GENISYS RESERVATION SYSTEMS, INC.
UNDERWRITING AGREEMENT
900,000 Shares of Common Stock and
2,400,000 Redeemable Warrants
March , 1997
X.X. Xxxxx & Co., Inc.
000 Xxxxx Xxxxxx - 0xx. Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Genisys Reservation Systems, Inc., a New Jersey corporation (the
"Company"), confirms its agreement with X.X. Xxxxx & Co., Inc. ("X.X. Xxxxx") (
the "Underwriter") with respect to the sale by the Company and the purchase by
the Underwriter of 900,000 shares (the "Shares") of the Company's common stock,
$.0001 par value per share (the "Common Stock"), and 2,400,000 redeemable
warrants to acquire one additional share of Common Stock ("Public Warrants").
The shares of Common Stock and Public Warrants will be immediately separable and
tradeable upon issuance and will not trade as units. The Public Warrants will be
comprised of 1,500,000 Class A Redeemable Warrants (the "Class A Warrants") and
900,000 Class B Redeemable Warrants (the "Class B Warrants"). Each Public
Warrant is exercisable from , 1997 until, , 2002. Each Class A Warrant will have
an initial exercise price of $5.75 for one (1) share of Common Stock, and each
Class B Warrant shall have an initial exercise price of $6.75 for one (1) share
of Common Stock. The Public Warrants will be subject to prior redemption by the
Company as more fully described in the Registration Statement and Prospectus
referred to below. The Shares, Class A Warrants and Class B Warrants are
hereinafter referred to as the "Firm Securities." Upon your request, as provided
in Section 2(b) of this Agreement, the Company shall also issue and sell to you
up to an additional 135,000 Shares and/or 225,000 Class A Warrants and 135,000
Class B Warrants for the purpose of covering over-allotments, if any, in the
sale of the Firm Securities. Such 135,000 Shares and/or 225,000 Class A Warrants
and 135,000 Class B Warrants are hereinafter referred to as the "Option
Securities" The Firm Securities and the Options Securities are hereinafter
collectively referred to as the "Public Offering Securities." The Company also
proposes to issue and sell to you warrants (the "Underwriter's Warrants")
pursuant to the Underwriter's Warrant Agreement dated , 1997 between the
Underwriter and the Company (the "Underwriter's Warrant Agreement") for the
purchase of an additional 90,000 Shares and 150,000 Class A Warrants and 90,000
Class B
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Warrants. The Shares and/or Public Warrants issuable upon exercise of the
Underwriter's Warrants are hereinafter referred to as the "Underwriter's
Securities." The shares of Common Stock issuable upon exercise of the Public
Warrants (including the Public Warrants issuable upon exercise of the
Underwriter's Warrants) are hereinafter sometimes referred to as the "Warrant
Shares." The Public Offering Securities, the Shares, the Public Warrants, the
Underwriter's Warrants, the Underwriter's Securities and the Warrant Shares are
more fully described in the Registration Statement and the Prospectus referred
to below.
1. Representations and Warranties. (a) The Company represents and
warrants to, and agrees
with, each of the Underwriters as of the date hereof, and as of the Closing
Date (hereinafter defined)
and the Option Closing Date (hereinafter defined), if any, as follows:
(i) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an amendment or
amendments thereto, on Form SB-2 (No. 333 - 15011), including any related
preliminary prospectus ("Preliminary Prospectus"), for the registration of the
Shares, the Public Warrants, the Underwriter's Securities and the Warrant Shares
under the Securities Act of 1933, as amended (the "Act"), which registration
statement and amendment or amendments have been prepared by the Company in
conformity with the requirements of the Act, and the Rules and Regulations of
the Commission thereunder. The Company will promptly file a further amendment to
said registration statement in the form heretofore delivered to the Underwriter
and will not file any other amendment thereto to which the Underwriter shall
have objected in writing after having been furnished with a copy thereof. Except
as the context may otherwise require, such registration statement, as amended,
on file with the Commission at the time the registration statement becomes
effective (including the prospectus, financial statements, schedules, exhibits
and all other documents or information incorporated by reference therein) and
all information deemed to be a part thereof as of such time pursuant to
paragraph (b) of Rule 430(A) of the rules and regulations) is hereinafter called
the "Registration Statement", and the form of prospectus in the form first filed
with the Commission pursuant to Rule 424(b) of the rules and regulations is
hereinafter called the "Prospectus." For purposes hereof, "Rules and
Regulations" mean the rules and regulations adopted by the Commission under
either the Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable.
(ii) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary Prospectus,
the Registration Statement or Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or threatened. Each of the Preliminary Prospectus, the Registration Statement
and Prospectus at the time of filing thereof conformed with the requirements of
the Acts and the Rules and Regulations, and none of the Preliminary Prospectus,
the Registration Statement or Prospectus at the time of filing thereof contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein and necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to statements made in
reliance upon and in conformity with written information furnished to the
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Company with respect to the Underwriter by or on behalf of the Underwriter
expressly for use in such Preliminary Prospectus, Registration Statement or
Prospectus or any amendment or supplement thereto. It is understood that the
statements set forth in the Prospectus on page 2 with respect to stabilization,
under the heading "Underwriting" and the identity of counsel to the Underwriter
under the heading "Legal Matters" constitute the only information furnished in
writing by or on behalf of the Underwriter for inclusion in the Registration
Statement and Prospectus, as the case may be.
(iii) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (hereinafter defined) and each
Option Closing Date (hereinafter defined), if any, and during such longer period
as the Prospectus may be required to be delivered in connection with sales by
the Underwriter or a dealer, the Registration Statement and the Prospectus will
contain all statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations, and will conform to the requirements
of the Act and the Rules and Regulations; neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, contains or will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided, however, that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in conformity with
information furnished to the Company in writing by or on behalf of the
Underwriter (as set forth in paragraph 1(a)(ii) hereof) expressly for use in the
Preliminary Prospectus, Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
(iv) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its incorporation.
The Company does not own an equity interest in any corporation, partnership,
trust, joint venture or other business entity. The Company is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations require such qualification or licensing except where the failure(s)
to be so qualified, licensed and in good standing, individually or in the
aggregate, would not materially and adversely affect the condition, financial or
otherwise, or the earnings, business affairs, position, prospects, value,
operation, properties, business or results of operations of the Company. The
Company has all requisite power and authority (corporate and other), and has
obtained any and all authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), necessary to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and has been
doing business in compliance with all such authorizations, approvals, orders,
licenses, certificates, franchises and permits and all federal, state, local and
foreign laws, rules and regulations and the Company has not received any notice
of proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs, position, prospects,
value, operations, properties, business, or results of operations of the
Company. The disclosures in the Registration Statement concerning the effects
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of federal, state, local, and foreign laws, rules and regulations on the
Company's business as currently conducted and as contemplated are correct in all
material respects and do not omit to state a material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made.
(v) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and will have the adjusted
capitalization set forth therein on the Closing Date (hereinafter defined) and
the Option Closing Date (hereinafter defined), if any, based upon the
assumptions set forth therein, and the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this Agreement
and as described in the Prospectus. The Common Stock, the Shares, the Public
Warrants, the Underwriter's Warrants, the Underwriter's Securities and the
Warrant Shares (collectively, hereinafter sometimes referred to as the
"Securities") and all other securities issued or issuable by the Company conform
or, when issued and paid for, will conform, in all respects to all statements
with respect thereto contained in the Registration Statement and the Prospectus.
All issued and outstanding securities of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and the holders thereof
have no rights of rescission with respect thereto, and are not subject to
personal liability by reason of being such holders; and none of such securities
were issued in violation of the preemptive rights of any holders of any security
of the Company or similar contractual rights granted by the Company. The
Securities are not and will not be subject to any preemptive or other similar
rights of any stockholder, have been duly authorized and, when issued, paid for
and delivered in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable and will conform to the description thereof contained in
the Prospectus; the holders thereof will not be subject to any liability solely
as such holders; all corporate action required to be taken for the
authorization, issue and sale of the Securities has been duly and validly taken;
and the certificates representing the Securities are in due and proper form.
Upon the issuance and delivery pursuant to the terms hereof of the Securities to
be sold by the Company hereunder, the Underwriter will acquire good and
marketable title to such Securities free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity of
any kind whatsoever.
(vi) The financial statements of the Company together with the related
notes and schedules (if any) thereto, included in the Registration Statement,
each Preliminary Prospectus and the Prospectus fairly present the financial
position, income, changes in cash flow, changes in stockholders' equity and the
results of operations of the Company at the respective dates and for the
respective periods to which they apply and the pro forma financial information
included in the Registration Statement, each Preliminary Prospectus and the
Prospectus presents fairly on a basis consistent with that of the audited
financial statements included therein, the Company's pro forma net income or
loss per share, as the case may be, pro forma net tangible book value, and the
pro forma capitalization and such financial statements have been prepared in
conformity with generally accepted accounting principles and the Rules and
Regulations, consistently applied throughout the periods involved. There has
been no material adverse change or development involving a material change in
the condition, financial or otherwise, or in the earnings, business affairs,
position,
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prospects, value, operation, properties, business or results of operation of the
Company whether or not arising in the ordinary course of business, since the
date of the financial statements included in the Registration Statement and the
Prospectus, and the outstanding debt, the property, both tangible and
intangible, and the business of the Company conforms in all material respects to
the descriptions thereof contained in the Registration Statement and the
Prospectus.
(vii) The Company (A) has paid all federal, state, local, and foreign
taxes for which it is liable, including, but not limited to, withholding taxes
and amounts payable under Chapters 21 through 24 of the Internal Revenue Code of
1986, as amended (the "Code"), and has furnished all information returns it is
required to furnish pursuant to the Code, (B) has established adequate reserves
for such taxes which are not due and payable, and (C) does not have any tax
deficiency or claims outstanding, proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is payable by
or on behalf of the Underwriter in connection with (A) the issuance by the
Company of the Securities, (B) the purchase by the Underwriter of the Public
Offering Securities, the Shares, the Public Warrants and the Warrant Shares and
the purchase by the Underwriter of the Underwriter's Warrants from the Company,
(C) the consummation by the Company of any of its obligations under this
Agreement, or (D) resales of the Securities in connection with the distribution
contemplated hereby.
(ix) The Company maintains insurance policies, including, but not
limited to, general liability, product liability and property insurance, which
insures the Company and its employees, against such losses and risks generally
insured against by comparable businesses. The Company (A) has not failed to give
notice or present any insurance claim with respect to any matter, including but
not limited to the Company's business, property or employees, under the
insurance policy or surety bond in a due and timely manner, (B) does not have
any disputes or claims against any underwriter of such insurance policies or
surety bonds or has not failed to pay any premiums due and payable thereunder,
or (C) has not failed to comply with all conditions contained in such insurance
policies and surety bonds. There are no facts or circumstances under any such
insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the company.
(x) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or business of the Company
which (A) questions the validity of the capital stock of the Company or this
Agreement, the Underwriter's Warrant Agreement, the Warrant Agreement (as
defined in Section 1(xxxiii) below) or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement, the Underwriter's
Warrant Agreement, or the Warrant Agreement, (B) is required to be disclosed in
the Registration Statement which is not so disclosed (and such proceedings as
are summarized in the Registration Statement are accurately summarized in all
material respects), or (C) if adversely determined, might materially and
adversely affect the condition, financial or otherwise,
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or the business affairs or business prospects, earnings, liabilities, prospects,
stockholders' equity, value, properties, business or assets of the Company.
(xi) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, enter into this Agreement,
the Underwriter's Warrant Agreement and the Warrant Agreement and to consummate
the transactions provided for herein and therein; and each of this Agreement,
the Underwriter's Warrant Agreement and the Warrant Agreement have been duly and
properly authorized, executed and delivered by the Company. This Agreement, the
Underwriter's Warrant Agreement and the Warrant Agreement each constitute a
legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, and neither the Company's issue and sale
of the Securities or execution or delivery of this Agreement, the Underwriter's
Warrant Agreement and the Warrant Agreement or its performance hereunder and
thereunder, its consummation of the transactions contemplated herein and
therein, or the conduct of its business as described in the Registration
Statement, the Prospectus, and any amendments or supplements thereto, conflicts
with or will conflict with or results or will result in any breach or violation
of any of the terms or provisions of, or constitutes or will constitute a
default under, or result in the creation or imposition of any lien, charge,
claim, encumbrance, pledge, security interest, defect or other restriction or
equity of any kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of, (A) the certificate of
incorporation or by-laws of the Company, (B) any license, contract, indenture,
mortgage, deed of trust, voting trust agreement, stockholders agreement, note,
loan or credit agreement or any other agreement or instrument to which the
Company is a party or by which it is or may be bound or which its properties or
assets (tangible or intangible) is or may be subject, or any indebtedness, or
(C) any statute, judgment, decree, order, rule or regulation applicable to the
Company of any arbitrator, court, regulatory body or administrative agency or
other governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or properties, in each
case except for conflicts, breaches, violations, defaults, creations or
impositions which do not and would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs, position,
shareholder's equity, value, operation, properties, business or results of
operations of the Company.
(xii) No consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other body, domestic or
foreign, is required for the issuance of the Securities pursuant to the
Prospectus and the Registration Statement, the issuance of the Underwriter's
Warrants, the execution, delivery or performance of this Agreement, the
Underwriter's Warrant Agreement and the Warrant Agreement, and the transactions
contemplated hereby and thereby, including, without limitation, any waiver of
any preemptive, first refusal or other rights that any entity or person may have
for the issue and/or sale of any of the Securities, except such as have been or
may be obtained under the Act or may be required under state securities or Blue
Sky laws in connection with the Underwriter's purchase and distribution of the
Securities and the Underwriter's purchase of the Underwriter's Warrants to be
sold by the Company hereunder and thereunder.
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(xiii) All executed agreements, contracts or other documents or copies
of executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which its assets, properties or business may be subject have been
duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding agreements of the Company, enforceable
against the Company, in accordance with their respective terms. The descriptions
in the Registration Statement of agreements, contracts and other documents and
statutes and regulations are accurate and fairly present the information
required to be shown with respect thereto by Form SB-2, and there are no
contracts or other documents which are required by the Act to be described in
the Registration Statement or filed as exhibits to the Registration Statement
which are not described or filed as required, and the exhibits which have been
filed are complete and correct copies of the documents of which they purport to
be copies.
(xiv) Subsequent to the respective dates as of which information is
set forth in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not
(A) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, (B) entered into any transaction other than in
the ordinary course of business, or (C) declared or paid any dividend or made
any other distribution on or in respect of its capital stock of any class, and
there has not been any change in the capital stock, or any change in the debt
(long or short term) or liabilities or material change in or affecting the
business affairs or prospects, management, stockholders' equity, properties,
business, financial operations or assets of the Company.
(xv) No default exists in the due performance and observance of any
term, covenant or condition of any license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust agreement,
stockholders agreement, partnership agreement, note, loan or credit agreement,
purchase order, or any other material agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement or instrument to
which the Company is a party or by which the Company may be bound or to which
the property or assets (tangible or intangible) of the Company is subject or
affected, which default would have a material adverse effect on the condition,
financial or otherwise, earnings, business affairs, position, shareholder's
equity, value, operation, properties, business or results of operations of the
Company.
(xvi) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance in all
material respects with all federal, state, local, and foreign laws and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours. There are no pending investigations involving
the Company, by the U.S. Department of Labor, or any other governmental agency
responsible for the enforcement of such federal, state, local, or foreign laws
and regulations. There is no unfair labor practice charge or complaint against
the Company pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the Company, or any predecessor entity, and none has ever occurred.
No representation question exists respecting the employees of the Company and no
collective bargaining agreement or modification
7
thereof is currently being negotiated by the Company. No grievance or
arbitration proceeding is pending under any expired or existing collective
bargaining agreements of the Company. No labor dispute with the employees of the
Company exists, or, to the knowledge of the Company is imminent.
(xvii) Except as described in the Prospectus, the Company does not
maintain, sponsor or contribute to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). The Company does not maintain or contribute, now or
at any time previously, to a defined benefit plan, as defined in Section 3(35)
of ERISA. No ERISA Plan (or any trust created thereunder) has engaged in a
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code, which could subject the Company to any tax penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to any such ERISA Plan.
Determination letters have been received from the Internal Revenue Service with
respect to each ERISA Plan which is intended to comply with Code Section 401(a),
stating that such ERISA Plan and the attendant trust are qualified thereunder.
The Company has never completely or partially withdrawn from a "multiemployer
plan."
(xviii) Neither the Company nor any of its employees, directors,
stockholders, or affiliates (within the meaning of the Rules and Regulations) of
any of the foregoing has taken or will take, directly or indirectly, any action
designed to or which has constituted or which might be expected to cause or
result in, under the Exchange Act, or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities or otherwise.
(xix) None of the patents, patent applications, trademarks, service
marks, trade names and copyrights, and licenses and rights to the foregoing
presently owned or held by the Company are in dispute or are in any conflict
with the right of any other person or entity. The Company (i) owns or has the
license or other right to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever, all patents, trademarks, service marks, trade
names and copyrights, technology and licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted or proposed to
be conducted without infringing upon or otherwise acting adversely to the right
or claimed right of any person, corporation or other entity under or with
respect to any of the foregoing and (ii) except as set forth in the Prospectus,
is not obligated or under any liability whatsoever to make any payments by way
of royalties, fees or otherwise to any owner or licensee of, or other claimant
to, any patent, trademark, service xxxx, tradename, copyright, know-how,
technology or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise.
(xx) The Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any trademark, service
xxxx, trade name or copyright or other intangible asset used or held for use by
it in connection with the conduct of its businesses which,
8
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, might have a material adverse effect on the condition, financial or
otherwise, or the business affairs, position, properties, stockholder's equity,
financial operations or assets of the Company.
(xxi) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property stated
in the Prospectus, to be owned or leased by it free and clear of all liens,
charges, claims, encumbrances, pledges, security interest, defects, or other
restrictions or equities of any kind whatsoever, other than those referred to in
the Prospectus and liens for taxes not yet due and payable.
(xxii) Wiss & Company, LLP., Certified Public Accountants, whose
report is filed with the Commission as a part of the Registration Statement, are
independent certified public accountants as required by the Act and the Rules
and Regulations.
(xxiii) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which each of its officers, directors or any
person or entity deemed to be an affiliate of the Company and any stockholders
of the Company has agreed not to, directly or indirectly, offer to sell, sell,
grant any option for the sale of, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock (either pursuant to
Rule 144 of the Rules and Regulations or otherwise) or dispose of any beneficial
interest therein for a period of not less than 18 months following the effective
date of the Registration Statement without the prior written consent of the
Underwriter and that any Common Stock which has been issued and is outstanding
on the effective date of the Registration Statement and is to be sold or
otherwise disposed of pursuant to such Rule 144 with the consent of the
Underwriter shall only be sold or otherwise disposed of through the Underwriter.
The Company will cause the Transfer Agent, as defined below, to xxxx an
appropriate legend on the face of stock certificates representing all of such
securities and to place "stop transfer" orders on the Company's stock ledgers.
(xxiv) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company, or any of its officers, directors, stockholders,
partners, employees or affiliates that may affect the Underwriter' compensation,
as determined by the National Association of Securities Dealers, Inc. ("NASD")
and the Company is aware that the Underwriter and each of the Underwriter's
shall compensate any of their respective personnel who may have acted in such
capacities as they shall determine in their sole discretion.
(xxv) The Shares, the Common Stock and the Public Warrants have been
approved for quotation on the Nasdaq SmallCap Market.
(xxvi) Neither the Company, nor any of its officers, employees,
agents or any other person acting on behalf of the Company has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business)
9
to any customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency (domestic or foreign) or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or other person who was, is, or
may be in a position to help or hinder the business of the Company (or assist
the Company in connection with any actual or proposed transaction) which (A)
might subject the Company, or any other such person to any damage or penalty in
any civil, criminal or governmental litigation or proceeding (domestic or
foreign), (B) if not given in the past, might have had a materially adverse
effect on the assets, business, operations or prospects of the Company, or (C)
if not continued in the future, might adversely affect the assets, business,
operations or prospects of the Company. The Company's internal accounting
controls are sufficient to cause the Company to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(xxvii) Except as set forth in the Prospectus, no officer, director, or
stockholder of the Company, or any "affiliate" or "associate" (as these terms
are defined in Rule 405 promulgated under the Rules and Regulations) of any of
the foregoing persons or entities has or has had, either directly or indirectly,
(A) an interest in any person or entity which (1) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by
the Company, or (2) purchases from or sells or furnishes to the Company any
goods or services, or (B) a beneficiary interest in any contract or agreement to
which the Company is a party or by which it may be bound or affected. Except as
set forth in the Prospectus under "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company, and any officer, director, Principal Security Holder (as such term is
defined in the Prospectus) of the Company, or any partner, affiliate or
associate of any of the foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company and
delivered to the Underwriter or to Scheichet & Xxxxx, P.C. ("Underwriter'
Counsel") shall be deemed a representation and warranty by the Company to the
Underwriter as to the matters covered thereby.
(xxix) The minute books of the Company have been made available to
the Underwriter and contain a complete summary of all meetings and actions of
the directors and stockholders of the Company, since the time of its
incorporation, and reflects all transactions referred to in such minutes
accurately in all material respects.
(xxx) Except and to the extent described in the Prospectus, no
holders of any securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right to include
any securities issued by the Company in the Registration Statement or any
registration statement under the Act and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
(xxxi) The Company has as of the effective date of the Registration
Statement (a) entered into employment agreements with Xxxxxx Xxxxxxx and Xxxx
Xxxxx providing for annual salaries of $100,000 and $80,000, respectively, each
on terms and conditions satisfactory to the Underwriter,
10
and (ii) purchased "Key-Man" insurance on the life of Xxxxxx Xxxxxxx which names
the Company as the sole beneficiary on terms and conditions satisfactory to the
Underwriter.
(xxxii) The Company has entered into a warrant agreement with respect
to the Public Warrants, substantially in the form filed as Exhibit 4.2 to the
Registration Statement ("Warrant Agreement") with Continental Stock Transfer and
Trust Company in form and substance satisfactory to the Underwriter.
(xxxiii) Immediately prior to the effective date of the Registration
Statement there shall be no more than an aggregate of 3,280,594 shares of Common
Stock issued and outstanding (including 280,485 Shares of Common Stock held by
non-management members of the public). Except for the Underwriter's Warrants, an
option held by Xxxx Xxxxx to acquire 5,000 shares of Common Stock upon
conversion of a $10,000 promissory note, an option held by Xxxx Xxxxxxx to
acquire 10,000 shares of Common Stock upon conversion of a $20,000 promissory
note, options held by Xxxx Xxxxx to purchase 25,000 shares of the Company's
Common Stock at an exercise price of $.60 per share and 35,000 shares of the
Company's Common Stock at a price of $2.00 per share, an option held by Loeb
Holding Corp., as agent, to acquire 400,000 shares of Common Stock of the
Company upon conversion of two promissory notes aggregating $37,500, a warrant
held by an unaffiliated equipment lessor to acquire 13,000 shares of Common
Stock at an exercise price of $2.00 per share and 287,500 Class A Redeemable
Warrants to purchase shares of Common Stock to be issued to lenders in the
recent bridge financing of the Company, there are no securities with equivalent
rights as the Common Stock, Common Stock or such equivalent securities, issuable
upon the exercise of options, warrants and other contract rights, or securities
convertible directly or indirectly into Common Stock or such equivalent
securities issued or outstanding.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter,
severally and not jointly, agrees to purchase from the Company at a price of
$4.50 per Share, $.18 per Class A Warrant and $.09 per Class B Warrant, that
number of Firm Securities set forth above, subject to such adjustment as the
Underwriter in its sole discretion shall make to eliminate any sales or
purchases of fractional shares.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements, herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriter to purchase all or any part of an additional 135,000 Shares at a
price of $4.50 per Share and 225,000 Class A Warrants and 135,000 Class B
Warrants at a price of $.18 per Class A Warrant and $.09 per Class B Warrant.
The option granted hereby will expire 45 days after the date the Registration
Statement becomes effective and may be exercised in whole or in part from time
to time upon notice by the Underwriter to the Company setting forth the number
of Option Securities as to which the several Underwriter are then exercising the
option and the time and date of payment and delivery for any such Option
Securities. Any such time and date of delivery (an
11
"Option Closing Date") shall be determined by the Underwriter, but shall not be
later than ten (10) full business days after the exercise of said option, nor in
any event prior to the Closing Date (hereinafter defined), unless otherwise
agreed upon by the Underwriter and the Company. No Option Securities shall be
delivered unless the Firm Securities shall be simultaneously delivered or shall
theretofore have been delivered as herein provided. Nothing herein contained
shall obligate the Underwriter to make any over-allotments, except that the
Underwriter agrees that it shall exercise the option to purchase Option
Securities equal to not less than 90,000 Shares, 150,000 Class A Warrants and
90,000 Class B Warrants.
(c) Payment of the purchase price for, and delivery of certificates
evidencing the Firm Securities shall be made at the offices of X.X. Xxxxx & Co.,
Inc. at 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, or at such other place
as shall be agreed upon by the Underwriter and the Company. Such delivery and
payment shall be made at 10:00 a.m. (New York City time) on , 1997, or at such
other time and date as shall be agreed upon by the Underwriter and the Company,
but no less than three (3) nor more than ten (10) full business days after the
effective date of the Registration Statement (such time and date of payment and
delivery being herein called "Closing Date"). In addition, in the event that any
or all of the Option Securities are purchased by the Underwriter, payment of the
purchase price for and delivery of certificates for, such Option Securities
shall be made at the above mentioned office of the Underwriter or at such other
place as shall be agreed upon by the Underwriter and the Company on each Option
Closing Date as specified in the notice from the Underwriter to the Company.
Delivery of the certificates for the Firm Securities and the Option Securities
if any, shall be made to the Underwriter against payment by the Underwriter,
severally and not jointly, of the purchase price for the Firm Securities and the
Option Securities if any, to the order of the Company by New York Clearing House
Funds. In the event such option is exercised, the Underwriter shall purchase
that number of Option Securities then being purchased subject to such
adjustments as the Underwriter in its discretion shall make to eliminate any
sales or purchases of fractional shares. Certificates for the Firm Securities
and the Option Securities if any, shall be in definitive, fully registered form,
shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Underwriter may request in writing at least two
(2) business days prior to Closing Date or the relevant Option Closing Date, as
the case may be. The certificates for the Firm Securities and the Option
Securities if any, shall be made available to the Underwriter at such office or
such other place as the Underwriter may designate for inspection, checking and
packaging no later than 9:30 a.m. on the last business day prior to Closing Date
or the relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Underwriter the Underwriter's Warrants at a purchase price of $.0001 per
warrant, which warrants shall entitle the holders thereof to purchase an
aggregate of 90,000 Shares and 150,000 Class A Warrants and 90,000 Class B
Warrants. The Underwriter's Warrants shall be exercisable for a period of four
(4) years commencing one (1) year from the Closing Date at a price of $6.00 per
Share, $.24 per Class A Warrant and $.12 per Class B Warrant. The Underwriter's
Warrant Agreement and form of Warrant Certificates with respect to each of the
(i) Underwriter's Warrants to purchase Shares and (ii) Underwriter's Warrants to
purchase Public Warrants, shall be substantially in the form filed as
12
Exhibit 4.3 to the Registration Statement. Payment for the Underwriter's
Warrants shall be made on the Closing Date.
3. Public Offering of the Public Offering Securities. As soon after the
Registration Statement becomes effective as the Underwriter deems advisable, the
Underwriter shall make a public offering of the Firm Securities and such of the
Option Securities as it may determine (other than to residents of or in any
jurisdiction in which qualification of the Shares and Public Warrants are
required and has not become effective) at the price and upon the other terms set
forth in the Prospectus. The Underwriter may from time to time increase or
decrease the public offering price after distribution of the Public Offering
Securities has been completed to such extent as the Underwriter, in its sole
discretion deems advisable. The Underwriter may enter into one or more
agreements as it Underwriter, in its sole discretion, deems advisable with one
or more broker-dealers who shall act as dealers in connection with such public
offering. Investors in the public offering will be required to purchase at least
one Share and one Public Warrant together or in multiples thereof. Such Public
Offering Securities will be immediately separable and tradeable upon issuance
and will not be registered or listed on any market or exchange for trading as
units.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with the
Underwriter as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable (such Registration Statement to be in form and substance
satisfactory to the Underwriter and Underwriter's Counsel) and will not at any
time, whether before or after the effective date of the Registration Statement,
file any amendment to the Registration Statement or supplement to the Prospectus
or file any document under the Act or Exchange Act before termination of the
offering of the Public Offering Securities by the Underwriter of which the
Underwriter shall not previously have been advised and furnished with a copy, or
to which the Underwriter shall have objected or which is not in compliance with
the Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof,
the Company will advise the Underwriter and confirm by notice in writing, (i)
when the Registration Statement, as amended, becomes effective, if the
provisions of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective, (ii)
of the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto, or the
institution of proceedings for that purpose (iii) of the issuance by the
Commission or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the receipt of any comments from the Commission; and (v)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to
13
the Prospectus or for additional information. If the Commission or any state
securities commission authority shall enter a stop order or suspend such
qualification at any time, the Company will make every effort to obtain promptly
the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Underwriter and Underwriter's Counsel) or transmit the
Prospectus by a means reasonably calculated to result in filing with the
Commission pursuant to Rule 424 (b)(1) (or, if applicable and if consented to by
the Underwriter, pursuant to Rule 424 (b)(47) not later than the Commission's
close of business on the earlier of (i) the second business day following the
execution and delivery of this Agreement and (ii) the fifth business day after
the effective date of the Registration Statement.
(d) The Company will give the Underwriter notice of its intention to
file or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriter in connection with the offering of the Securities which differs from
the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
and will furnish the Underwriter with copies of any such amendment or supplement
a reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file any such prospectus to which the Underwriter or
Underwriter' Counsel, shall reasonably object.
(e) The Company shall take all action, in cooperation with the
Underwriter, at or prior to the time the Registration Statement becomes
effective, to qualify the Public Offering Securities for offering and sale under
the securities laws of such jurisdictions as the Underwriter may designate to
permit the continuance of sales and dealings therein for as long as may be
necessary to complete the distribution, and shall make such applications, file
such documents and furnish such information as may be required for such purpose;
provided, however, the Company shall not be required to qualify as a foreign
corporation or file a general or limited consent to service of process in any
such jurisdiction. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Underwriter agrees that such action is
not at the time necessary or advisable, use all reasonable efforts to file and
make such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such qualification. It is
agreed that Underwriter's Counsel (or its designees) shall perform all such
required Blue Sky legal services.
(f) During the time when a prospectus is required to be delivered under
the Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when a prospectus relating
to the Securities is required to be delivered under the Act, any event shall
have occurred as a result of which, in the reasonable opinion of counsel for the
Company or Underwriter' Counsel, the Prospectus, as then amended or
14
supplemented, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act and the Rules and Regulations, the Company will notify
the Underwriter promptly and prepare and file with the Commission an appropriate
amendment or supplement in accordance with Section 10 of the Act, each such
amendment or supplement to be satisfactory to Underwriter' Counsel, and the
Company will furnish to the Underwriter copies of such amendment or supplement
as soon as available and in such quantities as the Underwriter may request.
(g) As soon as practicable, but in any event not later than 45 days
after the end of the 12- month period beginning on the day after the end of the
fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its security holders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Underwriter, an earnings
statement which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules
and Regulations, which statement need not be audited unless required by the Act,
covering a period of at least 12 consecutive months after the effective date of
the Registration Statement.
(h) During a period of seven years after the date hereof, the Company
will furnish to its stockholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly reports of earnings, and will deliver to the Underwriter:
(i) concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company for each quarter in the form
furnished to the Company's stockholders and certified by the Company's principal
financial or accounting officer;
(ii) concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company as at the end of the preceding
fiscal year, together with statements of operations, stockholders' equity, and
cash flows of the Company for such fiscal year, accompanied by a copy of the
certificate thereon of independent certified public accountants;
(iii) as soon as they are available, copies of all reports
(financial or other) mailed to
stockholders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD or any
securities exchange;
(v) every press release and every material news item or article
of interest to the financial community in respect of the Company or its affairs
which was released or prepared by or on behalf of the Company; and
15
(vi) any additional information of a public nature concerning
the Company (and any future subsidiaries) or its businesses which the
Underwriter may reasonably request.
During such seven-year period, if the Company has active subsidiaries, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiaries are consolidated, and will
be accompanied by similar financial statements for any significant subsidiary
which is not so consolidated.
(i) The Company will maintain a Transfer Agent, counsel, accounting
firm, financial printer and, if necessary under the jurisdiction of
incorporation of the Company, a Registrar (which may be the same entity as the
Transfer Agent) for its Public Offering Securities, Common Stock and Public
Warrants all of whom shall be reasonably acceptable to the Underwriter (it being
agreed that the Company's current financial printer and the Transfer Agent,
counsel and accounting firm described in the Prospectus are acceptable to the
Underwriter). Such Transfer Agent shall, for a period of five years following
the Closing Date, deliver to the Underwriter the monthly securities position of
the Company's stockholders of record.
(j) The Company will furnish to the Underwriter or on the
Underwriter's order, without charge, at such place as the Underwriter may
designate, copies of each Preliminary Prospectus, the Registration Statement any
pre-effective or post-effective amendments thereto (two of which copies will be
signed and will include all financial statements and exhibits), the Prospectus,
and all amendments and supplements thereto, including any Prospectus prepared
after the effective date of the Registration Statement, in each case as soon as
available and in such quantities as the Underwriter may reasonably request.
(k) On or before the effective date of the Registration Statement, the
Company shall provide the Underwriter with true copies of duly executed, legally
binding and enforceable agreements pursuant to which for a period of not less
than 18 months after the effective date of the Registration Statement, each
holder of securities issued by the Company and outstanding at the effective date
of the Registration Statement (including securities convertible into Common
Stock of the Company, but excluding 333,216 shares of Common Stock held by
Xxxxxx X. Xxxxxx, 200,000 shares of Common Stock held by Loeb Holding
Corporation, as escrow agent, and 280,485 shares of Common Stock held by
non-management members of the public) agrees that it or he or she will not,
directly or indirectly, issue, offer to sell, sell, grant an option for the sale
of, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of
any of such securities (either pursuant to Rule 144 of the Rules and Regulations
or otherwise) or dispose of any beneficial interest therein without the prior
written consent of the Underwriter (collectively, the "Lock-up Agreements"). The
Lock-up Agreements shall also provide that any such securities that may be sold
pursuant to Rule 144 (with the Underwriter's consent) shall be executed through
the Underwriter. The commission for any such open market transactions shall not
exceed 5% and the sales price shall be reasonably related to the market. During
the 18 month period commencing with the effective date of the Registration
Statement, the Company shall not, without the prior written consent of the
Underwriter, sell, contract or offer to sell, issue, transfer, assign, pledge,
distribute, or otherwise dispose of, directly or
16
indirectly, any debt security of the Company or any shares of Common Stock or
any issue of preferred stock of the Company, or any options, rights or warrants
with respect to any shares of Common Stock or any issue of preferred stock of
the Company, (other than upon exercise of the Underwriter's Warrants). On or
before the Closing Date, the Company shall deliver instructions to the Transfer
Agent authorizing it to place appropriate legends on the certificates
representing the securities subject to the Lock-up Agreement and to place
appropriate stop transfer orders on the Company's ledgers.
(l) Neither the Company, nor any of its officers, directors,
stockholders or affiliates (within the meaning of the Rules and Regulations)
will take, directly or indirectly, any action designed to, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "Use of
Proceeds" in the Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form SR as may be
required pursuant to Rule 463 under the Act) from time to time, under the Act,
the Exchange Act and the Rules and Regulations, and all such reports, forms and
documents filed shall comply as to form and substance with the applicable
requirements under the Act, the Exchange Act and the Rules and Regulations.
(o) The Company shall furnish to the Underwriter as early as
practicable prior to each of the date hereof, the Closing Date and each Option
Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date of the Registration Statement) which have been read by
the Company's independent public accountants, as stated in their letters to be
furnished pursuant to Section 6(j) hereof.
(p) The Company shall cause the Shares, the Common Stock and the
Public Warrants to be listed on the Nasdaq SmallCap Market and, for a period of
five (5) years from the date hereof, use its best efforts to maintain such
listing of the Shares, the Common Stock and the Public Warrants to the extent
outstanding.
(q) For a period of five (5) years from the Closing Date, the Company
shall furnish to the Underwriter at the Underwriter's request and at the
Company's sole expense, the list of holders of all of the Company's securities.
The Company shall also instruct Depository Trust Company ("DTC") to send to the
Underwriter a copy of the securities positions of all of the security holders of
the Company on DTC's records on a weekly basis for a period of three (3)
calendar months following the effective date, on a monthly basis for a period of
three (3) years following the effective date and, in addition thereto, as
frequently as may be reasonably requested by the Underwriter,
17
(r) The Company shall as soon as practicable, (i) but in no event
more than five business days before the effective date of the Registration
Statement, file a Form 8-A with the Commission providing for the registration
under the Exchange Act of the Securities and (ii) but in no event more than 30
days from the effective date of the Registration Statement, take all necessary
and appropriate actions to be included in Standard and Poor's Corporation
Descriptions or Xxxxx'x Manual in order to satisfy the requirements for "manual
exemption" in those states where available and to maintain such inclusion for as
long as the Securities are outstanding.
(s) Until the completion of the distribution of the Securities, the
Company shall not without the prior written consent of the Underwriter and
Underwriter's Counsel, issue, directly or indirectly any press release or other
communication or hold any press conference with respect to the Company or its
activities or the offering contemplated hereby, other than trade releases issued
in the ordinary course of the Company's business consistent with past practices
with respect to the Company's operations.
(t) For a period of three (3) years after the effective date of the
Registration Statement, the Underwriter shall have the right to designate, one
(1) individual for election to the Company's Board of Directors ("Board") and
the Company shall cause such individual to be elected to the Board (provided
such person is reasonably qualified and is not an officer, director, employee or
principal of the Underwriter). In the event the Underwriter shall not have
designated such individual at the time of any meeting of the Board or such
person is unavailable to serve, or at the end of the period of three (3) years,
the Company shall notify the Underwriter of each meeting of the Board and an
individual designated by the Underwriter shall be permitted to attend all
meetings of the Board and to receive all notices and other correspondence and
communications sent by the Company to members of the Board for a period of three
(3) years after the effective date. Such individual shall be reimbursed for all
actual out-of-pocket expenses incurred in connection with his or her service on,
or attendance at meetings of, the Board. The Company shall provide its outside
directors with compensation in the form of cash and/or options on its Common
Stock as deemed appropriate and customary for similar companies.
(u) For a period equal to the lesser of (i) seven (7) years from the
date hereof, and (ii) the date of the sale to the public of the securities
issuable upon exercise of the Underwriter's Securities, the Company will not
take any action or actions which may prevent or disqualify the Company's use of
any form otherwise available for the registration under the Act of the
securities issuable upon exercise of the Underwriter's Securities.
(v) Commencing one year from the date hereof, the Company shall pay the
Underwriter a commission equal to four percent (4%) of the exercise price of the
Public Warrants, payable on the date of the exercise thereof on terms provided
for in the Warrant Agreement. The Company will not solicit the exercise of the
Public Warrants other than through the Underwriter and will not authorize any
other dealer or engage in such solicitation without the Underwriter's prior
written consent.
(w) The Company agrees that, for a period of seven (7) years from
the effective date of the
18
Registration Statement (the "Effective Date"), if the Company intends to file a
Registration Statement or Statements for the public sale of securities for cash
(other than a Form S-8, Form S-4 or comparable Registration Statement), it will
notify all of the holders of the Underwriter's Securities and if so requested it
will include therein material to permit a public offering of the Underwriter's
Securities at the expense of the Company (excluding fees and expenses of the
holder's counsel and any underwriting or selling commissions), In addition, for
a period of five (5) years from the Effective Date, upon the written demand of
holder(s) representing a majority of the Underwriter's Securities, the Company
agrees, on one occasion, to promptly register the Underwriter's Securities at
the expense of the Company (excluding fees and expenses of the holder's counsel
and any underwriting or selling commissions).
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the closing date of
the public offering of the shares of the Public Offering Securities (the
"Closing Date") and the Option Closing Date (to the extent not paid at the
Closing Date) all expenses and fees (other than fees of Underwriter' Counsel,
except as provided in (iv) below) incident to the performance of the obligations
of the Company under this Agreement, the Underwriter's Warrant Agreement and the
Warrant Agreement including, without limitation, (i) the fees and expenses of
accountants and counsel for the Company, (ii) all costs and expenses incurred in
connection with the preparation, duplication, printing, (including mailing and
handling charges) filing, delivery and mailing (including the payment of postage
with respect thereto) of the Registration Statement and the Prospectus and any
amendments and supplements thereto and the printing, mailing (including the
payment of postage with respect thereto) and delivery of this Agreement, the
Underwriter's Warrant Agreement, the Warrant Agreement, and related documents,
including the cost of all copies thereof and of the Preliminary Prospectuses and
of the Prospectus and any amendments thereof or supplements thereto supplied to
the Underwriter and such dealers as the Underwriter may request, in quantities
as hereinabove stated, (iii) the printing, engraving, issuance and delivery of
the Securities, including, but not limited to, (x) the purchase by the
Underwriter of the Securities and the purchase by the Underwriter of the
Underwriter's Warrants from the Company, (y) the consummation by the Company of
any of its obligations under this Agreement, the Underwriter's Warrant
Agreement, and the Warrant Agreement, and (z) resale of the Securities by the
Underwriter in connection with the distribution contemplated hereby, (iv) the
qualification of the Securities under state or foreign securities or "Blue Sky"
laws and determination of the status of such securities under legal investment
laws, including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum", the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and disbursements and fees of counsel in connection therewith,
provided, however, that the Company's obligation with respect to such "Blue Sky"
fees and disbursement of counsel shall not exceed $30,000 (v) advertising costs
and expenses, including but not limited to costs and expenses in connection with
the "road show", information meetings and presentations, bound volumes and
prospectus memorabilia, tombstones in the Wall Street Journal and other
appropriate publications, (vi) costs, fees and expenses in connection with due
diligence investigations, including but not limited to the costs of background
checks on key management and/or personnel of the Company and the fees of any
independent
19
counsel or consultant retained, (vii) fees and expenses of the transfer agent,
warrant agent, escrow agent, if any, financial public relations firm, if any,
and registrar, if any, (viii) the costs of applications and listings in
securities manuals such as Standard & Poors or Moodys, (ix) the fees payable to
the Commission, Nasdaq and the NASD, and (x) the fees and expenses incurred in
connection with the listing of the Securities on the Nasdaq SmallCap Market and
any stock exchange.
(b) If this Agreement is terminated by the Underwriter in accordance
with the provisions of Section 6, Section 10(a) or Section 12, the Company shall
reimburse and indemnify the Underwriter for all of its actual out-of-pocket
expenses, including the fees and disbursements of Underwriter' Counsel (and in
addition to fees and expenses of Underwriter's Counsel incurred pursuant to
Section 5(a)(iv) above for which the Company shall remain liable), provided,
however, that in the event of a termination pursuant to Section 10(a) hereof
such obligation of the Company shall not exceed $50,000.
(c) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 5, it will pay to the
Underwriter on the Closing Date by certified or bank cashier's check or, at the
election of the Underwriter, by deduction from the proceeds of the offering
contemplated herein a non-accountable expense allowance equal to three percent
(3%) of the gross proceeds received by the Company from the sale of the Firm
Securities. In the event the Underwriter elects to exercise the over-allotment
option described in Section 2(b) hereof, the Company further agrees to pay to
the Underwriter on each Option Closing Date (by certified or bank cashier's
check or, at the Underwriter's election, by deduction from the proceeds of the
offering) a non-accountable expense allowance equal to three percent (3%) of the
gross proceeds received by the Company from the sale of the relevant Option
Securities.
(d) The Underwriter shall not be responsible for any expense of the
Company or others or for any charge or claim related to the offering
contemplated by hereunder in the event that the sale of the Securities as
contemplated hereunder is not consummated, except for the fees and disbursements
of Underwriter's Counsel.
6. Conditions of the Underwriter' Obligations. The obligations of the
Underwriter hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any, as if they had been
made on and as of the Closing Date or each Option Closing Date, as the case may
be; the accuracy on and as of the Closing Date or Option Closing Date, if any,
of the statements of the officers of the Company made pursuant to the provisions
hereof; and the performance by the Company on and as of the Closing Date and
each Option Closing Date, if any, of its covenants and obligations hereunder and
to the following further conditions:
(a) The Registration Statement, which shall be in form and substance
satisfactory to the Underwriter and Underwriter's Counsel, shall have become
effective no later than 12:00 p.m., New York time, on the date of this Agreement
or such later date and time as shall be consented to in
20
writing by the Underwriter, and, at the Closing Date and each Option Closing
Date, if any, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or shall be pending or contemplated by the Commission and any
request on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of Underwriter's Counsel. If the
Company has elected to rely upon Rule 430A of the Rules and Regulations, the
price of the Public Offering Securities and any price-related information
previously omitted from the effective Registration Statement pursuant to such
Rule 430A shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) of the Rules and Regulations within the prescribed time period, and
prior to the Closing Date the Company shall have provided evidence satisfactory
to the Underwriter of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared effective
in accordance with the requirements of Rule 430A of the Rules and Regulations.
(b) The Underwriter shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Underwriter's opinion, is material, or omits to state a
fact which, in the Underwriter's opinion, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, or
that the Prospectus, or any supplement thereto, contains an untrue statement of
fact which, in the Underwriter's opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Underwriter shall have
received from Underwriter's Counsel, such opinion or opinions with respect to
the organization of the Company, the validity of the Securities, the
Underwriter's Warrants, the Registration Statement, the Prospectus and other
related matters as the Underwriter may request and Underwriter's Counsel shall
have received such papers and information as they request to enable them to pass
upon such matters.
(d) On the Closing Date, the Underwriter shall have received the
favorable opinion of XxXxxxxxxx & Xxxxx, LLP, counsel to the Company, dated the
Closing Date, addressed to the Underwriter and in form and substance
satisfactory to Underwriter's Counsel, to the effect that:
(i) the Company (A) has been duly organized and is validly
existing as a corporation in good standing under the laws of its jurisdiction,
and (B) has all requisite corporate power and authority, and has obtained any
and all authorizations, approvals, orders, licenses, certificates, franchises
and permits of and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over environmental or
similar matters), to own or lease its properties and conduct its business as
described in the Prospectus; the Company is duly qualified and licensed and in
good standing as a foreign corporation in each jurisdiction in which its
ownership or leasing of any properties or the character of its operations
requires such qualification or licensing; to such counsel's knowledge, the
Company has not received any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license, certificate,
franchise, or permit which, singly or in the aggregate, if the subject of an
unfavorable
21
decision, ruling or finding, would materially adversely affect the business,
operations, condition, financial or otherwise, or the earnings, business affairs
or prospects, properties, business, assets or results of operations of the
Company. The disclosures in the Registration Statement concerning the effects of
federal, state and local laws, rules and regulations on the Company's business
as currently conducted and as contemplated are correct in all material respects
and do not omit to state a fact necessary to make the statements contained
therein not misleading in light of the circumstances in which they were made.
(ii) to such counsel's knowledge, the Company does not own an
equity interest in any other corporation, partnership, joint venture, trust or
other business entity other than as described in the Prospectus;
(iii) the Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and any amendment or supplement
thereto, under "Description of Securities" and "Certain Transactions," and, to
such counsel's knowledge, after due inquiry, the Company is not a party to or
bound by any instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other securities, except
for this Agreement, the Underwriter's Warrant Agreement, the Warrant Agreement
and as described in the Prospectus. The Securities, and all other securities
issued or issuable by the Company, conform in all material respects to all
statements with respect thereto contained in the Registration Statement and the
Prospectus. All issued and outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and non-assessable; the holders
thereof have no rights of rescission with respect thereto, and are not subject
to personal liability under the laws of the State of New Jersey as currently in
effect by reason of being such holders; and none of such securities were issued
in violation of the preemptive rights of any holders of any security of the
Company. The Securities to be sold by the Company hereunder and under the
Underwriter's Warrant Agreement are not and will not be subject to any
preemptive or other similar rights of any stockholder, have been duly authorized
and, when issued, paid for and delivered in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; the holders thereof will not be
subject to any liability solely as such holders; all corporate action required
to be taken for the authorization, issue and sale of the Securities has been
duly and validly taken; and the certificates representing the Securities are in
due and proper form. The Public Warrants and the Underwriter's Warrants
constitute valid and binding obligations of the Company to issue and sell, upon
exercise thereof and payment therefore the number and type of securities of the
Company called for thereby. Upon the issuance and delivery pursuant to this
Agreement of the Securities to be sold by the Company, the Underwriter and the
Underwriter will acquire good and marketable title to the Securities free and
clear of any pledge, lien, charge, claim, encumbrance, pledge, security
interest, or other restriction or equity of any kind whatsoever. No transfer tax
is payable by or on behalf of the Underwriter in connection with (A) the
issuance by the Company of the Securities, (B) the purchase by the Underwriter
and the Underwriter of the Securities from the Company, (C) consummation by the
Company of any of its obligations under this Agreement, or (D) resales of the
Securities in connection with the distribution contemplated hereby.
22
(iv) the Registration Statement is effective under the Act, and,
if applicable, filing of all pricing information has been timely made in the
appropriate form under Rule 430A, and, to such counsel's knowledge, after due
inquiry no stop order suspending the use of the Preliminary Prospectus, the
Registration Statement or Prospectus or any part of any thereof or suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending, threatened or
contemplated under the Act;
(v) each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or supplement thereto (other
than the financial statements and other financial and statistical data included
therein, as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations.
(vi) to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be described in
the Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement other than those described in the Registration Statement
(or required to be filed under the Exchange Act if upon such filing they would
be incorporated, in whole or in part, by reference therein) and the Prospectus
and filed as exhibits thereto, and the exhibits which have been filed are
correct copies of the documents of which they purport to be copies; (B) the
descriptions in the Registration Statement and the Prospectus and any supplement
or amendment thereto of contracts and other documents to which the Company is a
party or by which it is bound, including any document to which the Company is a
party or by which it is bound, incorporated by reference into the Prospectus and
any supplement or amendment thereto, are accurate in all material respects and
fairly represent the information required to be shown under the Act and the
Rules and Regulations of the Commission thereunder; (C) except as disclosed in
the Prospectus, there is not pending or threatened against the Company any
action, arbitration, suit, proceeding, inquiry, investigation, litigation,
governmental or other proceeding (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign,
pending or threatened against (or circumstances that may give rise to the same),
or involving the properties or business of the Company which (1) is required to
be disclosed in the Registration Statement which is not so disclosed (and such
proceedings as are summarized in the Registration Statement are accurately
summarized in all respects), (2) questions the validity of the capital stock of
the Company or this Agreement or of any action taken or to be taken by the
Company pursuant to or in connection with any of the foregoing; (D) no statute
or regulation or legal or governmental proceeding required to be described in
the Prospectus is not described as required; and (E) except as disclosed in the
Prospectus, there is no action, suit or proceeding pending, or threatened,
against or affecting the Company before any court or arbitrator or governmental
body, agency or official (or any basis thereof known to such counsel) in which
an adverse decision which may result in a material adverse change in the
condition, financial or otherwise, or the earnings, position, prospects,
stockholders' equity, value, operation, properties, business or results of
operations of the Company, could adversely affect the present or prospective
ability of the Company to perform its obligations under this Agreement, the
Underwriter's Warrant Agreement or the Warrant Agreement or which in any manner
draws into question the validity or enforceability of this Agreement, the
Underwriter's Warrant Agreement or the Warrant Agreement;
23
(vii) the Company has full legal right, power and authority to
enter into this Agreement, the Underwriter's Warrant Agreement and the Warrant
Agreement and to consummate the transactions provided for therein; and this
Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement has
been duly authorized, executed and delivered by the Company. This Agreement, the
Underwriter's Warrant Agreement and the Warrant Agreement assuming due
authorization, execution and delivery by each other party hereto and thereto
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or contribution may be
limited by applicable law), and neither the Company's execution or delivery of
this Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement,
its performance hereunder or thereunder, its consummation of the transactions
contemplated herein or therein, or the conduct of its business as described in
the Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or will
constitute a default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company pursuant to the terms of, (A) the
certificate of incorporation or by-laws of the Company, (B) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (C) any statute, judgment, decree, order, rule
or regulation applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or body (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or any of
its activities or properties, except for conflicts, breaches, violations,
defaults, creations or impositions which do not and would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs, position, shareholder's equity, value, operations, properties,
business or results of operations of the Company.
(viii) except as described in the Prospectus, no consent,
approval, authorization or order, and no filing with, any court, regulatory
body, government agency or other body (other than such as may be required under
Blue Sky laws, as to which no opinion need be rendered) is required in
connection with the issuance of the Securities pursuant to the Prospectus and
the Registration Statement, the issuance of the Underwriter's Warrants, the
performance of this Agreement, the Underwriter's Warrant Agreement and the
Warrant Agreement and the transactions contemplated hereby and thereby;
(ix) the Company is not in breach of, or in default under, any term
or provision of any license, contract, indenture, mortgage, installment sale
agreement, deed of trust, lease, voting trust agreement, stockholders'
agreement, partnership agreement, note, loan or credit agreement or any
24
other agreement or instrument evidencing an obligation for borrowed money, or
any other agreement or instrument to which the Company is a party or by which
the Company may be bound or to which the property or assets (tangible or
intangible) of the Company is subject or affected, which could materially
adversely affect the Company; and the Company is not in violation of any term or
provision of its Certificate of Incorporation or By-Laws, or in violation of any
franchise, license, permit, judgment, decree, order, statute, rule or regulation
the result of which would materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs, position,
shareholders' equity, value operation, properties, business or results of
operations of the Company.
(x) the Company owns or possesses, free and clear of all liens or
encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and licenses necessary
to conduct its business (including, without limitation any such licenses or
rights described in the Prospectus as being owned or possessed by the Company),
and to the best of such counsel's knowledge after reasonable investigation,
there is no claim or action by any person pertaining to, or proceeding, pending,
or threatened, which challenges the exclusive rights of the Company with respect
to any trademarks, service marks, copyrights, service names, trade names,
patents, patent applications and licenses used in the conduct of the Company's
business (including, without limitations, any such licenses or rights described
in the Prospectus as being owned or possessed by the Company).
(xi) the Company does not maintain, sponsor, or contribute to
any ERISA Plans or defined benefit plans, as defined in Section 3(35) of ERISA,
(xii) the Company's Registration Statement on Form 8-A under the
Exchange Act has become effective.
(xiii) such counsel has no information leading it to believe that the
persons listed under the caption "Principal Stockholders" in the Prospectus are
not the respective "beneficial owners" (as such phrase is defined in regulation
13d-3 under the Exchange Act) of the securities set forth opposite their
respective names thereunder as and to the extent set forth therein;
(xiv) to such counsel's knowledge, except as described in the
Prospectus, no person, corporation, trust, partnership, association or other
entity has the right to include and/or register any securities of the Company in
the Registration Statement, require the Company to file any registration
statement or, if filed, to include any security in such registration statement;
(xv) to such counsel's knowledge, except as described in the
Prospectus, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee with
respect to the sale of the Public Offering Securities hereunder or the financial
consulting arrangement between the Underwriter and the Company, if any, or any
other arrangements, agreements, understandings, payments or issuances that may
affect the Underwriter' compensation, as determined by the NASD;
25
(xvi) the Lock-up Agreements are legal, valid and binding
obligations of the parties thereto, enforceable against each such party and any
subsequent holder of the securities subject thereto in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable); and
(xvii) all action under the Act necessary to make the public
offering and consummate the sale of the Securities as provided in this Agreement
has been taken by the Company. The provisions of the Certificate of
Incorporation and By-laws of the Company comply as to form in all material
respects with the Act and the Rules and Regulations.
Such counsel shall state that such counsel has participated in conferences
with officers and other representatives of the Company and representatives of
the independent public accountants for the Company, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Preliminary Prospectus, the Registration
Statement, the Prospectus, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which
leads counsel to believe that either the Registration Statement or any amendment
thereto, at the time such Registration Statement or amendment became effective
or the Preliminary Prospectus or Prospectus or amendment or supplement thereto
as of the date of such opinion contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or Prospectus).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriter's Counsel) of
other counsel acceptable to Underwriter's Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of responsible officers of the Company and certificates
or other written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such statements or certificates
shall be delivered to Underwriter's Counsel if requested. The opinion of such
counsel for the Company shall state that the opinion of any such other counsel
is in form satisfactory to such counsel and that the Underwriter and they are
justified in relying thereon.
At each Option Closing Date, if any, the Underwriter shall have received
the favorable opinion
26
of XxXxxxxxxx & Xxxxx, LLP, counsel to the Company, dated the Option Closing
Date, addressed to the Underwriter and in form and substance satisfactory to
Underwriter's Counsel confirming as of such Option Closing Date the statements
made in its opinion delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing
Date, if any, Underwriter's Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or covenants of the
Company herein contained.
(f) Prior to each of Closing Date and each Option Closing Date, if any,
(i) there shall have been no adverse change nor development involving a
prospective change in the condition, financial or otherwise, prospects,
stockholders' equity or the business activities of the Company, whether or not
in the ordinary course of business, from the latest dates as of which such
condition is set forth in the Registration Statement and Prospectus; (ii) there
shall have been no transaction, not in the ordinary course of business, entered
into by the Company, (iii) the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness; (iv) the
Company shall not have issued any securities (other than the Securities) or
declared or paid any dividend or made any distribution in respect of its capital
stock of any class and there shall not have been any change in the capital or
any change in the debt (long or short term) or liabilities or obligations of the
Company (contingent or otherwise); (v) no material amount of the assets of the
Company shall have been pledged or mortgaged, except as set forth in the
Registration Statement and Prospectus (vi) no action, suit or proceeding, at law
or in equity, shall have been pending or threatened (or circumstances giving
rise to same) against the Company, or affecting any of its properties or
business before or by any court or federal, state or foreign commission, board
or other administrative agency wherein an unfavorable decision, ruling or
finding may adversely affect the business, operations, management prospects or
financial condition or assets of the Company, except as set forth in the
Registration Statement and Prospectus: and (vii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated,
threatened or contemplated by the Commission.
(g) At each of the Closing Date and each Option Closing Date, if any,
the Underwriter shall have received a certificate of the principal executive
officer and the chief financial or chief accounting officer of the Company,
dated the Closing Date or Option Closing Date, as the case may be, to the effect
that each of such persons has carefully examined the Registration Statement, the
Prospectus and this Agreement, and that:
(i) The representations and warranties in this Agreement of the
Company are true and correct, as if made on and as of the Closing Date or the
Option Closing Date, as the case may be, and the Company has complied with all
agreements and covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to such Closing
Date or Option Closing Date, as the case may be;
27
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no proceedings
for that purpose have been instituted or are pending or, are contemplated or
threatened under the Act;
(iii) The Registration Statement and the Prospectus and, if
any, each amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and neither the Preliminary Prospectus or any supplement thereto included any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and
(iv) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (A) there has not been any material
change in the shares of Common Stock or liabilities of the Company except as set
forth in or contemplated by the Prospectus; (B) there has not been any material
adverse change in the general affairs, management, business, financial condition
or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, as set forth in or contemplated
by the Prospectus; (C) the Company has not sustained any material loss or
interference with its business from any court or from legislative or other
governmental action, order or decree, whether foreign or domestic, or from any
other occurrence, not described in the Registration Statement and Prospectus;
(D) there has not occurred any event that makes untrue or incorrect in any
material respect any statement or information contained in the Registration
Statement or Prospectus or that is not reflected in the Registration Statement
or Prospectus but should be reflected therein in order to make the statements or
information therein, in light of the circumstances in which they were made, not
misleading in any material respect; (E) the Company has not incurred up to and
including the Closing Date or the Option Closing Date, as the case may be, other
than in the ordinary course of its business, any material liabilities or
obligations, direct or contingent; (F) the Company has not paid or declared any
dividends or other distributions on its capital stock; (G) the Company has not
entered into any transactions not in the ordinary course of business; (H) there
has not been any change in the capital stock or long-term debt or any increase
in the short-term borrowings (other than any increase in the short-terms
borrowings in the ordinary course of business) of the Company; (I) the Company
has not sustained any material loss or damage to its property or assets, whether
or not insured; and (J) there has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(h) By the Closing Date, the Underwriter will have received clearance
from the NASD as to the amount of compensation allowable or payable to the
Underwriter, as described in the Registration Statement.
28
(i) At the time this Agreement is executed, the Underwriter shall have
received a letter, dated such date, addressed to the Underwriter in form and
substance satisfactory (including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriter and Underwriter's Counsel, from Wiss & Company, LLP:
(i) confirming that they are independent accountants with
respect to the Company within the meaning of the Act and the applicable Rules
and Regulations;
(ii) stating that it is their opinion that the financial
statements of the Company included in the Registration Statement comply as to
form in all material respects with the applicable accounting requirements of the
Act and the Rules and Regulations thereunder and that the Underwriter may rely
upon the opinion of Wiss & Company, LLP, with respect to the financial
statements and supporting schedules included in the Registration Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and board of directors and the various
committees of the boards of directors of the Company, consultations with
officers and other employees of the Company responsible for financial and
accounting matters and other specified procedures and inquiries, nothing has
come to their attention which would lead them to believe that (A) the unaudited
financial statements, if any, of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations or are not
fairly presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited financial
statements of the Company included in the Registration Statement, or (B) at a
specified date not more than five (5) days prior to the effective date of the
Registration Statement, there has been any change in the capital stock or
long-term debt of the Company, or any decrease in the stockholders' equity or
net current assets or net assets of the Company as compared with amounts shown
in the September 30, 1996 balance sheet included in the Registration Statement,
other than as set forth in or contemplated by the Registration Statement, or, if
there was any change or decrease, setting forth the amount of such change or
decrease;
(iv) setting forth, at a date not later than five (5) days
prior to the date of the Registration Statement, the amount of liabilities of
the Company (including a breakdown of commercial paper and notes payable to
banks);
(v) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Prospectus in
each case to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including work
sheets, of the Company and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of specified
readings, inquiries and other
29
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi) stating that they have in addition carried out certain
specified procedures, not constituting an audit, with respect to certain pro
forma financial information which is included in the Registration Statement and
the Prospectus and that nothing has come to their attention as a result of such
procedures that caused them to believe such unaudited pro forma financial
information does not comply in form in all respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of that information;
(vii) stating that they have not during the immediately preceding
five (5) year period brought to the attention of any of the Company's management
any "weakness," as defined in Statement of Auditing Standard No. 60
"Communication of Internal Control Structure Related Matters Noted in an Audit,"
in any of the Company's internal controls; and
(viii) statements as to such other matters incident to the
transaction contemplated hereby as the Underwriter may request.
(j) On or prior to the Closing Date and each Option Closing Date, if
any, the Underwriter shall have received from Wiss & Company, LLP, a letter,
dated as of the Closing Date or the Option Closing Date, as the case may be, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (i) of this Section, except that the specified date in
the referred to shall be a date not more than five days prior to the Closing
Date or the Option Closing Date, as the case may be, and, if the Company has
elected to rely on Rule 430A of the Rules and Regulations, to the further effect
that they have carried out procedures as specified in clause (v) of subsection
(i) of this Section with respect to certain amounts, percentages and financial
information as specified by the Underwriter and deemed to be a part of the
Registration Statement pursuant to Rule 430A(b) and have found such amounts,
percentages and financial information to be in agreement with the records
specified in such clause (v).
(k) On each of Closing Date and Option Closing Date, if any, there
shall have been duly tendered to the Underwriter for the several Underwriter's
accounts the appropriate number of Securities.
(l) No order suspending the sale of the Securities in any jurisdiction
designated by the Underwriter pursuant to subsection (e) of Section 4 hereof
shall have been issued on either the Closing Date or the Option Closing Date, if
any, and no proceedings for that purpose shall have been instituted or shall be
contemplated.
(m) On or before Closing Date, the Shares, the Common Stock and the
Public Warrants shall have been approved for quotation on the Nasdaq SmallCap
Market and shall have been authorized upon official notice of issuance for
trading on the BSE.
30
(n) On or before Closing Date, there shall have been delivered to the
Underwriter the Lockup Agreements, in form and substance satisfactory to the
Underwriter.
(o) On or before the Closing Date, the Company shall have executed the
Underwriter's Warrant Agreement and the Warrant Agreement together with the
applicable Warrant Certificates, each in form and substance satisfactory to the
Underwriter.
(p) On or before the Closing Date the Underwriter shall have received
executed copies of the employment agreements and insurance policies referred to
in Section 1 (a) (xxxi) hereof, each to the satisfaction of the Underwriter.
If any condition to the Underwriter's obligations hereunder to be fulfilled
prior to or at the Closing Date or the relevant Option Closing Date, as the case
may be, is not so fulfilled, the Underwriter may terminate this Agreement or, if
the Underwriter so elects, it may waive any such conditions which have not been
fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of the
Underwriter (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the Underwriter,
including specifically each person who may be substituted for an Underwriter as
provided in Section 11 hereof), and each person, if any, who controls the
Underwriter ("controlling person") within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions in
respect thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), as such are
incurred, to which the Underwriter or such controlling person may become subject
under the Act, the Exchange Act, or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
(i) in any Preliminary Prospectus, the Registration Statement or the Prospectus
(as from time to time amended and supplemented); (ii) in any post-effective
amendment or amendments or any time new registration statement and prospectus in
which is included securities of the Company issued or issuable upon exercise of
the Securities; or (iii) in any application or other document or written
communication (in this Section 7 collectively called "Application") executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any securities commission or agency,
Nasdaq, the BSE or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to any Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or
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Prospectus, or any amendment thereof or supplement thereto, or in any
Application, as the case may be. The indemnity agreement in this subsection (a)
shall be in addition to any liability which the Company may have at common law
or otherwise.
(b) the Underwriter agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of the Act, to the same extent as the foregoing indemnity from the
Company to the Underwriter but only with respect to statements or omissions, if
any, made in any Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or in any Application
made in reliance upon, and in strict conformity with, written information
furnished to the Company with respect to the Underwriter by such Underwriter
expressly for use in such Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or in any such
Application, provided that such written information or omissions only pertain to
disclosures in the Preliminary Prospectus, the Registration Statement or
Prospectus directly relating to the transactions effected by the Underwriter in
connection with this offering. The Company acknowledges that the statements with
respect to the public offering of the Securities set forth under the heading
"Underwriting" and the stabilization legend in the Prospectus have been
furnished by the Underwriter expressly for use therein and constitute the only
information furnished in writing by or on behalf of the Underwriter for
inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party or parties
of the commencement thereof, the indemnifying party or parties will be entitled
to participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action at the
expense of the indemnifying party, (ii) the indemnifying parties shall not have
employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such
32
fees and expenses of one additional counsel shall be borne by the indemnifying
parties. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. Anything in this
Section 7 to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes claim for indemnification pursuant
to this Section 7, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Securities or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. In any case where the Company is
a contributing party and the Underwriter are the indemnified party, the relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other, shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Public Offering Securities (before deducting expenses)
bear to the total underwriting discounts received by the Underwriter hereunder,
in each case as set forth in the table in the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, or by the Underwriter, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, expenses or liabilities (or actions in
respect thereof) referred to above in this subdivision (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d) the Underwriter shall not
be required to contribute any amount in excess of the underwriting discount
applicable to the Securities purchased by the Underwriter hereunder. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7, each person,
if any, who controls the Company within the meaning of the Act, each officer
33
of the Company who has signed the Registration Statement, and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to this subparagraph (d), Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this subparagraph (d), notify
such party or parties from whom contribution may be sought, but the omission so
to notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this subparagraph (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution agreement
set forth above shall be in addition to any liabilities which any indemnifying
party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto shall be
deemed to be representations, warranties and agreements at the Closing Date and
any Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the respective indemnity agreements
contained in Section 7 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter,
the Company, any controlling person of any Underwriter or the Company, and shall
survive termination of this Agreement or the issuance and deliver of the
Securities to the Underwriter and the Underwriter, as the case may be, for a
period of seven (7) years from the date hereof, except for Section 4(v), in
which case the period shall be eight (8) years.
9. Effective Date. This Agreement shall become effective at 10:00 a.m., New
York City time, on the next full business day following the date hereof, or at
such earlier time after the Registration Statement becomes effective as the
Underwriter, in it's discretion, shall release the Securities for the sale to
the public; provided, however, that the provisions of Sections 5, 7 and 10 of
this Agreement shall at all times be effective. For purposes of this Section 9,
the Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Underwriter of telegrams to
securities dealers releasing such shares for offering or the release by the
Underwriter for publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the Underwriter
shall have the right to terminate this Agreement, (i) if any domestic or
international event or act or occurrence has disrupted, or in the Underwriter's
opinion will in the immediate future disrupt the financial markets; or (ii) any
material adverse change in the financial markets shall have occurred; or (iii)
if trading on the New York Stock Exchange, the American Stock Exchange, or in
the over-the-counter market shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required on the over-the-counter market by the NASD
or by order of the Commission or any other government authority having
jurisdiction;
34
or (iv) if the United States shall have become involved in a war or major
hostilities, or if there shall have been an escalation in an existing war or
major hostilities or a national emergency shall have been declared in the United
States; or (v) if a banking moratorium has been declared by a state or federal
authority; or (vi) if a moratorium in foreign exchange trading has been
declared; or (vii) if the Company, shall have sustained a loss material or
substantial to the Company by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in the Underwriter's opinion, make it
inadvisable to proceed with the delivery of the Securities; or (vii) if there
shall have been such a material adverse change in the condition (financial or
otherwise), business affairs or prospects of the Company, whether or not arising
in the ordinary course of business, which would render, in the Underwriter's
judgment, either of such parties unable to perform satisfactorily its respective
obligations as contemplated by this Agreement or the Registration Statement, or
such material adverse change in the general market, political or economic
conditions, in the United States or elsewhere as in the Underwriter's judgment
would make it inadvisable to proceed with the offering, sale and/or delivery of
the Securities.
(b) If this Agreement is terminated by the Underwriter in accordance
with the provisions of Section 10(a), the Company shall promptly reimburse and
indemnify the Underwriter for all of its actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriter in an amount
not to exceed $50,000 (less amounts previously paid pursuant to Section 5(c)
above). Notwithstanding any contrary provision contained in this Agreement, if
this Agreement shall not be carried out within the time specified herein, or any
extension thereof granted to the Underwriter, by reason of any failure on the
part of the Company to perform an undertaking or satisfy any condition of this
Agreement to be performed or satisfied by the Company (including, without
limitation, pursuant to Section 6 or Section 12) then, the Company shall
promptly reimburse and indemnify the Underwriter for all of its actual
out-of-pocket expenses, including the fees and disbursements of counsel for the
Underwriter (less amounts previously paid pursuant to Section 5 (c) above). In
addition, the Company shall remain liable for all Blue Sky counsel fees and
expenses and Blue Sky filing fees. Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any termination of this
Agreement (including, without limitation, pursuant to Sections 6, 10, 11 and 12
hereof), and whether or not this Agreement is otherwise carried out, the
provisions of Section 5 and Section 7 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
11. Omitted
12. Default by the Company. If the Company shall fail at the Closing Date or
any Option Closing Date, as applicable, to sell and deliver the number of Public
Offering Securities which it is obligated to sell hereunder on such date, then
this Agreement shall terminate (or, if such default shall occur with respect to
any Option Securities to be purchased on any Option Closing Date, the
Underwriter may at the Underwriter's option, by notice from the Underwriter to
the Company, terminate the Underwriter's obligation to purchase Option
Securities from the Company on such date) without any liability on the part of
any non-defaulting party other than pursuant to Section 5,
35
Section 7 and Section 10 hereof. No action taken pursuant to this Section shall
relieve the Company from liability, if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed to the
Underwriter at 000 Xxxxx Xxxxxx - 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xx. Xxxx Xxxxxxx, President, with a copy to Scheichet & Xxxxx, P.C.,
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X. Xxxxx, Esq. Notices
to the Company shall be directed to the Company at 0000 Xxxxxx Xxxxxx, 0xx
Xxxxx, Xxxxx, Xxx Xxxxxx 00000, Attn: Xxxxxx Xxxxxxx, President, with a copy to
XxXxxxxxxx & Xxxxx, LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention:
Xxxxx X. Xxxx, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and shall
be binding upon, the Underwriter, the Company and the controlling persons,
directors and officers referred to in Section 7 hereof, and their respective
successors, legal Underwriter and assigns and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in
accordance with the laws of the State of New York without giving effect to the
choice of law or
conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of
which shall be deemed to be an original, and all of which taken together
shall be deemed to be one
and the same instrument.
17. Entire Agreement; Amendments. This Agreement, the Underwriter's
Warrant Agreement and the Warrant Agreement constitute the entire agreement of
the parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Underwriter and
the Company.
36
If the foregoing correctly sets forth the understanding between the
Underwriter and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
GENISYS RESERVATION SYSTEMS, INC.
By:_____________________
Xxxxxx Xxxxxxx, President
Confirmed and accepted as of
the date first above written
X.X. Xxxxx & Co., Inc.
By:
Xxxxx Xxxxxx, Chairman
4734-3
37
