Exhibit 1.1
DRAFT 033197A
1,000,000 SHARES
JAZZ PHOTO CORP.
UNDERWRITING AGREEMENT
_____________, 1996
Hampshire Securities Corporation
As Representative of the several
Underwriters named in Schedule I
attached hereto
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
The undersigned, Jazz Photo Corp., a New Jersey corporation (the
"Company"), and the selling shareholders of the Company indentified in Schedule
II hereto (the "Selling Shareholders") hereby confirm their agreement with
Hampshire Securities Corporation (individually, "Hampshire," and, as
representative (the "Representative") of the several underwriters named in
Schedule I hereto (the "Underwriters")), and the Underwriters as follows:
1. INTRODUCTION.
(a) The Company proposes to issue and sell to the Underwriters an
aggregate of 1,000,000 shares of common stock, par value $.01 per share, of the
Company (the "Common Stock"). Such shares of Common Stock are hereinafter
referred to as the "Firm Stock".
(b) Solely for the purpose of covering over-allotments, if any, the
Company proposes to grant to Hampshire, individually and not as Representative,
an option (the "Company Over-allotment Option") to purchase from it, in the
aggregate, up to an additional 50,000 shares of Common Stock. Such shares of
Common Stock are hereinafter referred to as the "Company Additional Stock." The
Firm Stock and the Additional Stock are hereinafter referred to as the "Company
Stock."
(c) Solely for the purpose of covering over-allotments, if any, the
Selling Shareholders propose to grant to Hampshire, individually and not as
Representative, an option (the "Shareholder Over-allotment Option") to purchase
from them, in the aggregate, up to an additional 100,000 shares of Common Stock
as set forth in Schedule II hereto. Such shares of Common Stock are
hereinafter referred to as the "Shareholder Additional Stock." The Company
Additional Stock and the Company Additional Stock are hereinafter referred to as
the "Additional Stock." The Firm Stock and the Additional Stock are hereinafter
referred to as the "Stock."
(d) The Company proposes to sell to Hampshire, individually and not
as Representative, 100,000 warrants (the "Representative's Warrants") to
purchase up to an aggregate of 100,000 shares of Common Stock (the "Warrant
Shares") for an aggregate purchase price of $100.00. The Representative's
Warrants shall be substantially in the form filed as an exhibit to the
Registration Statement (as hereinafter defined). The Representative's Warrants
and the Warrant Shares are hereinafter referred to collectively as the
"Representative's Securities." The Stock and the Representative's Securities
are hereinafter referred to collectively as the "Securities."
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2. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(1) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and may have filed one
or more amendments thereto, on Form S-1 (Registration No. 333-_______),
including in such registration statement and each such amendment a related
preliminary prospectus, for the registration of the Securities under the
Securities Act of 1933, as amended (the "Securities Act"). As used in this
Agreement, the term "Registration Statement" shall refer to such registration
statement referred to in the first sentence of this Section 2(a), as amended, on
file with the Commission at the time such registration statement is declared by
the Commission to be effective under the Securities Act (including the
prospectus, financial statements, and exhibits filed as a part thereof,
provided, however, that such registration statement, at the time it is declared
by the Commission to be effective under the Securities Act, may omit such
information as is permitted to be omitted from such registration statement when
it becomes effective under the Securities Act pursuant to Rule 430A of the
General Rules and Regulations of the Commission under the Securities Act (the
"Regulations"), which information (the "Rule 430A Information") shall be deemed
to be included in such registration statement when a final prospectus is filed
with the Commission in accordance with Rules 430A and 424(b)(1) or (4) of the
Regulations); the term "Preliminary Prospectus" shall refer to each prospectus
included in the Registration Statement, or any amendments thereto, before the
Registration Statement is declared by the Commission to be effective under the
Securities Act, the form of prospectus omitting Rule 430A Information included
in the Registration Statement
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when the Registration Statement becomes effective under the Securities Act, if
applicable (the "Rule 430A Prospectus"), and any prospectus filed by the Company
with the consent of the Representative pursuant to Rule 424(a) of the
Regulations; and the term "Prospectus" shall refer to the final prospectus
forming a part of the Registration Statement in the form first filed with the
Commission pursuant to Rule 424(b)(1) or (4) of the Regulations or, if no such
filing is required, the form of final prospectus forming a part of the
Registration Statement.
(2) When the Registration Statement becomes effective under the
Securities Act, and at all times subsequent thereto up to and including the
Closing Date (as defined in Section 3(a) hereof) and each Additional Closing
Date (as defined in Section 3(b) hereof), and during such longer period as the
Prospectus may be required to be delivered in connection with sales by the
Underwriters or a dealer, and during such longer period until any post-effective
amendment thereto shall become effective under the Securities Act, the
Registration Statement (and any post-effective amendment thereto) and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement to the Registration Statement or the
Prospectus) will contain all statements which are required to be stated therein
in accordance with the Securities Act and the Regulations, will comply with the
Securities Act and the Regulations, and will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and no event will
have occurred which should have been set forth in an amendment or supplement to
the Registration Statement or the Prospectus which has not then been set forth
in such an amendment or supplement; if a Rule 430A Prospectus is included in the
Registration Statement at the time it is declared by the Commission to be
effective under the Securities Act, the
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Prospectus filed pursuant to Rules 430A and 424(b)(1) or (4) of the Regulations
will contain all Rule 430A Information and all statements which are required to
be stated therein in accordance with the Securities Act or the Regulations, will
comply with the Securities Act and the Regulations, and will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
and each Preliminary Prospectus, as of the date filed with the Commission,
contained all statements required to be stated therein in accordance with the
Securities Act and the Regulations, complied with the Securities Act and the
Regulations, and did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; except that no representation or warranty
is made in this Section 2(a)(2) with respect to statements or omissions made in
reliance upon, and in conformity with, written information furnished to the
Company as stated in Section 8(b) with respect to any Underwriter by, or on
behalf of, such Underwriter through the Representative expressly for inclusion
in the Registration Statement, any Preliminary Prospectus, or the Prospectus, or
any amendment or supplement thereto, or with respect to statements or omissions
made in reliance upon, and in conformity with, written information furnished to
the Company as stated in Section 8(c) with respect to any Selling Shareholder
by, or on behalf of, such such Selling Shareholder expressly for inclusion in
the Registration Statement, any Preliminary Prospectus, or the Prospectus, or
any amendment or supplement thereto.
(3) Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction has issued an order (a "Stop Order") suspending
the effectiveness of, or preventing or suspending the use of, the Registration
Statement, any Preliminary Prospectus, the
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Prospectus, or any amendment or supplement thereto, refusing to permit the
effectiveness of the Registration Statement, or suspending the registration or
qualification of the Securities nor has any of such authorities instituted or
threatened to institute any proceedings with respect to a Stop Order.
(4) Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the Prospectus has
been properly described therein. Any contract, agreement, instrument, lease, or
license required to be filed as an exhibit to the Registration Statement has
been filed with the Commission as an exhibit to the Registration Statement.
(5) The following corporations are the only subsidiaries (as
defined in the Regulations) of the Company: Jazz Photo (Hong Kong) Limited, a
Hong Kong corporation, and Jazz Photo Canada Limited, Ontario, Canada
corporation (collectively, the "Subsidiaries"). The Company and each of the
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of its respective jurisdiction of incorporation, with
full power and authority, and all necessary consents, authorizations, approvals,
orders, licenses, certificates, and permits of and from, and declarations and
filings with, all federal, state, local, and other governmental authorities and
all courts and other tribunals, to own, lease, license, and use its properties
and assets and to conduct its business in the manner described in the
Prospectus. The Company and each Subsidiary is duly qualified to do business as
a foreign corporation and is in good standing as such in every jurisdiction in
which its ownership, leasing, licensing, or use of property and assets or the
conduct of its business makes such qualification necessary, except where the
failure to so qualify will not have a material adverse effect on the Company's
business, properties, or financial condition on a consolidated basis.
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(6) The authorized capital stock of the Company consists of
15,000,000 shares of Common Stock, of which 4,000,000 shares are outstanding,
and 5,000,000 shares of preferred stock, par value $.01 per share, of which none
are outstanding. Each outstanding share of Common Stock is validly authorized
and issued, fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, has not been issued and is not owned or held
in violation of any preemptive or similar rights of shareholders. Each share
of capital stock of each Subsidiary is owned of record and beneficially by the
Company. There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance of, any
share of capital stock of the Company or any Subsidiary or any security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock of the Company, except as may be properly
described in the Prospectus. There is outstanding no security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock of the Company or any Subsidiary, except as may
be properly described in the Prospectus. The certificates evidencing the Common
Stock are in due and proper form.
(7) The consolidated financial statements of the Company
included in the Registration Statement and the Prospectus fairly present, with
respect to the Company, the financial position, the results of operations, the
cash flows, and the other information purported to be shown therein at the
respective dates and for the respective periods to which they apply. Such
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles (except to the extent that certain
footnote disclosures regarding any stub period may have been omitted in
accordance with the applicable rules of the Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) consistently applied
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throughout the periods involved, are correct and complete in all material
respects, and are in accordance with the books and records of the Company.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company, LLP, the accountants whose report on the audited
consolidated financial statements is filed with the Commission as a part of the
Registration Statement, are, and during the periods covered by their reports
included in the Registration Statement and the Prospectus were, independent
certified public accountants with respect to the Company within the meaning of
the Securities Act and the Regulations. No other financial statements are
required by Form S-1 or otherwise to be included in the Registration Statement
or the Prospectus. There has at no time been a material adverse change in the
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company on a consolidated basis from the
latest information set forth in the Registration Statement or the Prospectus,
except as may be properly described in the Prospectus.
(8) There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending, threatened, or,
to the best knowledge of the Company, in prospect (or any basis therefor) with
respect to the Company, any Subsidiary, or any of their respective operations,
businesses, properties, or assets, except as may be properly described in the
Prospectus or such as individually or in the aggregate do not now have, and will
not in the future have, a material adverse effect upon the operations, business,
properties, or assets of the Company and the Subsidiaries taken as a whole. To
the best knowledge of the Company, neither the Company nor any Subsidiary is not
in violation of, or in default with respect to, any law, rule, regulation,
order, judgment, or decree, except as may be properly described in the
Prospectus or such as in the aggregate do not now have, and will not in the
future have, a material adverse effect upon the operations, business,
properties, or assets of the Company and the Subsidiaries
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taken as a whole; nor is the Company or any Subsidiary currently required to
take any action in order to avoid any such violation or default.
(9) The Company and each Subsidiary has good and marketable
title to all properties and assets which the Prospectus indicates are owned by
it, free and clear of all liens, security interests, pledges, charges,
encumbrances, and mortgages, except as may be properly described in the
Prospectus or as are not material to the Company and the Subsidiaries taken as a
whole. No real property owned, leased, licensed, or used by the Company or any
Subsidiary lies in an area which is, or to the knowledge of the Company will be,
subject to zoning, use, or building code restrictions which would prohibit, and
no state of facts relating to the actions or inaction of another person or
entity or his or its ownership, leasing, licensing, or use of any real or
personal property exists or will exist which would prevent, the continued
effective ownership, leasing, licensing, or use of such real property in the
business of the Company and the Subsidiaries, each as presently conducted or as
the Prospectus indicates it contemplates conducting, except as may be properly
described in the Prospectus.
(10) Neither the Company or any Subsidiary nor, to the knowledge
of the Company, any other party, is now, or is expected by the Company to be, in
violation or breach of, or in default with respect to, any provision of any
contract, agreement, instrument, lease, license, arrangement, or understanding
which is material to the Company and the Subsidiaries taken as a whole, and each
such contract, agreement, instrument, lease, license, arrangement, and
understanding is in full force and effect and is the legal, valid, and binding
obligation of the parties thereto and is enforceable as to them in accordance
with its respective terms. The Company and each Subsidiary enjoys peaceful and
undisturbed possession under all leases and licenses under
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which it is operating. Except as described in the Prospectus, neither the
Company nor any Subsidiary is a party to, or bound by, any contract, agreement,
instrument, lease, license, arrangement, or understanding, or subject to any
charter or other restriction, which has had, or may in the future have, a
material adverse effect on the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of the Company
and the Subsidiaries taken as a whole. Neither the Company nor any Subsidiary is
in violation or breach of, or in default with respect to, any term of its
respective certificate of incorporation (or other charter document) or by-laws.
(11) The Company and each Subsidiary owns or possesses adequate
rights to use all patents, patent rights, inventions, trade secrets, licenses,
know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names, and copyrights described or referred to
in the Prospectus as owned or used by it or which are necessary for the conduct
of its business as currently conducted as described in the Prospectus and, to
the best knowledge of the Company, its business as contemplated as described in
the Prospectus. To the best knowledge of the Company, all such patents, patent
rights, licenses, trademarks, service marks, and copyrights are (i) valid and
enforceable, (ii) not being infringed by any third parties which infringement
could, singly or in the aggregate, materially and adversely affect the business,
properties, operations, condition (financial or otherwise), results of
operations, income, or business prospects of the Company and the Subsidiaries
taken as a whole, as presently being conducted or as proposed to be conducted as
described in the Prospectus, and (iii) are uncontested by any third party. The
Company has no knowledge of, nor has it received any notice of, infringement of,
or conflict with, asserted rights of others with respect to any patents, patent
rights, inventions, trade
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secrets, licenses, know-how, proprietary techniques, including processes and
substances, trademarks, service marks, trade names, or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling, or
finding could materially and adversely affect the business, properties,
operations, condition (financial or otherwise), results of operations, income,
or business prospects of the Company and the Subsidiaries taken as a whole, as
presently being conducted or as proposed to be conducted as described in the
Prospectus.
(12) Neither the Company or any Subsidiary, nor, to the best
knowledge of the Company, any director, officer, agent, employee, or other
person associated with, or acting on behalf of, the Company or any Subsidiary,
has, directly or indirectly: used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds; violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment. The Company's internal accounting controls
and procedures are sufficient to cause the Company and each of the Subsidiaries
to comply in all respects with the Foreign Corrupt Practices Act of 1977, as
amended.
(13) The Company has all requisite power and authority to
execute, deliver, and perform each of this Agreement and the Representative's
Warrants. All necessary corporate proceedings of the Company have been duly
taken to authorize the execution, delivery, and performance by the Company of
this Agreement and the Representative's Warrants. This Agreement has been duly
authorized, executed, and delivered by the Company, is the legal, valid, and
binding obligation of the Company. The Representative's Warrants have been duly
authorized
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by the Company and, when executed and delivered by the Company, will be legal,
valid, and binding obligations of the Company, each enforceable as to the
Company in accordance with its terms. No consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration or filing
with, any federal, state, local, or other governmental authority or any court or
other tribunal is required by the Company or any Subsidiary for the execution,
delivery, or performance by the Company of this Agreement or the
Representative's Warrants, except filings under the Securities Act which have
been or will be made before the Closing Date, and consents consisting only of
consents under "blue sky" or securities laws which have been obtained at or
prior to the date of this Agreement. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
the Company or any Subsidiary is a party, or to which any of its properties or
assets are subject, is required for the execution, delivery, or performance of
this Agreement and the Representative's Warrants; and the execution, delivery,
and performance of this Agreement and the Representative's Warrants will not
violate, result in a breach of, conflict with, result in the creation or
imposition of any lien, charge, or encumbrance upon any properties or assets of
the Company or any Subsidiary pursuant to the terms of, or, with or without the
giving of notice or the passage of time or both, entitle any party to terminate
or call a default under, any such contract, agreement, instrument, lease,
license, arrangement, or understanding, or violate, result in a breach of, or
conflict with any term of the certificate of incorporation (or other charter
document) or by-laws of the Company, or violate, result in a breach of, or
conflict with, any law, rule, regulation, order, judgment, or decree binding on
the Company or any Subsidiary or to which any of their respective operations,
businesses, properties, or assets are subject.
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(14) The Firm Stock is validly authorized and, when issued and
delivered in accordance with this Agreement, will be validly issued, fully paid,
and nonassessable, without any personal liability attaching to the ownership
thereof, and will not be issued in violation of any preemptive or similar rights
of shareholders, and the Underwriters will receive good title to the shares of
Firm Stock purchased by them, respectively, free and clear of all liens,
security interests, pledges, charges, encumbrances, shareholders' agreements,
and voting trusts. The Company Additional Stock is validly authorized and, when
issued in accordance with the terms hereof, will validly issued, fully paid, and
nonassessable, without any personal liability attaching to the ownership
thereof, and will not issued in violation of any preemptive or similar rights of
shareholders. The Shareholder Additional Stock is validly authorized and
issued, fully paid, and nonassessable, without any personal liability attaching
to the ownership thereof, and was not issued in violation of any preemptive or
similar rights of shareholders. The Company Additional Stock has been duly and
validly reserved for issuance. The Stock conforms to all statements relating
thereto contained in the Registration Statement and the Prospectus.
(15) The Warrant Stock is validly authorized and has been duly
and validly reserved for issuance and, when issued and delivered upon exercise
of the Representative's Warrants in accordance with the terms thereof, will be
validly issued, fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and will not be issued in violation of any
preemptive or similar rights of shareholders; and the holders of the
Representative's Warrants will receive good title to the securities purchased by
them upon the exercise of the Representative's Warrants, free and clear of all
liens, security interests, pledges, charges, encumbrances, shareholders'
agreements, and voting trusts. The Representative's Securities
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conform to all statements relating thereto contained in the Registration
Statement and the Prospectus.
(16) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except as may
otherwise be properly described in the Prospectus, neither the Company nor any
Subsidiary has (i) issued any securities or incurred any material liability or
material obligation, primary or contingent, for borrowed money, (ii) entered
into any material transaction not in the ordinary course of business, (iii)
declared or paid any dividend on its capital stock, except dividends by a
Subsidiary to the Company, or (iv) experienced any adverse changes or any
development which may materially adversely effect the condition (financial or
otherwise), net assets or shareholders' equity, results of operations, business,
key personnel, assets, or properties of the Company and the Subsidiaries taken
as a whole.
(17) Neither the Company or any Subsidiary nor any of their
respective officers, directors, or affiliates (as defined in the Regulations),
has taken or will take, directly or indirectly, prior to the termination of the
offering contemplated by this Agreement, any action designed to stabilize or
manipulate the price of any security of the Company, or which has caused or
resulted in, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the
Company, to facilitate the sale or resale of any of the Firm Stock or the
Additional Stock.
(18) The Company has obtained from each of its directors,
officers, and shareholders, other than the Selling Shareholders with respect to
the Shareholder Additional Stock, a written agreement, in form and substance
satisfactory to counsel for the Underwriters, that, for
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a period of 18 months from the date on which the Registration Statement is
declared by the Commission to be effective under the Securities Act, he, she, or
it will not, without the prior written consent of the Representative, publicly
offer, pledge, sell, contract to sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock or any
security or other instrument which by its terms is convertible into, or
exercisable or exchangeable for, shares of Common Stock or other securities of
the Company, including, without limitation, any shares of Common Stock issuable
pursuant to the terms of any employee stock options; provided, however, that
such persons may offer, sell, contract to sell, grant an option for the sale of,
or otherwise dispose of all or any part of his, her, or its shares of Common
Stock or other such security or instrument of the Company during such period if
such transaction is private in nature and the transferee of such shares of
Common Stock or other securities or instruments agrees, prior to such
transaction, to be bound by all of the provisions of such agreement.
(19) The Company is not, and does not intend to conduct its
business in a manner in which it would be required to register as, an
"investment company" as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations
promulgated thereunder.
(20) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement, which right has not been waived.
(21) Except as may be set forth in the Prospectus, the Company
has not incurred any liability for a fee, commission, or other compensation on
account of the employment of a broker or finder in connection with the
transactions contemplated by this Agreement.
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(22) Neither the Company or any Subsidiary, nor any of their
respective affiliates, is presently doing business with the government of Cuba
or with any person or affiliate located in Cuba. If, at any time after the date
on which the Registration Statement is declared by the Commission to be
effective under the Securities Act or with the Florida Department of Banking and
Finance (the "Florida Department"), whichever is later, and prior to the end of
the period referred to in the first clause of Section 2(a)(2) hereof, the
Company and any Subsidiary commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba, the Company will so inform
the Florida Department within 90 days after such commencement of business in
Cuba, and, during the period referred to in Section 2(a)(2) hereof, will inform
the Florida Department within 90 days after any change occurs with respect to
previously reported information.
(23) No officer, director, or shareholder of the Company has any
affiliation or association with the National Association of Securities Dealers,
Inc. (the "NASD") or any member thereof.
(24) Except as disclosed in the Prospectus, the Company and each
of the Subsidiaries has filed all necessary federal, state, local, and foreign
income and franchise tax returns and other reports required to be filed and has
paid all taxes shown as due thereon; and there is no tax deficiency which has
been, or, to the knowledge of the Company, might be, asserted against the
Company or any Subsidiary.
(25) To the best knowledge of the Company, none of the activities
or business of the Company or any Subsidiary is in violation of, or will cause
the Company or any Subsidiary to violate, any law, rule, regulation, or order of
the United States, any state, county, or locality, or of any agency or body of
the United States or of any state, county, or
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locality, the violation of which would have a material adverse effect upon the
condition (financial or otherwise), business, property, prospective results of
operations, or net worth of the Company and the Subsidiaries taken as a whole.
(26) The Common Stock has been approved for quotation on the
Nasdaq [National][SmallCap] Market [and the Pacific Stock Exchange].
(b) Each of the Selling Shareholders severally and not jointly
represents and warrants to, and agrees with, the several Underwriters that:
(1) Such Selling Shareholder has (i) caused a negotiated
certificate or negotiated certificates representing the number of shares of
Shareholder Additional Stock set forth opposite the name of such Selling
Shareholder in Schedule II hereto to be delivered to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
attorney-at-law (the "Custodian"), duly endorsed in blank or together with blank
stock powers duly executed, with such Selling Shareholder's signature
appropriately guaranteed by medallion guarantee, such certificate or
certificates to be held by the Custodian pursuant to a letter of transmittal and
custody agreement for delivery, pursuant to the provisions hereof, one or more
Additional Closing Dates and (ii) granted an irrevocable power of attorney to
▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (the "Attorneys") to purchase all requisite
stock transfer tax stamps, to execute this Agreement (including agreeing on the
price at which the Shareholder Additional Stock is to be sold to the
Underwriters) and thereafter to modify and amend this Agreement, to settle any
dispute relating to the terms of this Agreement, to waive any condition to the
obligations of such Selling Shareholder, and to execute all other instruments
and documents and to perform all other acts necessary or desirable to carry out
the provisions of this Agreement on behalf of such Selling
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Shareholder. Such letter of transmittal and custody agreement, together with
such irrevocable power of attorney, are hereinafter referred to as the
"Custodial Agreement".
(2) There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or, to the best knowledge of such Selling
Shareholder, investigation pending, threatened, or in prospect (or any basis
therefor) with respect to such Selling Shareholder or any of such Selling
Shareholder's business, properties, or assets, except as otherwise disclosed in
the Registration Statement. Such Selling Shareholder is not in violation of, or
in default with respect to, any law, rule, regulation, order, judgment, or
decree; nor is such Selling Shareholder required to take any action in order to
avoid such violation or default.
(3) Such Selling Shareholder has all requisite power and
authority to execute, deliver, and perform this Agreement and the Custodial
Agreement. This Agreement and the Custodial Agreement have been duly executed
and delivered by such Selling Shareholder, are the legal, valid, and binding
obligations of such Selling Shareholder, and are enforceable as to such Selling
Shareholder in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, or other laws affecting
the rights of creditors generally. To such Selling Shareholder's best
knowledge, no consent, authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any federal, state, local, or
other governmental authority or any court or other tribunal is required by such
Selling Shareholder for the execution, delivery, or performance of this
Agreement or the Custodial Agreement, except filings under the Securities Act
which have been or will be made before the Closing Date and such consents
consisting only of consents under "blue sky" or securities laws which have been
obtained at or prior to the date of this Agreement by such Selling Shareholder.
No consent of any party to
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any contract, agreement, instrument, lease, license, arrangement, or
understanding to which such Selling Shareholder is a party, or to which any of
such Selling Shareholder's properties or assets are subject, is required for the
execution, delivery, or performance of this Agreement or the Custodial
Agreement; and the execution, delivery, and performance of this Agreement and
the Custodial Agreement will not violate, result in a breach of, conflict with,
or result in the creation or imposition of any lien, charge, or encumbrance upon
any properties or assets of such Selling Shareholder pursuant to the terms of,
or, with or without the giving of notice or the passage of time or both, entitle
any party to terminate or call a default under, any such contract, agreement,
instrument, lease, license, arrangement, or understanding, or, to such Selling
Shareholder's best knowledge, violate, result in a breach of, or conflict with,
any law, rule, regulation, order, judgment, or decree binding on such Selling
Shareholder or to which any of such Selling Shareholder's business, properties,
or assets are subject.
(4) Such Selling Shareholder has good title to the shares of
Shareholder Additional Stock to be sold by such Selling Shareholder pursuant to
this Agreement, free and clear of all liens, security interests, pledges,
charges, encumbrances, stockholders' agreements, and voting trusts (except those
created by this Agreement and the Custodial Agreement and those which have been
terminated prior to the execution hereof), and, when and if delivered in
accordance with this Agreement, the Underwriters will receive good title to the
shares of Shareholder Additional Stock purchased by them from such Selling
Shareholder, free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts. The Shareholder
Additional Stock conforms to all statements relating thereto contained in the
Registration Statement or the Prospectus.
-19-
(5) Neither such Selling Shareholder nor any of such Selling
Shareholder's affiliates (as defined in the Regulations) has taken or will take,
directly or indirectly, prior to the termination of the offering contemplated by
this Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which has caused or resulted in, or which might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Stock or the Additional Stock.
(6) Such Selling Shareholder has reviewed, and is familiar with,
the Registration Statement and all amendments and supplements thereto, if any,
filed with the Commission prior to the date hereof, and with each Preliminary
Prospectus and the Prospectus contained therein, as supplemented, if applicable,
to the date hereof, and all information relating to such Selling Shareholder,
such Selling Shareholder's shares of Common Stock, and any contractual or other
business relationship between such Selling Shareholder and the Company that is
set forth in the Registration Statement, any such amendment or supplement
thereto, each Preliminary Prospectus, and the Prospectus, or any such supplement
thereof, and all other information furnished or to be furnished by, or on behalf
of, such Selling Shareholder for use in the Registration Statement, any such
amendment or supplement thereto, any Preliminary Prospectus, and the Prospectus,
or any such supplement thereto, is and, at the Closing Date and each Additional
Closing Date, will be, true, correct, and complete and does not, and at the
Closing Date and each Additional Closing Date, will not, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make such information not misleading.
-20-
(7) Such Selling Shareholder has not incurred any liability for
a fee, commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by this
Agreement.
(8) Such Selling Shareholder's decision to sell the Shareholder
Additional Stock has not been based upon any negative or otherwise material
information with respect to the Company which is not set forth in the
Prospectus.
3. PURCHASE, SALE, AND DELIVERY OF THE STOCK AND THE REPRESENTATIVE'S
WARRANTS.
(a) On the basis of the representations, warranties, covenants, and
agreements of the Company herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the several
Underwriters, and, the Underwriters, severally and not jointly, agree to
purchase from the Company, the numbers of shares of Firm Stock set forth
opposite the respective names of the Underwriters in Schedule I hereto.
The purchase price per share of the Firm Stock to be paid by the several
Underwriters shall be $__________. The initial public offering price per share
of the Firm Stock shall be $_________.
Payment for the Firm Stock by the Underwriters shall be made by certified
or official bank check in New York Clearing House (next day) funds or by
electronic wire transfer of next day funds, payable to the order of the Company,
at the offices of Hampshire Securities Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place in the New York City metropolitan area as
the Representative shall determine and advise the Company by at least two full
days' notice in writing, upon delivery of the Firm Stock to the Representative
for the respective
-21-
accounts of the Underwriters. Such delivery and payment shall be made at 9:00
a.m., New York City local time, on the third business day following the time of
the initial public offering, as defined in Section 11(a) hereof (unless such
time and date is postponed in accordance with the provisions of Section 9(c)
hereof), or at such other time as shall be agreed upon between the
Representative and the Company. The time and date of such delivery and payment
are hereinafter referred to as the "Closing Date."
Certificates representing the Firm Stock shall be registered in such name
or names and in such authorized denominations as the Representative may request
in writing at least two full business days prior to the Closing Date. The
Company shall permit the Representative to examine and package such certificates
for delivery at least one full business day prior to the Closing Date.
(b) The Selling Shareholders hereby grants to Hampshire the Shareholder
Over-allotment Option to purchase up to 100,000 shares of Common Stock,
allocated among the Selling Shareholders as specified in Schedule II hereto, as
may be necessary to cover over-allotments, at the same purchase price per share
to be paid by the several Underwriters to the Company for the Firm Stock as
provided for in this Section 3 hereof. The Company hereby grants to Hampshire
the Company Over-allotment Option to purchase up to 50,000 shares of Common
Stock, as may be necessary to cover over-allotments, at the same purchase price
per share to be paid by the several Underwriters to the Company for the Firm
Stock as provided for in this Section 3 hereof. The Over-allotment Options may
be exercised only to cover over-allotments in the sale of shares by Hampshire.
The Company Over-allotment Option and the Shareholder Over-allotment Option
shall be exercised pro rata to one another. The Over-allotment Options may be
exercised by Hampshire on the basis of the representations, warranties,
covenants, and agreements of the Company and the
-22-
Selling Shareholder herein contained, but subject to the terms and conditions
herein set forth, at any time and from time to time on or before the forty-fifth
day following the date on which the Registration Statement becomes effective
under the Securities Act, by written notice by Hampshire to the Company and
Custodian. Such notice shall set forth the aggregate number of shares of
Additional Stock as to which the Over-allotment Options are being exercised, the
name or names in which the certificates representing the Additional Stock are to
be registered, the authorized denominations in which the Additional Stock is to
be registered, and the time and date, as determined by Hampshire, when such
shares of Additional Stock are to be delivered (each such time and date are
hereinafter referred to as an "Additional Closing Date"); provided, however,
that no Additional Closing Date shall be earlier than the Closing Date nor
earlier than the second business day after the date on which the notice of the
exercise of the Shareholder Over-allotment Option and the Company Over-allotment
Option shall have been given nor later than the eighth business day after the
date on which such notice shall have been given.
In the event the Company declares or pays a dividend or a distribution on
the Common Stock, whether in the form of cash, shares of Common Stock, or other
consideration, prior to the Additional Closing Date, such dividend or
distribution shall also be paid on the Additional Stock on the later of the
Additional Closing Date and the date on which such dividend or distribution is
payable.
Payment for the shares of Additional Stock by Hampshire shall be made by
certified or official bank check in New York Clearing House (next day) funds or
by electronic wire transfer of next day funds payable to the order of the
Custodian and the Company (pro rata as described above) at the offices of
Hampshire Securities Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
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10019, or at such other place in the New York City metropolitan area as
Hampshire shall determine and advise the Company by at least two full days'
notice in writing, upon delivery of the shares of Additional Stock to Hampshire
for its account.
Certificates for the shares of Additional Stock shall be registered in such
name or names and in such authorized denominations as Hampshire may request in
writing at least two full business days prior to the Additional Closing Date
with respect thereto. The Company shall permit Hampshire to examine and package
such certificates for delivery at least one full business day prior to the
Additional Closing Date with respect thereto.
(c) The Company hereby agrees to issue and sell to Hampshire
and/or its designees on the Closing Date the Representative's Warrants to
purchase the Warrant Shares for an aggregate purchase price of $100.00.
Delivery and payment for the Representative's Warrants shall be made
on the Closing Date. The Company shall deliver to Hampshire, upon payment
therefor, certificates representing the Representative's Warrants in the name or
names and in such authorized denominations as Hampshire may request. The
Representative's Warrants shall be exercisable for a period of four years
commencing one year from the date on which the Registration Statement was
declared effective under the Securities Act at an initial exercise price per
Warrant Share equal to $_____________.
(d) It is understood that the Hampshire may (but shall not be
obligated to) make any and all the payments required pursuant to this Section 3
on behalf of any Underwriters whose check or checks shall not have been received
by the Representative at the time of delivery of the Stock to be purchased by
such Underwriter or Underwriters. Any such payment by the
-24-
Representative shall not relieve any such Underwriter or Underwriters of any of
its or their obligations hereunder.
4. OFFERING. The Underwriters are to make a public offering of the Firm
Stock as soon, on or after the date on which the Registration Statement becomes
effective under the Securities Act, as the Representative deems it advisable so
to do. The Firm Stock is to be initially offered to the public at the initial
public offering price as provided for in Section 3(a) (such price being
hereinafter referred to as the "public offering price"). After the initial
public offering, the Representative may from time to time increase or decrease
the public offering price, in the sole discretion of the Representative, by
reason of changes in general market conditions or otherwise.
5. COVENANTS.
(a) The Company covenants that it will:
(1) Use its best efforts to cause the Registration Statement to
become effective under the Securities Act as promptly as possible and notify the
Representative and counsel to the Underwriters immediately, and confirm such
notice in writing, (i) when the Registration Statement and any post-effective
amendment thereto become effective under the Securities Act, (ii) of the receipt
of any comments from the Commission or the "blue sky" or securities authority of
any jurisdiction regarding the Registration Statement, any post-effective
amendment thereto, the Prospectus, or any amendment or supplement thereto,
(iii) of the filing with the Commission of any supplement to the Prospectus, and
(iv) of the receipt of any notification with respect to a Stop Order or the
initiation or threatening of any proceeding with respect to a Stop Order. The
Company will use its best efforts to prevent the issuance of any Stop Order and,
if any Stop Order is issued, to obtain the lifting thereof as promptly as
possible. If the Registration Statement has become or
-25-
becomes effective under the Securities Act with a form of prospectus omitting
Rule 430A Information, or filing of the Prospectus with the Commission is
otherwise required under Rule 424(b) of the Regulations, the Company will file
with the Commission the Prospectus, properly completed, pursuant to Rule 424(b)
of the Regulations within the time period prescribed and will provide evidence
satisfactory to the Representative of such timely filing.
(2) During the time when a prospectus relating to the Firm Stock
or the Additional Stock is required to be delivered hereunder or under the
Securities Act or the Regulations, comply with all requirements imposed upon it
by the Securities Act, as now existing and as hereafter amended, and by the
Regulations, as from time to time in force, so far as necessary to permit the
continuance of sales of, or dealings in, the Stock in accordance with the
provisions hereof and the Prospectus. If, at any time when a prospectus
relating to the Firm Stock or the Additional Stock is required to be delivered
hereunder or under the Securities Act or the Regulations, any event shall have
occurred as a result of which, in the reasonable opinion of counsel for the
Company or counsel for the Underwriters, the Registration Statement or the
Prospectus as then amended or supplemented contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or if, in the
opinion of either of such counsel, it is necessary at any time to amend or
supplement the Registration Statement or the Prospectus to comply with the
Securities Act or the Regulations, the Company will immediately notify you and
promptly prepare and file with the Commission an appropriate amendment or
supplement (in form and substance satisfactory to the Representative and counsel
to the Underwriters) which will correct such statement or
-26-
omission or which will effect such compliance and will use its best efforts to
have any such amendment declared effective under the Securities Act as soon as
possible.
(3) Deliver without charge to each of the several Underwriters
such number of copies of each Preliminary Prospectus as may reasonably be
requested by the Underwriters and, as soon as the Registration Statement, or any
amendment thereto, becomes effective under the Securities Act or a supplement is
filed with the Commission, deliver without charge to the Representative two
signed copies of the Registration Statement, including exhibits, or such
amendment thereto, as the case may be, and two copies of any supplement thereto,
and deliver without charge to each of the several Underwriters such number of
copies of the Prospectus, the Registration Statement, and amendments and
supplements thereto, if any, without exhibits, as the Representative may request
for the purposes contemplated by the Securities Act.
(4) Endeavor in good faith, in cooperation with the
Representative, at or prior to the time the Registration Statement becomes
effective under the Securities Act, to qualify the Securities for offering and
sale under the "blue sky" or securities laws of such jurisdictions as may be
designated by the Representative; provided, however, that no such qualification
shall be required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction to which it is not then subject.
In each jurisdiction where such qualification shall be effected, the Company
will, unless the Representative agrees in writing that such action is not at the
time necessary or advisable, file and make such statements or reports at such
times as are or may be required by the laws of such jurisdiction.
-27-
(5) Make generally available, within the meaning of Section
11(a) of the Securities Act and the Regulations, to its security holders as soon
as practicable, but not later than November 12, 1998, an earnings statement,
which need not be certified by independent certified public accountants unless
required by the Securities Act or the Regulations, but which shall satisfy the
provisions of Section 11(a) of the Securities Act and the Regulations, covering
a period of at least 12 months beginning after the date on which the
Registration Statement was declared effective under the Securities Act.
(6) For a period of 18 months after the date of the Prospectus,
not, without the prior written consent of the Representative, offer, issue,
sell, contract to sell, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, any shares of Common Stock or other securities of
the Company, or any security or other instrument which by its terms is
convertible into, or exercisable or exchangeable for, shares of Common Stock,
except as contemplated by Section 3 hereof and except for (i) the issuance of
stock options, or shares of Common Stock issuable upon the exercise thereof,
which have been or may be granted pursuant to the Company's 1997 Long-Term
Incentive Plan, up to an aggregate of _______ shares of Common Stock, all as
properly described in the Prospectus, (ii) upon the exercise of warrants
outstanding on the date hereof, as properly described in the Prospectus, (iii)
the issuance of shares of Warrant Stock issuable upon exercise of the
Representative's Warrants, and (iv) the issuance of shares of Common Stock in
connection with an acquisition by the Company.
(7) For a period of five years after the date on which the
Registration Statement was declared effective under the Securities Act furnish
you, without charge, the following:
-28-
(i) within 90 days after the end of each fiscal year, one
copy of financial statements certified by independent certified public
accountants, including a balance sheet, statement of income, and statement of
changes in cash flows of the Company and its then existing subsidiaries, if any,
with supporting schedules, prepared in accordance with generally accepted
accounting principles, as at the end of such fiscal year and for the 12 months
then ended, which may be on a consolidated basis;
(ii) as soon as practicable after they have been sent to
shareholders of the Company or filed with, or furnished to, the Commission or
the NASD, one copy of each annual and interim financial and other report or
communication sent by the Company to its shareholders or filed with, or
furnished to, the Commission or the NASD;
(iii) as soon as practicable, one copy of every press
release and every material news item and article in respect of the Company, any
Subsidiary, or their respective affairs which was released by the Company or any
such Subsidiary; and
(iv) such additional documents and information with respect
to the Company, any Subsidiary, and their respective affairs, as the
Representative may from time to time reasonably request; provided, however, that
such additional documents and information shall be received by you on a
confidential basis, unless otherwise disclosed to the public, and shall not be
used in violation of the federal securities laws and the rules and regulations
promulgated thereunder.
(8) Apply the net proceeds received by the Company from the
offering contemplated by this Agreement in the manner set forth under the
heading "Use of Proceeds" in the Prospectus.
-29-
(9) Furnish to the Representative as early as practicable prior
to the Closing Date and each Additional Closing Date, if any, as the case may
be, but not less than two full business days prior thereto, a copy of the latest
available unaudited interim financial statements of the Company which have been
read by the Company's independent certified public accountants, as stated in
their letters to be furnished pursuant to Section 7(f) hereof.
(10) File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the date on which
the Registration Statement was declared effective under the Securities Act,
unless such filing shall comply with the Securities Act and the Regulations and
unless the Representative shall previously have been advised of such filing and
furnished with a copy thereof, and the Representative shall have approved such
filing in writing. Until the later of (i) the completion by the Underwriters of
the distribution of the Stock (but in no event more than nine months after the
date on which the Registration Statement shall have been declared effective
under the Securities Act) and (ii) 25 days after the date on which the
Registration Statement shall have been declared effective under the Securities
Act, the Company will prepare and file with the Commission, promptly upon the
Representative's request, any amendments or supplements to the Registration
Statement or the Prospectus which, in the sole opinion of the Representative,
may be necessary or advisable in connection with the distribution of the Stock.
(11) File timely with the Commission an appropriate form to
register the Common Stock, includind the Stock, pursuant to Section 12(g) of the
Exchange Act and comply with all registration, filing, and reporting
requirements of the Exchange Act, which may from time to time be applicable to
the Company.
-30-
(12) Comply with all provisions of all undertakings contained in
the Registration Statement.
(13) Prior to the later of (A) the date referred to in the second
sentence of clause (10) of this paragraph (a) of this Section 5, and (B) any
Additional Closing Date, issue no press release or other communication, directly
or indirectly, and hold no press conference with respect to the Company, the
financial condition, results of operations, business, properties, assets,
liabilities of any the Company or any Subsidiary, or this offering, without the
prior written consent of the Representative.
(14) Make all filings required to maintain the inclusion of the
Common Stock on the Nasdaq [National][SmallCap] Market [and the Pacific Stock
Exchange] for a least four years from the date of this Agreement.
(15) On the Closing Date, sell to the Hampshire, individually and
not as Representative of the several Underwriters, at the price of $.001 per
warrant, warrants to purchase the Warrant Stock, which Representative's Warrants
shall be substantially in the form set forth as an exhibit to the Registration
Statement.
(16) Until expiration of the Representative's Warrants, keep
reserved sufficient shares of Common Stock for issuance upon exercise of the
Representative's Warrants.
(17) Deliver to the Representative, without charge, within a
reasonable period after the last Additional Closing Date or the expiration of
the period during which the Representative may exercise the Over-allotment
Options, five sets of bound volumes of the Registration Statement and all
related materials to the individuals designated by the Representative or counsel
to the Underwriters.
-31-
(18) For a period of three years after the effective date on
which the Registration Statement is declared effective under the Securities Act,
provide, at its sole expense, to the Representative copies of the Company's
daily transfer sheets, if so requested by the Representative.
(19) Maintain key-person life insurance payable to the Company on
the life of ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President, Chief Executive Officer, and a
Director of the Company, in the amount of at least $1,000,000, for the period of
time equal to the longer of three years from the date on which the Registration
Statement becomes effective under the Securities Act and the term of the
employment agreement between the Company and such officer.
(20) For a period of three years from the date on which the
Registration Statement becomes effective under the Securities Act, the
Representative shall have the right to appoint a designee as an observer of the
Company's Board of Directors. Such observer will have the right to attend all
meetings of the Board of Directors. Such observer shall be entitled to receive
reimbursement for all out-of-pocket expenses incurred in attending such
meetings, including, but not limited to, food, lodging, transportation, and any
fees paid to directors for attending meetings. The Representative shall be
given notice of such meetings at the same time and in the same manner as
directors of the Company are informed. The Representative and such observer
shall be indemnified to the same extent as the other directors. The Company
will purchase directors and officers insurance in an amount of not less than
$2,000,000, provided, however, that the Company shall not be required to pay
more than $50,000 per year in order to maintain such insurance, and if insurance
in such amount is not available at such cost, the Company shall purchase that
amount of such insurance which is available at a cost of $50,000 per year.
-32-
(b) Each Selling Shareholder covenants that he, she, or it will not:
(1) For a period of 18 months from the date on which the
Registration Statement shall become effective under the Securities Act, without
the prior written consent of Hampshire, offer, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of, directly or indirectly, any
shares of Common Stock (other than the Shareholder Additional Stock upon
exercise of the Shareholder Over-allotment Option) or any security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, shares of Common Stock or other securities of the Company,
including, without limitation, any shares of Common Stock issuable pursuant to
the terms of any employee stock options.
(2) Take, directly or indirectly, prior to the termination of
the offering contemplated by this Agreement, any action designed to stabilize or
manipulate the price of any security of the Company, or which might in the
future reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Stock.
6. PAYMENT OF EXPENSES. The Company hereby agrees to pay all expenses
(other than fees of counsel for the Underwriters, except as provided in Section
6(c)) in connection with (a) the preparation, printing, filing, distribution,
and mailing of the Registration Statement and the Prospectus and the printing,
filing, distribution, and mailing of this Agreement and the Master Agreement
Among Underwriters, any Master Selected Dealer Agreement and related documents,
including the cost of all copies thereof and of the Preliminary Prospectuses and
of the Prospectus and any amendments or supplements thereto supplied to the
Underwriters in quantities as hereinabove stated, (b) the issuance, sale,
transfer, and delivery (as applicable) of the Securities,
-33-
including any transfer or other taxes payable thereon, (c) the qualification of
the Securities under state or foreign "blue sky" or securities laws, including
the costs of printing and mailing the preliminary and final "Blue Sky Survey"
and the fees of counsel for the Underwriters ($35,000) and the disbursements in
connection therewith, (d) the filing fees payable to the Commission, the NASD,
and the jurisdictions in which such qualification is sought, (e) any fees
relating to the listing of the Common Stock on the Nasdaq National Market and
any other stock market or exchange, (f) the cost of printing certificates
representing the shares of Common Stock, (g) the fees of the transfer agent for
the Common Stock, (h) the cost of publication of "tombstone" advertisements with
respect to offerings, not to exceed $30,000, and (i) a non-accountable expense
allowance equal to three percent of the gross proceeds of the sale of the Firm
Stock and the Company Additional Stock (less amounts, if any, previously paid to
the Representative by the Company in respect of such non-accountable expense
allowance) to the Representative on the Closing Date. Notwithstanding the
foregoing, if the offering contemplated hereby should be terminated, the Company
agrees to pay the Representative only the out-of-pocket expenses incurred by the
Underwriters in connection with this Agreement or the proposed offer, sale, and
delivery of the Securities.
The Selling Shareholders hereby agree to pay a non-accountable expense
allowance equal to three percent of the gross proceeds of the sale of any
Shareholder Additional Stock (less amounts, if any, previously paid to the
Representative by the Selling Shareholders in respect of such non-accountable
expense allowance) to the Representative on the Closing Date or any Additional
Closing Date, as applicable.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Firm Stock and the Additional
Stock, as provided herein,
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and the obligation of Hampshire to purchase and pay for the Representative's
Warrants, each as provided herein, shall be subject, in the discretion of the
Representative, to the continuing accuracy of the representations and warranties
of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to the Underwriters, as of the
date hereof and as of the Closing Date (or any Additional Closing Date, as the
case may be), to the performance by the Company and the Selling Shareholders, as
applicable, of their respective obligations hereunder, and to the following
conditions:
(a) The Registration Statement shall have become effective under the
Securities Act not later than 6:00 P.M., New York City local time, on the date
of this Agreement or such later date and time as shall be consented to in
writing by the Representative; on or prior to the Closing Date, or any
Additional Closing Date, as the case may be, no Stop Order shall have been
issued and no proceeding shall have been initiated or threatened with respect to
a Stop Order; and any request by the Commission for additional information shall
have been complied with by the Company to the reasonable satisfaction of counsel
for the Underwriters. If required, the Prospectus shall have been filed with
the Commission in the manner and within the time period required by Rule 424(b)
under the Securities Act.
(b) (1) At the Closing Date and any Additional Closing Date, as the
case may be, you shall have received the opinion of Messrs. ▇▇▇▇▇▇▇▇▇ & Kahr,
counsel for the Company, dated the date of delivery, addressed to the
Underwriters, and in form and scope satisfactory to counsel for the
Underwriters, with reproduced copies or signed counterparts thereof for each of
the Underwriters, to the effect that:
-35-
(i) the only subsidiaries (as defined in the Regulations)
of the Company are the Subsidiaries. Each of the Company and each of the
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of its respective jurisdiction of incorporation, with
full power and authority, and all necessary consents, authorizations, approvals,
orders, licenses, certificates, and permits of and from, and declarations and
filings with, all federal, state, local, and other governmental authorities and
all courts and other tribunals, to own, lease, license, and use its respective
properties and assets and to conduct its respective business in the manner
described in the Prospectus. Each of the Company and each of the Subsidiaries
is duly qualified to do business as a foreign corporation and is in good
standing as such in every jurisdiction in which its respective ownership,
leasing, licensing, or use of property and assets or the conduct of its business
makes such qualification necessary;
(ii) the authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, of which 2,210,000 shares are outstanding,
500,000 shares of Class A Common Stock, par value $.01 per share, of which none
is outstanding, and 1,000,000 shares of preferred stock, par value $.01 per
share, of which none is outstanding. Except as otherwise disclosed in the
Prospectus, each outstanding share of capital stock of each Subsidiary is owned
of record and beneficially by the Company, free and clear of all liens, security
interests, pledges, charges, encumbrances, shareholders' agreements, and voting
trusts. Except as disclosed in the Prospectus, each outstanding share of Common
Stock and each share of capital stock of each Subsidiary is validly authorized
and issued, fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, has not been issued and is not owned or held
in violation of any preemptive or similar rights of shareholders. To the
knowledge of such counsel,
-36-
there is no commitment, plan, or arrangement to issue, and no outstanding
option, warrant, or other right calling for the issuance of, any share of
capital stock of the Company or any Subsidiary or any security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock of the Company or any Subsidiary, except as may
be properly described in the Prospectus. There is outstanding no security or
other instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock of the Company or any Subsidiary. The
certificates evidencing the Common Stock are in due and proper form;
(iii) to the knowledge of such counsel, there is no
litigation, arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or in prospect (or any basis
therefor) with respect to the Company or any Subsidiary or any of their
respective operations, businesses, properties, or assets, except as may be
properly described in the Prospectus or such as individually or in the aggregate
do not now have, and will not in the future have, a material adverse effect upon
the operations, business, properties, or assets of the Company. To the
knowledge of such counsel, neither the Company nor any Subsidiary is in
violation of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree, except as may be properly described in the Prospectus or
such as in the aggregate do not now have and will not in the future have a
material adverse effect upon the operations, business, properties, or assets of
the Company; nor is the Company or any Subsidiary required to take any action in
order to avoid any such violation or default;
(iv) to the knowledge of such counsel, neither the Company
or any Subsidiary, nor any other party is now, or is expected by the Company to
be, in violation or breach of, or in default with respect to, any provision of
any contract, agreement, instrument, lease,
-37
license, arrangement, or understanding which is material to the Company, and, to
the knowledge of such counsel, each such contract, agreement, instrument, lease,
license, arrangement, or understanding is in full force and effect and is the
valid, legal, and binding obligation of the parties thereto and is enforceable
in accordance with its terms;
(v) neither the Company nor any Subsidiary is in violation
or breach of, or in default with respect to, any term of its respective
certificate of incorporation (or other charter document) or by-laws;
(vi) the Company has all requisite power and authority to
execute, deliver, and perform this Agreement and the Representative's Warrants.
All necessary corporate proceedings of the Company have been taken to authorize
the execution, delivery, and performance by the Company of this Agreement and
the Representative's Warrants. This Agreement has been duly authorized,
executed, and delivered by the Company, is the legal, valid, and binding
obligation of the Company, and, subject to applicable bankruptcy, insolvency,
and other laws affecting the enforceability of creditors' rights generally, is
enforceable as to the Company in accordance with its terms. The
Representative's Warrants have been duly authorized by the Company and, when
executed and delivered by the Company, will be legal, valid, and binding
obligations of the Company, each enforceable as to the Company in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal is
required by the Company for the execution, delivery, or performance by the
Company of this Agreement or the Representative's Warrants, except filings under
the Securities Act which have been made prior to the Closing Date or Additional
Closing Date, as the case may be, and consents consisting
-38-
only of consents under "blue sky" or securities laws, which have been obtained.
No consent of any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding known to such counsel to which the Company or any
Subsidiary is a party, or to which any of their respective properties or assets
are subject, is required for the execution, delivery, or performance of this
Agreement and the Representative's Warrants; and the execution, delivery, and
performance of this Agreement and the Representative's Warrants will not
violate, result in a breach of, conflict with, result in the creation or
imposition of any lien, charge, or encumbrance upon any properties or assets of
the Company pursuant to the terms of, or, with or without the giving of notice
or the passage of time or both, entitle any party to terminate or call a default
under, any such contract, agreement, instrument, lease, license, arrangement, or
understanding known to such counsel, violate or result in a breach of, or
conflict with any term of the certificate of incorporation (or other charter
document) or by-laws of the Company, or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or decree binding on
the Company or any Subsidiary to which any of their respective operations,
businesses, properties, or assets are subject;
(vii) each share of Firm Stock to be delivered on the
Closing Date is validly authorized and, when issued and delivered in accordance
with the terms hereof, will be validly issued, fully paid, and nonassessable,
without any personal liability attaching to the ownership thereof, and will not
issued in violation of any preemptive or similar rights of shareholders. Each
share of Company Additional Stock to be delivered on the Closing Date or any
Additional Closing Date, as applicable, is validly authorized and, when issued
and delivered in accordance with the terms hereof, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and will not issued in violation of any
-39-
preemptive or similar rights of shareholders. The Underwriters will receive
good title to the shares of Firm Stock and Company Additional Stock purchased by
them, respectively, free and clear of all liens, security interests, pledges,
charges, encumbrances, shareholders' agreements, and voting trusts. The Company
Additional Stock has been duly and validly reserved for issuance. The Stock
conforms to all statements relating thereto contained in the Registration
Statement or the Prospectus;
(viii) the Warrant Stock is validly authorized and has
been duly and validly reserved for issuance pursuant to the terms of the
Representative's Warrants. The Representative's Warrants have been duly and
validly issued and delivered. The Warrant Stock, when issued and delivered in
accordance with the Representative's Warrants, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and will not have been issued in violation of any preemptive
rights of shareholders. The Representative, and any other holders of the
Representative's Warrants, will receive good title to the securities purchased
by them upon exercise of the Representative's Warrants, free and clear of all
liens, security interests, pledges, charges, encumbrances, shareholders'
agreements, and voting trusts. The Representative's Securities conform to all
statements relating thereto contained in the Registration Statement or the
Prospectus;
(ix) to the knowledge of such counsel, each contract,
agreement, instrument, lease, or license required to be described in the
Registration Statement or the Prospectus has been properly described therein,
and each contract, agreement, instrument, lease, or license required to be filed
as an exhibit to the Registration Statement has been filed with the Commission
as an exhibit to the Registration Statement;
-40-
(x) insofar as statements in the Prospectus purport to
summarize the status of litigation or the provisions of laws, rules,
regulations, orders, judgments, decrees, contracts, agreements, instruments,
leases, or licenses, such statements have been prepared or reviewed by such
counsel and accurately reflect the status of such litigation and provisions
purported to be summarized and are correct in all respects;
(xi) the Company is not an "investment company" as
defined in the Investment Company Act and the rules and regulations thereunder
and, if the Company conducts its business as set forth in the Prospectus, will
not become an "investment company", and will not be required to be registered
under the Investment Company Act;
(xii) to the knowledge of such counsel, no person or
entity has the right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of the
Registration Statement, except by entities which have waived such rights as
described in the Registration Statement and the Prospectus;
(xiii) there is no stamp duty, value-added tax or any
similar tax or duty, payable by or on behalf of the Underwriters, the Company or
any Subsidiary in Hong Kong in connection with the authorization, issuance, sale
and delivery of the Securities to the Underwriters in the manner contemplated by
this Agreement; and
(xiv) the Registration Statement has become effective
under the Securities Act, the Prospectus has been filed in accordance with Rule
424(b) of the Regulations, including the applicable time periods set forth
therein, or such filing is not required. To the knowledge of such counsel, no
Stop Order has been issued and no proceeding for that purpose has been
instituted or threatened. On the basis of the participation of such counsel in
conferences at
-41-
which the contents of the Registration Statement and the Prospectus and related
matters were discussed, but without independent verification by such counsel of
the accuracy, completeness, or fairness of the statements contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
such counsel have no knowledge that (other than financial statements and other
financial data and schedules which are or should be contained therein, as to
which such counsel need express no opinion): (A) the Registration Statement, any
Rule 430A Prospectus, and the Prospectus, and any amendment or supplement
thereto, does not appear on its face to comply as to form in all material
respects with the requirements of the Securities Act and the Regulations;
(B) any of the Registration Statement, any Rule 430A Prospectus, or the
Prospectus, or any amendment or supplement thereto, contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(C) since the date of effectiveness under the Securities Act of the Registration
Statement, any event has occurred which should have been set forth in an
amendment or supplement to the Registration Statement or the Prospectus which
has not been set forth in such an amendment or supplement.
In rendering such opinion, counsel for the Company may rely (A) as to
matters involving the application of laws other than the laws of the United
States and the laws of the State of New Jersey, to the extent counsel for the
Company deems proper and to the extent specified in such opinion, upon an
opinion or opinions (in form and substance satisfactory to counsel for the
Underwriters) of other counsel, acceptable to counsel for the Underwriters,
familiar with the applicable laws, in which case the opinion of counsel for the
Company shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the
-42-
Company and that reliance thereon by counsel for the Company and the
Underwriters is reasonable; (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company; and (C) to the
extent they deem proper, upon written statements or certificates 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 opinions, certificates, or statements shall be annexed as exhibits to the
opinion of counsel for the Company.
(2) At any Additional Closing Date, you shall have received the
favorable opinion of Messrs. ▇▇▇▇▇▇▇▇▇ & Kahr, counsel for the Selling
Shareholders, dated the date of delivery, addressed to the Underwriters, and in
form and scope satisfactory to counsel for the Underwriters, with reproduced
copies or signed counterparts thereof for each of the Underwriters, to the
effect that:
(i) Each Selling Shareholder has all requisite power and
authority to execute, deliver, and perform this Agreement and his, her or its
respective Custodial Agreement. This Agreement and the Custodial Agreement have
each been duly executed and delivered by each Selling Shareholder, are the
legal, valid, and binding obligation of each Selling Shareholder, and are each
enforceable as to each Selling Shareholder in accordance with its respective
terms.
(ii) To the knowledge of such counsel, there is no
litigation, arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or in prospect (or any basis
therefor) with respect to any Selling Shareholder or any of such Selling
Shareholder's business, properties, or assets, which, if determined adversely to
such Selling Shareholder, would have a material adverse effect on such Selling
Shareholder's business, properties or assets of such Selling Shareholder. Such
Selling Shareholder is not in violation of,
-43-
or in default with respect to, any law, rule, regulation, order, judgment, or
decree; nor is such Selling Shareholder required to take any action in order
to avoid such violation or default.
(iii) Each share of Shareholder Additional Stock is
validly authorized and issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, and has not been issued
and is not owned or held in violation of any preemptive or similar rights of
shareholders. Such Selling Shareholder has good title to the shares of
Shareholder Additional Stock to be sold thereby pursuant to this Agreement, free
and clear of all liens, security interests, pledges, charges, encumbrances,
shareholders' agreements, and voting trusts. When delivered in accordance with
the terms of this Agreement, the Underwriters shall receive good title to the
Shareholder Additional Stock purchased by them from the Selling Shareholders,
free and clear of all liens, security interests, pledges, charges, encumbrances,
shareholders' agreements, and voting trusts.
In rendering such opinion, counsel for the Selling Shareholders may rely
(A) as to matters involving the application of laws other than the laws of the
United States and the laws of the State of Delaware, to the extent counsel for
the Selling Shareholders deems proper and to the extent specified in such
opinion, upon an opinion or opinions (in form and substance satisfactory to
counsel for the Underwriters) of other counsel, acceptable to counsel for the
Underwriters, familiar with the applicable laws, in which case the opinion of
counsel for the Selling Shareholders shall state that the opinion or opinions of
such other counsel are satisfactory in scope, form, and substance to counsel for
the Selling Shareholders and that reliance thereon by counsel for the Selling
Shareholders and counsel for the Underwriters is reasonable; and (B) as to
matters of fact, to the extent proper, on certificates of responsible officers
of the Company; provided, that copies
-44-
of any such opinions, certificates, or statements shall be annexed as exhibits
to the opinion of counsel for the Selling Shareholders.
(c) On or prior to the Closing Date and any Additional Closing Date,
as the case may be, the Underwriters shall have been furnished such information,
documents, certificates, and opinions as they may reasonably require for the
purpose of enabling them to review the matters referred to in Section 7(b), and
in order to evidence the accuracy, completeness, or satisfaction of any of the
representations, warranties, covenants, agreements, or conditions herein
contained, or as the Representative may reasonably request.
(d) At the Closing Date or any Additional Closing Date, as the case
may be, (i) the Registration Statement and the Prospectus and any amendments or
supplements thereto shall contain all statements which are required to be stated
therein in accordance with the Securities Act and the Regulations, and in all
material respects conform to the requirements thereof, and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) there shall have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, no material adverse change, or any development involving a
prospective material adverse change, in the business, properties, or condition
(financial or otherwise), results of operations, capital stock, long-term or
short-term debt, or general affairs of the Company or any Subsidiary from that
set forth in the Registration Statement and the Prospectus, except changes which
the Registration Statement and Prospectus indicate might occur after the date on
which the Registration Statement becomes effective under the Securities Act, and
neither the Company nor
-45-
any Subsidiary shall have incurred any material liabilities or entered into any
agreements not in the ordinary course of business other than as referred to in
the Registration Statement and Prospectus, (iii) except as set forth in the
Prospectus, no litigation, arbitration, claim, governmental or other proceeding
(formal or informal), or investigation shall be pending, threatened, or in
prospect (or any basis therefor) with respect to the Company or any Subsidiary
or any of their respective operations, businesses, properties, or assets which
would be required to be set forth in the Registration Statement, wherein an
unfavorable decision, ruling, or finding would materially adversely affect the
business, property, condition (financial or otherwise), results of operations,
or general affairs of the Company or such Subsidiary, and (iv) the Stock be
quoted upon the Nasdaq [National][SmallCap] Market [and the Pacific Stock
Exchange].
(e) At the Closing Date and any Additional Closing Date, as the case
may be, you shall have received a certificate of the chief executive officer,
the chief financial officer, and the chief accounting officer of the Company,
dated the Closing Date or such Additional Closing Date, as the case may be, to
the effect, among other things, that (i) the conditions set forth in Sections
7(a) and 7(d) have been satisfied, (ii) as of the date of this Agreement and as
of the Closing Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein were and are
accurate and correct in all materials respects, and (iii) as of the Closing Date
or such Additional Closing Date, as the case may be, the obligations to be
performed by the Company hereunder on or prior to such time have been fully
performed. At each Additional Closing Date, you shall have received a
certificate of a duly appointed attorney-in-fact for the Selling Shareholders,
dated such Additional Closing Date, that, as of the date of this Agreement and
such Additional Closing Date, the representations and
-46-
warranties of the Selling Shareholders contained herein were and are accurate
and correct in all material respects, and that as of such Additional Closing
Date, the obligations to be performed by the Selling Shareholders hereunder on
or prior thereto have been fully performed.
(f) At the time this Agreement is executed and at the Closing Date
and any Additional Closing Date, as the case may be, you shall have received a
letter, addressed to the Underwriters, and in form and substance satisfactory to
the Representative, with reproduced copies or signed counterparts thereof for
each of the Underwriters, from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company, LLP, independent
certified public accountants for the Company, dated the date of delivery:
(i) confirming that they are, and during the period covered by
their report(s) included in the Registration Statement and the Prospectus were,
independent certified public accountants with respect to the Company within the
meaning of the Securities Act and the published Regulations and stating that the
answer to Item 10 of the Registration Statement is correct insofar as it relates
to them;
(ii) stating that, in their opinion, the financial statements and
schedules of the Company included in the Registration Statement examined by them
comply in form in all material respects with the applicable accounting
requirements of the Securities Act and the related published rules and
regulations;
(iii) stating that, on the basis of procedures (but not an
examination made in accordance with generally accepted auditing standards)
consisting of 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 shareholders and Boards of Directors of the Company and
committees of such Board of
-47-
Directors, inquiries to certain officers and other employees of the Company
responsible for financial and accounting matters, and other specified procedures
and inquiries, nothing has come to their attention that caused them to believe
that: (A) the unaudited financial statements and schedules of the Company
included in the Registration Statement and Prospectus do not comply in form in
all material respects with the applicable accounting requirements of the
Securities Act and the Exchange Act and the related published rules and
regulations under the Securities Act or the Exchange Act or are not fairly
presented in conformity with generally accepted accounting principles (except to
the extent that certain footnote disclosures regarding any stub period may have
been omitted in accordance with the applicable rules of the Commission under the
Exchange Act) applied on a basis consistent with that of the audited financial
statements appearing therein; (B) there was any change in the capital stock or
long-term debt of the Company or any decrease in the net current assets or
shareholders' equity of the Company as of the date of the latest available
monthly financial statements of the Company as of a specified date not more than
five business days prior to the date of such letter, each as compared with the
amounts shown in the June 30, 1996 and December 31, 1996 balance sheets included
in the Registration Statement and Prospectus, other than as properly described
in the Registration Statement and Prospectus or any change or decrease (which
shall be set forth therein) which, in the sole discretion of the Representative,
the Representative shall accept, or (C) there was any decrease in net sales, net
earnings, or net earnings per share of Common Stock during the period from June
30, 1996 and December 31, 1996 and to the date of the latest available monthly
financial statements of the Company or to a specified date not more than five
business days prior to the date of such letter, each as compared with the
corresponding period in 1996, other than as properly described in the
Registration Statement and
-48-
Prospectus or any decrease (which shall be set forth therein) which, the sole
discretion of the Representative, the Representative shall accept; and
(iv) stating that they have compared specific numerical data and
financial information pertaining to the Company set forth in the Registration
Statement, which have been specified by the Representative prior to the date of
this Agreement, to the extent that such data and information may be derived from
the general accounting records of the Company, and excluding any questions
requiring an interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries, and other appropriate procedures
(which procedures do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter, and found them to be in
agreement.
(g) All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Securities shall be satisfactory in form and
substance to the Representative and to counsel for the Underwriters, and the
Underwriters shall have received from such counsel for the Underwriters the
opinion, dated as of the Closing Date and the Additional Closing Date, as the
case may be, with respect to such of the matters set forth under Section 7(b),
and with respect to such other related matters, as the Representative may
reasonably request.
(h) The NASD, upon review of the terms of the public offering of the
Stock shall not have objected to the Underwriters' participation in such
offering.
(i) Prior to or on the Closing Date, the Company shall have entered
into the Representative's Warrants with the Representative.
(j) Prior to or on the Closing Date, the Company shall have provided
to you copies of the agreements referred to in Section 2(a)(18).
-49-
Any certificate or other document signed by any officer of the Company and
delivered to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company hereunder to the
Underwriters as to the statements made therein. Any certificate or other
document signed by, or on behalf of, the Selling Shareholders and delivered to
the Underwriters or to counsel for the Representative shall be deemed a
representation and warranty by the Selling Shareholders hereunder to the
Underwriters as to the statement made therein. If any condition to the
Underwriters' obligations hereunder to be fulfilled prior to or at the Closing
Date or any Additional Closing Date, as the case may be, is not so fulfilled,
the Representative may, on behalf of the several Underwriters, terminate this
Agreement or, if the Representative so elects, in writing waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its officers, directors, partners,
employees, agents, and counsel, each of the Selling Shareholders, and each
person, if any, who controls any Underwriter or any Selling Shareholder within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, against any and all loss, liability, claim, damage, and expense whatsoever
(which shall include, for all purposes of this Section 8, but not be limited to,
attorneys' fees and any and all expense whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever and any and all amounts paid in settlement of any claim or
litigation) as and when incurred arising out of, based upon, or in connection
with, (i) any untrue statement or alleged untrue statement of a material fact
contained in (A) the Registration
-50-
Statement, any Preliminary Prospectus, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto or (B) any
application or other document or communication (for purposes of this Section 8,
collectively referred to as an "application") executed by, or on behalf of, the
Company or based upon written information furnished by, or on behalf of, the
Company filed in any jurisdiction in order to qualify the Securities under the
"blue sky" or securities laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon, and
in conformity with, written information furnished to the Company as stated in
Section 8(b) with respect to any Underwriter by, or on behalf of, such
Underwriter through the Representative or as stated in Section 8(c) with respect
to any Selling Shareholder by, or on behalf of, such Selling Shareholder
expressly for inclusion in the Registration Statement, any Preliminary
Prospectus, or the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (ii) any breach of any representation,
warranty, covenant, or agreement of the Company contained in this Agreement.
The foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Agreement.
If any action is brought against an Underwriter or any of its respective
officers, directors, partners, employees, agents, or counsel, any Selling
Shareholder, or any controlling persons of an Underwriter or a Selling
Shareholder (an "indemnified party") in respect of which indemnity may be sought
against the Company pursuant to the foregoing paragraph, such indemnified party
or parties shall promptly notify the Company in writing of the institution of
such action (but the
-51-
failure so to notify shall not relieve the Company from any liability it may
have other than pursuant to this Section 8(a)) and the Company shall promptly
assume the defense of such action, including, without limitation, the employment
of counsel satisfactory to such indemnified party or parties and payment of
expenses. Such 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 the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action or the Company shall not have
promptly employed counsel satisfactory to such indemnified party or parties to
have charge of the defense of such action or such indemnified party or parties
shall have concluded that there may be one or more legal defenses available to
it or them or to other indemnified parties which are different from, or in
addition to, those available to the Company, in any of which events such fees
and expenses shall be borne by the Company, and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this paragraph to the contrary notwithstanding, the
Company shall not be liable for any settlement of any such claim or action
effected without its written consent, which consent shall not be unreasonably
withheld. The Company shall not, without the prior written consent of each
indemnified party that is not released as described in this sentence, settle or
compromise any action, or permit a default or consent to the entry of judgment
or otherwise seek to terminate any pending or threatened action, in respect of
which indemnity may be sought hereunder (whether or not any indemnified party is
a party thereto), unless such settlement, compromise, consent, or termination
includes an unconditional release of each indemnified party from all liability
in respect of such action. The Company agrees promptly to notify the
Underwriters and the Selling Shareholders of the
-52-
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the sale of the Securities, the
Registration Statement, any Preliminary Prospectus, or the Prospectus, or any
amendment or supplement thereto, or any application.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each Selling Shareholder, each director of the Company, each
officer of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company or a Selling Shareholder
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
the several Underwriters and the Selling Shareholders in Section 8(a), but only
with respect to statements or omissions, if any, made in the Registration
Statement, any Preliminary Prospectus, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon, and in conformity with, written information
furnished to the Company as stated in this Section 8(b) with respect to any
Underwriter by, or on behalf of, such Underwriter through the Representative
expressly for inclusion in the Registration Statement, any Preliminary
Prospectus, or the Prospectus, or any amendment or supplement thereto, or on any
application, as the case may be; provided, however, that the obligation of each
Underwriter to provide indemnity under the provisions of this Section 8(b) shall
be limited to the amount which represents the product of (i) the number of
shares of Stock underwritten by such Underwriter hereunder and the (ii) the
underwriting discount per share of Common Stock set forth on the cover page of
the Prospectus. For all purposes of this Agreement, the amounts of the selling
concession and reallowance and the name of each of the Underwriters, and the
number of shares of Firm Stock purchased by each of the Underwriters set forth
in the
-53-
Prospectus constitute the only information furnished in writing by, or on behalf
of, such Underwriter expressly for inclusion in the Registration Statement, any
Preliminary Prospectus, or the Prospectus (as from time to time amended or
supplemented), or any amendment or supplement thereto, or in any application, as
the case may be. If any action shall be brought against the Company, the
Selling Shareholders, or any other person so indemnified based on the
Registration Statement, any Preliminary Prospectus, or the Prospectus, or any
amendment or supplement thereto, or in any application, and in respect of which
indemnity may be sought against any Underwriter pursuant to this Section 8(b),
such Underwriter shall have the rights and duties given to the Company, and the
Company, the Selling Shareholders, and each other person so indemnified shall
have the rights and duties given to the indemnified parties, by the provisions
of Section 8(a).
(c) The Selling Shareholders severally agrees to indemnify and hold
harmless the Company, each director of the Company, each officer of the Company
who shall have signed the Registration Statement, each Underwriter, each
officer, director, partner, employee, agent, and counsel of each Underwriter,
and each other person, if any, who controls the Company or any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
the several Underwriters in Section 8(a), but only with respect to (i)
statements or omissions, if any, made in the Registration Statement, any
Preliminary Prospectus, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application in
reliance upon, and in conformity with, written information furnished to the
Company by, or on behalf of, any Selling Shareholder expressly for inclusion in
the Registration Statement, any Preliminary Prospectus, or the Prospectus, or
any amendment or supplement thereto, or in any
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application, as the case may be, or (ii) any breach of any representation,
warranty, covenant, or agreement of any Selling Shareholder contained in this
Agreement. For all purposes of this Agreement, information with respect to the
Selling Shareholders set forth under "Principal and Selling Shareholders" shall
constitute the only information furnished in writing with respect to the Selling
Shareholders by, or on behalf of, the Selling Shareholders expressly for
inclusion in any the Registration Statement, any Preliminary Prospectus, or the
Prospectus (as from time to time amended or supplemented), or any amendment or
supplement thereto, or in any application, as the case may be. In case any
action shall be brought against the Company, any Underwriter, or any other
person so indemnified based on the Registration Statement, any Preliminary
Prospectus, or the Prospectus, or any amendment or supplement thereto, or on any
application, or with respect to any such breach, and in respect of which
indemnity may be sought against the Selling Shareholder, the Selling
Shareholders shall have the rights and duties given to the Company, and the
Company, the Underwriters, and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
8(a).
(d) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 8(a),
8(b), 8(c) (subject to the limitations thereof) but it is found in a final
judicial determination, not subject to further appeal, that such indemnification
may not be enforced in such case, even though this Agreement expressly provides
for indemnification in such case or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act, or otherwise,
then the Company (including for this purpose any contribution made by, or on
behalf of, any director of the Company, any officer of the Company who signed
the Registration Statement, and any controlling person of the Company), as
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one entity, the Selling Shareholders, as a second entity, and the Underwriters
(including for this purpose any contribution by, or on behalf of, an indemnified
party) as a third entity, shall contribute to the losses, liabilities, claims,
damages, and expenses whatsoever to which any of them may be subject, so that
the Underwriters, in the aggregate, are responsible for the proportion thereof
equal to the percentage which the underwriting discount per share of Common
Stock set forth on the cover page of the Prospectus represents of the initial
public offering price per share of Common Stock set forth on the cover page of
the Prospectus and the Company and the Selling Shareholders are responsible for
the remaining portion; provided, however, that if applicable law does not permit
such allocation, then other relevant equitable considerations such as the
relative fault of the Company, the Selling Shareholders, and the Underwriters in
connection with the facts which resulted in such losses, liabilities, claims,
damages, and expenses shall also be considered. The relative fault, in the case
of an untrue statement, alleged untrue statement, omission, or alleged omission,
shall be determined by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to information supplied by the
Company, by the Selling Shareholders, or by the Underwriters, and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement, alleged statement, omission, or alleged omission. The
Company, the Selling Shareholders, and the Underwriters agree that it would be
unjust and inequitable if the respective obligations of the Company, the Selling
Shareholders, and the Underwriters for contribution were determined by pro rata
or per capita allocation of the aggregate losses, liabilities, claims, damages,
and expenses (even if the Underwriters and the other indemnified parties were
treated as one entity for such purpose) or by any other method of allocation
that does not reflect the equitable considerations referred to in this
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Section 8(d). No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(d), each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act and each officer, director, partner,
employee, agent, and counsel of any Underwriter shall have the same rights to
contribution as such Underwriter, each person, if any, who controls any Selling
Shareholder within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, shall have the same rights to contribution as such
Selling Shareholder, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 8(d). Anything in this Section 8(d) to the contrary notwithstanding, no
party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 8(d) is
intended to supersede any right to contribution under the Securities Act, the
Exchange Act, or otherwise.
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Stock or Additional Stock hereunder, and if the
number of shares of Firm Stock or Additional Stock to which the defaults of all
Underwriters in the aggregate relate does not exceed 10% of the number of shares
of Firm Stock or Additional Stock, as the case may be, which all Underwriters
have agreed to purchase hereunder, then such shares of Firm Stock or Additional
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Stock to which such defaults relate shall be purchased by the non-defaulting
Underwriters in proportion to their respective commitments hereunder.
(b) If such defaults exceed in the aggregate 10% of the number of
shares of Firm Stock or Additional Stock, as the case may be, which all
Underwriters have agreed to purchase hereunder, the Representative may, in its
discretion, arrange to purchase itself or for another party or parties to
purchase such shares of Firm Stock or Additional Stock, as the case may be, to
which such default relates on the terms contained herein. If the Representative
does not arrange for the purchase of such shares of Firm Stock or Additional
Stock, as the case may be, within one business day after the occurrence of
defaults relating to in excess of 10% of the Firm Stock or the Additional Stock,
as the case may be, then the Company (with respect to the Firm Stock and the
Company Additional Stock) and the Selling Shareholders (with respect to the
Shareholder Additional Stock) shall be entitled to a further period of one
business day within which to procure another party or parties satisfactory to
the Representative to purchase such shares of Firm Stock or Additional Stock, as
the case may be, on such terms. If the Representative or the Company (with
respect to the Firm Stock and the Company Additional Stock) or the
Representative or the Selling Shareholders (with respect to the Shareholder
Additional Stock) do not arrange for the purchase of the shares of Firm Stock or
Additional Stock, as the case may be, to which such defaults relate as provided
in this Section 9(b), this Agreement may be terminated by the Representative or
by the Company (with respect to the Firm Stock and the Company Additional Stock)
or the Representative or the Selling Shareholders (with respect to the
Shareholder Additional Stock), in each case without liability on the part of the
Company or the Selling Shareholders (except that the provisions of Sections
5(a)(1), 6, 8, 10, and 13 shall survive such termination) or the several
Underwriters, but
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nothing in this Agreement shall relieve a defaulting Underwriter of its
liability, if any, to the other several Underwriters and to the Company and the
Selling Shareholders for any damages occasioned by its default hereunder.
(c) If the shares of Stock or Additional Stock to which such defaults
relate are to be purchased by the non-defaulting Underwriters, or are to be
purchased by another party or parties as aforesaid, the Representative or the
Company (with respect to the Firm Stock and the Company Additional Stock) or the
Representative or the Selling Shareholders (with respect to the Shareholder
Additional Stock) shall have the right to postpone the Closing Date or the
Additional Closing Date, as the case may be, for a reasonable period but not in
any event more than seven business days in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus or in
any other documents and arrangements with respect to the Firm Stock or the
Additional Stock, and the Company agrees to prepare and file promptly any
amendment or supplement to the Registration Statement or the Prospectus which in
the opinion of counsel for the Underwriters may thereby be made necessary. The
term "Underwriter" as used in this Agreement shall include any party substituted
under this Section 9 as if such party had originally been a party to this
Agreement and had been allocated the number of shares of Firm Stock and
Additional Stock actually purchased by it as a result of its original commitment
to purchase Firm Stock and Additional Stock and its purchase of shares of Firm
Stock or Additional Stock pursuant to this Section 9.
10. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional
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Closing Date, and such representations, warranties, covenants, and agreements of
the Underwriters, the Company, and the Selling Shareholders, including the
indemnity and contribution agreements contained in Section 8, shall remain
operative and in full force and effect regardless of any investigation made by,
or on behalf of, any Underwriter or any indemnified person, or by, or on behalf
of, the Company, any Selling Shareholder, or any person or entity which is
entitled to be indemnified under Section 8(b), and shall survive termination of
this Agreement or the delivery of the Firm Stock and the Additional Stock, if
any, to the several Underwriters. In addition, the provisions of Sections
5(a)(1), 6, 8, 10, 11, and 13 shall survive termination of this Agreement,
whether such termination occurs before or after the Closing Date or any
Additional Closing Date. Notwithstanding anything in the second sentence of
Section 6 hereof to the contrary, and in addition to the obligations assumed by
the Company pursuant to the first sentence of Section 6 hereof, if the offering
should be terminated, the Company shall be liable to the Underwriters only for
out-of-pocket expenses incurred by the Underwriters in connection with this
Agreement or the proposed, offer, sale, and delivery of the Securities.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
(a) This Agreement shall become effective at 9:30 A.M., New York City
local time, on the first full business day following the day on which the
Registration Statement becomes effective under the Securities Act or at the time
of the initial public offering by the Underwriters of the Firm Stock, whichever
is earlier. The time of the initial public offering shall mean the time, after
the Registration Statement becomes effective under the Securities Act, of the
release by the Representative for publication of the first newspaper
advertisement which is subsequently published relating to the Firm Stock or the
time, after the Registration Statement becomes effective
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under the Securities Act, when the Firm Stock is first released by the
Representative for offering by the Underwriters or dealers by letter or
telegram, whichever shall first occur. The Representative or the Company may
prevent this Agreement from becoming effective without liability of any party to
any other party, except as noted below in this Section 11, by giving the notice
indicated in Section 11(d) before the time this Agreement becomes effective
under the Securities Act.
(b) If the purchase price of the Firm Stock has not been determined
as provided for in Section 3 prior to 4:30 p.m., New York City local time, on
the fifth full business day after the date on which the Registration Statement
becomes was declared effective under the Securities Act, this Agreement may be
terminated at any time thereafter either by the Representative or by the Company
by giving notice to the other unless before such termination the purchase price
for the Firm Stock has been so determined. If the purchase price of the Firm
Stock has not been so determined prior to 4:30 p.m., New York City local time,
on the tenth full business day after the date on which the Registration
Statement was declared effective under the Securities Act, this Agreement shall
automatically terminate forthwith.
(c) In addition to the right to terminate this Agreement pursuant to
Sections 7 and 9 hereof, the Representative shall have the right to terminate
this Agreement at any time prior to the Closing Date or any Additional Closing
Date, as the case may be, by giving notice to the Company, and, if exercised,
the Over-allotment Options, at any time prior to any Additional Closing Date, by
giving notice to the Company and the Selling Shareholders, (i) if any domestic
or international event, act, or occurrence has materially and adversely
disrupted, or, in the opinion of the Representative, will in the immediate
future materially and adversely disrupt, the securities
-61-
markets; or (ii) if there shall have been a general suspension of, or a general
limitation on prices for, trading in securities on the New York Stock Exchange
or the American Stock Exchange or in the over-the-counter market; or (iii) if
there shall have been an outbreak or increase in the level of major hostilities
or other national or international calamity; or (iv) if a banking moratorium has
been declared by a state or federal authority; or (v) if a moratorium in foreign
exchange trading by major international banks or persons has been declared; or
(vi) if there shall have been a material interruption in the mail service or
other means of communication within the United States; or (vii) if the Company
shall have sustained a material or substantial loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage, or other calamity or malicious act,
whether or not such loss shall have been insured, or from any labor dispute or
court or government action, order, or decree, which will, in the opinion of the
Representative, make it inadvisable to proceed with the offering, sale, or
delivery of the Firm Stock or the Additional Stock, as the case may be; or
(viii) if any material governmental restrictions shall have been imposed on
trading in securities in general, which restrictions are not in effect on the
date hereof; or (ix) if there shall be passed by the Congress of the United
States or by any state legislature any act or measure, or adopted by any
governmental body or authoritative accounting institute or board, or any
governmental executive, any orders, rules, or regulations, which the
Representative believes likely to have a material adverse effect on the
business, financial condition, or financial statements of the Company or the
market for the Common Stock; or (x) if there shall have been such material and
adverse change in the market for the Company's securities or securities in
general or in political, financial, or economic conditions as in the judgment of
the Representative makes it inadvisable to proceed with the offering, sale, and
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delivery of the Firm Stock or the Additional Stock, as the case may be, on the
terms contemplated by the Prospectus.
(d) If the Representative elects to prevent this Agreement from
becoming effective, as provided in this Section 11, or to terminate this
Agreement pursuant to Section 7 of this Agreement or this Section 10, the
Representative shall notify the Company and the Selling Shareholders promptly by
telephone, telex, or telegram, confirmed by letter. If, as so provided, the
Company elects to prevent this Agreement from becoming effective or to terminate
this Agreement, the Company shall notify the Representative and the Selling
Shareholders promptly by telephone, telex, or telegram, confirmed by letter.
(e) Anything in this Agreement to the contrary notwithstanding other
than Section 11(f), if this Agreement shall not become effective by reason of an
election pursuant to this Section 11 or if this Agreement shall terminate or
shall otherwise not be carried out within the time specified herein by reason of
any failure on the part of the Company or the Selling Shareholders to perform
any covenant or agreement or satisfy any condition of this Agreement by it to be
performed or satisfied, the sole liability of the Company or the Selling
Shareholders to the several Underwriters, in addition to the obligations the
Company and the Selling Shareholders assumed pursuant to the first sentence of
Section 6, will be to reimburse the several Underwriters for such out-of-pocket
expenses (including the fees and disbursements of their counsel) as shall have
been incurred by them in connection with this Agreement or the proposed offer,
sale, and delivery of the Securities, and, upon demand, the Company and the
Selling Shareholders, severally, agrees to pay promptly the full amount thereof
to the Representative for the respective accounts of the Underwriters. Anything
in this Agreement to the contrary notwithstanding other than Section 11(f),
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if this Agreement shall not be carried out within the time specified herein for
any reason other than the failure on the part of the Company or the Selling
Shareholders to perform any covenant or agreement or satisfy any condition of
this Agreement by it to be performed or satisfied, the Company and the Selling
Shareholders shall have no liability to the several Underwriters other than for
obligations assumed by the Company and the Selling Shareholders pursuant to
Section 6.
(f) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 5(a)(1), 6, 8, 10, and 13 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. Notwithstanding anything in the second
sentence of Section 6 hereof to the contrary, and in addition to the obligations
assumed by the Company pursuant to the first sentence of Section 6 hereof, if
the offering should be terminated, the Company shall be liable to the several
Underwriters only for out-of-pocket expenses incurred by the several
Underwriters in connection with this Agreement or the proposed, offer, sale, and
delivery of the Securities.
12. NOTICES. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
by letter, to such Underwriter, c/o Hampshire Securities Corporation, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Executive Vice
President, with a copy to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, LLC,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, Esq.; or if sent to the Company or the Selling Shareholders, shall be
mailed, delivered, or telexed or telegraphed and confirmed by letter, to the
Company, Jazz Photo Corp., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
-▇▇-
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇▇▇ & Kahr, _____ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq. All notices hereunder shall be
effective upon receipt by the party to which it is addressed.
13. PARTIES. Hampshire represents that it is authorized to act as
Representative on behalf of the several Underwriters named in Schedule I hereto,
and the Company and the Selling Shareholders shall be entitled to act and rely
on any request, notice, consent, waiver, or agreement purportedly given on
behalf of the Underwriters when the same shall have been given by Hampshire on
such behalf. The Selling Shareholders represent that each of the
attorneys-in-fact named in the power of attorney referred to in Section 2(b)(1)
hereof is authorized to act on his behalf, and the Underwriters and the Company
shall be entitled to act and rely upon any request, notice, consent, waiver, or
agreement purportedly given on behalf of the Selling Shareholders when the same
shall have been given by either of such attorneys-in-fact. This Agreement shall
inure solely to the benefit of, and shall be binding upon, the several
Underwriters, the Company, and the Selling Shareholders and the persons and
entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any buyer, as such, of the Firm Stock or the
Additional Stock), and no other person shall have, or be construed to have, any
legal or equitable right, remedy, or claim under, in respect of, or by virtue of
this Agreement or any provision herein contained. Notwithstanding anything
contained in this Agreement to the contrary, all of the obligations of the
Underwriters hereunder are several and not joint.
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14. CONSTRUCTION. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
conflict of laws. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
15. CONSENT TO JURISDICTION. The Company irrevocably consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action or proceeding arising out
of, or relating to, this Agreement, any document or instrument delivered
pursuant to, in connection with, or simultaneously with this Agreement, or a
breach of this Agreement or any such document or instrument. In any such action
or proceeding, the Company waives personal service of any summons, complaint, or
other process and agrees that service thereof may be made in accordance with
Section 12. Within 30 days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding, the Company shall appear or answer such summons, complaint, or
other process. Should the Company fail to appear or answer within such 30-day
period or such extended period, as the case may be, the Company shall be deemed
in default and judgment may be entered against the Company for the amount as
demanded in any summons, complaint, or other process so served.
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If the foregoing correctly sets forth the understandings among the
Representative, the Company, and the Selling Shareholder, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.
Very truly yours,
JAZZ PHOTO CORP.
BY:
-------------------------------
NAME:
TITLE:
_____________________________________
____________, AS ATTORNEY-IN-
FACT FOR THE SELLING SHAREHOLDERS
ACCEPTED AS OF THE DATE FIRST ABOVE
WRITTEN IN NEW YORK, NEW YORK
HAMPSHIRE SECURITIES CORPORATION*
BY:
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, EXECUTIVE VICE PRESIDENT
*ON BEHALF OF ITSELF AND THE OTHER SEVERAL
UNDERWRITERS NAMED IN SCHEDULE I HERETO.
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SCHEDULE I
Total
Number
of Shares
to be
UNDERWRITER PURCHASED
----------- ----------
Hampshire Securities Corporation...................................
----------
Total.......................................................... 1,000,000
----------
----------
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SCHEDULE II
NAME OF SELLING SHAREHOLDER Number of Shares
--------------------------- ----------------
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