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EXHIBIT 1.1
2,200,000 Shares of Common Stock
of
CONSERVER CORPORATION OF AMERICA
UNDERWRITING AGREEMENT
New York, New York
1997
Xxxxxxx/Xxxxxx Associates, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Conserver Corporation of America, a Delaware corporation (the
"Company"), confirms its agreement with Xxxxxxx/Xxxxxx Associates, L.P. ("JMA"),
with respect to the sale by the Company and the purchase by the Underwriter, of
2,200,000 shares of the Company's common stock, par value $.001 per share
("Common Stock") and with respect to the grant by the Company to the
Underwriter, acting of the option described in Section 2(b) hereof to purchase
all or any part of 330,000 additional shares for the purpose of covering
over-allotments, if any. The aforesaid 2,200,000 shares of Common Stock (the
"Firm Securities") and together with all or any part of the 330,000 additional
shares of Common Stock subject to the overallotment option described in Section
2(b) hereof (the "Overallotment Securities") are hereinafter collectively
referred to as the "Securities". The Company also proposes to issue and sell to
the Underwriter, an option (the "Underwriter's Purchase Option") pursuant to the
Underwriter's Purchase Option Agreement (the "Underwriter's Purchase Option
Agreement") for the purchase of an aggregate of 220,000 additional shares of
Common Stock (the "Underwriter's Option Shares"). The Securities, the
Underwriter's Purchase Option Agreement and Underwriter's Option Shares are more
fully described in the Registration Statement (as defined in Subsection 1(a)
hereof) and the Prospectus (as defined in Subsection 1(a)
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hereof) referred to below. Unless the context otherwise requires, all references
to the "Company" shall include all presently existing subsidiaries and any
entities acquired by the Company on or prior to the Closing Date (defined in
Subsection 2(c) hereof). All representations, warranties and opinions of counsel
required hereunder shall cover any such subsidiaries and acquired entities taken
as a whole.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriter as of the
date hereof, and as of the Closing Date and any Overallotment Closing Date (as
defined in Subsection 2(c) hereof), if any, as follows:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an amendment or
amendments thereto, on Form S-1 (No. 333- 16571) including any related
preliminary prospectus (each a "Preliminary Prospectus"), for the registration
of the Securities under the Securities Act of 1933, as amended (the "Act"),
which registration statement and any amendment or amendments have been prepared
by the Company in conformity with the requirements of the Act and the rules and
regulations of the Commission under the Act. Following execution of this
Agreement, the Company will promptly file (i) if the Registration Statement has
been declared effective by the Commission, (A) a Term Sheet (as defined in the
Rules and Regulations (as hereinafter defined)) pursuant to Rule 434 under the
Act or (B) a Prospectus under Rules 430A and/or 424(b) under the Act, in either
case in form satisfactory to the Underwriter or (ii) in the event the
registration statement has not been declared effective, a further amendment to
said registration statement in the form heretofore delivered to the Underwriter
and will not, before the registration statement becomes effective, file any
other amendment thereto unless the Underwriter shall have consented thereto
after having been furnished with a copy thereof. Except as the context may
otherwise require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, schedules, exhibits and all other
documents filed as a part thereof and all information deemed to be a part
thereof as of such time pursuant to paragraph (b) of Rule 430A of the Rules and
Regulations)(as hereinafter defined), is hereinafter called the "Registration
Statement" and the form of prospectus in the form first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, is hereinafter
called the "Prospectus." For purposes hereof, "Rules and Regulations" mean the
rules and regulations adopted by the Commission under either the Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable.
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(b) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary Prospectus,
the Registration Statement or Prospectus or any part thereof and no proceedings
for a stop order have been instituted or are pending or, to the best knowledge
of the Company, threatened. Each of the Preliminary Prospectus, the Registration
Statement and the Prospectus at the time of filing thereof conformed in all
material respects with the requirements of the Act and the Rules and
Regulations, and neither the Preliminary Prospectus, the Registration Statement
nor the Prospectus at the time of filing thereof, except for representations
made therein regarding the exclusive distributor status of Groupe Conserver made
in reliance on information received by the Company from Groupe Conserver and
Conserver XXI, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein and necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in conformity with
written information furnished to the Company with respect to the Underwriter by
or on behalf of the Underwriter expressly for use in such Preliminary
Prospectus, Registration Statement or Prospectus.
(c) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date and each Overallotment Closing
Date (as hereinafter defined) and during such longer period as the Prospectus
may be required to be delivered in connection with sales by the Underwriter or a
dealer, the Registration Statement and the Prospectus will contain all material
statements which are required to be stated therein in compliance with the Act
and the Rules and Regulations, and will in all material respects conform to the
requirements of the Act and the Rules and Regulations; neither the Registration
Statement, nor any amendment thereto, at the time the Registration Statement or
such amendment is declared effective under the Act, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, not misleading, and
the Prospectus at the time the Registration Statement becomes effective, at the
Closing Date and at any Overallotment Closing Date, will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation and
warranty does not apply to statements made or statements omitted in reliance
upon and in conformity with information supplied to the Company in writing by or
on behalf of the Underwriter expressly for use in the Registration Statement or
Prospectus or any amendment thereof or supplement thereto.
(d) The Company has been duly organized and is now, and at the
Closing Date and any Overallotment Closing Date will be,
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validly existing as a corporation in good standing under the laws of the State
of Delaware. The Company does not own, directly or indirectly, an interest in
any corporation, partnership, trust, joint venture or other business entity;
provided, that the foregoing shall not be applicable to the investment of the
net proceeds from the sale of the Securities in short-term, low-risk investments
as set forth under "Use of Proceeds" in the Prospectus except to the extent that
any failure of the Company to comply with the foregoing does not have a material
adverse effect on the Company. The Company is duly qualified to do business and
in good standing as a foreign corporation in each jurisdiction in which its
ownership or leasing of its properties or the character of its operations
require such qualification to do business, except where the failure to so
qualify would not have a material adverse effect on the Company. The Company has
all requisite power and authority (corporate and other), and has obtained any
and all necessary authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties and conduct
its business as described in the Prospectus except where the failure to comply
would not have a material adverse effect upon the Company; the Company is and
has been doing business in compliance with all such authorizations, approvals,
orders, licenses, certificates, franchises and permits and all federal, state,
local and foreign laws, rules and regulations except where the failure to comply
would not have a material adverse effect upon the Company; and the Company has
not received any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license, certificate,
franchise, or permit which, singly or in the aggregate, if the subject of an
unfavorable decision ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, business affairs,
position, prospects, value, operation, properties, business or results of
operation of the Company. The disclosures, if any, in the Registration Statement
concerning the effects of federal, state, local, and foreign laws, rules and
regulations on the Company's business as currently conducted and as contemplated
are correct in all material respects and do not omit to state a material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which they were made.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under the caption "Capitalization"
and will have the adjusted capitalization set forth therein on the Closing Date,
based upon the assumptions set forth therein, and the Company is not a party to
or bound by any instrument, agreement or other arrangement providing for the
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Company to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement and as otherwise described in the
Prospectus. The Securities, the Underwriter's Purchase Option and the
Underwriter's Option Shares and all other securities issued or issuable by the
Company conform or, when issued and paid for, will conform in all respects to
all statements with respect thereto contained in the Registration Statement and
the Prospectus. All issued and outstanding securities of the Company have been
duly authorized and validly issued and are fully paid and non-assessable; the
holders thereof have no rights of rescission with respect thereto, and are not
subject to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company, or similar contractual rights granted by the
Company to subscribe for or purchase securities. The Securities, the
Underwriter's Purchase Option and the Underwriter's Option Shares to be issued
and sold by the Company hereunder, and upon payment therefor, are not and will
not be subject to any preemptive or other similar rights of any stockholder to
subscribe for or purchase securities, have been duly authorized and, when
issued, paid for and delivered in accordance with the terms hereof and thereof,
will be validly issued, fully paid and non-assessable and will conform to the
descriptions thereof contained in the Prospectus; the holders thereof will not
be subject to any liability solely as such holders; all corporate action
required to be taken for the authorization, issuance and sale of the Securities,
the Underwriter's Purchase Option and the Underwriter's Option Shares has been
duly and validly taken; and the certificates, if any, representing the
Securities and the Underwriter's Option Shares will be in due and proper form.
Upon the issuance and delivery pursuant to the terms hereof of the Securities to
be sold to the Underwriter by the Company hereunder, the Underwriter will
acquire good and marketable title to such Securities free and clear of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever.
(f) The financial statements of the Company, together with the
related notes and schedules thereto, included in the Registration Statement, the
Preliminary Prospectus and the Prospectus fairly present the financial position
and the results of operations of the Company at the respective dates and for the
respective periods to which they apply; and such financial statements have been
prepared in conformity with generally accepted accounting principles and the
Rules and Regulations, consistently applied throughout the periods involved.
There has been no material adverse change or development involving a prospective
change in the condition, financial or otherwise, or in the earnings, business
affairs, position, prospects, value,
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operation, properties, business, or results of operation of the Company, whether
or not arising in the ordinary course of business, since the dates of the
financial statements included in the Registration Statement and the Prospectus
and the outstanding debt, the property, both tangible and intangible, and the
business of the Company, conform in all material respects to the descriptions
thereof contained in the Registration Statement and in the Prospectus.
(g) Xxxxxxx X. Xxxxxx & Company, LLP, whose report is filed with the
Commission as a part of the Registration Statement, is an independent certified
public accountant as required by the Act and the Rules and Regulations.
(h) The Company (i) has paid all federal, state, local, and foreign
taxes for which it is liable, including, but not limited to, withholding taxes
and taxes payable under Chapters 21 through 24 of the Internal Revenue Code of
1986 (the "Code"), (ii) has furnished all tax and information returns it is
required to furnish pursuant to the Code, and has established adequate reserves
for such taxes which are not due and payable, and (iii) does not have knowledge
of any tax deficiency or claims outstanding, proposed or assessed against it.
(i) The Company maintains insurance, which is in full force and
effect, of the types and in the amounts which it reasonably believes to be
adequate for its business, including, but not limited to, personal injury and
product liability insurance covering all personal and real property owned or
leased by the Company against fire, theft, damage and all risks customarily
issued against.
(j) Except as disclosed in the Prospectus, there is no action, suit,
proceeding, inquiry, investigation, litigation or governmental proceeding
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, pending or to the knowledge of the
Company threatened against (or circumstances that may give rise to the same), or
involving the properties or business of the Company which: (i) questions the
validity of the capital stock of the Company or this Agreement or of any action
taken or to be taken by the Company pursuant to or in connection with this
Agreement; (ii) is required to be disclosed in the Registration Statement which
is not so disclosed (and such proceedings as are summarized in the Registration
Statement are accurately summarized in all respects); or (iii) might materially
affect the condition, financial or otherwise, or the earnings, business affairs,
position, prospects, value, operation, properties, business or results of
operations of the Company.
(k) The Company has full legal right, power and authority to enter
into this Agreement, the
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Underwriter's Purchase Option Agreement, the Consulting Agreement (as described
in Section 4(x) hereof) and to consummate the transactions provided for in such
agreements; and this Agreement, the Underwriter's Purchase Option Agreement and
the Consulting Agreement have each been duly authorized, executed and delivered
by the Company. Each of this Agreement, the Underwriter's Purchase Option
Agreement and the Consulting Agreement, constitutes a legally valid and binding
agreement of the Company, subject to due authorization, execution and delivery
by the Underwriter, enforceable against the Company in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law). Neither the
Company's execution or delivery of this Agreement, the Underwriter's Purchase
Option Agreement, or the Consulting Agreement, its performance hereunder and
thereunder, its consummation of the transactions contemplated herein and
therein, nor the conduct of its business as described in the Registration
Statement, the Prospectus, and any amendments or supplements thereto, conflicts
with or will conflict with or results or will result in any material breach or
violation of any of the terms or provisions of, or constitutes or will
constitute a material default under, or result in the creation or imposition of
any material lien, charge, claim, encumbrance, pledge, security interest defect
or other restriction or equity of any kind whatsoever upon, any property or
assets (tangible or intangible) of the Company pursuant to the terms of: (i) the
Certificate of Incorporation or By-Laws of the Company; (ii) any material
license, contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which the Company is bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject; or (iii) any statute, judgment, decree, order, rule or regulation
applicable to the Company of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, having jurisdiction over the Company or any of its
activities or properties.
(l) No consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other body, domestic or
foreign, is required for the performance by the Company of this Agreement and
the transactions contemplated hereby, except such as have been or may be
obtained under the Act or may be required
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under state securities or Blue Sky laws in connection with (i) the Underwriter's
purchase and distribution of the Firm Securities and Overallotment Securities to
be sold by the Company hereunder; or (ii) the issuance and delivery of the
Underwriter's Purchase Option or the Underwriter's Option Shares.
(m) All executed agreements or copies of executed agreements
(whether electronically scanned or otherwise) filed as exhibits to the
Registration Statement to which the Company is a party or by which the Company
may be bound or to which any of its assets, properties or businesses may be
subject have been duly and validly authorized, executed and delivered by the
Company, and constitute legally valid and binding agreements of the Company,
enforceable against it in accordance with their respective terms, except to the
extent there is no material adverse effect upon the Company. The descriptions
contained in the Registration Statement of contracts and other documents are
accurate in all material respects and fairly present the information required to
be shown with respect thereto by the Rules and Regulations and there are no
material contracts or other documents which are required by the Act or the Rules
and Regulations to be described in the Registration Statement or filed as
exhibits to the Registration Statement which are not described or filed as
required, and the exhibits which have been filed are materially or substantially
complete and correct copies of the documents of which they purport to be copies.
(n) Subsequent to the respective dates as of which information is
set forth in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not:
(i) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money in any material amount; (ii) entered into any
transaction other than in the ordinary course of business; (iii) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock; or (iv) made any changes in capital stock, material changes in debt (long
or short term) or liabilities other than in the ordinary course of business; or
(v) made any material changes in or affecting the general affairs, management,
financial operations, stockholders equity or results of operations of the
Company.
(o) No default exists in the due performance and observance of any
material term, covenant or condition of any license, contract, indenture,
mortgage, installment sales agreement, lease, deed of trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement, or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is a party or by which any of
the Company may be bound or to which any of its property or assets (tangible or
intangible)
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of the Company is subject or affected except where such default does not, and
will not, have a material adverse effect upon the Company.
(p) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance in all
material respects with all federal, state, local, and foreign laws and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours.
(q) Since its inception, the Company has not incurred any liability
arising under or as a result of the application of the provisions of the Act.
(r) Except as disclosed in the Prospectus, the Company does not
presently maintain, sponsor or contribute to, and never has maintained,
sponsored or contributed to, any program or arrangement that is an "employee
pension benefit plan," an "employee welfare benefit plan " or a "multiemployer
plan" as such terms are defined in Sections 3(2), 3(1) and 3(37) respectively of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
("ERISA Plans"). Except as disclosed in the Prospectus, the Company does not
maintain or contribute, now or at any time previously, to a defined benefit
plan, as defined in Section 3(35) of ERISA.
(s) The Company is not in violation in any material respect of any
domestic or foreign laws, ordinances or governmental rules or regulations to
which it is subject.
(t) Except for rights of SES Family Investment and Trading
Partnership LP and Xxxx Xxxxxxxx no holders of any securities of the Company or
of any options, warrants or other convertible or exchangeable securities of the
Company exercisable for or convertible or exchangeable for securities of the
Company have the right to include any securities issued by the Company in the
Registration Statement or any registration statement to be filed by the Company
or to require the Company to file a registration statement under the Act.
(u) Neither the Company, nor, to the Company's best knowledge after
due inquiry, any of its employees, directors, stockholders or affiliates (within
the meaning of the Rules and Regulations) has taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result in, under the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or otherwise.
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(v) Except as described in the Prospectus, none of the patents,
patent applications, trademarks, service marks, trade names and copyrights, or
licenses and rights to the foregoing presently owned or held by the Company is
in dispute or are in any conflict with the right of any other person or entity
within the Company's current area of operations nor has the Company received
notice of any of the foregoing. The Company to its knowledge: (i) owns or has
the right to use, free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects or other restrictions or equities of any
kind whatsoever, all patents, trademarks, service marks, trade names and
copyrights, technology and licenses and rights with respect to the foregoing,
used in the conduct of its business as now conducted or proposed to be conducted
without infringing upon or otherwise acting adversely to the right or claimed
right of any person, corporation or other entity under or with respect to any of
the foregoing; and (ii) except as set forth in the Prospectus, is not obligated
or under any liability whatsoever to make any payments by way of royalties, fees
or otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service xxxx trade name, copyright, know-how, technology or other
intangible asset, with respect to the use thereof or in connection with the
conduct of its business or otherwise.
(w) Except as disclosed in the Prospectus, the Company has an
unrestricted license to market and distribute the Conserver 21 product, free and
clear of and without violating any right, lien, or claim of others, including
without limitation, Conserver XXI and/or Groupe Conserver.
(x) Subject to the ownership rights of Agrotech 2000 S.L. in and to
the Conserver 21 product and related patents and technology, the Company has
taken reasonable security measures to protect the secrecy, confidentiality and
value of all the material trade secrets, trademarks, know-how (including
unpatented and/or unpatentable proprietary and confidential information)
technical data and information ("Intellectual Property") material to its
operations.
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(y) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property owned
or leased by it free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects, or other restrictions or equities of any
kind whatsoever, other than liens for taxes or assessments not yet due and
payable.
(aa) On or before the effective date of the Registration Statement,
the Company shall cause to be duly executed legally binding and enforceable
agreements pursuant to which (i) each of the Company's officers and directors,
has agreed not to, directly or indirectly, offer to sell, sell, grant any option
for the sale of, assign, transfer, pledge, hypothecate or otherwise encumber any
of their shares of Common Stock or other securities (either pursuant to Rule 144
of the Rules and Regulations or otherwise) or dispose of any beneficial interest
therein for a period of not less than 27 months, (ii) SES Family Investment and
Trading Partnership L.P. and Xxxx Agronoff have agreed not to, directly or
indirectly, offer to sell, sell, grant any option for the sale of, assign,
transfer, pledge, hypothecate or otherwise encumber any of their shares of
Common Stock or other securities (either pursuant to Rule 144 of the Rules and
Regulations or otherwise) or dispose of any beneficial interest therein for a
period of not less than 24 months, (iii) each of the persons receiving options
to purchase additional shares at $2.00 per share as described in the Prospectus,
has agreed not to, directly or indirectly, offer to sell, sell, grant any option
for the sale of, assign, transfer, pledge, hypothecate or otherwise encumber any
of their shares of Common Stock or their securities (either pursuant to Rule 144
of the Rules and Regulations or otherwise) or dispose of any beneficial interest
therein for a period of not less than 18 months without the prior written
consent of the Underwriter and (iv) all other persons have agreed not to,
directly or indirectly, offer to sell, sell, grant any option for the sale of,
assign, transfer, pledge, hypothecate or otherwise encumber any of their shares
of Common Stock or other securities (either pursuant to Rule 144 of the Rules
and Regulations or otherwise) or dispose of any beneficial interest therein for
a period of not less than 12 months. The Company will cause the Transfer Agent,
as defined below, to xxxx an appropriate legend on the face of stock
certificates representing all of such shares of Common Stock.
(bb) The Company has not incurred any liability and there are no
arrangements or understandings for services in the nature of a finder's or
origination fee with respect to the sale of the Securities or any other
arrangements, agreements, understandings, payments or issuances with respect to
the Company or any of its officers, directors, employees or affiliates that may
adversely affect the Underwriter's
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compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
(cc) The Firm Securities have been approved for quotation on the
Nasdaq SmallCap Market of the Nasdaq Stock Market, Inc. subject to official
notice of issuance.
(dd) Neither the Company nor any of its respective officers,
employees, agents or any other person acting on behalf of the Company, has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is, or may be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) which: (a) might subject the Company, or any other such person to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign); (b) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the Company;
and (c) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company's internal
accounting controls are sufficient to cause the Company to comply with the
Foreign Corrupt Practices Act of 1977, as amended.
(ee) Except as set forth in the Prospectus, no officer, director or
stockholder of the Company, or any "affiliate" or "associate" (as these terms
are defined in Rule 405 promulgated under the Rules and Regulations) of any such
person or entity or the Company, has or has had, either directly or indirectly,
(i) a material interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed to be furnished
or sold by the Company, or (B) purchases from or sells or furnishes to the
Company any goods or services, except with respect to the beneficial ownership
of not more than 1% of the outstanding shares of capital stock of any
publicly-held entity; or (ii) a beneficial interest in any material contract or
agreement to which the Company is a party or by which it may be bound or
affected. Except as set forth in the Prospectus under "Certain Transactions",
there are no existing agreements, arrangements, understandings or transactions,
or proposed agreements, arrangements, understandings or transactions, between or
among the Company, and any officer, director, or principal stockholder of the
Company, or any affiliate or associate of any such person or entity.
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(ff) Any certificate signed by any officer of the Company and
delivered to the Underwriter or to the Underwriter's counsel shall be deemed a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby.
(gg) The Company has entered into an employment agreement with
Xxxxxxx Xxxxx as described in the Prospectus. The Underwriter acknowledges that
the Company will not be obtaining any key-man life insurance policy with respect
to Xx. Xxxxx.
(hh) No securities of the Company have been sold by the Company
since its inception, except as disclosed in Part II of the Registration
Statement.
(ii) The minute books of the Company have been made available to
Underwriter's counsel and contain a complete summary of all meetings and actions
of the Board of Directors and Stockholders of the Company since March, 1995.
(jj) Except as disclosed in writing to the Underwriter in a
certificate dated May 12, 1997, no officer, or director or to the Company's
knowledge stockholder of the Company has any affiliation or association with any
member of the NASD.
2. Purchase, Sale and Delivery of the Securities and
Agreement to Issue Underwriter's Purchase Option.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriter, and the Underwriter agrees
to purchase from the Company, at the price per Security set forth below, the
Firm Securities.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements, herein contained, but subject to the terms and
conditions herein set forth, the Company
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hereby grants an option to the Underwriter to purchase up to an additional
330,000 shares of Common Stock. The option granted hereby will expire 45 days
after the date of this Agreement, and may be exercised in whole or in part from
time to time only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Firm Securities upon
notice by the Underwriter to the Company setting forth the number of
Overallotment Securities as to which the Underwriter is then exercising the
option and the time and date of payment and delivery for such Overallotment
Securities. Any such time and date of delivery shall be determined by the
Underwriter, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Date, as defined
in paragraph (c) below, unless otherwise agreed to between the Underwriter and
the Company. Nothing herein contained shall obligate the Underwriter to make any
over-allotments. No Overallotment Securities shall be delivered unless the Firm
Securities shall be simultaneously delivered or shall theretofore have been
delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates
for, the Firm Securities shall be made at the offices of the Underwriter at 00
Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place as
shall be designated by the Underwriter. Such delivery and payment shall be made
at 10:00 a.m. (New York City time) on June __, 1997 or at such other time and
date as shall be designated by the Underwriter but not less than three (3) nor
more than five (5) business days after the effective date of the Registration
Statement (such time and date of payment and delivery being hereafter called
"Closing Date"). In addition, in the event that any or all of the Overallotment
Securities are purchased by the Underwriter, payment of the purchase price for,
and delivery of certificates for such Overallotment Securities shall be made at
the above-mentioned office or at such other place and at such time (such time
and date of payment and delivery being hereinafter called "Overallotment Closing
Date") as shall be agreed upon by the Underwriter and the Company on each
Overallotment Closing Date as specified in the notice from the Underwriter to
the Company. Delivery of the certificates for the Firm Securities and the
Overallotment Securities, if any, shall
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be made to the Underwriter against payment by the Underwriter of the
purchase price for the Firm Securities and the Overallotment Securities, if any,
to the order of the Company as the case may be by certified check in New York
Clearing House funds, certificates for the Firm Securities and the Overallotment
Securities, if any, shall be in definitive, fully registered form, shall bear no
restrictive legends and shall be in such denominations and registered in such
names as the Underwriter may request in writing at least two (2) business days
prior to Closing Date or the relevant Overallotment Closing Date, as the case
may be. The certificates for the Firm Securities and the Overallotment
Securities, if any, shall be made available to the Underwriter at the
above-mentioned office or such other place as the Underwriter may designate for
inspection, checking and packaging no later than 9:30 a.m. on the last business
day prior to Closing Date or the relevant Overallotment Closing Date, as the
case may be.
The purchase price of the Securities to be paid by each of the
Underwriter, severally and not jointly, to the Company for the Securities
purchased under Clauses (a) and (b) above will be $4.50 per Share (which price
is net of the Underwriter's discount and commissions). The Company shall not be
obligated to sell any Securities hereunder unless all Firm Securities to be sold
by the Company are purchased hereunder. The Company agrees to issue and sell the
Securities to the Underwriter in accordance herewith.
(d) On the Closing Date, the Company shall issue and sell to the
Underwriter, the Underwriter's Purchase Option at a purchase price of $220.00
which Underwriter's Purchase Option shall entitle the holders thereof to
purchase an aggregate of 220,000 shares of Common Stock. The Underwriter's
Purchase Option shall be exercisable for a period of four (4) years commencing
one (1) year from the effective date of the Registration Statement at an initial
exercise price equal to one hundred sixty-five percent (165%) of the initial
public offering price of the Firm securities. The Underwriter's Purchase Option
Agreement and form of Purchase Option Certificate shall be substantially in the
form filed as an Exhibit to the Registration Statement. Payment for the
Underwriter's Purchase Option shall be made on the Closing Date. The Company has
reserved and shall continue to reserve a sufficient number of Shares for
issuance upon exercise of the Underwriter's Purchase Option.
3. Public Offering of the Securities. As soon after the Registration
Statement becomes effective and as the Underwriter deems advisable, but in no
event more than five
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(5) business days after such effective date, the Underwriter shall make a public
offering of the Securities (other than to residents of or in any jurisdiction in
which qualification of the Securities is required and has not become effective)
at the price and upon the other terms set forth in the Prospectus and otherwise
in compliance with the Rules and Regulations. The Underwriter may allow such
concessions and discounts upon sales to other dealers as set forth in the
Prospectus. The Underwriter may from time to time increase or decrease the
public offering price after distribution of the Securities has been completed to
such extent as the Underwriter, in its sole discretion, deems advisable.
4. Covenants of the Company. The Company covenants and agrees with the
Underwriter as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable and will not at any time, whether before or after the effective date
of the Registration Statement, file any amendment to the Registration Statement
or supplement to the Prospectus or file any document under the Exchange Act
within 25 days after the Closing Date except for Form 8-A/A1: (i) before
termination of the offering of the Securities by the Underwriter which the
Underwriter shall not previously have been advised and furnished with a copy; or
(ii) to which the Underwriter shall have objected; or (iii) which is not in
compliance with the Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof,
the Company will advise the Underwriter and confirm by notice in writing: (i)
when the Registration Statement, as amended, becomes effective, if the
provisions of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective; (ii)
of the issuance by the Commission of any stop order or of the initiation, or the
threatening of any proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto, or the
institution or proceeding for that purpose; (iii) of the issuance by any state
securities commission of any proceedings for the suspension of the qualification
of the Securities for offering or sale in any jurisdiction or of the initiation,
or the threatening, of any proceeding for that purpose; (iv) of the receipt of
any comments from the Commission; and (v) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information. If
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the Commission or any state securities commission or regulatory authority shall
enter a stop order or suspend such qualification at any time, the Company will
make every reasonable effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Underwriter) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424(b)(1) (or, if applicable and if consented to by the Underwriter pursuant to
Rule 424(b)(4)) not later than the Commission's close of business on the earlier
of (i) the second business day following the execution and delivery of this
Agreement and (ii) the fifth business day after the effective date of the
Registration Statement.
(d) The Company will give the Underwriter notice of its intention to
file or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriter in connection with the offering of the Securities which differs from
the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
will furnish the Underwriter with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file any such prospectus to which the Underwriter or Xxxxxxxxx
& XxXxxxx, LLP ("Underwriter's counsel"), shall reasonably object.
(e) The Company shall cooperate in good faith with the Underwriter,
and Underwriter's counsel, at or prior to the time the Registration Statement
becomes effective, in endeavoring to qualify the Securities for offering and
sale under the securities laws of such jurisdictions as the Underwriter may
reasonably designate, and shall cooperate with the Underwriter and Underwriter's
counsel in the making of such applications, and filing such documents and shall
furnish such information as may be required for such purpose; provided, however,
the Company shall not be required to qualify as a foreign corporation or file a
general consent to service of process in any such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Underwriter agree that such action is not at the time necessary or
advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may reasonably be required by the laws of such
jurisdiction to continue such qualification.
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(f) During the time when the Prospectus is required to be delivered
under the Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when the Prospectus
relating to the Securities is required to be delivered under the Act, any event
shall have occurred as a result of which, in the opinion of counsel for the
Company or Underwriter's counsel, the Prospectus, as then amended or
supplemented, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Underwriter promptly and
prepare and file with the Commission an appropriate amendment or supplement in
accordance with Section 10 of the Act, each such amendment or supplement to be
reasonably satisfactory to Underwriter's counsel, and the Company will furnish
to the Underwriter a reasonable number of copies of such amendment or
supplement.
(g) As soon as practicable, but in any event not later than 45 days
after the end of the 12-month period commencing on the day after the end of the
fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its security holders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Underwriter , an earnings
statement which will be in such form and detail required by, and will otherwise
comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the
Rules and Regulations, which statement need not be audited unless required by
the Act, covering a period of at least 12 consecutive months after the effective
date of the Registration Statement.
(h) During a period of five (5) years after the date hereof and
provided that the Company is required to file reports with the Commission under
Section 12 of the Exchange Act, the Company will furnish to its stockholders, as
soon as practicable, annual reports (including financial statements audited by
independent public accountants), and will deliver to the Underwriter:
(i) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders;
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(ii) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD or any
securities exchange;
(iii) every press release and every material news item or
article of interest to the financial community in respect of the Company and any
future subsidiaries or their affairs which was released or prepared by the
Company;
(iv) any additional information of a public nature concerning
the Company and any future subsidiaries or their respective businesses which the
Underwriter may reasonably request;
(v) a copy of any Schedule 13D, 13G, 14D-1, 13E-3 or 13E-4
received or filed by the Company from time to time.
During such five-year period, if the Company has active subsidiaries,
the foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and will
be accompanied by similar financial statements for any significant subsidiary
which is not so consolidated.
(i) For as long as the Company is required to file reports with the
Commission under Section 12 of the Exchange Act, the Company will maintain a
Transfer Agent, as well as a Registrar (which may be the same entity as the
Transfer Agent) for its Common Stock.
(j) The Company will furnish to the Underwriter or pursuant to the
Underwriter's direction, without charge, at such place as the Underwriter may
designate, copies of each Preliminary Prospectus, the Registration Statement and
any pre-effective or post-effective amendments thereto (two of which copies will
be signed and will include all financial statements and exhibits), the
Prospectus, and all amendments and supplements thereto, including any prospectus
prepared after the effective date of the Registration Statement, in each case as
soon as available and in such quantities as the Underwriter may reasonably
request.
(k) Neither the Company, nor its officers or directors, nor
affiliates of any of them (within the meaning of the Rules and Regulations) will
take, directly or indirectly, any action designed to, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price
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of any securities of the Company except as may be permitted under the Exchange
Act.
(l) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the provisions, set forth under the
caption "Use of Proceeds" in the Prospectus. No portion of the net proceeds will
be used directly or indirectly to acquire any securities issued by the Company.
(m) The Company shall timely file all such reports, forms or other
documents as may be required from time to time, under the Act, the Exchange Act,
and the Rules and Regulations, and all such reports, forms and documents filed
will comply as to form and substance with the applicable requirements under the
Act, the Exchange Act, and the Rules and Regulations.
(n) The Company shall furnish to the Underwriter as early as
practicable prior to each of the date hereof, the Closing Date and each
Overallotment Closing Date, if any, but no later than two (2) full business days
prior thereto, a copy of the latest available unaudited consolidated interim
financial statements of the Company (which in no event shall be as of a date
more than forty-five (45) days prior to the date of the Registration Statement)
which have been read by the Company's independent public accountants, as stated
in their letters to be furnished pursuant to Section 6(k) hereof.
(o) For a period of five (5) years from the Closing Date, the
Company shall furnish to the Underwriter at the Company's sole expense, (i)
daily consolidated transfer sheets relating to the Securities upon the
Underwriter's request; (ii) a list of holders of Securities upon the
Underwriter's request; (iii) a list of, if any, the securities positions of
participants in the Depository Trust Company upon the Underwriter's request.
(p) Until a date which is five (5) years from the Closing Date shall
use its best efforts to cause one (1) individual selected by the Underwriter to
be elected to the Board of Directors of the Company (the "Board"), if requested
by the Underwriter and provided such individual is reasonably acceptable to and
approved by the Company. The Underwriter's nominee, if elected, shall receive
the same compensation as the other non-employee members of the Board.
Alternatively, the Underwriter shall be entitled to appoint an individual who
shall be permitted to attend all meetings of the Board and to receive all
notices and other correspondence and communications sent by the Company to
members of the Board, and copies of all minutes thereof. The Company shall
reimburse the Underwriter's designee for his or her out-of-pocket expenses
reasonably incurred and authorized in advance by the Company in
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connection with his or her attendance of the Board meetings. To the extent
permitted by law, the Company agrees to indemnify and hold the designee (as a
director or observer) and the Underwriter harmless against any and all claims,
actions, awards and judgements arising out of his or her service as a director
or an observer and the Company shall maintain a liability insurance policy in an
amount of not less than $1,000,000 affording coverage for the action of its
officer and directors, to include such designee and the Underwriter as an
insured under such policy. The Underwriter's nominee shall, if a member of the
Board, be a member of the Audit Committee of the Board. The Underwriter's
nominee or designee, as the case may be, shall agree not to disclose any
non-public information and shall, if requested by the Company, execute and
deliver a non- disclosure agreement upon terms reasonably acceptable to the
Company. The Company reserves the right not to provide information and to
exclude such Underwriter's attendee from any meeting or portion thereof if
attendance at such meeting by such attendee would compromise or adversely affect
the attorney-client privilege between the Company and its counsel, or would, in
the good faith judgment of the Board, result in conflict of interest situation.
The Company shall use its reasonable efforts to promptly bring to the attention
of such attendee any agenda item that, in the good faith judgment of the Board,
would result in any trade secret, privileged matter or conflict of interest
arising during such meeting and the Board may exclude such attendee (or
alternatively, the attendee shall be entitled to exclude himself or herself)
from any deliberation or discussion of the Board concerning such trade secret
(if the observer has not executed a confidentiality agreement), privileged
matter or dissemination of such information. If such observer in his or her good
faith believes that an item to be discussed shall result in a conflict, then
such observer shall promptly bring such conflict to the attention of the
Chairman of the Board. In no event shall any provision of this paragraph waive
any obligation of confidentiality to the Company owed by any such attendee or
the Underwriter.
(q) For a period equal to the lesser of (i) five (5) years from the
date hereof, or (ii) the sale to the public of the Underwriter's Option Shares,
the Company will not take any action or actions that may prevent or disqualify
the Company's use of Form S-1 or, if applicable, Form S-3 (or other appropriate
form) for the registration under the Act of the Underwriter's Option Shares.
(r) For a period of five (5) years from the date hereof, use its
best efforts at its cost and expense to maintain the listing of the Securities
on the Nasdaq SmallCap or National Market System.
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(s) As soon as practicable, but in no event more than 5
business days after the effective date of the Registration Statement, file a
Form 8-A/A1 with the Commission providing for the registration under the
Exchange Act of the Securities.
(t) Following the Effective Date of the Registration Statement
and for a period of two (2) years thereafter, the Company shall, at its sole
cost and expense, prepare and file such blue sky trading applications with such
jurisdictions as the Underwriter may reasonably request after consultation with
the Company, and on the Underwriter's request, furnish the Underwriter with a
secondary trading survey prepared by securities counsel to the Company.
(u) The Company shall not amend or alter the terms of any
written or oral employment agreement between the Company and any executive
officer in a manner more favorable to such employee without the prior consent of
the Underwriter, which consent shall not be unreasonably withheld by the
Underwriter. For a period of three (3) years from the date hereof prior to the
Company entering into any oral or written employment agreement with any person
who will, upon commencement of such persons duties be deemed an executive
officer, the Company shall consult with the Underwriters and the entire Board of
Directors as to the proposed terms of such employment.
(v) Until the completion of the distribution of the
Securities, the Company shall not without the prior written consent of the
Underwriter, which consent shall not be unreasonably withheld, issue, directly
or indirectly, any press release or other communication or hold any press
conference with respect to the Company or its activities or the offering
contemplated hereby, other than trade releases issued in the ordinary course of
the Company's business consistent with past practices with respect to the
Company's operations.
(w) The Company will use its best efforts to maintain its
registration under the Exchange Act in effect for a period of five (5) years
from the Closing Date.
(x) On the Closing Date, the Company and the Underwriter shall
enter into a financial consulting agreement, in the form filed as an Exhibit to
the Registration Statement, pursuant to which the Underwriter will provide
financial consulting services to the Company for a three year period for an
aggregate fee of $2,777.77 per month ($100,000 in the aggregate), payable in
full
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at the Closing and the term of which shall commencing on the Closing Date (the
"Financial Consulting Agreement"). Among other provisions, the Consulting
Agreement shall contain terms which provide that the Company shall pay the
Underwriter a fee equal to five (5%) percent of the amount up to $5,000,000 and
two and one half (2 1/2 percent) of the excess, if any, over $5,000,000 of the
consideration involved in any transaction (regardless of the form of
transaction, whether by merger, acquisition or sale of assets or otherwise)
consummated by the Company with a party introduced by the Underwriter to the
Company.
(y) For a period of 12 months commencing on the Closing Date,
except with the written consent of the Underwriter, will not issue or sell,
directly or indirectly, any shares of its capital stock, or sell or grant
options, or warrants or rights to purchase any shares of its capital stock,
except pursuant to (i) this Agreement, (ii) the Underwriter's Purchase Option ,
(iii) the exercise of warrants and options of the Company heretofore issued and
described in the Prospectus, and (iv) the grant of options and the issuance of
shares issued upon exercise of options issued or to be issued under the
Company's stock option plan as described in the Prospectus (Stock Option Plan).
Except as discussed in the Prospectus, prior to the Closing Date, the Company
will not issue any options or warrants without the prior written consent of the
Underwriter. The Company shall not, for a period of 12 months from the Closing
Date offer or sell any securities pursuant to Regulation S or similar regulation
without the Underwriter's prior written consent.
(z) Except for the Company's present obligations to SEC Family
Investment and Trading L.P. and Xxxx Xxxxxxxx the
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Company will not file any registration statement relating to the offer or sale
of any of the Company's securities, including any registration statement on Form
S-8, during the 24 months following the Closing Date without the Underwriter's
prior written consent.
(aa) Subsequent to the dates as of which information is given
in the Registration Statement and Prospectus and prior to the Closing Dates,
except as disclosed in or contemplated by the Registration Statement and
Prospectus, (i) the Company will not have incurred any liabilities or
obligations, direct or contingent, or entered into any material transactions
other than in the ordinary course of business; (ii) there shall not have been
any change in the capital stock, funded debt (other than regular repayments of
principal and interest on existing indebtedness) or other securities of the
Company, any material adverse change in the condition (financial or other),
business, operations, income, net worth or properties, including any material
loss or damage to the properties of the Company (whether or not such loss is
insured against), which could materially adversely affect the condition
(financial or other), business, operations, income, net worth or properties of
the Company; and (iii) the Company shall not pay or declare any dividend or
other distribution on its Common Stock or its other securities or redeem or
repurchase any of its Common Stock or other securities.
(bb) Except as disclosed in or contemplated by the
Registration Statement and Prospectus, the Company, for a period of 24 months
following the Closing Date, shall not redeem any of its securities, and shall
not pay any dividends or make any other cash distribution in respect of its
securities in excess of the amount of the Company's current or retained earnings
derived after the Closing Date without obtaining the Underwriter's prior written
consent, which consent shall not be unreasonably withheld. The Underwriter hall
either approve or disapprove such contemplated redemption of securities or
dividend payment or distribution within ten (10) business days from the date the
Underwriter receives written notice of the Company's proposal with respect
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thereto; a failure of the Underwriter to respond within the ten (10) business
day period shall be deemed approval of the transaction.
(cc) The Company maintains and will continue to maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
in order to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of Closing Date
and the Overallotment Closing Date (to the extent not paid at the Closing Date)
all its expenses and fees (other than fees of Underwriter's Counsel, except as
provided in (iv) below) incident to the performance of the obligations of the
Company under this Agreement, including, without limitation: (i) the fees and
expenses of accountants and counsel for the Company; (ii) all costs and expenses
incurred in connection with the preparation, duplication, mailing, printing and
filing of the Registration Statement and the Prospectus and any amendments and
supplements thereto and the printing, mailing and delivery of this Agreement,
the Selected Dealer Agreements, Agreement Between Underwriter , and related
documents, including the cost of all copies thereof and of the Preliminary
Prospectuses and of the Prospectus and any amendments thereof or supplements
thereto supplied to the Underwriter in quantities as hereinabove stated; (iii)
the printing, engraving, issuance and delivery of the Securities and
Underwriter's Option Shares including any transfer or other taxes payable
thereon; (iv) disbursements and fees of Underwriter's counsel in connection with
the qualification of the Securities under state or foreign securities or "Blue
Sky" laws and determination of the status of such securities under legal
investment laws, including the costs of printing and mailing the "Preliminary
Blue Sky Memorandum," the "Supplemental Blue Sky Memorandum" and "Legal
Investments Survey," if any, which Underwriter's counsel fees (exclusive of
filing fees and disbursements) shall equal $15,000 and of which $10,000 has
previously been paid; (v) advertising costs and expenses, including but not
limited to costs and expenses in connection with one information meeting held in
New York, New York, one tombstone advertisement, at least 5 bound volumes of the
Offering documents for the
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Underwriter and its counsel and prospectus memorabilia; (vi) fees and expenses
of the transfer agent; (vii) the fees payable to the NASD; and (viii) the fees
and expenses incurred in connection with the listing of the Securities on the
Nasdaq SmallCap Market. All fees and expenses payable to the Underwriter
hereunder shall be payable at the Closing Date or Overallotment Closing Date, as
applicable; provided, however, the company shall pay such fees and costs in
advance of the Closing Date if requested by the Underwriter. The Underwriter
shall be responsible for all of its own costs of counsel.
(b) If this Agreement is terminated by the Underwriter in
accordance with the provisions of Section 6, Section 10(a) or Section 11, the
Company shall reimburse and indemnify the Underwriter for up to $100,000
out-of-pocket actual expenses reasonably incurred in connection with the
transactions contemplated hereby including the fees and disbursements of counsel
for the Underwriter of which the Underwriter acknowledges $50,000 has been paid
prior to the date hereof.
(c) The Company further agrees that, in addition to the
expenses payable pursuant to subsection (a) of this Section 5, it will pay to
the Underwriter a non-accountable expense allowance equal to three percent (3%)
of the gross proceeds received by the Company from the sale of the Firm
Securities, $50,000 of which has been paid to date to the Underwriter . The
Company will pay the remainder of the non-accountable expense allowance on the
Closing Date by certified or bank cashier's check or, at the election of the
Underwriter , by deduction from the proceeds of the offering contemplated
herein. In the event the Underwriter elect to exercise the over-allotment option
described in Section 2(b) hereof, the Company further agrees to pay to the
Underwriter on the Overallotment Closing Date (by certified or bank cashier's
check or, at the Underwriter's election, by deduction from the proceeds of the
offering) a non-accountable expense allowance equal to three percent (3%) of the
gross proceeds received by the Company from the sale of the Overallotment
Securities.
6. Conditions of the Underwriter's Obligations. The obligations
of the Underwriter hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the Closing Date and
each Overallotment Closing Date, if any, as if they had been made on and as of
the Closing Date or each Overallotment Closing Date, as the case may be; the
accuracy on and as of the Closing Date or Overallotment Closing Date, if any, of
the statements of officers of the Company made pursuant to the provisions
hereof; and the performance by the Company on and as
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of the Closing Date and each Overallotment Closing Date, if any, of each of its
covenants and obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 P.M., New York time, on the date of this Agreement or such later
date and time as shall be consented to in writing by the Underwriter, and, at
Closing Date and each Overallotment Closing Date, if any, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending or contemplated to the knowledge of the Company by the Commission and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of Underwriter's counsel. If
the Company has elected to rely upon Rule 430A of the Rules and Regulations, the
price of the Securities and any price-related information previously omitted
from the effective Registration Statement pursuant to such Rule 430A shall have
been transmitted to the Commission for filing pursuant to Rule 424(b) of the
Rules and Regulations within the prescribed time period, and prior to Closing
Date the Company shall have provided evidence satisfactory to the Underwriter of
such timely filing, or a post-effective amendment providing such information
shall have been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the Rules and Regulations.
(b) The Underwriter shall not have advised the Company that
the Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Underwriter's opinion, and the opinion of its
counsel is material or omits to state a fact which, in the Underwriter's
opinion, is material and is required to be stated therein or is necessary to
make the statements therein not misleading, or that the Prospectus, or any
supplement thereto, contains an untrue statement of fact which, in the
Underwriter's reasonable opinion, or the opinion of its counsel is material, or
omits to state a fact which, in the Underwriter's reasonable opinion, is
material and is required to be stated therein or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) At the Closing Date and the Overallotment Closing Date,
the Underwriter shall have received the favorable opinion of Xxxxxx Xxxxxx
Xxxxxx & Xxxx, counsel to the Company, dated the Closing Date, or Overallotment
Closing Date, as the case may be, addressed to the Underwriter and in form and
substance satisfactory to Underwriter's counsel, to the effect that:
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(i)(A) The Company has been duly organized 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 or lease its
properties and to carry on its business as set forth in the Registration
Statement and Prospectus; (B) to Counsel's knowledge the Company is duly
qualified as a foreign corporation in all jurisdictions in which by reason of
maintaining an office in such jurisdiction or by owning or leasing real property
in such jurisdiction it is required to be so qualified except where the failure
to be so qualified would have no material adverse effect upon the business,
properties, results of operations, conditions (financial or otherwise) affairs
or properties of the Company (a "Material Adverse Effect"); and (C) to the best
of counsel's knowledge, the Company has not received any notice of proceedings
relating to the revocation or modification of any such license or qualification
which revocation or modification would have a Material Adverse Effect upon the
Company.
(ii) The Registration Statement, each Preliminary
Prospectus that has been circulated and the Prospectus and any post-effective
amendments or supplements thereto (other than the financial statements,
schedules and other financial and statistical data included therein, as to which
no opinion need be rendered) comply as to form in all material respects with the
requirements of the Act and Regulations and the conditions for use of a
registration statement on Form S-1 have been satisfied by the Company.
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(iii) To the best of such counsel's knowledge, except
as described in the Prospectus, the Company does not own an interest of a
character required to be disclosed in the Registration Statement in any
corporation, partnership, joint venture, trust or other business entity;
(iv) To the best of such counsel's knowledge, the
Company has a duly authorized, issued and outstanding capitalization as set
forth in the Prospectus as of the date indicated therein, under the caption
"Capitalization". The Securities, Underwriter's Purchase Option and the
Underwriter's Option Shares conform or upon issuance will conform in all
material respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding securities
of the Company have been duly authorized and validly issued and all shares of
capital stock are fully paid and non-assessable; the holders thereof are not,
except by reason of their own conduct or acts, subject to personal liability by
reason of being such holders, and to the Counsel's knowledge none of such
securities were issued in violation of the preemptive rights of any holder of
any security of the Company. The Securities to be sold by the Company hereunder,
the Underwriter's Purchase Option to be sold by the Company under the
Underwriter's Purchase Option Agreement and Underwriter's Option Shares have
been duly authorized and, when issued, paid for and delivered in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable and
conform or upon issuance will conform to the description thereof contained in
the Prospectus; are not, subject to the Counsel's knowledge to any preemptive or
other similar rights of any stockholder of the Company; that, to such counsel's
knowledge, the holders of the Securities and Underwriter's Option Shares shall
not be personally liable for the payment of the Company's debts solely by reason
of being such holders except as they may be liable by reason of their own
conduct or acts; and that the certificates representing the Securities,
Underwriter's Purchase Option and Underwriter's Option Shares are in due and
proper legal form. Upon delivery of the Securities to the Underwriter against
payment therefor as provided for in this Agreement, the Underwriter (assuming
they are bona fide purchasers within the meaning of the Uniform Commercial Code)
will acquire good title to the Securities, free and clear of all liens,
encumbrances, equities, security interests and claims.
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(v) The Registration Statement has been declared
effective under the Act, and, if applicable, filing of all pricing information
has been timely made in the appropriate form under Rule 430A, and, to the best
of such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and to the best of such counsel's
knowledge, no proceedings for that purpose have been instituted or are pending
or threatened or contemplated under the Act;
(vi) To the best of such counsel's knowledge, (A)
there are no material contracts or other documents required to be described in
the Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement other than those described in the Registration Statement
and the Prospectus and filed as exhibits thereto, and (B) the descriptions in
the Registration Statement and the Prospectus and any supplement or amendment
thereto regarding such material contracts or other documents to which the
Company is a party or by which it is bound, are accurate in all material
respects and fairly represent the information required to be shown by Form S-1
and the Rules and Regulations;
(vii) This Agreement, the Underwriter's Purchase
Option Agreement and the Financial Consulting Agreement have each been duly and
validly authorized, executed and delivered by the Company, and assuming that
each is a valid and binding agreement of the Underwriter , as the case may be,
constitutes a legally valid and binding agreement of the Company, enforceable as
against the Company in accordance with their respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law or pursuant to public policy).
(viii) Neither the execution or delivery by the
Company of this Agreement, the Underwriter's Purchase Option Agreement or the
Financial Consulting Agreement, nor its performance hereunder or thereunder, nor
its consummation of the transactions contemplated herein or therein, nor the
conduct of its business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto, nor the issuance of the
Securities pursuant to this Agreement, conflicts with or will conflict with or
results or will result in any material breach or violation of any of the terms
or provisions of, or constitutes or will constitute a material default under, or
result in the creation imposition of any material lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity of
any kind
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whatsoever upon, any property or assets (tangible or intangible) of the Company
except to the extent such event will not have a Material Adverse Effect pursuant
to the terms of, (A) the Certificate of Incorporation or By-Laws of the Company,
(B) to the best knowledge of such counsel, any material indenture, mortgage,
deed of trust, voting trust agreement, stockholders agreement, note, loan or
credit agreement or any other agreement or instrument that is material to the
Company to which the Company is a party or by which it is bound or to which its
properties or assets (tangible or intangible) are subject, or any indebtedness,
or (C) to the best knowledge of such counsel, and except to the extent it would
not have a material adverse effect on the Company, any statute, judgment,
decree, order, rule or regulation applicable to the Company or any arbitrator,
court, regulatory body or administrative agency or other governmental agency or
body, having jurisdiction over the Company or any of its respective activities
or properties.
(ix) No consent, approval, authorization or order,
and no filing with, any court, regulatory body, government agency or other body
(other than such as may be required under state securities laws or the NASD, as
to which no opinion need be rendered) is required in connection with the
issuance by the Company of the Securities pursuant to the Prospectus and the
Registration Statement, the performance of this Agreement, the Underwriter's
Purchase Option Agreement and the Financial Consulting Agreement by the Company,
and the taking of any action by the Company contemplated hereby or thereby,
which has not been obtained;
(x) Except as described in the Prospectus, to the
best knowledge of such counsel, the Company is not in breach of, or in default
under, any material term or provision of any indenture, mortgage, installment
sale agreement, deed of trust, lease, voting trust agreement, stockholders'
agreement, note, loan or credit agreement or any other agreement or instrument
evidencing an obligation for borrowed money, or any other agreement or
instrument to which the Company is a party or by which the Company may be bound
or to which any of the property or assets (tangible or intangible) of the
Company is subject or affected; and the Company is not in violation of any
material term or provision of its Certificate of Incorporation or By-Laws or in
violation of any material franchise, license, permit, judgment, decree, order,
statute, rule or regulation material to the Company business;
(xi) The statements in the Prospectus under the
captions "THE COMPANY," "BUSINESS," "MANAGEMENT," "PRINCIPAL STOCKHOLDERS,"
"CERTAIN TRANSACTIONS," "DESCRIPTION OF SECURITIES STOCK," and "SHARES ELIGIBLE
FOR FUTURE SALE" have been reviewed by such counsel, and insofar as they refer
to
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statements of law, descriptions of statutes, licenses, rules or regulations or
legal conclusions, are correct in all material respects;
(xii) To the best of such counsel's knowledge, except
as described in the Prospectus, or with respect to SES Family Investment and
Trading Partnership LP and Xxxx Xxxxxxxx, no person, corporation, trust,
partnership, association or other entity holding securities of the Company has
the contractual right to include and/or register any securities of the Company
in the Registration Statement, require the Company to file any registration
statement or, if filed, to include any security in such registration statement;
(xiii) the Securities are eligible for listing on the
Nasdaq SmallCap Market.
In addition, such counsel shall state that in connection with the
preparation of the Registration Statement and the Prospectus such counsel has
participated in conferences with officers and other representatives of the
Company, Underwriters of the independent public accountants for the Company and
Underwriters of the Underwriter at which the contents of the Registration
Statement, the Prospectus and related matters were discussed and, although such
counsel is not passing upon, has not verified, and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus and made no independent
check or verification thereof, on the basis of the foregoing, other than in
regard to representations as to the status of Groupe Conserver as exclusive
distributor of Conserver 21, no facts other than regarding the representations
regarding the exclusive distributor status of Groupe Conserver have come to the
attention of such counsel which lead them to believe that either the
Registration Statement or any amendment thereto at the time such Registration
Statement or amendment became effective or the Prospectus as of the date of such
opinion contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made, not misleading
(it being understood that such counsel need express no opinion with respect to
the financial statements and schedules and other financial and statistical data
included in the Registration Statement or Prospectus or with respect to
statements or omissions made therein in reliance upon information furnished in
writing to the Company on behalf of the Underwriter expressly for use in the
Registration Statement or the Prospectus). In rendering such opinion, such
counsel may state that no portion of the opinion relates, or is given with
regard to any issues or elements of any state or federal Intellectual Property
Law, Patent Law, Trademark Law, Environmental Law, the laws and regulations
regulating the sale, distribution and preparation of food, drugs and pesticides,
or the laws regulating international trade for the Xxxxxx Xxxxxx,
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any of them, or any agencies deriving authority from either or both, and all
other foreign jurisdictions and their respective agencies.
In rendering such opinion, such counsel may rely, (A) as to matters
involving the application of laws other than the laws of the United States, the
corporate laws of Delaware and New York and jurisdictions in which they are
admitted, to the extent such counsel deems proper and to the extent specified in
such opinion, if at all, upon an opinion or opinions (in form and substance
reasonably satisfactory to Underwriter's counsel) of other counsel reasonably
acceptable to Underwriter's counsel, familiar with the applicable laws of such
other jurisdictions, and (B) as to matters of fact, to the extent they deem
proper, on certificates and written statements of responsible officers of the
Company and certificates or other written statements of officers of departments
of various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company; provided, that copies of any such
statements or certificates shall be delivered to Underwriter's counsel if
requested. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel is in form satisfactory to such counsel and,
in their opinion, the Underwriter and they are justified in relying thereon.
(d) At each Overallotment Closing Date, if any, the
Underwriter shall have received the favorable opinion of counsel to the Company,
each dated the Overallotment Closing Date, addressed to the Underwriter and in
form and substance satisfactory to Underwriter's counsel confirming as of the
Overallotment Closing Date the statements made by such firm, in their opinion,
delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the
Overallotment Closing Date, Underwriter's Counsel shall have been furnished such
documents, certificates and other legal opinions (including, without limitation,
legal opinions related to patent, trademark or Food and Drug matters) as they
may reasonably require and request for the purpose of enabling them to review or
pass upon the matters referred to in subsection (c) of this Section 6, or in
order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
(f) Prior to the Closing Date and each Overallotment Closing
Date, if any: (i) there shall have been no material adverse change nor
development involving a prospective change in the condition, financial or
otherwise, prospects or the business activities of the Company, whether or not
in the ordinary course
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of business, from the latest dates as of which such condition is set forth in
the Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, from the latest date as of which the financial condition of the Company
is set forth in the Registration Statement and Prospectus which is materially
adverse to the Company; (iii) the Company shall not be in material default under
any provision of any instrument relating to any outstanding indebtedness for
money borrowed, except as described in the Prospectus; (iv) no material amount
of the assets of the Company shall have been pledged or mortgaged, except as set
forth in the Registration Statement and Prospectus; (v) no action, suit or
proceeding, at law or in equity, shall have been pending or to its knowledge
threatened against the Company, or affecting any of its properties or businesses
before or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
materially adversely affect the business, operations, prospects or financial
condition or income of the Company, except as set forth in the Registration
Statement and Prospectus; and (vi) no stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission.
(g) At the Closing Date and each Overallotment Closing Date,
if any, the Underwriter shall have received a certificate of the Company signed
by the principal executive officer and by the chief financial or chief
accounting officer of the Company, dated the Closing Date or Overallotment
Closing Date, as the case may be, to the effect that:
(i) The representations and warranties of the
Company in this Agreement are, in all material respects, true and correct, as if
made on and as of the Closing Date or the Overallotment Closing Date, as the
case may be, and the Company has complied with all agreements and covenants and
satisfied all conditions contained in this Agreement on its part to be performed
or satisfied at or prior to such Closing Date or Overallotment Closing Date, as
the case may be;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the best of each of such person's
knowledge, are contemplated or to their knowledge threatened under the Act;
(iii) The Registration Statement and the
Prospectus and, if any, each amendment and each supplement thereto, contain all
statements and information required to be included therein, and none of the
Registration Statement, the Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to state any
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material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and neither the Preliminary Prospectus nor any supplement thereto
included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading except to the extent any such material fact may be corrected in the
Final Prospectus; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and except
as otherwise contemplated therein: (A) the Company has not incurred up to and
including the Closing Date or the Overallotment Closing Date, as the case may
be, other than in the ordinary course of its business, any material liabilities
or obligations, direct or contingent; (B) the Company has not paid or declared
any dividends or other distributions on its capital stock; (C) the Company has
not entered into any material transactions not in the ordinary course of
business; (D) there has not been any change in the capital stock or any increase
in long-term debt or any increase in the short-term borrowings (other than any
increase in the short-term borrowings in the ordinary course of business) of the
Company; (E) the Company has not sustained any material loss or damage to its
property or assets, whether or not insured; (F) there is no litigation which is
pending or threatened against the Company which is required to be set forth in
an amended or supplemented Prospectus which has not been set forth;
(v) Neither the Company nor any of its officers or
affiliates shall have taken, and the Company, its officers and affiliates will
not take, directly or indirectly, any action designed to, or which might
reasonably be expected to, cause or result in the stabilization or manipulation
of the price of the Company's securities to facilitate the sale or resale of the
Shares.
References to the Registration Statement and the Prospectus in this
subsection (h) are to such documents as amended and supplemented at the date of
such certificate.
(h) By the Effective Date, the Underwriter shall have received
clearance from NASD as to the amount of compensation allowable or payable to the
Underwriter , as described in the Registration Statement.
(i) At the time this Agreement is executed, the Underwriter
hall have received a letter, dated such date, addressed to the Underwriter in
form and substance satisfactory in all respects (including the non-material
nature of the changes or decreases, if any, referred
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to in clause (iii) below) to the Underwriter, from Xxxxxxx X. Xxxxxx & Company
LLP:
(i) confirming that they are independent public
accountants with respect to the Company within the meaning of the Act and the
applicable Rules and Regulations;
(ii) stating that it is their opinion that the
combined financial statements and supporting schedules of the Company included
in the Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act and the Rules and Regulations
thereunder and that the Underwriter may rely upon the opinion of Xxxxxx Xxxxxxxx
LLP with respect to the financial statements and supporting schedules included
in the Registration Statement;
(iii) stating that, on the basis of a limited review
which included a reading of the latest available unaudited interim combined
financial statements of the Company (with an indication of the date of the
latest available unaudited interim combined financial statements), a reading of
the latest available minutes of the stockholders and board of directors and the
various committees of the boards of directors of the Company, consultations with
officers and other employees of the Company responsible for financial and
accounting matters and other specified procedures and inquiries, nothing has
come to their attention that would lead them to believe that (A) the unaudited
combined financial statements and supporting schedules of the Company included
in the Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Rules and
Regulations or are not fairly presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited combined financial statements of the Company included in the
Registration Statement, or (B) at a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there has been any
change in the capital stock or long-term debt of the Company, or any decrease in
the stockholders' equity or net current assets or net assets of the Company as
compared with amounts shown in the financial statements included in the
Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any change or decrease, setting forth
the amount of such change or decrease, and (C) during the period from February
28, 1997 to a specified date not more than five (5) days prior to the effective
date of the Registration Statement, there was any decrease in net revenues, net
earnings or increase in net earnings per common share of the Company, in each
case as compared with the corresponding period beginning November 30, 1996 other
than as set forth in or contemplated by the Registration Statement, or, if there
was any such decrease, setting forth the amount of such decrease;
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(iv) setting forth, at a date not later than five (5)
days prior to the effective date of the Registration Statement, the amount of
liabilities of the Company (including a breakdown of commercial paper and notes
payable to banks);
(v) stating that they have compared specific dollar
amounts, numbers of Securities, percentages of revenues and earnings, statements
and other financial information pertaining to the Company set forth in the
Prospectus in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting records,
including work sheets, of the Company and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter and found them to be in
agreement; and
(vi) stating that they have not during the
immediately preceding five (5) year period brought to the attention of the
Company's management any "weakness", as defined in Statement of Auditing
Standard No. 60 "Communication of Internal Control Structure Related Matters
Noted in an Audit, " in the Company's internal controls;
(vii) stating that they have in addition carried out
certain specified procedures, not constituting an audit, with respect to certain
pro forma financial information which is included in the Registration Statement
and the Prospectus and that nothing has come to their attention as a result of
such procedures that caused them to believe such unaudited pro forma financial
information does not comply in form in all material respects with the applicable
accounting requirements of Rule ll-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of that information; and
(viii) statements as to such other matters incident
to the transaction contemplated hereby as the Underwriter may reasonably
request.
At the Closing Date and each Overallotment Closing Date, the
Underwriter shall have received from Xxxxxxx X. Xxxxxx & Company LLP, a letter,
dated as of the Closing Date, or Overallotment Closing Date, as the case may be,
to the effect that they reaffirm that statements made in the letter furnished
pursuant to Subsection (i) of this Section, except that the specified date
referred to shall be a date not more than five days prior to Closing Date and,
if the Company has elected to rely on Rule 430A of the Rules and Regulations, to
the further effect that they have carried out procedures as specified
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in clause (iii) of subsection (i) of this Section with respect to certain
amounts, percentages and financial information as specified by the Underwriter
and deemed to be a part of the Registration Statement pursuant to Rule 430A(b)
and have found such amounts, percentages and financial information to be in
agreement with the records specified in such clause (iii).
(k) On each of Closing Date and Overallotment Closing Date, if
any, there shall have been duly tendered to the Underwriter for their accounts
the appropriate number of Securities against payment therefore.
(l) No order suspending the sale of the Securities in any
jurisdiction designated by the Underwriter pursuant to subsection (e) of Section
4 hereof shall have been issued on either the Closing Date or the Overallotment
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or to its knowledge or that of the Company shall be contemplated.
If any condition to the Underwriter's obligations hereunder to be
fulfilled prior to or at the Closing Date or the relevant Overallotment Closing
Date, as the case may be, is not so fulfilled, the Underwriter may terminate
this Agreement or, if the Underwriter o elects, it may waive any such conditions
which have not been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Underwriter, and each person, if any, who controls the Underwriter ("controlling
person") within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any and all losses, claims, damages, expenses or
liabilities, joint or several (and actions in respect thereof), whatsoever
(including but not limited to any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever), as such are incurred, to
which such Underwriter or such controlling person may become subject under the
Act, the Exchange Act or any other statute or at common law or otherwise or
under the laws of foreign countries arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained (i) in any
Preliminary Prospectus (except that the indemnification contained in this
paragraph with respect to any preliminary prospectus shall not inure to the
benefit of the Underwriter or to the benefit of any person controlling the
Underwriter on account of any loss, claim, damage, liability or expense arising
from the sale
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of the Firm Securities by the Underwriter to any person if a copy of the
Prospectus, as amended or supplemented, shall not have been delivered or sent to
such person within the time required by the Act, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus, as
amended and supplemented, and such correction would have eliminated the loss,
claim, damage, liability or expense), the Registration Statement or the
Prospectus (as from time to time amended and supplemented); (ii) in any
post-effective amendment or amendments or any new registration statement and
prospectus in which is included Securities of the Company issued or issuable
upon exercise of the Underwriter's Purchase Option; or (iii) in any application
or other document or written communication (in this Section 7 collectively
called "application") executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Securities
under the securities laws thereof or filed with the Commission, any state
securities commission or agency, the Nasdaq Stock Market, Inc. or any other
securities exchange; or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of the Prospectus, in the light of the circumstances
under which they were made), unless in any case above such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company with respect to any Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment thereof or supplement thereto, in any
post-effective amendment, new registration statement or prospectus or in any
application, as the case may be.
The indemnity agreement in this subsection (a) shall be in addition to
any liability which the Company may have at common law or otherwise.
(b) The Underwriter agrees, to indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement, and each other person, if any, who controls the Company
within the meaning of 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
Underwriter (i) with respect to statements or omissions, or alleged statements
or omissions if any, made in any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement thereto in any
post-effective amendment, new registration statement or prospectus, or in any
application made in reliance upon, and in strict conformity with, written
information furnished to the Company
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with respect to the Underwriter by the Underwriter expressly for use in such
Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any post-effective amendment, new
registration statement or prospectus, or in any such application, directly
related to the transactions effected by the Underwriter in connection with this
Offering; provided that such written information or omissions only pertain to
disclosures in the Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto, in any post-effective
amendment, new registration statement or prospectus or in any such application,
and (ii) for any claim, loss, damages or liability for violation or alleged
violations of any federal or state securities laws in the offer or sale of the
Securities; provided, further, that the liability of the Underwriter to the
Company shall be limited to the product of the Underwriter's discount or
commission for the Shares multiplied by the number of Shares sold by the
Underwriter hereunder. The Company acknowledges that the statements with respect
to the public offering of the Firm Securities set forth under the heading
"Underwriting" and the stabilization legend and the last paragraph of the cover
page in the Prospectus have been furnished by the Underwriter expressly for use
therein and any information furnished by or on behalf of the Underwriter filed
in any jurisdiction in order to qualify the Securities under state securities
laws or filed with the Commission, the NASD or any securities exchange
constitute the only information furnished in writing by or on behalf of the
Underwriter for inclusion in the Prospectus and the Underwriter hereby confirm
that such statements and information are true and correct and shall be on each
Closing Date and Overallotment Closing Date.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party or parties
of the commencement thereof, the indemnifying party or parties will be entitled
to participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, the indemnifying party may assume the defense
thereof with counsel reasonably satisfactory to such
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indemnified party. Notwithstanding the foregoing the indemnified party or
parties shall have the right to employ its or their own counsel in any such case
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnifying party or parties shall have reasonably concluded that there may be
defenses available to it or them that are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 7 to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided however, that such consent was not
unreasonably withheld.
(d) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes claim for indemnification
pursuant to this Section 7, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Securities or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand in connection with the statements
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or omissions that resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations. In any case
where the Company is the contributing party and the Underwriter are the
indemnified party the relative benefits received by the Company on the one hand,
and the Underwriter , on the other, shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Securities (before deducting
expenses) bear to the total underwriting discounts and commissions received by
the Underwriter hereunder, in each case as set forth in the table on the cover
page of the Prospectus. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, expenses or
liabilities (or actions in respect thereof) referred to above in this
subdivision (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7, each person, if any, who controls the Company within the
meaning of the Act, each officer of the Company who has signed the Registration
Statement, and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to this subparagraph (d). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect to
which a claim for contribution may be made against another party or parties
under this subparagraph (d), notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have hereunder or otherwise than under this
subparagraph (d), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in
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addition to any liabilities which any indemnifying party may have at common law
or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto,
shall be deemed to be representations, warranties and agreements at the Closing
Date and the Overallotment Closing Date, as the case may be, and such
representations, warranties and agreements of the Company and the indemnity
agreements contained in Section 7 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Underwriter , the Company, or any controlling person, and shall survive
termination of this Agreement or the issuance and delivery of the Securities to
the Underwriter .
9. Effective Date. This Agreement shall become effective at
9:30 a.m., New York City time, on the next full business day following the date
hereof, or at such earlier time after the Registration Statement becomes
effective as the Underwriter , in its discretion, shall release the Securities
for the sale to the public, provided, however that the provisions of Sections 5,
7 and 10 of this Agreement shall at all times be effective. For purposes of this
Section 9, the Securities to be purchased hereunder shall be deemed to have been
so released upon the earlier of dispatch by the Underwriter of telegrams to
securities dealers releasing such Securities for offering or the release by the
Underwriter for publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
10. Termination.
(a) The Underwriter shall have the right to
terminate this Agreement: (i) if any calamitous domestic or international event
or act or occurrence has materially disrupted, or in the Underwriter's
commercially reasonable opinion will in the immediate future materially disrupt
general securities markets in the United States; or (ii) if trading on the New
York Stock Exchange, the American Stock Exchange, or in the over-the-counter
market shall have been suspended or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required on the over-the-counter market by the NASD or by order of the
Commission or any other government authority having jurisdiction; or (iii) if
the United States shall have become involved in a war or major hostilities; or
(iv) if a banking moratorium has been declared by a New York
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State or federal authority; or (v) if a moratorium in foreign exchange trading
has been declared; or if the Company shall have sustained a material loss,
whether or not insured, by reason of fire, flood, accident or other calamity; or
(vi) if there shall have been such material adverse change in the conditions or
prospects of the Company, involving a change not contemplated by the
Registration Statement, or (vii) if there shall have been such material adverse
change in general economic, political or financial conditions as in the
Underwriter's reasonable judgment would make it inadvisable or impracticable to
proceed with the offering, sale or delivery of the Securities.
(b) Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any termination of this
Agreement (including, without limitation, pursuant to Sections 9 and 10 hereof),
and whether or not this Agreement is otherwise carried out, the provisions of
Section 5 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.
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11. Default by the Company. If the Company shall fail at the
Closing Date or any Overallotment Closing Date, as applicable, to sell and
deliver the number of Securities which it is obligated to sell hereunder on such
date, then this Agreement shall terminate (or, if such default shall occur with
respect to any Option Securities to be purchased on an Overallotment Closing
Date, the Underwriter s may at the Underwriter's option, by notice from the
Underwriter to the Company, terminate the Underwriter's obligations to purchase
Securities from the Company on such date) without any liability on the part of
any non-defaulting party other than pursuant to Section 5 and Section 7 hereof.
No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect of such default.
12. Venue; Submission to Jurisdiction. The Company (a) agrees
that any legal suit, action or proceeding arising out of or relating to this
Agreement shall be instituted exclusively in New York State Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York, (b) waives any objection which the Company may have now or
hereafter to the venue of any such suit, action or proceeding, and (c)
irrevocably consents to the jurisdiction of the New York State Supreme Court,
County of New York and the United States District Court for the Southern
District of New York in any such suit, action or procedure. Each of the Company
and the Underwriter further agrees to accept and acknowledge service of any and
all process which may be served in any suit, action or proceeding in the New
York State Supreme Court for the Southern District of New York, and agrees that
service of process upon the Company mailed by certified mail to the Company's
address shall be deemed in every respect effective service of process upon the
company in any such suit, action or proceeding. In the event of litigation
between the parties arising hereunder, the prevailing party shall be entitled to
costs and reasonable attorney's fees.
13. Notices. All notices and communications hereunder, except
as herein otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed to
Xxxxxxx/Xxxxxx Associates, L.P., 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention Xxxxx Xxxxxx, with a copy to Xxxxxxxxx & XxXxxxx, LLP, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
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Attention: Xxxxxx X. XxXxxxx, Esq. Notices to the Company shall be directed to
the Company at 0000 XxXxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxx, 00000, with
a copy to Xxxxxx Xxxxxx Xxxxxx & Xxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx XxXxxxxxxx, Esq.
14. Parties. This Agreement shall inure solely to the benefit
of and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal Underwriters and assigns, and their respective
heirs and legal Underwriters and no other person shall have or be construed to
have any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provisions herein contained. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
15. Applicable Law/Construction. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of New York without giving effect to the choice of law or conflict of laws
principles.
16. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which taken together shall be deemed to be one and the same instrument.
17. Waiver. The waiver by either party of the breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach.
18. Assignment. Except as otherwise provided within this
Agreement, neither party hereto may transfer or assign this Agreement without
prior written consent of the other party.
19. Titles and Captions. All article, section and paragraph
titles or captions contained in this Agreement are for convenience only and
shall not be deemed part of the context nor affect the interpretation of this
Agreement.
20. Pronouns and Plurals. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the Person or Persons may require.
21. Entire Agreement. This Agreement contains the entire
understanding between and among the parties and supersedes any prior
understandings and agreements among them respecting the subject matter of this
Agreement.
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If the foregoing correctly sets forth the understanding
between the Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
CONSERVER CORPORATION OF AMERICA
By:___________________________
Name: Xxxxxxx X. Xxxxx
Title: President
Confirmed and accepted as of the date first above written.
XXXXXXX/XXXXX ASSOCIATES, L.P.
By:_____________________________
Name: Xxxxx Xxxxxxx
Title: President
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