EXHIBIT 1.1
_________________ SHARES OF COMMON STOCK
----------------------------------------
UNDERWRITING AGREEMENT
__________________, 1999
Xxxxxxxxx Securities, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Dear Sirs:
SFBC International, Inc., a Delaware corporation (the "Company") hereby
confirms its agreement with you (who are sometimes hereinafter referred to as
the "Representative") and with the other members of the underwriting group (the
"Underwriters") named on Schedule 1 hereto as follows:
1. INTRODUCTORY. Subject to the terms and conditions contained herein,
the Company proposes to issue and sell to the Underwriters 1,150,000 shares of
common stock (the "Common Stock"). In addition, solely for the purpose of
covering over-allotments, the Company grants to the Representative the option to
purchase up to an additional 172,500 shares of Common Stock equal to 15% of the
number of shares sold in the offering (the "Additional Shares"), which option to
purchase shall be exercisable, in whole or in part, from time to time during the
forty-five (45) day period commencing on the date on which the Registration
Statement (as hereinafter defined) is initially declared effective (the
"Effective Date") by the Securities and Exchange Commission (the "Commission").
Unless otherwise noted, the Common Stock, together with the Additional Shares
issuable on exercise of the over-allotment option, is referred to hereinafter as
the "Common Stock".
The Common Stock and Additional Shares are more fully described in the
Prospectus referred to below. All references to the Company below shall be
deemed to include, where appropriate, the Company's subsidiaries, if any.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
a. The Company has filed with the Commission a registration
statement, and may have filed one or more amendments thereto, on Form
SB-2 (Registration No. 333-______) including in such registration
statement and each such amendment a facing sheet, the information
called for by Part I, audited consolidated financial statements for the
past two fiscal years or such other period as may be appropriate, the
information called for by Part II, the undertakings to deliver
certificates, file reports and file post-effective amendments, the
required signatures, consents of experts, exhibits, a related
preliminary prospectus (a "Preliminary Prospectus") and any other
information or documents which are required for the registration of the
Common Stock, the purchase warrants referred to in Section 5(p) (the
"Representative's Warrants"), and the shares referred to in Section
5(q) underlying the Representative's Warrants, under the Securities Act
of 1933, as amended (the "Act"). As used in this Agreement, the term
"Registration Statement" means such registration statement, including
incorporated documents, all exhibits and consolidated financial
statements and schedules thereto, as amended, when it becomes
effective, and shall include information with respect to the Common
Stock, the Representative's Warrants, and the shares underlying the
Representative's Warrants and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A of the General Rules and Regulations promulgated
under the Act (the "Regulations"), which information is deemed to be
included therein when it becomes effective as provided by Rule 430A;
the term "Preliminary Prospectus" means each prospectus included in the
Registration Statement, or any amendments thereto, before it becomes
effective under the Act and any prospectus filed by the Company with
the consent of the Representative pursuant to Rule 424(a) of the
Regulations; and the term "Prospectus" means the final prospectus
included as part of the Registration Statement, except that if the
prospectus relating to the securities covered by the Registration
Statement in the form first filed on behalf of the Company with the
Commission pursuant to Rule 424(b) of the Regulations shall differ from
such final prospectus, the term "Prospectus" shall mean the prospectus
as filed pursuant to Rule 424(b) from and after the date on which it
shall have first been used.
b. When the Registration Statement becomes effective, and at
all times subsequent thereto, to and including the Closing Date (as
defined in Section 3) and each Additional Closing Date (as defined in
Section 3), and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Representative
or any dealer, and during such longer period until any post-effective
amendment thereto shall become effective, the Registration Statement
(and any post-effective amendment thereto) and the Prospectus (as
amended or as
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supplemented if the Company shall have filed with the Commission any
amendment or supplement to the Registration Statement or the
Prospectus) will contain all statements which are required to be stated
therein in accordance with the Act and the Regulations, will comply
with the Act and the Regulations, and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and no event will have occurred which should
have been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not then been set forth in such
an amendment or supplement; and no Preliminary Prospectus, as of the
date filed with the Commission, included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; except that no representation or warranty is made in this
Section 2(b) with respect to statements or omissions made in reliance
upon and in conformity with written information furnished to the
Company as stated in Section 8(b) with respect to the Underwriters by
or on behalf of the Underwriters expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto.
c. Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction have issued an order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement, or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement, or
suspending the registration or qualification of the Common Stock, the
Representative's Warrants or the shares underlying the Representative's
Warrants, nor has any of such authorities instituted or threatened to
institute any proceedings with respect to a Stop Order.
d. Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract,
agreement, instrument, lease, or license required to be filed as an
exhibit to the Registration Statement has been filed with the
Commission as an exhibit to or has been incorporated as an exhibit by
reference into the Registration Statement.
e. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
with full power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal,
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state, local, and other governmental authorities and all courts and
other tribunals, to own, lease, license, and use its properties and
assets and to carry on the business in the manner described in the
Prospectus. The Company is duly qualified to do business and is in good
standing in every jurisdiction in which its ownership, leasing,
licensing, or use of property and assets or the conduct of its business
makes such qualifications necessary. The Company has no subsidiaries
except as disclosed in the Prospectus.
f. The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, of which 2,080,000 shares of Common
Stock are issued and outstanding, 200,000 shares of Common Stock are
reserved for issuance upon the exercise of currently outstanding
options held by one individual under the Company's option plan,
244,956 shares of Common Stock are reserved for issuance upon
conversion of the Company's outstanding convertible notes, 244,956
shares of Common Stock are reserved for issuance upon exercise of
warrants issued to the holder(s) of the convertible notes, 104,000
shares of Common Stock are reserved for issuance upon the exercise of
the remaining options authorized under the Company's option plans, and
115,000 shares of Common Stock are reserved for issuance upon the
exercise of the Representative's Warrants. Each outstanding share of
Common Stock is validly authorized, or when issued will be authorized,
validly issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and has not been issued
and is not owned or held in violation of any preemptive rights of
stockholders. There is no commitment, plan, or arrangement to issue,
and no outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of the Company or any security
or other instrument which by its terms is convertible into, exercisable
for, or exchangeable for capital stock of the Company, except as set
forth above, and as may be properly described in the Prospectus.
g. The consolidated financial statements of the Company
included in the Registration Statement and the Prospectus fairly
present with respect to the Company the consolidated financial
position, the results of operations, and the other information
purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles, except to the extent that certain footnote
disclosures regarding any stub period may have been omitted in
accordance with the applicable rules of the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
consistently applied throughout the periods involved, are correct and
complete, and are in
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accordance with the books and records of the Company. The accountants
whose report on the audited consolidated financial statements is filed
with the Commission as a part of the Registration Statement are, and
during the periods covered by their report(s) included in the
Registration Statement and the Prospectus were, independent certified
public accountants with respect to the Company within the meaning of
the Act and the Regulations. Except as set forth therein, no other
financial statements are required by Form SB-2 or otherwise to be
included in the Registration Statement or the Prospectus, audited or
unaudited. At no time has there been a material adverse change in the
consolidated financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company
from the latest information set forth in the Registration Statement or
the Prospectus, except as may be properly described in the Prospectus.
h. There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending, or, to
the knowledge of the Company, threatened, or in prospect with respect
to the Company or any of its operations, businesses, properties, or
assets, except as is properly described in the Prospectus or such as
individually or in the aggregate do not now have and will not in the
future have a material adverse effect upon the operations, business,
properties, or assets of the Company. The Company is not in violation
of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in
the future have a material adverse effect upon the operations,
business, properties, or assets of the Company; nor is the Company
required to take any action in order to avoid any such violation or
default.
i. The Company has good and marketable title in fee simple
absolute to all real properties and good title to all other properties
and assets which the Prospectus indicates are owned by it, free and
clear of all liens, security interests, pledges, charges, encumbrances,
and mortgages except as may be properly described in the Prospectus or
such as in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business,
properties, or assets of the Company. No real property owned, leased,
licensed, or used by the Company lies in an area which is, or to the
knowledge of the Company will be, subject to zoning, use, or building
code restrictions which would prohibit, and no state of facts relating
to the actions or inaction of another person or entity or his or its
ownership, leasing, licensing, or use of any real or personal property
exists or will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the
business of the Company as presently conducted or
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as the Prospectus indicates it contemplates conducting, except as may
be properly described in the Prospectus or such as in the aggregate do
not now have and will not in the future have a material adverse effect
upon the operations, business, properties, or assets of the Company.
j. Neither the Company nor any other party is now or is
expected by the Company to be in violation or breach of, or in default
with respect to complying with, any material provision of any contract,
agreement, instrument, lease, license, arrangement, or understanding
which is material to the Company, and each such contract, agreement,
instrument, lease, license, arrangement, and understanding is in full
force and is the legal, valid, and binding obligation of the parties
thereto and is enforceable as to them in accordance with its terms. The
Company enjoys peaceful and undisturbed possession under all leases and
licenses under which it is operating. The Company is not a party to or
bound by any contract, agreement, instrument, lease, license,
arrangement, or understanding, or subject to any charter or other
restriction, which has had or may in the future have a material adverse
effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company.
The Company is not in violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation (or other
charter document) or by-laws.
k. All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises,
technology, know-how and other intangible properties and assets (all of
the foregoing being herein called "Intangibles") that the Company owns
or has pending, or under which it is licensed, are in good standing and
uncontested. Except as otherwise disclosed in the Registration
Statement, the Intangibles are owned by the Company, free and clear of
all liens, security interests, pledges, and encumbrances. There is no
right under any Intangible necessary to the business of the Company as
presently conducted or as the Prospectus indicates it contemplates
conducting (except as may be so designated in the Prospectus). The
Company has not infringed, is not infringing, and has not received
notice of infringement with respect to asserted Intangibles of others.
To the knowledge of the Company, there is no infringement by others of
Intangibles of the Company. To the knowledge of the Company, there is
no Intangible of others which has had or may in the future have a
materially adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or future
prospects of the Company.
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l. Neither the Company nor any director, officer, agent,
employee, or other person associated with or acting on behalf of the
Company has, directly or indirectly: used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended;
or made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment. The Company has not accepted any material
advertising allowances or marketing allowances from suppliers to the
Company and, to the extent any advertising allowance has been accepted,
the Company has provided proper documentation to the supplier with
respect to advertising as to which the advertising allowance has been
granted.
m. The Company has all requisite power and authority to
execute and deliver, and to perform thereunder each of this Agreement
and the Representative's Warrants. All necessary corporate proceedings
of the Company have been duly taken to authorize the execution and
delivery, and performance thereunder by the Company of this Agreement
and the Representative's Warrants. This Agreement has been duly
authorized, executed, and delivered by the Company, is a legal, valid,
and binding obligation of the Company, and is enforceable as to the
Company in accordance with its terms. The Representative's Warrants
have been duly authorized by the Company and, when executed and
delivered by the Company, will be a legal, valid, and binding
obligation of the Company, and will be enforceable against the Company
in accordance with its terms. No consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local, or other governmental authority
or any court or other tribunal is required by the Company for the
execution and delivery, or performance thereunder by the Company of
this Agreement and the Representative's Warrants except filings under
the Act which have been or will be made before the Closing Date and
such consents consisting only of consents under "blue sky" or
securities laws which are required in connection with the transactions
contemplated by this Agreement and which have been obtained at or prior
to the date of this Agreement. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to
which the Company is a party, or to which any of its properties or
assets are subject, is required for the execution or delivery, or
performance thereunder of this Agreement and the Representative's
Warrants; and the execution and delivery, and performance thereunder of
this Agreement and the Representative's Warrants will not violate,
result in a breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate
or call a default
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under any such contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any
term of the Certificate of Incorporation or by-laws of the Company, or
violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the Company or to
which any of its operations, businesses, properties, or assets are
subject.
n. The Common Stock, when issued and delivered in accordance
with this Agreement, and the shares of Common Stock underlying the
Representative's Warrants, when issued and delivered upon exercise of
the Representative's Warrants, upon payment of the exercise price
therefor, will be validly issued, fully paid, and nonassessable,
without any personal liability attaching to the ownership thereof, and
will not be issued in violation of any preemptive rights of
stockholders. The Underwriters will receive good title to the Common
Stock purchased, and the Representative will receive good title to the
Representative's Warrants and, upon exercise, the shares of Common
Stock underlying the Representative's Warrants. All such title shall be
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts.
o. The Common Stock, the Representative's Warrants and the
common stock underlying the Representative's Warrants conform to all
statements relating thereto contained in the Registration Statement and
the Prospectus.
p. Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as may otherwise be properly described in the Prospectus, the Company
has not (i) issued any securities or incurred any liability or
obligation, primary or contingent, for borrowed money, (ii) entered
into any transaction not in the ordinary course of business, or (iii)
declared or paid any dividend on its capital stock.
q. Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take,
directly or indirectly, prior to the termination of the distribution of
securities contemplated by this Agreement, any action designed to
stabilize or manipulate the price of any security of the Company, or
which has caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate
the sale or resale of the Common Stock.
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r. The Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by
this Agreement.
s. The Company has obtained from each officer, director and
person who beneficially owns shares of the Company's capital stock or
derivative securities convertible into shares of the Company's capital
stock his or her enforceable written agreement that for a period of 13
months from the Effective Date, he or she will not, without the
Representative's prior written consent, offer, pledge, sell, contract
to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of capital stock or any security or
other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock (except that, subject
to compliance with applicable securities laws, any such officer,
director or stockholder may transfer his or her stock in a private
transaction, provided that any such transferee shall agree, as a
condition to such transfer, to be bound by the restrictions set forth
in this Agreement and further provided that the transferor, except in
the case of the transferor's death, shall continue to be deemed the
beneficial owner of such shares in accordance with Regulation 13d-(3)
of the Exchange Act). For a period of three (3) years, commencing 13
months from the Effective Date, all public sales by officers, directors
and stockholders of the Company prior to the Effective Date shall be
effected through or with the Representative on an exclusive basis,
provided that the Representative offers the best price reasonably
available to the selling stockholders, and, provided the Representative
accepts the obligation to sell such shares within one (1) business day
after receipt of a notice containing such selling securities holder's
intention to sell. In addition, for a period of three (3) years
commencing 13 months from the Effective Date in the case of private
transactions in the Company's Common Stock, each such selling security
holder specified above shall offer the Representative the exclusive
opportunity to purchase or sell the securities on terms at least as
favorable as the selling security holder can obtain elsewhere. If the
Representative fails to accept in writing any such proposal for sale by
the selling security holders within three (3) business days after
receipt of a notice containing such proposal, then the Representative
shall have no claim or right with respect to any such sales contained
in such notice. If, thereafter, such proposal is modified in any
material respect, the selling security holders shall adopt the same
procedure as with respect to the original proposal. An appropriate
legend shall be marked on the face of stock certificates representing
all of such securities. Public or private sales of Common Stock by such
persons shall not include gifts, intra-family transfers or transfers
for estate planning purposes, which shall be exempt from the foregoing
provisions. The Company, on
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behalf of itself, and all officers, directors and holders of five
percent or more of the Common Stock of the Company, have provided the
Representative their enforceable written agreements not to sell,
transfer, or hypothecate capital stock or derivative securities of the
Company (i) through a "Regulation S" transaction for a minimum period
of 24 months from the Effective Date without the prior written consent
of the Representative, or (ii) through a "Regulation D" transaction for
a minimum period of 24 months from the Effective Date.
t. Except as otherwise provided in the Registration Statement,
no person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement.
u. The Company is eligible to use Form SB-2 for registration
of the Common Stock, the Representative's Warrants and the shares of
common stock underlying the Representative's Warrants.
v. No unregistered securities of the Company, of an affiliate
of the Company or of a predecessor of the Company have been sold within
three years prior to the date hereof, except as described in the
Registration Statement.
w. Except as set forth in the Registration Statement, there is
and at the Closing Date there will be no action, suit or proceeding
before any court, arbitration tribunal or governmental agency,
authority or body pending or, to the knowledge of the Company,
threatened which might result in judgments against the Company not
adequately covered by insurance or which collectively might result in
any material adverse change in the condition (financial or otherwise),
the business or the prospects of the Company or would materially affect
the properties or assets of the Company.
x. The Company has filed all federal and state tax returns
which are required to be filed by it and has paid all taxes shown on
such returns and all assessments received by it to the extent such
taxes have become due. All taxes with respect to which the Company is
obligated have been paid or adequate accruals have been set up to cover
any such unpaid taxes.
y. Except as set forth in the Registration Statement:
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i. The Company has obtained all permits, licenses and
other authorizations which are required under the Food and
Drug Laws and Medical Laws for the Company's business and its
ownership, use and operation of each location operated or
leased by the Company (the "Property"), all such permits,
licenses and authorizations are in effect, no appeal nor any
other action is pending to revoke any such permit, license or
authorization, and the Company is in full compliance with all
terms and conditions of all such permits, licenses and
authorizations.
ii. The Company and the Property are in compliance
with all Environmental Laws including, without limitation, all
restrictions, conditions, standards, limitations,
prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or contained in
any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
iii. The Company has not, and to the best knowledge
of the Company's executive officers, no other person has,
released, placed, stored, buried, dumped or otherwise
improperly disposed of any Medical Wastes, Hazardous
Substances, Oils, Pollutants or Contaminants or any other
wastes produced by, or resulting from, any business,
commercial, or industrial activities, operations, or
processes, at, on, beneath, or adjacent to the Property or any
property formerly owned, operated or leased by the Company
except for inventories of such substances to be used, and
wastes generated therefrom, in the ordinary course of business
of the Company (which inventories and wastes, if any, were and
are stored or disposed of in accordance with applicable laws
and regulations and in a manner such that there has been no
release of any such substances into the environment).
iv. Except as provided to the Representative, there
exists no written or tangible report, synopsis or summary of
any asbestos, toxic waste or Hazardous Substances, Oils,
Pollutants or Contaminants investigation made with respect to
all or any portion of the assets of the Company (whether or
not prepared by experts and whether or not in the possession
of the executive officers of the Company).
v. Definitions: As used herein:
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(1) ENVIRONMENTAL LAWS means all federal,
state and local laws, regulations, rules and
ordinances relating to pollution or protection of the
environment, including, without limitation, laws
relating to Releases or threatened Releases of
Hazardous Substances, Oils, Pollutants or
Contaminants into the indoor or outdoor environment
(including, without limitation, ambient air, surface
water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous
Substances, Oils, Pollutants or Contaminants.
(2) FOOD AND DRUG LAWS means the applicable
provisions and requirements of the Federal Food, Drug
and Cosmetic Act, as amended, 21 USC ss.301 ET SEq.,
and ss.355 ET Seq., and the rules and regulations
promulgated thereunder, as well as all state and
local laws, regulations, rules and ordinances
relating thereto.
(3) HAZARDOUS SUBSTANCES, OILS, POLLUTANTS
OR CONTAMINANTS means all substances defined as such
in the National Oil and Hazardous Substances
Pollutant Contingency Plan, 40 C.F.R. ss.300.6, or
defined as such under any Environmental Law.
(4) MEDICAL LAWS means all federal, state
and local laws, regulations, rules and ordinances
relating to providing medical treatment, testing, and
patient care, including without limitation, any
medical licensing required for the Company to conduct
its business.
(5) MEDICAL WASTE means all substances as
defined in 42 USC ss.6903(40) including without
limitation "any solid waste which is generated in the
diagnosis, treatment, or immunization of human beings
or animals, in research pertaining thereto, or in the
production or testing of biologicals, " and all
substances defined as "hazardous waste" in
(ss.6903(5)) which means "a solid waste, or
combination of solid wastes, which because of its
quantity, concentration, or physical, chemical, or
infectious characteristics may -
(A) cause or significantly
contribute to an increase
in mortality or an increase
in serious
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irreversible, or
incapacitating reversible,
illness; or
(B) pose a substantial present
or potential hazard to
human health or the
environment when improperly
treated, stored,
transported or disposed of,
or otherwise managed."
(6) RELEASE means any release, spill,
emission, discharge, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environmental
(including, without limitation, ambient air, surface
water, groundwater, and surface or subsurface strata)
or into or out of any property, including the
movement of Hazardous Substances, Oils, Pollutants or
Contaminants through or in the air, soil, surface
water, groundwater or any property.
z. Any pro forma financial or other information and related
notes included in the Registration Statement, each Preliminary
Prospectus and the Prospectus comply (or, if the Prospectus has not
been filed with the Commission, as to the Prospectus, will comply) in
all material respects with the requirements of the Act and the rules
and regulations of the Commission thereunder and present fairly the pro
forma information shown, as of the dates and for the periods covered by
such pro forma information. Such pro forma information, including any
related notes and schedules, has been prepared on a basis consistent
with the historical financial statements and other historical
information, as applicable, included in the Registration Statement, the
Preliminary Prospectus and the Prospectus, except for the pro forma
adjustments specified therein, and give effect to assumptions made on a
reasonable basis to give effect to historical and, if applicable,
proposed transactions described in the Registration Statement, each
Preliminary Prospectus and the Prospectus.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
3. PURCHASE, SALE, AND DELIVERY OF THE COMMON STOCK. On the basis of
the representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters, severally and not jointly, and the
Underwriters, severally and not jointly,
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agree to purchase from the Company the number of shares of Common Stock set
forth opposite the Underwriters' names in Schedule 1 hereto.
The purchase price per share of Common Stock to be paid by the
Underwriters shall be $____. The initial public offering price of the Common
Stock shall be $____.
Payment for the Common Stock by the Underwriters shall be made by
certified or official bank check in clearing house funds, payable to the order
of the Company at the offices of Xxxxxxxxx Securities, Inc., 0000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, or at such other place in Denver,
Colorado as the Representative shall determine and advise the Company by at
least two full days' notice in writing, upon delivery of the Common Stock to the
Representative. Such delivery and payment shall be made at 10:00 a.m., Mountain
Time, on the third business day following the time of the initial public
offering, as defined in Section 10(a). The time and date of such delivery and
payment are herein called the "Closing Date."
In addition, the Company hereby grants to the Representative the option
to purchase all or a portion of the Additional Shares as may be necessary to
cover over-allotments, at the same purchase price per Additional Share as the
price per share of Common Stock provided for in this Section 3. The
Representative may purchase Common Stock when exercising such option, in its
sole discretion. This option may be exercised by the Representative on the basis
of the representations, warranties, covenants, and agreements of the Company
herein contained, but subject to the terms and conditions herein set forth, at
any time and from time to time on or before the 45th day following the Effective
Date of the Registration Statement, by written notice by the Representative to
the Company. Such notice shall set forth the aggregate number of Additional
Shares as to which the option is being exercised, and the time and date, as
determined by the Representative, when such Additional Shares are to be
delivered (such time and date are herein called an "Additional Closing Date");
provided, however, that no Additional Closing Date shall be earlier than the
Closing Date nor earlier than the third business day after the date on which the
notice of the exercise of the option shall have been given nor later than the
eighth business day after the date on which such notice shall have been given;
and further provided, that not more than two Additional Closings shall be
noticed and held following purchase of Additional Shares by the Representative.
Payment for the Additional Shares shall be made by certified or
official bank check in clearing house funds payable to the order of the Company
at the offices of Xxxxxxxxx Securities, Inc., 0000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx, or at such other place in Denver, Colorado as you shall
determine and advise the Company by at least two full
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days' notice in writing, upon delivery of certificates representing the
Additional Shares to you.
Certificates for the Common Stock and any Additional Shares purchased
shall be registered in such name or names and in such authorized denominations
as you may request in writing at least two full business days prior to the
Closing Date or Additional Closing Date, as applicable. The Company shall permit
you to examine and package such certificates for delivery at least one full
business day prior to any such closing with respect thereto.
If for any reason one or more Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 10 hereof) to purchase and pay for the
number of shares of Common Stock agreed to be purchased by such Underwriter, the
Company shall immediately give notice thereof to the Representative, and the
non-defaulting Underwriters shall have the right within 24 hours after the
receipt by the Representative of such notice, to purchase or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon among
the Representative and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, the Common Stock which such defaulting Underwriter or
Underwriters agreed to purchase. If the non-defaulting Underwriters fail so to
make such arrangements with respect to all such Common Stock, the number of
shares of Common Stock which each non-defaulting Underwriter is otherwise
obligated to purchase under the Agreement shall be automatically increased pro
rata to absorb the remaining Common Stock which the defaulting Underwriter or
Underwriters agreed to purchase; provided, however, that the non-defaulting
Underwriters shall not be obligated to purchase the Common Stock which the
defaulting Underwriter or Underwriters agreed to purchase in excess of 10% of
the total number of shares of Common Stock which such non-defaulting Underwriter
agreed to purchase hereunder, and provided further that the non-defaulting
Underwriters shall not be obligated to purchase any Common Stock which the
defaulting Underwriter or Underwriters agreed to purchase if such additional
purchase would cause the Underwriter to be in violation of the net capital rule
of the Commission or other applicable law. If the total number of Common Stock
which the defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the 24-hour period
above referred to, to make arrangements with other underwriters or purchasers
satisfactory to the Representative for the purchase of such Common Stock on the
terms herein set forth. In any such case, either the Representative or the
Company shall have the right to postpone the Closing for not more than seven
business days after the date originally fixed as the Closing in order that any
necessary changes in the Registration Statement, the
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Prospectus or any other documents or arrangements may be made. If neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
24-hour periods stated above for the purchase of all the Common Stock which the
defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company any non-defaulting Underwriter, except the
Company shall be liable for actual expenses incurred by the Representative as
provided in Section 10 hereof, and without any liability on the part of any
non-defaulting Underwriter to the Company.
Nothing contained herein shall relieve any defaulting Underwriter of
its liability, if any, to the Company or to the remaining Underwriters for
damages occasioned by its default hereunder.
4. OFFERING. The Underwriters are to make a public offering of the
Common Stock as soon, on or after the effective date of the Registration
Statement, as the Representative deems it advisable so to do. The Common Stock
is to be initially offered to the public at the initial public offering price as
provided for in Section 3 (such prices being herein called the "public offering
price"). After the initial public offering, you may from time to time increase
or decrease the prices of the Common Stock, in your sole discretion, by reason
of changes in general market conditions or otherwise.
5. COVENANTS OF THE COMPANY. The Company covenants that it will:
a. Use its best efforts to cause the Registration Statement to
become effective as promptly as possible. If the Registration Statement
has become or becomes effective with a form of Prospectus omitting
certain information pursuant to Rule 430A of the Regulations, or filing
of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus, properly completed, pursuant to Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to you of such timely filing.
b. Notify you immediately, and confirm such notice in writing,
(i) when the Registration Statement and any post-effective amendment
thereto become effective, (ii) of the receipt of any comments from the
Commission or the "blue sky" or securities authority of any
jurisdiction regarding the Registration Statement, any post-effective
amendment thereto, the Prospectus, or any amendment or supplement
thereto, and (iii) of the receipt of any notification with respect to a
Stop Order or the initiation or threatening of any proceeding with
respect to a Stop Order. The
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Company will use its best efforts to prevent the issuance of any Stop
Order and, if any Stop Order is issued, to obtain the lifting thereof
as promptly as possible.
c. During the time when a prospectus relating to the Common
Stock or the Additional Shares is required to be delivered hereunder or
under the Act or the Regulations, comply so far as it is able with all
requirements imposed upon it by the Act, as now existing and as
hereafter amended, and by the Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or
dealings in the Common Stock and Additional Shares in accordance with
the provisions hereof and the Prospectus. If, at any time when a
prospectus relating to the Common Stock or Additional Shares is
required to be delivered hereunder or under the Act or the Regulations,
any event shall have occurred as a result of which, in the reasonable
opinion of counsel for the Company or counsel for the Representative,
the Registration Statement or the Prospectus, as then amended or
supplemented, contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, or if, in the opinion of
either of such counsel, it is necessary at any time to amend or
supplement the Registration Statement or the Prospectus to comply with
the Act or the Regulations, the Company will immediately notify you and
promptly prepare and file with the Commission an appropriate amendment
or supplement (in form and substance satisfactory to you) which will
correct such statement or omission or which will effect such compliance
and will use its best efforts to have any such amendment declared
effective as soon as possible.
d. Deliver without charge to you such number of copies of each
Preliminary Prospectus as you may reasonably request and, as soon as
the Registration Statement or any amendment thereto becomes effective
or a supplement is filed, deliver without charge to you two signed
copies of the Registration Statement or such amendment thereto, as the
case may be, including exhibits, and two copies of any supplement
thereto, and deliver without charge to you such number of copies of the
Prospectus, the Registration Statement, and amendments and supplements
thereto, if any, without exhibits, as you may reasonably request for
the purposes contemplated by the Act.
e. Endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes effective, to
qualify the Common Stock and Additional Shares for offering and sale
under the "blue sky" or securities laws of such jurisdictions as you
may designate; provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the
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Company would be subject to service of general process or to taxation
as a foreign corporation doing business in such jurisdiction to which
it is not then subject. In each jurisdiction where such qualification
shall be effected, the Company will, unless you agree in writing that
such action is not at the time necessary or advisable, file and make
such statements or reports at such times as are or may be required by
the laws of such jurisdiction.
f. Make generally available (within the meaning of Section
11(a) of the Act and the Regulations) to its security holders as soon
as practicable, but not later than fifteen (15) months after the date
of the Prospectus, an earnings statement (which need not be certified
by independent certified public accountants unless required by the Act
or the Regulations, but which shall satisfy the provisions of Section
11(a) of the Act and the Regulations) covering a period of at least 12
months beginning after the effective date of the Registration Statement
and will provide you and your counsel with copies thereof and
satisfactory proof of having done so.
g. For a period of 12 months after the date of the Prospectus,
not, without your prior written consent, offer, issue, sell, contract
to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock (or any security or
other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock) except as provided in
Section 3 and except for (i) the issuance of shares of Common Stock
underlying options outstanding on the date hereof which are properly
described in the Prospectus, (ii) the issuance of Representative's
Warrants, or (iii) the grant of options pursuant to the Company's
existing stock option plans, or (iv) the issuance of capital stock in
connection with any acquisitions undertaken by the Company.
h. For a period of five years after the Effective Date of the
Registration Statement, furnish you, without charge, the following:
i. Within 90 days after the end of each fiscal year,
three copies of consolidated financial statements certified by
independent certified public accountants, including a balance
sheet, statement of operations, and statement of cash flows of
the Company and its then existing subsidiaries, with
supporting schedules, prepared in accordance with generally
accepted accounting principles, at the end of such fiscal year
and for the 12 months then ended;
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ii. As soon as practicable after they have been sent
to stockholders of the Company or filed with the Commission,
three copies of each annual and interim financial and other
report or communication sent by the Company to its
stockholders or filed with the Commission;
iii. As soon as practicable, two copies of every
press release and every material news item and article in
respect of the Company or its affairs which was released by
the Company;
iv. Notice of any regular quarterly or special
meeting of the Company's Board of Directors concurrently with
the sending of such notice to the Company's directors; and
v. Such additional documents and information with
respect to the Company and its affairs and the affairs of any
of its subsidiaries as you may from time to time reasonably
request.
i. Designate an Audit Committee and a Compensation Committee,
the members of which shall be subject to your reasonable approval,
which will generally supervise the financial affairs of the Company and
review executive compensation, respectively.
j. Furnish to you as early as practicable prior to the Closing
Date and any Additional Closing Date, as the case may be, but not less
than two full business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements of the
Company which have been read by the Company's independent certified
public accountants, as stated in their letters to be furnished pursuant
to Section 7(e).
k. File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the
Effective Date of the Registration Statement, unless such filing shall
comply with the Act and the Regulations and unless you shall previously
have been advised of such filing and furnished with a copy thereof, and
you and counsel for the Representative shall have approved such filing
in writing within a reasonable time of receipt thereof.
l. Comply with all periodic reporting and proxy solicitation
requirements which may from time to time be applicable to the Company
as a result of the
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Company's registration under the Exchange Act on a Registration
Statement on Form 8-A .
m. Comply with all provisions of all undertakings contained in
the Registration Statement.
n. Prior to the Closing Date or any Additional Closing Date,
as the case may be, issue no press release or other communication,
directly or indirectly, and hold no press conference and grant no
interviews with respect to the Company, the financial condition,
results of operations, business, properties, assets, or liabilities of
the Company, or this offering, without your prior written consent.
o. File timely with the Commission and the National
Association of Securities Dealers, Inc. (the "NASD"), if required, a
report on Form 10-C in accordance with the Rules and Regulations of the
Commission under the Exchange Act.
p. On or prior to the Closing Date, sell to the Representative
for a total purchase price of $115.00, Representative's Warrants
entitling the Representative or its assigns to purchase (i) 115,000
shares of Common Stock at a price equal to 120% of the public offering
price of the Common Stock, with the terms of the Representative's
Warrants, including exercise period, anti-dilution provisions, exercise
price, exercise provisions, transferability, and registration rights,
to be in the form filed as an exhibit to the Registration Statement.
q. Until expiration of the Representative's Warrants, keep
reserved sufficient shares of Common Stock for issuance upon exercise
of the Representative's Warrants.
r. If the Representative, any employee of the Representative
or any company controlled by or under control of the Representative
acts as the introducing broker or finder during the five year period
commencing on the Effective Date with regard to (i) the sale of all or
substantially all of the assets and properties of the Company, (ii) the
merger or consolidation of the Company (other than a merger or
consolidation effected for the purpose of changing the Company's
domicile) or (iii) the acquisition by the Company of the assets or
stock of another business entity, which agreement or understanding is
thereafter consummated during such five-year period or within one year
of expiration of such five-year period, pay to the Representative or
such person(s) as the Representative may designate an amount
- 20 -
equal to 5% of the first $1,000,000 or portion thereof in value or
consideration received or paid by the Company, 4% of the second
$1,000,000 or portion thereof in value or consideration received or
paid by the Company and 3% of such value or consideration received by
the Company in excess of the first $2,000,000 of such value or
consideration received or paid by the Company. The fee payable to the
Representative will be in the same form of consideration as that paid
by or to the Company, as the case may be, in any such transaction. It
is understood that the designation of the Representative to act as a
finder is not exclusive and that the Representative shall not be
entitled to the foregoing amounts unless it participates in the
introduction.
s. Within three months of the Closing Date, engage a financial
public relations firm reasonably acceptable to you to assist the
Company in preparing regular announcements and disseminating such
information to the financial community, such engagement to extend for a
period of at least one year from the date of retention of such firm.
t. Shareholders owning Common Stock outstanding prior to the
public offering will place in an escrow account at
________________________ an aggregate of 100,000 shares of Common Stock
at or prior to the Effective Date. Such shares will be subject to
release from escrow of the earlier to occur of (i) the Company
achieving pre-tax net income (but excluding extraordinary items) of
$5,000,000 in the calendar year 2000, (ii) the Company achieving
pre-tax income (but excluding extraordinary items) of $6,000,000 in the
calendar year 2001, or (iii) seven years from the Effective Date.
u. Adopt procedures for the application of the net proceeds it
receives from the sale of the Common Stock and apply the net proceeds
from the sale of the Common Stock substantially in the manner set forth
in the Registration Statement, which does not contemplate repayment of
debt to officers, directors, stockholders or affiliates of the Company,
unless any deviation from such application is in accordance with the
Registration Statement and occurs only after approval by the Board of
Directors of the Company and then only after the Board of Directors has
obtained the written opinion of recognized legal counsel experienced in
federal and state securities laws as to the propriety of any such
deviation.
v. Within the time period which the Prospectus is required to
be delivered under the Act, comply, at its own expense, with all
requirements imposed upon it by the Act, as now or hereafter amended,
by the Rules and Regulations, as
- 21 -
from time to time may be enforced, and by any order of the Commission,
so far as necessary to permit the continuance of sales or dealing in
the Common Stock.
w. At the Closing, deliver to the Representative true and
correct copies of the Certificate of Incorporation of the Company and
all amendments thereto, all such copies to be certified by the
Secretary of the Company; true and correct copies of the by-laws of the
Company and of the minutes of all meetings of the directors and
stockholders of the Company held prior to the Closing which in any way
relate to the subject matter of this Agreement or the Registration
Statement.
x. Use all reasonable efforts to comply or cause to be
complied with the conditions precedent to the several obligations of
the Underwriters in Section 7 hereof.
y. File with the Commission all required information
concerning use of proceeds of the Public Offering in Forms 10-QSB and
10-KSB in accordance with the provisions of the Act and to provide a
copy of such reports to the Representative and its counsel.
z. Supply to the Representative and the Representative's
counsel at the Company's cost, four bound volumes each containing
material documents relating to the offering of the Common Stock within
a reasonable time after the Closing, not to exceed 90 days.
aa. As soon as possible prior to the Effective Date, and as a
condition of the Underwriter's obligations hereunder, (i) have the
Company listed on an accelerated basis, and to maintain such listing
for not less than ten years from the Closing Date, in Standard & Poor's
Standard Corporation Records; and (ii) have the Common Stock quoted on
The Nasdaq SmallCap Market as of the Effective Date, on the Closing
Date, on the Additional Closing Date and thereafter for at least ten
years provided the Company is in compliance with The Nasdaq SmallCap
Market maintenance requirements.
bb. At such time as the Company qualifies for listing on the
Nasdaq National Market, the American Stock Exchange or New York Stock
Exchange, the Company shall take all steps necessary to have the
Company's Common Stock to the extent eligible, listed on the Nasdaq
National Market, the American Stock Exchange or New York Stock
Exchange.
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cc. Continue, for a period of at least five years following
the Effective Date of the Registration Statement, to appoint such
auditors as are reasonably acceptable to the Representative, which
auditors shall (i) prepare consolidated financial statements in
accordance with Regulation S-B or, if applicable, Regulation S-X under
the General Rules and Regulations of the Act and (ii) examine (but not
audit) the Company's consolidated financial statements for each of the
first four (4) fiscal quarters prior to the announcement of quarterly
financial information, the filing of the Company's 10-QSB quarterly
report and the mailing of quarterly financial information to security
holders. Xxxxxxx Xxxxxx & Co., a member of the SEC Practice Section of
the AICPA, is acceptable to the Representative.
dd. Prior to the Effective Date, enter into employment
agreements with its key management employees with the terms thereof
including the term and the compensation of each person subject to the
reasonable approval of the Representative as long as such compensation
is within industry standards.
ee. Within 90 days of the Effective Date of the Registration
Statement, obtain a "key man" life insurance policy in the amount of
$1,000,000 each on the lives of Xx. Xxxx Xxxxxxx and Xx. Xxxxxx
Xxxxxxx, with the Company designated as the beneficiary of such policy,
and pay the annual premiums thereon for a period of not less than five
years from the Effective Date of the Registration Statement.
ff. Appoint American Stock Transfer and Trust Company, New
York, as its stock transfer and warrant agent ("Transfer Agent") and
cause its Transfer Agent to furnish the Representative a duplicate copy
of the daily transfer sheets prepared by the transfer agent during the
six-month period commencing on the Effective Date of the Registration
Statement and instruct the Transfer Agent to timely provide, upon the
request of the Representative, duplicate copies of such transfer sheets
and/or a duplicate copy of a list of stockholders, all at the Company's
expense, for a period of 4 1/2 years after such six-month period.
gg. Refrain from filing a Form S-8 Registration Statement for
a period of 18 months from the Effective Date of the Registration
Statement without the Representative's prior written consent. The
Company will also obtain from each holder of options to acquire Common
Stock of the Company such person's written enforceable agreement not to
sell shares of Common Stock pursuant to the exemption afforded by Rule
701 under the 1933 Act for a minimum period of 13 months from the
Effective Date without the prior written consent of the representative.
- 23 -
hh. Afford the Representative the right, but not the
obligation, commencing on the Effective Date and surviving for a period
of five years, to designate an observer to attend meetings of the Board
of Directors. The designee, if any, and the Representative will receive
notice of each meeting of the Board of Directors in accordance with
Delaware law, of which no less than four in-person meetings will be
held each year. Any such designee will receive reimbursement for all
reasonable costs and expenses incurred in attending meetings of the
Board of Directors, including but not limited to, food, lodging and
transportation, together with such other fee or compensation as is paid
by the Company to other members of the Board of Directors. Moreover, to
the extent permitted by law, the Representative and its designee shall
be indemnified for the actions of such designee as an observer to the
Board of Directors and in the event the Company maintains a liability
insurance policy affording coverage for the acts of its officers and/or
directors, to the extent permitted under such policy, each of the
Representative and its designee shall be an insured under such policy.
ii. The Company, on behalf of itself and on behalf of its
officers and directors, hereby grants and covenants to provide the
Representative a non-assignable right of first refusal, which right of
first refusal shall extend for a period of four years after the
Effective Date. The right of first refusal shall entitle the
Representative to purchase for its account, or to sell for the account
of the Company, any of the Company's subsidiaries or any selling
security holders or officers, directors or affiliates of such persons,
any debt or equity securities of the Company or common stock owned by
such selling security holders with respect to which the Company, any of
its subsidiaries or successors (other than a successor entity which has
acquired the Company and in which the stockholders of the Company own
less than 30% of the outstanding shares) or selling security holders
may seek to offer and sell pursuant to a registration statement under
the Act or in a private transaction other than with a lending
institution. The Company, its subsidiaries and any selling security
holders will consult with the Representative with regard to any such
offering and will offer the Representative the opportunity to purchase
or sell any such securities on terms not more favorable to the Company
than it can secure elsewhere. If the Representative fails to accept in
writing such proposal for financing made by the Company, its
subsidiaries or such selling security holders within 30 days after the
receipt by the Representative of a notice containing such proposal,
then the Representative shall have no further claim or right with
respect to the financing proposal contained in such notice. If
thereafter such proposal is modified, the Company, its subsidiaries or
affiliates shall adopt the same procedure as with respect to the
original proposal, except that upon re-presentation, such term
- 24 -
for response by the Representative shall be 15 days. Should the
Representative not avail itself of such opportunity, the right of first
refusal shall not be affected thereby, and the right of first refusal
shall continue in effect for the remaining period thereof. The Company
further agrees that any breach by the Company of the Representative's
right of first refusal shall be enforceable through injunctive relief.
The offer or sale by the Company of equity securities in connection
with acquisitions or mergers shall be exempted from the foregoing right
of first refusal.
jj. In the event the NASD Committee on, or Department of,
Corporate Financing shall determine that any Company stock or stock
options issued to, or financial consulting or other agreements of the
Company, with any person or persons who are unaffiliated with the
Representative are nevertheless considered underwriting compensation,
the Company will take such action as the NASD may require to prevent
such stock options or agreements from having any adverse effect on the
Representative's allowable compensation. In the event that the NASD
still deems the Representative's compensation to be unacceptable, the
Representative shall, in its sole discretion, make such further
adjustments to the form of its compensation as it deems necessary to
obtain NASD clearance, so long as such compensation adjustments do not
increase the amount of total compensation provided for in this
Agreement.
kk. Common Stock certificates shall be first submitted to the
Representative for approval prior to printing. The Company shall, as
promptly as possible, after filing the Registration Statement with the
Commission, obtain a CUSIP number for the Common Stock and have Common
Stock eligible for closing through Depository Trust Company.
6. PAYMENT OF EXPENSES. The Company hereby agrees to pay all expenses
(subject to the last sentence of this Section 6) in connection with the
offering, including but not limited to (a) the preparation, printing, filing,
distribution, and mailing of the Registration Statement and the Prospectus,
including NASD, SEC, Nasdaq, state "blue sky" filing and/or application fees,
and the printing, filing, distribution, and mailing of this Agreement, any
Agreement Among Underwriters, Selected Dealers Agreement, preliminary and final
Blue Sky Memorandums, material to be circulated to the Underwriters by you and
other incidental or related documents, including the cost of all copies thereof
and of the Preliminary Prospectuses and of the Prospectus, and any amendments or
supplements thereto, supplied to the Representative in quantities as herein
above stated, (b) the issuance, sale, transfer, and delivery of the Common
Stock, the Additional Shares, the Representative's Warrants and the shares of
common stock underlying the Representative's
- 25 -
Warrants, including, without limitation, any original issue, transfer or other
taxes payable thereon and the costs of preparation, printing and delivery of
certificates representing such securities, as applicable, (c) the qualification
of the Common Stock, Additional Shares, Representative's Warrants and shares of
Common Stock underlying the Representative's Warrants under state or foreign
"blue sky" or securities laws, (d) the fees and disbursements of counsel
(including "blue sky" counsel) for the Company and the accountants for the
Company, (e) the listing of the Common Stock on The Nasdaq SmallCap Market, and
(f) the Representative's non-accountable expense allowance equal to 3% of the
aggregate gross proceeds from the sale of the Common Stock and the Additional
Shares. Prior to or immediately following the Closing Date, the Company shall
bear the costs of tombstone announcements not to exceed $5,000, if requested to
do so by the Representative. As an incentive for the Representative to assist
the Company in managing its costs and to minimize the time of its management
personnel in traveling to road shows, the Representative agrees to limit such
road show meetings to not more than four meetings for the Representative's
branch offices and underwriting syndicate members and, in consideration of such
limited road show schedule, the Company shall, upon receipt of an invoice from
the Representative, reimburse the Representative for any direct accountable
expenses incurred by the Representative and its personnel in presenting and/or
attending such meetings subject to a maximum of such accountable expenses of
$15,000. Except as herein above provided, the Company and the Representative
shall pay their own expenses incurred in connection with any road shows.
The Company has previously remitted to the Representative the sum of
$25,000, which sum has been credited as a partial payment in advance of the
non-accountable expense allowance provided for in Section 6(f) above.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The Underwriters'
obligation to purchase and pay for the Common Stock and the Additional Shares,
as provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
you, as of the date hereof and as of the Closing Date (or the Additional Closing
Date, as the case may be), to the performance by the Company of its obligations
hereunder, and to the following conditions:
a. The Registration Statement shall have become effective not
later than 5:00 p.m., Mountain time, on the date of this Agreement or
such later date and time as shall be consented to in writing by you.
- 26 -
b. At the Closing Date and any additional Closing Date, you
shall have received the favorable opinion of Xxxxxxx Xxxxxx, P.A.,
counsel for the Company, dated the date of delivery, addressed to you,
and in form and scope satisfactory to your counsel, to the effect that:
i. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Delaware, with full power and authority, and all
necessary consents, authorizations, approvals, orders,
certificates, and permits of and from, and declarations and
filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals,
to own, lease, license, and use its properties and assets and
to conduct its business in the manner described in the
Prospectus. The Company is duly qualified to do business and
is in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets
or the conduct of its business makes such qualification
necessary;
ii. The authorized capital stock of the Company as of
the date of this Agreement consisted of 20,000,000 shares of
Common Stock, of which 2,080,000 shares of Common Stock are
issued and outstanding, 200,000 shares of Common Stock are
reserved for issuance upon the exercise of outstanding options
held by one individual under the Company's option plans,
244,956 shares of Common Stock are reserved for issuance upon
conversion of the Company's outstanding convertible notes,
244,956 shares of Common Stock are reserved for issuance upon
exercise of warrants issued to the holder(s) of the
convertible notes, 104,000 shares of Common Stock are reserved
for issuance upon the exercise of the remaining options
authorized under the Company's option plans, and 115,000
shares of Common Stock are reserved for issuance upon the
issuance of the Representative's Warrants; and there have been
no changes in the authorized and outstanding capital stock of
the Company since the date of this Agreement, except as
contemplated by the Registration Statement and the Prospectus.
Each outstanding share of capital stock is validly authorized,
or when issued will be authorized, validly issued, fully paid,
and nonassessable, with no personal liability attaching to the
ownership thereof, has not been issued and is not owned or
held in violation of any preemptive right of stockholders.
There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of the Company or any
security or other instrument which by its terms is convertible
into, exercisable for, or exchangeable for
- 27 -
capital stock of the Company, except as set forth above, and
except as is properly described in the Prospectus. There is
outstanding no security or other instrument which by its terms
is convertible into or exchangeable for capital stock of the
Company, except as described in the Prospectus;
iii. There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or
investigation pending, threatened, or in prospect (or any
basis therefor) with respect to the Company or any of its
respective operations, businesses, properties, or assets,
except as may be properly described in the Prospectus or such
as individually or in the aggregate do not now have and will
not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company.
The Company is not in violation of, or in default with respect
to, any law, rule, regulation, order, judgment, or decree,
except as may be properly described in the Prospectus or such
as in the aggregate have been disclosed to the Representative
and do not now have and will not in the future have a material
adverse effect upon the operations, business, properties, or
assets of the Company; nor is the Company required to take any
action in order to avoid any such violation or default;
iv. Neither the Company nor any other party is now or
is expected by the Company to be in violation or breach of, or
in default with respect to, complying with any material
provision of any contract, agreement, instrument, lease,
license, arrangement, or understanding which is material to
the Company;
v. The Company is not in violation or breach of, or
in default with respect to, any term of its Certificate of
Incorporation or by-laws;
vi. The Company has all requisite power and authority
to execute and deliver and to perform thereunder this
Agreement and the Representative's Warrants. All necessary
corporate proceedings of the Company have been taken to
authorize the execution and delivery and performance
thereunder by the Company of this Agreement and the
Representative's Warrants. This Agreement and the
Representative's Warrants have been duly authorized, executed
and delivered by the Company, and is a legal, valid, and
binding obligation of the Company, and (subject to applicable
bankruptcy, insolvency, and other laws affecting the enforce
ability of creditors' rights generally) enforceable as to the
Company
- 28 -
in accordance with its respective terms. No consent,
authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or
other tribunal is required by the Company for the execution or
delivery, or performance thereunder by the Company of this
Agreement and the Representative's Warrants (except filings
under the Act which have been made prior to the Closing Date
and consents consisting only of consents under "blue sky" or
securities laws which are required in connection with the
transactions contemplated by this Agreement, and which have
been obtained on or prior to the date the Registration
Statement becomes effective under the Act). No consent of any
party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party,
or to which any of its properties or assets are subject, is
required for the execution or delivery, or performance
thereunder of this Agreement and the Representative's
Warrants; and the execution and delivery and performance
thereunder of this Agreement and the Representative's Warrants
will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default
under any such contract, agreement, instrument, lease,
license, arrangement, or understanding, or violate or result
in a breach of any term of the Certificate of Incorporation or
by-laws of the Company, or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or
decree binding on the Company or to which any of its
operations, businesses, properties, or assets are subject;
vii. The shares of Common Stock are, and the shares
of common stock underlying the Representative's Warrants will
be upon exercise of the Representative's Warrants, validly
authorized, validly issued, fully paid, and nonassessable and
are not issued in violation of any preemptive rights of
stockholders, and the Underwriters have received good title to
the Common Stock and Additional Shares purchased by them from
the Company, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and
voting trusts; upon payment for the Common Stock and the
Representative's Warrants, the holders thereof will receive
good title to such securities, free and clear of all liens,
security interests, pledges, charges, encumbrances,
stockholders' agreement and voting trusts. The Common Stock
and the Representative's Warrants conform to all statements
relating thereto contained in the Registration Statement or
the Prospectus;
- 29 -
viii. The Representative's Warrants have been duly
and validly reserved for issuance pursuant to the terms of the
Representative's Warrant and shares of Common Stock underlying
the Representative's Warrants have been duly and validly
reserved for issuance pursuant to the terms of the
Representative's Warrants;
ix. Any contract, agreement, instrument, lease, or
license required to be described in the Registration Statement
or the Prospectus has been properly described therein. Any
contract, agreement, instrument, lease, or license required to
be filed as an exhibit to the Registration Statement has been
filed with the Commission as an exhibit to or has been
incorporated as an exhibit by reference into the Registration
Statement;
x. Insofar as statements in the Prospectus purport to
summarize the status of litigation or the provisions of laws,
rules, regulations, orders, judgments, decrees, contracts,
agreements, instruments, leases, or licenses, such statements
have been prepared or reviewed by such counsel and accurately
reflect the status of such litigation and provisions purported
to be summarized and are correct in all material respects;
xi. Except as provided in the Registration Statement,
no person or entity has the right to require registration of
shares of Common Stock or other securities of the Company
because of the filing or effectiveness of the Registration
Statement;
xii. The Registration Statement has become effective
under the Act. No Stop Order has been issued and no
proceedings for that purpose have been instituted or
threatened;
xiii. The Registration Statement and the Prospectus,
and any amendment or supplement thereto, comply as to form in
all material respects with the requirements of the Act and the
Regulations;
xiv. Such counsel has no reason to believe that
either the Registration Statement or the Prospectus, or any
amendment or supplement thereto, contains any untrue statement
of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading (except that no opinion need be
expressed as to the
- 30 -
consolidated financial statements and other financial data and
schedules which are or should be contained therein);
xv. Since the Effective Date of the Registration
Statement, any event which has occurred which should have been
set forth in an amendment or supplement to the Registration
Statement or the Prospectus has been set forth in such an
amendment or supplement;
xvi. The Company is not currently offering any
securities for sale except as described in the Registration
Statement;
xvii. Such counsel has no knowledge of any promoter,
affiliate, parent or subsidiaries of the Company except as are
described in the Registration Statement;
xviii. The Company has no subsidiaries except as
described in the Registration Statement;
xix. The Company owns or possesses, free and clear of
all liens or encumbrances and rights thereto or therein by
third parties, the requisite licenses or other rights to use
all trademarks, copyrights, service marks, service names,
trade names and licenses necessary to conduct its business
(including without limitation, any such licenses or rights
described in the Registration Statement as being owned or
possessed by the Company or any subsidiary) (all of which are
collectively referred to herein as the "Intellectual
Property"); there is no actual or pending, or threatened
claim, proceeding or action by any person pertaining to or
which challenges the exclusive rights of the Company with
respect to any of the Company's Intellectual Property; based
on a review of all the Company's products, proposed products
and Intellectual Property, such products, proposed products or
Intellectual Property do not and will not infringe on any
trademarks, copyrights, service marks, service names, trade
names or valid patents or patents pending held by third
parties known to the Company and such counsel;
xx. The Company is not a party to any agreement
giving rise to any obligation by the Company or any subsidiary
to pay any third-party royalties or fees of any kind
whatsoever with respect to any technology developed, employed,
used or licensed by the Company or any subsidiary, other than
is disclosed in the Prospectus;
- 31 -
xxi. The Common Stock is eligible for quotation on
The Nasdaq SmallCap Market;
xxii. All issued and outstanding shares of Common
Stock and all other securities issued and sold or exchanged by
the Company or its subsidiaries have been issued and sold or
exchanged in compliance with all applicable state and federal
securities laws and regulations; and
xxiii. The Company and all of its Property are in
compliance with all applicable Food and Drug, Medical and
Environmental Laws and the Company is in full compliance with
all permits, licenses and authorizations relating to Food and
Drug, Medical and Environmental Laws, including but not
limited to matters relating to Hazardous Substances, Oils,
Pollutants or Contaminants or to Medical Wastes.
In rendering such opinion, counsel for the Company may rely
(A) as to matters involving the application of laws other than the laws
of the United States and the laws of the State of Delaware, to the
extent counsel for the Company deems proper and to the extent specified
in such opinion, upon an opinion or opinions (in form and substance
satisfactory to counsel for the Representative) of other counsel,
acceptable to counsel for the Representative, familiar with the
applicable laws, in which case the opinion of counsel for the Company
shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the Company
and that reliance thereon by counsel for the Company is reasonable; (B)
as to matters of fact, to the extent the Representative deems proper,
on certificates of responsible officers of the Company; and (C) to the
extent they deem proper, upon written statements or certificates of
officers of departments of various jurisdictions having custody of
documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates
shall be delivered to counsel for the Representative.
c. On or prior to the Closing Date and any Additional Closing
Date, as the case may be, you shall have been furnished such
information, documents, certificates, and opinions as you may
reasonably require for the purpose of enabling you to review the
matters referred to in Sections 7(b) and (c), and in order to evidence
the accuracy, completeness, or satisfaction of any of the
representations, warranties, covenants, agreements, or conditions
herein contained, or as you may reasonably request.
- 32 -
d. At the Closing Date and any Additional Closing Date, as the
case may be, you shall have received a certificate of the chief
executive officer and of the chief financial officer of the Company,
dated the Closing Date or such Additional Closing Date, as the case may
be, to the effect that the conditions set forth in Section 7(a) have
been satisfied, that as of the date of this Agreement and as of the
Closing Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein were and
are accurate, and that as of the Closing Date or such Additional
Closing Date, as the case may be, the obligations to be performed by
the Company hereunder on or prior thereto have been fully performed.
e. At the time this Agreement is executed and at the Closing
Date and any Additional Closing Date, as the case may be, you shall
have received a letter from Xxxxxxx, Xxxxxx & Co., Certified Public
Accountants, addressed to you and dated the date of this Agreement or
of delivery, as the case may be, but covering a period within three
business days of such date, in form and substance satisfactory to you.
f. All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Common Stock and the Additional
Shares shall be satisfactory in form and substance to you and to
counsel for the Representative, and you shall have received a favorable
opinion from counsel to the Company, dated as of the Closing Date or
the Additional Closing Date, as the case may be, with respect to such
of the matters set forth under Sections 7(b) and 7(c), respectively,
and with respect to such other related matters, as you may reasonably
request.
g. The NASD, upon review of the terms of the public offering
of the Common Stock and the Additional Shares, shall not have objected
to your participation in such offering.
h. The Company shall have received notice that the Common
Stock will be quoted on The Nasdaq SmallCap Market as of the Effective
Date. Any certificate or other document signed by any officer of the
Company and delivered to you or to counsel for the Representative shall
be deemed a representation and warranty by such officer individually
and by the Company hereunder to the Representative as to the statements
made therein. If any condition to your obligations hereunder to be
fulfilled prior to or at the Closing Date or any Additional Closing
Date, as the case may be, is not so fulfilled, you may terminate this
Agreement or, if you so elect, in
- 33 -
writing waive any such conditions which have not been fulfilled or
extend the time for their fulfillment.
8. INDEMNIFICATION AND CONTRIBUTION.
a. Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Underwriters, the
Representative, and each of their officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls
the Representative or any one of the Underwriters within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any
and all loss, liability, claim, damage, and expense whatsoever (which
shall include, for all purposes of this Section 8, but not be limited
to, attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any
untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Prospectus, the Registration
Statement, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or (B) in any
application or other document or communication (in this Section 8
collectively called an "application") in any jurisdiction in order to
qualify the Common Stock and Additional Shares under the "blue sky" or
securities laws thereof or filed with the Commission or any securities
exchange; or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any breach of any representation,
warranty, covenant, or agreement of the Company contained in this
Agreement. The foregoing agreement to indemnify shall be in addition to
any liability the Company may otherwise have, including liabilities
arising under this Agreement; however, the Company shall have no
liability under this Section 8 if such statement or omission was made
in reliance upon and in conformity with written information furnished
to the Company as stated in Section 8(b) with respect to the
Underwriters by or on behalf of the Underwriters expressly for
inclusion in any Preliminary Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be.
If any action is brought against the Underwriters, the
Representative or any of their officers, directors, partners,
employees, agents, or counsel, or any controlling persons of an
Underwriter or the Representative (an "indemnified party") in respect
of which indemnity may be sought against the Company pursuant to the
- 34 -
foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but
the failure so to notify shall not relieve the Company from any
liability it may have other than pursuant to this Section 8(a)) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties
shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in
connection with the defense of such action or the Company shall not
have promptly employed counsel satisfactory to such indemnified party
or parties to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses
shall be borne by the Company. Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written
consent. The Company agrees promptly to notify the Underwriters and the
Representative of the commencement of any litigation or proceedings
against the Company or against any of its officers or directors in
connection with the sale of the Common Stock or the Additional Shares,
any Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or any application.
b. The Underwriters agree to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who
shall have signed the Registration Statement, each other person, if
any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Underwriters in Section
8(a), but only with respect to statements or omissions, if any, made in
any Preliminary Prospectus, the Registration Statement, or the
Prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application, in reliance
upon and in conformity with written information furnished to the
Company as stated in this Section 8(b) with respect to the Underwriters
by or on behalf of the Underwriters expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto, or in any application, as the
case may be; provided, however, that the obligation of the Underwriters
to provide indemnity under the provisions of this Section 8(b) shall be
limited to the amount
- 35 -
which represents the product of the number of shares of Common Stock
and Additional Shares sold hereunder and the initial public offering
price per share of Common Stock set forth on the cover page of the
Prospectus. For all purposes of this Agreement, the amounts of the
selling concession and reallowance set forth in the Prospectus, the
information under "Underwriting" and the identification of counsel to
the Representative under "Legal Matters" constitute the only
information furnished in writing by or on behalf of the Underwriters
expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus (as from time to time amended or
supplemented), or any amendment or supplement thereto, or in any
application, as the case may be. If any action shall be brought against
the Company or any other person so indemnified based on any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or any application, and in respect of
which indemnity may be sought against the Underwriters pursuant to this
Section 8(b), the Underwriters shall have the rights and duties given
to the Company, and the Company and each other person so indemnified
shall have the rights and duties given to the indemnified parties, by
the provisions of Section 8(a).
c. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 8 is for any reason held to be unavailable to the Underwriters
or the Company, then the Company shall contribute to the damages paid
by the several Underwriters, and the several Underwriters shall
contribute to the damages paid by the Company; provided, however, that
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. In
determining the amount of contribution to which the respective parties
are entitled, there shall be considered the relative benefits received
by each party from the sale of the Common Stock and Additional Shares
(taking into account the portion of the proceeds of the offering
realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated as
one entity for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in
the aggregate exceeds the total public offering price of the Common
Stock and Additional Shares purchased by such Underwriter under this
Agreement, less the
- 36 -
aggregate amount of any damages which such Underwriter and its
controlling persons have otherwise been required to pay in respect of
the same or any substantially similar claim. The Underwriters'
obligations to contribute hereunder are several in proportion to their
respective underwriting obligations and not joint. For purposes of this
Section, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act shall have the same rights to
contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of
Section 15 of the Act, shall have the same rights to contribution as
the Company. Anything in this Section 8(c) to the contrary
notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written
consent. This Section 8(c) is intended to supersede any right to
contribution under the Act, the Exchange Act, or otherwise.
9. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Representative, the Underwriters or
any indemnified person, or by or on behalf of the Company or any person or
entity which is entitled to be indemnified under Section 8(b), and shall survive
termination of this Agreement or the delivery of the Common Stock and the
Additional Shares to the Underwriters for a period equal to the statute of
limitations for claims related hereto, but not to exceed an aggregate of three
years from the date hereof. In addition, the provisions of Sections 5(a), 6, 8,
9, 10, and 12 shall survive termination of this Agreement, whether such
termination occurs before or after the Closing Date or any Additional Closing
Date.
10. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
a. This Agreement shall be executed within 24 hours of the
Effective Date of the Registration Statement and shall become effective
on the Effective Date or at the time of the initial public offering of
the Common Stock, whichever is earlier. The time of the initial public
offering shall mean the time, after the Registration Statement becomes
effective, of the release by the Representative for publication of the
first newspaper advertisement which is subsequently published relating
to the Common Stock or the time, after the Registration Statement
becomes
- 37 -
effective, when the Common Stock is first released by the
Representative for offering by dealers by letter or telegram, whichever
shall first occur. The Representative or the Company may prevent this
Agreement from becoming effective without liability of any party to any
other party, except as noted below in this Section 10, by giving the
notice indicated in Section 10(c) before the time this Agreement
becomes effective.
b. The Representative shall have the right to terminate this
Agreement at any time prior to the Closing Date or any Additional
Closing Date, as the case may be, by giving notice to the Company if
there shall have been a general suspension of, or a general limitation
on prices for, trading in securities on the New York Stock Exchange or
the American Stock Exchange or in the over-the-counter market; or if
there shall have been an outbreak of major hostilities or other
national or international calamity; or if a banking moratorium has been
declared by a state or federal authority; or if a moratorium in foreign
exchange trading by major international banks or persons has been
declared; or if there shall have been a material interruption in the
mail service or other means of communication within the United States;
or if the Company shall have sustained a material or substantial loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage, or
other calamity or malicious act which, whether or not such loss shall
have been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the offering, sale, or delivery of the
Common Stock or the Additional Shares, as the case may be; or if there
shall have been such material and adverse change in the market for
securities in general so as to make it inadvisable to proceed with the
offering, sale, and delivery of the Common Stock or the Additional
Shares, as the case may be, on the terms contemplated by the Prospectus
due to the impaired investment quality of the Common Stock or the
Additional Shares; or if the Dow Xxxxx Industrial Average shall have
fallen by 15% or more from its closing price on the day immediately
preceding the date that the Registration Statement is declared
effective by the Commission.
c. If the Representative elects to prevent this Agreement from
becoming effective as provided in this Section 10, or to terminate this
Agreement, it shall notify the Company promptly by telephone, facsimile
transmission, or telegram, confirmed by letter. If, as so provided, the
Company elects to prevent this agreement from becoming effective, the
Company shall notify the Representative promptly by telephone, telex,
or telegram, confirmed by letter.
- 38 -
d. Anything in this Agreement to the contrary notwithstanding
other than Section 10(e), if this Agreement shall not become effective
by reason of an election pursuant to this Section 10 or if this
Agreement shall terminate or shall otherwise not be carried out prior
to October 31, 1999 because (i) of any reason solely within the control
of the Company or its stockholders and not due to the breach of any
representation, warranty or covenant or bad faith of the
Representative, (ii) the Company unilaterally withdraws the proposed
Public Offering from the Representative in favor of another
underwriter, (iii) the Company does not permit the Registration
Statement to become effective for any reason other than if the Common
Stock is proposed to be priced at less than $6.00 per share, in which
event this provision will not apply, (iv) of any material discrepancy
in any representation by the Company and/or its officers, directors,
stockholders, agents, advisers or representatives, made in writing,
including but not limited to the Registration Statement, to the
Representative, (v) the Company is, directly and/or indirectly,
negotiating with other persons or entities of whatsoever nature
relating to a possible Public Offering of its securities, or (vi) of
any failure on the part of the Company to perform any covenant or
agreement or satisfy any condition of this Agreement by it to be
performed or satisfied, then, in any of such events, the Company shall
be obligated to reimburse the Representative for its out-of-pocket
expenses on an accountable basis. Should the Representative be required
to account for "out-of pocket" expenses, any expense incurred by the
Representative shall be deemed to be reasonable and unobjectionable
upon a reasonable showing by the Representative that such expenses were
incurred, directly or indirectly, in connection with the proposed
transaction and/or relationship of the parties hereto, as described
herein. In no event will the Representative be entitled to
reimbursement of accountable expenses exceeding $50,000, inclusive of
the $25,000 advanced against the non-accountable expense allowance. The
Representative will return to the Company any portion of the $50,000
payment previously received that is not used in the payment of
accountable expenses.
e. Notwithstanding any election hereunder or any termination
of this agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 5(a), 6, 8, 9, and 10 shall not
be in any way affected by such election or termination or failure to
carry out the terms of this Agreement or any part hereof.
f. Anything in this Agreement to the contrary notwithstanding
other than Sections 10(d) and (e), if this Agreement shall not be
carried out within the time specified herein for any reason other than
as set forth in Section 10(d), the Company
- 39 -
shall have no liability to the Representative other than for the
Representative's accountable expenses up to a maximum aggregate amount
of $50,000, which amount has been paid in advance in accordance with
Section 6 hereof. The Representative will return to the Company any
portion of the $50,000 payment previously received that is not used in
the payment of accountable expenses.
11. REPRESENTATIVE'S RESPONSIBILITY FOR AFTERMARKET SUPPORT. As a
matter of policy, the Representative sponsors its underwriting clients with
regular research, follow-up and other aftermarket activities to ensure that its
customers, other members of the investing public, and the various segments of
the financial community will be kept abreast of developments relating to the
Company and its industry. The Representative intends to make a market in the
Company's securities after the Public Offering but will not be obligated to do
so, and will use its best efforts to interest other investment banking firms and
research analysts in following the Company.
12. NOTICES. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to the
Representative, shall be mailed, delivered, or sent by facsimile transmission
and confirmed by original letter, to Xxxxxxxxx Securities, Inc., 0000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, Attention: Xxxxx Xxxx, with a copy to
Xxxxxx X. Xxxxxxx, Xxxxx & Xxxxx, Ltd., Xxx Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000; or if sent to the Company shall be mailed, delivered,
or telexed or telegraphed and confirmed by letter, to SFBC International, Inc.,
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxx 00000, Attention: Xxxxxx Xxxxxxx,
with a copy to Xxxxxxx X. Xxxxxx, Esq., Xxxxxxx Xxxxxx, P.A., 0000 Xxxx Xxxxx
Xxxxx Xxxxxxxxx, Xxxx Xxxx Xxxxx, Xxxxxxx 00000. All notices hereunder shall be
effective upon receipt by the party to which it is addressed.
13. PARTIES. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Underwriters, the Company, and the persons and
entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any buyer, as such, of the Common Stock or the
Additional Shares) and no other person shall have or be construed to have any
legal or equitable right, remedy, or claim under or in respect of or by virtue
of this Agreement or any provision herein contained.
14. CONSTRUCTION. This Agreement shall be construed in accordance
with the laws of the State of Delaware, without giving effect to conflict of
laws principles. Time is of the essence in this Agreement. The parties
acknowledge that this Agreement was initially prepared by the Representative,
and that all parties have read and negotiated the language
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used in this Agreement. The parties agree that, because all parties participated
in negotiating and drafting this Agreement, no rule of construction shall apply
to this Agreement which construes ambiguous language in favor of or against any
party by reason of that party's role in drafting this Agreement.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
SFBC INTERNATIONAL, INC.
By:_____________________________________
Xxxxxx Xxxxxxx
Chief Executive Officer
Accepted as of the date first above written.
Denver, Colorado
XXXXXXXXX SECURITIES, INC.
for itself
By:_________________________________
Xxxxxx X. X'Xxxxxx, President
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SCHEDULE 1
This Schedule sets forth the name of each Underwriter referred to in
the Underwriting Agreement and the number of shares of Common Stock to be sold
by the Company.
NUMBER OF
SHARES OF
NAME COMMON STOCK
---- ------------
Xxxxxxxxx Securities, Inc.
Total ____________
2849/6032/undwragr
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