EXHIBIT 1.1
1,550,000 Shares of Common Stock
CENTENNIAL SPECIALTY FOODS CORPORATION
UNDERWRITING AGREEMENT
_____________, 2003
X.X. Xxxxxx & Company, L.L.C.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Centennial Specialty Foods Corporation, a Delaware corporation (the
"Company"), hereby confirms its agreement with you (sometimes hereinafter
referred to as the "Representative") and with the other members of the
underwriting group (the "Underwriters") named on Schedule 1 hereto as follows:
1. Introductory. Subject to the terms and conditions herein contained, the
Company proposes to sell to the several Underwriters an aggregate of 1,550,000
shares (the "Firm Shares") of the Company's common stock, par value $0.0001 per
share (the "Common Stock"). The Company also proposes to sell to the
Underwriters not more than 232,500 additional shares of Common Stock (15% of the
number of shares constituting the Firm Shares) as determined by the
Representative as provided in Section 3 of this Agreement. Any and all shares of
Common Stock to be purchased by the Underwriters pursuant to such option are
referred to herein as the "Additional Shares." The Firm Shares and any
Additional Shares are collectively referred to herein as the "Shares."
2. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, each of the Underwriters that:
a. The Company has filed with the United States Securities and Exchange
Commission (the "Commission") a registration statement, and may have filed
one or more amendments thereto, on Form SB-2 (Registration No. 333-107892),
including in such registration statement and each such amendment, the
information called for by Part I, audited consolidated financial statements
of Xxxxxx Xxxxx Foods Inc. ("Xxxxxx Xxxxx") and the Company for the last two
years or such other period as is appropriate, the information called for by
Part II, the undertakings required by Form SB-2, the required signatures,
the consents of experts required by Form SB-2, the exhibits, a related
preliminary prospectus (a "Preliminary Prospectus") and any other
information or documents which are required for the registration of the
Shares, the warrants referred to in Section 5(p) (the "Representative's
Warrants") and the shares referred to in Section 5(p) purchasable upon
exercise of the Representative's Warrants (the "Representative's Warrant
Shares"), under the Securities Act of 1933, as amended (the "Act"). As used
in this Agreement, the term "Registration Statement" means such registration
statement, including incorporated documents, all exhibits and consolidated
financial statements and schedules thereto, as amended, when it becomes
effective, and shall include the information with respect to the Shares, the
Representative's Warrants, and the Representative's Warrant Shares and the
offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A of the General Rules and
Regulations promulgated under the Act (the "Regulations"), which information
is deemed to be included therein when it becomes effective as provided by
Rule 430A; the term "Preliminary Prospectus" means each prospectus included
in the Registration Statement, or any amendments thereto, before it becomes
effective under the Act and any prospectus filed by the Company with the
consent of the Representative pursuant to Rule 424(a) of the Regulations;
and the term "Prospectus" means the final prospectus included as part of the
Registration Statement, except that if the prospectus relating to the
securities covered by the Registration Statement in the form first filed on
behalf of the Company with the Commission pursuant to Rule 424(b) of the
Regulations shall differ from such final prospectus, the term "Prospectus"
shall mean the prospectus as filed pursuant to Rule 424(b) from and after
the date on which it shall have first been used.
b. When the Registration Statement becomes effective, and at all times
subsequent thereto, to and including the Closing Date (as defined in Section
3) and each Additional Closing Date (as defined in Section 3), and during
such longer period as the Prospectus may be required to be delivered in
connection with sales by the Underwriters or any dealers, and during such
longer period until any post-effective amendment thereto shall become
effective, the Registration Statement (and any post-effective amendment
thereto) and the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission any amendment or supplement to the
Registration Statement or the Prospectus) will contain all statements which
are required to be stated therein in accordance with the Act and the
Regulations, will comply with the Act and the Regulations, and will not
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, and no event will have occurred which
should have been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not then been set forth in such an
amendment or supplement; and no Preliminary Prospectus, as of the date filed
with the Commission, included any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; except that no
representation or warranty is made in this Section 2(b) with respect to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 8(b) with respect
to the Underwriters by or on behalf of the Underwriters expressly for
inclusion in any Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto.
c. Neither the Commission nor the "blue sky" or securities authority of
any jurisdiction has issued an order (a "Stop Order") suspending the
effectiveness of the Registration Statement, preventing or suspending the
use of any Preliminary Prospectus, the Prospectus, the Registration
Statement, or any amendment or supplement thereto, refusing to permit the
effectiveness of the Registration Statement, or suspending the registration
or qualification of the Shares, the Representative's Warrants, and the
Representative's Warrant Shares, nor has
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any of such authorities instituted or threatened to institute any
proceedings with respect to a Stop Order.
d. Any contract, agreement, instrument, lease, or license required to be
described in the Registration Statement or the Prospectus has been properly
described therein. Any contract, agreement, instrument, lease, or license
required to be filed as an exhibit to the Registration Statement has been
filed with the Commission as an exhibit to or has been incorporated as an
exhibit by reference into the Registration Statement.
e. The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, with full power and
authority, and all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and declarations and
filings with, all federal, state, local, and other governmental authorities
and all courts and other tribunals, to own, lease, license, and use its
properties and assets and to carry on the business in the manner described
in the Prospectus. Following the merger of Xxxxxx Xxxxx into the Company
which shall occur simultaneously with the purchase and sale of the Firm
Shares on the Closing Date as provided in Section 3, the sole subsidiary of
the Company will be Xxxxxx Canning Company ("Subsidiary"). Xxxxxx Xxxxx and
the Subsidiary are corporations duly organized and validly existing in good
standing under the laws of the States of Delaware and Colorado,
respectively, with full corporate powers and authority to own, lease, and
operate their properties and to conduct their businesses as described in the
Prospectus. Unless the context indicates otherwise, Xxxxxx Xxxxx shall mean,
for all purposes of this Agreement, Xxxxxx Xxxxx and the Subsidiary. The
Company and Xxxxxx Xxxxx are duly qualified to do business and are in good
standing in every jurisdiction in which its ownership, leasing, licensing,
or use of property and assets or the conduct of its business makes such
qualifications necessary.
f. The authorized capital stock of the Company consists of 47,000,000
shares of Common Stock, of which 3,500,000 shares of Common Stock are issued
and outstanding, and 3,000,000 shares of $0.0001 par value preferred stock,
of which 2,000,000 shares denominated as Series A Preferred Stock will be
issued and outstanding as of the Closing Date. No more than 150,000 shares
of the Company's common stock are issuable upon the exercise of outstanding
derivative securities. Each outstanding share of Common Stock is validly
authorized, validly issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, and has not been
issued and is not owned or held in violation of any preemptive rights of
stockholders. There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance of, any
share of capital stock of the Company or any security or other instrument
which by its terms is convertible into, exercisable for, or exchangeable for
capital stock of the Company, except as set forth above, and as may be
properly described in the Prospectus.
g. The consolidated financial statements of Xxxxxx Xxxxx and the
financial statements of the Company included in the Registration Statement
and the Prospectus fairly present with respect to the Company and Xxxxxx
Xxxxx the financial positions, the results of operations, and the other
information purported to be shown therein at the respective dates and for
the respective periods to which they apply. The financial statements have
been prepared in accordance with generally accepted accounting principles,
except to the extent that certain
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footnote disclosures regarding any stub period may have been omitted in
accordance with the applicable rules of the Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), consistently applied
throughout the periods involved, are correct and complete, and are in
accordance with the books and records of the Company and Xxxxxx Xxxxx. The
accountants whose reports on the audited financial statements are filed with
the Commission as a part of the Registration Statement are, and during the
periods covered by their reports included in the Registration Statement and
the Prospectus were, independent certified public accountants with respect
to the Company and Xxxxxx Xxxxx within the meaning of the Act and the
Regulations. The unaudited Pro Forma Consolidated Combined Financial
Statements included in the Prospectus have been prepared in accordance with
the Act and the Regulations. No other financial statements are required by
Form SB-2 or otherwise to be included in the Registration Statement or the
Prospectus. There has at no time been a material adverse change in the
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company or Xxxxxx Xxxxx from the
latest information set forth in the Registration Statement or the
Prospectus, except as may be properly described in the Prospectus.
h. There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, or, to the
knowledge of the Company, threatened or proposed with respect to the Company
or Xxxxxx Xxxxx or their operations, businesses, properties, or assets,
except as may be properly described in the Prospectus or such as
individually or in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business, properties, or
assets of the Company or Xxxxxx Xxxxx. Neither the Company nor Xxxxxx Xxxxx
is in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree except as may be properly described
in the Prospectus or such as in the aggregate do not now have and will not
in the future have a material adverse effect upon the operations, business,
properties, or assets of the Company or Xxxxxx Xxxxx taken as a whole, nor
is the Company or Xxxxxx Xxxxx required to take any action in order to avoid
any such violation or default.
i. The Company and Xxxxxx Xxxxx have good and marketable title in fee
simple to all real properties and good title to all other properties and
assets which the Prospectus indicates are owned by them, free and clear of
all liens, security interests, pledges, charges, encumbrances, and mortgages
except as may be properly described in the Prospectus or such as in the
aggregate do not now have and will not in the future have a material adverse
effect upon the operations, business, properties, or assets of the Company
or Xxxxxx Xxxxx. No real property owned, leased, licensed, or used by the
Company or Xxxxxx Xxxxx lies in an area which is, or to the knowledge of the
Company will be, subject to zoning, use, or building code restrictions which
would prohibit, and no state of facts relating to the actions or inaction of
another person or entity or his or its ownership, leasing, licensing, or use
of any real or personal property exists or will, to the knowledge of the
Company, exist which would prevent, the continued effective ownership,
leasing, licensing, or use of such real property in the business of the
Company or Xxxxxx Xxxxx, as presently conducted or as the Prospectus
indicates they contemplate conducting, except as may be properly described
in the Prospectus or such as in the aggregate do not now have and will not
in the future have a material adverse effect upon the operations, business,
properties, or assets of the Company or Xxxxxx Xxxxx.
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j. Neither the Company nor Xxxxxx Xxxxx is, nor to the knowledge of the
Company is any other party, now or is expected by the Company to be in
material violation or breach of, or in material default with respect to
complying with, any material provision of any contract, agreement,
instrument, lease, license, arrangement, or understanding which is material
to the Company or Xxxxxx Xxxxx, and each such contract, agreement,
instrument, lease, license, arrangement, and understanding is in full force
and is the legal, valid, and binding obligation of the parties thereto and
is enforceable as to them in accordance with its terms. The Company and
Xxxxxx Xxxxx enjoy peaceful and undisturbed possession under all leases and
licenses under which they are operating. Neither the Company nor Xxxxxx
Xxxxx is a party to or bound by any contract, agreement, instrument, lease,
license, arrangement, or understanding, or subject to any charter or other
restriction, which has had or which the Company based on its current
knowledge believes may in the future have a material adverse effect on the
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company or Xxxxxx Xxxxx. Neither the
Company nor Xxxxxx Xxxxx is in violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation or bylaws.
k. All patents, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, franchises, recipes, formulas,
technology, know-how and other intangible properties and assets (all of the
foregoing being herein called "Intangibles") that the Company or Xxxxxx
Xxxxx owns or has pending, or under which they are licensed, are in good
standing and currently uncontested. Except as otherwise disclosed in the
Registration Statement, the Intangibles are owned by the Company or Xxxxxx
Xxxxx, free and clear of all liens, security interests, pledges, and
encumbrances. The Company or Xxxxxx Xxxxx has registered or is registering
their trademarks, "Centennial Specialty Foods," the Centennial logo and the
"Xxxxxx" and "Xxxxx" brand names on the Principal Register of the United
States Patent and Trademark Office. There is no right under any Intangible
necessary to the business of the Company or Xxxxxx Xxxxx, as presently
conducted or as the Prospectus indicates they contemplate conducting (except
as may be so designated in the Prospectus). To the best knowledge of the
Company, neither the Company nor Xxxxxx Xxxxx has infringed and is not
infringing any Intangibles of others and the Company nor Xxxxxx Xxxxx has
not received notice of infringement with respect to asserted Intangibles of
others. To the knowledge of the Company, there is no infringement by others
of Intangibles of the Company or Xxxxxx Xxxxx. To the knowledge of the
Company, there is no Intangible of others which has had or may in the future
have a materially adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or future prospects
of the Company or Xxxxxx Xxxxx taken as a whole.
l. Neither the Company nor Xxxxxx Xxxxx, nor any director, officer,
agent, employee, or other person acting with authority on behalf of the
Company or Xxxxxx Xxxxx has, directly or indirectly: used any corporate
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended by the
International Anti-Bribery Act of 1998; or made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment. Neither the Company
nor
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Xxxxxx Xxxxx has accepted any material advertising allowances or marketing
allowances from suppliers to the Company or to Xxxxxx Xxxxx and, to the
extent any advertising allowance has been accepted, the Company or Xxxxxx
Xxxxx has provided proper documentation to the supplier with respect to
advertising as to which the advertising allowance has been granted.
m. The Company has all requisite power and authority to execute and
deliver, and to perform thereunder each of this Agreement and the
Representative's Warrants. All necessary corporate proceedings of the
Company have been duly taken to authorize the execution and delivery, and
performance thereunder by the Company of this Agreement and the
Representative's Warrants. This Agreement has been duly authorized,
executed, and delivered by the Company, is a legal, valid, and binding
obligation of the Company, and is enforceable as to the Company in
accordance with its terms. The Representative's Warrants have been duly
authorized by the Company and, when executed and delivered by the Company,
will be legal, valid, and binding obligations of the Company, and will be
enforceable against the Company in accordance with their terms. No consent,
authorization, approval, order, license, certificate, or permit of or from,
or declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by the
Company for the execution and delivery, or performance thereunder, by the
Company of this Agreement or the Representative's Warrants except filings
under the Act which have been or will be made before the Closing Date and
such consents consisting only of consents under "blue sky" or securities
laws which are required in connection with the transactions contemplated by
this Agreement and which have been obtained at or prior to the date of this
Agreement. No consent of any party to any contract, agreement, instrument,
lease, license, arrangement, or understanding to which the Company or Xxxxxx
Xxxxx is a party, or to which any of their properties or assets are subject,
is required for the execution or delivery, or performance thereunder of this
Agreement or the Representative's Warrants; and the execution and delivery,
and performance thereunder of this Agreement and the Representative's
Warrants will not violate, result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time or both) entitle any
party to terminate or call a default under any such contract, agreement,
instrument, lease, license, arrangement, or understanding, or violate or
result in a breach of any term of the Certificate of Incorporation, as
amended and restated, or bylaws (or other operating agreement) of the
Company or Xxxxxx Xxxxx, or violate, result in a breach of, or conflict with
any law, rule, regulation, order, judgment, or decree binding on the Company
or Xxxxxx Xxxxx or to which any of their operations, businesses, properties,
or assets are subject.
n. The Shares, the Representative's Warrants and the Representative's
Warrant Shares are validly authorized and reserved for issuance. The Shares,
when issued and delivered in accordance with this Agreement, and the
Representative's Warrant Shares, when issued and delivered upon exercise of
the Representative's Warrants and upon payment of the exercise price
therefor, will be validly issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, and will not be
issued in violation of any preemptive rights of stockholders, and the
Representative or its assigns will receive good title to the Shares
purchased, the Representative will receive good title to the
Representative's Warrants purchased and any purchaser of the
Representative's Warrant Shares will upon payment of the exercise price of
the Representative's Warrants receive good title thereto, all
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such title free and clear of all liens, security interests, pledges,
charges, encumbrances, stockholders' agreements, and voting trusts.
o. The Shares, the Representative's Warrants and the Representative's
Warrant Shares conform to all statements relating thereto contained in the
Registration Statement and the Prospectus.
p. Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may
otherwise be properly described in the Prospectus, neither the Company nor
Xxxxxx Xxxxx has (i) issued any securities or incurred any liability or
obligation, primary or contingent, for borrowed money, (ii) entered into any
transaction not in the ordinary course of business, or (iii) declared or
paid any dividend on its capital stock.
q. Neither the Company nor any of its officers, directors, or affiliates
(as defined in the Regulations), has taken or will take, directly or
indirectly, prior to the termination of the distribution of securities
contemplated by this Agreement, any action designed to stabilize or
manipulate the price of any security of the Company, or which has caused or
resulted in, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the
Company, to facilitate the sale or resale of the Shares.
r. The Company has not incurred any liability for a fee, commission, or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement.
s. Except as disclosed in the Prospectus, the Company has obtained from
each stockholder who owns shares of Common Stock or derivative securities
convertible into shares of the Common Stock, his, her or its enforceable
written agreement that for a period of 12 months from the Effective Date,
he, she or it will not, without the Representative's prior written consent,
which shall not be unreasonably withheld, offer, sell, contract to sell,
pledge, hypothecate, or grant any option to purchase, or otherwise dispose
of, directly or indirectly, any shares of Common Stock or any security or
other instrument convertible into or exchangeable for shares of Common Stock
(except that, subject to compliance with applicable securities laws, any
such stockholder may transfer his, her or its stock in a transaction
specified in such agreement, provided that any such transferee shall agree,
as a condition to such transfer, to be bound by the restrictions set forth
in the agreement, and further provided that the transferor, except in the
case of the transferor's death, shall continue to be deemed the beneficial
owner of such shares in accordance with Regulation 13d-(3) of the Exchange
Act).
t. Except as otherwise provided in the Registration Statement, no person
or entity has the right to require registration of shares of Common Stock or
other securities of the Company because of the filing or effectiveness of
the Registration Statement.
u. The Company is eligible to use Form SB-2 for registration of the
Shares, the Representative's Warrants and the Representative's Warrant
Shares.
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v. No unregistered securities of the Company, of an affiliate of the
Company or of a predecessor of the Company have been sold within three years
prior to the date hereof, except as described in the Registration Statement.
w. Except as set forth in the Registration Statement, there is and at
the Closing Date there will be no action, suit or proceeding before any
court, arbitration tribunal or governmental agency, authority or body
pending or, to the knowledge of the Company, threatened which might result
in judgments against the Company or Xxxxxx Xxxxx not adequately covered by
insurance or which collectively might result in any material adverse change
in the condition (financial or otherwise), the business or the prospects of
the Company or Xxxxxx Xxxxx or would materially affect the properties or
assets of the Company or Xxxxxx Xxxxx.
x. The Company and Xxxxxx Xxxxx have filed all federal and state tax
returns which are required to be filed by them and have paid all taxes shown
on such returns and all assessments received by them to the extent such
taxes have become due. All taxes with respect to which the Company or Xxxxxx
Xxxxx is obligated have been paid or adequate accruals have been set up to
cover any such unpaid taxes.
y.Except as set forth in the Registration Statement:
i. The Company and Xxxxxx Xxxxx have obtained all permits, licenses
and other authorizations which are required under the Environmental Laws
for the ownership, use and operation of each location owned, operated or
leased by the Company or Xxxxxx Xxxxx (the "Property"), all such permits,
licenses and authorizations, if any, obtained are in effect, no appeal
nor any other action is pending to revoke, suspend or modify any such
permit, license or authorization, and the Company and Xxxxxx Xxxxx are in
material compliance with all material terms and conditions of all such
permits, licenses and authorizations, if any, obtained by the Company or
Xxxxxx Xxxxx.
ii. The Company, Xxxxxx Xxxxx and the Property are in compliance
with all material provisions of Environmental Laws including, without
limitation, all restrictions, conditions, standards, limitations,
prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder.
iii. Neither the Company nor Xxxxxx Xxxxx has, and to the knowledge
of the Company, no other person has, released, disposed of, placed,
stored, buried or dumped any Hazardous Substances, Oils, Pollutants or
Contaminants or any other wastes produced by, or resulting from, any
business, commercial, or industrial activities, operations, or processes,
on, beneath, or adjacent to the Property or any property formerly owned,
operated or leased by the Company or Xxxxxx Xxxxx except for inventories
of such substances to be used, and wastes generated therefrom, in the
ordinary course of business of the Company or Xxxxxx Xxxxx (which
inventories and wastes, if any, were and are stored or disposed of
materially in
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accordance with applicable laws and regulations and in a manner such that
there has been no material release or imminent threat of release of any
such substances into the environment).
iv. There exists no written or tangible report, synopsis or summary
of any asbestos, toxic waste or Hazardous Substances, Oils, Pollutants or
Contaminants investigation made with respect to all or any portion of the
Property or other assets of the Company or Xxxxxx Xxxxx (whether or not
prepared by experts and whether or not in the possession of the executive
officers of the Company).
v. Definitions: As used herein:
(1) Environmental Laws means all federal, state and local laws,
regulations, rules and ordinances relating to pollution or protection
of the environment, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Substances, Oils,
Pollutants or Contaminants into the indoor or outdoor environment
(including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, Release, transport or handling of Hazardous
Substances, Oils, Pollutants or Contaminants.
(2) Hazardous Substances, Oils, Pollutants or Contaminants means
all substances defined as such in the National Oil and Hazardous
Substances Pollutant Contingency Plan, or defined as such under any
Environmental Law.
(3) Release means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environmental
(including, without limitation, ambient air, surface water,
groundwater, and surface or subsurface strata) or into or out of any
property, including the movement of Hazardous Substances, Oils,
Pollutants or Contaminants through or in the air, soil, surface
water, groundwater or any property.
z. No authorization, approval, consent or order of, or filing with, any
Federal, state or local governmental body, authority, self regulatory
authority, agency or official (collectively, the "Governmental Authorities")
is necessary in connection with the issuance and sale of the Shares and the
consummation of the transactions contemplated hereby, except such as may be
required by the NASD or have been obtained under the applicable laws, rules
and regulations maintained and enforced by the Governmental Authorities in
their respective jurisdictions or under the Act, state securities or Blue
Sky laws or regulations.
aa. The pro forma financial or other information and related notes
included in the Registration Statement, each Preliminary Prospectus and the
Prospectus comply in all material respects with the requirements of the Act
and the Regulations of the Commission thereunder and present fairly the pro
forma information shown, as of the dates and for the periods covered by such
pro forma information. Such pro forma information, including any related
notes and schedules, has been prepared on a basis consistent with the
historical financial statements and other historical information, as
applicable, included in the
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Registration Statement, the Preliminary Prospectus and the Prospectus,
except for the pro forma adjustments specified therein, and give effect to
assumptions described or footnoted therein to give effect to historical and,
if applicable, proposed transactions described in the Registration
Statement, each Preliminary Prospectus and the Prospectus.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
3. Purchase, Sale, and Delivery of the Shares. On the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters, severally and not jointly, and the
Underwriters, severally and not jointly, agree to purchase from the Company the
number of Firm Shares set forth opposite the Underwriters' names in Schedule 1
hereto.
The purchase price per Firm Share to be paid by the Underwriters shall be
$4.50. The initial public offering price of the Shares shall be $5.00.
Payment for the Firm Shares by the Underwriters shall be made by wire
transfer or by certified or official bank check in clearing house funds, payable
to the order of the Company at the offices of X.X. Xxxxxx & Company, L.L.C.,
0000 XXX Xxxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, or at such other
place as the Representative shall determine and advise the Company by at least
two full days' notice in writing, upon delivery of the Shares to the
Representative. Such delivery and payment shall be made at 10:00 a.m., Mountain
Time, on the third business day following the time of the initial public
offering, as defined in Section 10(a) hereof, unless the Commission declares the
Registration Statement effective after 4:30 p.m. Eastern time, in which event
delivery and payment shall be made on the fourth business day following the time
of the initial public offering. The time and date of such delivery and payment
are herein called the "Closing Date." Delivery of the Shares may be made, at the
option of the Representative, through the facilities of The Depository Trust
Company.
In addition, the Company hereby grants to the Representative the option to
purchase all or a portion of the Additional Shares as may be necessary to cover
over-allotments, at the same purchase price per Additional Share as the price
per Firm Share provided for in this Section 3. The Representative may purchase
Additional Shares when exercising such option, in its sole discretion. This
option may be exercised by the Representative on the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, at any time
and from time to time on or before the 45th day following the Effective Date of
the Registration Statement, by written notice by the Representative to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the time and date, as determined
by the Representative, when such Additional Shares are to be delivered (each
such time and date are herein called an "Additional Closing Date"); provided,
however, that no Additional Closing Date shall be earlier than the Closing Date
nor earlier than the third business day after the date on which the notice of
the exercise of the option shall have been given nor later than the eighth
business day after the date on which such notice shall have been given; and
further provided, that
10
not more than two Additional Closings shall be noticed and held following the
initial purchase of Additional Shares by the Representative.
Payment for the Additional Shares shall be made by wire transfer or by
certified or official bank check in clearing house funds payable to the order of
the Company at the offices of X.X. Xxxxxx & Company, L.L.C., 0000 XXX Xxxxxxx,
Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, or at such other place as the
Representative shall determine and advise the Company by at least two full days'
notice in writing, upon delivery of certificates representing the Additional
Shares to you.
Certificates for the Shares purchased shall be registered in such name or
names and in such authorized denominations as you may request in writing at
least two full business days prior to the Closing Date or Additional Closing
Date, as applicable. The Company shall permit the Representative to examine and
package such certificates for delivery at least one full business day prior to
any such closing with respect thereto and the Representative may require
delivery of such Additional Shares through the facilities of The Depository
Trust Company.
If for any reason one or more Underwriters shall fail or refuse (otherwise
than for a reason sufficient to justify the termination of this Agreement under
the provisions of Section 10 hereof) to purchase and pay for the number of Firm
Shares agreed to be purchased by such Underwriter, the Company shall immediately
give notice thereof to the Representative, and the non-defaulting Underwriters
shall have the right within 24 hours after the receipt by the Representative of
such notice, to purchase or procure one or more other Underwriters to purchase,
in such proportions as may be agreed upon among the Representative and such
purchasing Underwriter or Underwriters and upon the terms herein set forth, the
Firm Shares which such defaulting Underwriter or Underwriters agreed to
purchase. If the non-defaulting Underwriters fail so to make such arrangements
with respect to all such Firm Shares, the number of Firm Shares which each
non-defaulting Underwriter is otherwise obligated to purchase under the
Agreement shall be automatically increased pro rata to absorb the remaining Firm
Shares which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the Firm Shares which the defaulting Underwriter or Underwriters
agreed to purchase in excess of 10% of the total number of Firm Shares which
such non-defaulting Underwriter agreed to purchase hereunder, and provided
further that the non-defaulting Underwriters shall not be obligated to purchase
any Firm Shares which the defaulting Underwriter or Underwriters agreed to
purchase if such additional purchase would cause the Underwriter to be in
violation of the net capital rule of the Commission or other applicable law. If
the total number of Firm Shares which the defaulting Underwriter or Underwriters
agreed to purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company shall have the right, within the 24 hours next
succeeding the 24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to the Representative for the purchase
of such Firm Shares on the terms herein set forth. In any such case, either the
Representative or the Company shall have the right to postpone the Closing for
not more than seven business days after the date originally fixed as the Closing
in order that any necessary changes in the Registration Statement, the
Prospectus or any other documents or arrangements may be made. If neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
24-hour periods stated above for the purchase of
11
all the Firm Shares which the defaulting Underwriter or Underwriters agreed to
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company to any non-defaulting
Underwriter, except the Company shall be liable for actual expenses incurred by
the Representative as provided in Section 10 hereof, and without any liability
on the part of any non-defaulting Underwriter to the Company.
Nothing contained herein shall relieve any defaulting Underwriter of its
liability, if any, to the Company or to the remaining non-defaulting
Underwriters for damages occasioned by its default hereunder.
4. Offering. The Underwriters are to make a public offering of the Shares as
soon, on or after the effective date of the Registration Statement, as the
Representative deems it advisable so to do. The Shares are to be initially
offered to the public at the initial public offering price as provided for in
Section 3 (such price being herein called the "public offering price"). After
the initial public offering, you may from time to time increase or decrease the
price of the Shares in your sole discretion, by reason of changes in general
market conditions or otherwise.
5. Covenants of the Company. The Company covenants that it shall:
a. Use its best efforts to cause the Registration Statement to become
effective as promptly as possible. If the Registration Statement has become
or becomes effective with a form of Prospectus omitting certain information
pursuant to Rule 430A of the Regulations, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will file the Prospectus,
properly completed, pursuant to Rule 424(b) within the time period
prescribed and will provide written evidence satisfactory to the
Representative of such timely filing.
b. Notify you immediately, and confirm such notice in writing, (i) when
the Registration Statement and any post-effective amendment thereto become
effective, (ii) of the receipt of any comments from the Commission or the
"blue sky" or securities authority of any jurisdiction regarding the
Registration Statement, any post-effective amendment thereto, the
Prospectus, or any amendment or supplement thereto, and (iii) of the receipt
of any notification with respect to a Stop Order or the initiation or
threatening of any proceeding with respect to a Stop Order. The Company will
use its best efforts to prevent the issuance of any Stop Order and, if any
Stop Order is issued, to obtain the lifting thereof as promptly as possible.
c. During the time when a prospectus relating to the Shares is required
to be delivered hereunder or under the Act or the Regulations, comply so far
as it is able with all requirements imposed upon it by the Act, as now
existing and as hereafter amended, and by the Regulations, as from time to
time in force, so far as necessary to permit the continuance of sales of or
dealings in the Shares and Representative's Warrant Shares in accordance
with the provisions hereof and the Prospectus. If, at any time when a
prospectus relating to the Shares or Representative's Warrant Shares is
required to be delivered hereunder or under the Act or the Regulations, any
event shall have occurred as a result of which, in the reasonable opinion of
counsel for the Company or counsel for the Representative, the Registration
Statement or the Prospectus, as then amended or supplemented, contains any
untrue statement of a material
12
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or if, in the
opinion of either of such counsel, it is necessary at any time to amend or
supplement the Registration Statement or the Prospectus to comply with the
Act or the Regulations, the Company will immediately notify you and promptly
prepare and file with the Commission an appropriate amendment or supplement
(in form and substance satisfactory to you) which will correct such
statement or omission or which will effect such compliance and will use its
best efforts to have any such amendment declared effective as soon as
possible.
d. Deliver without charge to you at locations of your choosing such
number of copies of each Preliminary Prospectus and Prospectus as you may
reasonably request and, as soon as the Registration Statement or any
amendment thereto becomes effective or a supplement is filed, deliver
without charge to you two signed copies of the Registration Statement or
such amendment thereto, as the case may be, including exhibits, and two
copies of any supplement thereto, and deliver without charge to you such
number of copies of the Prospectus, the Registration Statement, and
amendments and supplements thereto, if any, with and without exhibits, as
you may reasonably request for the purposes contemplated by the Act.
e. Endeavor in good faith, in cooperation with you, at or prior to the
time the Registration Statement becomes effective, to qualify the Shares and
Representative's Warrant Shares for offering and sale under the "blue sky"
or securities laws of such jurisdictions as you may designate; provided,
however, that no such qualification shall be required in any jurisdiction
where, as a result thereof, the Company would be subject to service of
general process or to taxation as a foreign corporation doing business in
such jurisdiction to which it is not then subject. In each jurisdiction
where such qualification shall be effected, the Company will, unless you
agree in writing that such action is not at the time necessary or advisable,
file and make such statements or reports at such times as are or may be
required by the laws of such jurisdiction.
f. Make generally available (within the meaning of Section 11(a) of the
Act and the Regulations) to its security holders as soon as practicable, but
not later than 15 months after the date of the Prospectus, an earnings
statement (which need not be certified by independent certified public
accountants unless required by the Act or the Regulations, but which shall
satisfy the provisions of Section 11(a) of the Act and the Regulations)
covering a period of at least 12 months beginning after the effective date
of the Registration Statement.
g. For a period of 12 months after the date of the Prospectus, not,
without your prior written consent, offer, issue, sell, contract to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of the Company's preferred stock, any shares of
Common Stock or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for shares of preferred
stock or Common Stock, except as provided in Section 3 and except (i) with
the Representative's prior written consent, (ii) in connection with an
acquisition, (iii) upon exercise of the Representative's Warrants, and (iv)
the grant of options and issuance of shares of Common Stock on exercise
thereof to the independent directors of the Company under the 2003
Non-Employee Directors' Stock Option Plan.
13
h. For a period of five years after the Effective Date of the
registration statement, furnish you, without charge, the following, unless
and to the extent such information is posted on the Company's web site or is
accessible through the Commission's web site:
i. Within 90 days after the end of each fiscal year, subject to
extension for up to an additional 15 days, three copies of consolidated
financial statements certified by independent certified public
accountants, including a balance sheet, statement of operations, and
statement of cash flows of the Company and its then existing
subsidiaries, with supporting schedules (if applicable), prepared in
accordance with generally accepted accounting principles, at the end of
such fiscal year and for the 12 months then ended;
ii. As soon as practicable after they have been sent to
stockholders of the Company or filed with the Commission, three copies
of each annual and interim financial and other report or communication
sent by the Company to its stockholders or filed with the Commission;
iii. As soon as practicable, two copies of every press release and
every material news item and article in respect of the Company or its
affairs which was released by the Company;
iv. Notice of any regular quarterly or special meeting of the
Company's Board of Directors concurrently with the sending of such
notice to the Company's directors;
v. As soon a practicable after filing, copies of all materials
filed with the Commission pursuant to the Exchange Act if such material
is not accessible via the Commission's website; and
vi. Such additional documents and information with respect to the
Company and its affairs and the affairs of any of its subsidiaries as
you may from time to time reasonably request.
i. Prior to the Effective Date, and continuing for such period of time
that the Company's Common Stock is publicly traded, designate and maintain
an Audit Committee comprised of members that comply with the obligations
imposed by applicable law and the Company's procedures and policies, and
designate and maintain a Compensation Committee, the composition of which
shall comply with applicable law and the listing standards of the exchange
or automated quotation system on which the Company's shares trade, the
members of which shall be subject to your reasonable approval, which will
generally supervise the financial affairs of the Company and review
executive compensation, respectively.
j. Furnish to you as early as practicable prior to the Closing Date and
any Additional Closing Date, as the case may be, but not less than two full
business days prior thereto, a copy of the latest available unaudited
interim consolidated financial statements of the Company which have been
read by the Company's independent certified public accountants, as stated in
their letters to be furnished pursuant to Section 7(e).
14
k. File no amendment or supplement to the Registration Statement or
Prospectus at any time, whether before or after the Effective Date of the
Registration Statement, unless such filing shall comply with the Act and the
Regulations and unless the Representative shall previously have been advised
of such filing and furnished with a copy thereof, and the Representative and
counsel for the Representative shall have approved such filing in writing
within a reasonable time of receipt thereof.
l. Comply with all periodic reporting and proxy solicitation
requirements which may from time to time be applicable to the Company as a
result of the Company's registration under the Exchange Act on a
registration statement on Form 8-A .
m. Comply with all provisions of all undertakings contained in the
Registration Statement.
n. Prior to the Closing Date or any Additional Closing Date, as the case
may be, issue no press release or other communication, directly or
indirectly, and hold no press conference and grant no interviews with
respect to the Company, the financial condition, results of operations,
business, properties, assets, or liabilities of the Company, or this
offering, without you're the Representative's prior written consent.
o. File timely with the Commission, The Nasdaq Stock Market and the
Boston Stock Exchange all reports required to be filed.
p. On or prior to the Closing Date, sell to the Representative for a
total purchase price of $10.00, Representative's Warrants entitling the
Representative or its assigns to purchase 155,000 shares of Common Stock at
a price equal to 140% of the initial public offering price of the Shares
($7.00), with the terms of the Representative's Warrants, including exercise
period, anti-dilution provisions, exercise price, exercise provisions,
transferability, and registration rights, to be in the form filed as an
exhibit to the Registration Statement.
q. Until expiration of the Representative's Warrants, keep reserved a
sufficient number of shares of Common Stock for issuance as Representative's
Warrant Shares upon full exercise of the Representative's Warrants.
r. Upon the Closing Date, engage a financial public relations firm
acceptable to the Representative to assist the Company in preparing regular
announcements and disseminating such information to the financial community,
such engagement of such public relations firm or another firm reasonably
acceptable to the Representative to extend for two consecutive six month
terms; provided the Representative shall have the right to reasonably
approve the public relations firm before the renewal of any six-month term,
which approval shall not be unreasonably withheld.
s. Adopt procedures for the application of the net proceeds it receives
from the sale of the Shares and apply the net proceeds from the sale of the
Shares substantially in the manner set forth in the Registration Statement,
which does not contemplate repayment of debt to officers, directors,
stockholders, derivative security holders or affiliates of the Company,
unless any
15
deviation from such application is in accordance with the Registration
Statement and occurs only after approval by the Board of Directors of the
Company and then only after the Board of Directors has obtained the written
opinion of recognized legal counsel experienced in federal and state
securities laws as to the propriety of any such deviation.
t. Within the time period which the Prospectus is required to be
delivered under the Act, comply, at its own expense, with all requirements
imposed upon it by the Act, as now or hereafter amended, by the Rules and
Regulations, as from time to time may be enforced, and by any order of the
Commission, so far as necessary to permit the continuance of sales or
dealing in the Shares.
u. At the Closing, deliver to the Representative true and correct copies
of the Certificate of Incorporation, as amended and restated, of the Company
and Xxxxxx Xxxxx, all such copies to be certified by the Secretary of the
Company and Xxxxxx Xxxxx; true and correct copies of the bylaws of the
Company and Xxxxxx Xxxxx and of the minutes of all meetings of the directors
and stockholders of the Company and Xxxxxx Xxxxx held prior to the Closing
which in any way relate to the subject matter of this Agreement or the
Registration Statement.
v. Use all reasonable efforts to comply or cause to be complied with the
conditions precedent to the several obligations of the Underwriters in
Section 7 hereof.
w. File with the Commission all required information concerning use of
proceeds of the Public Offering in Forms 10-QSB and 10-KSB (or 10-Q and 10-K
as required) in accordance with the provisions of the Exchange Act and to
provide a copy of such reports to the Representative and its counsel if such
reports are not accessible on the Company's web site or on the Commission's
web site.
x. Supply to the Representative and the Representative's counsel at the
Company's cost, three leather-bound volumes each containing material
documents (including but not limited to all documents and appropriate
correspondence filed with or received from the Commission, NASD, Nasdaq and
Boston Stock Exchange and all closing documents) relating to the offering of
the Shares within a reasonable time after the Closing, not to exceed 120
days.
y. As soon as possible prior to the Effective Date, and as a condition
of the Underwriter's obligations hereunder, (i) have the Company listed on
an accelerated basis in the Daily News Supplement of Standard and Poor's
Corporation Records and maintain such a listing for not less than 10 years
from the Closing Date in Standard & Poor's Standard Corporation Records, if
required for blue sky exemptions or qualifications; (ii) have the Common
Stock authorized for listing on The Nasdaq SmallCap Market and Boston Stock
Exchange as of the Effective Date, on the Closing Date, on the Additional
Closing Date and thereafter for at least 10 years provided the Company is in
compliance with The Nasdaq SmallCap Market's and Boston Stock Exchange's
maintenance requirements; and (iii) have appointed Corporate Stock Transfer,
Inc. in Denver, Colorado, or a firm acceptable to the Representative as its
transfer agent, subject to such transfer agent providing the competitive
pricing.
16
z. Continue, for a period of at least five years following the Effective
Date of the Registration Statement, to appoint such auditors as are
reasonably acceptable to the Representative, which auditors shall (i)
prepare consolidated financial statements in accordance with the Regulations
and (ii) review (but not audit) the Company's consolidated financial
statements for each of the first three fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
10-QSB (or 10-Q as required) quarterly report and the mailing of quarterly
financial information to security holders.
aa. For a period of five years after the Effective Date, distribute an
annual report to all stockholders meeting the requirements of Section 14a-3
of the Exchange Act and setting forth clearly the financial position of the
Company.
bb. Cause its transfer agent to furnish the Representative a duplicate
copy of the daily transfer sheets prepared by the transfer agent during the
six-month period commencing on the Effective Date of the Registration
Statement and instruct the transfer agent to timely provide, upon the
reasonable request of the Representative, duplicate copies of such transfer
sheets and/or a duplicate copy of a list of stockholders, all at the
Company's expense, for a period of 4-1/2 years after such six-month period.
cc. Refrain from filing a Form S-8 registration statement or utilizing
Regulation S for a period of 12 months from the Effective Date of the
Registration Statement without the Representative's prior written consent.
dd. Afford the Representative the right, but not the obligation,
commencing on the Effective Date and surviving for a period of five years,
to designate an observer to attend meetings of the Board of Directors. The
designee, if any, and the Representative will receive notice of each meeting
of the Board of Directors in accordance with Delaware law. Any such designee
will receive reimbursement for all reasonable costs and expenses incurred in
attending meetings of the Board of Directors, including but not limited to,
food, lodging and transportation, together with such other cash fee or such
cash compensation as is paid by the Company to the highest compensated
outside member of the Board of Directors. Moreover, to the extent permitted
by law, the Representative and its designee shall be indemnified for the
actions of such designee as an observer to the Board of Directors and in the
event the Company maintains a liability insurance policy affording coverage
for the acts of its officers and/or directors, to the extent permitted under
such policy, each of the Representative and its designee shall be an insured
under such policy. During the stated five-year period, the Representative's
adviser to the Company's Board of Directors will be (i) invited to attend
meetings of the Company's Board of Directors; (ii) provided with a copy of
all actions by unanimous written consent of the Board of Directors in lieu
of an actual meeting; (iii) furnished with a copy of all public filings by
the Company and Company press releases as released unless and to the extent
such filings and press releases are posted on the Company's web site or the
Commission's web site; (iv) updated by the Company's management on at least
a quarterly basis, regarding the Company's activities, prospects and
financial condition; and (v) advised promptly of material events to the
extent consistent with applicable law. During the initial two years after
the effective date, the Company will hold meetings of its Board of Directors
at intervals of at least quarterly. Any adviser designated by the
Representative, as
17
herein provided, shall be acceptable to the Company so long as such person
is not employed by or affiliated with a competitor of the Company (it being
understood that affiliation shall be defined as such term is used in the
Exchange Act and shall not encompass trading in the securities of, or
ownership of less than 5% of, common stock in a competitor to the Company),
which acceptance shall not be unreasonably withheld, and such designated
observer shall make certain representations in writing to the Company, as
the Company may reasonably request, concerning his responsibilities under
the federal securities laws with respect to information obtained by such
observer as a result of his attendance at meetings of the Board of Directors
of the Company and as a result of the receipt by him of other nonpublic
information concerning the Company.
ee. Use Xxxxx of Denver as its financial printer and pay all statements
rendered by Xxxxx in accordance with the letter of intent between the
Company and the Underwriter dated February 20, 2003.
ff. Cause stockholders owning up to a majority of the Company's shares
of Common Stock outstanding prior to the offering to place in an escrow
account an aggregate of 200,000 shares of Common Stock or such larger number
of shares as may be required by various states and agreed to by such
stockholders, at or prior to the Effective Date. Such shares of Common Stock
shall be subject to release from escrow upon: (i) the Company achieving net
income after tax exceeding $1.5 million in fiscal year 2004; (ii) the
Company achieving net income after tax exceeding $4.0 million in fiscal year
2005. In the event the Company fails to meet the criteria set forth above in
fiscal 2004 or fiscal 2005, the escrowed shares of Common Stock shall be
released at the earlier of: (i) seven years from the Effective Date, or (ii)
consummation of a merger, acquisition or exchange in which the Company is
not the surviving entity or in which the shareholders of the Company own
less than 50% of the outstanding capital stock of the surviving entity
following such transaction or the sale of all or substantially all of the
assets of the Company that is approved by a majority of the holders of the
outstanding shares excluding the shares held in the escrow account, or (iii)
such date required by states and agreed to by such stockholders.
gg. Comply in all material respects with The Nasdaq SmallCap Market and
Boston Stock Exchange listing criteria and rules of The Nasdaq SmallCap
Market and Boston Stock Exchange, including without limitation, their
corporate governance rules.
hh. Caused all officers, directors and holders of five percent or more
of the Common Stock of the Company to agree in writing not to, and the
Company agrees that it will not, sell, transfer, hypothecate or convey any
capital stock or derivative securities of the Company through a "Regulation
S" transaction for a minimum period of three years from the Effective Date.
ii. Comply in all material respects with the representations, warranties
and covenants of the Company and Xxxxxx Xxxxx contained in the Merger
Agreement between the Company and Xxxxxx Xxxxx.
18
6. Payment of Expenses. The Company hereby agrees to pay all expenses (subject
to the last sentence of this Section 6) in connection with the offering,
including but not limited to (a) the preparation, printing, filing,
distribution, and mailing of the Registration Statement and the Prospectus,
including NASD, SEC, The Nasdaq SmallCap Market and Boston Stock Exchange
filings and/or application fees, and the printing, filing, distribution, and
mailing of this Agreement, any Agreement Among Underwriters, Selected Dealers
Agreement, preliminary and final Blue Sky Memorandums, material to be circulated
to the Underwriters by you and other incidental or related documents, including
the cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus, and any amendments or supplements thereto, supplied and delivered to
the Representative in quantities and locations as this Representative requests,
(b) the issuance, sale, transfer, and delivery of the Firm Shares, Additional
Shares, the Representative's Warrants and the Representative's Warrant Shares,
including, without limitation, any original issue, transfer or other taxes
payable thereon and the costs of preparation, printing and delivery of
certificates representing such securities, as applicable, (c) the qualification
of the Firm Shares, Additional Shares, the Representative's Warrants and the
Representative's Warrant Shares under state or foreign "blue sky" or securities
laws, which qualification shall be undertaken by counsel to the Representative
at the Company's expense, (d) the fees and disbursements of counsel for the
Company and the accountants for the Company, (e) the listing of the Shares on
The Nasdaq SmallCap Market and Boston Stock Exchange, and (f) the
Representative's non-accountable expense allowance equal to 3% of the aggregate
gross proceeds from the sale of the Firm Shares. Prior to or immediately
following the Closing Date, the Company shall bear the costs of tombstone
announcements if requested to do so by the Representative. The Company shall
have paid for all expenses incurred in connection with any road shows.
The Company has previously remitted to the Representative the sum of
$50,000, which sum has been credited as a partial payment in advance of the
non-accountable expense allowance provided for in Section 6(f) above.
7. Conditions of Underwriters' Obligations. The Underwriters' obligation to
purchase and pay for the Firm Shares and Additional Shares, as provided herein,
shall be subject to the continuing accuracy of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to you, as of the date hereof,
as of the Closing Date and as of each Additional Closing Date, to the
performance by the Company of its obligations hereunder, and to the following
conditions:
a. The Registration Statement shall have become effective under the Act,
and the Firm shares shall have been registered under Section 12(b) or 12(g)
of the Exchange Act, as applicable, not later than 5:00 p.m., Mountain time,
on the date of this Agreement or such later date and time as shall be
consented to in writing by you.
b. At the Closing Date and any Additional Closing Date, you shall have
received the favorable opinion of Holland & Xxxx, LLP, counsel for the
Company, dated the date of delivery, addressed to the Representative, and in
form and scope satisfactory to the Representative's counsel and such firm.
19
In rendering such opinion, counsel for the Company may rely (A) as to
matters involving the application of laws other than the laws of the United
States and the laws of the State of Delaware, to the extent counsel for the
Company deems proper and to the extent specified in such opinion, upon an
opinion or opinions (in form and substance satisfactory to counsel for the
Representative) of other counsel, acceptable to counsel for the Representative,
familiar with the applicable laws, in which case the opinion of counsel for the
Company shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the Company and that
reliance thereon by counsel for the Company is reasonable; (B) as to matters of
fact, to the extent the Representative deems proper, on certificates of
responsible officers of the Company; and (C) to the extent they deem proper,
upon written statements or certificates of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to counsel for the Representative.
c. You shall have been furnished such information, documents,
certificates, and opinions as you may reasonably require for the purpose of
enabling you to review the matters referred to in this Section 7, and in
order to evidence the accuracy, completeness, or satisfaction of any of the
representations, warranties, covenants, agreements, or conditions herein
contained, or as you may reasonably request.
d. You shall have received a certificate of the chief executive officer
and of the chief financial officer of the Company, dated the Closing Date or
such Additional Closing Date, as the case may be, to the effect that the
conditions set forth in Section 7(a) have been satisfied, that as of the
date of this Agreement and as of the Closing Date or such Additional Closing
Date, as the case may be, the representations and warranties of the Company
contained herein were and are accurate, and that as of the Closing Date or
such Additional Closing Date, as the case may be, the obligations to be
performed by the Company hereunder on or prior thereto have been fully
performed.
e. At the time this Agreement is executed and at the Closing Date and
each Additional Closing Date, as the case may be, you shall have received
letters from Xxxxxxxx Xxxxx Xxxxxxx & Xxxxxxx PC, Certified Public
Accountants, addressed to you and dated the date of delivery but covering a
period within three business days of such date, in form and substance
satisfactory to you.
f. All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Firm Shares and the Additional Shares shall be
satisfactory in form and substance to you and to counsel for the
Representative, and you shall have received a favorable opinion from counsel
to the Company, dated as of the Closing Date or the Additional Closing Date,
as the case may be, with respect to such of the matters set forth under
Sections 7(b) and with respect to such other related matters as you may
reasonably request.
g. The NASD, upon review of the terms of the public offering of the Firm
Shares and the Additional Shares shall not have objected to your
participation in such offering.
20
h. The Company shall have received notice that the Common Stock will be
quoted on The Nasdaq SmallCap Market and traded on the Boston Stock Exchange
as of the Effective Date.
Any certificate or other document signed by any officer of the Company and
delivered to you or to counsel for the Representative shall be deemed a
representation and warranty by such officer individually in his capacity as an
officer and by the Company hereunder to the Representative as to the statements
made therein. If any condition to your obligations hereunder to be fulfilled
prior to or at the Closing Date or any Additional Closing Date, as the case may
be, is not so fulfilled, you may terminate this Agreement or, if you so elect,
in writing waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.
8. Indemnification and Contribution.
a. Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Underwriters, the Representative, and each
of their officers, directors, partners, employees, agents, managers,
members, sureties and the Representative's counsel, and each person, if any,
who controls the Representative or any one of the Underwriters within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage, and expense whatsoever
(which shall include, for all purposes of this Section 8, but not be limited
to, attorneys' fees, expert witness fees, and any and all expense whatsoever
incurred in investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all amounts
paid in settlement of any claim or litigation) as and when incurred arising
out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement, or the Prospectus (as from time to
time amended and supplemented), or any amendment or supplement thereto, or
(B) in any application or other document or communication (in this Section 8
collectively called an "application") in any jurisdiction in order to
qualify the Common Stock under the "blue sky" or securities laws thereof or
filed with the Commission or any securities exchange; or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any breach
of any representation, warranty, covenant, or agreement of the Company
contained in this Agreement. The foregoing agreement to indemnify shall be
in addition to any liability the Company may otherwise have, including
liabilities arising under this Agreement; however, the Company shall have no
liability under this Section 8 if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company as stated in Section 8(b) with respect to the Underwriters by or on
behalf of the Underwriters expressly for inclusion in any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any amendment
or supplement thereto, or in any application, as the case may be.
If any action is brought against the Underwriters, the Representative or any of
their officers, directors, partners, employees, agents, managers, members,
sureties or Representative's counsel, or any controlling persons of an
Underwriter or the Representative (an "indemnified party") in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
such indemnified party or parties shall promptly notify the Company in writing
of the
21
institution of such action (but the failure so to notify shall not relieve the
Company from any liability it may have other than pursuant to this Section 8(a))
and the Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or the
Company shall not have promptly employed counsel satisfactory to such
indemnified party or parties to have charge of the defense of such action or
such indemnified party or parties shall have reasonably concluded that there may
be one or more legal defenses available to it or them or to other indemnified
parties which are different from or additional to those available to the
Company, in any of which events such fees and expenses shall be borne by the
Company. Anything in this paragraph to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent and shall not be liable for the fees and expenses of
more than one law firm for the indemnified parties. The Company agrees promptly
to notify the Underwriters and the Representative of the commencement of any
litigation or proceedings against the Company or against any of its officers,
directors, control persons or affiliates in connection with the sale of the
Shares, any Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or any application.
b. The Underwriters agree to indemnify and hold harmless the Company,
each director of the Company, each officer of the Company who shall have
signed the Registration Statement, the Company's counsel, each other person,
if any, who controls the Company within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Underwriters in Section 8a, but only with
respect to statements or omissions, if any, made in any Preliminary
Prospectus, the Registration Statement, or the Prospectus (as from time to
time amended and supplemented), or any amendment or supplement thereto, or
in any application, in reliance upon and in conformity with written
information furnished to the Company as stated in this Section 8b with
respect to the Underwriters by or on behalf of the Underwriters expressly
for inclusion in any Preliminary Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be; provided, however, that the obligation of
the Underwriters to provide indemnity under the provisions of this Section
8b shall be limited to the amount which represents the product of the number
of Firm Shares and Additional Shares sold hereunder and the initial public
offering price per Share set forth on the cover page of the Prospectus. For
all purposes of this Agreement, the amounts of the selling concession and
reallowance set forth in the Prospectus, the information under
"Underwriting" and the identification of counsel to the Representative under
"Legal Matters" constitute the only information furnished in writing by or
on behalf of the Underwriters expressly for inclusion in any Preliminary
Prospectus, the Registration Statement, or the Prospectus (as from time to
time amended or supplemented), or any amendment or supplement thereto, or in
any application, as the case may be. If any action shall be brought against
the Company or any other person so indemnified based on any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any amendment
or supplement thereto, or any application, and in respect of which indemnity
may be sought against the
22
Underwriters pursuant to this Section 8b, the Underwriters shall have the
rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the
indemnified parties, by the provisions of Section 8a.
c. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section
8 is for any reason held to be unavailable to an indemnified person in this
Section 8, then the Company shall contribute to the damages paid by the
several Underwriters, and the several Underwriters shall contribute to the
damages paid by the Company; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. In determining the amount of contribution
to which the respective parties are entitled, there shall be considered the
relative benefits received by each party from the sale of the Firm Shares
and Additional Shares (taking into account the portion of the proceeds of
the offering realized by each), the parties' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate in the circumstances. The
Company and the Underwriters agree that it would not be equitable if the
amount of such contribution were determined by pro rata or per capita
allocation (even if the Underwriters were treated as one entity for such
purpose). No Underwriter or person controlling such Underwriter shall be
obligated to make contribution hereunder which in the aggregate exceeds the
total public offering price of the Firm Shares and Additional Shares
purchased by such Underwriter under this Agreement, less the aggregate
amount of any damages which such Underwriter and its controlling persons
have otherwise been required to pay in respect of the same or any
substantially similar claim. The Underwriters' obligations to contribute
hereunder are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act
shall have the same rights to contribution as such Underwriter, and each
director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the Act, shall have the same rights to
contribution as the Company. Anything in this Section 8c to the contrary
notwithstanding, no party shall be liable for contribution with respect to
the settlement of any claim or action effected without its written consent.
This Section 8c is intended to supersede any right to contribution under the
Act, the Exchange Act, or otherwise.
9. Representations and Agreements to Survive Delivery. All representations,
warranties, covenants, and agreements contained in this Agreement shall be
deemed to be representations, warranties, covenants, and agreements at the
effective date of the Registration Statement, the Closing Date and any
Additional Closing Date, and such representations, warranties, covenants, and
agreements of the Underwriters and the Company, including the indemnity and
contribution agreements contained in Section 8, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Representative, the Underwriters or any indemnified person, or by or on
behalf of the Company or any person or entity which is entitled to be
indemnified under Section 8b., and shall survive termination of this Agreement
or the
23
delivery of the Firm Shares and Additional Shares to the Underwriters for a
period equal to the statute of limitations for claims related hereto.
10. Effective Date of This Agreement and Termination Thereof.
a. This Agreement shall be executed within 24 hours of the Effective
Date of the Registration Statement and shall become effective on its
execution or the Effective Date or at the time of the initial public
offering of the Shares, whichever islater. The time of the initial public
offering shall mean the time, after the Registration Statement becomes
effective, of the release by the Representative for publication of the first
newspaper advertisement which is subsequently published relating to the
Shares or the time, after the Registration Statement becomes effective, when
the Shares are first released by the Representative for offering by dealers
by letter, telegram, facsimile or e-mail, whichever shall first occur. The
Representative or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except as noted
below in this Section 10, by giving the notice indicated in Section 10c.
before the time this Agreement becomes effective.
b. The Representative shall have the right to terminate this Agreement
at any time prior to the Closing Date or any Additional Closing Date, as the
case may be, by giving notice to the Company if there shall have been a
general suspension of, or a general limitation on prices for, trading in
securities on the New York or Boston Stock Exchange or The Nasdaq SmallCap
Market or in the over-the-counter market; or if there shall exist major
hostilities or other national or international calamity, or terrorist
activity causes significant disruption of the financial markets; or if a
banking moratorium has been declared by a state or federal authority; or if
a moratorium in foreign exchange trading by major international banks has
been declared; or if there shall have been a material interruption in the
mail service or other means of communication within the United States; or if
the Company shall have sustained a material or substantial loss by fire,
flood, accident, hurricane, earthquake, theft, sabotage, or other calamity
or malicious act which, whether or not such loss shall have been insured,
will, in the Representative's opinion, make it inadvisable to proceed with
the offering, sale, or delivery of the Firm Shares and Additional Shares, as
the case may be; or if there shall have been such material and adverse
change in the market for securities in general so as to make it inadvisable
to proceed with the offering, sale, and delivery of the Shares, as the case
may be, on the terms contemplated by the Prospectus due to the impaired
investment quality of the Shares; or if the Dow Xxxxx Industrial Average or
the Nasdaq Composite Index shall have fallen by 15% or more from its closing
price on the day immediately preceding the date that the Registration
Statement is declared effective by the Commission or on any subsequent date
prior to and including the Closing Date.
c. If the Representative elects to prevent this Agreement from becoming
effective as provided in this Section 10, or to terminate this Agreement, it
shall notify the Company promptly by telephone, telex, or telegram,
confirmed by letter. If, as so provided, the Company elects to prevent this
Agreement from becoming effective, the Company shall notify the
Representative promptly by telephone, telex, or telegram, confirmed by
letter.
24
d. If, prior to Closing, and other than as disclosed in the Prospectus,
the Company is acquired, merges, sells all or substantially all of its
assets or otherwise effects a corporate reorganization with any other entity
and, as a result, the offering is abandoned by the Company, then the Company
shall engage the services of the Representative in connection with such
transaction or acquisition. The Representative shall act as the Company's
investment banker in connection with any such transaction or acquisition and
render such services as are customary in connection therewith in
consideration for a fee that is customary for the services provided.
e. Anything in this Agreement to the contrary notwithstanding other than
Section 10e., if this Agreement shall not become effective by reason of an
election pursuant to this Section 10 or if this Agreement shall terminate or
shall otherwise not be carried out prior to December 31, 2003 because (i) of
any reason solely within the control of the Company or its stockholders and
not due to the breach of any representation, warranty or covenant or bad
faith of the Representative, (ii) the Company unilaterally withdraws the
proposed public offering from the Representative in favor of another
underwriter, (iii) the Company does not permit the Registration Statement to
become effective, (iv) of any material discrepancy in any representation by
the Company and/or its officers, directors, stockholders, agents, advisers
or representatives, made in writing, including but not limited to the
Registration Statement, to the Representative, (v) the Company is, directly
and/or indirectly, negotiating with other persons or entities of whatsoever
nature relating to a possible public offering of its securities, or (vi) of
any failure on the part of the Company to perform any material covenant or
material agreement or satisfy any material condition of this Agreement by it
to be performed or satisfied, then, in any of such events, the Company shall
be obligated to reimburse the Representative for its out-of-pocket expenses
on an accountable basis including, without limitation, its legal fees and
disbursements, but not to exceed an aggregate of $30,000 in excess of the
advances paid by the Company to the Representative in accordance with
Section 6 hereof, (2) pay all reasonable "blue sky" filing fees and
expenses, including "blue sky" legal fees of the Representative's counsel
retained by the Company for such purpose, and (3) indemnify and hold
harmless the Representative for any expenses incurred by the Company in
connection with the offering including, but not limited to, printing
expenses and the Company's accounting and legal fees. Should the
Representative be required to account for "out-of-pocket" expenses, any
expense incurred by the Representative shall be deemed to be reasonable and
unobjectionable upon a reasonable showing by the Representative that such
expenses were incurred, directly or indirectly, in connection with the
proposed offering and/or relationship of the parties hereto, as described
herein. The Representative will return to the Company any portion of the
$50,000 payment previously received that is not used in the payment of
accountable expenses if the offering is not completed.
f. Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 2, 5a, 6, 8, 9, 10 and 12 shall not be in any way
affected by such election or termination or failure to carry out the terms
of this Agreement or any part hereof.
11. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the
Representative, shall be mailed, delivered, or sent by
25
facsimile transmission and confirmed by original letter, to X.X. Xxxxxx &
Company, L.L.C., 0000 XXX Xxxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxx Xxxx, with a copy to Xxxxxx X. Xxxx, Esq., Xxxx Xxxxx P.C., 000
00xx Xxxxxx, Xxxxx 0000 X. Xxxxxx, Xxxxxxxx, 00000; or if sent to the Company
shall be mailed, delivered, or telexed or telegraphed and confirmed by letter,
to Centennial Specialty Foods Corporation, 000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, Attention:Xxxxxxx X. Xxxxxx, with a copy to Xxxxxx X. Xxxxxx,
Esq., Holland & Xxxx, LLP, 0000 X. Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000. All notices hereunder shall be effective upon receipt
by the party to which it is addressed.
12. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters, the Company, and the persons and entities
referred to in Section 8 who are entitled to indemnification or contribution,
and their respective successors, legal representatives, and assigns (which shall
not include any buyer, as such, of the Firm Shares and Additional Shares) and no
other person shall have or be construed to have any legal or equitable right,
remedy, or claim under or in respect of or by virtue of this Agreement or any
provision herein contained.
13. Construction. This Agreement shall be construed in accordance with the laws
of the State of Colorado, without giving effect to conflict of laws. Time is of
the essence in this Agreement. The parties acknowledge that this Agreement was
initially prepared by the Representative, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that, because
all parties participated in negotiating and drafting this Agreement, no rule of
construction shall apply to this Agreement which construes ambiguous language in
favor of or against any party by reason of that party's role in drafting this
Agreement.
If the foregoing correctly sets forth the understanding between us, please
so indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between us.
Very truly yours,
CENTENNIAL SPECIALTY FOODS CORPORATION
By: ___________________________________________
Xxxxxxx X. Xxxxxx, Chief Executive Officer
Accepted as of the date first above written.
Greenwood Village, Colorado
X.X. XXXXXX & COMPANY, L.L.C.
for itself and a Underwriters on Schedule 1:
By: ______________________________________
Xxxxx Xxxx,
Director of Investment Banking, Denver
26
CENTENNIAL SPECIALTY FOODS CORPORATION
(a Delaware corporation)
SCHEDULE 1
This Schedule sets forth the name of each Underwriter referred to in the
Underwriting Agreement and the number of Shares to be purchased by each
underwriter.
NAME OF UNDERWRITER NUMBER OF SHARES
------------------- ----------------
X.X. Xxxxxx & Company, L.L.C.
Total 1,550,000
=========
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