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has been filed with the Commission under the Act. The Company
proposes to file, prior to the effective date of such registration statement
(the "Effective Date"), an additional amendment or amendments to such
registration statement, as are required by applicable law copies of which shall
be delivered to you. "Preliminary Prospectus" shall mean each prospectus filed
pursuant to Rule 430A of the Rules and Regulations. The registration statement
(including all financial statements and exhibits) as amended at
the time it becomes effective and the final prospectus included therein are
respectively referred to as the "Registration Statement" and the "Prospectus",
except that (i) if the prospectus first filed by the Company pursuant to Rule
424(b) of the Rules and Regulations shall differ from said prospectus as then
amended the terms "Prospectus" shall mean the prospectus first filed pursuant to
Rule 424(b), and (iii) 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 Closing Date (as hereinafter defined),
the terms "Registration Statement" and "Prospectus" shall include each
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.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When the Registration
Statement becomes effective and at all times subsequent thereto up to the
Closing Date (as hereinafter defined) (i) the Registration Statement and
Prospectus and any amendments or supplements thereto will contain all
statements which are required to be stated therein in accordance with the Act
and the Rules and Regulations, and 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 Underwriter specifically for
use in the preparation thereof. It is understood that the statements set forth
in the Prospectus under the heading "Underwriting" and the identity of counsel
to the Underwriter under the heading "Legal Matters" constitute the only
information furnished in writing by or on behalf of the Underwriter for
inclusion in the Registration Statement and Prospectus, as the case may be.
(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 business, properties
or financial condition of the Company.
(d) The authorized, issued and outstanding capital stock of the
Company as of September 30, 1996 is as set forth in the Prospectus under
"Capitalization"; the Securities to be issued and outstanding capital stock of
the Company set forth thereunder have been, or will be when issued as set forth
in the Prospectus, duly authorized, validly issued, fully paid and
non-assessable; except as set forth in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue or
agreements or other rights to convert any obligation into, any shares of common
stock of the Company have been granted or entered into by the Company; and the
Shares and Warrants conforms to all statements relating thereto contained in
the Registration Statement and Prospectus.
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(e) The Securities are duly authorized, and when issued and
delivered pursuant to this Agreement, will be duly authorized, validly issued,
fully paid and non-assessable and free of preemptive rights of any security
holder of the Company. Neither the filing of the Registration Statement nor the
offering or sale of the Securities as contemplated in this Agreement gives rise
to any rights, other than those which have been waived or satisfied, for or
relating to the registration of any Securities except as described in the
Registration Statement.
The Securities contained in the Underwriter's Purchase Option
("PO") (described in Section 11 herein) have been duly authorized and, when
duly issued and delivered, such PO will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms and
entitled to the benefits provided by the PO. The Securities included in the PO
when issued and sold, 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 has been duly and validly authorized,
executed and delivered by the Company, and assuming due execution of this
Agreement by the Underwriter, constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
the rights of creditors generally and also subject to any limitations on
enforceability which may be imposed by application of equitable principles. The
Company has full power and lawful authority to authorize, issue and sell the
Securities 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, issue
and sale except, such as may be required under the Act or state securities
laws.
(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 breach of, any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance 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 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 a violation of 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 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 under any of the leases or
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subleases mentioned above, or affecting or questioning the right of the Company
to continue 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) Xxxxx Xxxxxxxx, 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 Company shall obtain a report from Xxxxx Xxxxxxxx, LLP
stating that the financial statements, together with related notes, set forth
in the Prospectus present fairly the financial position and results of
operations and changes in financial 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.
(k) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, and prior to the Closing
Date (as hereinafter defined) 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 long-term debt by, the Company, or
any issuance of options, warrants or other rights to purchase the capital stock
of the Company other than as set forth in the Registration Statement or
pursuant to the Company's Stock Option Plan, and assuming the Company receives
the proceeds of the offering contemplated hereby it does not now reasonably
foresee a prospective adverse change in the condition (financial or other), net
worth, results of operations, business, key personnel or properties which would
be material to the business or financial condition of the Company, and the
Company has not 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 or 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 earnings 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
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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) The Company and its subsidiaries have sufficient licenses,
permits and other governmental authorizations as 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 to the best of its
knowledge owns and possesses adequate rights to use all material patents,
patent applications, trademarks, service marks, trade-names, trademark
registrations, service xxxx registrations, copyrights and licenses necessary
for the conduct of such business and has not received any notice of conflict
with the asserted rights of other 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 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
shall implement internal accounting controls and procedures which shall be
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 Date (as hereinafter defined) all transfer or
other taxes which are required to be paid by the Company in connection with the
sale and transfer of the Securities 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 no subsidiaries other than as described in
the Prospectus.
(s) 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 public
offering referred to herein.
2. Purchase, Delivery and Sale of the Securities.
(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 Underwriter, and the
Underwriter agrees to buy from the Company (i) at $4.50 per Share, at the place
and time hereinafter
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specified, the 1,400,000 Shares (the "First Shares") and (ii) at $.09 per
Warrant, the 1,400,000 Warrants (the "First Warrants"). The First Shares and
First Warrants are hereinafter collectively referred to as the "First
Securities".
Delivery of the First Securities against payment therefor shall
take place at the offices of Xxxxxxxxx Xxxxxx, Inc., Xxx Xxxxxxx Xxxx 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
December, 1996 or at such later time and date as you may designate, such time
and date of payment and delivery for the First Securities 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 Underwriter to
purchase all or any part of an aggregate of an additional 210,000 Securities at
the same price per Share and Warrant as the Underwriter shall pay for the First
Securities being sold pursuant to the provisions of subsection (a) of this
Section 2 (such additional Securities being referred to herein as the "Option
Securities"). This option may be exercised within 30 days after the effective
date of the Registration Statement upon notice by the Underwriter to the
Company advising it as to the amount of Option Securities as to which the
option is being exercised, the names and denominations in which the
certificates for such Option Securities 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 Underwriter 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 Securities against payment
therefor shall take place at the office of Xxxxxxxxx Xxxxxx, Inc., Xxx Xxxxxxx
Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000. The Option granted hereunder may be
exercised only to cover over-allotments in the sale by the Underwriter of First
Securities referred to in subsection (a) above.
(c) The Company will make the certificates for the Securities to
be purchased by the Underwriter 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"
and individually as a "Closing Date"). The certificates shall be in such names
and denominations as you may request, at least two full business days prior to
the Closing Dates. Delivery at the time and place specified in this Agreement
is a further condition to the obligations of the Underwriter.
Definitive certificates in negotiable form for the Shares and
Warrants to be purchased by the Underwriter hereunder will be delivered by the
Company to you for the account of the Underwriter against payment of the
purchase prices by the Underwriter, by certified or bank cashier's checks in
New York Clearing House funds, payable to the order of the Company.
In addition, in the event the Underwriter exercise the option to
purchase from the Company all or any portion of the Option Securities pursuant
to the provisions of subsection (b) above, payment for such Securities shall be
made to or upon the order of the Company by certified or bank cashier's checks
payable in New York
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Clearing House funds at the offices of the Underwriter at the time and date of
delivery of such Securities as required by the provisions of subsection (b)
above, against receipt of the certificates for such Securities by the
Underwriter for the account of the Underwriter registered in such names and in
such denominations as the Underwriter may request.
It is understood that the Underwriter propose to offer the
Securities to be purchased hereunder to the public upon the terms and
conditions set forth in the Registration Statement, after the Registration
Statement becomes effective.
(d) At the "First Closing" the Company shall grant to the
Underwriter a purchase option for 140,000 Shares and 140,000 Warrants.
3. Covenants of the Company.
The Company covenants and agrees with the Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective and upon notification from the
Commission that the Registration Statement has become effective, will so advise
you and will not at any time, whether before or after the effective date, file
any amendment to the Registration Statement or supplement to the Prospectus of
which you shall not previously have been advised and furnished with a copy or
to which you or your counsel shall have reasonably objected in writing or which
is not in compliance with the Act and the Rules and Regulations. At any time
prior to the later of (A) the completion by the Underwriter of the distribution
of the Securities 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, or (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 reasonable opinion, may be necessary or advisable in connection with the
distribution of the Securities.
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
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 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 Securities for offering in any
jurisdiction, or of the institution of any proceedings for any of such
purposes, and will use its utmost efforts to prevent the issuance of any such
order, and, if issued, to obtain as soon as possible the lifting thereof.
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The Company has caused to be delivered to you such copies of the
Preliminary Prospectus which you have reasonably requested, 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 Underwriter and dealers to use
the Prospectus in connection with the sale of the Securities for such period as
in the opinion of counsel to the Underwriter 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 this Act to be delivered 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
Underwriter 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 Securities or in
case it shall be necessary to amend or supplement the Prospectus to comply with
law or with Rules and Regulations, the Company will notify you promptly and
forthwith prepare and file with the Commission 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 fact necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which
they are made, not misleading. The preparation and furnishing of any such
amendment or supplement to the Registration Statement or amended Prospectus or
supplement to be attached to the Prospectus shall be without expense to the
Underwriter, except that in case any Underwriter is required, in connection
with the sale of the Securities, 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 Underwriter, amend or supplement the
Registration Statement and Prospectus and furnish the Underwriter with
reasonable quantities of prospectuses complying with Section 10(a)(3) of the
Act.
The Company will comply with the Act, the applicable 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
Securities.
(b) The Company will use its best efforts to qualify to register
the Securities for sale under the securities or "blue sky" laws of such
jurisdictions as the Underwriter may reasonably request 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 to service of process in any jurisdiction in any action other
than one arising out of the offering or sale of the Securities. 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 Underwriter may reasonably request.
(c) If the sale of the Securities 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,
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including, but not limited to, all of the expenses itemized in Section 8, on an
actual out-of-pocket accountable basis.
(d) 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 and warrantholders 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 Effective Date, (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 source and application of funds 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 they are available, a copy of all reports
(financial or other) mailed to stockholders; (iii) as soon as they are
available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission; and (iv) such other information as
you may from time to time reasonably request.
(e) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (d) 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.
(f) 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 you such number of copies of the Registration
Statement, including such financial statements but without exhibits, and of all
amendments thereto, as you may reasonably request. The Company will deliver to
or upon the order of the Underwriter, from time to time until the Effective
Date as many copies of any Preliminary Prospectus filed with the Commission
prior to the Effective Date as the Underwriter may reasonably request. The
Company will deliver to the Underwriter on the Effective Date 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 Underwriter may from time to time reasonably
request.
(g) The Company will make generally available to its security
holders and deliver to you as soon as it is practicable to do so, an earnings
statement (which need not be audited) covering a period of at least twelve
consecutive months beginning after the Effective Date which shall satisfy the
requirements of Section 11(a) of the Act.
(h) The Company will apply the net proceeds from the sale of the
Securities 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 Securities and the application of the proceeds therefrom as may be
required pursuant to Rule 463 under the Act.
(i) 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
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reasonable opinion of Xxxxxx X. Xxxxxxx, counsel to the Underwriter may be
reasonably necessary or advisable in connection with the distribution of the
Securities, and will use its best efforts to cause the same to become effective
as promptly as possible.
(j) Prior to the Effective Date, the Company shall have obtained
agreements on your behalf stating that for a period of eighteen months from the
Closing Date, the officers, directors and beneficial holders of more than 5% of
the outstanding Shares of Common Stock of the Company currently outstanding
will not publicly sell any Shares of Common Stock without the prior written
consent of the Underwriter.
(k) Upon 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 Securities (including Shares and Warrants
separately), in the NASDAQ system, and will effect and maintain such listing
for at least five (5) years from the Closing Date.
(l) The Company will reserve and keep available that maximum
number of its authorized but unissued Common Stock which are issuable upon
exercise of the Warrants.
(m) On the Closing Date and simultaneously with the delivery of
the Securities, the Company shall execute and deliver to you the Underwriter's
Purchase Option. The Option will be substantially in the form of the
Underwriter's Option filed as Exhibit to the Registration Statement.
(n) During the 90 day period commencing as of the Closing Date,
the Company will not, without the prior written consent of the Underwriter
grant options to purchase Shares of Common Stock at a price less than the
initial public offering price.
(o) The Company and each 5% or more shareholder represent that
it or he has not taken and agree not to take any action designed to or which
might cause or result in the stabilization or manipulation of the price of the
Securities or to facilitate the sale or resale of the Securities.
(p) Upon exercise of any Warrant(s) subsequent to one year from
the Effective Date, the Company will pay the Underwriter a fee of 8% of the
aggregate exercise price of the Warrants, of which 1% may be reallowed to the
dealer who solicited the exercise (which may also be the Underwriter), if (i)
the market price of the Company's Common Stock is greater than the exercise
price of the Warrant's on the date of exercise, and (ii) the exercise of the
Warrant was solicited by a member of the National Association of Securities
Dealers, Inc. and such member was designated in writing, by the holder of such
Warrant, as having solicited the exercise of the Warrant; (iii) the Warrant is
not held in a discretionary account, and (iv) the solicitation of the Warrant
was not in violation of Rule 10b-6 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 Underwriter and will not authorize any other
dealer to engage in such solicitation without the Underwriter's prior written
consent.
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4. Conditions of Underwriter's Obligation.
The obligation of the Underwriter to purchase and pay for the
Securities which they have agreed to purchase hereunder is subject to the
accuracy (as of the date hereof, and as of the Closing Dates) and compliance
with the representations and warranties of the Company herein, to the accuracy
of statements of officers of the Company made pursuant to the provisions
hereof, to the performance by the Company of its obligations to be performed
hereunder, and to the following conditions.
(a) The Registration Statement shall have become effective and
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
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
Xxxxxx X. Xxxxxxx, counsel to the Underwriter; and no stop order shall be in
effect denying or suspending effectiveness of such qualification nor shall any
stop order proceedings with respect thereto be instituted or pending or
threatened under such law.
(b) The Underwriter shall not have advised the Company that the
Registration Statement, the Prospectus, or any amendment or supplement thereto
contains any untrue statement of fact which, in the reasonable opinion of
Xxxxxx X. Xxxxxxx, counsel, is material and is required to be stated therein or
necessary to make the statements therein no misleading.
(c) At the First Closing Date, you shall have received the
opinion, dated as of the Closing Date, of Xxxxxxxxx & Xxxxxxxxx, LLP, counsel
for the Company, in form and substance reasonably satisfactory to counsel for
the Underwriter, 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 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 be so qualified would not have a
material affect upon the Company.
(ii) to the best knowledge of such counsel, the Company or its
subsidiaries, has obtained all material licenses, registrations, permits and
other governmental authorizations which are reasonably necessary to the conduct
of its business and such licenses, registrations, permits and governmental
authorizations are in full force and effect.
(iii) the authorized capitalization of the Company as of
September 30, 1996 is 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
11
and conform to the description thereof contained in the Prospectus; 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 shares other than as set forth in the Prospectus; the Common Stock
and the Warrants, conform 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 in accordance with the terms of such
Warrants 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 to the best of such counsel's knowledge, neither the filing of the
Registration Statement nor the offering or sale of the Securities 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 or those contained in the PO.
(iv) this Agreement and the Underwriter's PO have been duly and
validly authorized, executed and delivered by the Company, and assuming due
execution and delivery of this Agreement by the Underwriter, are the valid and
legally binding obligations of the Company, subject to applicable bankruptcy,
reorganization, insolvency, moratorium, and other similar laws applicable to
creditor's rights generally and also subject to any limitations on
enforceability which may be imposed by application of equitable principles.
except no opinion need be expressed as to the enforceability of the indemnity
provisions contained in Section 6 or the contribution provisions contained in
Section 7 of this Agreement.
(v) the certificates evidencing the Shares of Common Stock and
Warrants 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; at all times during the term
of the Warrants the shares of Common Stock of the Company issuable upon
exercise of the Warrants will have been duly authorized and reserved for
issuance upon such exercise of Warrants and at the price provided for, will be
duly and validly issued, fully paid and non- assessable.
(vi) 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 Shares, this Agreement, the
Warrants, or any action taken or to be taken by the Company pursuant to this
Agreement; and no such proceedings are known to such counsel to be contemplated
against the Company; to the best knowledge of such counsel, 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.
(vii) Neither the Company nor its subsidiaries is in violation
of or default under, nor will the execution and delivery of this Agreement or
the Warrants and the incurrence of the obligations herein or therein
contemplated, result in a violation of, or constitute a default under the
certificate or articles of incorporation or by-laws, or to the
12
best knowledge of such counsel, in the performance or observance of any material
obligations, agreements, covenants or conditions contained in any bond,
debenture, note or other evidence of indebtedness or in any 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 instrumentality or court, domestic or
foreign.
(viii) the Registration Statement has become effective under the
Act, and to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement is in effect and no proceedings for
that 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.
(ix) such counsel has participated in the preparation of the
Registration Statement and the Prospectus and 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 necessary to make the statements therein not misleading or that the
Prospectus or any supplement thereto contains 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 financial statements, notes thereto and other financial
information and statistical data contained therein, as to which such counsel
need express no opinion).
(x) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and other
documents are accurate and fairly present the information required to be shown,
and such counsel has examined 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.
(xi) no authorization, approval, consent, or license of any
governmental or regulatory authority or agency is necessary in connection with
the authorization, issuance, transfer, sale or delivery of the Securities 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 Securities (other than necessary
amendments to the Registration Statement) other than (a) registrations or
qualifications of the Securities under applicable state or foreign
13
securities or Blue Sky laws and (b) registration under the Act, and (c)
"clearance" from the National Association of Securities Dealers, Inc.
Such opinion shall also cover such matters incident to the
transactions contemplated hereby as the Underwriter or counsel for the
Underwriter 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. Notwithstanding the foregoing, such counsel may rely as to
all matters of law other than the law of the United States or of the States of
Delaware or New York upon opinions of counsel satisfactory to you, in which
case the opinion shall state that such counsel has no reason to believe that
you and they are not entitled to so rely.
(d) Intentionally Omitted.
(e) You shall have received letters prior to the Effective Date
and again on and as of the First Closing Date from Xxxxx Xxxxxxxx, LLP
independent public accountants for the Company, substantially in the form
approved by you.
(f) At the First Closing Date, (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 Date and the Company
shall have performed all of its obligations hereunder and satisfied all
conditions 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 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 in the business,
properties or 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, and the Company shall not have incurred any material
liabilities or 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 of
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 Closing Date, a
certificate signed by the Chairman of the Board or President and the principal
financial officer of the Company, dated as of the Closing Date, evidencing
compliance with the provisions of this subsection (f).
14
(h) Upon exercise of the option provided for in Section 2(b)
hereof, the obligations of the Underwriter to purchase and pay for the Option
Securities 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
contemplated by the Commission for additional information shall have been
complied with to the satisfaction of Xxxxxx X. Xxxxxxx, counsel to the
Underwriter; (ii) At the Option Closing Date there shall have been delivered to
you, the signed opinion of Xxxxxxxxx & Xxxxxxxxx, LLP, counsel for the Company,
dated as of the Option Closing Date, in form and substance satisfactory to
Xxxxxx X. Xxxxxxx, counsel to the Underwriter, 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(c) hereof, except that such
opinion, where appropriate, shall cover the Option Securities rather than the
First Securities. If the First Closing Date is the same as the Option Closing
Date, such opinions may be combined; (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 reasonably satisfactory to
Xxxxxx X. Xxxxxxx, counsel to the Underwriter, substantially the same in scope
and substance as the certificate furnished to you at the First Closing Date
pursuant to Section 4(f) hereof; (iv) At the Option Closing Date, there shall
have been delivered to you a letter in form and substance satisfactory to you
from Xxxxx Xxxxxxxx, LLP dated the Option Closing Date and addressed to the
Underwriter, confirming the information in their letter referred to in Section
4(e) hereof as of the date thereof and stating that, without any additional
investigation required, nothing has come to their attention during the period
from the ending date of their review referred to in said letter to a date not
more than five 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 Securities shall be
satisfactory in form and substance to the Underwriter and Xxxxxx X. Xxxxxxx,
counsel to the Underwriter, shall have been furnished with all such documents,
certificates and opinions as you may request in connection with this
transaction in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company or its compliance with
any of the covenants or conditions contained therein.
(i) 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
15
Underwriter under this Agreement may be canceled at, or at any time prior to,
each Closing Date by the Underwriter notifying the Company of such cancellation
in writing or by telegram at or prior to the applicable Closing Date. Any such
cancellation shall be without liability of the Underwriter to the Company.
5. Conditions of the Obligations of the Company.
The obligation of the Company to sell and deliver the Securities
is subject to the following conditions:
(a) The Registration Statement shall have become effective not
later than 10:00 A.M., New York time, on the day following the date of this
Agreement,; or on such later date as the Company and the Underwriter may agree
in writing.
(b) On the Closing Date, no stop 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 conditions to the obligations of the Company provided for
in this Section have been fulfilled on the First Closing Date but are not
fulfilled after the First Closing Date and prior to the Option Closing Date,
then only the obligation of the Company to sell and deliver the Option
Securities 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 from and against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense and investigation and all
attorneys' fees), to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement alleged untrue statement of any material fact
contained in (A) the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment thereof or supplement thereto, (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 Securities
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 thereof 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 Underwriter
specifically for use in the preparation of the Registration Statement or any
such
16
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) The Underwriter agree to 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, from and 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 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, in reliance upon and in conformity with
written information furnished to the Company by you specifically for use in the
preparation thereof. This indemnity agreement will be in addition to any
liability which the Underwriter 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. 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 as 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 indemnified party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is the
Underwriter or a person who controls such 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 Underwriter, it is advisable for the Underwriter or
17
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 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 all such Underwriter and controlling persons, which firm shall be
designated in writing by you). No settlement of any action against an
indemnified party shall be made without the consent of the indemnified party,
specified in this paragraph which shall not be unreasonably withheld in light of
all factors of importance to such indemnified party.
7. Contribution.
In order to provide for just and equitable contribution under
the Act in any case in which (i) the 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 the 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 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 Underwriter are responsible in the
aggregate for that portion of such losses, claims, damages or liabilities
represented by the percentage that the underwriting discounts per Share and
Warrant 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
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 omissions relates to information supplied by the Company or
the Underwriter, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriter agree that it would not be just and
equitable if the respective obligations of the Company and the Underwriter 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 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 Underwriter
18
and each person who controls the Underwriter shall be entitled to contribution
from the Company 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
Underwriter. No contribution shall be requested with regard to the settlement of
any matter from any party who did not consent to the settlement; provided,
however, that such consent shall not be unreasonably withheld in light of all
factors of importance to such party.
8. Cost and Expenses.
(a) Whether or not this Agreement becomes effective or the sale
of the Securities to the Underwriter 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 statement therein and all
amendments and exhibits thereto), each Preliminary Prospectus and the
Prospectus, as amended or supplemented, the fee of the National Association of
Securities Dealers, Inc. ("NASD") in connection with the filing required by the
NASD relating to the offering of the Securities contemplated hereby; all
expenses, including reasonable fees and disbursements of counsel in connection
with the qualification of the Securities under the state securities or blue sky
laws which the Underwriter shall designate; the cost of printing and furnishing
to the Underwriter copies of the Registration Statement, and the Preliminary
Prospectus, the Prospectus, this Agreement, and the Blue Sky Memorandum and the
cost of printing and certificates representing the securities comprising the
Securities. 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 Underwriter 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 Underwriter a non-accountable expense
allowance of $214,200. In the event the over-allotment option is exercised, the
Company shall pay to the Underwriter at the Option Closing Date an additional
amount equal to 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 Underwriter pursuant to Section
10 of this Agreement, the Company shall be liable for the accountable out of
pocket expenses of the Underwriter, including legal fees up to a maximum of
$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 Underwriter, including legal
fees but not in excess of $40,000.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from the Underwriter from any other person for
services as a finder in
19
connection with the proposed offering, and the Company agrees to indemnify and
hold harmless the Underwriter from and against any losses, claims, damages or
liabilities, joint or several which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fee), to which the indemnified party may become subject insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the claim of any person (other than an employee
of the party claiming indemnity) or entity that he or it is entitled to a
finder's fee in connection with the proposed offering by reason of such
person's or entity's influence or prior contact with the indemnifying party.
9. Effective Date.
The Agreement shall become effective upon its execution, except
that the Underwriter may, at its 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 the Underwriter in its discretion shall
first commence the initial public offering of any of the Securities. The time
of the initial public offering shall mean the time of release by you of the
first newspaper advertisement with respect to the Securities, or the time when
the Securities 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, 12, 13, 14 and 16 shall remain in effect notwithstanding such
termination.
10. Termination.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 12, 13,
14 and 16 may be terminated at any time prior to the First Closing Date, and
the option referred to in Section 2(b), if exercised, may be canceled, at any
time prior to the Option Closing Date, by the Underwriter if in its judgment it
is impracticable to offer for sale or to enforce contracts made for the resale
of the Securities 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 or the American Stock Exchange having been suspended or
limited, (iii) material governmental restrictions having been imposed on
trading in securities generally (which are not in force and effect on the date
hereof), (iv) a banking moratorium having been declared by federal or New York
state authorities, (v) an outbreak of major international hostilities or other
national or international calamity having occurred, (vi) the passage by the
Congress of the United States or by any state legislative body of similar
impact, of any act or measure, or the adoption of any orders, rules or
regulations by any government body or any authoritative accounting institute or
board, or any governmental executive, which is reasonably believed likely by
the Underwriter to have a material adverse impact on the business, financial
condition or financial statements of the Company, (vii) any material adverse
change in the financial or securities markets in the United States having
occurred since the date of this Agreement, or (viii) 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.
20
(b) If the Underwriter elects to prevent this Agreement from
becoming effective or to terminate this Agreement as provided in this Section
10 or in Section 9, the Company shall be promptly notified by the Underwriter,
by telephone or telegram, confirmed by letter.
11. Underwriter's Option.
On the First Closing Date, the Company will sell to the
Underwriter for a consideration of $120, and upon the terms and conditions set
forth in the form of annexed as an exhibit to the Registration Statement, an
option ("PO") to purchase an aggregate of 140,000 Shares and 140,000 Warrants.
The PO shall be for a five year term and the exercise prices shall be $7.50 per
Share and $.15 per Warrant with the Warrant to be identical to the Warrants
sold to the public. In the event of conflict in the terms of this Agreement and
the Warrant, the language of the Warrant shall control.
12. Representations, Warranties, and Agreements to Survive
Delivery.
The respective indemnities, agreements, representations,
warranties and other statements of the Company or its Principal Stockholders,
where appropriate, and the Underwriter 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 Underwriter, the Company or any of its officers or
directors or any controlling person and will survive delivery of any payment of
the Securities and the termination of this Agreement.
13. Notice.
All communications hereunder will be in writing and, except as
otherwise expressly provided herein, if sent to the Underwriter, will be
mailed, delivered or telegraphed and confirmed to them at Xxxxxxxxx Xxxxxx,
Inc. Xxx Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000 with a copy sent to
Xxxxxx X. Xxxxxxx, 33 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000 of
if sent to the Company, will be mailed, delivered or telegraphed and confirmed
to it at 000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 with a copy to Xxxxxxxxx
& Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx
Xxxxxxxxx, Esq.
14. Parties in Interest.
The Agreement herein set forth is made solely for the benefit of
the Underwriter, the Company and, to the extent expressed, the Principal
Stockholders, any person controlling the Company or the Underwriter, and
directors of the Company, nominees for directors of the Company (if any) named
in the Prospectus, the officers of the Company who have signed the Registration
Statement, and their respective executors, administrators, successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" shall not include any
purchasers, as such purchaser, from the Underwriter of the Securities.
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15. Director
For a period of three years from Effective Date, the Underwriter
will have the right to designate one person to be elected as a director of the
Company or to be an observer at the meeting.
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 the Company and the Underwriter in
accordance with its terms.
Very truly yours,
AMPLIDYNE, INC.
By: __________________________
Xxxxxxxx X. Xxxxx, President
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
Xxxxxxxxx Xxxxxx, Inc.
By: ___________________________
We hereby agree to be bound by the provisions of Sections 3(o)
and 12 hereof as corrected.
---------------------------
Xxxxxxxx X. Bians
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