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EXHIBIT 1.1
UNDERWRITING AGREEMENT
between
DELICIOUS BRANDS, INC.
and
NETWORK 1 FINANCIAL SECURITIES, INC.
Dated: _______, 1998
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DELICIOUS BRANDS, INC.
(formerly The Delicious Frookie Company, Inc.)
1,000,000 Shares of Common Stock
UNDERWRITING AGREEMENT
New York, New York
___________, 1998
Network 1 Financial Securities, Inc.
Galleria Building 2, 0 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxxxx 00000
Ladies and Gentlemen:
The undersigned, Delicious Brands, Inc., a Delaware
corporation (the "Company"), hereby confirms its agreement with Network 1
Financial Securities, Inc. (being referred to herein variously as the
"Representative" or "you") and with the other underwriters named on Schedule 1
hereto (the Representative and the other Underwriters being collectively called
the "Underwriters" or, individually, an "Underwriter"), as follows:
1. Purchase and Sale of Securities.
1.1 Firm Shares.
1.1.1 Purchase of Firm Shares. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell, severally and
not jointly, to the several Underwriters, 1,000,000 shares (the "Firm Shares")
of the Company's common stock, par value $.01 per share ("Common Stock") at a
purchase price (net of commissions) of $____ per share. The Underwriters,
severally and not jointly, agree to purchase from the Company the number of Firm
Shares set forth opposite their respective names on Schedule I attached hereto
and made a part hereof at a purchase price of $_____ per share.
1.1.2 Payment and Delivery. Delivery and payment for the Firm
Shares shall be made at 10:00 A.M., New York time, on or before the third
business day following the date that the Firm Shares commence trading or at such
earlier time as the Representative shall determine, or at such other time as
shall be agreed upon by the Representative and the Company at the offices of the
Representative or at such other place as shall be agreed upon by the
Representative and the Company. The hour and date of delivery and payment for
the Firm Shares are called the "Closing Date." Payment for the Firm Shares shall
be made on the Closing Date at the Representative's election by wire transfer or
by certified or bank cashier's check(s) in New York Clearing House funds payable
to the order of the Company upon delivery to the Representative of certificates
(in form and substance satisfactory to the Representative) representing the Firm
Shares for the account of the respective accounts of the Underwriters. The Firm
Shares shall be registered in such name or names and in such authorized
denominations as the Representative may request in writing at least two full
business days prior to the Closing Date. The Company will permit the
Representative to examine and package the Firm Shares for
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delivery at least one full business day prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Shares except upon tender of
payment by the Underwriters for all the Firm Shares.
1.2 Over-Allotment Option.
1.2.1 Option Shares. For the purposes of covering any
over-allotments in connection with the distribution and sale of the Firm Shares,
the Underwriters are hereby granted an option ("Over-allotment Option") to
purchase up to an additional 150,000 Shares of Common Stock from the Company
(the "Option Shares"). The Firm Shares and the Option Shares are hereinafter
referred to collectively as the "Public Securities." The purchase price to be
paid for the Option Shares will be the same price per Option Share as the price
per Firm Share set forth in Section 1.1.1 hereof.
1.2.2 Exercise of Option. The Over-allotment Option granted
pursuant to Section 1.2.1 hereof may be exercised by the Representative on
behalf of the Underwriters as to all or any part of the Option Shares at any
time, from time to time, within thirty days after the effective date ("Effective
Date") of the Registration Statement (as hereinafter defined). The Underwriters
will not be under any obligation to purchase any Option Shares prior to the
exercise of the Over-allotment Option. The Over-allotment Option granted hereby
may be exercised by the giving of oral notice to the Company and the
Attorney-in-Fact (as hereinafter defined) from the Representative, which must be
confirmed by a letter or telecopy setting forth the number of Option Shares to
be purchased, the date and time for delivery of and payment for the Option
Shares and stating that the Option Shares referred to therein are to be used for
the purpose of covering over-allotments in connection with the distribution and
sale of the Firm Shares. If such notice is given at least two full business days
prior to the Closing Date, the date set forth therein for such delivery and
payment will be the Closing Date. If such notice is given thereafter, the date
set forth therein for such delivery and payment will not be earlier than five
full business days after the date of the notice. If such delivery and payment
for the Option Units does not occur on the Closing Date, the date and time of
the closing for such Option Units will be as set forth in the notice
(hereinafter "Option Closing Date"). Upon exercise of the Over-allotment Option,
the Company will become obligated to convey to the Underwriters, and, subject to
the terms and conditions set forth herein, the Underwriters will become
obligated to purchase, the number of Option Units specified in such notice.
1.2.3 Payment and Delivery. Payment for the Option Shares will
be at the Representative's election by wire transfer or by certified or bank
cashier's check(s) in New York Clearing House funds payable to the order of the
Company at the offices of the Representative or at such other place as shall be
agreed upon by the Representative and the Company upon delivery to the
Representative of certificates representing such securities for the respective
accounts of the Underwriters. The certificates representing the Option Shares to
be delivered will be in such denominations and registered in such names as the
Representative requests not less than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be, and will be made
available to the Representative for inspection, checking and packaging at the
aforesaid office of the Company's transfer agent or correspondent not less than
one full business day prior to such Closing Date.
1.3 Representative's Warrant.
1.3.1 Representative's Warrant. The Company hereby agrees to
issue and sell to the Representative (and/or its designees) on the Closing Date,
for an aggregate purchase price
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of $10.00, a Warrant ("Representative's Warrant") exercisable, at any time, in
whole or in part, for a period of four years commencing one year from the
Effective Date, for the purchase of an aggregate of 100,000 shares of Common
Stock ("Representative's Shares") at an initial exercise price of 165% of the
initial offering price of a share of Common Stock (i.e., $___ per Share). The
Representative's Warrant and the shares of Common Stock issuable upon exercise
of the Representative's Warrant are hereinafter referred to collectively as the
"Representative's Securities." The Public Securities and the Representative's
Securities are hereinafter referred to collectively as the "Securities."
1.3.2 Delivery and Payment. Delivery and payment for the
Representative's Warrant shall be made on the Closing Date. The Company shall
deliver to the Representative, upon payment therefor, certificates for the
Representative's Warrant in the name or names and in such authorized
denominations as the Representative may request.
2. Representations and Warranties of the Company. The Company represents
and warrants to the Representative as follows:
2.1 Filing of Registration Statement.
2.1.1 Pursuant to the Act. The Company has filed with the
Securities and Exchange Commission ("Commission") a registration statement and
an amendment or amendments thereto, on Form S-1 (No. 333-50771), including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Securities under the Securities Act of 1933, as amended ("Act"), which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act and the rules and
regulations ("Regulations") of the Commission under the Act. Except as the
context may otherwise require, such registration statement, as amended, on file
with the Commission at the time the registration statement becomes effective
(including the prospectus, financial statements, schedules, exhibits and all
other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to paragraph
(b) of Rule 430A of the Regulations), is hereinafter called the "Registration
Statement," and the form of the final prospectus dated the Effective Date (or,
if applicable, the form of final prospectus filed with the Commission pursuant
to Rule 424 of the Regulations), is hereinafter called the "Prospectus." The
Registration Statement has been declared effective by the Commission on the date
hereof.
2.1.2 Pursuant to the Exchange Act. The Company has filed with
the Commission a registration statement on Form 8-A (No.______), as amended,
providing for the registration under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), of the Common Stock. Such registration of the Common
Stock has been declared effective by the Commission on the date hereof.
2.2 No Stop Orders, Etc. Neither the Commission nor, to the best of the
Company's knowledge, any state regulatory authority has issued any order
preventing or suspending the use of any Preliminary Prospectus or has instituted
or, to the best of the Company's knowledge, threatened to institute, any
proceedings with respect to such an order.
2.3 Disclosures in Registration Statement.
2.3.1 Securities Act and Exchange Act Representation. At the
time the Registration Statement became effective and at all times subsequent
thereto up to and including the Closing Date and the Option Closing Date, if
any, the Registration Statement and the
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Prospectus and any amendment or supplement thereto contained and will contain
all material statements which are required to be stated therein in accordance
with the Act and the Regulations, and conformed and will conform in all material
respects to the requirements of the Act and the Regulations; neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, during such time period and on such dates, contained or will contain
any untrue statement of a material fact or omitted or will omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, nor did they or will they contain any untrue statement
of a material fact nor did they or will they omit 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. When any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Securities or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied or will comply in all material respects with the applicable provisions
of the Act and the Regulations and did not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The representation and
warranty made in this Section 2.1.3 does not apply to statements made or
statements omitted in reliance upon and in conformity with written information
furnished to the Company with respect to the Underwriters by the Representative
expressly for use in the Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
2.3.2 Disclosure of Contracts. The description in the
Registration Statement and the Prospectus of contracts and other documents is
accurate and presents fairly the information required to be disclosed and there
are no contracts or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits to
the Registration Statement which have not been so described or filed. Each
contract or other instrument (however characterized or described) to which the
Company is a party or by which its property or business is or may be bound or
affected and (i) which is referred to in the Prospectus, or (ii) is material to
the Company's business, has been duly and validly executed, is in full force and
effect in all material respects and is enforceable against the parties thereto
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, as enforceability of any indemnification provision may be
limited under the federal and state securities laws, and that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. None of such contracts or
instruments has been assigned by the Company, and neither the Company nor, to
the best of the Company's knowledge, any other party is in default thereunder
and, to the best of the Company's knowledge, no event has occurred which, with
the lapse of time or the giving of notice, or both, would constitute a default
thereunder. None of the material provisions of such contracts or instruments
violates or will result in a violation of any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court having
jurisdiction over the Company or any of its assets or businesses, including,
without limitation, those relating to environmental laws and regulations.
2.3.3 Prior Securities Transactions. No securities of the
Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by, or under common control
with the Company within the three years prior to the date hereof, except as
disclosed in the Registration Statement.
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2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise specifically stated therein, (i) there has been
no material adverse change in the condition, financial or otherwise, or in the
results of operations, business or business prospects of the Company, including,
but not limited to, a material loss or interference with its business from fire,
storm, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
whether or not arising in the ordinary course of business, and (ii) there have
been no transactions entered into by the Company, other than those in the
ordinary course of business, which are material with respect to the condition,
financial or otherwise, or to the results of operations, business or business
prospects of the Company.
2.4.2 Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, and except as may otherwise be indicated or contemplated
herein or therein, the Company has not (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money; or (ii)
declared or paid any dividend or made any other distribution on or in respect to
its capital stock.
2.5 Independent Accountants. Xxxxxxxxxx, Melvoin & Xxxxxxx LLP, Xxxxxx,
Xxxxxx & Xxxxxxxxxx, LLP and Xxxxxxxx Xxxxxxxxxx Xxxxxx and Xxxxxxxx, LLP, whose
reports are filed with the Commission as part of the Registration Statement, are
each independent accountants as required by the Act and the Regulations.
2.6 Financial Statements. The financial statements, including the notes
thereto and supporting schedules included in the Registration Statement and
Prospectus, fairly present the financial position and the results of operations
of the Company at the dates and for the periods to which they apply; and such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved; and
the supporting schedules included in the Registration Statement present fairly
the information required to be stated therein. The pro forma financial
information set forth in the Registration Statement reflects all significant
assumptions and adjustments relating to the business and operations of the
Company.
2.7 Authorized Capital; Options; Etc. The Company had at the date or
dates indicated in the Prospectus duly authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
Based on the assumptions and adjustments stated in the Registration Statement
and the Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein. Except as set forth in the Registration
Statement and the Prospectus, on the Effective Date and on the Closing Date
there will be no options, warrants, or other rights to purchase or otherwise
acquire any authorized but unissued shares of Common Stock of the Company,
including any obligations to issue any shares pursuant to anti-dilution
provisions, or any security convertible into shares of Common Stock of the
Company, or any contracts or commitments to issue or sell shares of Common Stock
or any such options, warrants, rights or convertible securities.
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2.8 Valid Issuance of Securities; Etc.
2.8.1 Outstanding Securities. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights of rescission
with respect thereto, and are not subject to personal liability by reason of
being such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The outstanding options and warrants
to purchase shares of Common Stock constitute the valid and binding obligations
of the Company, enforceable in accordance with their terms. The authorized
Common Stock and outstanding options and warrants to purchase shares of Common
Stock conform to all statements relating thereto contained in the Registration
Statement and the Prospectus. The offers and sales of the outstanding Common
Stock, options and warrants to purchase shares of Common Stock were at all
relevant times either registered or qualified under the Act and the applicable
state securities or Blue Sky Laws or exempt from such registration requirements.
2.8.2 Securities Sold Pursuant to this Agreement. The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not and
will not be subject to personal liability by reason of being such holders; the
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual rights granted by
the Company; and all corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly and validly
taken. When issued, the Representative's Warrant will constitute a valid and
binding obligation of the Company to issue and sell, upon exercise thereof and
payment therefor, the number and type of securities of the Company called for
thereby and the Representative's Warrant will be enforceable against the Company
in accordance with its terms, except (i) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (ii) as enforceability of any indemnification provision may be
limited under the federal and state securities laws, and (iii) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
2.9 Registration Rights of Third Parties. Except as set forth in the
Prospectus and on SCHEDULE 2.9 hereto, no holders of any securities of the
Company or of any options or warrants of the Company exercisable for or
convertible or exchangeable into securities of the Company have the right to
require the Company to register any such securities of the Company under the Act
or to include any such securities in a registration statement to be filed by the
Company.
2.10 Validity and Binding Effect of Agreements. This Agreement and the
Representative's Warrant have been duly and validly authorized by the Company,
and constitute, or when executed and delivered, will constitute, the valid and
binding agreements of the Company, enforceable against the Company in accordance
with their respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (ii) as enforceability of any indemnification provision may be
limited under the federal and state securities laws, and (iii) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
2.11 No Conflicts, Etc. The execution, delivery, and performance by the
Company of this Agreement and the Representative's Warrant, the consummation by
the Company of the
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transactions herein and therein contemplated and the compliance by the Company
with the terms hereof and thereof do not and will not, with or without the
giving of notice or the lapse of time or both, (i) result in a breach of, or
conflict with any of the terms and provisions of, or constitute a default under,
or result in the creation, modification, termination or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to the
terms of any indenture, mortgage, deed of trust, note, loan or credit agreement
or any other agreement or instrument evidencing an obligation for borrowed
money, or any other agreement or instrument to which the Company is a party or
by which the Company may be bound or to which any of the property or assets of
the Company is subject; (ii) result in any violation of the provisions of the
Certificate of Incorporation or the By-Laws of the Company; (iii) 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 of its properties or business; or (iv) have a material adverse
effect on any permit, license, certificate, registration, approval, consent,
license or franchise concerning the Company.
2.12 No Defaults; Violations. Except as described in the Prospectus, no
default exists in the due performance and observance of any term, covenant or
condition of any license, contract, indenture, mortgage, deed of trust, note,
loan or credit agreement, or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to which the
Company is a party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not in violation
of any term or provision of its Certificate of Incorporation or By-Laws or in
violation of any franchise, license, permit, applicable law, rule, regulation,
judgment or decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its properties or business.
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. The Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies to own or lease its properties and conduct its
business as described in the Prospectus. The Company is and has been doing
business in compliance with all such authorizations, approvals, orders,
licenses, certificates and permits and all federal, state and local rules and
regulations. The disclosures in the Registration Statement concerning the
effects of federal, state and local regulation on the Company's business as
currently contemplated are correct in all material respects and do not omit to
state a material fact.
2.13.2 Transactions Contemplated Herein. The Company has all
corporate power and authority to enter into this Agreement and to carry out the
provisions and conditions hereof, and all consents, authorizations, approvals
and orders required in connection therewith have been obtained. No consent,
authorization or order of, and no filing with, any court, government agency or
other body is required for the valid issuance, sale and delivery of the
Securities pursuant to this Agreement and the Representative's Warrant, and as
contemplated by the Prospectus, except with respect to applicable federal and
state securities laws.
2.14 Title to Property; Insurance. The Company has good and marketable
title to, or valid and enforceable leasehold estates in, all items of real and
personal property (tangible and intangible) owned or leased by it, free and
clear of all liens, encumbrances, claims, security interests, defects and
restrictions of any material nature whatsoever, other than those referred to in
the Prospectus and liens for taxes not yet due and payable. The Company has
adequately
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insured its properties against loss or damage by fire or other casualty and
maintains, in adequate amounts, such other insurance as is usually maintained by
companies engaged in the same or similar business.
2.15 Litigation; Governmental Proceedings. Except as set forth in the
Prospectus, there is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding pending or, to the
Company's knowledge, threatened against, or involving the properties or business
of, the Company which might materially and adversely affect the financial
position, prospects, value or the operation of the properties or the business of
the Company, or which questions the validity of the capital stock of the Company
or this Agreement or of any action taken or to be taken by the Company pursuant
to, or in connection with, this Agreement. The lawsuit brought by a former
distributor of the Company's products against the Company in the Supreme Court
of the State of New York, Kings County, has been settled and the Company is not
obligated to pay more than $70,000 to the plaintiff in fulfillment of the terms
of such settlement. There are no outstanding orders, judgments or decrees of any
court, governmental agency or other tribunal, domestic or foreign, naming the
Company and enjoining the Company from taking, or requiring the Company to take,
any action, or to which the Company, its properties or business is bound or
subject.
2.16 Good Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of the state of
its incorporation. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which ownership or
leasing of any properties or the character of its operations requires such
qualification or licensing, except where the failure to qualify would not have a
material adverse effect on the Company.
2.17 Taxes. The Company has filed all returns (as hereinafter defined)
required to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. The Company has paid
all taxes (as hereinafter defined) shown as due on such returns that were filed
and has paid all taxes imposed on or assessed against the Company. The
provisions for taxes payable, if any, shown on the financial statements filed
with or as part of the Registration Statement are sufficient for all accrued and
unpaid taxes, whether or not disputed, and for all periods to and including the
dates of such consolidated financial statements. Except as disclosed in writing
to the Representative, (i) no issues have been raised (and are currently
pending) by any taxing authority in connection with any of the returns or taxes
asserted as due from the Company, and (ii) no waivers of statutes of limitation
with respect to the returns or collection of taxes have been given by or
requested from the Company. The term "taxes" means all federal, state, local,
foreign, and other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees, assessments,
or charges of any kind whatever, together with any interest and any penalties,
additions to tax, or additional amounts with respect thereto. The term "returns"
means all returns, declarations, reports, statements, and other documents
required to be filed in respect to taxes.
2.18 Employees' Options. No more than ________ shares of Common Stock
are eligible for sale pursuant to Rule 701 promulgated under the Act in the
12-month period following the Effective Date.
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2.19 Transactions Affecting Disclosure to NASD.
2.19.1 Finder's Fees. There are no claims, payments,
issuances, arrangements or understandings for services in the nature of a
finder's, consulting or origination fee with respect to the introduction of the
Company to the Underwriters or the sale of the Securities hereunder or any other
arrangements, agreements, understandings, payments or issuances with respect to
the Company that may affect the Underwriters' compensation, as determined by the
National Association of Securities Dealers, Inc. ("NASD").
2.19.2 Payments Within Twelve Months. Except as set forth on
SCHEDULE 2.19, other than payments to the Representative, the Company has not
made any direct or indirect payments (in cash, securities or otherwise) to (i)
any person, as a finder's fee, investing fee or otherwise, in consideration of
such person raising capital for the Company or introducing to the Company
persons who provided capital to the Company, (ii) to any NASD member, or (iii)
to any person or entity that has any direct or indirect affiliation or
association with any NASD member within the 12-month period prior to the date on
which the Registration Statement was filed with the Commission ("Filing Date")
or thereafter.
2.19.3 Use of Proceeds. None of the net proceeds of the
offering will be paid by the Company to any NASD member or any affiliate or
associate of any NASD member, except as specifically authorized herein.
2.19.4 Insiders' NASD Affiliation. Except as set forth on
SCHEDULE 2.19, no officer or director of the Company or owner of any of the
Company's unregistered securities has any direct or indirect affiliation or
association with any NASD member. The Company will advise the Representative and
the NASD if any officer, director or stockholder of the Company becomes,
directly or indirectly, an affiliate or associated person of an NASD member
participating in the offering.
2.20 Foreign Corrupt Practices Act. Neither the Company nor any of its
officers, directors, employees or 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 or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or other person who was, is, or
may be in a position to help or hinder the business of the Company (or assist it
in connection with any actual or proposed transaction) which (i) might subject
the Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the Company
as reflected in any of the financial statements contained in the Prospectus or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The internal accounting
controls and procedures of the Company are sufficient to cause the Company to
comply with the Foreign Corrupt Practices Act of 1977, as amended.
2.21 Nasdaq Eligibility. As of the Effective Date, the Public
Securities have been approved for designation upon notice of issuance on the
Nasdaq SmallCap Market ("Nasdaq").
2.22 Intangibles. The Company owns or possesses the requisite licenses
or rights to use all trademarks, service marks, service names, trade names,
patents and patent applications, copyrights and other rights (collectively,
"Intangibles") described as being licensed to or owned
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by it in the Registration Statement. The Company's Intangibles which have been
registered in the United States Patent and Trademark Office have been fully
maintained and are in full force and effect. There is no claim or action by any
person pertaining to, or proceeding pending or threatened and the Company has
not received any notice of conflict with, the asserted rights of others which
challenges the exclusive right of the Company with respect to any Intangibles
used in the conduct of the Company's business except as described in the
Prospectus. The Intangibles and the Company's current products, services and
processes do not infringe on any Intangibles held by any third party. To the
best of the Company's knowledge, no others have infringed upon the Intangibles
of the Company.
2.23 Relations With Employees.
2.23.1 Employee Matters. The Company has generally enjoyed a
satisfactory employer-employee relationship with its employees and is in
compliance in all material respects with all federal, state and local laws and
regulations respecting the employment of its employees and employment practices,
terms and conditions of employment and wages and hours relating thereto. There
are no pending investigations involving the Company by the U.S. Department of
Labor, or any other governmental agency responsible for the enforcement of such
federal, state and local laws and regulations. There is no unfair labor practice
charge or complaint against the Company pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute, slowdown or stoppage
pending or threatened against or involving the Company or any predecessor
entity, and none has ever occurred. No question concerning representation exists
respecting the employees of the Company and no collective bargaining agreement
or modification thereof is currently being negotiated by the Company. No
grievance or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company. The Company has entered into a
new collective bargaining agreement, dated as of May 13, 1998, with the Bakery,
Cracker, Pie and Yeast Wagon Driver's Union, Local 734 International Brotherhood
of Teamsters of America ("Teamsters Local 734"), and such collective bargaining
agreement has been approved by the membership of Teamsters Local 734 and is in
full force and effect.
2.23.2 Employee Benefit Plans. Other than as set forth in the
Registration Statement, the Company neither maintains, sponsors nor contributes
to, nor is it required to contribute to, any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multi-employer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("ERISA Plans"). The Company does not maintain or contribute
to, and has at no time maintained or contributed to, a defined benefit plan, as
defined in Section 3(35) of ERISA. If the Company does maintain or contribute to
a defined benefit plan, any termination of the plan on the date hereof would not
give rise to liability under Title IV of ERISA. No ERISA Plan (or any trust
created thereunder) has engaged in a "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended ("Code"), which could subject the Company to any tax penalty for
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal Revenue Service with
respect to each ERISA Plan which is intended to comply with Code Section 401(a),
stating that such ERISA Plan and the attendant trust are qualified thereunder.
The Company has never completely or partially withdrawn from a "multi-employer
plan." [MODIFY FOR COLLECTIVE BARGAINING AGREEMENT.]
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2.24 Officers' Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to the Representative or its
counsel shall be deemed a representation and warranty by the Company to the
Representative as to the matters covered thereby.
2.25 Reserved.
2.26 Lock-Up Agreements. The Company has caused to be duly executed
legally binding and enforceable agreements pursuant to which all of the officers
and directors of the Company and all holders of at least 2,500 shares of the
outstanding Common Stock of the Company or warrants or options to purchase, or
other securities convertible into, 5,000 or more shares of Common Stock
(including family members who reside in the same household as such persons and
affiliates of such persons), other than Xxxxxxx and Xxxxxx Worth, agree not to
sell any shares of Common Stock or warrants or options to purchase, or other
securities convertible into Common Stock (other than the Firm Shares and Option
Shares being sold by the Selling Stockholders, except to the extent any of the
Option Shares are not sold by the Underwriters pursuant to this Agreement),
owned by them (either pursuant to Rule 144 of the Regulations or otherwise) for
a period of 12 months following the Effective Date except with the prior written
consent of the Representative. Xxxxxxx and Xxxxxx Worth (together, the "Worths")
have entered into legally binding and enforceable agreements pursuant to which
each of them agrees not to sell any shares of Common Stock or warrants or
options to purchase, or other securities convertible into Common Stock, owned by
them (either pursuant to Rule 144 or otherwise) for a period of 36 months
following the Effective Date; provided that the Worths may sell up to 10% of
their aggregate holdings between the first and second anniversaries of the
Effective Date and an additional 20% of their aggregate holdings between the
second and third anniversaries of the Effective Date without the prior written
consent of the Representative. To the extent that any other lockup agreements
between the Company and any of its shareholders exist and continue to have
effect, the Company agrees that it will (i) not consent to the early release of
any securities of the Company covered by such lockup agreements without the
prior written consent of the Representative, and (ii) consent to the early
release of such securities when and as requested by the Representative.
2.27 Subsidiaries. The representations and warranties made by the
Company in this Agreement shall, in the event that the Company has one or more
subsidiaries (a "subsidiary(ies)") also apply and be true with respect to each
subsidiary, individually and taken as a whole with the Company and all other
subsidiaries, as if each representation and warranty contained herein made
specific reference to the subsidiary each time the term "Company" was used.
2.28 Voting Trust Agreement and Voting Agreement. Each of (i) the
Voting Trust Agreement dated as of December 22, 1997 by and among Xxxxxxx X.
Worth, Xxxxxx Worth, Xxxxxxxx Mollen & Xxxxxx, the Company and the Voting
Trustee (as defined therein) and (ii) the Voting Agreement dated as of April 29,
1998 by and between the Company and the Voting Trustee (as defined therein),
have been duly and validly authorized by the Company and constitute the valid
and binding agreements of the Company and, to the best knowledge of the Company,
the other parties to such agreements, enforceable against the Company and, to
the best knowledge of the Company, such other parties in accordance with their
respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (ii) as enforceability of any indemnification provision may be
limited under the federal and state securities laws, and (iii) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
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2.29 Conversion of 9% Notes. All of the Company's 9% Subordinated
Convertible Notes, in the aggregate principal amount of $1,960,000, have been
converted into shares of Series A Convertible Preferred Stock of the Company.
3. Covenants of the Company. The Company covenants and agrees as follows:
3.1 Amendments to Registration Statement. The Company will deliver to
the Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the Representative
shall reasonably object.
3.2 Federal Securities Laws.
3.2.1 Compliance. During the time when a Prospectus is
required to be delivered under the Act, the Company will use all reasonable
efforts to comply with all requirements imposed upon it by the Act, the
Regulations and the Exchange Act and by the regulations under the Exchange Act,
as from time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Securities in accordance with the provisions hereof
and the Prospectus. If at any time when a Prospectus relating to the Securities
is required to be delivered under the Act any event shall have occurred as a
result of which, in the opinion of counsel for the Company or counsel for the
Representative, the Prospectus, as then amended or supplemented, includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representative promptly and prepare and file with the
Commission, subject to Section 3.1 hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Act.
3.2.2 Filing of Final Prospectus. The Company will file the
Prospectus (in form and substance satisfactory to the Representative) with the
Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3 Exchange Act Registration. For a period of five years
from the Effective Date, the Company will use its best efforts to maintain the
registration of the Common Stock under the provisions of Section 12 of the
Exchange Act.
3.3 Blue Sky Filing. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as the Representative may
reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. 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 be required
by the laws of such jurisdiction.
3.4 Delivery to the Underwriters of Prospectuses. The Company will
deliver to each of the several Underwriters, without charge, from time to time
during the period when the Prospectus is required to be delivered under the Act
or the Exchange Act, such number of copies of each Preliminary Prospectus and
the Prospectus as such Underwriter may reasonably request
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and, as soon as the Registration Statement or any amendment or supplement
thereto becomes effective, deliver to you two original executed Registration
Statements, including exhibits, and all post-effective amendments thereto and
copies of all exhibits filed therewith or incorporated therein by reference and
all original executed consents of certified experts.
3.5 Events Requiring Notice to the Representative. The Company will
notify the Representative immediately and confirm the notice in writing (i) of
the effectiveness of the Registration Statement and any amendment thereto, (ii)
of the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding for that purpose, (iii) of the issuance by any
state securities commission of any proceedings for the suspension of the
qualification of the Securities for offering or sale in any jurisdiction or of
the initiation, or the threatening, of any proceeding for that purpose, (iv) of
the mailing and delivery to the Commission for filing of any amendment or
supplement to the Registration Statement or Prospectus, (v) of the receipt of
any comments or request for any additional information from the Commission, and
(vi) of the happening of any event during the period described in Section 3.1.4
hereof which, in the judgment of the Company, makes any statement of a material
fact made in the Registration Statement or the Prospectus untrue or which
requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review of Financial Statements. For a period of five years from the
Effective Date, the Company, at its expense, shall cause its regularly engaged
independent certified public accountants to participate in the preparation and
presentation (but not audit) of the Company's financial statements for each of
the first three fiscal quarters prior to the announcement of quarterly financial
information, the filing of the Company's Form 10-Q quarterly reports and the
mailing of quarterly financial information to stockholders.
3.7 Reserved.
3.8 Secondary Market Trading and Standard & Poor's. The Company will
take all necessary and appropriate actions to achieve accelerated publication in
Standard and Poor's Corporation Records Corporate Descriptions (within thirty
(30) days after the Effective Date) and to maintain such publication with
updated quarterly information for a period of five years from the Effective
Date, including the payment of any necessary fees and expenses. The Company
shall take such action as may be reasonably requested by the Representative to
obtain a secondary market trading exemption in such states as may be requested
by the Underwriter, including the payment of any necessary fees and expenses and
the filing of a Form (e.g. 25101(b)) for secondary market trading in the State
of California on the Effective Date or as soon thereafter as is permissible.
3.9 Nasdaq Maintenance. For a period of five years from the date
hereof, the Company will use its best efforts to maintain the quotation on
Nasdaq of the Common Stock and, if the Company satisfies the inclusion standards
of the Nasdaq National Market System, apply for and maintain quotations on the
Nasdaq National Market System of such securities during such period.
3.10 Reserved.
3.11 Reserved.
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3.12 Reports to the Representative and Others.
3.12.1 Periodic Reports, Etc. For a period of five years from
the Effective Date, the Company will promptly furnish to the Representative, and
to each other Underwriter who may so request, copies of such financial
statements and other periodic and special reports as the Company from time to
time files with any governmental authority or furnishes generally to holders of
any class of its securities, and promptly furnish to the Representative (i) a
copy of each periodic report the Company shall be required to file with the
Commission, (ii) a copy of every press release with respect to the Company or
its affairs which was released by the Company, and (iii) a copy of each Form 8-K
or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the Company.
3.12.2 Transfer Sheets and Weekly Position Listings. For a
period of five years from the Closing Date, the Company will furnish to the
Representative at the Company's sole expense such transfer sheets and position
listings of the Company's securities as the Representative may reasonably
request, including the daily, weekly and monthly consolidated transfer sheets of
the transfer agent of the Company and the weekly position listings of the
Depository Trust Company.
3.12.3 Secondary Market Trading Memorandum. Until such time as
the Securities are listed or quoted, as the case may be, on one of the
following: the New York Stock Exchange, the American Stock Exchange or Nasdaq
National Market, the Company shall engage the Representative's legal counsel to
deliver to the Representative a written opinion detailing those states in which
Securities may be traded in non-issuer transactions under the Blue Sky laws of
the fifty states ("Secondary Market Trading Memorandum"). The Secondary Market
Trading Memorandum shall be delivered to the Representative on the Effective
Date. The Company shall pay to the Representative's legal counsel a one-time fee
of $5,000 for such services at the Closing.
3.13 Representative's Warrant. On the Closing Date, the Company will
execute and deliver the Representative's Warrant to the Representative
substantially in the form filed as an exhibit to the Registration Statement.
3.14 Disqualification of Form S-1. For a period equal to five years
from the date hereof, the Company will not take any action or actions which may
prevent or disqualify the Company's use of Form S-1 (or other appropriate form)
for the registration of the Representative's Warrant and the securities issuable
upon exercise thereof under the Act.
3.15 Payment of Expenses.
3.15.1 General Expenses. The Company hereby agrees to pay on
each of the Closing Date and, to the extent not paid on the Closing Date, the
Option Closing Date, if any, all expenses incident to the performance of the
obligations of the Company under this Agreement, including but not limited to
the preparation, printing, filing, delivery and mailing (including the payment
of postage with respect to such mailing) of the Registration Statement, the
Prospectus and the Preliminary Prospectuses and the printing and mailing of this
Agreement and related documents, including the cost of all copies thereof and
any amendments thereof or supplements thereto supplied to the Underwriters in
quantities as may be reasonably required by the Underwriters, (iv) the printing,
engraving, issuance and delivery of the shares of Common Stock and the
Representative's Warrant, including any transfer or other taxes payable thereon,
(v) the qualification of the Securities under state or foreign securities or
Blue Sky laws, including the
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filing fees under such Blue Sky laws, the costs of printing and mailing the
"Preliminary Blue Sky Memorandum," and all amendments and supplements thereto,
fees up to an aggregate of $35,000 and disbursements of the Representative's
counsel, and a one-time fee of $5,000 payable to the Representative's counsel
for the preparation of the Secondary Market Trading Memorandum, (vi) costs
associated with applications for assignments of a rating of the Securities by
qualified rating agencies, (vii) filing fees, costs and expenses (including fees
up to an aggregate of $5,000 and disbursements for the Representative's counsel)
incurred in registering the offering with the NASD, (viii) costs up to an
aggregate of $30,000 of placing "tombstone" advertisements in The Wall Street
Journal, The New York Times and a third publication to be mutually selected by
the Representative and the Company, fees and disbursements of the transfer
agent, the Company's expenses associated with "due diligence" meetings arranged
by the Representative; the preparation, binding and delivery of transaction
"bibles" in quantity, form and style satisfactory to the Representative and
transaction lucite cubes or similar commemorative items in a style and quantity
as requested by the Representative, (ix) any listing of the Securities on Nasdaq
and any securities exchange and any listing in Standard & Poor's, (x) fees and
disbursements of any counsel engaged to review the Company's intellectual
property rights, and (xi) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 3.15.1. Since an important part of the public
offering process is for the Company to describe appropriately and accurately the
background of the principals of the Company, the Company has engaged and will
pay for an investigative search firm of the Representative's choice to conduct
an investigation of Xxxxxx X. Xxxxx. The Representative may deduct from the net
proceeds of the offering payable to the Company on the Closing Date, or the
Option Closing Date, if any, the expenses set forth herein to be paid by the
Company to the Representative and/or to third parties.
3.15.2 Non-Accountable Expenses. The Company further agrees to
pay to the Representative a non-accountable expense allowance equal to three
percent (3%) of the gross proceeds from the sale of the Firm Shares and the
Option Shares on the Closing Date and any additional monies owed attributable to
the Option Shares or otherwise on the Option Closing Date by certified or bank
cashier's check or, at the election of the Representative, by deduction from the
proceeds of the offering contemplated herein. If the offering contemplated by
this Agreement is not consummated for any reason whatsoever other than a breach
by the Representative of this Agreement, then the following provisions shall
apply: The Company's liability for payment to the Representative of the
non-accountable expense allowance shall be equal to the sum of the
Representative's actual out-of-pocket expenses (including, but not limited to,
counsel fees, "road-show" and due diligence expenses).
3.16 Application of Net Proceeds. The Company will apply the net
proceeds from the offering received by it in a manner consistent in all material
respects with the application described under the caption "Use of Proceeds" in
the Prospectus. The Company hereby agrees that, except as so described, the
Company will not apply any net proceeds from the offering to pay (i) any debt
for borrowed funds, or (ii) any debt or obligation owed to any officer, director
or holder of 5,000 or more shares of Common Stock or warrants or options to
purchase, or other securities convertible into, 5,000 or more shares of Common
Stock.
3.17 Delivery of Earnings Statements to Security Holders. The Company
will make generally available to its security holders as soon as practicable,
but not later than the first day of the fifteenth full calendar month following
the Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under
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Section 11(a) of the Act) covering a period of at least twelve consecutive
months beginning after the Effective Date.
3.18 Key Person Life Insurance. The Company will maintain key person
life insurance in an amount not less than $1,000,000 each on the lives of
Xxxxxxx X. Xxxxx and Xxxxxx Xxxxxx, to be in effect as of the Effective Date,
and pay the annual premiums therefor naming the Company as the sole beneficiary
thereof for at least three years following the Effective Date.
3.19 Stabilization. Neither the Company, nor, to its knowledge, any of
its employees, directors or stockholders has taken or will take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
3.20 Internal Controls. The Company maintains and will continue to
maintain 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 in order to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.21 Accountants and Lawyers. For a period of five years from the
Effective Date, the Company shall retain independent public accountants and
securities lawyers acceptable to the Representative.
3.22 Transfer Agent. For a period ending on the five year anniversary
of the Effective Date the Company shall retain a transfer agent for the Common
Stock acceptable to the Representative. Continental Stock Transfer & Trust
Company ("Transfer Agent") is acceptable to the Representative.
3.23 Sale of Securities. The Company agrees not to permit or cause a
private or public sale or private or public offering (except for such private
transfers as are permitted under the terms of the lockup agreements described in
Section 2.26) of any of its securities (in any manner, including pursuant to
Rule 144 under the Act) owned nominally or beneficially by the persons described
in Section 2.26 for a period of 12 months following the Effective Date without
obtaining the prior written approval of the Representative; provided, however,
that with respect the Worths, the Company shall refuse to permit or cause any
such sale or offering for 24 months following the Effective Date, except that
the Company will permit the Worths to sell up to 10% of their aggregate holdings
between the first and second anniversaries of the Effective Date and an
additional 20% of their aggregate holdings between the second and third
anniversaries of the Effective Date.
3.24 Exercise Price of Options. For a period of three years after the
Effective Date, the Company will not grant any option, pursuant to any of the
Company's stock option or incentive plans or otherwise, at an exercise price
less than the fair market value of the Common Stock on the date of the grant.
4. Conditions of the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Securities, as provided herein,
shall be subject to the continuing
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accuracy of the representations and warranties of the Company as of the date
hereof and as of each of the Closing Date and the Option Closing Date, if any,
to the accuracy of the statements of officers of the Company made pursuant to
the provisions hereof and to the performance by the Company of its obligations
hereunder and to the following conditions:
4.1 Regulatory Matters.
4.1.1 Effectiveness of Registration Statement. The
Registration Statement has been declared effective on the date of this Agreement
and, at each of the Closing Date and the Option Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for such purpose shall have been instituted or shall
be pending or, to the best knowledge of the Company, contemplated by the
Commission and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
Xxxxxxxx Xxxxxx & Xxxxxx, counsel to the Representative.
4.1.2 NASD Clearance. By the Effective Date, the
Representative shall have received clearance from the NASD as to the amount of
compensation allowable or payable to the Underwriters as described in the
Registration Statement.
4.1.3 No Blue Sky Stop Orders. No order suspending the sale of
the Securities in any jurisdiction designated by the Representative pursuant to
Section 3.3 hereof shall have been issued on or before either the Closing Date
or the Option Closing Date, and no proceedings for that purpose shall have been
instituted or, to the best knowledge of the Company, shall be contemplated.
4.2 Opinions of Counsel.
4.2.1 Opinion of Company Counsel. On the Closing Date and the
Option Closing Date, if any, the Representative shall have received the
favorable opinion of Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP, counsel to the
Company, dated the Closing Date (or the Option Closing Date, if any), addressed
to the Representative and in form and substance satisfactory to Xxxxxxxx Xxxxxx
& Xxxxxx, counsel to the Representative, to the effect that:
(i) The Company (which for purposes of this Section
4.2.1 shall mean Delicious Brands, Inc. ("DBI") and each subsidiary
(collectively, the "Subsidiaries") of DBI individually) has been duly organized
and is validly existing as a corporation and in good standing under the laws of
its state of organization and is duly qualified and in good standing in each
jurisdiction in which it owns or leases any real property or the character of
its operations requires such qualification, except where the failure to so
qualify would not have a material adverse effect on the business of the Company.
(ii) The Company has all requisite corporate power
and authority, and, to the best of such counsel's knowledge, has all necessary
authorizations, approvals, orders, licenses, certificates and 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 Prospectus, and, to the
best of such counsel's knowledge, is and has been doing business in compliance
with all such authorizations, approvals, orders, licenses, certificates and
permits, except where the failure to obtain or to comply would not have a
material adverse effect on the business of DBI and the Subsidiaries taken as a
whole. DBI has all corporate power and authority to enter into this Agreement
and the Representative's Warrant and to carry out the provisions and conditions
hereof and thereof, and all consents, authorizations, approvals and orders
required in connection
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therewith have been obtained. No consents, approvals, authorizations or orders
of, and no filing with, any court or governmental agency or body (other than
such as may be required under the Act and applicable Blue Sky laws), is required
for the valid offer, authorization, issuance, sale and delivery of the
Securities, and the consummation of the transactions and agreements contemplated
by this Agreement and the Representative's Warrant, and as contemplated by the
Prospectus or if so required, all such authorizations, approvals, consents,
orders, registrations, licenses and permits have been duly obtained and are in
full force and effect and have been disclosed to the Representative.
(iii) All issued and outstanding securities of DBI
have been duly authorized and validly issued and, based upon the records of DBI,
are fully paid and non-assessable; the holders thereof have no rights of
rescission with respect thereto, and are not subject to personal liability by
reason of being such holders; and none of such securities was issued in
violation of preemptive rights of any holders of any securities of the Company
or, to such counsel's knowledge, similar contractual rights granted by the
Company. The outstanding options and warrants to purchase shares of Common Stock
constitute the valid and binding obligations of the Company, enforceable in
accordance with their terms. The offers and sales of the outstanding Common
Stock and options and warrants to purchase shares of Common Stock of DBI were,
based upon such counsel's review of DBI's records, at all relevant times either
registered under the Act or exempt from the registration requirements thereof.
The authorized and, to such counsel's knowledge, outstanding capital stock of
DBI is as set forth under the caption "Capitalization" in the Prospectus.
(iv) The Securities have been duly authorized and,
when issued and paid for, will be validly issued, fully paid and non-assessable;
the holders thereof are not and will not be subject to personal liability by
reason of being such holders. The Securities are not and will not be subject to
the preemptive rights of any holders of any security of DBI or, to the best of
such counsel's knowledge, similar contractual rights granted by DBI. All
corporate action required to be taken for the authorization, issuance and sale
of the Securities has been duly and validly taken. The certificates representing
the Securities are in due and proper form.
(v) To the best of such counsel's knowledge, except
as set forth in the Prospectus and on Schedule 2.9 hereto, no holders of any
securities of DBI or of any options, warrants or securities of DBI exercisable
for or convertible or exchangeable into securities of DBI have the right to
require DBI to register any such securities of DBI under the Act or to include
any such securities in a registration statement to be filed by DBI.
(vi) To the best of such counsel's knowledge, after
due inquiry, the shares of Common Stock are eligible for listing on the AMEX.
(vii) This Agreement and the Representative's Warrant
have each been duly and validly authorized and, when executed and delivered by
the Company, will constitute valid and binding obligations of DBI, enforceable
against DBI in accordance with their respective terms, except (a) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (b) as enforceability of any
indemnification provisions may be limited under the federal and state securities
laws, and (c) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
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(viii) The execution, delivery and performance by DBI
of this Agreement and the Representative's Warrant, the issuance and sale of the
Securities, the consummation of the transactions contemplated hereby and thereby
and the compliance by the Company with the terms and provisions hereof and
thereof, do not and will not, with or without the giving of notice or the lapse
of time, or both, (a) conflict with, or result in a breach of, any of the terms
or provisions of, or constitute a default under, or result in the creation or
modification of any lien, security interest, charge or encumbrance upon any of
the properties or assets of the Company pursuant to the terms of, any material
mortgage, deed of trust, note, indenture, loan, contract, commitment or other
material agreement or instrument to which the Company is a party or by which the
Company or any of its properties or assets may be bound, (b) result in any
violation of the provisions of the Certificate of Incorporation or the By-Laws
of the Company, (c) violate any statute or any judgment, order or decree, rule
or regulation applicable to the Company of any court, domestic or foreign, or of
any federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company, its properties or assets, except for such
violations that would not have a material adverse effect on the Company, singly
or in the aggregate, or (d) have a material adverse effect on any permit,
certification, registration, approval, consent, license or franchise of the
Company.
(ix) The Registration Statement, each Preliminary
Prospectus and the Prospectus and any post-effective amendments or supplements
thereto (other than the financial statements included therein, as to which no
opinion need be rendered) comply as to form in all material respects with the
requirements of the Act and Regulations. The Securities and all other securities
issued or issuable by DBI conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus. The
statements in the Prospectus under "Risk Factors," "Business," "Management,"
"Certain Transactions," "Principal Stockholders," "Selling Securityholders,"
"Description of Capital Stock" and "Shares Eligible for Future Sale" have been
reviewed by such counsel, and insofar as they refer to statements of law,
descriptions of statutes, licenses, Intangibles, rules or regulations or legal
conclusions are correct in all material respects. No statute or regulation or
legal or governmental proceeding required to be described in the Prospectus is
not described as required, nor to such counsel's knowledge are any 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 not
so described or filed as required.
(x) Counsel has participated in conferences with
officers and other representatives of DBI, representatives of the independent
public accountants for DBI and representatives of the Representative at which
the contents of the Registration Statement, the Prospectus and related matters
were discussed and although such counsel is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus (except as
otherwise set forth in counsel's opinion), no facts have come to the attention
of such counsel which lead them to believe that either the Registration
Statement or the Prospectus or any amendment or supplement thereto contain any
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 light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and other financial and statistical data included in the Registration
Statement or Prospectus).
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(xi) The Registration Statement is effective under
the Act, and, to the best of such 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 or threatened
under the Act or applicable state securities laws.
(xii) To the best of such counsel's knowledge, the
Company has good and marketable title to, or valid and enforceable leasehold
estates in, all items of real and personal property (tangible and intangible)
stated in the Prospectus to be owned or leased by it, free and clear of all
liens, encumbrances, claims, security interests, defects and restrictions of any
material nature whatsoever, other than those referred to in the Prospectus and
liens for taxes not yet due and payable.
(xiii) Except as described in the Prospectus, to the
best of such counsel's knowledge, no default exists in the due performance and
observance of any term, covenant or condition of any material license, contract,
indenture, mortgage, deed of trust, note, loan or credit agreement, commitment,
or any other material agreement or instrument to which the Company is a party or
by which the Company may be bound or to which any of its properties or assets is
subject. DBI is not in violation of any term or provision of its Certificate of
Incorporation or ByLaws. To the best of such counsel's knowledge, the Company is
not in violation of any franchise, license, permit, law, rule or regulation
applicable to the Company, or of any judgment or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its properties or business, except for such violations which, singly or
in the aggregate, would not have a material adverse effect on the Company.
(xiv) To the best of such counsel's knowledge, after
due inquiry, except as described in the Prospectus and on SCHEDULE 2.27 hereto,
the Company does not own an interest in any corporation, partnership, joint
venture, trust or other business entity.
(xv) To the best of such counsel's knowledge, after
due inquiry, except as set forth in the Prospectus, there is no action, suit or
proceeding before or by any court or governmental agency or body, domestic or
foreign, now pending or threatened against the Company, that might result in any
material and adverse change in the condition (financial or otherwise), business
or prospects of the Company, or might materially and adversely affect the
properties or assets thereof.
(xvi) DBI is not, and upon consummation of the
transactions contemplated by this Agreement will not be, an "investment company"
within the meaning of Section 3 of the Investment Company Act of 1940, as
amended.
The opinion of counsel for the Company and any opinion relied
upon by such counsel for the Company shall include a statement to the effect
that it may be relied upon by counsel for the Representative in its opinion
delivered to the Representative.
4.2.2 Opinion of Intellectual Property Counsel. On the Closing
Date and the Option Closing Date, if any, the Representative also shall have
received the favorable opinion of Xxxxx Miskin Previto & Xxxxx, intellectual
property counsel to the Company, dated the Closing Date (or the Option Closing
Date, if any), addressed to the Representative and in form and substance
satisfactory to Xxxxxxxx Mollen & Xxxxxx, counsel to the Representative, to the
effect that, to the best of such counsel's knowledge, the Company and its
predecessor, R.W. Frookies, Inc. (collectively, for purposes of this Section
4.2.2, the "Company"), owns or possesses, free and clear of all recorded liens
or encumbrances and rights thereto or therein by third parties, other
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than as described in the Prospectus, the requisite licenses or other rights to
use all Intangibles necessary to conduct its business (including, without
limitation, any such licenses or rights described in the Prospectus as being
licensed to or owned or possessed by the Company) and, to the best of such
counsel's knowledge, there is no claim or action by any person pertaining to, or
proceeding, pending or threatened which challenges the exclusive rights of the
Company with respect to any Intangibles used in the conduct of its business
(including without limitation any such licenses or rights described in the
Prospectus as being owned or possessed by the Company). To the best of such
counsel's knowledge, the Company's current products, services and processes do
not infringe on any Intangible held by third persons. The Company's Intangible's
currently registered in the United States Patent and Trademark Office are in
full force and effect. For purposes of this Section 4.2.2, "Intangibles" means
all copyrights, trademarks and service marks and the good will associated
therewith, patents and patent applications and trade names of the Company.
4.2.3 Reliance. In rendering such opinions, such counsel may
rely (i) as to matters involving the application of laws other than the laws of
the United States and jurisdictions in which they are admitted, to the extent
such counsel deem proper and to the extent specified in such opinions, if at
all, upon an opinion or opinions (in form and substance reasonably satisfactory
to Representative's counsel) of other counsel reasonably acceptable to
Representative's counsel, familiar with the applicable laws, and (ii) as to
matters of fact, to the extent they deem proper, on certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to Representative's counsel if requested. Any opinion or opinions
relied upon by counsel for the Company, intellectual property counsel for the
Company or counsel for the Selling Stockholders shall include a statement to the
effect that it may be relied upon by counsel for the Representative in its
opinion delivered to the Representative.
4.2.4 Secondary Market Trading Memorandum. On the Effective
Date the Representative shall have received the written Secondary Market Trading
Memorandum.
4.3 Cold Comfort Letters.
4.3.1 Cold Comfort Letter of Xxxxxxxxxx, Melvoin and Xxxxxxx
LLP. At the time this Agreement is executed, and at each of the Closing Date and
the Option Closing Date, if any, you shall have received a letter, addressed to
the Representative and in form and substance satisfactory in all respects
(including the non-material nature of the changes or decreases, if any, referred
to in clause (iii) below) to you and to Xxxxxxxx Xxxxxx & Xxxxxx, counsel for
the Representative, from Xxxxxxxxxx, Melvoin and Xxxxxxx LLP, dated,
respectively, as of the date of this Agreement and as of the Closing Date and
the Option Closing Date, if any:
(i) confirming that they are independent accountants
with respect to the Company and Xxxxxxx Foods, L.L.C. ("Xxxxxxx") within the
meaning of the Act and the applicable Regulations;
(ii) stating that in their opinion the financial
statements of the Company as of December 31, 1996 and December 31, 1997 and for
each of the two years in the period ended December 31, 1997 and the financial
statements of Xxxxxxx as of December 31, 1997 and for the year then ended
included in the Registration Statement and Prospectus comply as to form in all
material respects with the applicable accounting requirements of the Act and the
published Regulations thereunder;
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(iii) stating that, based on the performance of
procedures specified by the American Institute of Certified Public Accountants
for a review of the latest available unaudited interim financial statements of
the Company (as described in Statement on Auditing Standards ("SAS") No. 71 --
"Interim Financial Information"), with an indication of the date of the latest
available unaudited interim financial statements, a reading of the latest
available minutes of the stockholders and board of directors and the various
committees of the board of directors, consultations with officers and other
employees of the Company responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that (a) the unaudited financial statements of
the Company included in the Registration Statement do not comply as to form in
all material respects with the applicable accounting requirements of the Act and
the Regulations or any material modification should be made to the unaudited
interim financial statements included in the Registration Statement for them to
be in conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial statements of
the Company included in the Registration Statement, and (b) at a date not later
than five days prior to the Effective Date, Closing Date or Option Closing Date,
as the case may be, there was any change in the capital stock or long-term debt
of the Company, or any decrease in the stockholders' equity of the Company as
compared with amounts shown in the December 31, 1997 balance sheet included in
the Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any decrease, setting forth the amount
of such decrease;
(iv) setting forth, at a date not later than five
days prior to the Effective Date, the amount of liabilities of the Company
(including a break-down of commercial papers and notes payable to banks);
(v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company and Xxxxxxx set forth in
the Prospectus, in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
accounting records, and work sheets, of the Company and of Xxxxxxx with the
results obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi) statements as to such other matters incident to
the transaction contemplated hereby as you may reasonably request.
4.3.2 Cold Comfort Letter of Xxxxxx, Xxxxxx & Xxxxxxxxxx, LLP.
At the time this Agreement is executed, and at each of the Closing Date and the
Option Closing Date, if any, you shall have received a letter, addressed to the
Representative and in form and substance satisfactory in all respects to you and
to Xxxxxxxx Mollen & Xxxxxx, counsel for the Representative, from Xxxxxx, Xxxxxx
& Xxxxxxxxxx, LLP, dated, respectively, as of the date of this Agreement and as
of the Closing Date and the Option Closing Date, if any:
(i) confirming that they are independent accountants
with respect to the Company within the meaning of the Act and the applicable
Regulations;
(ii) stating that in their opinion the financial
statements of the Company for the year ended December 31, 1995 included in the
Registration Statement and Prospectus
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comply as to form in all material respects with the applicable accounting
requirements of the Act and the published Regulations thereunder;
(iii) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company (but only relating to the
year ended December 31, 1995) set forth in the Prospectus in each case to the
extent that such amounts, numbers, percentages, statements and information may
be derived from the general accounting records, and work sheets, of the Company
with the results obtained from the application of specified readings, inquiries
and other appropriate procedures (which procedures do not constitute an
examination in accordance with generally accepted auditing standards) set forth
in the letter and found them to be in agreement;
(iv) statements as to such other matters incident to
the transaction contemplated hereby as you may reasonably request.
4.3.3 Cold Comfort Letter of Xxxxxxxx Xxxxxxxxxx Xxxxxx and
Xxxxxxxx, LLP. At the time this Agreement is executed, and at each of the
Closing Date and the Option Closing Date, if any, you shall have received a
letter, addressed to the Representative and in form and substance satisfactory
in all respects to you and to Xxxxxxxx Mollen & Xxxxxx, counsel for the
Representative, from Xxxxxxxx Xxxxxxxxxx Xxxxxx and Xxxxxxxx, LLP, dated,
respectively, as of the date of this Agreement and as of the Closing Date and
the Option Closing Date, if any:
(i) confirming that they are independent accountants
with respect to Xxxxxxx within the meaning of the Act and the applicable
Regulations;
(ii) stating that in their opinion the financial
statements of Xxxxxxx as of December 31, 1996 and for the period January 23,
1996 (Date of Inception) through December 31, 1996 included in the Registration
Statement and Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the published Regulations
thereunder;
(iii) stating that they have compared specific dollar
amounts, number of shares, percentages of revenues and earnings, statements and
other financial information pertaining to Xxxxxxx (but only relating to the
period January 23, 1996 (Date of Inception) through December 31, 1996) set forth
in the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
accounting records, and work sheets, of Xxxxxxx with the results obtained from
the application of specified readings, inquiries and other appropriate
procedures (which procedures do not constitute an examination in accordance with
generally accepted auditing standards) set forth in the letter and found them to
be in agreement;
(iv) statements as to such other matter incident to
the transaction contemplated hereby as you may reasonably request.
4.4 Officers' Certificates.
4.4.1 Officers' Certificate. At each of the Closing Date and
the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the President and the Chief Financial
Officer of the Company, dated the Closing Date or the Option Closing Date, as
the case may be, respectively, to the effect that the Company has performed all
covenants and complied with all conditions required by this Agreement to be
performed or
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complied with by the Company prior to and as of the Closing Date, or the Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.6 hereof have been satisfied as of such date and that, as of the Closing Date
and the Option Closing Date, as the case may be, the representations and
warranties of the Company set forth in Section 2 hereof are true and correct. In
addition, the Representative will have received such other and further
certificates of officers of the Company as the Representative may reasonably
request.
4.4.2 Secretary's Certificate. At each of the Closing Date and
the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company, dated the
Closing Date or the Option Date, as the case may be, respectively, certifying
(i) that the By-Laws and Certificate of Incorporation, as amended, of the
Company are true and complete, have not been modified and are in full force and
effect, (ii) that the resolutions relating to the public offering contemplated
by this Agreement are in full force and effect and have not been modified, all
correspondence between the Company or its counsel and the Commission, all
correspondence between the Company or its counsel and Nasdaq concerning
inclusion of the Securities on Nasdaq, and as to the incumbency of the
officers of the Company. The documents referred to in such certificate shall be
attached to such certificate.
4.5 No Material Changes. Prior to and on each of the Closing Date and
the Option Closing Date, if any, (i) there shall have been no material adverse
change or development involving a prospective material change in the condition
or prospects or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus, (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the Company
from the latest date as of which the financial condition of the Company is set
forth in the Registration Statement and Prospectus which is materially adverse
to the Company, taken as a whole, (iii) the Company shall not be in default
under any provision of any instrument relating to any outstanding indebtedness
which default would have a material adverse effect on the Company, (iv) no
material amount of the assets of the Company shall have been pledged or
mortgaged, except as set forth in the Registration Statement and Prospectus, (v)
no action, suit or proceeding, at law or in equity, shall have been pending or
threatened against the Company or affecting any of its property or business
before or by any court or federal or state commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
materially adversely affect the business, operations, prospects or financial
condition or income of the Company, except as set forth in the Registration
Statement and Prospectus, (vi) no stop order shall have been issued under the
Act and no proceedings therefor shall have been initiated or threatened by the
Commission, and (vii) the Registration Statement and the Prospectus and any
amendments or supplements thereto contain all material statements which are
required to be stated therein in accordance with the Act and the Regulations and
conform in all material respects to the requirements of the Act and the
Regulations, and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto contains 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, in light of the circumstances under which they
were made, not misleading.
4.6 Delivery of Representative's Warrant. The Company has delivered to
the Representative an executed copy of the Representative's Warrant.
4.7 Opinion of Counsel for the Representative. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to Xxxxxxxx Mollen & Xxxxxx, counsel
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to the Representative, and you shall have received from such counsel a favorable
opinion, dated the Closing Date and the Option Closing Date, if any, with
respect to such of these proceedings as you may reasonably require. On or prior
to the Effective Date, the Closing Date and the Option Closing Date, as the case
may be, counsel to the Representative shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in this Section
4.7, or in order to evidence the accuracy, completeness or satisfaction of any
of the representations, warranties or conditions herein contained.
4.8 Unaudited Financials. The Company has furnished to the
Representative a copy of the latest available unaudited interim financial
statements for the period ended __________, 1998 ("Unaudited Financials") of the
Company which have been read by Xxxxxxxxxx, Melvoin and Xxxxxxx LLP, as stated
in their letter dated as of the Closing Date to be furnished pursuant to Section
4.3.1 hereof.
5. Indemnification.
5.1 Indemnification of the Underwriters.
5.1.1 General. Subject to the conditions set forth below, the
Company and each Selling Stockholder, jointly and severally, agrees to indemnify
and hold harmless each of the Underwriters, their respective directors,
officers, agents and employees and each person, if any, who controls any such
Underwriter ("controlling person") within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, against any and all loss, liability,
claim, damage and expense whatsoever (including but not limited to any and all
legal or other expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, whether arising out
of any action between any of the Underwriters and the Company or between any of
the Underwriters and any third party or otherwise) to which they or any of them
may become subject under the Act, the Exchange Act or any other statute or at
common law or otherwise or under the laws of foreign countries, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact directly relating to the transactions effected by the Underwriters in
connection with this offering contained in (i) any Preliminary Prospectus, the
Registration Statement or the Prospectus (as from time to time each may be
amended and supplemented); (ii) in any post-effective amendment or amendments or
any new registration statement and prospectus in which are included securities
of the Company issued or issuable upon exercise of the Representative's Warrant;
or (iii) any application or other document or written communication (in this
Section 5 collectively called "application") executed by the Company or based
upon written information furnished by the Company in any jurisdiction in order
to qualify the Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq or any securities
exchange; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to an
Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment or supplement thereof, or in any application, as the case may be;
provided, however, that the indemnification hereunder shall not be applicable to
any Preliminary Prospectus if the untrue statement or alleged untrue statement
was contained in a Preliminary Prospectus and was corrected in the Prospectus.
The Company agrees promptly to notify the Representative of the commencement of
any litigation or proceedings against the
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Company or any of its officers, directors or controlling persons in connection
with the issue and sale of the Securities or in connection with the Registration
Statement or Prospectus.
5.1.2 Procedure. If any action is brought against an
Underwriter or controlling person in respect of which indemnity may be sought
against the Company pursuant to Section 5.1.1, such Underwriter shall promptly
notify the Company in writing of the institution of such action and the Company
shall assume the defense of such action, including the employment and fees of
counsel (subject to the approval of such Underwriter) and payment of actual
expenses. Such Underwriter or controlling person shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the employment of such counsel shall have been authorized in writing
by the Company in connection with the defense of such action, (ii) the Company
shall not have employed counsel to have charge of the defense of such action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events the fees and expenses of
not more than one additional firm of attorneys selected by the Underwriter
and/or controlling person shall be borne by the Company. Notwithstanding
anything to the contrary contained herein, if an Underwriter or controlling
person shall assume the defense of such action as provided above, the Company
shall have the right to approve the terms of any settlement of such action which
approval shall not be unreasonably withheld.
5.2 Indemnification of the Company. Each Underwriter, severally and not
jointly, agrees to indemnify and hold harmless the Company against any and all
loss, liability, claim, damage and expense described in the foregoing indemnity
from the Company to the several Underwriters, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions, by
the Underwriters made in any Preliminary Prospectus, the Registration Statement
or Prospectus or any amendment or supplement thereto or in any application in
reliance upon, and in strict conformity with, written information furnished to
the Company with respect to such Underwriter by or on behalf of such Underwriter
expressly for use in such Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment or supplement thereto or in any such application. In
case any action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment or supplement thereto or any application, and in
respect of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company and the
Company and each other person so indemnified shall have the rights and duties
given to the several Underwriters by the provisions of Section 5.1.2.
5.3 Contribution.
5.3.1 Contribution Rights. In order to provide for just and
equitable contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for indemnification
pursuant hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Act, the Exchange Act or otherwise may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 5, then, and in each such case, the Company and the Underwriters shall
contribute to the aggregate
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losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Company and the Underwriters, as
incurred, in such proportion that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount appearing
on the cover page of the Prospectus bears to the initial offering price thereon
and the Company is responsible for the balance; provided, however, that no
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding the provisions of
this Section 5.3.1, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section, each director, officer and employee of
an Underwriter, and each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act, shall have the same rights to contribution as
such Underwriter, each director, officer and employee of the Company, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act, shall have the same rights to contribution as the Company.
5.3.2 Contribution Procedure. Within fifteen days after
receipt by any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution on account of any settlement of any claim, action or
proceeding which was effected by the party seeking contribution without the
written consent of the contributing party. The contribution provisions contained
in this Section are intended to supersede, to the extent permitted by law, any
right to contribution under the Act, the Exchange Act or otherwise available.
6. Default by an Underwriter.
6.1 Default Not Exceeding 10% of Firm Shares or Option Shares. If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Shares or the Option Shares if exercised, hereunder, and if
the number of the Firm Shares or Option Shares with respect to which such
default relates does not exceed in the aggregate 10% of the number of Firm
Shares or Option Shares which all Underwriters have agreed to purchase
hereunder, then such Firm Shares or Option Shares to which the default relates
shall be purchased by the non-defaulting Underwriters in proportion to their
respective commitments hereunder.
6.2 Default Exceeding 10% of Firm Shares or Option Shares. In the event
that such default relates to more than 10% of the Firm Shares or Option Shares,
you may in your discretion arrange for yourself or for another party or parties
to purchase such Firm Shares or Option Shares to which such default relates on
the terms contained herein. If within one business day after such default
relating to more than 10% of the Firm Shares or Option Shares you do not arrange
for the purchase of such Firm Shares or Option Shares, then the Company shall be
entitled to a further period of one business day within which to procure another
party or parties
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satisfactory to you to purchase said Firm Shares or Option Shares on such terms.
In the event that neither you nor the Company arrange for the purchase of the
Firm Shares or Option Shares to which a default relates as provided in this
Section 6, this Agreement may be terminated by you or the Company without
liability on the part of the Company (except as provided in Sections 3.15 and
5.1 hereof) or the several Underwriters; provided, however, that if such default
occurs with respect to the Option Shares, this Agreement will not terminate as
to the Firm Shares, and provided further that nothing herein shall relieve a
defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for damages occasioned by its default hereunder.
6.3 Postponement of Closing Date. In the event that the Firm Shares or
Option Shares to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, you or the Company shall have the right to postpone the Closing
Date or Option Closing Date for a reasonable period, but not in any event
exceeding five business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment to the Registration Statement or the Prospectus which in the opinion
of counsel for the Underwriters may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 6 with like effect as if it had originally been a party to
this Agreement with respect to such Securities.
7. Additional Covenants.
7.1 Press Releases. The Company will not issue a press release or
engage in any other publicity out of the ordinary course until 25 days after the
Effective Date without the Representative's prior written consent unless
required by law.
7.2 Form S-8 or any Similar Form. The Company shall not file a
registration statement on Form S-8 (or any similar or successor form) for the
registration of shares of Common Stock underlying stock options for a period of
one year from the Effective Date without the Representative's prior written
consent.
7.3 Compensation and Other Arrangements. The Company hereby agrees that
for a period of three years from the Effective Date, all compensation and other
arrangements between the Company and its officers, directors and affiliates
shall be approved by the Compensation Committee of the Company's Board of
Directors, a majority of the members of which shall have no affiliation or other
relationship with the Company other than as directors.
8. Representations and Agreements to Survive Delivery. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Dates and such representations, warranties and
agreements of the Underwriters and the Company, including the indemnity
agreements contained in Section 5 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, and shall survive
termination of this Agreement or the issuance and delivery of the Securities to
the several Underwriters until the earlier of the expiration of any applicable
statute of limitations and the seventh anniversary of the later of the Closing
Date or the Option Closing Date, if any, at which time the representations,
warranties and agreements shall terminate and be of no further force and effect.
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9. Effective Date of This Agreement and Termination Thereof.
9.1 Effective Date. This Agreement shall become effective on the
Effective Date at the time that the Registration Statement is declared
effective.
9.2 Termination. You shall have the right to terminate this Agreement
at any time prior to any Closing Date, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in your opinion will in
the immediate future materially disrupt, general securities markets in the
United States; or (ii) if trading on the New York Stock Exchange, the American
Stock Exchange or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been fixed, or maximum ranges for prices
for securities shall have been required on the over-the-counter market by the
NASD or by order of the Commission or any other government authority having
jurisdiction, or (iii) if the United States shall have become involved in a war
or major hostilities, or (iv) if a banking moratorium has been declared by a New
York State or federal authority, or (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Securities, or (vii) if either Xxxxxxx X. Xxxxx or Xxxxxx Xxxxxx shall no
longer serve the Company in his present capacity, or (viii) if the Company has
breached any of its respective representations, warranties or obligations
hereunder, or (ix) if the Representative shall have become aware after the date
hereof of such a material adverse change in the condition (financial or
otherwise), business, or prospects of the Company, or such adverse material
change in general market conditions, as in the Representative's judgment would
make it impracticable to proceed with the offering, sale and/or delivery of the
Securities or to enforce contracts made by the Underwriters for the sale of the
Securities.
9.3 Notice. If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 9, the
Company shall be notified on the same day as such election is made by you by
telephone or telecopy, confirmed by letter.
9.4 Expenses. In the event that this Agreement shall not be carried out
for any reason whatsoever, within the time specified herein or any extensions
thereof pursuant to the terms herein, the obligation of the Company to pay the
expenses related to the transactions contemplated herein shall be governed by
Section 3.15 hereof.
9.5 Indemnification. Notwithstanding any contrary provision contained
in this Agreement, any election hereunder or any termination of this Agreement,
and whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way affected by such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
10. Miscellaneous.
10.1 Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telecopied and confirmed
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If to the Representative:
Network 1 Financial Securities, Inc.
Galleria Building 2, 0 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxxxx 00000
Attention: __________________________
Copy to:
Xxxxxxxx Mollen & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxx Xxxxxx, Esq.
If to the Company:
Delicious Brands, Inc.
0000 Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President and Chief Executive Officer
Copy to:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
10.2 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this Agreement.
10.3 Amendment. This Agreement may be amended only by a
written instrument executed by each of the parties hereto.
10.4 Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection
with this Agreement) constitutes the entire agreement of the parties
hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written,
with respect to the subject matter hereof.
10.5 Binding Effect. This Agreement shall inure solely to the
benefit of and shall be binding upon, the Representative, the
Underwriters, the Company, the controlling persons, directors and
officers referred to in Section 5 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.
10.6 Governing Law, Jurisdiction. This Agreement shall be
governed by and construed and enforced in accordance with the law of
the State of New York, without giving effect to conflicts of law. The
Company hereby agrees that any action, proceeding
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or claim against it arising out of, relating in any way to this
Agreement shall be brought and enforced in the courts of the State of
New York or the United States District Court for the Southern District
of New York, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive. The Company hereby waives any
objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered
or certified mail, return receipt requested, postage prepaid, addressed
to it at the address set forth in Section 10.1 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon
the Company in any action, proceeding or claim. The parties hereto
agree that the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of its reasonable
attorneys' fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor.
10.7 Execution in Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has
been signed by each of the parties hereto and delivered to each of the
other parties hereto.
10.8 Waiver, Etc. The failure of any of the parties hereto at
any time to enforce any of the provisions of this Agreement shall not
be deemed or construed to be a waiver of any such provision, nor in any
way to affect the validity of this Agreement or any provision hereof or
the right of any of the parties hereto thereafter to enforce each and
every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of
such waiver is sought; and no waiver of any such breach, non-compliance
or non-fulfillment shall be construed or deemed to be a waiver of any
other or subsequent breach, non-compliance or non-fulfillment.
If the foregoing correctly sets forth the
understanding among the Representative and the Company, please so
indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
DELICIOUS BRANDS, INC.
By: ____________________________________
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
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Accepted as of the date first
above written.
New York, New York
Network 1 Financial Securities, Inc.
By: ____________________________________
Name:
Title:
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SCHEDULE I
DELICIOUS BRANDS, INC.
1,000,000 SHARES OF COMMON STOCK
Number of Firm
Shares
Underwriter to be Purchased
Network 1 Financial Securities, Inc.
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