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EXHIBIT 1.1
XXXXXXXXXXX.XXX, INC.
5,700,000 Shares*
Common Stock
UNDERWRITING AGREEMENT
LADENBURG XXXXXXXX & CO. INC.
PUNK, XXXXXX & COMPANY, L.P.
As Representatives of the Several Underwriters
x/x Xxxxxxxxx Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxxxxxxx.xxx, Inc., a Delaware corporation (the "Company"), and Applied
Digital Solutions, Inc., a Missouri corporation (the "Selling Stockholder"),
hereby confirm their agreement with the underwriters named in Schedule I hereto
(the "Underwriters"), for which you are acting as representatives (the
"Representatives"), with respect to (a) the sale by the Company and the purchase
by the Underwriters of 4,000,000 shares (the "Company Shares") of the Company's
common stock, $.0001 par value (the "Common Stock"), and (b) the sale by the
Selling Stockholder and the purchase by the Underwriters of 1,700,000 shares of
Common Stock (the "Selling Stockholder Shares"). The Company Shares and the
Selling Stockholder Shares are collectively referred to herein as the "Firm
Shares." The Company and the Selling Stockholder have also agreed to sell up to
an aggregate of 855,000 shares (the "Additional Shares") of Common Stock to
cover over-allotments, if any, of which up to 600,000 shares are to be issued
and sold by the Company and 255,000 shares are to be sold by the Selling
Stockholder. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "Shares."
You have advised us that, subject to the terms and conditions herein
contained, you desire to purchase the Firm Shares and that you propose to make
an initial public offering of the Firm Shares as soon as you deem advisable
after the Registration Statement referred to below becomes effective.
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* Plus an option to purchase from the Company and the Selling Stockholder
up to 600,000 Additional Shares and 255,000 Additional Shares, respectively, to
cover over-allotments.
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The terms that follow, when used in this Agreement, shall have the meanings
indicated. "Preliminary Prospectus" shall mean each prospectus subject to
completion included in the Company's registration statement on Form S-1 referred
to in Section 1(a)(i) below or any amendment or post-effective amendment thereto
(including the prospectus subject to completion included in the Registration
Statement (as defined below) on the date that the Registration Statement becomes
effective (the "Effective Date") that omits Rule 430A Information (as defined
below)). "Registration Statement" shall mean the registration statement referred
to in Section 1(a)(i) below, including all financial statement schedules and
exhibits, as amended at the Representation Date (as defined in Section 1(a)
hereof) (or, if not effective at the Representation Date, in the form in which
it shall become effective) and, if any post-effective amendment thereto becomes
effective prior to the Closing Date (as defined in Section 2 hereof), shall also
mean such registration statement as so amended. The term "Registration
Statement" shall include Rule 430A Information deemed to be included therein at
the Effective Date as provided by Rule 430A (as defined below). If the Company
files an abbreviated registration statement to register additional shares of
Common Stock pursuant to Rule 462(b) (the "Rule 462 Registration Statement")
under the Securities Act of 1933, as amended (the "Act"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement. "Prospectus" shall mean (x) if the Company relies on
Rule 434 under the Act, the Term Sheet (as defined below) relating to the Shares
that is first filed pursuant to Rule 424(b)(7) under the Act, together with the
Preliminary Prospectus identified therein that the Term Sheet supplements, or
(y) if the Company does not rely on Rule 434 under the Act, the prospectus first
filed with the Securities and Exchange Commission (the "Commission") pursuant to
Rule 424(b) under the Act, or, if no prospectus is required to be filed pursuant
to Rule 424(b) under the Act, the prospectus included in the Registration
Statement. "Term Sheet" shall mean any term sheet that satisfies the
requirements of Rule 434 under the Act. "Rule 158," "Rule 424," "Rule 434" and
"Rule 430A" refer to such rules under the Act. "Act Regulations" refer to the
rules and regulations under the Act. "Rule 430A Information" means information
with respect to the Shares and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule 430A. For
purposes of the representations and warranties contained herein, to the extent
reference is made to the Prospectus and at the relevant time the Prospectus is
not yet in existence, such reference shall be deemed to be to the most recent
Preliminary Prospectus. For purposes of this Agreement, all references to the
Registration Statement, Prospectus, Preliminary Prospectus or Term Sheet or to
any amendment or supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval system ("XXXXX").
1. Representations and Warranties.
(a) The Company and the Selling Stockholder, jointly and severally,
represent and warrant to, and agree with, each of the Underwriters as of the
date hereof (such date being referred to as the "Representation Date"), as
follows:
(i) The Company meets the requirements for use of Form S-1 under the
Act and has filed with the Commission a registration statement (Registration No.
333-87043) on such form, including a prospectus subject to completion, for the
registration under the Act of the offering and sale of the Shares. The Company
may have filed one or more amendments thereto, including the
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related prospectus subject to completion, each of which has previously been
furnished to the Underwriters. After the execution of this Agreement, the
Company will file with the Commission either (A) prior to effectiveness of such
registration statement, a further amendment to such registration statement
(including a form of prospectus), a copy of which amendment has been furnished
to and approved by the Underwriters prior to the execution of this Agreement, or
(B) after effectiveness of such registration statement, either (1) if the
Company relies on Rule 434 under the Act, a Term Sheet relating to the Shares
that shall identify the Preliminary Prospectus that it supplements containing
such information as is required or permitted by Rules 434, 430A and 424(b) under
the Act or (2) if the Company does not rely on Rule 434 under the Act, a
prospectus in the form most recently included in an amendment to such
registration statement (or, if no amendment shall have been filed, in such
registration statement) in accordance with Rules 430A and 424(b) of the Act
Regulations and as have been provided to and approved by the Underwriters prior
to execution of this Agreement.
(ii) Neither the Commission nor any "blue sky" or securities
authority of any jurisdiction in which the Shares have been offered has issued
any order preventing or suspending the use of any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto. When any Preliminary
Prospectus was filed with the Commission it (A) complied in all material
respects with the applicable requirements of the Act and the Act Regulations and
(B) did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and each Preliminary Prospectus and the Prospectus
delivered to the Underwriters for use in connection with the offering of Shares
will, at the time of such delivery, be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T under the Act. On the Effective Date,
the Representation Date and each Closing Date, the Registration Statement did
and will, and when the Prospectus or any Term Sheet that is a part thereof is
first filed (if required) in accordance with Rule 424(b) and on the
Representation Date and each Closing Date, the Prospectus will, comply in all
material respects with the applicable requirements of the Act and the Act
Regulations; on the Effective Date, the Representation Date and each Closing
Date, the Registration Statement did not 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 in order to make the statements therein not
misleading; on the Effective Date, the Representation Date and each Closing
Date, and on the date of any filing pursuant to Rule 424(b), the Prospectus or
any Term Sheet that is a part thereof did not and will not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, that the Company makes no
representations or warranties as to the information provided in writing to the
Company by or on behalf of the Underwriters expressly for use in any Preliminary
Prospectus, the Registration Statement or the Prospectus, and the Company agrees
that the only information provided in writing by or on behalf of the
Underwriters to the Company expressly for use in any Preliminary Prospectus, the
Registration Statement or the Prospectus is that information contained in the
table of Underwriters set forth under the caption "Underwriting" in the
Prospectus, the amounts of the selling concession and reallowance set forth in
the Prospectus and the eighth, thirteenth, fourteenth and fifteenth paragraphs
under the caption "Underwriting." On the Effective Date, the Representation Date
and each Closing Date, the Company's registration statement on Form
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8-A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
complied and will comply in all material respects with the Exchange Act and the
rules and regulations of the Commission thereunder.
(iii) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, with all requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and is duly qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature or location of its
properties (owned or leased) or the conduct of its business requires such
qualification, except where the failure so to qualify would not have an adverse
effect on the condition (financial or other), business, properties, prospects,
net worth or results of operations of the Company or any Subsidiary (as defined
below) that is or would be, singly or in the aggregate, material to the Company
and its Subsidiaries taken as a whole, whether or not occurring in the ordinary
course of business (a "Material Adverse Effect").
(iv) All the subsidiaries (as defined in the Act Regulations) of the
Company are listed on Exhibit 21.1 to the Registration Statement and are
referred to herein individually as a "Subsidiary" and collectively as the
"Subsidiaries." Each Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of the state in which it is
incorporated, with all requisite corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
or location of its properties (owned or leased) or the conduct of its business
requires such qualification, except where the failure to so qualify would not
have a Material Adverse Effect.
(v) Each of the Company and each Subsidiary possesses all
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from, and has made all declarations and filings with, all
regulatory or governmental officials, bodies and tribunals ("Permits") to own,
lease or operate its respective property and to conduct its respective
businesses described in the Registration Statement and the Prospectus, except
where failure to have obtained or made the same would not have a Material
Adverse Effect, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
Permits. Each of the Company and each Subsidiary has fulfilled and performed all
its current material obligations with respect to such Permits and no event has
occurred that allows, or after notice or lapse of time, or both, would allow,
revocation or termination thereof or result in any other material impairment of
the rights of the holder of any such Permit and such Permits contain no
restrictions that are materially burdensome to the Company or such Subsidiary
and each of the Company and each Subsidiary is in compliance with all applicable
laws, rules, regulations, orders and consents, the violation of which could have
a Material Adverse Effect. The respective properties and businesses of each of
the Company and each Subsidiary conform in all material respects to the
descriptions thereof contained in the Registration Statement and the Prospectus.
(vi) All of the Company's issued and outstanding capital stock
(including the Selling Stockholder Shares and the Additional Shares to be sold
by the Selling Stockholder) has been duly authorized, validly issued and is
fully paid and nonassessable, and the Common Stock and
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the capitalization of the Company conform to the descriptions thereof and the
statements made with respect thereto in the Registration Statement and the
Prospectus as of the date set forth therein. None of the issued shares of Common
Stock (including the Selling Stockholder Shares and the Additional Shares to be
sold by the Selling Stockholder) have been issued in violation of any preemptive
or other rights to subscribe for or purchase shares of capital stock of the
Company. Except as described in the Registration Statement and the Prospectus,
there are no outstanding securities convertible into or exchangeable for, and no
outstanding options, warrants or other rights to purchase, any shares of the
capital stock of the Company, nor any agreements or commitments to issue any of
the same and there are no preemptive or other rights to subscribe for or to
purchase, and no restrictions upon the voting or transfer of, any capital stock
of the Company pursuant to the Company's certificate of incorporation or by-laws
or any agreement or other instrument to which the Company is a party. All offers
and sales of the Company's capital stock prior to the date hereof were at all
relevant times exempt from the registration requirements of the Act, and were
duly registered or the subject of an available exemption from the registration
requirements of the applicable state securities or blue sky laws.
(vii) All the outstanding shares of capital stock of each Subsidiary
have been duly authorized and validly issued and are fully paid and
nonassessable, and, except as described in the Registration Statement and
Prospectus, are owned of record and beneficially by the Company, free and clear
of any security interests, liens, encumbrances, equities or other claims. There
are no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or other
equity interest in any Subsidiary other than the Company's right to acquire the
remaining 20% of the capital stock of certain of its Subsidiaries, 80% of the
capital stock of which is owned by the Company, as described in the Registration
Statement and the Prospectus. Except as described in the Registration Statement
and the Prospectus or as may be restricted by the law of the state in which such
Subsidiary is incorporated with respect to the need for sufficient surplus, each
Subsidiary is not currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distribution on its capital
stock, from repaying to the Company any loan or advance to such Subsidiary from
the Company or from transferring any of such Subsidiary's property or assets to
the Company.
(viii) Each of the Company and each Subsidiary has good and marketable
title to, and is possessed of, each property, right, interest or estate
constituting the properties and assets described in the Registration Statement
and the Prospectus as owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except such as are described in the Registration
Statement and the Prospectus or such as are not burdensome and do not interfere
with the use or proposed use of the property or the conduct of the business of
the Company or such Subsidiary in a manner that is or would be material to the
business of the Company and its Subsidiaries taken as a whole. Each of the
Company and each Subsidiary has valid, subsisting and enforceable leases for the
properties described in the Registration Statement and the Prospectus as leased
by it and no event has occurred which, with the passage of time or the giving of
notice or both, would cause a material breach of, or default under, any such
leases.
(ix) The Company has all requisite power, authority, authorizations,
approvals, orders, licenses, certificates and permits to enter into this
Agreement and to carry out the
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provisions and conditions hereof, including the issuance and delivery of the
Shares to be issued and sold by the Company to the Underwriters as provided
herein. This Agreement has been duly and validly authorized by the Company, and
this Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding agreement of the Company, enforceable
against it in accordance with its terms, except to the extent rights to
indemnity hereunder may be limited by Federal or state securities laws or public
policy underlying such laws and except to the extent the enforcement hereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
equitable principles.
(x) Except as disclosed in the Registration Statement and the
Prospectus, each of the Company and each Subsidiary owns or possesses adequate
licenses or other rights to use, free and clear of all liens, charges, claims,
encumbrances and restrictions of any kind whatsoever, all patents, trademarks,
service marks, trade names, domain names, copyrights, trade secrets, technology
and licenses, and rights with respect to the foregoing, used by it or which are
necessary in the conduct of its business as currently or proposed to be
conducted by the Company or such Subsidiary, as described in the Prospectus, and
except as disclosed in the Registration Statement and the Prospectus, neither
the Company nor any Subsidiary is obligated or under any liability whatsoever to
make any payments by way of royalties, fees or otherwise to any owner or
licensee of, or other claimant to, any patent, trademark, service xxxx, trade
name, domain name, copyright, trade secret, know-how, technology or other
intangible asset, with respect to the use thereof or in connection with the
conduct of its business or otherwise. None of the technology employed by the
Company or any Subsidiary has been obtained or is being used by the Company or
such Subsidiary in violation of any contractual fiduciary obligation binding on
the Company or such Subsidiary or, to the knowledge of the Company, each
Subsidiary and the Selling Stockholder or their respective officers, directors
or employees, otherwise in violation of the rights of any persons. Except as
disclosed in the Registration Statement and the Prospectus, neither the Company
nor any Subsidiary has received any notice of infringement of or conflict with
(or knows of any such infringement of or conflict with) asserted rights of
others with respect to any patents, trademarks, service marks, trade names,
domain names, copyrights, trade secrets, technology or licenses, or rights with
respect to the foregoing which could result in any Material Adverse Effect; and,
except as disclosed in the Registration Statement and the Prospectus, the
discoveries, inventions, products or processes of the Company and its
Subsidiaries referred to in the Prospectus do not infringe or conflict with any
right or patent of any third party, or any discovery, invention, product or
process which is the subject of a patent application filed by any third party,
known to the Company, any Subsidiary or the Selling Stockholder.
(xi) Each of the Company and each Subsidiary has reviewed its
operations and the operations of any third parties with which it has a material
relationship to evaluate the extent to which its business or operations will be
affected by Year 2000 issues (as defined below). Based on such review, the
disclosure in the Registration Statement relating to Year 2000 issues is
accurate and complies in all material respects with the Act Regulations. "Year
2000 issues" as used herein means Year 2000 issues described in or contemplated
by the Commission's Interpretation: Disclosure of Year 2000 Issues and
Consequences by Public Companies, Investment Advisors, Investment Companies, and
Municipal Securities Issuers (Release No. 33-7558).
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(xii) The Shares to be sold by the Company have been duly and validly
authorized for issuance by the Company and the Company has the corporate power
and authority to issue, sell and deliver such Shares; and, when such Shares are
issued and delivered against payment therefor as provided by this Agreement,
such Shares will have been validly issued, fully paid and nonassessable, and the
issuance of such Shares will not be subject to any preemptive or similar rights.
All corporate action required to be taken by the stockholders or the Board of
Directors of the Company for the authorization, issuance and sale of such Shares
has been duly and validly taken.
(xiii) PricewaterhouseCoopers LLP, Rubin, Brown, Gornstein & Co., LLP
and XxXxxx & Company, whose reports are filed with the Commission as part of the
Registration Statement, are independent certified public accountants with
respect to the Company and its Subsidiaries within the meaning of and as
required by the Act and the Act Regulations.
(xiv) The consolidated financial statements and related schedules and
notes included in the Registration Statement and the Prospectus comply in all
material respects with the requirements of the Act and present fairly the
financial position of the Company and its Subsidiaries, on the basis stated in
the Registration Statement, as of the respective dates thereof and the results
of operations and cash flows of the Company and its Subsidiaries, for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire period
involved, except as otherwise disclosed in the Registration Statement and the
Prospectus. The other financial and statistical information and data set forth
in the Registration Statement and Prospectus are accurately presented and, to
the extent such information and data is derived from the financial books and
records of the Company and its Subsidiaries, is prepared on a basis consistent
with such financial statements and books and records. The selected consolidated
financial information included under the caption "Selected Financial Data" in
the Prospectus presents fairly the information shown therein and has been
compiled on a basis consistent with that of the audited consolidated financial
statements of the Company and its Subsidiaries included therein. No other
financial statements or schedules of the Company or any Subsidiary are required
by the Act or the Act Regulations to be included in the Registration Statement
or Prospectus. Neither the Company nor any Subsidiary is currently planning any
acquisition for which disclosure of pro forma financial information would be
required by the Act.
(xv) The pro forma financial statements of the Company and the related
notes thereto set forth in the Registration Statement and the Prospectus have
been prepared on a basis consistent with the historical financial statements of
the Company, give effect to the assumptions used in the preparation thereof on a
reasonable basis and in good faith and present fairly the historical
transactions contemplated by the Registration Statement and the Prospectus. Such
pro forma financial statements have been prepared in accordance with the
applicable requirements of Rule 11-02 of Regulation S-X promulgated by the
Commission and the assumptions used in preparing such information are
reasonable. The other pro forma financial and statistical information and data
set forth in the Registration Statement and the Prospectus are accurately
presented and prepared on a basis consistent with the pro forma financial
statements.
(xvi) Each of the Company and each Subsidiary maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (A)
transactions are
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executed in accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xvii) Each of the Company and each Subsidiary maintains insurance
covering its properties, operations, personnel and businesses, including
business interruption insurance. Such insurance insures against such losses and
risks and in such amounts as are prudent and customary in the business in which
it is engaged. Neither the Company nor any Subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect. All such
insurance is outstanding and duly in force on the date hereof.
(xviii) Each of the Company and each Subsidiary is in compliance with
all Federal, state, local or foreign laws or regulations relating to pollution
or protection of human health or the environment ("Environmental Laws"), except
where the failure to be in compliance would not have a Material Adverse Effect.
Neither the Selling Stockholder, the Company nor any Subsidiary has authorized,
conducted or has any knowledge of the generation, transportation, storage, use,
treatment, disposal or release of any hazardous substance, hazardous waste,
hazardous material, hazardous constituent, toxic substance, pollutant,
contaminant, petroleum product, natural gas, liquified gas or synthetic gas,
defined or regulated under any Environmental Law on, in or under any property
currently leased or owned or by any means controlled by the Company or any
Subsidiary (the "Real Property") in violation of any applicable law, except for
any violation which would not have a Material Adverse Effect; there is no
pending or, to the Company's, any Subsidiary's or the Selling Stockholder's
knowledge, threatened claim, action, litigation or any administrative agency
proceeding involving the Company or any Subsidiary, nor has the Company or any
Subsidiary received any written notice, or any oral notice to any executive
officer of the Company or any Subsidiary or any other employee responsible for
receipt of any such notice, from any governmental entity or third party, that
(A) alleges a violation of any Environmental Laws by the Company or any
Subsidiary or any person or entity whose liability for a violation of an
Environmental Law the Company or any Subsidiary has retained or assumed either
contractually or by operation of law, which liability or violation could have a
Material Adverse Effect; (B) alleges the Company or any Subsidiary is a liable
party under the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq., or any state superfund law; (C) alleges
possible contamination of the environment by the Company or any Subsidiary; or
(D) alleges possible contamination of the Real Property.
(xix) Neither the Company nor any Subsidiary is in violation of their
respective charters or by-laws. Neither the Company nor any Subsidiary is, or
with the passage of time or the giving of notice or both will be, in violation
of any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any Subsidiary, or of any judgment,
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order or decree of any court or governmental agency or body or of any arbitrator
having jurisdiction over the Company or any Subsidiary which could have a
Material Adverse Effect, or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any mortgage, loan
agreement, note, bond, debenture, credit agreement or any other evidence of
indebtedness or in any agreement, contract, indenture, lease or other instrument
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound, or to which any of the property or assets of the Company or
any Subsidiary is subject, the effect of which violation or default in
performance or observance could have a Material Adverse Effect.
(xx) There is no action, suit or proceeding before or by any court,
arbitrator or governmental agency or body pending or, to the Company's, any
Subsidiary's or the Selling Stockholder's knowledge, threatened, against the
Company or any Subsidiary, (A) that is required to be described in the
Registration Statement or the Prospectus but is not described as required or (B)
that, if adversely determined, could have a Material Adverse Effect. There is no
agreement, contract, indenture, lease or other document or instrument that is
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement that is not described or
filed as required. All such agreements to which the Company or any Subsidiary is
a party have been duly authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the Company or such
Subsidiary, and are enforceable against the Company or such Subsidiary in
accordance with the terms thereof.
(xxi) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) the Company (1) has not issued any securities other than in
connection with the exercise of any outstanding options or warrants, (2)
incurred any material liability or obligation, direct or contingent, for
borrowed money, (3) entered into any transaction, not in the ordinary course of
business, that is material to the Company and its Subsidiaries taken as a whole,
(4) entered into any transaction with an affiliate of the Company or any
Subsidiary (as the term "affiliate" is defined in Rule 405 promulgated by the
Commission pursuant to the Act), which would otherwise be required to be
disclosed in the Registration Statement and the Prospectus, or (5) declared or
paid any dividend on its capital stock or made any other distribution to its
equity holders, (B) there has not been any material change in the capital stock
or other equity, or material increase in the short-term debt or long-term debt,
of the Company and its Subsidiaries and (C) there has been no change or
development with respect to the condition (financial or otherwise), business,
properties, prospects, net worth or results of operations of the Company or any
Subsidiary that could have a Material Adverse Effect.
(xxii) Neither the execution, delivery or performance of this
Agreement, the offer, issuance, sale or delivery of the Shares, nor the
consummation of the other transactions contemplated hereby (A) requires the
consent, approval, authorization or order of any court or governmental agency or
body, except such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Shares by the Underwriters or such as may be
required by the National Association of Securities Dealers, Inc. (the "NASD")
and such other approvals as have been obtained, (B) will conflict with, result
in a breach or violation of, or constitute a default under the terms of any
agreement, contract, indenture, lease or other instrument to which the Company
or any Subsidiary is a
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party or by which any of them or any of their respective properties may be
bound, or the charter or by-laws of the Company or any Subsidiary, (C) will
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary or an acceleration of
indebtedness pursuant to the terms of any agreement or instrument to which any
of them may be bound or to which any of them is a party or by which any of the
property or assets of any of them is subject, (D) will conflict with or violate
any law, statute or regulation, or any judgment, order, consent or memorandum of
understanding applicable to the Company or any Subsidiary of any court,
regulatory body, administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any Subsidiary or their respective properties,
or (E) result in the suspension, termination or revocation of any Permit.
(xxiii) The Company has not distributed and, prior to the later to
occur of (A) the Closing Date or (B) completion of the distribution of the
Shares, will not distribute without the prior written consent of Ladenburg
Xxxxxxxx & Co. Inc. ("Ladenburg") any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, any
Preliminary Prospectus, the Prospectus or other materials, if any, permitted by
the Act and the Act Regulations.
(xxiv) Neither the Company nor any Subsidiary nor any employee or
agent of the Company or any Subsidiary has made any payment of funds of the
Company or any Subsidiary or received or retained any funds, in violation of any
law, rule or regulation, or which payment, receipt or retention of funds is of a
character required to be disclosed in the Registration Statement or the
Prospectus.
(xxv) There is no (i) unfair labor practice complaint, grievance or
arbitration proceeding pending or, to the Company's, any Subsidiary's or the
Selling Stockholder's knowledge, threatened against the Company or any of its
Subsidiaries before the National Labor Relations Board or any state or local
labor relations board, (ii) strike, labor dispute, slowdown or stoppage pending
or, to the Company's, any Subsidiary's or the Selling Stockholder's knowledge,
threatened against the Company or any of its Subsidiaries or (iii) union
representation question existing with respect to the employees of the Company
and its Subsidiaries, except for such actions specified in clause (i), (ii) or
(iii) above, which, singly or in the aggregate, would not have a Material
Adverse Effect. To the Company's, any Subsidiary's or the Selling Stockholder's
knowledge, no collective bargaining organizing activities are taking place with
respect to the Company or any of its Subsidiaries.
(xxvi) Each of the Company and each Subsidiary has filed (or have
obtained extensions thereto) all Federal, state and local tax returns that are
required to be filed (other than returns with respect to which failure to so
file would not have a Material Adverse Effect), which returns are complete and
correct in all material respects and have paid all taxes shown on such returns
and all assessments received by them with respect thereto to the extent that the
same have become due, except those taxes that are being contested or protested
in good faith by the Company or any Subsidiary and as to which any reserves
required under generally accepted accounting principles have been established;
and neither the Company, any Subsidiary nor the Selling Stockholder has any
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company or any Subsidiary which could have a Material
Adverse Effect.
11
(xxvii) Except for the shares of capital stock of each Subsidiary,
neither the Company nor any Subsidiary owns or controls (directly or
indirectly), or owns or holds any right to acquire any share of stock or any
other securities of any corporation, other than the right to acquire the
remaining 20% of the capital stock of certain of its Subsidiaries, 80% of the
capital stock of which is owned by the Company, as described in the Registration
Statement and the Prospectus, or has any equity interest in any firm,
partnership, association or other entity other than as reflected in the
consolidated financial statements included in the Registration Statement and the
Prospectus.
(xxviii) No holder of any security of the Company has the right (other
than a right which has been waived in writing or complied with) to have any
security owned by such holder included in the Registration Statement and, except
as described in the Registration Statement and the Prospectus, no holder of any
security of the Company has the right to demand registration of any security
owned by such holder during the period ending 12 months after the date of the
Prospectus.
(xxix) Neither the Company nor any Subsidiary or their respective
officers, directors, employees or agents has taken or will take, directly or
indirectly, (A) any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares, or (B) since the filing of the
Registration Statement (1) sold, bid for, purchased or paid anyone any
compensation for soliciting purchases of, the Shares or (2) paid or agreed to
pay any person any compensation for soliciting another to purchase any
securities of the Company.
(xxx) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and is not subject to
registration under such act, and will not be treated as such by reason of its
receipt and application of the net proceeds from the offering.
(xxxi) The Company has obtained from each of the Company's officers,
directors and stockholders (including the Selling Stockholder, the former
stockholders of Bostek, Inc. and the persons who are to receive shares of Common
Stock in connection with the Company's acquisition of minority interests in
certain subsidiaries and the buy-out of earn-out arrangements) and any person
who holds options to purchase the Company's Common Stock a written agreement
(the "Lock-Up Agreements"), in form and substance satisfactory to counsel for
the Underwriters, that, for a period of 180 days from the date of the
Prospectus, he, she or it will not, without Ladenburg's prior written consent,
(a) (x) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any security convertible into or exchangeable or
exercisable for shares of Common Stock or (y) enter into any swap or other
arrangement that transfers all or a portion of the economic consequences
associated with ownership of any Common Stock and (b) make any demand for, or
exercise any right with respect to, the registration of any shares of Common
Stock, or any securities convertible into or exercisable or exchangeable for
Common Stock.
12
(xxxii) No transfer tax stamp duty or other similar tax is payable by
or on behalf of the Underwriters in connection with (i) the issuance by the
Company of the Firm Shares and the 600,000 Additional Shares to be issued and
sold by the Company, (ii) the purchase by the Underwriters of the Firm Shares or
Additional Shares from the Company or (iii) the consummation by the Company of
any of its obligations under this Agreement.
(xxxiii) No relationship, direct or indirect, exists between or among
the Company or any of its Subsidiaries on the one hand, and the directors,
officers, stockholders (including the Selling Stockholder), customers or
suppliers of the Company or any of its Subsidiaries on the other hand, which is
required by the Act to be so described in the Registration Statement or the
Prospectus which is not so described.
(xxxiv) To the Company's, each Subsidiary's and the Selling
Stockholder's knowledge, no officer, director or stockholder has any affiliation
or association with the National Association of Securities Dealers, Inc. or any
member thereof.
(xxxv) The Shares have been duly approved for quotation on the NASDAQ
National Market.
(b) The Selling Stockholder represents and warrants to, and agrees with,
each Underwriter that:
(i) The Selling Stockholder has full right, power and authority to
enter into this Agreement, the Custody Agreement (as defined below) and the
power of attorney appointing _____ and ______ as power of attorney for the
Selling Stockholder (the "Power of Attorney") and to sell, assign, transfer and
deliver to the Underwriters the Selling Stockholder Shares and 255,000
Additional Shares to be sold by the Selling Stockholder in accordance with the
terms of this Agreement. This Agreement, the Custody Agreement and the Power of
Attorney have been duly authorized, executed and delivered by the Selling
Stockholder and are valid and binding agreements of the Selling Stockholder,
enforceable against the Selling Stockholder in accordance with their respective
terms.
(ii) The Selling Stockholder is the sole registered and beneficial
owner of 12,000,000 shares of Common Stock and upon sale and delivery of, and
payment for, the Selling Stockholder Shares and 255,000 Additional Shares to be
sold by the Selling Stockholder, as provided herein, the Selling Stockholder
will convey good and marketable title to such Shares, free and clear of all
security interests, liens, encumbrances, equities, claims or other defects.
(iii) Other than as permitted by the Act and the Act Regulations, the
Selling Stockholder has not distributed and will not distribute any Preliminary
Prospectus, the Prospectus or any other offering material in connection with the
offering and sale of the Shares. The Selling Stockholder has not, directly or
indirectly, (A) taken and will not, directly or indirectly, take any action
designed to cause or result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares, or (B) since the filing of the Registration Statement (1) sold, bid for,
13
purchased or paid anyone any compensation for soliciting purchases of, the
Shares or (2) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(iv) Neither the execution, delivery or performance of this Agreement,
the Custody Agreement or the Power of Attorney by the Selling Stockholder, the
compliance by the Selling Stockholder with the provisions hereof nor the
consummation of the transactions contemplated hereby (A) requires the consent,
approval, authorization or order of any court or regulatory agency or body
(except such as have been obtained under the Act and such as may be required by
the NASD or under state securities or blue sky laws in connection with the
purchase and distribution by the Underwriters of the Selling Stockholder Shares
and 255,000 Additional Shares to be sold by the Selling Stockholder), or (B)
conflict with, or result in a breach or violation of, or constitute a default
under (i) the certificate of incorporation or by-laws of the Selling Stockholder
or (ii) the terms of any agreement, contract, indenture, lease or other
instrument to which the Selling Stockholder is a party or by which the Selling
Stockholder or any of the Selling Stockholder's properties are bound, or (C)
will conflict with or violate any law, statute or regulation, or any judgment,
order, consent or memorandum of understanding applicable to the Selling
Stockholder of any court, regulatory body, administrative agency or governmental
body or arbitrator having jurisdiction over the Selling Stockholder or the
property of the Selling Stockholder.
(v) Certificates representing the Selling Stockholder Shares and
255,000 Additional Shares to be sold by the Selling Stockholder, accompanied by
a duly executed instrument of transfer, have been placed in custody, for
delivery pursuant to the terms of this Agreement, under a custody agreement duly
authorized, executed and delivered by the Selling Stockholder, in the form
heretofore furnished to you (the "Custody Agreement"), with ____________,** as
Custodian (the "Custodian"); the Selling Stockholder Shares and 255,000
Additional Shares to be sold by the Selling Stockholder represented by the
certificates so held in custody for the Selling Stockholder are for the benefit
of and coupled with and subject to the interests hereunder of the Custodian and
the Underwriters; the arrangements for custody and delivery of such certificates
made by the Selling Stockholder hereunder and under the Custody Agreement and
Power of Attorney are not subject to termination by any acts of the Selling
Stockholder, by operation of law or by the occurrence of any other event,
including without limitation the bankruptcy, liquidation or dissolution of the
Selling Stockholder; and if any such event shall occur before the delivery of
the Shares to be sold by the Selling Stockholder hereunder, certificates for
such Shares will be delivered by the Custodian in accordance with the terms and
conditions of this Agreement, the Custody Agreement and the Power of Attorney as
if such event had not occurred, regardless of whether or not the Custodian shall
have received notice of such event.
(vi) All information furnished or to be furnished by the Selling
Stockholder specifically for use in connection with the preparation of the
Preliminary Prospectus, the Registration Statement and the Prospectus, insofar
as it relates to the Selling Stockholder, is and on the Effective Date, the
Representation Date and each Closing Date will be true and correct in all
material respects
-------------------
** Transfer Agent
14
and, with respect to the Registration Statement and Prospectus, does not and on
the Effective Date, the Representation Date and each 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 in order to make the statements
therein not misleading.
(vii) At the Closing Dates, all stock transfer or other taxes (other
than income taxes) which are required to be paid in connection with the sale and
transfer of the Selling Stockholder Shares and 255,000 Additional Shares to be
sold by the Selling Stockholder hereunder will have been fully paid or provided
for by the Selling Stockholder and all laws imposing such taxes will have been
fully complied with.
(c) Any certificate signed by any officer of the Company or by the
Selling Stockholder delivered to the Underwriters or to counsel for the
Underwriters pursuant to the terms of this Agreement shall be deemed a
representation and warranty by the Company or the Selling Stockholder, as the
case may be, to the Underwriters as to the matters covered thereby.
2. Sale and Delivery to the Underwriters; Closing.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company (with respect to
the Company Shares) and the Selling Stockholder (with respect to the Selling
Stockholder Shares) agree severally, and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company and the Selling Stockholder, at a purchase price of $__________
per share (the "Initial Price"), the number of Firm Shares set forth opposite
such Underwriter's name in Schedule I hereto. The number of Firm Shares to be
purchased from the Company and the Selling Stockholder, respectively (as
adjusted by the Representatives to avoid fractions), by each of the Underwriters
shall bear the same proportion to the total number of shares to be sold by the
Company or the Selling Stockholder pursuant to this Agreement as the number of
Firm Shares set forth opposite the name of such Underwriter on Schedule I bears
to the total number of Firm Shares to be purchased by the Underwriters pursuant
to this Agreement.
(b) The Company and the Selling Stockholder, severally and not jointly,
grant to the Underwriters an option to purchase, and the Underwriters shall have
the right to purchase, severally and not jointly, from the Company and the
Selling Stockholder all or any part of the Additional Shares at the Initial
Price. Additional Shares shall be purchased from the Company and the Selling
Stockholder for the accounts of the Underwriters in proportion to the number of
Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter. Such option may be exercised only to cover over-allotments in the
sale of the Firm Shares by the Underwriters and may be exercised in whole or in
part at any time and from time to time within 30 days after the date of this
Agreement, in each case upon written or facsimile notice, or verbal or
telephonic notice confirmed by written or telegraphic notice, by the
Underwriters to the Company no later than 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date (as hereinafter defined) or at
least two business days before the Additional Shares Closing Date (as
hereinafter defined), as the case may be, setting forth the number of Additional
Shares to be purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase. The number of Additional Shares to be
15
sold by each of the Company and the Selling Stockholder shall equal (i) the
maximum number of Additional Shares which may be purchased from each of the
Company and the Selling Stockholder pursuant to the option (as indicated in the
first paragraph of this Agreement) multiplied by (ii) a fraction, the numerator
of which is the aggregate number of Additional Shares as to which the option is
being exercised, and the denominator of which is 855,000 (subject, in each case,
to adjustment by the Underwriters to eliminate fractional shares). The
respective number of Additional Shares to be sold by the Company and the Selling
Stockholder to each Underwriter shall be the number which bears the same
proportion to the aggregate number of Additional Shares being purchased from
each of the Company and the Selling Stockholder, as the case may be, as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule I bears to the total number of Firm Shares (subject, in each case, to
adjustment by the Underwriters to eliminate fractional shares).
(c) Payment of the purchase price for, and delivery of, the Firm Shares
to be purchased by the Underwriters shall be made at the offices of Ladenburg
Xxxxxxxx & Co. Inc., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or at such other place as shall be agreed upon by the Underwriters, the Company
and the Selling Stockholder at 10:00 A.M. on the third (fourth, if the pricing
occurred after 4:30 p.m. on any given day) business day after the date of this
Agreement, or such other time not later than ten business days after such date
as shall be agreed upon by the Underwriters, the Company and the Selling
Stockholder (such time and date of payment and delivery being herein called the
"Firm Shares Closing Date"). Payment shall be made to the Company and the
Selling Stockholder by wire transfer and payable in immediately available funds
to the order of the Company or the Selling Stockholder, as the case may be,
against delivery to the Underwriters of the Company Shares and the Selling
Stockholder Shares, respectively.
(d) Payment of the purchase price for, and delivery of, the Additional
Shares to be purchased by the Underwriters shall be made at the office as set
forth above or at such other place as shall be agreed upon by the Underwriters,
the Company and the Selling Stockholder at the time and on the date (which may
be the same as, but in no event shall be earlier than, the Firm Shares Closing
Date) specified in the notice referred to in Section 2(b) hereof (such time and
date of delivery and payment are called the "Additional Shares Closing Date").
The Firm Shares Closing Date and the Additional Shares Closing Date are called,
individually, a "Closing Date" and together, the "Closing Dates." Payment shall
be made to the Company and the Selling Stockholder by wire transfer and payable
in immediately available funds to the order of the Company or the Selling
Stockholder, as the case may be, against delivery to the Underwriters of the
Additional Shares to be sold by the Company and the Selling Stockholder,
respectively.
(e) The Shares shall be in such denominations and registered in such
names as the Underwriters may request in writing at least two business days
before the Firm Shares Closing Date or, in the case of the Additional Shares, on
the day of notice of exercise of the option as described in Section 2(b) hereof.
The Shares will be made available for examination and packaging by the
Underwriters not later than 1:00 P.M. on the last business day prior to the Firm
Shares Closing Date (or the Additional Shares Closing Date in the case of the
Additional Shares) at such place as is designated by the Underwriters. If the
Underwriters so elect, delivery of the Shares may be made by credit through full
FAST transfer to the accounts of The Depository Trust Company designated by the
Underwriters.
16
3. Covenants.
(a) The Company covenants with each Underwriter as follows:
(i) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Representation Date, and any amendment
thereto, to become effective as promptly as possible after the filing thereof.
The Company will not file any amendment to the Registration Statement or
amendment or supplement to the Prospectus to which the Underwriters shall
reasonably object in writing after a reasonable opportunity to review such
amendment or supplement. Subject to the foregoing sentences in this clause
3(a)(i), if the Registration Statement has become or becomes effective pursuant
to Rule 430A, or filing of the Prospectus or any Term Sheet that constitutes a
part thereof or supplement to the Prospectus is otherwise required under Rule
424(b), the Company will cause the Prospectus or any Term Sheet that constitutes
a part thereof, properly completed, or such supplement thereto, to be filed with
the Commission pursuant to Rule 434 and the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to the
Underwriters of such timely filing. The Company will promptly advise the
Underwriters and, if requested, confirm such advice in writing, (A) when the
Registration Statement, if not effective at the Representation Date, and any
amendment thereto, shall have become effective, (B) when the Prospectus or any
Term Sheet that constitutes a part thereof, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule 434 and
424(b), (C) when any amendment to the Registration Statement shall have been
filed or become effective, (D) of any request by the Commission for any
amendment of or supplement to the Registration Statement or any Prospectus or
for any additional information, (E) of the receipt by the Company of any
notification of, or if the Company otherwise has knowledge of, the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose, (F) if the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, when the Rule 462(b)
Registration Statement has become effective and (G) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as soon as
possible the lifting thereof.
(ii) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Act or the Act Regulations, any event occurs
as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or amend or supplement the Prospectus to comply with
the Act or the Act Regulations, the Company promptly will prepare and file with
the Commission, at the Company's expense, subject to the second sentence of
Section 3(a)(i) hereof, an amendment or supplement which will correct such
statement or omission or effect such compliance and will use its best efforts to
cause the same to become effective as soon as possible; and in case any
Underwriter is required to deliver a prospectus after the nine-month period
referred to in Section 10(a)(3) of the Act, the Company upon request, but
17
at the expense of such Underwriter, will promptly prepare such amendment or
amendments to the Registration Statement and such Prospectus as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the Act.
Neither consent to, nor delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 5.
(iii) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company, at
its expense, but only for the nine-month period referred to in Section 10(a)(3)
of the Act, will furnish to each Underwriter or mail to its order copies of the
Registration Statement, the Prospectus, the Preliminary Prospectus and all
amendments and supplements to any such documents, in each case as soon as
available and in such quantities as such Underwriter may request, for the
purposes contemplated by the Act.
(iv) The Company consents to the use of the Prospectus in accordance
with the provisions of the Act and with the securities or blue sky laws of the
jurisdictions in which the Shares are offered by the Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the Act to be delivered in connection with the sales by any
Underwriter or dealer. The Company will comply with all requirements imposed
upon it by the Act, as now and hereafter amended, so far as necessary to permit
the continuance of sales of or dealing in the Shares in accordance with the
provisions hereof and the Prospectus.
(v) As soon as practicable, but in any event not later than forty-five
(45) days after the end of the 12-month period beginning at the end of the
fiscal quarter of the Company during which the Effective Date occurs (or 90
days, if such 12-month period coincides with the Company's fiscal year) the
Company will make generally available to its security holders and to the
Underwriters a consolidated earnings statement or statements of the Company and
its Subsidiaries covering a twelve-month period beginning with the first full
calendar quarter following the Effective Date which will satisfy the provisions
of Section 11(a) of the Act and Rule 158 thereunder.
(vi) The Company will, without charge, furnish (A) to the
Underwriters, three signed copies of the Registration Statement (including
exhibits thereto), (B) to each Underwriter, a conformed copy of such
Registration Statement (without exhibits thereto) and (C) so long as delivery of
a prospectus by an Underwriter or dealer may be required by the Act, as many
copies of the Prospectus and all amendments and supplements thereto as the
Underwriters may reasonably request. The copies of the Registration Statement,
and each amendment thereto, and the copies of the Prospectus, and any amendments
or supplements thereto, furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(vii) During the period of five years hereafter the Company will
furnish to the Underwriters as soon as practicable after the end of each fiscal
year, a copy of its annual report to stockholders for such year; and the Company
will furnish to the Underwriters (i) as soon as available, a copy of each report
or definitive proxy statement of the Company filed with the Commission under the
Exchange Act or mailed to stockholders, and (ii) from time to time, such other
information concerning the Company as the Underwriters may reasonably request,
provided that prior to the
18
Company's furnishing any such other information that is nonpublic the
Underwriters shall enter into such agreement respecting the confidentiality
thereof as the Company may reasonably request.
(viii) The Company will apply the net proceeds from the offering and
sale of the Shares to be sold by the Company in accordance with the description
set forth in the "Use of Proceeds" section of the Prospectus.
(ix) The Company will cooperate with the Underwriters and their
counsel in connection with endeavoring to obtain and maintain the qualification
or registration, or exemption from qualification, of the Shares for offer and
sale under the applicable securities laws of such states and other jurisdictions
of the United States as the Underwriters may designate; provided, that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to taxation or general service of process in any jurisdiction where
it is not now so subject.
(x) The Company will not at any time, directly or indirectly (A) take
any action designed to cause or result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of any
of the Shares, or (B) (1) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of, the Shares or (2) pay or agree to pay any person
any compensation for soliciting another to purchase any other securities of the
Company.
(xi) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(xii) The Company will not, directly or indirectly, for a period of
180 days following the date of the Prospectus, without the prior written consent
of Ladenburg, offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or enter into any swap or other arrangement that
transfers all or a portion of the economic consequences associated with the
ownership of any Common Stock, regardless of whether any of the transactions
described in this paragraph are to be settled by the delivery of Common Stock,
or such other securities, in cash or otherwise, other than (A) pursuant to any
employee stock option plan of the Company in effect at the Representation Date,
or (B) upon exercise of any options outstanding at the Representation Date. The
Company also agrees not to file any registration statement with respect to any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock for a period of 180 days following the date of the
Prospectus without the prior written consent of Ladenburg.
(xiii) The Company shall cause the Shares to be quoted on the Nasdaq
National Market and shall use its best efforts to maintain such trading while
the Shares are outstanding.
19
(xiv) The Company will not, prior to the later of 25 days after the
Effective Date or any Additional Shares Closing Date, as the case may be, issue
any press release or other communication, directly or indirectly, or hold any
press conferences with respect to the Company or any Subsidiary or the offering
without the prior written consent of Ladenburg, which consent will not be
unreasonably withheld.
(xv) Until the expiration of three years from the Effective Date, the
Company will not effect a change in the independent certified public accountants
for the Company unless either the Company has received Ladenburg's prior written
consent, which consent will not be unreasonably withheld, or such substitute
independent certified public accountant is one of the "big five" firms.
(xvi) If the Registration Statement at the time of effectiveness of
this Agreement does not cover all of the Shares, the Company will file a Rule
462(b) Registration Statement with the Commission registering the Shares not so
covered in compliance with Rule 462(b) by 10:00 P.M., New York City time, on the
date of this Agreement and will pay to the Commission the filing fee for such
Rule 462(b) Registration Statement at the time of the filing thereof or will
give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the Act.
(b) The Selling Stockholder covenants and agrees with each of the
Underwriters that:
(i) The Selling Stockholder will not, directly or indirectly (A) take
any action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares, or (B) (1) sell, bid for, purchase, attempt to induce any person to
purchase, or pay anyone any compensation for soliciting purchases of the Shares
or (2) pay or agree to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
(ii) As soon as the Selling Stockholder is advised thereof, the
Selling Stockholder will advise the Underwriters and confirm such advice in
writing, (A) of receipt by the Selling Stockholder, or by any representative or
agent of the Selling Stockholder, of any communication from the Commission
relating to the Registration Statement, the Prospectus or any Preliminary
Prospectus, or any notice or order of the Commission relating to the Company or
the Selling Stockholder in connection with the transactions contemplated by this
Agreement and (B) of the happening of any event which makes or may make any
statement made in the Registration Statement, the Prospectus or any Preliminary
Prospectus untrue or that requires the making of any change in the Registration
Statement, Prospectus or Preliminary Prospectus, as the case may be, in order to
make such statement not misleading.
(iii) The Selling Stockholder will not, directly or indirectly, for a
period of 180 days following the date of the Prospectus, without the prior
written consent of Ladenburg, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of,
directly or
20
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or enter into any swap or other
arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any Common Stock, regardless of whether any of
the transactions described in this paragraph are to be settled by the delivery
of Common Stock, or such other securities, in cash or otherwise. The Selling
Stockholder also agrees not to make any demand for, or exercise any right with
respect to, the registration of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock for a period of
180 days following the date of the Prospectus without the prior written consent
of Ladenburg.
(iv) The Selling Stockholder will deliver to the Underwriters prior to
the Firm Shares Closing Date a properly completed and executed United States
Treasury Department Form W-9.
4. Payment of Expenses.
(a) The Company covenants and agrees with the Underwriters that the
Company will pay (directly or by reimbursement): (i) the fees, disbursements and
expenses of counsel and accountants for the Company, and all other expenses, in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus, the Prospectus and any amendments or
supplements thereto, and the furnishing of copies thereof, including charges for
mailing, air freight and delivery and counting and packaging thereof to the
Underwriters and dealers; (ii) the cost of printing this Agreement, the
Agreement Among Underwriters, the Selling Agreement, communications with the
Underwriters and selling group and the Preliminary and Supplemental Blue Sky
Memorandum, if any, and any other documents in connection with the offering,
purchase, sale and delivery of the Shares; (iii) all expenses in connection with
the qualification of the Shares for offering and sale under securities laws as
provided in Section 3(a) hereof, including filing and registration fees and the
fees, disbursements and expenses for counsel for the Underwriters in connection
with such qualification and in connection with Blue Sky surveys or similar
advice with respect to sales; (iv) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing any
required review and clearance by the NASD of the terms of the sale of the
Shares; (v) all fees and expenses in connection with quotation of the Shares on
the Nasdaq National Market; (vi) the cost of publication of
"tombstone"advertisements with respect to the offering; (vii) the cost of at
least five sets of bound volumes of the Registration Statement and all related
materials to the individuals designated by the Underwriters; (viii) and all
other costs and expenses incident to the performance of the obligations of the
Company and the Selling Stockholder under this Agreement which are not otherwise
specifically provided for in this Section 4, including the fees of the Company's
transfer agent and registrar, the cost of any stock issue or transfer taxes on
sales of the Shares to the Underwriters, the cost of the Company's personnel and
other internal costs, the cost of printing and engraving the certificates
representing the Shares and all expenses and taxes incident to the sale and
delivery of the Shares to be sold by the Company to the Underwriters hereunder,
but excluding the Selling Stockholder's indemnification and contribution
obligations under Section 6 below. The provisions of this section shall not
supersede or otherwise affect any agreement that the Company and the Selling
Stockholder may otherwise have for allocation of such expenses between
themselves.
21
(b) The Selling Stockholder shall pay (directly or by reimbursement)
all fees and expenses incident to the performance of the Selling Stockholder's
obligations under this Agreement that are not otherwise specifically provided
for herein, including but not limited to any fees and expenses of counsel for
the Selling Stockholder, all underwriting discounts and applicable state
transfer taxes involved in the transfer to the several Underwriters of the
Shares to be purchased by them from the Selling Stockholder.
(c) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to Sections
8 or 9(a)(iii) hereof) or if this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part of the Company or the
Selling Stockholder to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse the Representatives for all
out-of-pocket expenses (including reasonable fees and expenses of counsel for
the Underwriters) reasonably incurred by them in connection herewith.
Notwithstanding termination of this Agreement, the Company shall be liable for
all expenses it has agreed to pay pursuant to Section 4(a) hereof.
5. Conditions of the Underwriters' Obligation.
The obligation of the Underwriters to purchase the Shares hereunder is
subject to the continued accuracy of the representations and warranties of the
Company and the Selling Stockholder herein contained as of the date hereof and
on each Closing Date, to the accuracy of the statements of the Company and the
Selling Stockholder made in any certificate or certificates pursuant to the
provisions hereof as of the date hereof and on each Closing Date and to the
performance by the Company and the Selling Stockholder of their respective
obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or at such later time and date as may be
approved by the Representatives and the Company and shall remain effective at
each Closing Date. No stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Act or proceedings
therefor initiated or threatened by the Commission. No order suspending the
effectiveness of the Registration Statement or the qualification or registration
of the Shares under the securities or blue sky laws of any jurisdiction shall be
in effect or proceedings therefor initiated or threatened by the Commission or
the authorities of any such jurisdiction. If the Company has elected to rely
upon Rule 430A, the price of the Shares and any price-related or other
information previously omitted from the effective Registration Statement
pursuant to Rule 430A shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) within the prescribed time period, and prior to the Firm
Shares Closing Date, the Company shall have provided evidence satisfactory to
the Underwriters of such timely filing, or a post-effective amendment providing
such information shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New York City
time, on the date of this Agreement; and no stop order
22
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been commenced or shall be
pending before or contemplated by the Commission.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall not have occurred (i) any
change, or any development involving a prospective change, in or affecting the
business, properties, prospects, condition (financial or other) or results of
operations of the Company and its Subsidiaries taken as a whole, which, in the
judgment of the Representatives, materially affects the market for the Shares or
(ii) any event or development relating to or involving the Company, any officer
or director of the Company or the Selling Stockholder, which makes any statement
made in the Prospectus untrue or which, in the opinion of the Company and its
counsel or the Underwriters and their counsel, requires the making of any
addition to or change in the Prospectus in order to state a material fact
required by the Act or any other law to be stated therein or necessary in order
to make the statements therein not misleading, if amending or supplementing the
Prospectus to reflect such event or development would, in the opinion of the
Representatives, materially adversely affect the market for the Shares.
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company or any Subsidiary or any of
their respective officers or directors in their capacities as such, before or by
any Federal, state or local court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, or arbitrator, in which
litigation or proceeding an unfavorable ruling, decision or finding could have a
Material Adverse Effect.
(e) Each of the representations and warranties of the Company or the
Selling Stockholder contained herein shall be true and correct at each Closing
Date, as if made at such Closing Date, and all covenants and agreements
contained herein to be performed on the part of the Company or the Selling
Stockholder and all conditions contained herein to be fulfilled or complied with
by the Company or the Selling Stockholder at or prior to each Closing Date,
shall have been duly performed, fulfilled or complied with.
(f) You shall have received on the Closing Date, a certificate dated
such Closing Date, signed by Xxxx Xxxxxxx and Xx Xxxxxxxx, in their capacities
as Chief Executive Officer and Chief Financial Officer of the Company, and a
certificate dated such Closing Date signed by Xxxxxxx X. Xxxxxxxx and Xxxxxxx
Xxxxxxx, in their capacities as the Chief Executive Officer and Vice
President-General Counsel of the Selling Stockholder, confirming the matters set
forth in sections 1(a)(xxi) and 5(e) and that the Company and the Selling
Stockholder, respectively, have complied with all of the agreements and
satisfied all of the conditions herein contained and required to be complied
with or satisfied by the Company or the Selling Stockholder on or prior to such
Closing Date, as applicable.
(g) Xxxxx Xxxx LLP, counsel for the Company, shall have furnished to
the Underwriters their opinion, satisfactory in form and substance to counsel
for the Underwriters, dated
23
the Firm Shares Closing Date (and, if applicable, the Additional Shares Closing
Date), to the effect that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and the Prospectus, and is duly qualified to conduct its business
and is in good standing in each jurisdiction or place where the nature or
location of its properties (owned or leased) or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify would not have a Material Adverse Effect.
(ii) Each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state in
which it is incorporated, with full corporate power and authority to own,
lease and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus, and is duly qualified to
conduct its business and is in good standing in each jurisdiction or place
where the nature or location of its properties (owned or leased) or the
conduct of its business requires such registration or qualification, except
where the failure so to register or qualify would not have a Material
Adverse Effect.
(iii) All the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are owned of record and, to such counsel's
knowledge, beneficially by the Company directly, or indirectly through one
of the other Subsidiaries, free and clear of any perfected security
interest or any other lien, adverse claim, equity or other encumbrance,
except as disclosed in the Registration Statement and the Prospectus.
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus, and the authorized capital stock of the Company conforms in all
material respects to the description thereof and the statements made with
respect thereto in the Registration Statement and the Prospectus under the
caption "Description of Capital Stock." All the shares of the capital stock
of the Company outstanding prior to the issuance of the Shares to be sold
by the Company (including the Selling Stockholder Shares) have been duly
authorized and validly issued, are fully paid and nonassessable and were
issued and sold in compliance with all applicable federal securities laws.
Except as set forth in the Prospectus, no options, warrants or other rights
to purchase from the Company or any Subsidiary, agreements or other
obligations of the Company or any Subsidiary to issue or other rights to
convert any obligation into, or exchange any securities for, shares of
capital stock of or ownership interest in the Company or any Subsidiary are
outstanding.
(v) There are no preemptive or other rights to subscribe for or to
purchase shares of capital stock of the Company pursuant to any statute,
the certificate of incorporation or by-laws of the Company or any agreement
or other instrument known to counsel to which
24
the Company is a party as to which any person can successfully maintain an
action, suit or proceeding against the Company for violation of his or her
preemptive rights with respect to the issuance of any shares of capital
stock of the Company.
(vi) The Shares to be sold by the Company have been duly and validly
authorized by the Company for issuance, and the Company has full corporate
power and authority to issue, sell and deliver such Shares; and, when the
Shares to be sold by the Company are issued and delivered against payment
therefor as provided by this Agreement, such Shares will have been validly
issued and will be fully paid and nonassessable, and the issuance of such
Shares will not be subject to any statutory preemptive rights or similar
statutory rights or, to such counsel's knowledge, any other preemptive or
similar rights. The Shares to be sold by the Company, when issued, will
conform in all material respects to the description thereof contained in
the Registration Statement and the Prospectus under the caption
"Description of Capital Stock."
(vii) The certificates for the Shares are in due and proper form under
Delaware law and the by-laws of the Company and conform with the form of
certificate duly authorized by the Board of Directors of the Company.
(viii) To the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or any
Subsidiary required to be disclosed in the Prospectus that is not disclosed
in the Prospectus, and there is no contract or other document required to
be described in the Registration Statement or the Prospectus, or to be
filed as an exhibit, which is not described or filed as required.
(ix) The Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) have been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued, no proceedings for that purpose have been instituted or threatened,
and the Registration Statement and the Prospectus (other than the financial
statements and other financial information contained therein as to which
such counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the applicable Act
Regulations.
(x) The statements in the Registration Statement and Prospectus,
insofar as they are descriptions of contracts, agreements or other legal
documents, or summaries of matters of law or legal conclusions, are
accurate in all material respects and present fairly the information
required to be shown.
(xi) The Company has the corporate power and authority to enter into
this Agreement and to issue, sell and deliver the Shares to be sold by it
to the Underwriters as provided herein. This Agreement has been duly
authorized, executed and delivered by the Company, is a valid and binding
agreement of the Company, enforceable in accordance with
25
its terms (except to the extent rights to indemnity hereunder may be
limited by Federal or state securities laws or public policy underlying
such laws and except to the extent the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by equitable
principles).
(xii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated hereby, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the Shares
by the Underwriters or such as may be required in connection with the
clearance of this offering by the NASD and such other approvals (specified
in such opinion) as have been obtained.
(xiii) Neither the execution and delivery of this Agreement, the issue
and sale of the Shares, the consummation of any other of the transactions
herein contemplated, nor the fulfillment of the terms hereof, will conflict
with, or result in a breach or violation of, or constitute a default under,
or result in the creation or imposition of any lien, charge, claim or
encumbrance upon, any of the property or assets of the Company or any
Subsidiary pursuant to (a) the terms of any agreement, contract, indenture,
lease or other instrument known to such counsel to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound or
to which any of the property or assets of the Company or any Subsidiary is
subject, (b) any law, statute, rule or regulation, or any judgment, order,
consent or memorandum of understanding known to such counsel of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over the Company or any Subsidiary, or (c) the charter
or by-laws of the Company and each Subsidiary.
(xiv) All of the Shares have been approved for quotation on the Nasdaq
National Market.
(xv) To such counsel's knowledge, neither the Company nor any
Subsidiary is in violation of its charter or by-laws. To such counsel's
knowledge, neither the Company nor any Subsidiary is in breach of or
otherwise in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note, indenture, loan agreement
or any other contract, lease or other instrument known to such counsel to
which it is subject or by which it may be bound, or to which any of the
property or assets of the Company or any Subsidiary is subject, except for
such breach or default which could not reasonably be expected to have a
Material Adverse Effect.
(xvi) Each of the Company and each Subsidiary has all necessary
Permits (except where the failure to so have any such Permits, individually
or in the aggregate, would not have a Material Adverse Effect) to own its
properties and to conduct its business as now being conducted as described
in the Prospectus.
(xvii) Neither the Company nor any of its Subsidiaries is, and after
giving effect to the offering and sale of the shares and the application of
the proceeds thereof as
26
described in the Prospectus, will not be, an "investment company" or person
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xviii) Except as set forth in the Registration Statement and the
Prospectus, to the knowledge of such counsel no holder of any securities of
the Company or any other person has the right, contractual or otherwise, to
cause the Company to sell or otherwise issue to such person, or to permit
such person to underwrite the sale of, any of the Shares or the right to
have any Common Stock or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of any shares
of Common Stock or other securities of the Company that has not been waived
or lapsed.
In addition, such counsel shall also state that such counsel has
participated in conferences with representatives of the Underwriters, officers
and representatives of the Company and the Selling Stockholder and
representatives of the independent certified public accountants of the Company,
at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and that, although such counsel is
not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as set forth in Section 5(g)(iv), (vii) and
(x)), on the basis of the foregoing, no facts have come to the attention of such
counsel which lead such counsel to believe that the Registration Statement at
the time it became effective (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) or at the
Representation Date and at the Firm Shares Closing Date (and, if applicable, the
Additional Shares Closing Date) contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus, as of its
date and at the Firm Shares Closing Date (and, if applicable, the Additional
Shares Closing Date), included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, that such counsel need not express any comment
with respect to the financial statements, supporting schedules or other
financial data contained in the Registration Statement or the Prospectus.
(h) [Xxxxx Xxxx LLP], counsel for the Selling Stockholder, shall have
furnished to the Underwriters their opinion, satisfactory in form and substance
to the Underwriters, dated the Firm Shares Closing Date (and, if applicable, the
Additional Shares Closing Date), to the effect that:
(i) The Selling Stockholder has full corporate power and authority to
enter into this Agreement, the Custody Agreement, the Power of Attorney and
the Lock-Up Agreement. Each of this Agreement, the Custody Agreement, the
Power of Attorney and the Lock-Up Agreement have been duly authorized,
executed and delivered by the Selling Stockholder; this Agreement, the
Custody Agreement, the Power of Attorney and the LockUp Agreement are valid
and binding agreements of the Selling Stockholder, enforceable in
accordance with their respective terms (except to the extent rights to
indemnity hereunder or thereunder may be limited by Federal or state
securities laws or public policy underlying
27
such laws and except to the extent the enforcement hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
equitable principles). The Selling Stockholder has full corporate power and
authority and any approval required by law to sell, transfer and deliver in
the manner provided in this Agreement, the Custody Agreement and the Power
of Attorney the Shares being sold by the Selling Stockholder hereunder.
(ii) Immediately prior to delivery of any Shares being sold by the
Selling Stockholder, the Selling Stockholder was the sole registered and,
to such counsel's knowledge, beneficial owner of such Shares, and upon
delivery of and payment for the Shares being sold by the Selling
Stockholder hereunder, the Underwriters will receive good and valid title
to such Shares, free and clear of all liens, encumbrances, equities,
security interests, claims or other defects arising through the Selling
Stockholder.
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Custody Agreement, the Power of Attorney
and the Lock-Up Agreement and the sale of the Shares being sold by the
Selling Stockholder hereunder except such as may be required under the Act
and such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Shares by the
Underwriters and such as may be required in connection with the clearance
of the offering by the NASD (as to which such counsel need express no
opinion) and such other approvals (specified in such opinion) as have been
obtained.
(iv) The execution, delivery and performance of this Agreement, the
Custody Agreement, the Power of Attorney and the Lock-Up Agreement and the
sale of Shares being sold by the Selling Stockholder will not conflict
with, result in a breach or violation of, or constitute a default under any
(A) statute, order, rule or regulation (except that such counsel need
express no opinion with respect to the compliance with state securities and
Blue Sky laws), (B) the terms of any indenture or other agreement or
instrument known to such counsel and to which the Selling Stockholder is a
party or bound, (C) any judgment, order or decree known to such counsel to
be applicable to the Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over the Selling Stockholder or any the Selling Stockholder's properties,
or (D) the Selling Stockholder's certificate of incorporation or by-laws.
(v) There are no transfer or other taxes (other than income taxes and
New York transfer taxes) known to such counsel payable in connection with
the sale and delivery of the Shares being sold by the Selling Stockholder
to the several Underwriters.
(i) Fulbright & Xxxxxxxx L.L.P., counsel for the Underwriters, shall have
furnished to the Underwriters an opinion with respect to such matters as may be
reasonably requested by the Underwriters, dated the Firm Shares Closing Date
(and, if applicable, the Additional Shares Closing Date).
28
(j) At the Effective Date, the Representation Date and at each Closing
Date, PricewaterhouseCoopers LLP, Rubin, Brown, Gornstein & Co. LLP and XxXxxx &
Company shall have furnished to the Underwriters a letter or letters, dated
respectively as of the Effective Date, the Representation Date and each Closing
Date, in form and substance satisfactory to the Underwriters, containing
statements and information of the type customarily included in accountants'
"comfort letters" to underwriters with respect to the historical and pro forma
financial statements and certain financial and statistical information
pertaining to the Company and the Subsidiaries contained in the Registration
Statement and the Prospectus.
(k) At each Closing Date, counsel for the Underwriters shall have been
furnished with such information, certificates and documents as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Shares as contemplated herein and related proceedings, or to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained, or otherwise in
connection with the offering contemplated hereby; and all opinions and
certificates mentioned above or elsewhere in this Agreement shall be reasonably
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters.
(l) On or prior to the Representation Date, the Company shall have
furnished to the Underwriters a Stop Transfer Order letter addressed to the
Company's transfer agent in form and substance reasonably satisfactory to the
Underwriters and a Lock-Up Agreement from the Company's officers and directors,
each stockholder of the Company (including the Selling Stockholder, the former
stockholders of Bostek, Inc. and the persons who are to receive shares of Common
Stock in connection with the Company's acquisition of minority interests in
certain subsidiaries and the buy-out of earn-out arrangements) and any person
who holds options to purchase the Company's Common Stock.
6. Indemnification and Contribution.
(a) The Company and the Selling Stockholder (collectively, the
"Sellers"), jointly and severally, agree to indemnify, defend and hold harmless
each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, to the fullest extent
lawful from and against any losses, expenses, claims, damages or liabilities
(including any and all investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), which, jointly or severally, any of
them may become subject under the Act, the Exchange Act or otherwise, as such
expenses are incurred, insofar as such losses, expenses, claims, damages or
liabilities arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
in any Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or in any Blue Sky application or other document executed by
a Seller specifically for that purpose or based upon information furnished by a
Seller filed in any state or other jurisdiction in order to qualify any or all
of the Shares under the securities laws thereof or filed with the Commission or
any securities association or securities exchange (each, an "Application"), or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement made in
29
Section 1 of this Agreement; provided, however, that the Sellers will not be
liable in any such case to the extent that any such loss, expense, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with the written information furnished to the Company by any
Underwriter expressly for use in the Registration Statement or the Prospectus;
and provided, further, that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any Preliminary Prospectus, the
indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any such Underwriter, the directors, officers, employees or agents of
such Underwriter or any person controlling such Underwriter and the Sellers
shall not be liable to any such Underwriter, the directors, officers, employees
or agents of such Underwriter or any persons controlling such Underwriter, from
whom the person asserting any such losses, expenses, claims, damages or
liabilities purchased the Shares concerned, to the extent that any such loss,
expense, claim, damage or liability results from the fact that there was not
sent or given to such person, at or prior to the written confirmation of the
sale of such Shares to such person, a copy of the Prospectus, as the same may be
amended or supplemented, within the time required by the Act (if required
thereby), and the untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact in such
Preliminary Prospectus was corrected in such Prospectus and the Company had
previously furnished copies thereof to such Underwriter on a timely basis in
order to permit the Prospectus (as the same may be amended or supplemented) to
be sent or given. The foregoing indemnity agreement shall be in addition to any
liability that the Company and the Selling Stockholder may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, the Selling Stockholder, each person, if any, who controls the Company
or the Selling Stockholder within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, each director of the Company and each officer
who signs the Registration Statement, to the same extent as the foregoing
indemnities from the Company and the Selling Stockholder to each Underwriter,
the directors, officers, employees and agents of such Underwriter and any person
controlling such Underwriter, but only insofar as such loss, expense, claim,
damage or liability arises out of or is based upon any untrue statement or
omission or alleged untrue statement or omission made in reliance or in
conformity with information relating to such Underwriter furnished in writing to
the Company by such Underwriter expressly for use in the Registration Statement
or the Prospectus. This indemnity agreement will be in addition to any liability
that any Underwriter may otherwise have. The Company and the Selling Stockholder
agree that the information contained in the table of Underwriters set forth
under the heading "Underwriting" in the Prospectus, the amounts of the selling
concession and reallowance set forth in the Prospectus and the eighth,
thirteenth, fourteenth and fifteenth paragraphs under the caption "Underwriting"
constitute the only information provided in writing by any Underwriter expressly
for use in the Registration Statement or the Prospectus.
(c) If any action is brought against an indemnified party under this
Section 6, the indemnified party or parties shall promptly notify the
indemnifying party in writing of the institution of such action (provided that
the failure to give such notice shall not relieve the indemnifying party of any
liability which it may have pursuant to this Agreement, unless and to the extent
the indemnifying party did not otherwise learn of such action and such failure
has resulted in the forfeiture of substantive rights or defenses by the
indemnifying party) and the indemnifying party shall assume the
30
defense of such action, including the employment of counsel and payment of
reasonable expenses. The indemnified party or parties shall have the right to
employ separate counsel (including local counsel) in any such case and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to take charge of the defense of such action within a
reasonable time after notice of the institution of such action, (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them that are different from or additional to those
available to the indemnifying party or (iv) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest (in which case the indemnifying party shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the indemnifying party and paid as incurred; provided that the indemnifying
party shall only be responsible for the fees and expenses of one counsel for the
indemnified party or parties hereunder. Anything in this paragraph to the
contrary notwithstanding, the indemnifying party 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. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) If the indemnification provided for in this Section 6 is unavailable
to an indemnified party under subsections (a) or (b) of this Section 6 or is
insufficient to hold harmless a party indemnified thereunder, in respect of any
losses, expenses, claims, damages or liabilities referred to therein, then each
applicable indemnifying party shall contribute to the amount paid in settlement
of any action, suit or proceeding or any claims asserted, but after deducting in
the case of losses, expenses, claims, damages and liabilities suffered by the
Company or the Selling Stockholder, any contribution received by the Company or
the Selling Stockholder from persons other than the Underwriters who may also be
liable for contribution, including persons who control the Company or the
Selling Stockholder within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, officers of the Company who signed the Registration Statement
and directors of the Company, to which the Company, the Selling Stockholder and
one or more of the Underwriters may be subject, in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholder on the one hand, and the Underwriters on the other hand,
from the offering of the Shares or, if, but only if, such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Company and the Selling Stockholder on the one hand, and the Underwriters on the
other hand, in connection with the statements or omissions which resulted in
such losses, expenses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Stockholder on the one hand, and the Underwriters on the other
hand, shall be deemed to be in the same proportion as the total proceeds from
the offering (net of
31
underwriting discounts but before deducting expenses) received by the Company
and the Selling Stockholder bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company and the
Selling Stockholder on the one hand, and the Underwriters on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, the
Selling Stockholder or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, expenses, claims and liabilities referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any claim or action. The Company, the
Selling Stockholder and the Underwriters agree that it would not be just and
equitable if contribution pursuant hereto were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section
6(d) no Underwriter shall be required to contribute any amount in excess of the
underwriting discount received by it by reason of such untrue statement or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this Section 6(d)
to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The Company and the Selling Stockholder hereby agree that in
addition to their other respective obligations under subsection (a) of this
Section 6, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission described in
subsection (a) of this Section, it will reimburse the Underwriters on a monthly
basis for all reasonable legal fees and other expenses reasonably incurred in
connection with investigating or defending such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the obligations under
this Section 6 and the possibility that such payments might later be held to be
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Underwriters
shall promptly return such payments to the Company or the Selling Stockholder,
as applicable.
7. Survival. The respective indemnity and contribution agreements contained
in Section 6 hereof and the covenants, warranties and other representations of
the Company and the Selling Stockholder contained in this Agreement or contained
in certificates of officers of the Company or the Selling Stockholder or
submitted pursuant hereto, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, or any of their
respective officers, employees, directors, stockholders or person who controls
the Underwriters within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, or by or on behalf of the Company or any of its directors,
officers, employees or any person who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of
the Selling Stockholder, or any person who controls the Selling Stockholder
within the meaning of
32
Section 15 of the Act or Section 20 of the Exchange Act, and shall survive
delivery of and payment for the Shares.
8. Default by an Underwriter. If one or more of the Underwriters shall fail
or refuse at a Closing Date to purchase and pay for any of the Shares agreed to
be purchased by such Underwriter or Underwriters hereunder on such date and the
aggregate number of Firm Shares or Additional Shares, as the case may be, which
such defaulting Underwriter or Underwriters, as the case may be, agreed but
failed or refused to purchase is not more than one-tenth of the total number of
Shares to be purchased on such date by all Underwriters, each nondefaulting
Underwriter shall be obligated severally, in the proportion which the number of
Firm Shares set forth opposite its name in Schedule I bears to the total number
of Firm Shares which all the non-defaulting Underwriters, as the case may be,
have agreed to purchase, or in such other proportion as the Underwriters may
specify, to purchase the Firm Shares or Additional Shares, as the case may be,
which such defaulting Underwriter or Underwriters, as the case may be, agreed
but failed or refused to purchase on such date; provided that in no event shall
the number of Firm Shares or Additional Shares, as the case may be, which any
Underwriter has agreed to purchase pursuant to Section 2 hereof be increased
pursuant to this Section 8 by an amount in excess of one-tenth of such number of
Firm Shares or Additional Shares, as the case may be, without the written
consent of such Underwriter. If on the Firm Shares Closing Date or on the
Additional Shares Closing Date, as the case may be, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares, or Additional Shares,
as the case may be, and the aggregate number of Firm Shares or Additional
Shares, as the case may be, with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares to be purchased on such date by
all Underwriters in the event of a default by an Underwriter and arrangements
satisfactory to the Underwriters, the Selling Stockholder and the Company for
purchase of such Shares are not made within 48 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter, the Selling Stockholder and the Company. In any such case which
does not result in termination of this Agreement, either the Underwriters or the
Company shall have the right to postpone the Firm Shares Closing Date, or the
Additional Shares Closing Date, as the case may be, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of any such Underwriter
under this Agreement.
9. Termination of Agreement.
(a) The Underwriters may terminate this Agreement, by written notice to
the Company and the Selling Stockholder prior to the Firm Shares Closing Date
(or, if applicable, the Additional Shares Closing Date), (i) if there shall
occur any default or breach by the Company or the Selling Stockholder hereunder
or the failure to satisfy any of the conditions contained in Section 5 hereof,
(ii) if there has been, since the date of this Agreement or since the respective
dates as of which information is provided in the Registration Statement and
prior to the Firm Shares Closing Date (or, if applicable, the Additional Shares
Closing Date), there shall have been any material adverse change, or any
development involving a prospective material adverse change (including, without
limitation, a change in the management or control of the Company), in the
condition (financial or otherwise), business prospects, net worth or results of
operations of the Company, or (iii) if, since the date of this
33
Agreement and prior to the Firm Shares Closing Date (or, if applicable, the
Additional Shares Closing Date), (A) there has occurred any material adverse
change in the financial markets of the United States or in political, financial
or economic conditions in the United States or any outbreak or escalation of
hostilities or declaration by the United States of a national emergency or war
or other calamity or crisis, the effect of which on the financial securities
markets of the United States is such as to make it, in the judgment of the
Underwriters, impracticable or inadvisable to market the Shares on the terms and
in the manner contemplated by the Prospectus, or (B) trading in any of the
securities of the Company has been suspended by the Commission, or trading
generally on the New York Stock Exchange or the Nasdaq National Market has been
suspended (other than by limitation on hours or number of days of trading), or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by the New York Stock Exchange or the
Nasdaq National Market or by order of the Commission or any other governmental
authority or (C) a banking moratorium has been declared by any of the Federal or
New York authorities.
(b) If this Agreement is terminated pursuant to this Section 9 or any
other provision of this Agreement, such termination shall be without liability
of any party to any other party except as provided in Sections 4 and 6. Sections
4 and 6 shall survive any termination of this Agreement.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
directed to the Underwriters, x/x Xxxxxxxxx Xxxxxxxx & Co. Inc., 000 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, attention Xxxxx Xxxxx, with a copy to
Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
attention Xxxx Xxxxxx, Esq.; notices to the Company shall be directed to 000
Xxxxxxx Xxxx, Xxxxxxx Xxxx, Xxx Xxxxxx 00000, attention Xxxx Xxxxxxx, with a
copy to Xxxxx Xxxx LLP, 000 Xxxxx Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx
00000, attention Xxxxx X. XxXxxxxx, Esq., and notices to the Selling Stockholder
shall be directed to _________________________________, attention
_________________, with a copy to___________________________.
11. Parties. This Agreement shall inure to the benefit of and be binding
upon the Underwriters, the Company, the Selling Stockholder and their respective
successors and legal representatives. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to provide any person, firm or
corporation, other than the Underwriters, the Company, the Selling Stockholder
and their respective successors and legal representatives and the controlling
persons and officers, employees, directors and stockholders referred to in
Sections 6 and 7 and their respective heirs and legal representatives, any legal
or equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Company, the Selling Stockholder and their respective
successors and legal representatives, and said controlling persons,
stockholders, officers and directors and their respective heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Shares from the Underwriters shall be deemed to be a successor by
reason merely of such purchase.
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12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflicts of laws principles thereof.
13. Counterparts. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
[Remainder of page intentionally left blank]
* * * * *
35
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters and the Company in accordance with its terms.
Very truly yours,
XXXXXXXXXXX.XXX, INC.
By:
-------------------------------
APPLIED DIGITAL SOLUTIONS, INC.
By:
-------------------------------
CONFIRMED AND ACCEPTED,
as of the date first above written:
LADENBURG XXXXXXXX & CO. INC.
PUNK, XXXXXX & COMPANY, L.P.
By: LADENBURG XXXXXXXX & CO. INC.
By:
-------------------------------
Name: Xxxxx Xxxxx
Title: Director Investment Banking
36
SCHEDULE I
Number of Firm Shares
Underwriter To Be Purchased
----------- ---------------
Ladenburg Xxxxxxxx & Co. Inc.
Punk, Xxxxxx & Company, L.P.
