[3,000,000] Shares of Common Stock(1)
($.01 par value)
CASTLE BRANDS INC.
UNDERWRITING AGREEMENT
New York, New York
, 2005
XXXXXXXXXXX & CO. INC.
As Representative of the several
Underwriters named in Schedule I hereto
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Castle Brands Inc., a Delaware corporation (the "Company"), confirms its
agreement with Xxxxxxxxxxx & Co. Inc. ("Oppenheimer") and each of the
underwriters named in Schedule I hereto (collectively, the "Underwriters"), for
whom Oppenheimer is acting as the representative (the "Representative"), with
respect to the issue and sale by the Company, and the purchase by the
Underwriters, acting severally and not jointly, of [3,000,000] shares of the
Company's common stock, $.01 par value per share ("Common Stock"). Such shares
of Common Stock are hereinafter referred to as the "Firm Shares."
The Company also proposes to issue and sell to the Underwriters, acting
severally and not jointly, up to an additional [450,000] shares of Common Stock
(the "Option Shares"), if and to the extent that you, as representative of the
Underwriters, shall have determined to exercise, on behalf of the Underwriters,
the right to purchase such shares of Common Stock granted to the Underwriters in
Section 2(c) hereof. The Firm Shares and the Option Shares are hereinafter
referred to as the "Shares."
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, each of
the Underwriters as follows:
(i) A registration statement on Form S-1 (File No.
333-128676) (the "Initial Registration Statement") in
respect of the Shares has been filed with the Securities
and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendments
thereto, each in the form heretofore delivered to you,
and, excluding exhibits thereto, delivered to you for
each of the other Underwriters, have been declared
effective by the Commission in such form; other than a
registration statement, if any, increasing the size of
the offering (a "Rule 462(b) Registration Statement"),
filed pursuant to Rule 462(b) under the Securities Act
of 1933, as amended (the "Securities
--------
(1) Plus an option to purchase from the Company up to [375,000] additional
shares to cover over-allotments.
Act"), which became effective upon filing, no other
document with respect to the Initial Registration
Statement has heretofore been filed with the Commission;
and no stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceedings
for that purpose have been initiated or are pending or
threatened by the Commission or any state regulatory
authority (any preliminary prospectus included in the
Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Securities Act,
is hereinafter called a "Preliminary Prospectus"); the
Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits
thereto and including the information contained in the
form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act in
accordance with Section 4(a) hereof and deemed by virtue
of Rule 430A under the Securities Act to be part of the
Initial Registration Statement at the time it was
declared effective, each as amended at the time such
Initial Registration Statement became effective or the
Rule 462(b) Registration Statement, if any, became or
hereafter becomes effective, are hereinafter
collectively called the "Registration Statement;" and
such final prospectus, in the form first filed pursuant
to Rule 424(b) under the Securities Act, is hereinafter
called the "Prospectus." For purposes of this Agreement,
all references to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment
or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval
system ("XXXXX").
(ii) Each Preliminary Prospectus delivered to the
Underwriters for use in connection with this offering
was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T and the
Securities Act. The Prospectus that will be delivered to
the Underwriters for use in connection with this
offering will be identical to the electronically
transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by
Regulation S-T and the Securities Act.
(iii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time
of filing thereof, conformed in all material respects to
the requirements of the Securities Act and the rules and
regulations of the Commission thereunder, and did not
contain an untrue statement of a material fact or omit
to state a 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; provided, however, that this
representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
conformity with information furnished in writing to the
Company by an Underwriter through the Representative
expressly for use therein.
(iv) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the
Registration Statement or the Prospectus will conform,
in all material respects to the requirements of the
Securities Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration
Statement and any amendment
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thereto, and as of the applicable dates of the
Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein
or necessary to make the statements therein not
misleading; provided, however, that this representation
and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an
Underwriter through the Representative expressly for use
therein. The Company has included in the Registration
Statement and the Prospectus, as of the applicable
effective dates thereof and of any amendment thereto,
all information required by the Securities Act and the
rules and regulations of the Commission thereunder to be
included therein.
(v) Each of the Company and its Subsidiaries (as hereinafter
defined) (i) has been duly organized and is validly
existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, (ii)
other than as disclosed in the Registration Statement,
owns no interest, either of record or beneficially, in
any corporation, partnership, trust, joint venture or
other business entity, (iii) is duly qualified to do
business, and is in good standing as a foreign
corporation, in each jurisdiction in which its ownership
or leasing of any properties or the character of its
operations requires such qualification, except for such
failure to be so qualified or in good standing that
would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or
otherwise), earnings, operations, business prospects, or
properties of the Company and its Subsidiaries, taken as
a whole (a "Material Adverse Effect"), (iv) has all
requisite power and authority, corporate and other, and
has obtained any and all necessary authorizations,
approvals, orders, licenses, consents, certificates and
permits (collectively, "Permits") of and from all
governmental or regulatory officials and bodies, to own
or lease its properties and conduct its business as
described in the Registration Statement except for the
failure to obtain such Permits that would not have a
Material Adverse Effect and (v) is and has been doing
business in compliance with all such Permits and all
federal, state, local and foreign laws, rules and
regulations, and has not received any notice of
proceedings relating to the revocation or modification
of any such Permit which, if the subject of an
unfavorable decision, ruling or finding, would,
individually or in the aggregate, have a Material
Adverse Effect. The disclosures in the Registration
Statement concerning the effects of federal, state,
local and foreign laws, rules and regulations on each of
the Company's and the Subsidiaries' 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.
(vi) The Company had and has, at the date or dates indicated
in the Registration Statement, a duly authorized and
outstanding capitalization as set forth in the
Registration Statement under "Capitalization" and will
have the adjusted authorized and outstanding
capitalization set forth therein on the Closing Date,
based upon the assumptions set forth therein. Neither
the Company nor any of its Subsidiaries is a party to,
or bound by, any instrument, agreement or other
arrangement providing for it to issue any capital stock,
rights, warrants, options or other securities of the
Company, except for this Agreement or as described in
the Registration Statement.
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(vii) The statements set forth in the Registration Statement
under the caption "Description of Securities," insofar
as they purport to constitute a summary of the terms of
the capital stock and other securities of the Company
are accurate and complete as of the Closing. All
securities of the Company which are issued and
outstanding or issuable conform or, when issued and paid
for, will conform, in all material respects to the
description of such securities contained in the
Registration Statement. All issued and outstanding
securities of the Company have been duly authorized and
validly issued and are fully paid and nonassessable, and
the holders thereof have no rights of rescission with
respect thereto and are not subject to personal
liability by reason of being such holders; and none of
such securities were issued in violation of any
preemptive rights of any holders of any security of the
Company or similar contractual rights granted by the
Company. The Shares (i) are not and will not be issued
in violation of any preemptive or other similar rights
of any stockholder, (ii) have been duly authorized for
quotation on the American Stock Exchange, and (iii) when
issued, paid for and delivered in accordance with the
terms hereof, will be validly issued, fully paid and
non-assessable and will conform in all material respects
to the description thereof contained in the Registration
Statement. The holders of the Shares will not be subject
to any liability solely by reason of being such holders.
(viii) All corporate action required to be taken by the Company
or any of it Subsidiaries for the authorization,
issuance and sale of the Shares has been duly and
validly taken; and the certificates representing the
Shares will be in due and proper form according to the
corporate law of Delaware. Upon the issuance and
delivery, pursuant to the terms hereof, of the Shares to
be sold by the Company hereunder, and payment therefor
the Underwriters will acquire good and marketable title
to such Shares, free and clear of any lien, charge,
claim, encumbrance, pledge, security interest, defect or
other restriction or equity of any kind whatsoever
except for any such lien, charge, claim, encumbrance,
pledge, security interest, defect, other restriction, or
equity created by the Underwriters or imposed upon the
assets of the Underwriters.
(ix) The subsidiaries of the Company listed on Schedule II
hereto (each, a "Subsidiary," and together, the
"Subsidiaries") are the only subsidiaries of the Company
as defined by Rule 1-02 of Regulation S-X. All the
outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise
set forth in the Registration Statement, are owned,
directly or through other Subsidiaries of the Company,
by the Company free and clear of any security interest,
claim, lien or encumbrance.
(x) The consolidated financial statements (audited and
unaudited), including the related notes and schedules
thereto, included in the Registration Statement, fairly
present in all material respects the financial position,
income, changes in cash flow, changes in stockholders'
equity, and results of operations of the Company and its
Subsidiaries at the respective dates and for the
respective periods to which they apply. Except, and to
the extent, set forth in the Registration Statement,
such financial statements have been prepared in
conformity with generally accepted accounting
principles, consistently applied throughout the periods
involved. The other financial information set forth in
the Registration Statement are accurate in all material
respects and present fairly in all material respects the
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information shown therein and have been derived from, or
compiled on, a basis consistent with that of the audited
and unaudited consolidated financial statements included
in the Registration Statement.
(xi) There has not occurred any material adverse change, or,
to the knowledge of the Company, any development
involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings,
business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in
the Registration Statement (exclusive of any amendments
or supplements thereto subsequent to the date of this
Agreement).
(xii) The outstanding debt, the property, both tangible and
intangible, and the business of the Company and each of
its Subsidiaries conform in all material respects to the
descriptions thereof contained in the Registration
Statement.
(xiii) Each of the Company and its Subsidiaries has filed all
Federal, state, local and foreign tax returns that are
required to be filed or has requested extensions
thereof, whether or not arising from transactions in the
ordinary course of business, except as set forth in or
contemplated in the Registration Statement or where such
failure singularly or in the aggregate would not have a
Material Adverse Effect, and has paid all taxes required
to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such
assessment, fine or penalty that (i) is currently being
contested in good faith, whether or not arising from
transactions in the ordinary course of business, (ii) is
set forth in the Registration Statement or (iii) would
not, singularly or in the aggregate, have a Material
Adverse Effect.
(xiv) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are
engaged; all policies of insurance insuring the Company
or any of its Subsidiaries or their respective
businesses, assets, employees, officers and directors
are in full force and effect; the Company and its
Subsidiaries are in compliance with the terms of such
policies in all material respects; and there are no
claims by the Company or any of its Subsidiaries under
any such policy or instrument as to which any insurance
company is denying liability or defending under a
reservation of rights clause; neither the Company nor
any such Subsidiary has been refused any insurance
coverage sought or applied for; and neither the Company
nor any such Subsidiary has any reason to believe that
it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be
necessary to continue its business at a cost that would
not have a Material Adverse Effect.
(xv) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental
proceeding, domestic or foreign, pending or, to the
Company's knowledge, threatened against (or, to the
Company's knowledge, circumstances that are reasonably
likely give rise to the same), or involving the
properties or business of the Company or any of its
Subsidiaries which (i) questions the validity of its
capital stock, this Agreement or any action taken or to
be taken by the Company or its Subsidiaries pursuant to,
or in connection with, this
5
Agreement, (ii) is required to be disclosed in the
Registration Statement which is not so disclosed or
(iii) except for matters disclosed in the Registration
Statement, might, individually or in the aggregate, have
a Material Adverse Effect.
(xvi) The Company and each of its Subsidiaries (i) are in
compliance with any and all applicable Federal, state,
local and foreign laws and regulations relating to the
protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals
required of them under applicable Environmental Laws to
conduct their respective businesses, (iii) are in
compliance with all terms and conditions of any such
permit, license or approval, except, in the case of each
of (i), (ii) and (iii) above, where such noncompliance
with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the
aggregate, have a Material Adverse Effect and (iv) have
no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or
operating expenditures required for cleanup, closure of
properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on
operating activities and any potential liabilities to
third parties) which would, individually or in the
aggregate, have a Material Adverse Effect.
(xvii) The Company has the power and authority, corporate and
other, to authorize, issue, deliver and sell the Shares
being sold by it hereunder, enter into this Agreement
and consummate the transactions provided for in this
Agreement; and this Agreement has been duly and properly
authorized, executed and delivered by the Company.
(xviii) None of the Company's issuance or sale of the Shares or
the execution or delivery of this Agreement by the
Company, the Company's performance hereunder or the
conduct of the Company's or its Subsidiaries' business
as described in the Registration Statement and any
amendments or supplements thereto, (A) results in or
will result in any breach or violation of any of the
terms or provisions of, (B) constitutes or will
constitute a default under, or (C) results in or will
result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest,
defect or other restriction of any kind whatsoever, upon
any property or assets (tangible or intangible) of the
Company or any of its Subsidiaries pursuant to the terms
of any of the following: (i) the Charter or By-laws of
the Company or its Subsidiaries, (ii) any license,
contract, indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note,
indebtedness, loan, lease, deed of trust, credit
agreement or any other agreement or instrument to which
the Company or its Subsidiaries is a party or by which
it is or may be bound or to which any of its properties
or assets (tangible or intangible) is or may be subject,
or (iii) any statute, judgment, decree, order, rule or
regulation, applicable to the Company or its
Subsidiaries, of any arbitrator, court, regulatory body
or administrative agency or other governmental agency or
body, domestic or foreign, having jurisdiction over the
Company, its Subsidiaries or any of their activities or
properties except in the case of clauses (ii) and (iii)
for such breaches, violations, defaults, liens or other
6
restrictions that do not or will not, singularly or in
the aggregate, have a Material Adverse Effect.
(xix) 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
in connection with the transactions contemplated herein
or the performance of this Agreement, except such as
have been or may be obtained under the Securities Act,
the Securities and Exchange Act of 1934 (the "Exchange
Act"), and the rules and regulations promulgated under
these acts, or may be required under state securities or
Blue Sky laws, the rules of the National Association of
Securities Dealers, Inc. ("NASD") or the American Stock
Exchange in connection with the Underwriters' purchase
and distribution of the Shares, in the manner
contemplated herein and in the Registration Statement.
(xx) All executed agreements, contracts or other documents or
copies of executed agreements, contracts or other
documents filed as exhibits to the Registration
Statement to which the Company or any of its
Subsidiaries is a party or by which it may be bound or
to which any of its assets, properties or business may
be subject have been duly and validly authorized,
executed and delivered by it, and constitute the legal,
valid and binding agreements of the Company or such
Subsidiary, enforceable against it in accordance with
their respective terms. The descriptions in the
Registration Statement of agreements, contracts and
other documents are accurate in all material respects
and fairly present the information required to be shown
with respect thereto on Form S-1. There are no contracts
or other documents which are required by the Securities
Act or the rules and regulations of the Commission
thereunder to be described in the Registration Statement
or filed as exhibits to the Registration Statement which
are not described or filed as required, as the case may
be, and the exhibits which have been filed are in all
material respects complete and correct copies of the
documents of which they purport to be copies.
(xxi) Neither the Company nor any of its Subsidiaries is in
violation or default of (A) any provision of its Charter
or By-laws or (B) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound
or to which its property is subject except, in the case
of clause (B), where such violation or default,
singularly or in the aggregate, would not have a
Material Adverse Effect.
(xxii) No labor problem or dispute with the employees of the
Company or any of its Subsidiaries exists or, to the
knowledge of the Company, is threatened or imminent, and
the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or its
Subsidiaries' principal suppliers, manufacturers,
contractors or customers, that could have a Material
Adverse Effect, whether or not arising from transactions
in the ordinary course of business.
(xxiii) No "prohibited transaction" (as defined in Section 406
of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published
interpretations thereunder ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended from time
to time (the "Code")) or
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"accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section
4043(b) of ERISA (other than events with respect to
which the 30-day notice requirement under Section 4043
of ERISA has been waived) has occurred with respect to
any employee benefit plan which could have a Material
Adverse Effect; each employee benefit plan is in
compliance in all material respects with applicable law,
including ERISA and the Code; the Company has not
incurred and does not expect to incur liability under
Title IV of ERISA with respect to the termination of, or
withdrawal from, any "pension plan;" and each "pension
plan" (as defined in ERISA) for which the Company would
have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by
action or by failure to act, which could reasonably be
expected to cause the loss of such qualification.
(xxiv) Neither the Company or its Subsidiaries nor any of its
employees, directors, stockholders, partners, or
affiliates of any of the foregoing has taken, directly
or indirectly, any action designed to or which has
constituted or which could reasonably be expected to
cause or result in, under the Exchange Act and the rules
and regulations promulgated thereunder, stabilization or
manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares or
otherwise.
(xxv) The Company and each of its Subsidiaries owns or has
obtained licenses for the trade and service marks, trade
and service xxxx registrations, trade names, copyrights,
trade secrets, technology, know-how and other
intellectual property referenced or described in the
Registration Statement as being owned by or licensed to
it (collectively, the "Intellectual Property"). Except
as set forth in the Registration Statement, to the
knowledge of the Company, there are no rights of third
parties to any such owned Intellectual Property; to the
knowledge of the Company there is no infringement by
third parties of any such owned Intellectual Property;
to the knowledge of the Company, there is no pending or
threatened action, suit, proceeding or claim by others
challenging the Company's or its Subsidiaries' rights in
or to any such Intellectual Property, and the Company is
unaware of any facts which would form a reasonable basis
for any such claim; there is no domestic or foreign,
pending or, to the knowledge of the Company, threatened,
action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property,
and the Company is unaware of any facts which would form
a reasonable basis for any such claim; and there is no
pending or, to the knowledge of the Company, threatened,
action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary
rights of others, and the Company is unaware of facts
which would form a reasonable basis for any such claim.
The Company owns, possesses, licenses or has other
rights to use all Intellectual Property necessary for
the conduct of the Company's business as now conducted
or as proposed in the Registration Statement to be
conducted.
(xxvi) The Company and each of its Subsidiaries have good and
marketable title to, or valid and enforceable leasehold
estates in, all items of real and personal property
owned or leased by it, including all such items stated
in the Registration Statement to be owned or leased by
it, in each case free and clear of all liens, charges,
claims, encumbrances, pledges, security interests,
defects, or other
8
restrictions or equities of any kind whatsoever, except
such as are described in the Registration Statement or
such as do not materially affect the value of such
property to the extent of the Company's interest and do
not interfere with the use made and proposed to be made
of such property by the Company and its Subsidiaries;
and any real property and buildings held under lease by
the Company or any of its Subsidiaries are held by such
respective entity under valid, subsisting and
enforceable leases with such exceptions as are not
material and do not interfere in any material respect
with the use made and proposed to be made of such
property and buildings by the Company and its
Subsidiaries.
(xxvii) Xxxxxx LLP ("Xxxxxx"), which has audited certain
financial statements of the Company included in the
Registration Statement, has advised the Company that it
is an independent registered public accountant as
required by the Securities Act and the rules and
regulations promulgated thereunder and the Public
Accounting Oversight Board, and Xxxxxx is, with respect
to the Company and each of its Subsidiaries, not in
violation of the auditor independence requirements of
the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx
Act").
(xxviii) Except as described in the Registration Statement under
"Underwriting," there are no claims, payments,
issuances, arrangements or understandings, whether oral
or written, of the Company for services in the nature of
a finder's or origination fee with respect to the sale
of the Shares by it hereunder or any other arrangements,
agreements, understandings, payments or issuances with
respect to the Company or, to the Company's knowledge,
any of its respective officers, directors, stockholders,
employees or affiliates that may affect the
Underwriters' compensation, as determined by the NASD.
(xxix) Neither the Company nor, to its knowledge, any of its
officers, employees, agents, or any other person acting
on behalf of the Company, has, directly or indirectly,
given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers
in the ordinary course of business) 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 any of its
Subsidiaries (or assist the Company in connection with
any actual or proposed transaction) which (i) might
subject the Company, any of its Subsidiaries, or any
other such person, to any damage or penalty in any
civil, criminal or governmental litigation or proceeding
(domestic or foreign), (ii) if not given in the past,
might have had a Material Adverse Effect, or (iii) if
not continued in the future, might have a Material
Adverse Effect.
(xxx) The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are
executed in accordance with management's general or
specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial
statements in conformity 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
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recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxxi) The minute books of the Company and each of its
Subsidiaries have been made available to the
Underwriters and counsel for the Underwriters, and such
books contain a complete summary of all meetings and
actions of the board of directors (including each board
committee) and stockholders of the Company and each of
its Subsidiaries since the time of its respective
incorporation through the date of the latest meeting and
action, and (ii) accurately reflect in all material
respects all transactions referred to in such minutes.
(xxxii) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in the Registration Statement
has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(xxxiii) The Company is in compliance with all applicable
provisions of the Xxxxxxxx-Xxxxx Act and all rules and
regulations promulgated thereunder or implementing the
provisions thereof that are currently applicable to the
Company and is actively taking steps to ensure that it
will be in compliance with other provisions of the
Xxxxxxxx-Xxxxx Act not currently applicable to the
Company upon and at all times after the applicability of
such provisions.
(xxxiv) The Company has taken all necessary actions to ensure
that, upon and at all times after the American Stock
Exchange approved the Shares for quotation, it will be
in compliance with all applicable corporate governance
requirements set forth in the Amex Company Guide that
are then in effect and is actively taking steps to
ensure that it will be in compliance with other
applicable corporate governance requirements set forth
in the Amex Company Guide not currently in effect upon
and all times after the effectiveness of such
requirements.
(xxxv) Except as (i) set forth in the Registration Statement or
(ii) not required to be described pursuant to Item 404
of Regulation S-K under the Securities Act, no officer,
director or 5% stockholder of the Company, or any
"affiliate" or "associate" (as these terms are defined
in Rule 405 under the Securities Act) or "immediate
family member" (as this term is defined in Item 404 of
Regulation S-K) of any of the foregoing persons or
entities has or has had, either directly or indirectly,
(i) an 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 any of its Subsidiaries, or (B)
purchases from or sells or furnishes to the Company or
any of its Subsidiaries any goods or services, or (ii) a
beneficial interest in any contract or agreement to
which the Company or any of its Subsidiaries is a party
or by which it may be bound or affected. Except as (i)
set forth in the Registration Statement under "Certain
Relationships and Related Party Transactions," or (ii)
not required to be disclosed pursuant to Item 404 of
Regulation S-K under the Securities Act, there are no
existing agreements, arrangements, understandings or
transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the (x)
Company or any of its Subsidiaries and (y) any officer
or director or any 5% stockholder of the Company or any
of its Subsidiaries, or any partner, affiliate,
associate or immediately family member of any of the
foregoing persons.
10
(xxxvi) There are no outstanding loans, advances (except normal
advances for business expense in the ordinary course of
business) or guarantees of indebtedness by the Company
to or for the benefit of any of the officers or
directors of the Company.
(xxxvii) There are no transactions, arrangements or other
relationships between and/or among the Company, any of
its affiliates (as such term is defined in Rule 405 of
the Securities Act) and any unconsolidated entity,
including, but not limited to, any structured finance,
special purpose or limited purpose entity, that could
reasonably be expected to materially affect the
Company's liquidity or the availability of or
requirements for its capital resources required to be
described in the Registration Statement which have not
been described as required.
(xxxviii) Except as described in the Registration Statement, no
holders of any securities of the Company or of any
options, warrants or other convertible or exchangeable
securities of the Company have the right to include any
securities issued by the Company in the Registration
Statement or any registration statement to be filed by
the Company or to require the Company to file a
registration statement under the Securities Act, other
than those holders who have waived such rights. Except
as described in the Registration Statement, no holder of
any securities of the Company or any other person has
the right, contractual or otherwise, which has not been
satisfied or effectively waived, to cause the Company to
sell or otherwise issue to them, or permit them to
underwrite the sale of, any of the Shares.
(xxxix) Neither the Company nor any of its Subsidiaries is, nor
upon consummation of the transactions contemplated
hereby will be, an "investment company" within the
meaning of such term under the Investment Company Act of
1940 (the "Investment Company Act"), and the rules and
regulations of the Commission promulgated thereunder.
(xl) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the
Company, from making any other distribution on such
Subsidiary's capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary's
property or assets to the Company or any other
Subsidiary of the Company, except as set forth in the
Registration Statement.
(xli) Except for information provided in writing to the
Company by the Underwriters about the Underwriters for
use in the Prospectus, the Company has not relied upon
the Underwriters or their legal or other advisors for
any legal, tax, accounting or financial advice in
connection with the offering of the Shares or otherwise.
The Company understands that it may seek the advice of
its own advisors with respect to these matters or other
matters related to the offering of the Shares.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to sell to each Underwriter,
and each Underwriter, severally and not jointly, agrees to
11
purchase from the Company at a price of $[ ] per share of Common
Stock, that number of Firm Shares set forth in Schedule I opposite
the name of such Underwriter.
(b) Payment of the purchase price and delivery of certificates for
the Firm Shares shall be made at the offices of Blank Rome LLP,
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
such other place as shall be agreed upon by the Representative
and the Company. Such delivery and payment shall be made at
10:00 a.m. (New York City time) on [ ], 2005,
or at such other time and date as shall be agreed upon by the
Representative and the Company, but not more than three business
days after the foregoing date (such time and date of payment and
delivery being herein called the "Closing Date"). Delivery of
the Firm Shares shall be made to the Representative for the
respective accounts of the several Underwriters against payment
by the several Underwriters through the Representative of the
respective aggregate purchase prices of the Firm Shares being
sold by the Company to or upon the order of the Company by wire
transfer payable in same day funds to the accounts specified by
the Company. Delivery of the Firm Shares shall be made through
the facilities of The Depository Trust Company unless the
Representative shall otherwise instruct.
(c) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company hereby grants
an option to the Underwriters to purchase all or any part of
Option Shares at the same purchase price per share as the
Underwriters shall pay for the Firm Shares. Said option may be
exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters. Said option may be exercised from
time to time on or before the 30th day after the date of the
Prospectus upon written or telegraphic notice by the
Representative to the Company setting forth the number of Option
Shares as to which the several Underwriters are exercising the
option and any Option Closing Date. The maximum number of Option
Shares to be sold by the Company is [375,000].
(d) The time and date at which certificates for Option Shares are to
be delivered shall be determined by the Representative but shall
not be earlier than two nor later than 10 full business days
after the exercise of such option, nor in any event prior to the
Closing Date (such time and date being herein referred to as the
"Option Closing Date"). If the date of exercise of the option is
two or more days before the Closing Date, the notice of
exercise shall set the Closing Date as the Option Closing Date.
To the extent, if any, that the option provided for in Section
2(c) hereof is exercised, the Company will deliver the Option
Shares (at the expense of the Company) to the Representative at
Blank Rome LLP, 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000, on the date specified by the Representative, against
payment by the several Underwriters through the Representative
thereof to, or upon the order of, the Company by wire transfer
payable in same day funds to the accounts specified by the
Company. Delivery of the Option Shares shall be made through the
facilities of The Depository Trust Company unless the
Representative shall otherwise instruct. If settlement for the
Option Shares occurs after the Closing Date, the Company will
deliver to the Representative on any settlement date for the
Option Shares, and the obligation of the Underwriters to purchase
the Option Shares shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of
such date the opinions, certificates and letters delivered on the
Closing Date pursuant to Section 6 hereof.
3. Public Offering of the Shares. It is understood that the several
Underwriters propose to offer the Shares for sale to the public as set
forth in the Registration Statement.
12
4. Covenants and Agreements. The Company agrees with each of the several
Underwriters that:
(a) Prior to the termination of the offering of the Shares, the
Company will not file any amendment of the Registration Statement
or supplement to the Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished the Representative a
copy for their review prior to filing and will not file any such
proposed amendment or supplement to which the Representative
reasonably objects. Subject to the foregoing sentence, if the
Registration Statement has become effective pursuant to Rule
430A, or filing of the Prospectus is otherwise required under
Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed therein and will provide
evidence satisfactory to the Representative of such timely
filing. The Company will promptly advise the Representative (i)
when the Prospectus, and any supplement thereto, shall have been
filed (if required) with the Commission pursuant to Rule 424(b)
or when any Rule 462(b) Registration Statement shall have been
filed with the Commission, (ii) when, prior to termination of the
offering of the Shares, any amendment to the Registration
Statement shall have been filed or become effective, (iii) of any
request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or of any
additional information, (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for
that purpose and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification
of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will
use its best efforts to prevent the issuance of any such stop
order or the suspension of any such qualification and, if issued,
to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the rules
and regulations promulgated thereunder, any event occurs as a
result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the
light of the circumstances under which they were made not
misleading, or, if, in the opinion of counsel for the
Underwriters, it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the
Securities Act and the rules and regulations promulgated
thereunder, the Company promptly will (A) notify the
Representative of any such event, (B) prepare and file with the
Commission, at its own expense, subject to the first sentence of
Section 4(a), an amendment or supplement which will correct such
statement or omission or effect such compliance and (C) supply,
at its own expense, any supplemented prospectus to each of the
Underwriters and to any dealer in such quantities as each
Underwriter may reasonably request.
(c) The Company shall endeavor in good faith, in cooperation with the
Representative, at or prior to the date and time that this
Agreement is executed and delivered by the parties hereto (the
"Execution Time"), to qualify the Shares for offering and sale
under the securities laws of such jurisdictions as the
Representative may designate to permit the continuance of sales
and dealings therein for as long as may be necessary to complete
the distribution, and shall make such applications, file such
documents and furnish such information as may be required for
such purpose; provided, however, the Company shall not be
required to qualify as a foreign corporation or file a general or
limited consent to
13
service of process in any such jurisdiction. In each jurisdiction
where such qualification shall be effected, the Company will, unless
the Representative agrees that such action is not at the time
necessary or advisable, use all reasonable efforts to file and make
such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such
qualification.
(d) As soon as practicable, but in any event not later than 45 days
after the end of the 12-month period beginning on the day after
the end of the fiscal quarter of the Company during which the
Registration Statement is declared effective by the Commission
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 under the Securities Act, and to the
Representative, an earnings statement which will be in the detail
required by, and will otherwise comply with, the provisions of
Section 11(a) of the Securities Act and Rule 158 under the
Securities Act.
(e) For so long as the company is a reporting company under the
Exchange Act (but in no event for less than five years following
the Closing), the Company will furnish to its stockholders as
soon as practicable after the end of each fiscal year an annual
report (including a balance sheet and statements of income,
stockholders' equity and cash flows of the Company and its
consolidated subsidiaries audited by independent registered
public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the effective date of the
Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail.
(f) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to the
Representative copies of all reports or other communications
(financial or other) furnished to stockholders generally, and to
deliver to the Representative (i) as soon as they are available,
copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange on
which any class of securities of the Company is listed; and (ii)
such additional public information concerning the business and
financial condition of the Company as the Representative may from
time to time reasonably request (such financial statements to be
on a consolidated basis to the extent the accounts of the Company
and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission). Delivery to the
Representative will be deemed to have been made to the extent the
Company has filed any such material with the Commission.
(g) The Company will furnish to the Representative and Underwriters'
Counsel, without charge, at such place as the Representative may
designate, signed copies of the Registration Statement (including
exhibits thereto) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act and the rules and regulations
promulgated thereunder, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representative may reasonably request.
(h) At the Execution Time, the Underwriter shall have received an
agreement substantially in the form of Exhibit A hereto signed by
the persons or entities listed on Schedule III hereto (the
"Lock-Up Agreements"). On or before the Closing Date, the
Company shall
14
deliver instructions to Continental Stock Transfer & Trust Company,
the transfer agent for the Shares, authorizing it to place
appropriate stop transfer orders on the Company's ledgers and
appropriate restrictive legends on the certificates representing the
outstanding shares of Common Stock (but not the Shares) and the
Conversion Shares (as defined in Section 6(l)), in keeping with the
Lock-Up Agreements.
(i) The Company will not, for a period of 180 days following the
Execution Time (the Lock-Up Period"), without the prior written
consent of the Representative, offer, sell, contract to sell,
pledge or otherwise dispose of (or enter into any transaction
which is designed to, or could be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company
or any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company) directly or indirectly,
including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or
establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of the
rules promulgated under Section 16 of the Exchange Act with
respect to, any other shares of Common Stock or any securities
convertible into, or exchangeable for, shares of Common Stock, or
publicly announce an intention to effect any such transaction;
provided, however, that the Company may issue and sell Common
Stock and securities exercisable for Common Stock pursuant to any
employee stock option plan, stock ownership plan, stock purchase
plan or dividend reinvestment plan of the Company in effect at
the Execution Time and the Company may issue Common Stock
issuable upon the conversion of securities or the exercise of
warrants outstanding at the Execution Time.
(j) Prior to the completion of the distribution of the Shares by the
Underwriters, neither the Company nor any of its officers or
directors, nor any of their respective affiliates (within the
meaning of the Exchange Act) will take, directly or indirectly,
any action designed to, or which might in the future reasonably
be expected to, cause or result in, under the Exchange Act and
the rules and regulations promulgated thereunder or otherwise,
stabilization or manipulation of the price of any securities of
the Company to facilitate the sale or resale of the Shares.
(k) The Company shall apply the net proceeds from the sale of the Shares
in the manner, and subject to the conditions, set forth under "Use
of Proceeds" in the Prospectus. Except as described in the
Prospectus, no portion of the net proceeds will be used, directly or
indirectly, to acquire any securities issued by the Company.
(l) For so long as the Company is a reporting company under the
Exchange Act (but in no event for less than five years following
the Closing), the Company shall timely file all such reports,
forms or other documents as may be required from time to time,
under the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder and all such reports, forms
and documents filed will comply as to form and substance in all
material respects with the applicable requirements under the
Securities Act, the Exchange Act and the rules and regulations
promulgated thereunder.
(m) For so long as the Company is a reporting company under the
Exchange Act (but in no event for less than five years following
the Closing), the Company shall use its best efforts to cause the
Common Stock to be quoted on the American Stock Exchange, the
Nasdaq National Market, the NYSE or another national securities
exchange and shall use
15
its best efforts to maintain the listing or quotation of the Common
Stock to the extent outstanding on one of such markets or exchanges.
(n) The Company will, at its expense, subsequent to the issuance of the
Shares, prepare and deliver to the Representative and counsel to the
Underwriters up to an aggregate of five bound volumes and/or cds
containing copies of the documents used in connection with the
issuance of the Shares, as requested by the Representative.
(o) The Company shall give reasonable consideration to using the
Representative as the lead underwriter or placement agent for any
public or private financing of the Company during the period
between the Closing Date and June 30, 2007, subject to a review
of the Representative's prior performance and the reaching of a
mutually acceptable agreement, in the case of public financings,
and provided that the foregoing shall not apply to private
financings involving current shareholders, lenders or investors
identified by the Company.
(p) The Company shall give reasonable consideration to using the
Representative as the financial advisor to the Company with respect
to the sale of the Company, during the period between the Closing
Date and June 30, 2007, although any such arrangement must be
mutually acceptable to both the Company and the Representative.
5. Payment of Expenses. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the
Company agrees to pay or cause to be paid all expenses incident to the
performance of its obligations under this Agreement, including: (i) the
fees, disbursements and expenses of the Company's counsel and the
Company's independent registered public accountants in connection with
the registration and delivery of the Shares under the Securities Act
and all other fees or expenses in connection with the preparation and
filing of the Registration Statement, any Preliminary Prospectus, the
Prospectus and amendments and supplements to any of the foregoing,
including all printing costs associated therewith, and the mailing and
delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related
to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the cost
of printing or producing any Blue Sky memorandum in connection with the
offer and sale of the Shares under state securities laws and all
expenses in connection with the qualification of the Shares for offer
and sale under state securities laws as provided in Section 4(c)
hereof, including filing fees and the reasonable fees and disbursements
of counsel for the Underwriters in connection with such qualification
and in connection with the Blue Sky memorandum, (iv) all filing fees
and up to $5,000 of the fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification
of the offering of the Shares by the National Association of Securities
Dealers, Inc., (v) all fees and expenses incident to listing the Shares
on the American Stock Exchange, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer
agent, registrar or depositary, (viii) the costs and expenses of the
Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the
Shares, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road
show, (ix) the document production charges and expenses associated with
printing this Agreement, (x) costs of bound volumes, and (xi) all other
costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section.
16
In addition, the Company agrees to pay the Representative a
non-accountable expense allowance equal to $125,000, of which $50,000
has been paid prior to the date hereof and the balance shall be payable
at, and only in the event of, the Closing. For purposes of this
paragraph, "Closing" means the date on which the Company delivers the
Firm Shares to the Representative and the Representative pays the
Company for the Firm Shares. It is understood, however, that except as
provided in this Section, Section 7 entitled "Reimbursement of
Underwriters' Expenses" and Section 8 entitled "Indemnification and
Contribution," the Underwriters will pay all of their costs and
expenses, including fees and disbursements of their counsel, "road
show" travel related expenses for Underwriter personnel, stock transfer
taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make. The
Representative is authorized upon consummation of the proposed offering
to place customary "tombstone" advertisements in publications of its
choice at its expense.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Shares that they have agreed
to purchase pursuant to this Agreement are subject, in the discretion
of the Underwriters, to (A) the continuing accuracy of the
representations and warranties of the Company herein, as of the date
hereof and as of the Closing Date and any applicable Option Closing
Date, as if such representations and warranties had been made on and as
of the Closing Date or such Option Closing Date, as the case may be,
(B) the accuracy on and as of the Closing Date or any Option Closing
Date, of the statements of the officers of the Company made pursuant to
the provisions hereof, (C) the performance by the Company on and as of
the Closing Date and any Option Closing Date, of its covenants and
obligations hereunder theretofore to be performed, (D) the accuracy of
the statements of the Company made in any certificates pursuant to the
provisions hereof, and (E) the following further conditions:
(a) If filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such
supplement, shall be filed in the manner and within the time
period required by Rule 424(b); and 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 threatened; and all requests for additional
information on the part of the Commission shall have been
complied with to your reasonable satisfaction.
(b) The Representative shall not have reasonably determined and
advised the Company that the Registration Statement, or any
amendment thereto, contains an untrue statement of fact which,
in the Representative's opinion, is material, or omits to
state a fact which, in the Representative'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 Representative's opinion, is
material, or omits to state a fact which, in the
Representative's opinion, is material and is required to be
stated therein or is necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(c) On or prior to the Closing Date, the Representative shall have
received from Underwriters' Counsel, such opinions or
statements with respect to the organization of the Company,
the validity of the Shares, the compliance as to form of the
Registration Statement, and the Prospectus with the
requirements of the Securities Act and the rules and
regulations promulgated thereunder, and other related matters
as the Representative requests. Underwriters' Counsel shall
have received such papers and information as it reasonably
requests to enable it to pass upon such matters.
17
(d) On the Closing Date, the Underwriters shall have received the
signed opinion of each of Xxxxxxxxx Xxxxxx Xxxx & Xxxxx LLP
and ___________,counsels for the Company (individually and
collectively, "Company Counsel"), dated as of the Closing
Date, and any other opinions of counsel referred to in such
opinions of Company Counsel or relied upon by Company Counsel
in rendering their opinion) addressed to the Underwriters and
reasonably satisfactory to Underwriters' Counsel,
substantially to the effect that:
(i) The Company and each of the Subsidiaries is a
corporation duly organized, validly existing and in
good standing under the laws of the state or other
jurisdiction of its incorporation or organization,
with full power and authority, corporate and other,
and with all Permits necessary to own or lease, as
the case may be, and operate its properties, whether
tangible or intangible, and to conduct its business
as described in the Registration Statement, and the
Company and each of its subsidiaries is duly
qualified to do business as a foreign corporation and
is in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify
could have a material adverse effect on the financial
condition, results of operations, business or
properties of the Company.
(ii) The Company has full power and authority, corporate
and other, to execute, deliver and perform this
Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and
performance of this Agreement by the Company, the
consummation by the Company of the transactions
herein contemplated and the compliance by the Company
with the terms of this Agreement have been duly
authorized by all necessary corporate action, and
this Agreement has been duly executed and delivered
by the Company. This Agreement is (assuming for the
purposes of this opinion that it is valid and binding
upon the other party thereto) the valid and binding
obligation of the Company, enforceable in accordance
with its terms, subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting
the rights of creditors generally and the discretion
of courts in granting equitable remedies and except
that enforceability of the indemnification provisions
set forth in Section 7 hereof and the contribution
provisions set forth in Section 8 hereof may be
limited by the federal securities laws or public
policy underlying such laws.
(iii) The execution, delivery and performance of this
Agreement by the Company, the consummation by the
Company of the transactions herein contemplated and
the compliance by the Company with the terms of this
Agreement do not, and will not, with or without the
giving of notice or the lapse of time, or both, (A)
result in a violation of the Certificate of
Incorporation or By-Laws, each as amended, of the
Company, (B) result in a breach of or conflict with
any terms or provisions of, or constitute a default
under, or result in the modification or termination
of, or result in the creation or imposition of any
lien, security interest, charge or encumbrance upon
any of the properties or assets of the Company or any
Subsidiary pursuant to any indenture, mortgage, note,
contract, commitment or other material agreement or
instrument to which the Company or a Subsidiary is a
party or by which the Company or any Subsidiary, or
any of their respective properties or assets are or
may be bound or affected; (C) violate any existing
applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic
or foreign, having jurisdiction over the Company or
any Subsidiary, or any of their respective properties
or business; or (D) have any
18
effect on any Permit necessary for the Company or any
Subsidiary to own or lease, as the case may be, and
operate its properties or conduct its business or the
ability of the Company or any Subsidiary to make use
of its properties or business.
(iv) To the best of Company Counsel's knowledge, no
Permits of any court or governmental agency or body
(other than under the Act, the Regulations and
applicable state securities or Blue Sky laws) are
required for the valid authorization, issuance, sale
and delivery of the Shares to the Underwriter, and
the consummation by the Company of the transactions
contemplated by this Agreement.
(v) The Registration Statement has become effective under
the Act; to the best of Company Counsel's knowledge,
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, threatened or contemplated under the Act
or applicable state securities laws.
(vi) The Registration Statement and the Prospectus, as of
the Effective Date, and each amendment or supplement
thereto as of its effective or issue date (except for
the financial statements and other financial data
included therein, as to which Company Counsel need
not express an opinion) comply as to form in all
material respects with the requirements of the Act
and Regulations.
(vii) The descriptions in the Registration Statement and
the Prospectus of statutes, regulations, government
classifications, contracts and other documents
(including opinions of such counsel); and the
response to Item 10 of Form S-1 have been reviewed by
Company Counsel, and, based upon such review, are
accurate in all material respects and present fairly
the information required to be disclosed, and there
are no material statutes, regulations or government
classifications, or, to the best of Company Counsel's
knowledge, material contracts or documents, of a
character required to be described in the
Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement,
which are not so described or filed as required, as
the case may be.
None of the material provisions of the contracts or
instruments described above violates any existing
applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic
or foreign, having jurisdiction over the Company or
any Subsidiary, or any of their respective assets or
businesses, including, without limitation, the
Alcohol and Tobacco Tax and Trade Bureau of the
United States Treasury Department, the Food and Drug
Administration ("FDA") and the Federal Trade
Commission ("FTC") and comparable foreign, state and
local regulatory authorities.
(viii) All of the issued and outstanding capital stock or
other equity interest of each Subsidiary has been
duly and validly authorized and issued and is fully
paid and non-assessable; and, except as described in
the Prospectus, are owned, directly or through other
Subsidiaries, by the Company, free and clear of any
security interest, claim, lien or encumbrance.
19
(ix) The outstanding capital stock of the Company,
including all outstanding shares of Common Stock and
outstanding shares of the Series A convertible
preferred stock, Series B convertible preferred stock
and Series C convertible preferred stock of the
Company (collectively "Preferred Stock"), and
outstanding options and warrants to purchase Common
Stock have been duly authorized and validly issued
and are fully paid and nonassessable. Other than the
outstanding shares of Preferred Stock, the Company
has no outstanding shares of preferred stock. The
outstanding shares of Common Stock and Preferred
Stock are fully paid and nonassessable. The
outstanding options and warrants to purchase shares
of Common Stock and the outstanding indebtedness of
the Company convertible into shares of Common Stock
("Convertible Debt") constitute the valid and binding
obligations of the Company, enforceable in accordance
with their terms. None of the outstanding shares of
Common Stock or Preferred Stock or outstanding
options or warrants to purchase shares of Common
Stock or outstanding Convertible Debt has been issued
in violation of the preemptive rights of any
stockholder of the Company. None of the holders of
the outstanding Common Stock or Preferred Stock is
subject to personal liability solely by reason of
being such a holder. The offers and sales of the
outstanding Common Stock and Preferred Stock and
outstanding options and warrants to purchase Common
Stock and outstanding Convertible Debt were at all
relevant times either registered under the Act and
the applicable state securities or Blue Sky laws or
exempt from such registration requirements. The
authorized Common Stock and Preferred Stock and the
outstanding options and warrants to purchase Common
Stock and outstanding Convertible Debt conform to the
descriptions thereof contained in the Registration
Statement and Prospectus. To the best of Company
Counsel's knowledge, except as set forth in the
Prospectus, no holders of any of the Company's
securities has any rights, "demand", "piggyback" or
otherwise, to have such securities registered under
the Act.
(x) The authorized capital stock of the Company as of [ ]
30, 2005 was as set forth under the heading
"Capitalization" in the Prospectus, and, as of the
date of Company Counsel's opinion, all of the
8,450,493 issued and outstanding shares of common
stock of the Company as set forth in the first
paragraph under the heading "Description of
Securities" in the Prospectus have been duly
authorized and validly issued and are fully paid and
non-assessable;
(xi) The issuance and sale of the Shares have been duly
authorized and, when the Shares have been issued and
duly delivered against payment therefor as
contemplated by this Agreement, the Shares will be
validly issued, fully paid and nonassessable, and the
holders thereof will not be subject to personal
liability solely by reason of being such holders. The
Shares are not subject to preemptive rights of any
stockholder of the Company. The certificates
representing the Shares are in proper legal form.
(xii) Upon delivery of the Firm Shares to the Underwriters
against payment therefor as provided in this
Agreement, the Underwriters (assuming each is a bona
fide purchaser within the meaning of the Uniform
Commercial Code) will acquire good title to the Firm
Shares, free and clear of all liens, encumbrances,
equities, security interests and claims.
20
(xiii) Assuming that the Representative exercises the
over-allotment option to purchase any of the Option
Shares and makes payment therefor in accordance with
the terms of this Agreement, upon delivery of the
Option Shares to the Representative hereunder, the
Representative (assuming it is a bona fide purchaser
within the meaning of the Uniform Commercial Code)
will acquire good title to such Option Shares, free
and clear of any liens, encumbrances, equities,
security interests and claims.
(xiv) To the best of Company Counsel's knowledge, there are
no claims, actions, suits, proceedings, arbitrations,
investigations or inquiries before any governmental
agency, court or tribunal, foreign or domestic, or
before any private arbitration tribunal, pending or
threatened against the Company or any Subsidiary, or
involving the Company's or any Subsidiary's
properties or businesses, other than as described in
the Registration Statement, such description being
accurate, and other than litigation incident to the
kind of business conducted by the Company or such
Subsidiary, as the case may be, which, individually
and in the aggregate, is not material.
(xv) The Company and each subsidiary owns or possesses
adequate and enforceable rights to use all patents,
patent applications, trademarks, service marks,
copyrights, rights, trade secrets, confidential
information, processes and formulations used or
proposed to be used in the conduct of its business as
described in the Prospectus (collectively the
"Intangibles"); to the best of Company Counsel's
knowledge, neither the Company nor any Subsidiary has
infringed or is infringing with the rights of others
with respect to the Intangibles; and, to the best of
Company Counsel's knowledge, neither the Company nor
any Subsidiary has received any notice that it has or
may have infringed, is infringing upon or is
conflicting with the asserted rights of others with
respect to the Intangibles which might, singly or in
the aggregate, materially adversely affect its
business, results of operations or financial
condition and such counsel is not aware of any
licenses with respect to the Intangibles which are
required to be obtained by the Company or any
Subsidiary other than those licenses which the
Company or such subsidiary, as the case may be, has
obtained. The opinions described in this Section
6(d)(xiii) may be given by Company Counsel in
reliance on the opinion of an attorney, reasonably
acceptable to Underwriter's Counsel, practicing in
the patent area.
Company Counsel has participated in reviews and discussions in
connection with the preparation of the Registration Statement
and the Prospectus, and in the course of such reviews and
discussions and such other investigation as Company Counsel
deemed necessary, no facts came to its attention which lead it
to believe that (A) the Registration Statement (except as to
the financial statements and other financial data contained
therein, as to which Company Counsel need not express an
opinion), as of the Closing Date, contains any untrue
statement of a material fact required to be stated therein or
omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading, or that (B) the Prospectus (except as to the
financial statements and other financial data contained
therein, as to which Company Counsel need not express an
opinion) contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading. Xxxxxxxxx, Xxxxxx
Xxxx & Xxxxx LLP
21
must give this opinion in its entirety and each other counsel
giving an opinion must give the opinion set forth in this
paragraph as to the subject matter of its opinion.
In rendering its opinion pursuant to this Section 6(d),
Company Counsel may rely upon the certificates of government
officials and officers of the Company as to matters of fact,
provided that Company Counsel shall state that they have no
reason to believe, and do not believe, that they are not
justified in relying upon such opinions or such certificates
of government officials and officers of the Company as to
matters of fact, as the case may be.
The opinion letters delivered pursuant to this Section 6(d)
shall state that any opinion given therein qualified by the
phrase "to the best of our knowledge" is being given by
Company Counsel after due investigation of the matters therein
discussed.
(e) At any Option Closing Date, the Underwriters shall have
received the opinions of Company Counsel, dated such Option
Closing Date, addressed to the Underwriters and in form and
substance satisfactory to Underwriters' Counsel, confirming,
as of such Option Closing Date, the statements made by Company
Counsel in their respective opinions delivered on the Closing
Date.
(f) Prior to each of the Closing Date and any Option Closing Date
and other than as set forth in the Registration Statement or
Prospectus, (i) there shall have been no material adverse
change in the condition (financial or otherwise), earnings,
business prospects, or properties of the Company and its
Subsidiaries taken as a whole, whether or not in the ordinary
course of business, from the latest dates as of which such
condition is set forth in the Registration Statement and
Prospectus; (ii) there shall have been no transaction, not in
the ordinary course of business, entered into by the Company
or any of its Subsidiaries, from the latest date as of which
the financial condition of the Company and its Subsidiaries,
taken as a whole, is set forth in the Registration Statement
and Prospectus which is adverse to the Company and its
Subsidiaries, taken as a whole; (iii) neither the Company nor
any of its Subsidiaries, shall be in material breach under any
provision of any instrument relating to any outstanding
indebtedness; (iv) neither the Company nor any of its
Subsidiaries shall have issued any securities (other than the
Shares); (v) neither the Company nor any of its Subsidiaries
shall have declared or paid any dividend or made any
distribution in respect of its capital stock of any class;
(vi) there shall have been no change in the capital stock of
the Company, or any change in the debt (long or short term) or
liabilities or obligations of the Company or any of its
Subsidiaries (contingent or otherwise); (vii) no amount of the
assets of the Company or any of its Subsidiaries shall have
been pledged or mortgaged, except as set forth in the
Registration Statement and Prospectus; (viii) no actions,
suits or proceedings, at law or in equity, shall have been
pending or, to the knowledge of the Company, threatened (or
circumstances giving rise to same) against the Company or any
of its Subsidiaries, or affecting any of its properties or
business, before or by any court or federal, state or foreign
commission, board or other administrative agency wherein
unfavorable decisions, rulings or findings could reasonably be
expected, singularly or in the aggregate, to have a Material
Adverse Effect; and (viii) no stop order shall have been
issued under the Securities Act and no proceedings therefor
shall have been initiated or, to the best knowledge of the
Company, threatened or contemplated by the Commission or any
state regulatory authority.
22
(g) At each of the Closing Date and any Option Closing Date, the
Underwriters shall have received a certificate of the Company
signed by the principal executive officer and by the chief
financial officer of the Company, dated the Closing Date or
such Option Closing Date, as the case may be, to the effect
that each such person has carefully examined the Registration
Statement, the Prospectus and this Agreement, and that:
(i) the representations and warranties of the Company in
this Agreement are true and correct in all respects
as if made on and as of such Closing Date or Option
Closing Date, as the case may be, and the Company has
complied with all agreements and covenants and
satisfied all conditions contained in this Agreement
on its part to be performed or satisfied at or prior
to such Closing Date or Option Closing Date, as the
case may be;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been
issued, and no proceedings for that purpose have been
instituted or are pending or, to the best of each of
such person's knowledge or the Company's knowledge,
after due inquiry, are contemplated or threatened;
(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 neither the Registration
Statement nor any amendment or supplement thereto
includes any untrue statement of a material fact or
omits to state any material fact required to be
stated therein or necessary to make the statements
therein not misleading and neither the 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; and
(iv) since the date of the most recent financial
statements included in the Prospectus (exclusive of
any supplement thereto), there has been no material
adverse change in the condition (financial or
otherwise), earnings, business prospects, or
properties of the Company and its Subsidiaries, taken
as a whole, whether or not arising from transactions
in the ordinary course of business.
(h) The Company shall have requested and caused Xxxxxx to have
furnished to the Representative letters, at the Execution Time
and at the Closing Date, dated respectively as of the
Execution Time and as of the Closing Date, in form and
substance satisfactory to the Representative, containing
statements and information of the type ordinarily included in
accountant's "comfort letters" with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus.
(i) On each of the Closing Date and any Option Closing Date, there
shall have been duly tendered to the Representative for the
several Underwriters' accounts the appropriate number of
Shares.
(j) No order suspending the sale of the Shares in any jurisdiction
designated by the Representative pursuant to Section 4(c)
hereof shall have been issued on either the Closing Date or
any Option Closing Date, and no proceedings for that purpose
shall have been instituted or shall be contemplated.
23
(k) Prior to the Closing Date, any voting agreements or voting
trusts among shareholders of the Company of which the Company
has knowledge, will be amended to terminate upon the
consummation of an initial public offering by the Company of
its Common Stock.
(l) Prior to or at the Closing Date, the Company shall have
converted all of its Preferred Stock, all of the accrued and
outstanding dividends on its Preferred Stock through the
Closing Date, all of the principal amount outstanding under
its 5% Euro denominated convertible subordinated notes and $6
million of the $15 million principal amount outstanding under
its 6% convertible notes into shares of Common Stock
(collectively, the "Conversion Shares") in accordance with the
terms set forth in the Registration Statement.
(m) The Lock-Up Agreements shall be in full force and effect on
the Closing Date and any Option Closing Date.
(n) Prior to the Closing Date, the Company shall have furnished to
the Representative such further information, certificates and
documents as the Representative may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as provided in this Agreement, this
Agreement and all obligations of the Underwriters hereunder may be
canceled at, or at any time prior to, the Closing Date by the
Representative (or if such conditions are not satisfied prior to an
Option Closing Date, at the Representative's option, the Representative
may terminate the Underwriters' obligation to purchase Option Shares
from the Company on such date). Notice of such cancellation shall be
given to the Company in writing or by telephone or facsimile confirmed
in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the offices of Blank Rome LLP, 000 Xxxxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the Shares
provided for herein is not consummated (a) because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not
satisfied or (b) because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or comply with any
provision hereof other than (i) by reason of a default by any of the
Underwriters or (ii) because of any termination pursuant to Section
11(b) hereof, the Company will reimburse the Underwriters severally
through the Representative on demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and
sale of the Shares, against which reimbursement will be applied the
$50,000 previously paid to the Underwriters as set forth in Section 5.
If the Underwriters shall terminate this Agreement for any other
reason, then the Company will reimburse the Underwriters only for their
accountable out-of-pocket expenses up to a maximum of $50,000, against
which reimbursement will be applied the $50,000 previously paid to
them. In no event, however, will the Underwriters, in the event the
offering is terminated, be entitled to retain or receive more than an
amount equal to their actual accountable out-of-pocket expenses and if
such expenses aggregate less than $50,000, the difference shall be
refunded to the Company from the $50,000 previously paid to the
Underwriters as set forth in Section 5.
24
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of
each Underwriter, each person who controls any Underwriter
within the meaning of either the Securities Act or the
Exchange Act and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act against any and
all losses, claims, damages or liabilities, joint or several,
to which they or any of them may become subject under the
Securities Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement as originally
filed or in any amendment thereof, or in any Preliminary
Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) the Company
will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in
reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter
through the Representative specifically for inclusion therein
and (ii) the indemnity agreement contained in this paragraph
(a) with respect to a preliminary Prospectus shall not inure
to the benefit of any Underwriter (or related indemnitee)
asserting any such losses, claims, damages, liabilities or
expenses if at or prior to the written confirmation of the
sale of any Shares a copy of the Prospectus (or Prospectus as
amended or supplemented) was not sent or delivered to such
person and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented).
This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of
its officers who signs the Registration Statement, and each
person who controls the Company within the meaning of either
the Securities Act or the Exchange Act, against any and all
losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the
Securities Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any
untrue statement of a material fact contained in the
Registration Statement as originally filed or in any amendment
thereof, or in any Preliminary Prospectus or the Prospectus,
or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss,
claim, damage, liability or action, but only with reference to
written information relating to such Underwriter furnished to
the Company by or on behalf of such Underwriter through the
Representative specifically for inclusion in the documents
referred to in the foregoing indemnity. The Company
acknowledges that the statements
25
set forth under the heading "Underwriting" in (i) the
paragraph relating to discounts to brokers or dealers, (ii)
the last two sentences of the paragraph relating to the shares
reserved for sales to directors, officers, employees, business
associates, and related persons, (iii) the paragraph relating
to short sales, stabilizing transactions and purchases to
cover positions created by short sales, (iv) the paragraph
relating to penalty bids, (v) the paragraph relating to the
effect of purchases to cover a short position and stabilizing
transaction, (vi) the paragraph relating to sales to
discretionary accounts and (vii) the paragraph relating to the
prospectus in electronic format in any Prospectus or the
Registration Statement constitute the only information
furnished in writing by or on behalf of the several
Underwriters for inclusion in any Prospectus or the
Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8,
notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party
(i) will not relieve the indemnifying party from liability
under paragraph (a) or (b) above unless and to the extent the
indemnifying party did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations
to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for
which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the
indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent
the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel
if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party, and the
indemnified party shall have reasonably concluded that there
may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying
party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of
the indemnifying party. An indemnifying party will not,
without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party
from all liability arising out of such claim, action, suit or
proceeding and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on
behalf of any indemnified party.
26
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 8 is unavailable to or insufficient to
hold harmless an indemnified party for any reason, the Company
and the Underwriters agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to
which the Company and one or more of the Underwriters may be
subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and
by the Underwriters on the other from the offering of the
Shares; provided, however, that in no case shall any
Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Shares) be
responsible for any amount in excess of the underwriting
discount or commission applicable to the Shares purchased by
such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason,
the Company and the Underwriters shall contribute in such
proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and of the
Underwriters in connection with the statements or omissions
which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company
shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by it, and
benefits received by the Underwriters shall be deemed to be
equal to the total underwriting discounts and commissions, in
each case as set forth on the cover page of the Prospectus.
Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged
omission to state a material fact relates to information
provided by the Company on the one hand or the Underwriters on
the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Underwriters'
respective obligations to contribute pursuant to this Section
8 are several in proportion to the respective number of Shares
they have purchased hereunder, and not joint. The Company and
the Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding
the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person
who controls an Underwriter within the meaning of either the
Securities Act or the Exchange Act and each director, officer,
employee and agent of an Underwriter and each affiliate of any
Underwriter (within the meaning of the Securities Act) shall
have the same rights to contribution as such Underwriter, and
each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act, each officer of
the Company who shall have 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 the
applicable terms and conditions of this paragraph (d).
9. Representations and Indemnities to Survive Delivery. All
representations, warranties, agreements, indemnities and other
statements of the Company or its officers and of the Underwriters,
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 as of the Closing Date and
as of any Option Closing Date, as the case may be, and such
representations, warranties and agreements and the indemnity agreements
contained in Section 8 hereof, shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter, the Company or any controlling person of any Underwriter
or
27
the Company, and shall survive the termination of this Agreement or the
issuance, sale and delivery of the Shares to the Underwriters and the
Representative, as the case may be.
10. Effective Date. This Agreement shall become effective upon the
execution of this Agreement by all of the parties hereto.
11. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representative, by notice given to the
Company prior to delivery of and payment for the Shares, (a) as
provided in Sections 6, 12 or 13 or (b) if at any time prior to such
time (i) trading in the Company's Common Stock shall have been
suspended by the Commission or the American Stock Exchange or trading
in securities generally on the New York Stock Exchange, American Stock
Exchange or the Nasdaq National Market shall have been suspended or
limited or minimum prices shall have been established on either of New
York Stock Exchange, American Stock Exchange or the Nasdaq National
Market, (ii) the Company shall have sustained a loss material or
substantial to the Company by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which,
whether or not such loss shall have been insured, will, in the
Representative's opinion, make it inadvisable to proceed with the
delivery of the Shares, (iii) a banking moratorium shall have been
declared either by Federal or New York State authorities, (iv) any
domestic or international event or act or occurrence has materially
disrupted, or in the Representative's opinion will in the immediate
future materially adversely disrupt, the financial markets, (v) any
material adverse change in the financial markets shall have occurred,
(vi) a material disruption in securities settlement, payment or
clearance services in the United States shall have occurred, (vii)
there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is
such as to make it, in the sole judgment of the Representative,
impractical or inadvisable to proceed with the offering or delivery of
the Shares as contemplated by the Prospectus, or (ix) the initial
public offering price or the purchase price per security has not been
agreed upon prior to 5:00 p.m., New York time, on the fifth full
business day after the Registration Statement shall have become
effective; provided, however, that the provisions of this Section 11
and of Sections 5, 7 and 8 hereof shall at all times be in full force
and effect and shall survive the termination of this Agreement.
12. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Shares agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase
shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective
proportions which the amount of Shares set forth opposite their names
in Schedule I hereto bears to the aggregate amount of Shares set forth
opposite the names of all the remaining Underwriters) the Shares which
the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate
amount of Shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount
of Shares set forth in Schedule I hereto, the remaining Underwriters
shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Shares, and if such nondefaulting
Underwriters do not purchase all the Shares, this Agreement will
terminate (or, if such default shall occur with respect to any Option
Shares to be purchased on an Option Closing Date, the Underwriters may,
at the Representative's option, by notice from the Representative to
the Company, terminate the Underwriters' obligation to purchase Option
Shares from the Company on such date) without liability to any
nondefaulting Underwriter or the Company. In the event of a default by
any Underwriter as set forth in this Section 12, the Closing Date shall
be postponed for such period, not exceeding five business days, as the
Representative shall determine in order that the required changes in
the Registration Statement and the
28
Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting
Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default
hereunder.
13. Default by the Company. If the Company shall fail on the Closing Date
or on any Option Closing Date, as applicable, to sell and deliver the
number of Shares 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 Shares to be purchased on an Option Closing
Date, the Underwriters may, at the Representative's option, by notice
from the Representative to the Company, terminate the Underwriters'
obligation to purchase Option Shares 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 8 hereof. No action taken
pursuant to this Section 13 shall relieve the Company from liability,
if any, in respect of such default.
14. Arm's-Length Transaction. The Company acknowledges and agrees that (i)
the purchase and sale of the Shares pursuant to this Agreement is an
arm's-length commercial transaction between the Company, on the one
hand, and the several Underwriters, on the other, (ii) in connection
therewith each Underwriter is acting as a principal and not the agent
or fiduciary of the Company, and (iii) no Underwriter has assumed an
advisory responsibility in favor of the Company with respect to the
offering contemplated hereby or the process leading thereto
(irrespective of whether such Underwriter has advised or is currently
advising the Company on other matters) or any other obligation to the
Company except the obligations expressly set forth in this Agreement.
15. 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 Underwriters shall be
directed to Xxxxxxxxxxx & Co. Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxx Xxxxx (Facsimile Number: (000) 000-0000),
with a copy to Blank Rome LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX
00000, Attention: Xxxxx X. Xxxxx, Esq. (Facsimile Number: (212)
885-5001). Notices to the Company shall be directed to the Company at
Castle Brands Inc., 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000, Attention: Xxxx X. Xxxxxxx, III (Facsimile Number: (646)
356-0222), with a copy to Xxxxxxxxx Xxxxxxx Xxxx & Xxxxx LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxx X.
Xxxxxxxxxx, III, Esq. (Facsimile Number: (000) 000-0000).
16. Parties. This Agreement shall inure solely to the benefit of and shall
be binding upon, the Underwriters, the Company and the controlling
persons, directors, officers, employees, agents and affiliates referred
to in Section 8 hereof, and their respective successors, legal
representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provisions
herein contained. No purchaser of Shares from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
17. Applicable Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed
by and construed in accordance with the laws of the State of New York.
Each of the parties irrevocably submits to the exclusive jurisdiction
of the state and federal courts of competent jurisdiction sitting in
New York City and waives any objection to venue in such courts.
29
18. 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
agreement.
19. Headings. The section headings used herein are for convenience only and
shall not affect the construction hereof.
20. Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto and supersedes all prior written or
oral agreements, understandings and negotiations with respect to the
subject matter hereof. This Agreement may not be amended except in a
writing, signed by the Representative and the Company.
[Signature Pages Follow]
30
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,
CASTLE BRANDS INC.
By: _____________________________________
Xxxx X. Xxxxxxx, III
President and Chief Executive Officer
31
Confirmed and accepted as of
the date first above written.
XXXXXXXXXXX & CO. INC.
For itself and as Representative
of the several Underwriters named
in Schedule I hereto.
By:____________________________
Name:
Title:
32
SCHEDULE I
No. of Shares
to be Purchased
---------------
Xxxxxxxxxxx & Co. Inc.
ThinkEquity Partners LLC
Ladenburg Xxxxxxxx & Co. Inc.
----------------
TOTAL:
----------------
SCHEDULE II
[List of Subsidiaries]
SCHEDULE III
[List of security holders subject to the Lock-Up]
EXHIBIT A
[Form of Lock-Up]
