EXHIBIT 1.1
MED-EMERG INTERNATIONAL, INC.
1,250,000 Shares of Common Stock
and
1,250,000 Redeemable Common Stock Purchase Warrants
UNDERWRITING AGREEMENT
___________, 1997
Network 1 Financial Securities, Inc.
The Galleria, Penthouse
0 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxxxx 00000
Century City Securities, Inc.
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, XX 00000
Gentlemen:
Med-Emerg International, Inc., a corporation organized under the laws of
the Province of Ontario, Canada (the "Company"), hereby confirms its agreement
with Network 1 Financial Securities, Inc. ("Network") and Century City
Securities, Inc. ("Century"; Network and Century, collectively, the
"Underwriter") as set forth below.
The Company proposes to issue and sell to the Underwriter an aggregate of
(i) 1,250,000 shares (the "Firm Shares") of the Company's common stock, no par
value (the "Common Stock"), and (ii) 1,250,000 redeemable warrants to purchase
Common Stock (the "Firm Warrants"). In addition, for the sole purpose of
covering over-allotments from the sale of the Firm Shares and the Firm Warrants,
(A) the Company proposes to grant to the Underwriter an option to purchase (i)
an additional 46,875 shares of Common Stock (the "Company Option Shares") and
(ii) an additional 187,500 redeemable warrants to purchase Common Stock (the
"Option Warrants", and together with the Company Option Shares, the "Company
Option Securities") and (B) each of the Selling Shareholders named on Schedule 1
annexed hereto ("Schedule 1") proposes to grant to the Underwriter an option to
purchase the number of shares of Common Stock set forth opposite his or its name
on Schedule 1 (the "Selling Shareholders Option Shares," and together with the
Company Option Shares, the "Option Shares"), all as provided in section 2(c) of
this agreement (the "Agreement"). The Firm Shares and the Option Shares are
collectively referred to herein as the "Shares." The Firm Warrants and the
Option Warrants are collectively referred to herein as the "Warrants." Any
shares of Common Stock issuable upon the exercise of any Warrants are referred
to herein as "Warrant Shares." The Firm Shares and the Firm Warrants are
collectively referred to herein as the "Firm Securities;" the Option Shares and
the Option Warrants are collectively referred
to herein as the "Option Securities;" and the Firm Securities, the Option
Securities and the Warrant Shares are collectively referred to herein as the
"Securities."
Pursuant to an agreement to be entered into among the Company, the
Underwriter and Continental Stock Transfer and Trust Company (the "Warrant
Agreement"), each Warrant will be exercisable during the period commencing on
the first anniversary of the effective date of the Registration Statement (as
hereinafter defined) (the "Effective Date") and expiring on the fifth
anniversary thereof, subject to redemption by the Company (as described below),
at an initial exercise price (subject to adjustment as set forth in the Warrant
Agreement) of $5.00 per share. The Warrants will be redeemable at a price of
$.10 per Warrant, commencing on the second anniversary of the Effective Date (or
earlier with the consent of the Underwriter) and prior to their expiration, upon
not less than 30 days prior written notice to the holders of the Warrants,
provided that the closing bid price of the Common Stock as reported on the
Nasdaq SmallCap Market if traded thereon, or if not traded thereon, the closing
sale price if listed on the Nasdaq National Market or a national or regional
securities exchange (or other reporting system that provides last sales prices),
shall have been at least $8.00 per share, subject to adjustment, for 20
consecutive trading days ending three days prior to the date on which the
Company gives notice of redemption, subject to the right of the holder to
exercise such Warrants prior to redemption.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the Underwriter that:
(a) A registration statement on Form F-1 (File No. 333-21865), with
respect to the Securities and the Underwriter's Warrant Securities (as
hereinafter defined), including a prospectus subject to completion, has been
filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act "), and one
or more amendments to that registration statement may have been so filed. Copies
of such registration statement and of each amendment heretofore filed by the
Company with the Commission have been delivered to the Underwriter. After the
execution of this Agreement, the Company will file with the Commission either
(i) if the registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, a prospectus in the
form most recently included in that registration statement (or, if an amendment
thereto shall have been filed, in such amendment), with such changes or
insertions as are required by Rule 430A under the Act or permitted by Rule
424(b) under the Act and as have been provided to and approved by the
Underwriter prior to the execution of this Agreement, or (ii) if that
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Act, an amendment to that registration
statement, including a form of prospectus, a copy of which amendment has been
furnished to and approved by the Underwriter prior to the execution of this
Agreement. The Company also may file a related registration statement with the
Commission pursuant to Rule 462(b) under the Act for purposes of registering
certain additional Securities, which registration statement shall become
effective upon filing with the Commission (the "Rule 462(b) Registration
Statement"). As used in this Agreement, the term "Registration Statement" means
that registration statement, as amended at the time it was or is declared
effective, and any amendment thereto that was or is thereafter declared
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effective, including all financial schedules and exhibits thereto and any
information omitted therefrom pursuant to Rule 430A under the Act and included
in the Prospectus (as hereinafter defined), together with any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means each prospectus
subject to completion filed with the Registration Statement (including the
prospectus subject to completion, if any, included in the Registration Statement
at the time it was or is declared effective); and the term "Prospectus" means
the prospectus first filed with the Commission pursuant to Rule 424(b) under the
Act or, if no prospectus is so filed pursuant to Rule 424(b), the prospectus
included in the Registration Statement. The Company has caused to be delivered
to the Underwriter copies of each Preliminary Prospectus and has consented to
the use of those copies for the purposes permitted by the Act. If the Company
has elected to rely on Rule 462(b) and the Rule 462(b) Registration Statement
has not been declared effective, then (i) the Company has filed a Rule 462(b)
Registration Statement in compliance with and that is effective upon filing
pursuant to Rule 462(b) and has received confirmation of its receipt and (ii)
the Company has given irrevocable instructions for transmission of the
applicable filing fee in connection with the filing of the Rule 462(b)
Registration Statement, in compliance with Rule 111 promulgated under the Act or
the Commission has received payment of such filing fee.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. When each Preliminary Prospectus and each
amendment and each supplement thereto was filed with the Commission it (i)
contained all statements required to be stated therein, in accordance with, and
complied with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (ii) did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. When the Registration Statement was or is declared
effective, it (i) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply with the requirements
of, the Act and the rules and regulations of the Commission thereunder and (ii)
did not or will not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading.
When the Prospectus and each amendment or supplement thereto is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or such amendment or
supplement is not required so to be filed, when the Registration Statement
containing such Prospectus or amendment or supplement thereto was or is declared
effective) and on the Firm Closing Date and any Option Closing Date (as each
such term is hereinafter defined), the Prospectus, as amended or supplemented at
any such time, (i) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use therein.
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(c) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the Province of Ontario, Canada,
and is duly qualified or authorized to transact business as a foreign
corporation and is in good standing in each jurisdiction where the ownership or
leasing of its property or the conduct of its business requires such
qualification or authorization.
(d) The Company has full corporate power and authority, and all
necessary material authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory authorities, to own or lease its
property and conduct its business as now being conducted and as proposed to be
conducted as described in the Registration Statement and the Prospectus (and, if
the Prospectus is not in existence, the most recent Preliminary Prospectus).
(e) Except for the subsidiaries listed in Exhibit 21.1 to the
Registration Statement (the "Subsidiaries"), the Company does not own, directly
or indirectly, an interest in any corporation, partnership, limited liability
company, joint venture, trust or other business entity. Each Subsidiary is duly
qualified and licensed and in good standing in its jurisdiction of formation and
as a foreign corporation in each jurisdiction where the ownership or leasing of
its property or the conduct of its business requires such qualification or
licensing. Each Subsidiary has full corporate power and authority, and all
necessary material authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory authorities, to own or lease its
properties and conduct its business as now being conducted and as proposed to be
conducted as described in the Prospectus (and, if the Prospectus is not in
existence, the most recent Preliminary Prospectus)
(f) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus (and, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). All of the issued shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights. There are no
outstanding options, warrants or other rights granted by the Company to purchase
shares of its Common Stock or other securities, other than as described in the
Prospectus (and, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). The Shares and the Warrant Shares have been duly
authorized, and the Warrant Shares have been duly reserved for issuance, by all
necessary corporate action on the part of the Company and, when the Shares are
issued and delivered to and paid for by the Underwriter pursuant to this
Agreement and the Warrant Shares are issued and delivered to and paid for by the
holders of Warrants upon exercise of the Warrants in accordance with the terms
thereof, the Shares and the Warrant Shares will be validly issued, fully paid,
nonassessable and free of preemptive rights and will conform to the description
thereof in the Prospectus (and, if the Prospectus is not in existence, the most
recent Preliminary Prospectus). No holder of outstanding securities of the
Company is entitled as such to any preemptive or other right to subscribe for
any of the Securities, and no person is entitled to have securities registered
by the Company under the Registration Statement or otherwise under the Act other
than as described in the Prospectus (and, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
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(g) The capital stock of the Company conforms to the description
thereof contained in the Prospectus (and, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(h) All issuances of securities of the Company have been effected
pursuant to an exemption from the registration requirements of the Act. Except
as previously disclosed in writing to the Underwriter, no compensation was paid
to or on behalf of any member of the National Association of Securities Dealers,
Inc. ("NASD"), or any affiliate or employee thereof, in connection with any such
issuance.
(i) The consolidated financial statements of the Company included in
the Registration Statement and the Prospectus (and, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) fairly present the financial
position of the Company and its subsidiaries as of the dates indicated and the
results of operations of the Company and its subsidiaries for the periods
specified. Such consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in Canada, consistently
applied, except to the extent that certain footnote disclosures regarding
unaudited interim periods may have been omitted in accordance with the
applicable rules of the Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). The consolidated financial data set forth under the
caption "Summary Consolidated Financial Information" in the Prospectus (and, if
the Prospectus is not in existence, the most recent Preliminary Prospectus)
fairly present, on the basis stated in the Prospectus (or such Preliminary
Prospectus), the information included therein.
(j) KMPG and Xxxxxxxx Xxxxx, who have audited certain financial
statements of the Company and delivered their report with respect to the
consolidated financial statements included in the Registration Statement and the
Prospectus (and, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), are independent public accountants with respect to the
Company as required by the Act and the applicable rules and regulations
thereunder.
(k) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (and, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), (i) except as otherwise
contemplated therein, there has been no material adverse change in the business,
operations, condition (financial or otherwise), earnings or prospects of the
Company and the Subsidiaries, whether or not arising in the ordinary course of
business, (ii) except as otherwise stated therein, there have been no
transactions entered into by the Company or the Subsidiaries and no commitments
made by the Company or the Subsidiaries that, individually or in the aggregate,
are material with respect to the Company and the Subsidiaries, (iii) there has
not been any change in the capital stock or indebtedness of the Company and the
Subsidiaries, and (iv) there has been no dividend or distribution of any kind
declared, paid or made by the Company in respect of any class of its capital
stock.
(l) The Company has full corporate power and authority to enter into
and perform its obligations under this Agreement, the Warrant Agreement and the
Underwriter's Warrant
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Agreement (as hereinafter defined). The execution and delivery of this Agreement
and the Underwriter's Warrant Agreement have been duly authorized by all
necessary corporate action on the part of the Company and this Agreement, the
Warrant Agreement and the Underwriter's Warrant Agreement have each been duly
executed and delivered by the Company and each is a valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law), and except as rights to indemnity and contribution under this Agreement
may be limited by applicable law. The issuance, offering and sale by the
Company to the Underwriter of the Securities pursuant to this Agreement or the
Underwriter's Securities pursuant to the Underwriter's Warrant Agreement, the
compliance by the Company with the provisions of this Agreement, the Warrant
Agreement and the Underwriter's Warrant Agreement, and the consummation of the
other transactions contemplated by this Agreement, the Warrant Agreement and the
Underwriter's Warrant Agreement do not (i) require the consent, approval,
authorization, registration or qualification of or with any court or
governmental or regulatory authority, except such as have been obtained or may
be required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act, or (ii) conflict
with or result in a breach or violation of, or constitute a default under, any
material contract, indenture, mortgage, deed of trust, loan agreement, note,
lease or other material agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of its
property is bound or subject, or the certificate of incorporation or by-laws of
the Company or any Subsidiary, or any statute or any rule, regulation, judgment,
decree or order of any court or other governmental or regulatory authority or
any arbitrator applicable to the Company or any Subsidiary.
(m) No legal or governmental proceedings are pending to which the
Company or any Subsidiary is a party or to which the property of the Company or
any Subsidiary is subject, and no such proceedings have been threatened against
the Company or any Subsidiary or with respect to any of its property, except
such as are described in the Prospectus (and, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). No contract or other
document is required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement that is
not described therein (and, if the Prospectus is not in existence, in the most
recent Preliminary Prospectus) or filed as required.
(n) Neither the Company nor any Subsidiary is in (i) violation of its
certificate of incorporation, by-laws or other governing documents, (ii)
violation in any material respect of any law, statute, regulation, ordinance,
rule, order, judgment or decree of any court or any governmental or regulatory
authority applicable to it, or (iii) default in any material respect in the
performance or observance of any obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, deed of trust, loan
agreement, note, lease or other material agreement or
6
instrument to which it is a party or by which it or any of its property may be
bound or subject, and no event has occurred which with notice or lapse of time
or both would constitute such a default.
(o) The Company and the Subsidiaries currently own or possess
adequate rights to use all intellectual property, including all trademarks,
service marks, trade names, copyrights, inventions, know-how, trade secrets,
proprietary technologies, processes and substances, or applications or licenses
therefor, that are described in the Prospectus (and if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and any other rights or
interests in items of intellectual property as are necessary for the conduct of
the business now conducted or proposed to be conducted by them as described in
the Prospectus (or, such Preliminary Prospectus), and, except as disclosed in
the Prospectus (and such Preliminary Prospectus), the Company is not aware of
the granting of any patent rights to, or the filing of applications therefor by,
others, nor is the Company aware of, nor has the Company received notice of,
infringement of or conflict with asserted rights of others with respect to any
of the foregoing. All such intellectual property rights and interests are (i)
valid and enforceable and (ii) to the best knowledge of the Company, not being
infringed by any third parties.
(p) The Company and each Subsidiary possesses adequate licenses,
orders, authorizations, approvals, certificates or permits issued by the
appropriate federal, state or foreign regulatory agencies or bodies necessary to
conduct its business as described in the Registration Statement and the
Prospectus (and, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and, except as disclosed in the Prospectus (and, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), there
are no pending or, to the best knowledge of the Company, threatened, proceedings
relating to the revocation or modification of any such license, order,
authorization, approval, certificate or permit.
(q) The Company and each Subsidiary has good and marketable title to
all of the properties and assets reflected in the Company's consolidated
financial statements or as described in the Registration Statement and the
Prospectus (and, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), subject to no lien, mortgage, pledge, charge or
encumbrance of any kind, except those reflected in such consolidated financial
statements or as described in the Registration Statement and the Prospectus (and
such Preliminary Prospectus). Except as disclosed in the Prospectus, the Company
and each Subsidiary occupies its leased properties under valid and enforceable
leases conforming to the description thereof set forth in the Registration
Statement and the Prospectus (and such Preliminary Prospectus).
(r) The Company is not and does not intend to conduct its business in
a manner in which it would be an "investment company" as defined in Section 3(a)
of the Investment Company Act of 1940 (the "Investment Company Act").
(s) Except as listed on Schedule 2 hereto, the Company has obtained
and delivered to the Underwriter the agreements (the "Lock-up Agreements") with
the officers, directors and other security holders owning or having rights to
acquire shares of Common Stock or preferred stock to
7
the effect that, among other things, each such person (i) will not, commencing
on the Effective Date and continuing for the period thereafter set forth
opposite their names on Schedule 2, directly or indirectly, sell, offer or
contract to sell or grant any option to purchase, transfer, assign or pledge, or
otherwise encumber, or dispose of any shares of Common Stock or preferred stock
or any securities convertible into or exercisable for Common Stock or preferred
stock now or hereafter owned by such person without the prior written consent of
the Underwriter, and (ii) will comply with any additional restriction or
condition on the disposition of such Common Stock or preferred stock which may
be required to qualify the offering of the Securities in any state in accordance
with the blue sky or securities laws of such state.
(t) No labor dispute with the employees of the Company or any
Subsidiary exists, is threatened or, to the best of the Company's knowledge, is
imminent that could result in a material adverse change in the condition
(financial or otherwise), business, prospects, net worth or results of
operations of the Company and the Subsidiaries, except as described in or
contemplated by the Prospectus (and, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(u) The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any Subsidiary has been refused any insurance
coverage sought or applied for; and neither the Company nor any Subsidiary has
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the condition (financial or
otherwise), business, prospects, net worth or results of operations of the
Company and the Subsidiaries, except as described in or contemplated by the
Prospectus (and, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(v) The Underwriter's Warrants (as hereinafter defined) will conform
to the description thereof in the Registration Statement and in the Prospectus
(and, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) and, when sold to and paid for by the Underwriter in accordance with
the Underwriter's Warrant Agreement, will have been duly authorized and validly
issued and will constitute valid and binding obligations of the Company entitled
to the benefits of the Underwriter's Warrant Agreement. The shares of Common
Stock issuable upon exercise of the Underwriter's Warrants and the Warrants
issuable upon exercise thereof (the "Underwriter's Warrant Shares") have been
duly authorized and reserved for issuance upon exercise of the Underwriter's
Warrants and the Warrants issuable upon exercise thereof by all necessary
corporate action on the part of the Company and, when issued and delivered and
paid for upon such exercise in accordance with the terms of the Underwriter's
Warrant Agreement, the Underwriter's Warrants, and the Warrants issuable upon
exercise thereof, respectively, will be validly issued, fully paid,
nonassessable and free of preemptive rights and will conform to the description
thereof in the Prospectus (and, if the Prospectus is not in existence, the most
recent Preliminary Prospectus).
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(w) No person has acted as a finder in connection with, or is
entitled to any commission, fee or other compensation or payment for services as
a finder for or for originating, or introducing the parties to, the transactions
contemplated herein and the Company will indemnify the Underwriter with respect
to any claim for finder's fees in connection herewith. Except as set forth in
the Registration Statement and the Prospectus (and, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), the Company has no
management or financial consulting agreement with anyone. No promoter, officer,
director or stockholder of the Company is, directly or indirectly, affiliated or
associated with an NASD member and no securities of the Company have been
acquired by an NASD member, except as previously disclosed in writing to the
Underwriter.
(x) The Company and each Subsidiary has filed all federal, state,
local and foreign tax returns which are required to be filed through the date
hereof, or has received extensions thereof, and has paid all taxes shown on such
returns and all assessments received by it to the extent that the same are
material and have become due.
(y) Neither the Company nor any director, officer, agent, employee or
other person associated with or acting on behalf of the Company has, directly or
indirectly: used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended;
or made any bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment. No transaction has occurred between or among the Company and
any of its officers or directors or any affiliates of any such officer or
director, that is required to be described in and is not described in the
Registration Statement and the Prospectus.
(z) Neither the Company nor any of its officers, directors or
affiliates (as defined in the Regulations), has taken or will take, directly or
indirectly, prior to the completion of the Offering, any action designed to
stabilize or manipulate the price of any security of the Company, or which has
caused or resulted in, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any security
of the Company, to facilitate the sale or resale of any of the Securities or the
Option Securities.
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES AND THE UNDERWRITER'S
WARRANTS.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to each Underwriter, and each
Underwriter agrees to purchase from the Company, severally and not jointly, the
number of Firm Shares as set forth opposite its name on Schedule 3 annexed
hereto ("Schedule 3"), at a purchase price of $3.51 per share and the Firm
Warrants at a purchase price of $.09 per Warrant.
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(b) Certificates in definitive form for the Firm Securities that the
Underwriter has agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Underwriter requests
upon notice to the Company at least 48 hours prior to the Firm Closing Date,
shall be delivered by or on behalf of the Company to the Underwriter, against
payment by or on behalf of the Underwriter of the purchase prices therefor by
certified or official bank check or checks drawn upon or by a New York Clearing
House bank and payable in next-day funds to the order of the Company. Such
delivery of and payment for the Firm Securities shall be made at the offices of
Counsel for the Underwriter, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 9:30 A.M.,
New York City time on ___________, 1997, or at such other place, time or date as
the Underwriter and the Company may agree upon, such time and date of delivery
against payment being herein referred to as the "Firm Closing Date. The Company
will make such certificates for the Firm Securities available for checking and
packaging by the Underwriter, at such offices as may be designated by the
Underwriter, at least 24 hours prior to the Firm Closing Date.
(c) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the Underwriter an option to purchase
any or all of the Company Option Securities and the Selling Shareholders hereby
grant the Underwriter an option to purchase the Selling Shareholder Option
Shares, which options are exercisable by the Underwriter on behalf of and for
the account of the Underwriter. The purchase price to be paid for any of the
Option Securities shall be the same price per share or Warrant as the price per
share or Warrant for the Firm Securities set forth above in paragraph (a) of
this section 2. The option granted hereby may be exercised as to all or any part
of the Option Securities from time to time within 45 calendar days after the
Firm Closing Date. The Underwriter shall not be under any obligation to purchase
any of the Option Securities prior to the exercise of such option. The
Underwriter may from time to time exercise the option granted hereby by giving
notice in writing or by telephone (confirmed in writing) to the Company and the
Selling Shareholders (in the case of the Selling Shareholder Option Shares)
setting forth the aggregate number of Option Securities as to which the
Underwriter is then exercising the option and the date and time for delivery of
and payment for such Option Securities. Any such date of delivery shall be
determined by the Underwriter but shall not be earlier than two business days or
later than three business days after such exercise of the option and, in any
event, shall not be earlier than the Firm Closing Date. The time and date set
forth in such notice, or such other time on such other date as the Underwriter
and the Company may agree upon, is herein called the "Option Closing Date" with
respect to such Option Securities. Upon exercise of the option as provided
herein, the Company and/or the Selling Shareholders shall become obligated to
sell to the Underwriter, and, subject to the terms and conditions herein set
forth, the Underwriter shall become obligated to purchase from the Company and
the Selling Shareholders, the Option Securities as to which the Underwriter is
then exercising its option. If the option is exercised as to all or any portion
of the Option Securities, certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the related Option
Closing Date in the manner, and upon the terms and conditions, set forth in
paragraph (b) of this section 2, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph (c), to refer to such Option Securities and Option Closing Date,
respectively.
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(d) On the Firm Closing Date, the Company will further issue and sell
to the Underwriter or, at the direction of the Underwriter, to bona fide
officers of the Underwriter, for an aggregate purchase price of $10, warrants to
purchase Common Stock and redeemable warrants to purchase Common Stock (the
"Underwriter's Warrants") entitling the holders thereof to purchase an aggregate
of 125,000 shares of Common Stock and 125,000 redeemable warrants to purchase
Common Stock for a period of four years, such period to commence on the first
anniversary of the Effective Date. The Underwriter's Warrants shall be
exercisable at a price equal to 120% of the initial public offering price of the
Common Stock and Warrants, respectively, and shall contain terms and provisions
more fully described herein below and as set forth more particularly in the
warrant agreement relating to the Underwriter's Warrants to be executed by the
Company on the Effective Date (the "Underwriter's Warrant Agreement"),
including, but not limited to, (i) customary anti-dilution provisions in the
event of stock dividends, split mergers, sales of all or substantially all of
the Company's assets, sales of stock below then prevailing market or exercise
prices and other events, and (ii) prohibitions of mergers, consolidations or
other reorganizations of or by the Company or the taking by the Company of other
action during the five-year period following the Effective Date unless adequate
provision is made to preserve, in substance, the rights and powers incidental to
the Underwriter's Warrants. As provided in the Underwriter's Warrant Agreement,
the Underwriter may designate that the Underwriter's Warrants be issued in
varying amounts directly to bona fide officers of the Underwriter. As further
provided, no sale, transfer, assignment, pledge or hypothecation of the
Underwriter's Warrants shall be made for a period of 12 months from the
Effective Date, except (i) by operation of law or reorganization of the Company,
or (ii) to the Underwriter and bona fide partners, officers of the Underwriter
and selling group members. The shares of Common Stock issuable upon exercise of
the Underwriter's Warrants and the Warrants issuable upon exercise thereof are
referred to herein as the "Underwriter's Warrant Shares"; and the Underwriter's
Warrants, the Warrants issuable upon exercise thereof, and the Underwriter's
Warrant Shares are collectively referred to herein as the "Underwriter's
Securities."
3. OFFERING BY THE UNDERWRITER. The Underwriter proposes to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus (the "Offering").
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Underwriter that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, to
become effective as promptly as possible. If required, the Company will file
the Prospectus and any amendment or supplement thereto with the Commission in
the manner and within the time period required by Rule 424(b) under the Act.
During any time when a prospectus relating to the Securities is required to be
delivered under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act and the rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (ii) will not file with the
Commission any prospectus or amendment referred to in the first sentence of
Section (a) (i) hereof, any amendment or supplement to such
11
prospectus or any amendment to the Registration Statement as to which the
Underwriter shall not previously have been advised and furnished with a copy for
a reasonable period of time prior to the proposed filing and as to which filing
the Underwriter shall not have given its consent. The Company will prepare and
file with the Commission, in accordance with the rules and regulations of the
Commission, promptly upon request by the Underwriter or counsel to the
Underwriter, any amendments to the Registration Statement or amendments or
supplements to the Prospectus that may be necessary or advisable in connection
with the distribution of the Securities by the Underwriter, and will use its
best efforts to cause any such amendment to the Registration Statement to be
declared effective by the Commission as promptly as possible. The Company will
advise the Underwriter, promptly after receiving notice thereof, of the time
when the Registration Statement or any amendment thereto has been filed or
declared effective or the Prospectus or any amendment or supplement thereto has
been filed and will provide evidence satisfactory to the Underwriter of each
such filing or effectiveness.
(b) The Company will advise the Underwriter, promptly after receiving
notice or obtaining knowledge thereof, of (i) the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, (ii) the suspension of the
qualification of any Securities for offering or sale in any jurisdiction, (iii)
the institution, threat or contemplation of any proceeding for any such purpose
or (iv) any request made by the Commission for amending the Registration
Statement, for amending or supplementing the Prospectus or for additional
information. The Company will use its best efforts to prevent the issuance of
any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(c) The Company will, in cooperation with counsel to the Underwriter,
arrange for the qualification of the Securities for offering and sale under the
blue sky or securities laws of such jurisdictions as the Underwriter may
designate and will continue such qualifications in effect for as long as may be
necessary to complete the distribution of the Securities.
(d) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Prospectus to comply with the Act or the
rules or regulations of the Commission thereunder, the Company will promptly
notify the Underwriter thereof and, subject to section 4(a) hereof, will prepare
and file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) So long as any Warrants are outstanding, the Company shall use
its best efforts to cause post-effective amendments to the Registration
Statement to become effective in compliance
12
with the Act and without any lapse of time between the effectiveness of any such
post-effective amendments and cause a copy of each Prospectus, as then amended,
to be delivered to each holder of record of a Warrant and to furnish to the
Underwriter and any dealer as many copies of each such Prospectus as the
Underwriter or dealer may reasonably request. The Company shall not call for
redemption of the Warrants unless a registration statement covering the
securities underlying the Warrants has been declared effective by the Commission
and remains current at least until the date fixed for redemption. In addition,
for so long as any Warrant is outstanding, the Company will promptly notify the
Underwriter of any material change in the business, financial condition or
prospects of the Company. So long as any of the Warrants remain outstanding, the
Company will timely deliver and supply to its Warrant Agent sufficient copies of
the Company's current Prospectus, as will enable such Warrant agent to deliver a
copy of such Prospectus to any Warrant or other holder where such Prospectus
delivery is by law required to be made.
(f) The Company will, without charge, provide to the Underwriter and
to counsel for the Underwriter (i) as many signed copies of the registration
statement originally filed with respect to the Securities and each amendment
thereto (in each case including exhibits thereto) as the Underwriter may
reasonably request, (ii) as many conformed copies of such registration statement
and each amendment thereto (in each case without exhibits thereto) as the
Underwriter may reasonably request and (iii) so long as a prospectus relating to
the Securities is required to be delivered under the Act, as many copies of each
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
as the Underwriter may reasonably request.
(g) The Company, as soon as practicable, will make generally
available to its security holders and to the Underwriter an earnings statement
of the Company that satisfies the provisions of section 11 (a) of the Act and
Rule 158 thereunder.
(h) The Company will reserve and keep available for issuance that
maximum number of authorized but unissued shares of Common Stock which are
issuable upon exercise of the Warrants and the Underwriter's Warrants (including
the underlying securities) outstanding from time to time.
(i) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus. The Company
will timely file, and will provide or cause to be provided to the Underwriter
and counsel to the Underwriter a copy of the report on Form SR required to be
filed by the Company pursuant to Rule 463 under the Act.
(j) The Company will not, without the prior written consent of the
Underwriter, directly or indirectly offer, agree to sell, sell, grant any option
to purchase or otherwise dispose (or announce any offer, agreement to sell,
sales grant of any option to purchase or other disposition) of any shares of
Common Stock, preferred stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock or preferred stock for a
period of 24 months after the Effective Date, except (i) the Shares and Warrants
issued pursuant to this Agreement, (ii) the Warrant Shares issuable upon
exercise of the Warrants, (iii) the Warrants, (iv) the Underwriter's Warrant
13
Shares and Warrants issuable upon the exercise of the Underwriter's Warrants,
and (v) shares of Common Stock issuable upon the exercise of options granted and
to be granted under the Company's Stock Option Plan as in effect as of the date
hereof. The Company also will not for a period of 36 months following the
Effective Date, without the prior written consent of the Underwriter, (i) issue
or sell any of its securities pursuant to Regulation S promulgated under the Act
or (ii) file a registration on Form S-8 for the sale of securities by a person
other than an employee of the Company or a Subsidiary.
(k) Prior to the Closing Date or the Option Closing Date (if any),
the Company will not, directly or indirectly, without prior written consent of
the Underwriter, issue any press release or other public announcement or hold
any press conference with respect to the Company or its activities with respect
to the Offering (other than trade releases issued in the ordinary course of the
Company's business consistent with past practices with respect to the Company's
operations).
(l) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A under the Act, then immediately following the execution of this
Agreement, the Company will prepare, and file or transmit for filing with the
Commission in accordance with Rule 430A and Rule 424(b) under the Act, copies of
the Prospectus including the information omitted in reliance on Rule 430A, or,
if required by such Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all information so
omitted.
(m) The Company will cause the Securities to be included in The
Nasdaq Small Cap Market and the Boston Stock Exchange on the Effective Date and
to maintain such listings thereafter. The Company will file with The Nasdaq
Small Cap Market and the Boston Stock Exchange all documents and notices that
are required by companies with securities that are traded on The Nasdaq Small
Cap Market and the Boston Stock Exchange.
(n) During the period of five years from the Firm Closing Date, the
Company will, as promptly as possible, not to exceed 135 days, after each annual
fiscal period render and distribute reports to its stockholders which will
include audited statements of its operations and changes of financial position
during such period and its audited balance sheet as of the end of such period,
as to which statements the Company's independent certified public accountants
shall have rendered an opinion.
(o) During a period of three years commencing with the Firm Closing
Date, the Company will furnish to the Underwriter, at the Company's expense,
copies of all periodic and special reports furnished to stockholders of the
Company and of all information, documents and reports filed with the Commission.
(p) The Company has appointed Continental Stock Transfer & Trust
Company as transfer agent for the Common Stock and warrant agent for the
Warrants, subject to the Closing. The Company will not change or terminate such
appointment for a period of three years from the
14
Firm Closing Date without first obtaining the written consent of the
Underwriter. For a period of three years after the Effective Date, the Company
shall cause the transfer agent and warrant agent to deliver promptly to the
Underwriter a duplicate copy of the daily transfer sheets relating to trading of
the Securities. The Company shall also provide to the Underwriter, promptly upon
their request, up to four times in any calendar year, copies of DTC or
equivalent transfer sheets.
(q) During the period of 180 days after the date of this Agreement,
the Company will not at any time, directly or indirectly, take any action
designed to or that will constitute, or that might reasonably be expected to
cause or result in, the stabilization of the price of the Common Stock or the
Warrants to facilitate the sale or resale of any of the Securities.
(r) The Company will not take any action to facilitate the sale of
any shares of Common Stock pursuant to Rule 144 under the Act if any such sale
would violate any of the terms of the Lock-up Agreements.
(s) Prior to the 120th day after the Firm Closing Date, the Company
will provide the Underwriter and its designees with three bound volumes of the
transaction documents relating to the Registration Statement and the closing(s)
hereunder, in form and substance reasonably satisfactory to the Underwriter.
(t) The Company shall consult with the Underwriter prior to the
distribution to third parties of any financial information news releases or
other publicity regarding the Company, its business, or any terms of this
offering and the Underwriter will consult with the Company prior to the issuance
of any research report or recommendation concerning the Company's securities.
Copies of all documents that the Company or its public relations firm intend to
distribute will be provided to the Underwriter for review prior to such
distribution.
(u) The Company and the Underwriter will advise each other
immediately in writing as to any investigation, proceeding, order, event or
other circumstance, or any threat thereof, by or relating to the Commission or
any other governmental authority, that could impair or prevent the Offering.
Except as required by law or as otherwise mutually agreed in writing, neither
the Company nor the Underwriter will acquiesce in such circumstances and each
will actively defend any proceedings or orders in that connection.
(v) The Company will, for a period of no less than three years
commencing immediately after the Effective Date, engage a designee by the
Underwriter as advisor (the "Advisor") to the Company's Board of Directors, who
shall attend meetings of the Board, receive all notices and other correspondence
and communications sent by the Company to its Board of Directors and receive
compensation equal to that of other non officer directors; provided, that in
lieu of the Underwriter's right to designate an Advisor, the Underwriter shall
have the right during such three-year period, in its sole discretion, to
designate one person for election as a director of the Company and the Company
will utilize its best efforts to obtain the election of such person who shall be
entitled to receive the same compensation, expense reimbursements and other
benefits as set forth above. In
15
addition, such Advisor shall be entitled to receive reimbursement for all costs
incurred in attending such meetings including, but not limited to, food, lodging
and transportation. The Company, during said three-year period, shall schedule
no less than four formal meetings (at least one of which shall be "in person"
and the others may be held telephonically) of its Board of Directors in each
such year at which meetings such Advisor shall be permitted to attend (in
person, for each meeting held "in person") as set forth herein; said meetings
shall be held quarterly each year and advance notice of such meetings identical
to the notice given to directors shall be given to the Advisor. The Company and
its principal stockholders shall, during such three year period, give the
Underwriter timely prior written notice of any proposed acquisitions, mergers,
reorganizations or other similar transactions. The Company shall indemnify and
hold the Underwriter and such Advisor or director harmless against any and all
claims, actions, damages, costs and expenses, and judgments arising solely out
of the attendance and participation of such Advisor or director at any such
meeting described herein, and, if the Company maintains a liability insurance
policy affording coverage for the acts of its officers and directors, it shall,
if possible, include such Advisor or director as an insured under such policy.
(w) The Company shall first submit to the Underwriter certificates
representing the Securities for approval prior to printing, and shall, as
promptly as possible, after filing the Registration Statement with the
Commission, obtain CUSIP numbers for the Securities.
(x) The Company shall engage the Underwriter's counsel to provide the
Underwriter, at the closing of any sale of Securities hereunder and quarterly
thereafter, with an opinion, setting forth those states in which the Common
Stock and Warrants may be traded in non-issuer transactions under the blue sky
or securities laws of the 50 states. The Company shall pay such counsel a
one-time fee of $12,500 for such opinions at the closing of the sale of the Firm
Securities.
(y) The Company will prepare and file a registration statement with
the Commission pursuant to section 12 of the 1934 Act, and will use its best
efforts to have such registration statement declared effective by the Commission
on an accelerated basis on the day after the Effective Date. For this purpose
the Company shall prepare and file with the Commission a General Form of
Registration of Securities (Form 8-A or Form 10).
(z) For so long as the Securities are registered under the 1934 Act,
the Company will hold an annual meeting of stockholders for the election of
directors within 180 days after the end of each of the Company's fiscal years
and within 135 days after the end of each of the Company's fiscal years will
provide the Company's stockholders with the audited consolidated financial
statements of the Company as of the end of the fiscal year just completed prior
thereto. Such consolidated financial statements shall be those required by Rule
14a-3 under the 1934 Act and shall be included in an annual report pursuant to
the requirements of such Rule.
(aa) Prior to the Effective Date, the Company shall obtain key-man
life insurance in the minimum amount of $1,000,000 on Xxxx Xxxxxxxx on such
terms and conditions as are
16
reasonably satisfactory to the Underwriter, assuming such coverage is available
on commercially reasonable terms.
(bb) The Company shall retain the Underwriter as a financial advisor
at an annual fee of $60,000 for a 24-month period commencing on the Closing
Date. The entire fee of $120,000 shall be payable on the Closing Date.
(cc) The Company will engage a financial public relations firm
reasonably satisfactory to the Underwriter on or before the Firm Closing Date,
and continuously engage such firm, or a substitute firm reasonably acceptable to
the Underwriter, for a period of twelve (12) months following the Firm Closing
Date.
(dd) The Company will take all necessary and appropriate actions to be
included in Standard and Poor's Corporation Descriptions or other equivalent
manual and to maintain its listing therein for a period of five (5) years from
the Effective Date.
(ee) On or prior to the Effective Date, the Company will give written
instructions to the transfer agent for the Common Stock directing said transfer
agent to place stop-order restrictions against, and appropriate legends advising
of the Lock-up Agreements on, the certificates representing the securities of
the Company owned by the persons who have entered into the Lock-up Agreements.
4A. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLING
SHAREHOLDERS. Each of the Selling Shareholders (to the extent applicable)
severally represents and warrants to, and agrees with, the Underwriter as
follows:
(a) On the Effective Date, and at all times subsequent thereto up to
and on each Option Closing Date (i) all information with respect to such Selling
Shareholder contained in the Registration Statement does not and will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading, and (ii) all
information with respect to such Selling Shareholder contained in the
Prospectus, as amended or supplemented, does not and will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED, HOWEVER, that, as to such Selling
Shareholder, the representations and warranties contained in this subsection (a)
only apply to statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company or the Underwriter, by or
on behalf of such Selling Shareholder, specifically for inclusion in
Registration Statement or the Prospectus.
(b) Such Selling Shareholder has duly authorized, executed and
delivered on ___________, 1997 the Irrevocable Power of Attorney, Custody
Agreement and Lock-Up Agreement (the "Custody Agreement") with the Company, as
custodian (the "Custodian"), and Xxxx Xxxxxxxx and Xxxxxxx Xxxxxx, as
attorneys-in-fact (the "Attorneys-in-Fact"), and, such Custody
17
Agreement constitutes the valid, legal and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms; such Selling Shareholder
has pursuant to the Custody Agreement, duly authorized each and all of the
Attorneys-in-Fact to execute and deliver this Agreement on behalf of such
Selling Shareholder, and otherwise to act, and to execute documents and
instruments, on behalf of such Selling Shareholder in connection with the
transactions contemplated by this Agreement, and the Attorneys-in-Fact and the
Custodian are each duly authorized by such Selling Shareholder under the Custody
Agreement to deliver the Shares to be sold by such Selling Shareholder pursuant
to the Agreement, and to accept payment therefor. When executed and delivered
by one or more of the Attorneys-in-Fact on behalf of such Selling Shareholder in
accordance with the Custody Agreement and this Agreement will have been duly
authorized, executed and delivered on behalf of such Selling Shareholder.
(c) No consent, approval, authorization or order of any court,
government, governmental agency or body or financial institution, domestic or
foreign (other than under the Securities Act and state securities or blue sky
laws), is required for the consummation by such Selling Shareholder of the
transactions contemplated in this Agreement or the Custody Agreement, including,
without limitation, the sale of the Shares to the Underwriter, as contemplated
herein or therein (other than those that have been obtained and are in full
force and effect).
(d) The execution and delivery of this Agreement and the Custody
Agreement, and the consummation of the transactions contemplated herein and
therein, including, without limitation, the sale of the Shares by the
Underwriter, as contemplated herein or therein, will not (i) result in a breach
by such Selling Shareholder of, or constitute a default by such Selling
Shareholder under, any agreement or instrument or any decree, judgement or order
to which such Selling Shareholder is a party or by which such Selling
Shareholder is bound or the properties of such Selling Shareholder are subject
or (ii) violate any provision of the certificate of incorporation, by-laws, or
comparable governing documents of such Selling Shareholder (if such Selling
Shareholder is a corporation), or any law, rule or regulation, domestic or
foreign, applicable to such Selling Shareholder or to which its properties are
subject.
(e) Such Selling Shareholder who is a Selling Shareholder has, and
will on each Option Closing Date have, good and marketable title to the Shares
to be sold by such Selling Shareholder pursuant to this Agreement, free and
clear of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind, or restriction on voting or other rights as a
shareholder of any nature, other than pursuant to this Agreement and the Custody
Agreement; such Selling Shareholder has full right, power and authority to sell,
transfer and deliver the Shares, pursuant to this Agreement; upon delivery of
such Shares and payment of the purchase price therefor as contemplated in this
Agreement the Underwriter will receive good and marketable title to the Shares
purchased by it from such Selling Shareholder, free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any kind or of
any restriction on transfer or voting or other rights as a shareholder of any
nature.
18
(f) Certificates for the Shares to be sold by such Selling
Shareholder pursuant to this Agreement in suitable form for transfer by delivery
or accompanied by duly executed instruments of transfer or assignment, executed
in blank, have been placed in custody with the Custodian pursuant to the Custody
Agreement for purpose of effecting delivery, in accordance with the Custody
Agreement and this Agreement.
(g) Each Selling Shareholder hereby agrees that for a period of
twenty-four months from the Effective Date (the "Lock-Up-Period"), such Selling
Shareholder will not, without prior written consent of the Underwriter, directly
or indirectly, offer, sell or grant any option to purchase, transfer or
otherwise dispose of or contract to dispose of (or announce any offer, sale,
grant of any option to purchase, or other disposition of), for value or
otherwise, any shares of Common Stock, options or warrants to purchase Common
Stock, or any securities convertible into or exchangeable for Common Stock,
owned directly by such person or with respect to which such person has the power
of disposition, other than the sale of the Shares under this Agreement.
(h) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or that might be reasonably
expected to, violate Rule 102 of Regulation M under the 1934 Act, or cause or
result in stabilization or manipulation of the price of the Common Stock; and
such Selling Shareholder has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Shares.
(i) In the event the Selling Shareholder is a corporation, such
Selling Shareholder is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, as the case
may be, with all necessary power and authority to execute, deliver and perform
the Custody Agreement and this Agreement and to sell and deliver the Shares to
the Underwriter in accordance with this Agreement, and upon execution and
delivery thereof by one or more of the Attorneys-in-Fact, such agreements will
be duly executed and delivered and enforceable against such Selling Shareholder
in accordance with their respective terms.
5. EXPENSES
(a) The Company shall pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereby are consummated or this Agreement is terminated
pursuant to section 10 hereof, including all costs and expenses incident to (i)
the preparation, printing and filing or other production of documents with
respect to the transactions, including any costs of printing the registration
statement originally filed with respect to the Securities and any amendment
thereto, any Preliminary Prospectus and the Prospectus and any amendment or
supplement thereto, this Agreement, the selected dealer agreement and the other
agreements and documents governing the underwriting arrangements and any blue
sky memoranda, (ii) all reasonable and necessary arrangements relating to the
delivery to the Underwriter of copies of the foregoing documents, (iii) the fees
and disbursements of the counsel, the accountants and any other experts or
advisors retained by the Company, (iv) the preparation, issuance and delivery to
the Underwriter of any certificates evidencing the Securities, including
transfer agent's, warrant
19
agent's and registrar's fees or any transfer or other taxes payable thereon, (v)
the qualification of the Securities under state blue sky or securities laws,
including filing fees and fees and disbursements of counsel for the Underwriter
relating thereto (such counsel fees not to exceed $35,000, of which $10,000
shall be due and payable upon the commencement of blue sky filing, together with
the related filing fees) and any fees and disbursements of local counsel, if
any, retained for such purpose, (vi) the filing fees of the Commission and the
NASD relating to the Securities, (vii) the inclusion of the Securities on The
Nasdaq Small Cap Market, the Boston Stock Exchange and in the Standard and
Poor's Corporation Descriptions Manual, (viii) any "road shows" or other
meetings with prospective investors in the Securities, including transportation,
accommodation, meal, conference room, audio-visual presentation and similar
expenses of the Underwriter or its representatives or designees (other than as
shall have been specifically approved by the Underwriter to be paid for by the
Underwriter) and (ix) the placing of "tombstone advertisements" in The Wall
Street Journal and the Investment Dealers Digest and the manufacture of
prospectus memorabilia. In addition to the foregoing, the Company shall
reimburse the Underwriter for its expenses on the basis of a non-accountable
expense allowance in the amount of 3.00% of the gross offering proceeds to be
received by the Company, $50,000 of which has been paid by the Company to the
Underwriter. The Underwriter hereby acknowledges receipt of such $50,000, which
shall be credited against the non-accountable expense allowance to be paid by
the Company. The unpaid portion of the expense allowance, based on the gross
proceeds from the sale of the Firm Securities, shall be deducted from the funds
to be paid by the Underwriter in payment for the Firm Securities, pursuant to
section 2 of this Agreement, on the Firm Closing Date. To the extent any Option
Securities are sold, any remaining non-accountable expense allowance based on
the gross proceeds from the sale of the Option Securities shall be deducted from
the funds to be paid by the Underwriter in payment for the Option Securities,
pursuant to section 2 of this Agreement, on the Option Closing Date. The Company
warrants, represents and agrees that all such payments and reimbursements will
be promptly and fully made.
(b) Notwithstanding any other provision of this Agreement, if the
offering of the Securities contemplated hereby is terminated for any reason, the
Company agrees that, in addition to the Company paying its own expenses as
described in subparagraph (a) above, (i) the Company shall reimburse the
Underwriter only for its actual accountable out-of-pocket expenses (in addition
to blue sky legal fees and expenses referred to in subparagraph (a) above), and
(ii) the Underwriter shall be entitled to retain the non-accountable expense
allowance paid by the Company pursuant to subparagraph (a) above; provided,
however, that the amount retained pursuant to this clause (ii) shall not exceed
the Underwriter's expenses on an accountable basis to the date of such
cancellation and that all unaccounted for amounts shall be refunded to the
Company. Such expenses shall include, but are not to be limited to, fees for the
services and time of counsel for the Underwriter to the extent not covered by
clause (i) above, plus any additional expenses and fees, including, but not
limited to, travel expenses, postage expenses, duplication expenses,
long-distance telephone expenses, and other expenses incurred by the Underwriter
in connection with the proposed offering.
6. WARRANT SOLICITATION FEE. The Company agrees to pay the Underwriter a
fee of five percent (5%) of the aggregate exercise price of the Warrants if (i)
the market price of the Common
20
stock is not less than the exercise price of the Warrants on the date of
exercise; (ii) the exercise of the Warrants is solicited by the Underwriter at
such time as it is a member of the NASD, and the Underwriter is designated in
writing by the holder of the Warrants as the NASD member soliciting the
exercise; (iii) the Warrants are not held in a discretionary account; (iv) the
disclosure of compensation arrangements is made both at the time of the Offering
and at the time of the exercise; and (v) the solicitation of the Warrant
exercise is not in violation of Rule 101 of Regulation M promulgated under the
1934 Act. The Company agrees not to solicit the exercise of any Warrant other
than through the Underwriter and will not authorize any other dealer to engage
in such solicitation without the prior written consent of the Underwriter which
will not be unreasonably withheld. The Warrant solicitation fee will not be paid
in a non solicited transaction. Any request for exercise will be presumed to be
unsolicited unless the customer states in writing that the transaction was
solicited and designates in writing that the Underwriter solicited the exercise.
No Warrant solicitation by the Underwriter will occur for a period of 12 months
after the Effective Date.
7. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriter to purchase and pay for the Firm Shares shall be subject, in the
Underwriter's sole discretion, to the accuracy of the representations and
warranties of the Company and the Selling Shareholders contained herein as of
the date hereof and as of the Firm Closing Date as if made on and as of the Firm
Closing Date, to the accuracy of the statements of the Company's officers made
pursuant to the provisions hereof, to the performance by the Company of its
covenants and agreements hereunder and to the following additional conditions:
(a) If the registration statement, as heretofore amended, has not
been declared effective as of the time of execution hereof, the registration
statement, as heretofore amended or as amended by an amendment thereto to be
filed prior to the Firm Closing Date, shall have been declared effective not
later than 11 A.M., New York City time, on the date on which the amendment to
such registration statement containing information regarding the initial public
offering price of the Securities has been filed with the Commission, or such
later time and date as shall have been consented to by the Underwriter; if
required, the Prospectus and any amendment or supplement thereto shall have been
filed with the Commission in the manner and within the time period required by
Rule 424(b) under the Act, no stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been instituted or threatened or, to the knowledge of the
Company or the Underwriter, shall be contemplated by the Commission; and the
Company shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Underwriter shall have received an opinion, dated the Firm
Closing Date, of Xxxxxx & Xxxxxx, counsel to the Company, to the effect that:
(1) the Company and each Subsidiary has been duly organized and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its organization and is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of each other
jurisdiction in which its ownership or leasing of any properties or the conduct
of
21
its business requires such qualification, except where the failure to so qualify
would not have a materially adverse effect upon the Company;
(2) the Company and each Subsidiary has full corporate power and
authority to own or lease its property and conduct its business as now being
conducted and as proposed to be conducted, as described in the Registration
Statement and the Prospectus, and the Company has full corporate power and
authority to enter into this Agreement, the Warrant Agreement and the
Underwriter's Warrant Agreement and to carry out all the terms and provisions
hereof and thereof to be carried out by it;
(3) to the knowledge of such counsel, there are no outstanding
options, warrants or other rights granted by the Company to purchase shares of
its Common Stock, preferred stock or other securities other than as described in
the Prospectus; the Shares have been duly authorized and the Warrant Shares and
the Underwriter's Warrant Shares have been duly reserved for issuance by all
necessary corporate action on the part of the Company and, the Shares when
issued and delivered to and paid for by the Underwriter pursuant to this
Agreement, the Warrant Shares when issued upon payment of the exercise price
specified in the Warrants, Underwriter's Warrants when issued and delivered and
paid for in accordance with this Agreement and the Underwriter's Warrant
Agreement by the Underwriter and the Warrant Shares when issued upon payment of
the exercise price specified in the Underwriter's Warrants, will be validly
issued, fully paid, nonassessable and free of preemptive rights and will conform
to the description thereof in the Prospectus; to the knowledge of such counsel,
no holder of outstanding securities of the Company is entitled as such to any
preemptive or other right to subscribe for any of the Shares, the Warrant
Shares, or the Underwriter's Warrant Shares; and to the knowledge of such
counsel, no person is entitled to have securities registered by the Company
under the Registration Statement or otherwise under the Act other than as
described in the Prospectus;
(4) the execution and delivery of this Agreement, the Warrant
Agreement, the Underwriter's Warrant Agreement and the Financial Advisory and
Investment Banking Agreement have been duly authorized by all necessary
corporate action on the part of the Company and this Agreement, the Warrant
Agreement, the Underwriter's Warrant Agreement and the Financial Advisory and
Investment Banking Agreement have been duly executed and delivered by the
Company, and each is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other similar laws affecting creditors' rights generally and to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) and except as rights to indemnity and
contribution under this Agreement, the Warrant Agreement and the Underwriter's
Warrant Agreement may be limited by applicable securities laws and the public
policy underlying such laws;
22
(5) the Underwriter's Warrants conform to the description
thereof in the Registration Statement and in the Prospectus and are duly
authorized and upon payment of the purchase price therefore specified in Section
2(d) of this Agreement are validly issued and constitute valid and binding
obligations of the Company entitled to the benefits of the Underwriter's Warrant
Agreement; and the certificates representing the Securities are in due and
proper form under the laws of Canada and any political subdivision thereof;
(6) the statements set forth in the Prospectus under the
caption "Description of Securities" insofar as those statements purport to
summarize the terms of the capital stock and warrants of the Company, provide a
fair summary of such terms; the statements set forth in the Prospectus
describing Canadian or provincial statutes and regulations and with respect to
matters of Canadian or Ontario law, including the statements under the captions
"Risk Factors - Classification of Physicians as Independent Contractors;
Potential Tax Liability," "Risk Factors - Adverse Effect of Provincial Laws
Regarding the Corporate Practice of Medicine," "Risk Factors - Corporate
Exposure to Professional Liabilities," "Risk Factors - Government Regulations,"
"Business - Government Regulation," "Business - Proposed Healthcare
Legislation," "Tax Aspects of the Offering - Canadian Federal Income Tax
Considerations - Persons Not Resident Canada" and the descriptions of the
consequences to the Company under such statutes and regulations are fair
summaries of the information set forth therein and are accurate in all material
respects; the statements in the Prospectus, insofar as those statements
constitute summaries of the contracts, instruments, leases or licenses referred
to therein, constitute a fair summary of those contracts, instruments, leases or
licenses and include all material terms thereof, as applicable;
(7) none of (A) the execution and delivery of this Agreement,
the Warrant Agreement and the Underwriter's Warrant Agreement, (B) the issuance,
offering and sale by the Company to the Underwriter of the Securities pursuant
to this Agreement and the Underwriter's Warrant Securities pursuant to the
Underwriter's Warrant Agreement, nor (C) the compliance by the Company with the
other provisions of this Agreement, the Warrant Agreement and the Underwriter's
Warrant Agreement and the consummation of the transactions contemplated hereby
and thereby, (1) requires the consent, approval, authorization, registration or
qualification of or with any court or governmental authority known to us, except
such as have been obtained and such as may be required under state blue sky or
securities laws, (2) conflicts with or results in a breach or violation of, or
constitutes a default under, any material contract, indenture, mortgage, deed of
trust, loan agreement, note, lease or other material agreement or instrument
known to us to which the Company is a party or by which the Company or any of
its property is bound or subject, or the certificate of incorporation or by-laws
of the Company, or any material statute or any judgment, decree, order, rule or
regulation of any court or other governmental or regulatory authority known to
us applicable to the Company, or (3) subjects the Company or investors in the
Securities to any tax imposed by Canada or any political subdivision thereof.
(8) to the knowledge of such counsel, (A) no legal or
governmental proceedings are pending to which the Company or a Subsidiary is a
party or to which the property of the Company or a Subsidiary is subject and (B)
no contract or other document is required to be
23
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not described therein or filed as
required;
(9) the Company and each of the Subsidiaries possesses adequate
licenses, orders, authorizations, approvals, certificates or permits issued by
the appropriate Canadian, provincial or local regulatory agencies or bodies
necessary to conduct its business as described in the Registration Statement and
the Prospectus, and, to the knowledge of such counsel, there are no pending or
threatened proceedings relating to the revocation or modification of any such
license, order, authorization, approval, certificate or permit, except as
disclosed in the Registration Statement and the Prospectus; and
(10) neither the Company nor any Subsidiary is in violation
or breach of, or in default with respect to, any term of its certificate of
incorporation or by-laws, and to the knowledge of such counsel, neither the
Company nor any Subsidiary is in (i) violation in any material respect of any
law, statute, regulation, ordinance, rule, order, judgment or decree of any
court or any governmental or regulatory authority applicable to it, or (ii)
default in any material respect in the performance or observance of any
obligation, agreement, covenant or condition contained in any material contract,
indenture, mortgage, deed of trust, loan agreement, note, lease or other
material agreement or instrument to which it is a party or by which it or any of
its property may be bound or subject, and no event has occurred which with
notice, lapse of time or both would constitute such a default.
(c) The Underwriter shall have received an opinion, dated the Firm
Closing Date, of Xxxxxxx, Savage, Kaplowitz, Xxxxxxxxxx & Xxxxxx LLP, counsel to
the Company, to the effect that:
(1) to the knowledge of such counsel, there are no outstanding
options, warrants or other rights granted by the Company to purchase shares of
its Common Stock, preferred stock or other securities other than as described in
the Prospectus; and to the knowledge of such counsel, no person is entitled to
have securities registered by the Company under the Registration Statement or
otherwise under the Act other than as described in the Prospectus;
(2) the Shares have been approved for inclusion on The Nasdaq
SmallCap Market and the Boston Stock Exchange;
(3) this Agreement, the Warrant Agreement, the Underwriter's
Warrant Agreement and the Financial Advisory and Investment Banking Agreement
have been duly executed and delivered by the Company, and each is a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other similar
laws affecting creditors' rights generally and to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) and except as rights to indemnity and
24
contribution under this Agreement, the Warrant Agreement and the Underwriter's
Warrant Agreement may be limited by applicable securities laws and the public
policy underlying such laws;
(4) none of (A) the execution and delivery of this Agreement,
the Warrant Agreement and the Underwriter's Warrant Agreement, (B) the issuance,
offering and sale by the Company to the Underwriter of the Securities pursuant
to this Agreement and the Underwriter's Warrant Securities pursuant to the
Underwriter's Warrant Agreement, nor (C) the compliance by the Company with the
other provisions of this Agreement, the Warrant Agreement and the Underwriter's
Warrant Agreement and the consummation of the transactions contemplated hereby
and thereby, (1) requires the consent, approval, authorization, registration or
qualification of or with any court or governmental authority known to us, except
such as have been obtained and such as may be required under state blue sky or
securities laws, or (2) conflicts with or results in a breach or violation of,
or constitutes a default under, any material contract, indenture, mortgage, deed
of trust, loan agreement, note, lease or other material agreement or instrument
known to us to which the Company is a party or by which the Company or any of
its property is bound or subject, or any material statute or any judgment,
decree, order, rule or regulation of any court or other governmental or
regulatory authority known to us applicable to the Company;
(5) to the knowledge of such counsel, (A) no legal or
governmental proceedings are pending to which the Company or a Subsidiary is a
party or to which the property of the Company or a Subsidiary is subject and (B)
no contract or other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein or filed as required;
(6) to the knowledge of such counsel, neither the Company nor
any Subsidiary is in default in any material respect in the performance or
observance of any obligation, agreement, covenant or condition contained in any
material contract, indenture, mortgage, deed of trust, loan agreement, note,
lease or other material agreement or instrument to which it is a party or by
which it or any of its property may be bound or subject, and no event has
occurred which with notice, lapse of time or both would constitute such a
default; and the statements in the Prospectus, insofar as those statements
constitute matters of United States Federal or New York State laws and
regulations or legal conclusions, or summaries of the contracts, agreement
instruments, leases or licenses referred to therein, constitute a fair summary
of those matters, legal conclusions, contracts, agreement instruments, leases or
licenses and include all material terms thereof, as applicable;
(7) the Registration Statement is effective under the Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement or any amendment
thereto has been issued, and no proceedings for that purpose have been
instituted or threatened or, to the best knowledge of such counsel, are
contemplated by the Commission;
(8) the registration statement originally filed with respect to
the Securities and each amendment thereto and the Prospectus (in each case,
other than the financial statements and
25
schedules and other financial and statistical information contained therein, as
to which such counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the rules and
regulations of the Commission thereunder;
(9) the Company is not an "investment company" as defined in
Section 3(a) of the Investment Company Act and, if the Company conducts its
business as set forth in the Prospectus, it will not become an "investment
company" and will not be required to register under the Investment Company Act;
and
(10) the Company's appointment of Xxxxxx & Elliot as its agent to
receive service of process in any action against it in any federal or state
court sitting in the County of New York arising out of the transactions
contemplated by this Agreement, assuming the Company's due authorization
thereof, is binding upon and enforceable against the Company in accordance with
its terms.
(d) On each Option Closing Date, the Underwriters shall have received
the opinion, dated the Option Closing Date, of [insert name of counsel for the
Selling Shareholders] in its capacity as counsel for the Selling Shareholders,
to the effect set forth below:
(i) Each Selling Shareholder has full legal right power and
authority to enter into this Agreement and to sell, assign, transfer and deliver
in the manner provided herein the Option Shares sold by such Selling
Shareholder; this Agreement has been duly executed and delivered by such Selling
Shareholder; and this Agreement, assuming due authorization, execution and
delivery by each other party thereto and further assuming it is a valid and
binding agreement of each of the Underwriters, is a valid and binding agreement
of such Selling Shareholder, enforceable against such Selling Shareholder in
accordance with the terms (except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws now or hereafter in effect
relating to or affecting creditors' rights generally and by general principles
of equity relating to the availability of remedies and except as rights to
indemnity and contribution may be limited by applicable securities laws and the
public policy underlying such laws);
(ii) None of the execution, delivery or performance of this
Agreement, the Power of Attorney and the Custody Agreement by such Selling
Shareholder and the consummation by such Selling Shareholder of the transactions
herein and therein contemplated, conflict with or result in a breach of, or
default under, any indenture, mortgage, deed of trust, voting trust agreement,
Shareholders agreement, note agreement or other agreement or other instrument
known to such counsel to which such Selling Shareholder is a party or by which
such Selling Shareholder is bound or to which any of the property of any of the
Selling Shareholders is subject, or the charter or by-laws of any of the Selling
Shareholders and nothing has come to such counsel's attention which causes such
counsel to believe that such actions will result in any violation of any law,
rule, administrative regulation or court decree applicable to such Selling
Shareholder (other than state or provincial securities or blue sky laws or
regulations, as to which such counsel need not express any opinion);
26
(iii) A Power of Attorney and the Custody Agreement have been
duly executed and delivered by each Selling Shareholder and, assuming the due
authorization, execution and delivery of the Custody Agreement by the other
parties thereto, each constitutes the valid and binding agreement of such
Selling Shareholder enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally or by general principles of equity relating to the availability
of remedies and except rights to indemnity or contribution may be limited by
applicable securities laws and the public policy underlying such laws;
(iv) Upon the delivery of the Option Shares to be sold hereunder
by the Selling Shareholders and payment therefor in accordance with the terms of
this Agreement and assuming that each of the Underwriters which has severally
purchased such Option Shares acquires such Option Shares without notice of any
adverse claim (within the meaning of the Uniform Commercial Code) such
Underwriter will have acquired all of the rights of such Selling Shareholder to
the Option Shares sold by such Selling Shareholder hereunder, and in addition
will have acquired title to such Option Shares free and clear of any adverse
claim; and
(v) Under the laws of Canada or the Province of Ontario, the
submission by such Selling Shareholder to the jurisdiction of any United States
federal or state court sitting in the City of New York and the designation of
the law of the State of New York to apply to this Agreement is binding upon such
Selling Shareholder and, if properly brought to the attention of the court or
administrative body in accordance with the laws of Canada, or the Province of
Ontario, would be enforceable in any judicial or administrative proceeding in
Canada or the Province of Ontario.
Each such counsel also shall state in its opinion that it has
participated in the preparation of the Registration Statement and the Prospectus
and that nothing has come to its attention that has caused it to believe that
the Registration Statement, at the time it became effective (including the
information deemed to be a part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b), if applicable), contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date or as of the Firm Closing Date, contained an
untrue statement of material fact or omitted to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials, copies of which certificates will
be provided to the Underwriter, and, as to matters of the laws of certain
jurisdictions, on the opinions of other counsel to the Company, which opinions
shall also be delivered to the Underwriter, in form and substance acceptable to
the Underwriter, if such other counsel expressly authorize such reliance and
counsel to the Company expressly states in their opinion that such counsel's and
the Underwriter's reliance upon such opinion is justified.
27
References to the Registration Statement and the Prospectus in paragraph
(b), (c) and (d) of this Section shall include any amendment or supplement
thereto at the date of such opinion.
(e) The Underwriter shall have received from KPMG, a letter dated the
Firm Closing Date and dated each Option Closing Date (as defined below), if
applicable, in form and substance satisfactory to the Underwriter, to the effect
that (i) they are independent public accountants with respect to the Company
within the meaning of the Act and the applicable rules and regulations
thereunder; (ii) in their opinion, the consolidated financial statements audited
by them and included in the Registration Statement and the Prospectus comply as
to form in all material respects with the applicable accounting requirements of
the Act and the related published rules and regulations thereunder; (iii) based
upon procedures set forth in detail in such letter, nothing has come to their
attention which causes them to believe that (A) the unaudited financial
statements as of March 31, 1997 included in the Registration Statement was not
determined on a basis substantially consistent with that used in determining the
corresponding amounts in the audited financial statements as of December 31,
1996 included in the Registration Statement or (B) at a specified date not more
than five days prior to the date of this Agreement, there has been any change in
the capital stock of the Company, any increase in the long-term debt or decrease
in net sales of the Company and its Subsidiaries, as compared with the amounts
shown in the March 31, 1997 balance sheet included in the Registration Statement
or as of the date of the most recent financial statements made available by the
Company there has been any change in the capital stock of the Company, any
increase in the long-term debt or any decrease in net sales, working capital or
net assets of the Company and its Subsidiaries as compared with the amounts
shown in the March 31, 1997 balance sheet included in the Registration Statement
or, during the period from April 1, 1997 through the date of the most recent
financial statement made available by the Company and its Subsidiaries, there
were any decreases, as compared with the corresponding period in the preceding
year, in revenues, or any increase in net loss of the Company, except in all
instances for changes, increases or decreases which the Registration Statement
and the Prospectus disclose have occurred or may occur; and (iv) in addition to
the audit referred to in their opinion and the limited procedures referred to in
clause (iii) above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information (including the summary of consolidated financial
information and secured financial information) which are included in the
Registration Statement and Prospectus and which are specified by the
Underwriter, and have found such amounts, percentages and financial information
to be in agreement with the relevant accounting, financial and other records of
the Company identified in such letter. References to the Registration Statement
and the Prospectus in this paragraph (c) with respect to the letter referred to
above shall include any amendment or supplement thereto at the date of such
letter.
(f) The representations and warranties of the Company contained in
this Agreement shall be true and correct as if made on and as of the Firm
Closing Date; the Registration Statement shall not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein necessary to make the statements therein not misleading, and the
Prospectus, as amended or supplemented as of the Firm Closing Date, shall not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the
28
statements therein, in the light of the circumstances under which they were
made, not misleading; and the Company shall have performed all covenants and
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Firm Closing Date.
(g) No stop order suspending the effectiveness of the Registration
Statement or any amendment thereto shall have been issued, and no proceedings
for that purpose shall have been instituted or threatened or contemplated by the
Commission.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall not have
been any material adverse change, or any development involving a prospective
material adverse change, in the business, operations, condition (financial or
otherwise), earnings or prospects of the Company and the Subsidiaries, except in
each case as described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto).
(i) The Underwriter shall have received a certificate, dated the Firm
Closing Date, of the Chief Executive Officer and the Secretary of the Company to
the effect set forth in subparagraphs (f) through (h) above.
(j) The Common Stock and Warrants shall be qualified in such
jurisdictions as the Underwriter may reasonably request pursuant to section
4(c), and each such qualification shall be in effect and not subject to any stop
order or other proceeding on the Firm Closing Date.
(k) The Company shall have executed and delivered to the Underwriter
the Underwriter's Warrant Agreement and a certificate or certificates evidencing
the Underwriter's Warrants, in each case in a form acceptable to the
Underwriter.
(l) The Underwriter shall have received Lock-up Agreements executed
by the persons listed on Schedule 2 annexed hereto.
(m) The Underwriter shall have received on each Closing Date a
certificate from each Selling Shareholder selling Shares, under this Agreement
on such Closing Date to the affect that, and the Underwriter shall be satisfied
that, the representations and warranties of such Selling Shareholder contained
in this Agreement are true and correct as if made on and as of such Closing
Date, and that such Selling Shareholder has complied with all agreements and
satisfied all conditions on its part to be complied with or satisfied at or
prior to such Closing Date.
(n) The Selling Shareholders shall have each delivered to the
Underwriter on or prior to the date hereof a fully executed Custody Agreement.
Each such Selling Shareholder shall also agree and consent to the entry of stop
transfer instructions with the Company's transfer agent against the transfer of
shares held by such persons, except in compliance with the Custody Agreement and
this Agreement.
29
(o) On or before the Firm Closing Date, the Underwriter and counsel
for the Underwriter shall have received such further certificates, documents,
letters or other information as they may have reasonably requested from the
Company, the Selling Shareholders, and other security holders of the Company.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Underwriter and counsel
for the Underwriter. The Company shall furnish to the Underwriter such conformed
copies of such opinions, certificates, letters and documents in such quantities
as the Underwriter and counsel for the Underwriter shall reasonably request.
The obligation of the Underwriter to purchase and pay for any Option
Securities shall be subject, in its discretion, to each of the foregoing
conditions to purchase the Firm Securities, except that all references to the
Firm Securities and the Firm Closing Date shall be deemed to refer to such
Option Securities and the related Option Closing Date, respectively.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the
Underwriter, each Selling Shareholder and each person, if any, who controls the
Underwriter or such Selling Shareholder within the meaning of section 15 of the
Act or section 20 of the 1934 Act against any losses, claims, damages, or
liabilities, joint or several, to which the Underwriter, such Selling
Shareholder or such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(1) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the Blue Sky or securities laws thereof or filed
with the Commission or any securities association or securities exchange (each
an "Application"), or
(2) the omission or alleged omission to state in such
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse, as incurred, the Underwriter and
such controlling person for any legal or other expenses reasonably incurred by
the Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
loss, claim, damage, liability, action, investigation, litigation or proceeding;
PROVIDED, HOWEVER, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged
30
untrue statement or omission or alleged omission made in such registration
statement or any amendment thereto, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto, or any Application in reliance upon and
in conformity with written information furnished to the Company by the
Underwriter or such Selling Shareholder, as the case may be, specifically for
use therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have. The Company will not, without the prior
written consent of the Underwriter, such Selling Shareholder or controlling
person, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Underwriter or any
person who controls the Underwriter or such Selling Shareholder within the
meaning of section 15 of the Act or section 20 of the 1934 Act is a party to
such claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of the Underwriter or such Selling
Shareholder and each such controlling person from all liability arising out of
such claim, action, suit or proceeding.
(b) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless the Company, each director of the Company and each
officer of the Company who signed the Registration Statement, the Underwriter
and each person, if any, who controls the Company or the Underwriter within the
meaning of section 15 of the Act or section 20 of the 1934 Act against any
losses, claims, damages, liabilities, joint or several, to which the Company,
such director or officer of the Company, the Underwriter or such controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon:
(1) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the Blue Sky or securities laws thereof or filed
with the Commission or any securities association or securities exchange (each
an "Application"), or
(2) the omission or alleged omission to state in such
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse, as incurred, the Underwriter and
such controlling person for any legal or other expenses reasonably incurred by
the Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
loss, claim, damage, liability, action, investigation, litigation or proceeding,
in each case to the extent, but only to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company or the
Underwriter by the Selling Shareholder specifically for use therein. This
31
indemnity agreement will be in addition to any liability which the Selling
Shareholder may otherwise have. The Selling Shareholder will not, without the
prior written consent of the Company and the Underwriter, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not the Company or the Underwriter or any person who
controls the Company or the Underwriter within the meaning of section 15 of the
Act or section 20 of the 1934 Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Company, the Underwriter and each such controlling
person from all liability arising out of such claim, action, suit or proceeding.
(c) The Underwriter will indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement, each Selling Shareholder, and each person, if any, who controls the
Company or such Selling Shareholder within the meaning of section 15 of the Act
or section 20 of the Exchange Act against, any losses, claims, damages or
liabilities to which the Company or any such director, officer, Selling
Shareholder or controlling person may become subject under the Act or otherwise,
but only insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or any Application, or (ii) the omission
or the alleged omission to state therein a material fact required to be stated
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Application, or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by the
Underwriter specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company or any such director,
officer, such Selling Shareholder or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or any action
in respect thereof. This indemnity agreement will be in addition to any
liability which the Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
section 8. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it
32
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this section 8 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence or (ii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party.
(e) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this section 8 is unavailable or insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by the Company on the one hand and the Underwriter on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriter. The relative fault of the parties shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriter, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and the other
equitable considerations appropriate in the circumstances. The Company and the
Underwriter agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), the Underwriter shall
not be obligated to make contributions hereunder that in the aggregate exceed
the total public offering price of the Securities purchased by the Underwriter
under this Agreement, less the aggregate amount of any damages that the
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of
33
fraudulent misrepresentation (within the meaning of section 11 (f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls an Underwriter within the meaning of section 15 of the Act
or section 20 of the 1934 Act shall have the same rights to contribution as the
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of section 15 of the Act or section 20 of the 1934
Act, shall have the same rights to contribution as the Company.
9. SUBSTITUTION OF UNDERWRITERS.
If any Underwriter shall for any reason not permitted hereunder cancel its
obligations to purchase the Firm Securities hereunder, or shall fail to take up
and pay for the number of Firm Securities set forth opposite names in Schedule 3
hereto upon tender of such Firm Securities in accordance with the terms hereof,
then:
(a) If the aggregate number of Firm Securities which such Underwriter
or Underwriters agreed but failed to purchase does not exceed 10% of the total
number of Firm Securities, the other Underwriter shall be obligated to purchase
the Firm Securities which such defaulting Underwriter agreed but failed to
purchase.
(b) If any Underwriter so defaults and the agreed number of Firm
Securities with respect to which such default or defaults occurs is more than
10% of the total number of Firm Securities, the remaining Underwriter shall have
the right to take up and pay for the Firm Securities which the defaulting
Underwriter agreed but failed to purchase. If such remaining Underwriter does
not, at the Firm Closing Date, take up and pay for the Firm Securities which the
defaulting Underwriter agreed but failed to purchase, the time for delivery of
the Firm Securities shall be extended to the next business day to allow the
remaining Underwriter the privilege of substituting within twenty-four hours
(including nonbusiness hours) another underwriter or underwriters satisfactory
to the Company. If no such underwriter or underwriters shall have been
substituted as aforesaid, within such twenty-four hour period, the time of
delivery of the Firm Securities may, at the option of the Company, be again
extended to the next following business day, if necessary, to allow the Company
the privilege of finding within twenty-four hours (including nonbusiness hours)
another underwriter or underwriters to purchase the Firm Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If it
shall be arranged for the remaining Underwriter or substituted Underwriters to
take up the Firm Securities of the defaulting Underwriter as provided in this
section, (i) the Company or the underwriter shall have the right to postpone the
time of delivery for a period of not more than seven business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other document or arrangements, and the
Company agrees promptly to file any amendments to the Registration Statement or
supplements to the Prospectus which may thereby be made necessary, and (ii) the
respective numbers of Firm Securities to be purchased by the remaining
Underwriters or substituted
34
Underwriters shall be taken as the basis of the underwriting obligation for all
purposes of this agreement.
If in the event of a default by any Underwriter and the remaining
Underwriter shall not take up and pay for all the Firm Securities agreed to be
purchased by the defaulting Underwriter or substitute another underwriter or
underwriters as aforesaid, the Company shall not find or shall not elect to seek
another underwriter or underwriters for such Firm Securities as aforesaid, then
this Agreement shall terminate.
If, following exercise of the option provided in Section 3(c) hereof, any
Underwriter or Underwriters shall for any reason not permitted hereunder cancel
their obligations to purchase Option Securities at the Option Closing Date, or
shall fail to take up and pay for the number of Option Securities, which it
became obligated to purchase at the Option Closing Date upon tender of such
Option Securities in accordance with the terms hereof, then the remaining
Underwriters or substituted Underwriters may take up and pay for the Option
Units of the defaulting Underwriters in the manner provided in Section 9(b)
hereof. If the remaining Underwriters or substituted Underwriters shall not take
up and pay for all such Option Securities, the Underwriters shall be entitled to
purchase the number of Option Securities for which there is no default or, at
their election, the option shall terminate, the exercise thereof shall be of no
effect.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. In the event of termination,
there shall be no liability on the part of any non-defaulting Underwriter to the
Company, provided that the provisions of this Section 9 shall not in any event
affect the liability of any defaulting Underwriter to the Company arising out of
such default.
10. SURVIVAL. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, any of its officers
or directors and the Underwriter set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, the Underwriter or any
controlling person referred to in section 8 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in sections 5 and 8 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
11. TERMINATION.
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the Underwriter by
notice to the Company given prior to the Firm Closing Date or the related Option
Closing Date, respectively, in the event that the Company shall have failed,
refused or been unable to perform all obligations and satisfy all conditions on
its part to be performed or satisfied under Section 7 hereunder at or prior
thereto or if at or prior to the Firm Closing Date or such Option Closing Date,
respectively:
35
(1) the Company sustains a loss by reason of explosion, fire,
flood, accident or other calamity, which, in the opinion of the Underwriter,
substantially affects the value of the properties of the Company or which
materially interferes with the operation of the business of the Company
regardless of whether such loss shall have been insured; there shall have been
any material adverse change, or any development involving a prospective material
adverse change (including, without limitation, a change in management or control
of the Company), in the business, operations, condition (financial or
otherwise), earnings or prospects of the Company, except in each case as
described in or contemplated by the Prospectus (exclusive of any amendment or
supplement thereto);
(2) any action, suit or proceeding shall be threatened,
instituted or pending, at law or in equity, against the Company, by any person
or by any federal, state, foreign or other governmental or regulatory
commission, board or agency wherein any unfavorable result or decision could
materially adversely affect the business, operations, condition (financial or
otherwise), earnings or prospects of the Company;
(3) trading in the Common Stock or Warrants shall have been
suspended by the Commission, the NASD or on Nasdaq, or trading in securities
generally on the New York Stock Exchange shall have been suspended or minimum or
maximum prices shall have been established on either such exchange or quotation
system;
(4) a banking moratorium shall have been declared by Canadian,
New York or United States authorities;
(5) there shall have been (A) an outbreak of hostilities between
the United States and any foreign power (or, in the case of any ongoing
hostilities, a material escalation thereof), (B) an outbreak of any other
insurrection or armed conflict involving the United States or (C) any other
calamity or crisis or material change in financial, political or economic
conditions, having an effect on the financial markets that, in any case referred
to in this clause (5), in the sole judgment of the Underwriter makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities as contemplated by the Registration Statement;
(6) termination of this Agreement pursuant to this section 10
shall be without liability of any party to any other party, except as provided
in section 5(b) and section 8 hereof.
12. INFORMATION SUPPLIED BY THE UNDERWRITER. The statements set forth in
the first paragraph on page 2, in the first (as to the underwriting commitment
of each Underwriter) and second paragraphs under the heading "Underwriting" in
any Preliminary Prospectus or the Prospectus (to the extent such statements
relate to the Underwriter) constitute the only information furnished by the
Underwriter to the Company for the purposes of section 8(b) hereof. The
Underwriter confirms that such statements (to such extent) are correct.
36
13. NOTICES. All notice hereunder to or upon either party hereto shall be
deemed to have been duly given for all purposes if in writing and (i) delivered
in person or by messenger or an overnight courier service against receipt, or
(ii) send by certified or registered mail, postage paid, return receipt
requested, or (iii) sent by telegram, facsimile, telex or similar means,
provided that a written copy thereof is sent on the same day by postage paid
first-class mail, to such party at the following address:
To the Company: Med-Emerg International, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn: Xxxx Xxxxxxxx
Fax: (000) 000-0000
To the Underwriter: Network 1 Financial and Century City
Securities, Inc. Securities, Inc.
The Galleria, Penthouse 1900 Avenue of the Stars
0 Xxxxxx Xxxxxx Xxx Xxxxxxx, XX 00000
Xxx Xxxx, Xxx Xxxxxx 00000 Attn: Corporate Finances
Dept.
Attn: Corporate Finance Department Fax: 000-000-0000
Fax: (000) 000-0000
or such other address as either party hereto may at any time, or from time to
time, direct by notice given to the other party in accordance with this section.
The date of giving of any such notice shall be, in the case of clause (i), the
date of the receipt; in the case of clause (ii), five business days after such
notice or demand is sent; and, in the case of clause (iii), the business day
next following the date such notice is sent.
14. AMENDMENT. Except as otherwise provided herein, no amendment of this
Agreement shall be valid or effective, unless in writing and signed by or on
behalf of the parties hereto.
15. WAIVER. No course of dealing or omission or delay on the part of
either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.
16. APPLICABLE LAW. This agreement shall be governed by, and interpreted
and enforced in accordance with, the laws of the State of New York without
regard to principles of choice of law or conflict of laws.
17. JURISDICTION. Each of the parties hereto hereby irrevocably consents
and submits to the exclusive jurisdiction of the Supreme Court of the State of
New York and the United States District Court for the Southern District of New
York in connection with any suit, action or other
37
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, waives any objection to venue in the County of New York,
State of New York, or such District and agrees that service of any summons,
complaint, notice or other process relating to such suit, action or other
proceeding may be effected in the manner provided by clause (ii) of Section 12.
18. REMEDIES. In the event of any actual or prospective breach or default
by either party hereto, the other party shall be entitled to equitable relief,
including remedies in the nature of rescission, injunction and specific
performance. All remedies hereunder are cumulative and not exclusive, and
nothing herein shall be deemed to prohibit or limit either party from pursuing
any other remedy or relief available at law or in equity for such actual or
prospective breach or default, including the recovery of damages.
19. ATTORNEYS' FEES. The prevailing party in any suit, action or other
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, shall be entitled to recover its costs and reasonable
attorneys' fees.
20. SEVERABILITY. The provisions hereof are severable and in the event
that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.
21. COUNTERPARTS. This agreement may be executed in counterparts, each of
which shall be deemed an original and which together shall constitute one and
the same agreement.
22. SUCCESSORS. This agreement shall inure to the benefit of and be
binding upon the Underwriter, the Company and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provisions herein contained,
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company contained in
section 8 of this Agreement shall also be for the benefit of any person or
persons who control any Underwriter within the meaning of section 15 of the Act
or section 20 of the Exchange Act and (ii) the indemnities of the Underwriter
contained in section 8 of this Agreement shall also be for the benefit of the
directors of the Company, the officers of the Company who have signed the
Registration Statement and any person or persons who control the Company within
the meaning of section 15 of the Act or section 20 of the Exchange Act. No
purchaser of Securities from the Underwriter shall be deemed a successor because
of such purchase.
23. TITLES AND CAPTIONS. The titles and captions of the articles and
sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.
38
24. GRAMMATICAL CONVENTIONS. Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular or the plural
sense and each capitalized term defined herein and each pronoun used herein
shall be construed in the masculine, feminine or neuter sense.
25. REFERENCES. The terms "herein," "hereto," "hereof," "hereby," and
"hereafter," and other terms of similar import, refer to this Agreement as a
whole, and not to any Article, Section or other part hereof.
26. ENTIRE AGREEMENT. This Agreement embodies the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes any
prior agreement, commitment or arrangement relating thereto.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and the
Underwriter.
Very truly yours,
MED-EMERG INTERNATIONAL, INC.
By:
---------------------------------------
Name: Xxxx Xxxxxxxx
Title: President
The foregoing agreement is hereby confirmed and accepted as of the date first
above written.
NETWORK 1 FINANCIAL SECURITIES, INC.
By:
-------------------------------------------
Name:
Title:
CENTURY CITY SECURITIES, INC.
By:
-------------------------------------------
Name:
Title:
39
Schedule 1
NUMBER OF OPTION SHARES TO BE PURCHASED BY
NETWORK 1 FINANCIAL CENTURY CITY TOTAL NUMBER OF
SELLING SHAREHOLDER SECURITIES, INC. SECURITIES, INC. OPTION SHARES
------------------- ------------------------ ---------------- -------------
Hampton House Int'l 27,625
X. Xxxxxx Bou Dib 20,000
Xxxxx Xxxxxx 14,000
Xxxx Kingswood 12,000
W. Xxxxx Xxxx 12,000
Xxxx Xxxxxxx 10,000
Xxxxxx El Dada 8,000
Xxxxxx Xxxxxxxxx 8,000
Xxxx Xxxxxx 6,000
Xxxxx X. Xxxxxx 5,000
Xxxxxx Xxxxxx 5,000
Xxxx Xxxxxx 5,000
Xxxxx Xxxxxxx 4,000
Xxxxxxxxx Xxxxxx-Xxxxxx 4,000
Total
Schedule 2 - Lock-Up Agreements
NAME AND ADDRESS OF HOLDER TERM
[name]
Schedule 3
NUMBER OF
UNDERWRITER NUMBER OF SHARES REDEEMABLE WARRANTS
----------- ---------------- -------------------
Network I Financial
Securities, Inc.
Century City
Securities, Inc.
---------------- -------------------
Total 1,250,000 1,250,000
42
