Exhibit 1.1
[Form of Underwriting Agreement - Subject to Additional Review]
5,000,000 Shares of Common Stock
and 5,000,000 Redeemable Warrants
COMMODORE SEPARATION TECHNOLOGIES, INC.
UNDERWRITING AGREEMENT
New York, New York
, 1996
NATIONAL SECURITIES CORPORATION
As Representative of the
Several Underwriters listed on Schedule A hereto
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Commodore Separation Technologies, Inc., a Delaware corporation (the
"Company"), confirms its agreement with National Securities Corporation
("National") and each of the underwriters named in Schedule A hereto
(collectively, the "Underwriters," which term shall also include any underwriter
substituted as hereinafter provided in Section 11), for whom National is acting
as representative (in such capacity, National shall hereinafter be referred to
as "you" or the "Representative"), with respect to the sale by the Company and
the purchase by the Underwriters, acting severally and not jointly, of the
respective number of shares ("Shares") of the Company's common stock, $.001 par
value per share ("Common Stock"), and redeemable common stock purchase warrants
(the "Redeemable Warrants"), each to purchase one share of Common Stock, set
forth in Schedule A hereto. The aggregate 5,000,000 Shares and 5,000,000
Redeemable Warrants will be separately tradeable upon issuance and are
hereinafter referred to as the "Firm Securities." Each Redeemable Warrant is
exercisable commencing on ____________, 1997 [12 months from the date of this
Agreement] until ____________, 2001 [60 months from the date of this Agreement],
unless previously redeemed by the Company, at an initial exercise price of
$_______ [140% of the initial public offering price per Share] per share of
Common Stock. The Redeemable Warrants may be redeemed by the Company at a
redemption price of $.10 per Redeemable Warrant at any time after _____________,
1998 [18 months from the date of this Agreement] on thirty (30) days' prior
written notice, provided that the closing bid price of the Common Stock equals
or exceeds 300% of the initial public offering price per Share, for any twenty
(20) trading days within a period of thirty (30) consecutive trading days ending
on the fifth trading day prior to the date of the notice of redemption, all in
accordance with the terms and conditions of the Warrant Agreement (as
hereinafter defined).
Upon your request, as provided in Section 2(b) of this Agreement, the
Company shall also issue and sell to the Underwriters, acting severally and not
jointly, up to an additional 750,000 Redeemable Warrants (the "Option Warrants")
for the purpose of covering over-allotments, if any. Upon your request, as
provided in Section 2(b) of this Agreement, Commodore Environmental Services,
Inc., a ___________ corporation (the "Selling Stockholder"), shall sell to the
Underwriters, acting severally and not jointly, up to an additional 750,000
shares of Common Stock (the "Option Shares") for the purpose of covering
over-allotments, if any. Such Option Shares and Option Warrants are hereinafter
collectively referred to as the "Option Securities." The Company also proposes
to issue and sell to you warrants (the "Representative's Warrants") pursuant to
the Representative's Warrant Agreement (the "Representative's Warrant
Agreement") for the purchase of an additional 500,000 shares of Common Stock
and/or 500,000 Redeemable Warrants. The shares of Common Stock and Redeemable
Warrants issuable upon exercise of the Representative's Warrants are hereinafter
referred to as the "Representative's Securities." The Firm Securities, the
Option Securities, the Representative's Warrants and the Representative's
Securities (collectively, hereinafter referred to as the "Securities") are more
fully described in the Registration Statement and the Prospectus referred to
below.
1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees with, each
of the Underwriters as of the date hereof, and as of the Closing Date (as
hereinafter defined) and each Option Closing Date (as hereinafter defined), if
any, as follows:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form S-1 (No. 333-_________),
including any related preliminary prospectus ("Preliminary
Prospectus"), for the registration of the Firm Securities, the Option
Securities, the Representative's Warrants and the Representative's
Securities under the Securities Act of 1933, as amended (the "Act"),
which registration statement and amendment or amendments have been
prepared by the Company in
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conformity with the requirements of the Act, and the rules and
regulations (the "Regulations") of the Commission under the Act. The
Company will promptly file a further amendment to said registration
statement in the form heretofore delivered to the Underwriters and will
not file any other amendment thereto to which the Underwriters shall
have objected in writing after having been furnished with a copy
thereof. Except as the context may otherwise require, such registration
statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus,
financial statements, schedules, exhibits and all other documents filed
as a part thereof or incorporated therein (including, but not limited
to those documents or information incorporated by reference therein)
and all information deemed to be a part thereof as of such time
pursuant to paragraph (b) of Rule 430(A) of the Regulations), is
hereinafter called the "Registration Statement", and the form of
prospectus in the form first filed with the Commission pursuant to Rule
424(b) of the Regulations, is hereinafter called the "Prospectus." For
purposes hereof, "Rules and Regulations" mean the rules and regulations
adopted by the Commission under either the Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as applicable.
(ii) Neither the Commission nor any state regulatory authority
has issued any order preventing or suspending the use of any
Preliminary Prospectus, the Registration Statement or Prospectus or any
part of any thereof and no proceedings for a stop order suspending the
effectiveness of the Registration Statement or any of the Company's
securities have been instituted or are pending or threatened. Each of
the Preliminary Prospectus, the Registration Statement and Prospectus
at the time of filing thereof conformed with the requirements of the
Act and the Rules and Regulations, and none of the Preliminary
Prospectus, the Registration Statement or Prospectus at the time of
filing thereof contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that this
representation and warranty does not apply to statements made in
reliance upon and in conformity with written information furnished to
the Company with respect to the Underwriters by or on behalf of the
Underwriters expressly for use in such Preliminary Prospectus,
Registration Statement or Prospectus or any amendment thereof or
supplement thereto.
(iii) When the Registration Statement becomes effective and at
all times subsequent thereto up to the Closing Date (as defined herein)
and each Option Closing Date (as defined herein), if any, and during
such longer period as the Prospectus may be required to be delivered in
connection with sales by the Underwriters or a dealer, the Registration
Statement and the Prospectus will contain all statements which are
required to be stated therein in accordance with the Act and the Rules
and Regulations, and will conform to the requirements of the Act and
the Rules and Regulations; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, will contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the
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circumstances under which they were made, not misleading, provided,
however, that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in strict
conformity with information furnished to the Company in writing by or
on behalf of any Underwriter expressly for use in the Preliminary
Prospectus, Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
(iv) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the state
of its incorporation. Except as set forth in the Prospectus, the
Company does not own an interest in any corporation, partnership,
trust, joint venture or other business entity. The Company is duly
qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties
or the character of its operations requires such qualification or
licensing. The Company has all requisite power and authority (corporate
and other), and has obtained any and all necessary authorizations,
approvals, orders, licenses, certificates, franchises and permits of
and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and
has been doing business in compliance with all such authorizations,
approvals, orders, licenses, certificates, franchises and permits and
all applicable federal, state, local and foreign laws, rules and
regulations; and the Company has not received any notice of proceedings
relating to the revocation or modification of any such authorization,
approval, order, license, certificate, franchise, or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, position, prospects, value,
operation, properties, business or results of operations of the
Company. The disclosures in the Registration Statement concerning the
effects of federal, state, local, and foreign laws, rules and
regulations on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to
state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading in light of the
circumstances under which they were made.
(v) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under "Capitalization"
and "Description of Securities" and will have the adjusted
capitalization set forth therein on the Closing Date and each Option
Closing Date, if any, based upon the assumptions set forth therein, and
the Company is not a party to or bound by any instrument, agreement or
other arrangement providing for it to issue any capital stock, rights,
warrants, options or other securities, except for this Agreement, the
Warrant Agreement, the Representative's Warrant Agreement and as
described in the Prospectus. The Securities and all other securities
issued or issuable by the Company conform or, when issued and paid for,
will conform, in all respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus. All issued
and outstanding securities of the Company have been duly
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authorized and validly issued and are fully paid and non-assessable and
the holders thereof have no rights of rescission with respect thereto,
and are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or
similar contractual rights granted by the Company. The Firm Securities,
the Option Warrants, the Representative's Warrants and the
Representative's Securities are not and will not be subject to any
preemptive or other similar rights of any stockholder, have been duly
authorized and, when issued, paid for and delivered in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable
and will conform to the description thereof contained in the
Prospectus; the holders thereof will not be subject to any liability
solely as such holders; all corporate action required to be taken for
the authorization, issue and sale of the Firm Securities, the Option
Warrants, the Representative's Warrants and the Representative's
Securities has been duly and validly taken; and the certificates
representing the Firm Securities, the Option Warrants, the
Representative's Warrants and the Representative's Securities will be
in due and proper form. Upon the issuance and delivery pursuant to the
terms hereof of the Firm Securities, the Option Warrants, the
Representative's Warrants and the Representative's Securities to be
sold by the Company hereunder, the Underwriters or the Representative,
as the case may be, will acquire good and marketable title to such Firm
Securities, Option Warrants, Representative's Warrants and
Representative's Securities free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or
equity of any kind whatsoever.
(vi) The financial statements of the Company, together with
the related notes and schedules thereto, included in the Registration
Statement, each Preliminary Prospectus and the Prospectus fairly
present the financial position, income, changes in cash flow, changes
in stockholders' equity and the results of operations of the Company at
the respective dates and for the respective periods to which they apply
and such financial statements have been prepared in conformity with
generally accepted accounting principles and the Rules and Regulations,
consistently applied throughout the periods involved and such financial
statements as are audited have been examined by Xxxxxx & Co., who are
independent certified public accountants within the meaning of the Act
and the Rules and Regulations, as indicated in their reports filed
therewith. There has been no adverse change or development involving a
prospective adverse change in the condition, financial or otherwise, or
in the earnings, position, prospects, value, operation, properties,
business, or results of operations of the Company, whether or not
arising in the ordinary course of business, since the date of the
financial statements included in the Registration Statement and the
Prospectus and the outstanding debt, the property, both tangible and
intangible, and the business of the Company conform in all material
respects to the descriptions thereof contained in the Registration
Statement and the Prospectus. Financial information (including, without
limitation, any pro forma financial information) set forth in the
Prospectus under the headings "Summary Financial Data", "Selected
Financial Data," "Capitalization," and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," fairly
present, on the basis
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stated in the Prospectus, the information set forth therein, and have
been derived from or compiled on a basis consistent with that of the
audited financial statements included in the Prospectus; and, in the
case of pro forma financial information, if any, the assumptions used
in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein. The amounts shown as accrued for
current and deferred income and other taxes in such financial
statements are sufficient for the payment of all accrued and unpaid
federal, state, local and foreign income taxes, interest, penalties,
assessments or deficiencies applicable to the Company, whether disputed
or not, for the applicable period then ended and periods prior thereto;
adequate allowance for doubtful accounts has been provided for
unindemnified losses due to the operations of the Company; and the
statements of income do not contain any items of special or
nonrecurring income not earned in the ordinary course of business,
except as specified in the notes thereto.
(vii) The Company (i) has paid all federal, state, local, and
foreign taxes for which it is liable, including, but not limited to,
withholding taxes and amounts payable under Chapters 21 through 24 of
the Internal Revenue Code of 1986, as amended (the "Code"), and has
furnished all information returns it is required to furnish pursuant to
the Code, (ii) has established adequate reserves for such taxes which
are not due and payable, and (iii) does not have any tax deficiency or
claims outstanding, proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriters in connection with (i) the
issuance by the Company of the Firm Securities, the Option Warrants,
the Representative's Warrants or the Representative's Securities, (ii)
the purchase by the Underwriters of the Firm Securities and the Option
Warrants from the Company and the purchase by the Representative of the
Representative's Warrants from the Company, (iii) the consummation by
the Company of any of its obligations under this Agreement, or (iv)
resales of the Firm Securities and the Option Warrants in connection
with the distribution contemplated hereby.
(ix) The Company maintains insurance policies, including, but
not limited to, general and product liability, environmental and
property insurance, which insures the Company and its employees against
such losses and risks generally insured against by comparable
businesses. The Company (A) has not failed to give notice or present
any insurance claim with respect to any matter, including but not
limited to the Company's business, property or employees, under any
insurance policy or surety bond in a due and timely manner, (B) does
not have any disputes or claims against any underwriter of such
insurance policies or surety bonds or has failed to pay any premiums
due and payable thereunder, or (C) has not failed to comply with all
conditions contained in such insurance policies and surety bonds. There
are no facts or circumstances under any such insurance policy or surety
bond which would relieve any insurer of its obligation to satisfy in
full any valid claim of the Company.
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(x) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding
(including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, pending or
threatened against (or circumstances that may give rise to the same),
or involving the properties or business of, the Company which (i)
questions the validity of the capital stock of the Company, this
Agreement, the Warrant Agreement or the Representative's Warrant
Agreement, or of any action taken or to be taken by the Company
pursuant to or in connection with this Agreement, the Warrant Agreement
or the Representative's Warrant Agreement, (ii) is required to be
disclosed in the Registration Statement which is not so disclosed (and
such proceedings as are summarized in the Registration Statement are
accurately summarized in all material respects), or (iii) might
materially and adversely affect the condition, financial or otherwise,
or the earnings, position, prospects, stockholders' equity, value,
operation, properties, business or results of operations of the
Company.
(xi) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Firm Securities, the Option
Warrants, the Representative's Warrants and the Representative's
Securities, enter into this Agreement, the Warrant Agreement and the
Representative's Warrant Agreement and to consummate the transactions
provided for in this Agreement, the Warrant Agreement and the
Representative's Warrant Agreement; and this Agreement, the Warrant
Agreement and the Representative's Warrant Agreement have each been
duly and properly authorized, executed and delivered by the Company.
Each of this Agreement, the Warrant Agreement and the Representative's
Warrant Agreement constitutes a legal, valid and binding agreement of
the Company enforceable against the Company in accordance with its
terms, and none of the Company's issue and sale of the Firm Securities,
the Option Warrants, the Representative's Warrants and the
Representative's Securities, execution or delivery of this Agreement,
the Warrant Agreement or the Representative's Warrant Agreement, its
performance hereunder and thereunder, its consummation of the
transactions contemplated herein and therein, or the conduct of its
business as described in the Registration Statement, the Prospectus,
and any amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or violation of
any of the terms or provisions of, or constitutes or will constitute a
default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or
assets (tangible or intangible) of the Company pursuant to the terms of
(i) the certificate of incorporation or by-laws of the Company, (ii)
any license, contract, collective bargaining agreement, indenture,
mortgage, deed of trust, lease, voting trust agreement, stockholders
agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which the Company is
or may be bound or to which either of its properties or assets
(tangible or intangible) is or may be subject, or any indebtedness, or
(iii) any statute, judgment, decree, order, rule or regulation
applicable to the Company of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body (including,
without
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limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or
any of its activities or properties.
(xii) No consent, approval, authorization or order of, and no
filing with, any court, regulatory body, government agency or other
body, domestic or foreign, is required for the issuance of the Firm
Securities, the Option Warrants, the Representative's Warrants and the
Representative's Securities pursuant to the Prospectus and the
Registration Statement, the performance of this Agreement, the Warrant
Agreement and the Representative's Warrant Agreement and the
transactions contemplated hereby and thereby, including without
limitation, any waiver of any preemptive, first refusal or other rights
that any entity or person may have for the issue and/or sale of any of
the Firm Securities, the Option Warrants, the Representative's Warrants
and the Representative's Securities, except such as have been or may be
obtained under the Act or may be required under state securities or
Blue Sky laws in connection with the Underwriters' purchase and
distribution of the Firm Securities and the Option Securities, and the
Representative's Warrants to be sold by the Company hereunder.
(xiii) All executed agreements, contracts or other documents
or copies of executed agreements, contracts or other documents filed as
exhibits to the Registration Statement to which the Company is a party
or by which it may be bound or to which its assets, properties or
business may be subject have been duly and validly authorized, executed
and delivered by the Company and constitute the legal, valid and
binding agreements of the Company enforceable against the Company in
accordance with their respective terms. The descriptions in the
Registration Statement of agreements, contracts and other documents are
accurate and fairly present the information required to be shown with
respect thereto by Form S-1, and there are no contracts or other
documents which are required by the Act to be described in the
Registration Statement or filed as exhibits to the Registration
Statement which are not described or filed as required, and the
exhibits which have been filed are complete and correct copies of the
documents of which they purport to be copies.
(xiv) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus,
and except as may otherwise be indicated or contemplated herein or
therein, the Company has not (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, (ii)
entered into any transaction other than in the ordinary course of
business, or (iii) declared or paid any dividend or made any other
distribution on or in respect of its capital stock of any class, and
there has not been any change in the capital stock, or any change in
the debt (long or short term) or liabilities or material adverse change
in or affecting the general affairs, management, financial operations,
stockholders' equity or results of operations of the Company.
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(xv) No default exists in the due performance and observance
of any term, covenant or condition of any license, contract, collective
bargaining agreement, indenture, mortgage, installment sale agreement,
lease, deed of trust, voting trust agreement, stockholders agreement,
partnership agreement, note, loan or credit agreement, purchase order,
or any other agreement or instrument evidencing an obligation for
borrowed money, or any other material agreement or instrument to which
the Company is a party or by which the Company may be bound or to which
the property or assets (tangible or intangible) of the Company is
subject or affected.
(xvi) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance
with all federal, state, local, and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours. There are no pending investigations
involving the Company by the U.S. Department of Labor, or any other
governmental agency responsible for the enforcement of such federal,
state, local, or foreign laws and regulations. There is no unfair labor
practice charge or complaint against the Company pending before the
National Labor Relations Board or any lockout, strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened against or
involving the Company, or any predecessor entity, and none has ever
occurred. No representation question exists respecting the employees of
the Company, and no collective bargaining agreement or modification
thereof is currently being negotiated by the Company. No grievance or
arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company. No labor dispute with
the employees of the Company exists, or is imminent.
(xvii) The Company does not maintain, sponsor or contribute to
any program or arrangement that is an "employee pension benefit plan,"
an "employee welfare benefit plan," or a "multiemployer plan" as such
terms are defined in Sections 3(2), 3(1) and 3(37), respectively, of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). The Company does not maintain or contribute,
now or at any time previously, to a defined benefit plan, as defined in
Section 3(35) of ERISA. No ERISA Plan (or any trust created thereunder)
has engaged in a "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code, which could subject the
Company to any tax penalty on prohibited transactions and which has not
adequately been corrected. Each ERISA Plan is in compliance with all
reporting, disclosure and other requirements of the Code and ERISA as
they relate to any such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each ERISA
Plan which is intended to comply with Code Section 401(a), stating that
such ERISA Plan and the attendant trust are qualified thereunder. The
Company has never completely or partially withdrawn from a
"multiemployer plan."
(xviii) Neither the Company nor any of its employees,
directors, stockholders, partners, or affiliates (within the meaning of
the Rules and Regulations) of any of the foregoing has taken or will
take, directly or indirectly, any action designed to or which
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has constituted or which might be expected to cause or result in, under
the Exchange Act, or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities or otherwise.
(xix) Except as otherwise disclosed in the Prospectus, none of
the patents, patent applications, trademarks, service marks, trade
names and copyrights, and licenses and rights to the foregoing
presently owned or held by the Company are in dispute so far as known
by the Company or are in any conflict with the right of any other
person or entity. The Company (i) owns or has the right to use, free
and clear of all liens, charges, claims, encumbrances, pledges,
security interests, defects or other restrictions or equities of any
kind whatsoever, all patents, trademarks, service marks, trade names
and copyrights, technology and licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted or
proposed to be conducted without infringing upon or otherwise acting
adversely to the right or claimed right of any person, corporation or
other entity under or with respect to any of the foregoing and (ii) is
not obligated or under any liability whatsoever to make any payment by
way of royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any patent, trademark, service xxxx, trade name,
copyright, know-how, technology or other intangible asset, with respect
to the use thereof or in connection with the conduct of its business or
otherwise.
(xx) The Company owns and has the unrestricted right to use
all trade secrets, know-how (including all other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), inventions, designs, processes, works of authorship,
computer programs and technical data and information (collectively
herein "intellectual property") that are material to the development,
manufacture, operation and sale of all products and services sold or
proposed to be sold by the Company, free and clear of and without
violating any right, lien, or claim of others, including without
limitation, former employers of its employees; provided, however, that
the possibility exists that other persons or entities, completely
independently of the Company, or its employees or agents, could have
developed trade secrets or items of technical information similar or
identical to those of the Company. The Company is not aware of any such
development of similar or identical trade secrets or technical
information by others.
(xxi) The Company has taken reasonable security measures to
protect the secrecy, confidentiality and value of its intellectual
property in all material respects.
(xxii) The Company has good and marketable title to, or valid
and enforceable leasehold estates in, all items of real and personal
property stated in the Prospectus to be owned or leased by it, free and
clear of all liens, charges, claims, encumbrances, pledges, security
interests, defects, or other restrictions or equities of any kind
whatsoever, other than those referred to in the Prospectus and liens
for taxes not yet due and payable.
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(xxiii) Xxxxxx & Co., whose report is filed with the
Commission as a part of the Registration Statement, are independent
certified public accountants as required by the Act and the Rules and
Regulations.
(xxiv) The Company has caused to be duly executed legally
binding and enforceable agreements pursuant to which each of the
Company's officers, directors, stockholders and holders of securities
exchangeable or exercisable for or convertible into shares of Common
Stock has agreed (i) not to, directly or indirectly, issue, offer,
offer to sell, sell, grant any option for the sale or purchase of,
assign, transfer, pledge, hypothecate or otherwise encumber or dispose
of any shares of Common Stock or securities convertible into,
exercisable or exchangeable for or evidencing any right to purchase or
subscribe for any shares of Common Stock (either pursuant to Rule 144
of the Rules and Regulations or otherwise) or dispose of any beneficial
interest therein for a period of not less than thirteen (13) months
following the effective date of the Registration Statement without the
prior written consent of the Representative and the Company and (ii) to
waive all rights to request or demand the registration pursuant to the
Act of any securities of the Company which are registered in the name
of or beneficially owned by any such holder. During the 13 month period
commencing on the effective date of the Registration Statement, the
Company shall not, without the prior written consent of the
Representative, sell, contract or offer to sell, issue, transfer,
assign, pledge, distribute, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any options, rights or
warrants with respect to any shares of Common Stock. The Company will
cause the Transfer Agent (as hereinafter defined) to xxxx an
appropriate legend on the face of stock certificates representing all
of such securities and to place "stop transfer" orders on the Company's
stock ledgers.
(xxv) There are no claims, payments, issuances, arrangements
or understandings, whether oral or written, for services in the nature
of a finder's or origination fee with respect to the sale of the
Securities hereunder or any other arrangements, agreements,
understandings, payments or issuance with respect to the Company or any
of its officers, directors, stockholders, partners, employees or
affiliates, that may affect the Underwriters' compensation, as
determined by the National Association of Securities Dealers, Inc.
("NASD").
(xxvi) The Common Stock and Redeemable Warrants have been
approved for listing on the American Stock Exchange ("AMEX").
(xxvii) Neither the Company nor any of its officers,
employees, agents or any other person acting on behalf of the Company
has, directly or indirectly, given or agreed to give any money, gift or
similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or
agent of a customer or supplier, or official or employee of any
governmental agency (domestic or foreign) or instrumentality of any
government (domestic or foreign) or any political party or candidate
for office (domestic or foreign) or other person who was, is, or may be
in
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a position to help or hinder the business of the Company (or assist the
Company in connection with any actual or proposed transaction) which
(a) might subject the Company, or any other such person to any damage
or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (b) if not given in the past, might
have had a material adverse effect on the assets, business or
operations of the Company, or (c) if not continued in the future, might
adversely affect the assets, business, condition, financial or
otherwise, earnings, position, properties, value, operations or
prospects of the Company. The Company's internal accounting controls
are sufficient to cause the Company to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(xxviii) Except as set forth in the Prospectus, no officer,
director, stockholder or partner of the Company, or any "affiliate" or
"associate" (as these terms are defined in Rule 405 promulgated under
the Rules and Regulations) of any of the foregoing persons or entities
has or has had, either directly or indirectly, (i) an interest in any
person or entity which (A) furnishes or sells services or products
which are furnished or sold or are proposed to be furnished or sold by
the Company, or (B) purchases from or sells or furnishes to the Company
any goods or services, or (ii) a beneficiary interest in any contract
or agreement to which the Company is a party or by which it may be
bound or affected. Except as set forth in the Prospectus under "Certain
Relationships and Related Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or
among the Company, and any officer, director, or 5% or greater
securityholder of the Company, or any partner, affiliate or associate
of any of the foregoing persons or entities.
(xxix) Any certificate signed by any officer of the Company,
and delivered to the Underwriters or to Underwriters' Counsel (as
defined herein) shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
(xxx) The minute books of the Company have been made available
to the Underwriters and contain a complete summary of all meetings and
actions of the directors (including committees thereof) and
stockholders of the Company, since the time of its incorporation, and
reflect all transactions referred to in such minutes accurately in all
material respects.
(xxxi) Except and to the extent described in the Prospectus,
no holders of any securities of the Company or of any options, warrants
or other convertible or exchangeable securities of the Company have the
right to include any securities issued by the Company in the
Registration Statement or any registration statement to be filed by the
Company or to require the Company to file a registration statement
under the Act and no person or entity holds any anti-dilution rights
with respect to any securities of the Company.
- 12 -
(xxxii) (A) The Company is in compliance with all federal,
state, local or foreign laws, common law, rules, codes, administrative
orders or regulations relating to pollution or protection of human
health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or
wildlife, including without limitation all laws, common law, rules,
codes, administrative orders and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental Laws")
and (B) to the best of the Company's knowledge, there are no events or
circumstances that could form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company relating
to any Hazardous Materials or the violation of any Environmental Laws.
The Company has no reason to believe that it will not receive all
necessary and required approvals, authorizations, validations and
certifications from applicable regulatory authorities to enable the
Company to commence full operations as contemplated in the Registration
Statement and the Prospectus.
(xxxiii) In the ordinary course of its business, the Company
conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company, in the course of
which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly
or in the aggregate, have a material adverse effect on the Company.
(xxxiv) The Company has as of the effective date of the
Registration Statement (i) entered into an employment agreement with
each of Xxxx X. Xxxxxxx, Xxxx X. Xxxxxxx, Xxxxx X. XxXxxxxxx, Xxxxxxxx
Xxxxxxx, Ph.D. and Xxxxxxx X. Xxxxxxx in the forms filed as Exhibits
10.1, 10.2, 10.3, 10.4 and 10.5, respectively, to the Registration
Statement and (ii) purchased term key person insurance on the lives of
Messrs. Burkart, Magnell, XxXxxxxxx and Kilambi in the amount of $1
million each, which policies name the Company as the sole beneficiary
thereof.
(xxxv) As of the date hereof, the Company does not have more
than 15,000,000 shares of Common Stock issued and outstanding
(including securities with equivalent rights as the Common Stock and
shares of Common Stock, or such equivalent securities, issuable upon
exercise of any and all options, warrants and other contract rights and
securities convertible directly or indirectly into shares of Common
Stock or such equivalent securities, but excluding up to 1,235,000
shares of Common Stock issuable
- 13 -
upon the exercise of options granted under the Company's 1996 Stock
Option Plan at prices not less than the initial public offering price
per Share).
(xxxvi) The Company confirms as of the date hereof that it is
in compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it or any affiliate
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Commission or with
the Florida Department of Banking and Finance (the "Department"),
whichever date is later, or if the information reported or incorporated
by reference in the Prospectus, if any, concerning the Company's, or
any affiliate's, business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Company will provide
the Department notice of such business or change, as appropriate, in a
form acceptable to the Department.
(xxxvii) The Company has furnished the Representative and
Underwriters' Counsel with a true and complete copy of the Selling
Stockholder SEC Documents. As used herein, the "Selling Stockholder SEC
Documents" shall mean all documents (other than preliminary material)
that the Selling Stockholder has filed or has been required to file
with the Commission since January 1, 1994. As of its filing date (and,
with respect to any registration statement, the date on which it or any
post-effective amendment was declared effective), each Selling
Stockholder SEC Document was in compliance, in all material respects,
with the applicable requirements of the Act and the Exchange Act,
contained no untrue statement of a material fact and did not omit any
statement of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the
Selling Stockholder included in the Selling Stockholder SEC Documents
complied, at the time of filing with the Commission (and, with respect
to any registration statement, at the time it was declared effective),
as to form, in all material respects, with applicable accounting
requirements and the published rules and regulations of the Commission
with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved and fairly present, in all material respects, the
consolidated financial position of the Selling Stockholder and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations for the periods presented. Since January 1,
1996, there has not been any change in the business, assets, condition,
financial or otherwise, or results of operations of the Selling
Stockholder or any of its subsidiaries which might materially and
adversely affect the condition, financial or otherwise, or the
earnings, position, prospects, stockholders' equity, value, operation,
properties, business or results of operations of the Company.
(xxxviii) The Company is not, and upon the issuance and sale
of the Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus under the caption
"Use of Proceeds" will not be, an "investment
- 14 -
company" or an entity "controlled" by an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended
(the "1940 Act").
(xxxix) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparations of financial statements in conformity with
generally accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorizations; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xl) The Company has entered into a warrant agreement
substantially in the form filed as Exhibit 4.2 to the Registration
Statement (the "Warrant Agreement") with the Representative and The
Bank of New York, as Warrant Agent, in form and substance satisfactory
to the Representative, with respect to the Redeemable Warrants and
providing for the payment of the commission contemplated by Section
4(a)(xxi).
(b) The Selling Stockholder represents and warrants to, and agrees
with, each of the Underwriters as of the date hereof, and as of the Closing Date
and each Option Closing Date, if any, as follows:
(i) The Selling Stockholder has full legal right, power and
authority to enter into this Agreement, the Power of Attorney with
______________ and ______________, or either of them, as
attorney-in-fact (the "Attorney-in-Fact") in the form heretofore
furnished to you (the "Power of Attorney") and the Custody Agreement
with ____________________________ as custodian (the "Custodian") in the
form heretofore furnished to you (the "Custody Agreement"). The Selling
Stockholder has full legal right, power and authority to deliver and
sell the Option Shares, enter into this Agreement, the Power of
Attorney and the Custody Agreement and to consummate the transactions
provided for in this Agreement, the Power of Attorney and the Custody
Agreement; and this Agreement, the Power of Attorney and the Custody
Agreement have each been duly and properly authorized, executed and
delivered by the Selling Stockholder. Each of this Agreement, the Power
of Attorney and the Custody Agreement constitutes a legal, valid and
binding agreement of the Selling Stockholder enforceable against the
Selling Stockholder in accordance with its terms, and none of the
Selling Stockholder's delivery and sale of the Option Shares, execution
or delivery of this Agreement, the Power of Attorney or the Custody
Agreement, its performance hereunder and thereunder, or its
consummation of the transactions contemplated herein and therein,
conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the
creation or imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any kind
whatsoever upon, any
- 15 -
property or assets (tangible or intangible) of the Selling Stockholder
pursuant to the terms of (i) the certificate of incorporation or
by-laws of the Selling Stockholder, (ii) any license, contract,
collective bargaining agreement, indenture, mortgage, deed of trust,
lease, voting trust agreement, stockholders agreement, note, loan or
credit agreement or any other agreement or instrument to which the
Selling Stockholder is a party or by which the Selling Stockholder is
or may be bound or to which either of its properties or assets
(tangible or intangible) is or may be subject, or any indebtedness, or
(iii) any statute, judgment, decree, order, rule or regulation
applicable to the Selling Stockholder of any arbitrator, court,
regulatory body or administrative agency or other governmental agency
or body (including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having
jurisdiction over the Selling Stockholder or any of its activities or
properties. The Attorney-in-Fact, acting alone, is authorized to
execute and deliver this Agreement and the Custody Agreement and the
certificates referred to in Section 6(k) hereof on behalf of the
Selling Stockholder, to authorize the delivery of the Option Shares to
be sold by the Selling Stockholder under this Agreement and to duly
endorse (in blank or otherwise) the certificate or certificates
representing such Option Shares or a stock power or powers with respect
thereto, to accept payment therefor, and otherwise to act on behalf of
the Selling Stockholder in connection with this Agreement and the
Custody Agreement.
(ii) No consent, approval, authorization or order of, and no
filing with, any court, regulatory body, government agency or other
body, domestic or foreign, is required for the delivery and sale of the
Option Shares pursuant to the Prospectus and the Registration
Statement, the performance of this Agreement, the Power of Attorney and
the Custody Agreement and the transactions contemplated hereby and
thereby, including without limitation, any waiver of any preemptive,
first refusal or other rights that any entity or person may have for
the delivery and sale of any of the Option Shares, except such as have
been or may be obtained under the Act or may be required under state
securities or Blue Sky laws in connection with the Underwriters'
purchase and distribution of the Firm Securities and the Option
Securities.
(iii) At the date hereof the Selling Stockholder has, and at
the time of delivery of the Option Shares to be sold by the Selling
Stockholder to the several Underwriters, the Selling Stockholder will
have full right, power and authority to sell, assign, transfer and
deliver the Option Shares to be sold by the Selling Stockholder
hereunder. At the date hereof the Selling Stockholder is, and at the
time of delivery of the Option Shares to be sold by the Selling
Stockholder, the Selling Stockholder will be, the lawful owner of and
has and will have, good and marketable title to such Option Shares free
and clear of any liens, charges, pledges, equities, encumbrances,
security interests, claims, community property rights, restrictions on
transfer or other defects in title. Upon delivery of and payment for
the Option Shares to be sold by the Selling Stockholder hereunder, good
and marketable title to such Option Shares will pass to the
Underwriters, free and clear of any liens, charges, pledges, equities,
encumbrances, security interests, claims, community property rights,
restrictions on transfer or other defects in title. Except as
- 16 -
described in the Registration Statement and the Prospectus (or, if
there is no Prospectus, the most recent Preliminary Prospectus) or
created hereby, there are no outstanding options, warrants, rights, or
other agreements or arrangements requiring the Selling Stockholder at
any time to transfer any Common Stock to be sold hereunder by the
Selling Stockholder. The Option Shares are not and will not be subject
to any preemptive or other similar rights of any stockholder. All
corporate action required to be taken for the delivery and sale of the
Option Shares has been duly and validly taken; and the certificates
representing the Option shares are in due and proper form.
(iv) At the time when the Registration Statement becomes or
became effective, and at all times subsequent thereto up to and
including the Closing Date and the Option Closing Date, the
Registration Statement and any amendments thereto will not contain any
untrue statement of a material fact regarding the Selling Stockholder
or omit to state a material fact regarding the Selling Stockholder
required to be stated therein or necessary in order to make the
statements therein regarding the Selling Stockholder not misleading,
and the Prospectus (and any supplements thereto) (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) will not
contain any untrue statement of a material fact regarding the Selling
Stockholder or omit to state a material fact regarding the Selling
Stockholder required to be stated therein or necessary in order to make
the statements therein regarding the Selling Stockholder, in light of
the circumstances under which they were made, not misleading, and the
Selling Stockholder is unaware of any material misstatement in or
omission from the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus)
or of any material adverse information regarding the Selling
Stockholder and his, her or its security holdings which is not set
forth in the Registration Statement and the Prospectus (or, if the
Prospectus is not then in existence, in the most recent Preliminary
Prospectus).
(v) Neither the Selling Stockholder nor any of its employees,
directors, stockholders, partners, or affiliates (within the meaning of
the Rules and Regulations) of any of the foregoing has taken or will
take, directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in, under the
Exchange Act, or otherwise, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities or otherwise.
(vi) There is not pending or threatened against the Selling
Stockholder any action, suit or proceeding which (A) questions the
validity of this Agreement, the Power of Attorney, the Custody
Agreement or of any action taken or to be taken by the Selling
Stockholder pursuant to or in connection with this Agreement, the Power
of Attorney, or the Custody Agreement or (B) is required to be
disclosed in the Registration Statement which is not so disclosed, and
such actions, suits or proceedings as are summarized in the
Registration Statement, if any, are accurately summarized.
- 17 -
(vii) On the effective date of the Prospectus, certificates in
negotiable form for the Option Shares to be sold by the Selling
Stockholder under this Agreement on the Option Closing Date, if
requested by the Underwriters pursuant to Section 2(b) hereof, together
with a stock power or powers duly endorsed in blank by the Selling
Stockholder, will have been placed in custody with the Custodian for
the purpose of effecting delivery hereunder and thereunder.
(viii) The Selling Stockholder does not have any registration
rights or other similar rights with respect to any securities of the
Company; and the Selling Stockholder does not have any right of first
refusal or other similar right to purchase any securities of the
Company upon the issuance or sale thereof by the Company or upon the
sale thereof by any other stockholder of the Company.
(ix) The Selling Stockholder has not since the filing of the
initial Registration Statement (i) sold, bid for, purchased, attempted
to induce any person to purchase, or paid anyone any compensation for
soliciting purchases of Common Stock, or (ii) paid or agreed to pay to
any person any compensation for soliciting another to purchase any
securities of the Company (except for the sale of the Option Shares to
the Underwriters under this Agreement and except as otherwise permitted
by law).
(x) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriters in connection with (i) the
sale by the Selling Stockholder of the Option Shares, (ii) the purchase
by the Underwriters of the Option Shares from the Selling Stockholder,
(iii) the consummation by the Selling Stockholder of any of its
obligations under this Agreement, or (iv) resales of the Option Shares
in connection with the distribution contemplated hereby.
(xi) Any certificate signed by or on behalf of the Selling
Stockholder and delivered to the Underwriters shall he deemed a
representation and warranty by the Selling Stockholder to the
Underwriters as to the matters covered thereby.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter,
severally and not jointly, agrees to purchase from the Company at a price of
$_______ [92% of the public offering price] per Share and $_______ [92% of the
public offering price] per Redeemable Warrant, that number of Firm Securities
set forth in Schedule A opposite the name of such Underwriter, subject to such
adjustment as the Representative in its sole discretion shall make to eliminate
any sales or purchases of fractional shares, plus any additional number of Firm
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 11 hereof.
- 18 -
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, (i) the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of an
additional 750,000 Redeemable Warrants at a price of $______ [92% of the public
offering price] per Redeemable Warrant and (ii) the Selling Stockholder hereby
grants an option to the Underwriters, severally and not jointly, to purchase all
or any part of an additional 750,000 shares of Common Stock at a price of
$______ [92% of the public offering price] per share of Common Stock. The option
granted hereby will expire forty-five (45) days after (i) the date the
Registration Statement becomes effective, if the Company has elected not to rely
on Rule 430A under the Rules and Regulations, or (ii) the date of this Agreement
if the Company has elected to rely upon Rule 430A under the Rules and
Regulations, and may be exercised in whole or in part from time to time only for
the purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Firm Securities upon notice by the
Representative to the Company and the Selling Stockholder setting forth the
number of Option Securities as to which the several Underwriters are then
exercising the option and the time and date of payment and delivery for any such
Option Securities. Any such time and date of delivery (an "Option Closing Date")
shall be determined by the Representative, but shall not be later than three (3)
full business days after the exercise of said option, nor in any event prior to
the Closing Date, as hereinafter defined, unless otherwise agreed upon by the
Representative and the Company. Nothing herein contained shall obligate the
Underwriters to make any over-allotments. No Option Securities shall be
delivered unless the Firm Securities shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates
for, the Firm Securities shall be made at the offices of the Representative at
0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx 00000, or at such other
place as shall be agreed upon by the Representative and the Company. Such
delivery and payment shall be made at 10:00 a.m. (New York City time) on
____________, 1996 or at such other time and date as shall be agreed upon by the
Representative and the Company, but not less than three (3) nor more than five
(5) full business days after the effective date of the Registration Statement
(such time and date of payment and delivery being herein called the "Closing
Date"). In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
office of the Representative or at such other place as shall be agreed upon by
the Representative and the Company on each Option Closing Date as specified in
the notice from the Representative to the Company and the Selling Stockholder.
Delivery of the certificates for the Firm Securities and the Option Securities,
if any, shall be made to the Underwriters against payment by the Underwriters,
severally and not jointly, of the purchase price for the Firm Securities and the
Option Securities, if any, to the order of the Company for the Firm Securities
and the Option Warrants, if any, and to the order of the Selling Stockholder for
the Option Shares, if any, by New York Clearing House funds. In the event such
option is exercised, each of the Underwriters, acting severally and not jointly,
shall purchase that proportion of the total number of Option Securities then
being purchased which the number of Firm Securities set forth in Schedule A
hereto opposite the name of such Underwriter bears to the total number of Firm
- 19 -
Securities, subject in each case to such adjustments as the Representative in
its discretion shall make to eliminate any sales or purchases of fractional
shares. Certificates for the Firm Securities and the Option Securities, if any,
shall be in definitive, fully registered form, shall bear no restrictive legends
and shall be in such denominations and registered in such names as the
Underwriters may request in writing at least two (2) business days prior to the
Closing Date or the relevant Option Closing Date, as the case may be. The
certificates for the Firm Securities and the Option Securities, if any, shall be
made available to the Representative at such office or such other place as the
Representative may designate for inspection, checking and packaging no later
than 9:30 a.m. on the last business day prior to the Closing Date or the
relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representative Representative's Warrants at a purchase price of $.0001 per
warrant, which Representative's Warrants shall entitle the holders thereof to
purchase an aggregate of 500,000 shares of Common Stock and/or 500,000
Redeemable Warrants. The Representative's Warrants shall be exercisable for a
period of four (4) years commencing one (1) year from the effective date of the
Registration Statement at a price equaling one hundred twenty percent (120%) of
the respective initial public offering price of the Shares and the Redeemable
Warrants. The Representative's Warrant Agreement and form of Warrant Certificate
shall be substantially in the form filed as Exhibit 4.4 to the Registration
Statement. Payment for the Representative's Warrants shall be made on the
Closing Date.
3. Public Offering of the Shares and Redeemable Warrants. As soon after
the Registration Statement becomes effective as the Representative deems
advisable, the Underwriters shall make a public offering of the Shares and
Redeemable Warrants (other than to residents of or in any jurisdiction in which
qualification of the Shares and Redeemable Warrants is required and has not
become effective) at the price and upon the other terms set forth in the
Prospectus. The Representative may from time to time increase or decrease the
respective public offering price after distribution of the Shares and Redeemable
Warrants has been completed to such extent as the Representative, in its sole
discretion, deems advisable. The Underwriters may enter into one of more
agreements as the Underwriters, in each of their sole discretion, deem advisable
with one or more broker-dealers who shall act as dealers in connection with such
public offering.
4. Covenants and Agreements of the Company and the Selling Stockholder.
(a) The Company covenants and agrees with each of the Underwriters
as follows:
(i) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective
as promptly as practicable and will not at any time, whether before or
after the effective date of the Registration Statement, file any
amendment to the Registration Statement or supplement to the Prospectus
or file any document under the Act or Exchange Act before termination
of the offering of the Shares and Redeemable Warrants by the
Underwriters of which the Representative shall not
- 20 -
previously have been advised and furnished with a copy, or to which the
Representative shall have objected or which is not in compliance with
the Act, the Exchange Act or the Rules and Regulations.
(ii) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representative and confirm the
notice in writing (i) when the Registration Statement, as amended,
becomes effective, if the provisions of Rule 430A promulgated under the
Act will be relied upon, when the Prospectus has been filed in
accordance with said Rule 430A and when any post-effective amendment to
the Registration Statement becomes effective; (ii) of the issuance by
the Commission of any stop order or of the initiation, or the
threatening, of any proceeding suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of
the Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto, or the institution of proceedings for that purpose;
(iii) of the issuance by the Commission or by any state securities
commission of any proceedings for the suspension of the qualification
of any of the Securities for offering or sale in any jurisdiction or of
the initiation, or the threatening, of any proceeding for that purpose;
(iv) of the receipt of any comments from the Commission; and (v) of any
request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information. If the Commission or any state securities
commission shall enter a stop order or suspend such qualification at
any time, the Company will make every effort to obtain promptly the
lifting of such order.
(iii) The Company shall file the Prospectus (in form and
substance satisfactory to the Representative) or transmit the
Prospectus by a means reasonably calculated to result in filing with
the Commission pursuant to Rule 424(b)(1) (or, if applicable and if
consented to by the Representative, pursuant to Rule 424(b)(4)) not
later than the Commission's close of business on the earlier of (i) the
second business day following the execution and delivery of this
Agreement and (ii) the fifth business day after the effective date of
the Registration Statement.
(iv) The Company will give the Representative notice of its
intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any amendment or
supplement to the Prospectus (including any revised prospectus which
the Company proposes for use by the Underwriters in connection with the
offering of the Securities which differs from the corresponding
prospectus on file at the Commission at the time the Registration
Statement becomes effective, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) of the Rules and
Regulations), and will furnish the Representative with copies of any
such amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any such
prospectus to which the Representative or Xxxxxx, Xxxxxxxxxx &
Sutcliffe LLP ("Underwriters' Counsel") shall object.
- 21 -
(v) The Company shall endeavor in good faith, in cooperation
with the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Securities for offering and
sale under the securities laws of such jurisdictions as the
Representative may designate to permit the continuance of sales and
dealings therein for as long as may be necessary to complete the
distribution, and shall make such applications, file such documents and
furnish such information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a foreign
corporation or file a general or limited consent to service of process
in any such jurisdiction. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Representative agrees
that such action is not at the time necessary or advisable, use all
reasonable efforts to file and make such statements or reports at such
times as are or may reasonably be required by the laws of such
jurisdiction to continue such qualification.
(vi) During the time when a prospectus is required to be
delivered under the Act, the Company shall use all reasonable efforts
to comply with all requirements imposed upon it by the Act and the
Exchange Act, as now and hereafter amended and by the Rules and
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and the Prospectus, or any
amendments or supplements thereto. If at any time when a prospectus
relating to the Securities is required to be delivered under the Act,
any event shall have occurred as a result of which, in the opinion of
counsel for the Company or Underwriters' Counsel, the Prospectus, as
then amended or supplemented, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the
Act, the Company will notify the Representative promptly and prepare
and file with the Commission an appropriate amendment or supplement in
accordance with Section 10 of the Act, each such amendment or
supplement to be satisfactory to Underwriters' Counsel, and the Company
will furnish to the Underwriters copies of such amendment or supplement
as soon as available and in such quantities as the Underwriters may
request.
(vii) As soon as practicable, but in any event not later than
forty-five (45) days after the end of the 12-month period beginning on
the day after the end of the fiscal quarter of the Company during which
the effective date of the Registration Statement occurs (ninety (90)
days in the event that the end of such fiscal quarter is the end of the
Company's fiscal year), the Company shall make generally available to
its security holders, in the manner specified in Rule 158(b) of the
Rules and Regulations, and to the Representative, an earnings statement
which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the Act and Rule 158(a) of the
Rules and Regulations, which statement need not be audited unless
required by the Act, covering a period of at least twelve (12)
consecutive months after the effective date of the Registration
Statement.
- 22 -
(A) During a period of seven (7) years after the date
hereof, the Company will furnish to its stockholders, as soon as
practicable, annual reports (including financial statements audited
by independent public accountants) and unaudited quarterly reports
of earnings, and will deliver to the Representative:
(B) concurrently with furnishing such quarterly reports to
its stockholders, statements of income of the Company for each
quarter in the form furnished to the Company's stockholders and
certified by the Company's principal financial or accounting
officer;
(C) concurrently with furnishing such annual reports to
its stockholders, a balance sheet of the Company as at the end of
the preceding fiscal year, together with statements of operations,
stockholders' equity, and cash flows of the Company for such fiscal
year, accompanied by a copy of the certificate thereon of
independent certified public accountants;
(D) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders;
(E) as soon as they are available, copies of all reports
and financial statements furnished to or filed with the Commission,
the NASD or any securities exchange;
(F) every press release and every material news item or
article of interest to the financial community in respect of the
Company, or its affairs, which was released or prepared by or on
behalf of the Company; and
(G) any additional information of a public nature
concerning the Company (and any future subsidiary) or its
businesses which the Representative may request.
During such seven-year period, if the Company has an active
subsidiary, the foregoing financial statements will be on a
consolidated basis to the extent that the accounts of the Company and
any of its subsidiaries are consolidated, and will be accompanied by
similar financial statements for any significant subsidiary which is
not so consolidated.
(viii) The Company will maintain a transfer agent and warrant
agent ("Transfer Agent") and, if necessary under the jurisdiction of
incorporation of the Company, a Registrar (which may be the same entity
as the Transfer Agent) for its Common Stock and Redeemable Warrants.
(ix) The Company will furnish to the Representative or on the
Representative's order, without charge, at such place as the
Representative may designate, copies of each Preliminary Prospectus,
the Registration Statement and any pre-effective or post-effective
- 23 -
amendments thereto (two of which copies will be signed and will include
all financial statements and exhibits), the Prospectus, and all
amendments and supplements thereto, including any prospectus prepared
after the effective date of the Registration Statement, in each case as
soon as available and in such quantities as the Representative may
request.
(x) On or before the effective date of the Registration
Statement, the Company shall provide the Representative with true
original copies of duly executed, legally binding and enforceable
agreements pursuant to which, for a period of thirteen (13) months from
the effective date of the Registration Statement, each of the Company's
stockholders and holders of securities exchangeable or exercisable for
or convertible into shares of Common Stock agrees that it or he or she
(i) will not, directly or indirectly, issue, offer to sell, sell, grant
an option for the sale or purchase of, assign, transfer, pledge,
hypothecate or otherwise encumber or dispose of any shares of Common
Stock or securities convertible into, exercisable or exchangeable for
or evidencing any right to purchase or subscribe for any shares of
Common Stock (either pursuant to Rule 144 of the Rules and Regulations
or otherwise) or dispose of any beneficial interest therein without the
prior consent of the Representative (collectively, the "Lock-up
Agreements") and (ii) waives, during such thirteen (13) month period,
any and all rights to request or demand the registration pursuant to
the Act, of any securities of the Company which are registered in the
name of or beneficially owned by it or he or she, respectively. During
the thirteen (13) month period commencing on the effective date of the
Registration Statement, the Company shall not, without the prior
written consent of the Representative, sell, contract or offer to sell,
issue, transfer, assign, pledge, distribute, or otherwise dispose of,
directly or indirectly, any shares of Common Stock or any options,
rights or warrants with respect to any shares of Common Stock. On or
before the Closing Date, the Company shall deliver instructions to the
Transfer Agent authorizing it to place appropriate legends on the
certificates representing the securities subject to the Lock-up
Agreements and to place appropriate stop transfer orders on the
Company's ledgers.
(xi) Neither the Company nor any of its officers, directors,
stockholders, nor any of its affiliates (within the meaning of the
Rules and Regulations) will take, directly or indirectly, any action
designed to, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any
securities of the Company.
(xii) The Company shall apply the net proceeds from the sale
of the Firm Securities and the Option Warrants, if any, in the manner,
and subject to the conditions, set forth under "Use of Proceeds" in the
Prospectus. No portion of the net proceeds will be used, directly or
indirectly, to acquire any securities issued by the Company.
(xiii) The Company shall timely file all such reports, forms
or other documents as may be required (including, but not limited to, a
Form SR as may be required
- 24 -
pursuant to Rule 463 under the Act) from time to time, under the Act,
the Exchange Act, and the Rules and Regulations, and all such reports,
forms and documents filed will comply as to form and substance with the
applicable requirements under the Act, the Exchange Act, and the Rules
and Regulations.
(xiv) The Company shall furnish to the Representative as early
as practicable prior to each of the date hereof, the Closing Date and
each Option Closing Date, if any, but no later than two (2) full
business days prior thereto, a copy of the latest available unaudited
interim financial statements of the Company (which in no event shall be
as of a date more than thirty (30) days prior to the date of the
Registration Statement) which have been read by the Company's
independent public accountants, as stated in their letters to be
furnished pursuant to Sections 6(m) and 6(n) hereof.
(xv) The Company shall cause the Common Stock and Redeemable
Warrants to be listed on AMEX and, for a period of seven (7) years from
the date hereof, use its best efforts to maintain the AMEX listing of
the Common Stock and the Redeemable Warrants to the extent outstanding.
(xvi) For a period of five (5) years from the Closing Date,
the Company shall furnish to the Representative at the Company's sole
expense, (i) daily consolidated transfer sheets relating to the Common
Stock and Redeemable Warrants (ii) the list of holders of all of the
Company's securities and (iii) a Blue Sky "Trading Survey" for
secondary sales of the Company's securities prepared by counsel to the
Company.
(xvii) As soon as practicable, (i) but in no event more than
five (5) business days before the effective date of the Registration
Statement, file a Form 8-A with the Commission providing for the
registration under the Exchange Act of the Securities and (ii) but in
no event more than thirty (30) days after the effective date of the
Registration Statement, take all necessary and appropriate actions to
be included in Standard and Poor's Corporation Records and Xxxxx'x OTC
Manual and to continue such inclusion for a period of not less than
seven (7) years.
(xviii) The Company hereby agrees that it will not, for a
period of thirteen (13) months from the effective date of the
Registration Statement, adopt, propose to adopt or otherwise permit to
exist any employee, officer, director, consultant or compensation plan
or similar arrangement permitting (i) the grant, issue, sale or entry
into any agreement to grant, issue or sell any option, warrant or other
contract right (x) at an exercise price that is less than the greater
of the public offering price of the Shares set forth herein and the
fair market value on the date of grant or sale or (y) to any of its
executive officers or directors or to any holder of 5% or more of the
Common Stock, except as provided in subsection (ii) of this
subparagraph; (ii) the maximum number of shares of Common Stock or
other securities of the Company purchasable at any time pursuant to
options or warrants issued by the Company to exceed the aggregate
2,000,000 shares reserved for future issuance under the Company's 1996
Stock Option
- 25 -
Plan described in the "Executive Compensation-Stock Options" section of
the Prospectus; (iii) the payment for such securities with any form of
consideration other than cash; or (iv) the existence of stock
appreciation rights, phantom options or similar arrangements.
(xix) Until the completion of the distribution of the
Securities, the Company shall not, without the prior written consent of
the Representative and Underwriters' Counsel, issue, directly or
indirectly, any press release or other communication or hold any press
conference with respect to the Company or its activities or the
offering contemplated hereby, other than trade releases issued in the
ordinary course of the Company's business consistent with past
practices with respect to the Company's operations.
(xx) For a period equal to the lesser of (i) seven (7) years
from the date hereof, and (ii) the sale to the public of the
Representative's Securities, the Company will not take any action or
actions which may prevent or disqualify the Company's use of Form S-1
(or other appropriate form) for the registration under the Act of the
Representative's Securities. The Company further agrees to use its best
efforts to file such post-effective amendments to the Registration
Statement, as may be necessary, in order to maintain its effectiveness
and to keep such Registration Statement effective while any of the
Redeemable Warrants or Representative's Warrants remain outstanding.
(xxi) Commencing one year and one day from the date hereof, if
the Company engages the Representative as a warrant solicitation agent
under the terms of the Warrant Agreement, the Company shall pay the
Representative a commission equal to five percent (5%) of the exercise
price of the Redeemable Warrants, payable on the date of the exercise
thereof on the terms provided in the Warrant Agreement; provided,
however, the Representative shall be entitled to receive the commission
contemplated by this Section 4(a)(xxi) only if: (i) the Representative
has provided actual services in connection with the solicitation of the
exercise of a Redeemable Warrant by a Warrantholder and (ii) the
Warrantholder exercising a Redeemable Warrant affirmatively designates
in writing on the exercise form on the reverse side of the Redeemable
Warrant Certificate that the exercise of such Warrantholder's
Redeemable Warrant was solicited by the Representative.
(xxii) Prior to the Closing Date, the Company shall have
converted all short-term debt payable to the Selling Stockholder
(including any additional cash advances made by the Selling Stockholder
to the Company prior to the Closing Date which are not (or would not
be) reflected as debt on the Company's balance sheet) into equity as
partial consideration for the Company's previous issuance of 15,000,000
shares of Common Stock to the Selling Stockholder.
(b) The Selling Stockholder covenants and agrees with each of the
Underwriters as follows:
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(i) The Selling Stockholder will not, directly or indirectly,
without the prior written consent of the Company and the
Representative, offer, offer to sell, sell, grant an option for the
sale or purchase of, assign, transfer, pledge, hypothecate or otherwise
encumber or dispose of any shares of Common Stock or any securities
convertible into, exchangeable or exercisable for, or evidencing any
right to purchase or subscribe for, any shares of Common Stock (either
pursuant to Rule 144 of the Rules and Regulations or otherwise) or
dispose of any beneficial interest therein for a period of thirteen
(13) months after the date hereof, except pursuant to this Agreement,
and neither the Selling Stockholder nor any of its officers, directors,
stockholders, nor any of its affiliates (within the meaning of the
Rules and Regulations) will take, directly or indirectly, any action
designed to, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any
securities of the Company.
(ii) The Selling Stockholder consents to the use of the
Prospectus and any amendment or supplement thereto by the Underwriters
and all dealers to whom the Securities may be sold, both in connection
with the offering or sale of the Securities and for such period of time
thereafter as the Prospectus is required by law to be delivered in
connection therewith.
(iii) The Selling Stockholder will review the Prospectus and
will comply with all agreements and satisfy all conditions on its part
to be complied with or satisfied pursuant to this Agreement, the
Custody Agreement and the Power of Attorney at or prior to any Option
Closing Date, if any, and will advise its Attorney-in-Fact prior to any
Option Closing Date, if any statement to be made on behalf of the
Selling Stockholder in the certificates contemplated by Section 6(k)
hereof would be inaccurate if made as of such Option Closing Date.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date
and the Option Closing Date (to the extent not paid at the Closing Date) all
expenses and fees (other than fees of Underwriters' Counsel, except as provided
in (iv) below) incident to the performance of the obligations of the Company and
the Selling Stockholder under this Agreement, the Warrant Agreement and the
Representative's Warrant Agreement (and, in the case of the Selling Stockholder,
under the Custody Agreement and the Power of Attorney), including, without
limitation, (i) the fees and expenses of accountants and counsel for the Company
and the Selling Stockholder, (ii) all costs and expenses incurred in connection
with the preparation, duplication, printing (including mailing and handling
charges), filing, delivery and mailing (including the payment of postage with
respect thereto) of the Registration Statement and the Prospectus and any
amendments and supplements thereto and the printing, mailing (including the
payment of postage with respect thereto) and delivery of this Agreement, the
Warrant Agreement, the Representative's Warrant Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreements, and related documents, including
the cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments thereof or supplements
- 27 -
thereto supplied to the Underwriters and such dealers as the Underwriters may
request, in quantities as hereinabove stated, (iii) the printing, engraving,
issuance and delivery of the Securities including, but not limited to, (x) the
purchase by the Underwriters of the Firm Securities and the Option Securities
from the Company and the Selling Stockholder, as the case may be, and the
purchase by the Representative of the Representative's Warrants from the
Company, (y) the consummation by each of the Company and the Selling Stockholder
of any of its obligations under this Agreement, the Warrant Agreement and the
Representative's Warrant Agreement (and, in the case of the Selling Stockholder,
under the Custody Agreement and the Power of Attorney), and (z) resale of the
Firm Securities and the Option Securities by the Underwriters in connection with
the distribution contemplated hereby, (iv) the qualification of the Securities
under state or foreign securities or "Blue Sky" laws and determination of the
status of such securities under legal investment laws, including the costs of
printing and mailing the "Preliminary Blue Sky Memorandum", the "Supplemental
Blue Sky Memorandum" and "Legal Investments Survey," if any, and disbursements
and fees of counsel in connection therewith, (v) sales and marketing costs and
expenses, including but not limited to costs and expenses in connection with the
"road show", information meetings and presentations, bound volumes and
prospectus memorabilia and "tomb-stone" advertisement expenses, (vi) costs and
expenses in connection with due diligence investigations, including but not
limited to the fees of any independent counsel, expert or consultant retained,
(vii) fees and expenses of the Transfer Agent and registrar and all issue and
transfer taxes, if any, (viii) applications for assignment of a rating of the
Securities by qualified rating agencies, (ix) the fees payable to the Commission
and the NASD, and (x) the fees and expenses incurred in connection with the
quotation of the Securities on AMEX and any other exchange.
(b) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 6 or Section 12, the Company shall
reimburse and indemnify the Underwriters for all of their actual out-of-pocket
expenses, including the fees and disbursements of Underwriters' Counsel, less
any amounts already paid pursuant to Section 5(c) hereof.
(c) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 5, it will pay to the
Representative on the Closing Date by certified or bank cashier's check or, at
the election of the Representative, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance equal to three
percent (3%) of the gross proceeds received by the Company from the sale of the
Firm Securities, $50,000 of which has been paid to date. In the event the
Representative elects to exercise the over-allotment option described in Section
2(b) hereof, the Company agrees to pay to the Representative on the Option
Closing Date (by certified or bank cashier's check or, at the Representative's
election, by deduction from the proceeds of the offering) a non-accountable
expense allowance equal to three percent (3%) of the gross proceeds received by
the Company and the Selling Stockholder from the sale of the Option Securities.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company and the Selling Stockholder herein
as of the date hereof and as of the Closing Date
- 28 -
and each Option Closing Date, if any, as if they had been made on and as of the
Closing Date or each Option Closing Date, as the case may be; the accuracy on
and as of the Closing Date or each Option Closing Date, if any, of the
statements of the officers of the Company and the Selling Stockholder made
pursuant to the provisions hereof; and the performance by each of the Company
and the Selling Stockholder on and as of the Closing Date and each Option
Closing Date, if any, of its covenants and obligations hereunder and to the
following further conditions:
(a) The Registration Statement shall have become effective not
later than 12:00 P.M., New York time, on the date of this Agreement or such
later date and time as shall be consented to in writing by the Representative,
and, at the Closing Date and each Option Closing Date, if any, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending or contemplated by the Commission and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Underwriters' Counsel. If the Company has elected to
rely upon Rule 430A of the Rules and Regulations, the price of the Shares and
Redeemable Warrants and any price-related information previously omitted from
the effective Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the Rules
and Regulations within the prescribed time period and, prior to the Closing
Date, the Company shall have provided evidence satisfactory to the
Representative of such timely filing, or a post-effective amendment providing
such information shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A of the Rules and Regulations.
(b) The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representative's opinion, is material, or omits to state a
fact which, in the Representative's opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that the
Prospectus, or any supplement thereto, contains an untrue statement of fact
which, in the Representative's opinion, is material, or omits to state a fact
which, in the Representative's opinion, is material and is required to be stated
therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to each of the Closing Date and each Option Closing
Date, if any, the Representative shall have received from Underwriters' Counsel,
such opinion or opinions with respect to the organization of the Company, the
validity of the Securities, the Registration Statement, the Prospectus and other
related matters as the Representative may request and Underwriters' Counsel
shall have received such papers and information as they request to enable them
to pass upon such matters.
(d) At the Closing Date, the Underwriters shall have received the
favorable opinion of Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Xxxxxxx,
counsel to the Company, dated the Closing Date, addressed to the Underwriters
and in form and substance satisfactory to Underwriters' Counsel, to the effect
that:
- 29 -
(i) the Company (A) has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction, (B) is duly qualified and licensed and in good standing
as a foreign corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations requires
such qualification or licensing, and (C) has all requisite corporate
power and authority, and has obtained any and all necessary
authorizations, approvals, orders, licenses, certificates, franchises
and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the Company is and
has been doing business in compliance with all such authorizations,
approvals, orders, licenses, certificates, franchises and permits and
all federal, state and local laws, rules and regulations; and, the
Company has not received any notice of proceedings relating to the
revocation or modification of any such authorization, approval, order,
license, certificate, franchise, or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially adversely affect the business, operations,
condition, financial or otherwise, or the earnings, business affairs,
position, prospects, value, operation, properties, or results of
operations of the Company. The disclosures in the Registration
Statement concerning the effects of federal, state and local laws,
rules and regulations on the Company's business as currently conducted
and as contemplated are correct in all material respects and do not
omit to state a fact required to be stated therein or necessary to make
the statements contained therein not misleading in light of the
circumstances in which they were made.
(ii) the Company does not own an interest in any other
corporation, partnership, joint venture, trust or other business
entity;
(iii) the Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and any
amendment or supplement thereto, under "CAPITALIZATION", and the
Company is not a party to or bound by any instrument, agreement or
other arrangement providing for it to issue, sell, transfer, purchase
or redeem any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Warrant Agreement and the
Representative's Warrant Agreement and as described in the Prospectus.
The Securities and all other securities issued or issuable by the
Company conform in all material respects to all statements with respect
thereto contained in the Registration Statement and the Prospectus. All
issued and outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission with respect thereto,
and are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or any
similar rights granted by the Company. The Securities to be sold by the
Company hereunder and under the Warrant Agreement and the
Representative's Warrant Agreement are not and will not be subject to
any preemptive or other similar rights of any stockholder, have been
duly authorized and, when issued,
- 30 -
paid for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; the holders thereof
will not be subject to any liability solely as such holders; all
corporate action required to be taken for the authorization, issue and
sale of the Securities has been duly and validly taken; and the
certificates representing the Securities are in due and proper form.
The Representative's Warrants and the Redeemable Warrants constitute
valid and binding obligations of the Company to issue and sell, upon
exercise thereof and payment therefor, the number and type of
securities of the Company called for thereby. Upon the issuance and
delivery pursuant to this Agreement of the Firm Securities and the
Option Securities and the Representative's Warrants to be sold by the
Company, the Underwriters and the Representative, respectively, will
acquire good and marketable title to the Firm Securities and the Option
Securities and the Representative's Warrants free and clear of any
pledge, lien, charge, claim, encumbrance, pledge, security interest, or
other restriction or equity of any kind whatsoever. No transfer tax is
payable by or on behalf of the Underwriters in connection with (A) the
issuance by the Company of the Firm Securities, the Option Warrants,
the Representative's Warrants and the Representative's Securities, (B)
the purchase by the Underwriters of the Firm Securities and the Option
Warrants from the Company, and the purchase by the Representative of
the Representative's Warrants from the Company (C) the consummation by
the Company of any of its obligations under this Agreement, the Warrant
Agreement or the Representative's Warrant Agreement, or (D) resales of
the Firm Securities and the Option Securities in connection with the
distribution contemplated hereby.
(iv) the Registration Statement is effective under the Act,
and, if applicable, filing of all pricing information has been timely
made in the appropriate form under Rule 430A, and no stop order
suspending the use of the Preliminary Prospectus, the Registration
Statement or Prospectus or any part of any thereof or suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or, to
the best of such counsel's knowledge, threatened or contemplated under
the Act;
(v) each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or supplements thereto
(other than the financial statements and other financial and
statistical data included therein, as to which no opinion need be
rendered) comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations.
(vi) to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be
described in the Registration Statement and the Prospectus and filed as
exhibits to the Registration Statement other than those described in
the Registration Statement (or required to be filed under the Exchange
Act if upon such filing they would be incorporated, in whole or in
part, by reference therein) and the Prospectus and filed as exhibits
thereto, and the exhibits which
- 31 -
have been filed are correct copies of the documents of which they
purport to be copies; (B) the descriptions in the Registration
Statement and the Prospectus and any supplement or amendment thereto of
contracts and other documents to which the Company is a party or by
which it is bound, including any document to which the Company is a
party or by which it is bound, incorporated by reference into the
Prospectus and any supplement or amendment thereto, are accurate and
fairly represent the information required to be shown by Form S-1; (C)
there is not pending or threatened against the Company any action,
arbitration, suit, proceeding, inquiry, investigation, litigation,
governmental or other proceeding (including, without limitation, those
having jurisdiction over environmental or similar matters), domestic or
foreign, pending or threatened against (or circumstances that may give
rise to the same), or involving the properties or business of the
Company which (x) is required to be disclosed in the Registration
Statement which is not so disclosed (and such proceedings as are
summarized in the Registration Statement are accurately summarized in
all respects), (y) questions the validity of the capital stock of the
Company or this Agreement, the Warrant Agreement or the
Representative's Warrant Agreement, or of any action taken or to be
taken by the Company pursuant to or in connection with any of the
foregoing; (D) no statute or regulation or legal or governmental
proceeding required to be described in the Prospectus is not described
as required; and (E) there is no action, suit or proceeding pending, or
threatened, against or affecting the Company before any court or
arbitrator or governmental body, agency or official (or any basis
thereof known to such counsel) in which there is a reasonable
possibility of a decision which may result in a material adverse change
in the condition, financial or otherwise, or the earnings, position,
prospects, stockholders' equity, value, operation, properties, business
or results of operations of the Company, which could adversely affect
the present or prospective ability of the Company to perform its
obligations under this Agreement, the Warrant Agreement or the
Representative's Warrant Agreement or which in any manner draws into
question the validity or enforceability of this Agreement, the Warrant
Agreement or the Representative's Warrant Agreement;
(vii) the Company has full legal right, power and authority to
enter into each of this Agreement, the Warrant Agreement and the
Representative's Warrant Agreement, and to consummate the transactions
provided for therein; and each of this Agreement, the Warrant Agreement
and the Representative's Warrant Agreement has been duly authorized,
executed and delivered by the Company. Each of this Agreement, the
Warrant Agreement and the Representative's Warrant Agreement, assuming
due authorization, execution and delivery by each other party thereto
constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or
equitable, and except as rights to indemnity or contribution may be
limited by applicable law), and none of the Company's execution or
delivery of this Agreement, the Warrant Agreement and the
Representative's Warrant Agreement, its
- 32 -
performance hereunder or thereunder, its consummation of the
transactions contemplated herein or therein, or the conduct of its
business as described in the Registration Statement, the Prospectus,
and any amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or violation of
any of the terms or provisions of, or constitutes or will constitute a
default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or
assets (tangible or intangible) of the Company pursuant to the terms
of, (A) the certificate of incorporation or by-laws of the Company, (B)
any license, contract, collective bargaining agreement, indenture,
mortgage, deed of trust, lease, voting trust agreement, stockholders
agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be
bound or to which any of its properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, or (C) any
statute, judgment, decree, order, rule or regulation applicable to the
Company of any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body (including, without
limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or
any of its activities or properties.
(viii) no consent, approval, authorization or order, and no
filing with, any court, regulatory body, government agency or other
body (other than such as may be required under Blue Sky laws, as to
which no opinion need be rendered) is required in connection with the
issuance of the Firm Securities and the Option Warrants pursuant to the
Prospectus and the Registration Statement, the issuance of the
Representative's Warrants, the performance of this Agreement, the
Warrant Agreement and the Representative's Warrant Agreement, and the
transactions contemplated hereby and thereby;
(ix) the properties and business of the Company conform in all
material respects to the description thereof contained in the
Registration Statement and the Prospectus; and the Company has good and
marketable title to, or valid and enforceable leasehold estates in, all
items of real and personal property stated in the Prospectus to be
owned or leased by it, in each case free and clear of all liens,
charges, claims, encumbrances, pledges, security interests, defects or
other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus and liens for taxes not yet due and
payable;
(x) the Company is not in breach of, or in default under, any
term or provision of any license, contract, collective bargaining
agreement, indenture, mortgage, installment sale agreement, deed of
trust, lease, voting trust agreement, stockholders' agreement,
partnership agreement, note, loan or credit agreement or any other
agreement or instrument evidencing an obligation for borrowed money, or
any other agreement or instrument to which the Company is a party or by
which the Company may be bound or to which the properties or assets
(tangible or intangible) of the Company is subject or affected; and the
Company is not in violation of any term or provision of its Articles of
- 33 -
Incorporation or By-Laws or in violation of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation;
(xi) the statements in the Prospectus under "RISK FACTORS,"
"BUSINESS," "MANAGEMENT," "EXECUTIVE COMPENSATION," "PRINCIPAL
STOCKHOLDERS," "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,"
"DESCRIPTION OF SECURITIES," and "SHARES ELIGIBLE FOR FUTURE SALE" have
been reviewed by such counsel, and insofar as they refer to statements
of law, descriptions of statutes, licenses, rules or regulations or
legal conclusions, are correct in all material respects;
(xii) the Securities have been accepted for quotation on AMEX;
(xiii) the persons listed under the caption "PRINCIPAL
STOCKHOLDERS" in the Prospectus are the respective "beneficial owners"
(as such phrase is defined in regulation 13d-3 under the Exchange Act)
of the securities set forth opposite their respective names thereunder
as and to the extent set forth therein;
(xiv) neither the Company nor any of its officers,
stockholders, employees or agents, nor any other person acting on
behalf of the Company has, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or instrumentality of
any government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who is or
may be in a position to help or hinder the business of the Company (or
assist it in connection with any actual or proposed transaction) which
(A) might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (B) if not given in
the past, might have had an adverse effect on the assets, business or
operations of the Company, as reflected in any of the financial
statements contained in the Registration Statement, or (C) if not
continued in the future, might adversely affect the assets, business,
operations or prospects of the Company;
(xv) no person, corporation, trust, partnership, association
or other entity has the right to include and/or register any securities
of the Company in the Registration Statement, require the Company to
file any registration statement or, if filed, to include any security
in such registration statement;
(xvi) except as described in the Prospectus, there are no
claims, payments, issuances, arrangements or understandings for
services in the nature of a finder's or origination fee with respect to
the sale of the Securities hereunder or financial consulting
arrangements or any other arrangements, agreements, understandings,
payments or issuances that may affect the Underwriters' compensation,
as determined by the NASD;
- 34 -
(xvii) assuming due execution by the parties thereto other
than the Company, the Lock-up Agreements are legal, valid and binding
obligations of the parties thereto, enforceable against the party and
any subsequent holder of the securities subject thereto in accordance
with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any
action, legal or equitable, and except as rights to indemnity or
contribution may be limited by applicable law);
(xviii) except as described in the Prospectus, the Company
does not (A) maintain, sponsor or contribute to any ERISA Plans, (B)
maintain or contribute, now or at any time previously, to a defined
benefit plan, as defined in Section 3(35) of ERISA, and (C) has never
completely or partially withdrawn from a "multiemployer plan";
(xix) the minute books of the Company have been made available
to the Underwriters and contain a complete summary of all meetings and
actions of the directors and stockholders of the Company since the time
of its incorporation and reflect all transactions referred to in such
minutes accurately in all material respects;
(xx) the Company is not, and upon the issuance and sale of the
Firm Securities, the Option Warrants, the Representative's Warrants and
the Representative's Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus under the caption "USE OF PROCEEDS" will not be, an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act");
(xxi) the Company has furnished the Representative and
Underwriters' Counsel with a true and complete copy of the Selling
Stockholder SEC Documents. As used herein, the "Selling Stockholder SEC
Documents" shall mean all documents (other than preliminary material)
that Commodore Environmental Services, Inc., a ___________ corporation
and the sole stockholder and parent corporation of the Company (the
"Selling Stockholder"), has filed or has been required to file with the
Commission since January 1, 1994. As of its filing date (and, with
respect to any registration statement, the date on which it or any
post-effective amendment was declared effective), each Selling
Stockholder SEC Document was in compliance, in all material respects,
with the applicable requirements of the Act and the Exchange Act,
contained no untrue statement of a material fact and did not omit any
statement of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the
Selling Stockholder included in the Selling Stockholder SEC Documents
complied, at the time of filing with the Commission (and, with respect
to any registration statement, at the time it was declared effective),
as to form, in all material respects, with applicable accounting
requirements and the published rules and regulations of the Commission
with respect thereto, were prepared in accordance with generally
accepted accounting principles
- 35 -
applied on a consistent basis during the periods involved and fairly
present, in all material respects, the consolidated financial position
of the Selling Stockholder and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations for the
periods presented. Since January 1, 1996, there has not been any change
in the business, assets, condition, financial or otherwise, or results
of operations of the Selling Stockholder or any of its subsidiaries
which might materially and adversely affect the condition, financial or
otherwise, or the earnings, position, prospects, stockholders' equity,
value, operation, properties, business or results of operations of the
Company.
(xxii) except as set forth in the Prospectus and to the best
knowledge of such counsel, no officer, director or stockholder of the
Company, or any "affiliate" or "associate" (as these terms are defined
in Rule 405 promulgated under the Rules and Regulations) of any of the
foregoing persons or entities has or has had, either directly or
indirectly, (A) an interest in any person or entity which (x) furnishes
or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Company, or (y) purchases from
or sells or furnishes to the Company any goods or services, or (B) a
beneficial interest in any contract or agreement to which the Company
is a party or by which it may be bound or affected. Except as set forth
in the Prospectus under "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS," there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company, and any
officer, director, or 5% or greater securityholder of the Company, or
any affiliate or associate of any such person or entity;
(xxiii) the Company is in compliance with all provisions of
Section 1 of Laws of Florida, Chapter 92-198, An Act Relating to
Disclosure of Doing Business with Cuba;
(xxiv) to the best of such counsel's knowledge, after due
inquiry, (A) the Company is in compliance with all federal, state,
local or foreign laws, common law, rules, codes, administrative orders
or regulations relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including
without limitation all laws, common law, rules, codes, administrative
orders and regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws") and (B) there are no
events or circumstances that could form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company relating to any Hazardous Materials or the violation of any
Environmental Laws;
- 36 -
(xxv) the Company has obtained all necessary and required
approvals, authorizations, franchises, licenses, orders, permits,
validations and certifications from regulatory authorities to permit
the commencement of its commercial operations as contemplated in the
Prospectus, and none of such approvals, authorizations, franchises,
licenses, orders, permits, validations and certifications have been
revoked, restricted or limited in any manner and all of such approvals,
authorizations, franchises, licenses, orders, permits, validations and
certifications are in full force and effect; and
(xxvi) to the best of such counsel's knowledge, after due
inquiry, there is no action, suit, proceeding, inquiry, investigation,
litigation or governmental proceeding, domestic or foreign, pending or
threatened (or circumstances that may give rise to the same) involving
the Company's production, use, testing, manufacturing or marketing of
any products or services, which (i) questions the authority of the
Company to produce, use, test, manufacture or market any products or
services as described in the Prospectus, (ii) questions the
completeness or accuracy of data generated by any trials, tests or
studies being conducted by or on behalf of the Company, (iii) is
required to be disclosed in the Prospectus which is not so disclosed,
or (iv) might materially and adversely affect the condition, financial
or otherwise, or the earnings, prospects, value, operations or business
of the Company.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company, and
representatives of the independent public accountants for the Company, at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement, the Prospectus, and related matters and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which lead
them to believe that either the Registration Statement or any amendment thereto,
at the time such Registration Statement or amendment became effective or the
Preliminary Prospectus or Prospectus or amendment or supplement thereto as of
the date of such opinion contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or the Prospectus). Such counsel shall
further state that its opinions may be relied upon by Underwriters' Counsel in
rendering its opinion to the Underwriters.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on certificates
and written
- 37 -
statements of responsible officers of the Company and certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to Underwriters' Counsel if requested. The opinion of such counsel for
the Company shall state that the opinion of any such other counsel is in form
satisfactory to such counsel and that the Representative, Underwriters' Counsel
and they are each justified in relying thereon. Any opinion of counsel for the
Company shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991) or any comparable state accord.
(e) At the Closing Date, the Underwriters shall have received the
favorable opinion of _______________, special counsel to the Company, dated the
Closing Date, addressed to the Underwriters, in form and substance satisfactory
to Underwriters' Counsel, and in substantially the form of Schedule B attached
hereto.
(f) At the Closing Date, the Underwriters shall have received the
favorable opinion of Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Xxxxxxx, in
its capacity as counsel for the Selling Stockholder, dated the Closing Date,
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) The Selling Stockholder has full legal right, power and
authority to enter into this Agreement, the Power of Attorney with
______________ and ______________, or either of them, as
attorney-in-fact (the "Attorney-in-Fact") in the form heretofore
furnished to you (the "Power of Attorney") and the Custody Agreement
with ____________________________ as custodian (the "Custodian") in the
form heretofore furnished to you (the "Custody Agreement"). The Selling
Stockholder has full legal right, power and authority to deliver and
sell the Option Shares, enter into this Agreement, the Power of
Attorney and the Custody Agreement and to consummate the transactions
provided for in this Agreement, the Power of Attorney and the Custody
Agreement; and this Agreement, the Power of Attorney and the Custody
Agreement have each been duly and properly authorized, executed and
delivered by the Selling Stockholder. Each of this Agreement, the Power
of Attorney and the Custody Agreement constitutes a legal, valid and
binding agreement of the Selling Stockholder enforceable against the
Selling Stockholder in accordance with its terms, and none of the
Selling Stockholder's delivery and sale of the Option Shares, execution
or delivery of this Agreement, the Power of Attorney or the Custody
Agreement, its performance hereunder and thereunder, or its
consummation of the transactions contemplated herein and therein,
conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the
creation or imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any kind
whatsoever upon, any property or assets (tangible or intangible) of the
Selling Stockholder pursuant to the terms of (i) the certificate of
incorporation or by-laws of the Selling Stockholder, (ii) any
- 38 -
license, contract, collective bargaining agreement, indenture,
mortgage, deed of trust, lease, voting trust agreement, stockholders
agreement, note, loan or credit agreement or any other agreement or
instrument to which the Selling Stockholder is a party or by which the
Selling Stockholder is or may be bound or to which either of its
properties or assets (tangible or intangible) is or may be subject, or
any indebtedness, or (iii) any statute, judgment, decree, order, rule
or regulation applicable to the Selling Stockholder of any arbitrator,
court, regulatory body or administrative agency or other governmental
agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or
foreign, having jurisdiction over the Selling Stockholder or any of its
activities or properties. The Attorney-in-Fact, acting alone, is
authorized to execute and deliver this Agreement and the Custody
Agreement and the certificates referred to in Section 6(k) hereof on
behalf of the Selling Stockholder, to authorize the delivery of the
Option Shares to be sold by the Selling Stockholder under this
Agreement and to duly endorse (in blank or otherwise) the certificate
or certificates representing such Option Shares or a stock power or
powers with respect thereto, to accept payment therefor, and otherwise
to act on behalf of the Selling Stockholder in connection with this
Agreement and the Custody Agreement;
(ii) No consent, approval, authorization or order of, and no
filing with, any court, regulatory body, government agency or other
body, domestic or foreign, is required for the delivery and sale of the
Option Shares pursuant to the Prospectus and the Registration
Statement, the performance of this Agreement, the Power of Attorney and
the Custody Agreement and the transactions contemplated hereby and
thereby, including without limitation, any waiver of any preemptive,
first refusal or other rights that any entity or person may have for
the delivery and sale of any of the Option Shares, except such as have
been or may be obtained under the Act or may be required under state
securities or Blue Sky laws in connection with the Underwriters'
purchase and distribution of the Firm Securities and the Option
Securities;
(iii) At the date hereof the Selling Stockholder has, and at
the time of delivery of the Option Shares to be sold by the Selling
Stockholder to the several Underwriters, the Selling Stockholder will
have full right, power and authority to sell, assign, transfer and
deliver the Option Shares to be sold by the Selling Stockholder
hereunder. At the date hereof the Selling Stockholder is, and at the
time of delivery of the Option Shares to be sold by the Selling
Stockholder, the Selling Stockholder will be, the lawful owner of and
has and will have, good and marketable title to such Option Shares free
and clear of any liens, charges, pledges, equities, encumbrances,
security interests, claims, community property rights, restrictions on
transfer or other defects in title. Upon delivery of and payment for
the Option Shares to be sold by the Selling Stockholder hereunder, good
and marketable title to such Option Shares will pass to the
Underwriters, free and clear of any liens, charges, pledges, equities,
encumbrances, security interests, claims, community property rights,
restrictions on transfer or other defects in title. Except as described
in the Registration Statement and the Prospectus (or, if there is no
Prospectus, the most recent Preliminary Prospectus) or created hereby,
there are no outstanding
- 39 -
options, warrants, rights, or other agreements or arrangements
requiring the Selling Stockholder at any time to transfer any Common
Stock to be sold hereunder by the Selling Stockholder. The Option
Shares are not and will not be subject to any preemptive or other
similar rights of any stockholder. All corporate action required to be
taken for the delivery and sale of the Option Shares has been duly and
validly taken; and the certificates representing the Option shares are
in due and proper form;
(iv) At the time when the Registration Statement becomes or
became effective, and at all times subsequent thereto up to and
including the Closing Date and the Option Closing Date, the
Registration Statement and any amendments thereto will not contain any
untrue statement of a material fact regarding the Selling Stockholder
or omit to state a material fact regarding the Selling Stockholder
required to be stated therein or necessary in order to make the
statements therein regarding the Selling Stockholder not misleading,
and the Prospectus (and any supplements thereto) (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) will not
contain any untrue statement of a material fact regarding the Selling
Stockholder or omit to state a material fact regarding the Selling
Stockholder required to be stated therein or necessary in order to make
the statements therein regarding the Selling Stockholder, in light of
the circumstances under which they were made, not misleading, and the
Selling Stockholder is unaware of any material misstatement in or
omission from the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus)
or of any material adverse information regarding the Selling
Stockholder and his, her or its security holdings which is not set
forth in the Registration Statement and the Prospectus (or, if the
Prospectus is not then in existence, in the most recent Preliminary
Prospectus);
(v) Neither the Selling Stockholder nor any of its employees,
directors, stockholders, partners, or affiliates (within the meaning of
the Rules and Regulations) of any of the foregoing has taken, directly
or indirectly, any action designed to or which has constituted or which
might be expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Securities or
otherwise;
(vi) There is not pending or threatened against the Selling
Stockholder any action, suit or proceeding which (A) questions the
validity of this Agreement, the Power of Attorney, the Custody
Agreement or of any action taken or to be taken by the Selling
Stockholder pursuant to or in connection with this Agreement, the Power
of Attorney, or the Custody Agreement or (B) is required to be
disclosed in the Registration Statement which is not so disclosed, and
such actions, suits or proceedings as are summarized in the
Registration Statement, if any, are accurately summarized;
(vii) On the effective date of the Prospectus, certificates in
negotiable form for the Option Shares to be sold by the Selling
Stockholder under this Agreement on the Option Closing Date, if
requested by the Underwriters pursuant to Section 2(b) hereof,
- 40 -
together with a stock power or powers duly endorsed in blank by the
Selling Stockholder, will have been placed in custody with the
Custodian for the purpose of effecting delivery hereunder and
thereunder;
(viii) The Selling Stockholder does not have any registration
rights or other similar rights with respect to any securities of the
Company; and the Selling Stockholder does not have any right of first
refusal or other similar right to purchase any securities of the
Company upon the issuance or sale thereof by the Company or upon the
sale thereof by any other stockholder of the Company;
(ix) The Selling Stockholder has not since the filing of the
initial Registration Statement (i) sold, bid for, purchased, attempted
to induce any person to purchase, or paid anyone any compensation for
soliciting purchases of Common Stock, or (ii) paid or agreed to pay to
any person any compensation for soliciting another to purchase any
securities of the Company (except for the sale of the Option Shares to
the Underwriters under this Agreement and except as otherwise permitted
by law); and
(x) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriters in connection with (i) the
sale by the Selling Stockholder of the Option Shares, (ii) the purchase
by the Underwriters of the Option Shares from the Selling Stockholder,
(iii) the consummation by the Selling Stockholder of any of its
obligations under this Agreement, or (iv) resales of the Option Shares
in connection with the distribution contemplated hereby.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of responsible officers of the Selling Stockholder,
provided that copies of any such statements or certificates shall be delivered
to Underwriters' Counsel if requested. The opinion of such counsel for the
Selling Stockholder shall state that the opinion of any such other counsel is in
form satisfactory to such counsel and that the Representative, Underwriters'
Counsel and they are each justified in relying thereon. Any opinion of counsel
for the Selling Stockholder shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written policy
or other document relating to legal opinions, including, without limitation, the
Legal Opinion Accord of the ABA Section of Business Law (1991) or any comparable
state accord. Such counsel shall state that its opinions may be relied upon by
Underwriters' Counsel in rendering its opinion to the Underwriters.
(g) At each Option Closing Date, if any, the Underwriters shall
have received the favorable opinions of each of Greenberg, Traurig, Hoffman,
Lipoff, Xxxxx & Xxxxxxx, counsel to the Company and the Selling Stockholder, and
_____________________, special counsel to
- 41 -
the Company, dated such Option Closing Date, addressed to the Underwriters and
in form and substance satisfactory to Underwriters' Counsel confirming as of
such Option Closing Date the statements made by each of Greenberg, Traurig,
Hoffman, Lipoff, Xxxxx & Quentel, and __________________, in their respective
opinions delivered on the Closing Date.
(h) On or prior to each of the Closing Date and each Option Closing
Date, if any, Underwriters' Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions of the
Company or the Selling Stockholder, or herein contained.
(i) Prior to each of the Closing Date and each Option Closing Date,
if any, (i) there shall have been no adverse change nor development involving a
prospective change in the condition, financial or otherwise, earnings, position,
value, properties, results of operations, prospects, stockholders' equity or the
business activities of the Company, whether or not in the ordinary course of
business, from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, from the latest date as of which the financial condition of the Company
is set forth in the Registration Statement and Prospectus which is adverse to
the Company; (iii) the Company shall not be in default under any provision of
any instrument relating to any outstanding indebtedness; (iv) the Company shall
not have issued any securities (other than the Securities) or declared or paid
any dividend or made any distribution in respect of its capital stock of any
class and there has not been any change in the capital stock or any material
change in the debt (long or short term) or liabilities or obligations of the
Company (contingent or otherwise); (v) no material amount of the assets of the
Company shall have been pledged or mortgaged, except as set forth in the
Registration Statement and Prospectus; (vi) no action, suit or proceeding, at
law or in equity, shall have been pending or threatened (or circumstances giving
rise to same) against the Company or affecting any of its properties or
businesses before or by any court or federal, state or foreign commission, board
or other administrative agency wherein an unfavorable decision, ruling or
finding may adversely affect the business, operations, earnings, position,
value, properties, results of operations, prospects or financial condition or
income of the Company; and (vii) no stop order shall have been issued under the
Act and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission.
(j) At each of the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received a certificate of the Company signed by
the principal executive officer and by the chief financial or chief accounting
officer of the Company, dated the Closing Date or Option Closing Date, as the
case may be, to the effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing
Date or the Option Closing Date, as the
- 42 -
case may be, and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this Agreement on
its part to be performed or satisfied at or prior to such Closing Date
or Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no
proceedings for that purpose have been instituted or are pending or, to
the best of each of such person's knowledge, after due inquiry, are
contemplated or threatened under the Act;
(iii) The Registration Statement and the Prospectus and, if
any, each amendment and each supplement thereto, contain all statements
and information required to be included therein, and none of the
Registration Statement, the Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading and neither the Preliminary
Prospectus or any supplement thereto included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
(a) the Company has not incurred up to and including the Closing Date
or the Option Closing Date, as the case may be, other than in the
ordinary course of its business, any material liabilities or
obligations, direct or contingent; (b) the Company has not paid or
declared any dividends or other distributions on its capital stock; (c)
the Company has not entered into any transactions not in the ordinary
course of business; (d) there has not been any change in the capital
stock or long-term debt or any increase in the short-term borrowings
(other than any increase in the short-term borrowings in the ordinary
course of business) of the Company; (e) the Company has not sustained
any loss or damage to its properties or assets, whether or not insured;
(f) there is no litigation which is pending or threatened (or
circumstances giving rise to same) against the Company or any
affiliated party of any of the foregoing which is required to be set
forth in an amended or supplemented Prospectus which has not been set
forth; and (g) there has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this
subsection (j) are to such documents as amended and supplemented at the date of
such certificate.
(k) At each of the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received a certificate from the Selling
Stockholder (which may he signed by the Attorney-in-Fact), dated the Closing
Date, to the effect that the Selling Stockholder has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that:
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(A) The representations and warranties of the Selling Stockholder
in this Agreement are true and correct, as if made at and as of the
Closing Date or the Option Closing Date, as the case may be, and such
Selling Stockholder has complied with all agreements and covenants and
satisfied all conditions contained in this Agreement to be performed or
satisfied by the Selling Stockholder at or prior to the Closing Date or
the Option Closing Date, as the case may be; and
(B) The Registration Statement and Prospectus and, if any, each
amendment and each supplement thereto, contain all statements and
information required to be included therein regarding the Selling
Stockholder, and none of the Registration Statement, the Prospectus nor
any amendment or supplement thereto includes any untrue statement of a
material fact regarding the Selling Stockholder or omits to state any
material fact regarding the Selling Stockholder required to be stated
therein or necessary to make the statements therein regarding the
Selling Stockholder not misleading, and neither the Preliminary
Prospectus or any supplement thereto included any untrue statement of a
material fact regarding the Selling Stockholder or omitted to state a
material fact regarding the Selling Stockholder required to be stated
therein or necessary in order to make the statements therein regarding
the Selling Stockholder, in light of the circumstances under which they
were made, not misleading.
References to the Registration Statement and the Prospectus in this
subsection (k) are to such documents as amended and supplemented at the date of
such certificate.
(l) By the Closing Date, the Underwriters will have received
clearance from the NASD as to the amount of compensation allowable or payable to
the Underwriters, as described in the Registration Statement.
(m) At the time this Agreement is executed, the Underwriters shall
have received a letter, dated such date, addressed to the Underwriters in form
and substance satisfactory (including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriters and Underwriters' Counsel, from Xxxxxx & Co.:
(i) confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act
and the applicable Rules and Regulations;
(ii) stating that it is their opinion that the financial
statements and supporting schedules of the Company included in the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act and the Rules and
Regulations thereunder and that the Representative may rely upon the
opinion of Xxxxxx & Co. with respect to the financial statements and
supporting schedules included in the Registration Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim financial
statements of the Company, a reading of the
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latest available minutes of the stockholders and board of directors and
the various committees of the boards of directors of the Company,
consultations with officers and other employees of the Company
responsible for financial and accounting matters and other specified
procedures and inquiries, nothing has come to their attention which
would lead them to believe that (A) the unaudited financial statements
and supporting schedules of the Company included in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and
Regulations or are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements of the Company
included in the Registration Statement, or (B) at a specified date not
more than five (5) days prior to the effective date of the Registration
Statement, there has been any change in the capital stock or long-term
debt of the Company, or any decrease in the stockholders' equity or net
current assets or net assets of the Company as compared with amounts
shown in the June 30, 1996 balance sheet included in the Registration
Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any change or decrease,
setting forth the amount of such change or decrease;
(iv) setting forth, at a date not later than five (5) days
prior to the date of the Registration Statement, the amount of
liabilities of the Company (including a break-down of commercial paper
and notes payable to banks);
(v) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company set forth in the
Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company and excluding
any questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings, inquiries
and other appropriate procedures (which procedures do not constitute an
examination in accordance with generally accepted auditing standards)
set forth in the letter and found them to be in agreement;
(vi) statements as to such other matters incident to the
transaction contemplated hereby as the Representative may request.
(n) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from Xxxxxx & Co. a letter, dated as of the
Closing Date or the Option Closing Date, as the case may be, to the effect that
they reaffirm that statements made in the letter furnished pursuant to
subsection (m) of this Section, except that the specified date referred to shall
be a date not more than five (5) days prior to the Closing Date or the Option
Closing Date, as the case may be, and, if the Company has elected to rely on
Rule 430A of the Rules and Regulations, to the further effect that they have
carried out procedures as specified in clause (v) of subsection (m) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Representative and deemed to be a part of the Registration
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Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (v).
(o) On each of the Closing Date and each Option Closing Date, if
any, there shall have been duly tendered to the Representative for the several
Underwriters' accounts the appropriate number of Securities.
(p) No order suspending the sale of the Securities in any
jurisdiction designated by the Representative pursuant to subsection (a)(v) of
Section 4 hereof shall have been issued on either the Closing Date or the Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(q) On or before the Closing Date, the Company shall have executed
and delivered to the Representative, (i) the Representative's Warrant Agreement
substantially in the form filed as Exhibit 4.4 to the Registration Statement, in
final form and substance satisfactory to the Representative, and (ii) the
Representative's Warrants in such denominations and to such designees as shall
have been provided to the Company.
(r) On or before the Closing Date, the Firm Securities and Option
Securities shall have been duly approved for listing on AMEX, subject to
official notice of issuance.
(s) On or before the Closing Date, there shall have been delivered
to the Representative all of the Lock-up Agreements, in form and substance
satisfactory to Underwriters' Counsel.
(t) On or before the Closing Date, the Company shall have executed
and delivered to the Representative and the Transfer Agent the Warrant Agreement
substantially in the form filed as Exhibit 4.2 to the Registration Statement, in
final form and substance satisfactory to the Representative.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or the relevant Option Closing Date,
as the case may be, is not so fulfilled, the Representative may terminate this
Agreement or, if the Representative so elects, it may waive any such conditions
which have not been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company and the Selling Stockholder, jointly and severally,
agree to indemnify and hold harmless each of the Underwriters (for purposes of
this Section 7 "Underwriter" shall include the officers, directors, partners,
employees, agents and counsel of the Underwriter, including specifically each
person who may be substituted for an Underwriter as provided in Section 11
hereof), and each person, if any, who controls the Underwriter ("controlling
person") within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all losses, claims, damages, expenses or
liabilities,
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joint or several (and actions, proceedings, investigations, inquiries, suits and
litigation in respect thereof), whatsoever (including but not limited to any and
all expenses whatsoever reasonably incurred in investigating, preparing or
defending against any such claim, action, proceeding, investigation, inquiry,
suit or litigation, commenced or threatened, or any claim whatsoever), as such
are incurred, to which the Underwriter or such controlling person may become
subject under the Act, the Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
(A) any untrue statement or alleged untrue statement of a material fact
contained (i) in any Preliminary Prospectus, the Registration Statement or the
Prospectus (as from time to time amended and supplemented); (ii) in any
post-effective amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Securities; or (iii) in any application or other document
or written communication (in this Section 7 collectively called "application")
executed by the Company or based upon written information furnished by the
Company or the Selling Stockholder in any jurisdiction in order to qualify the
Securities under the securities laws thereof or filed with the Commission, any
state securities commission or agency, AMEX or any other securities exchange;
(B) the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of the Prospectus, in the light of the circumstances under which they
were made), or (C) any breach of any representation, warranty, covenant or
agreement of the Company or the Selling Stockholder contained herein or in any
certificate by or on behalf of the Company or any of its officers or the Selling
Stockholder delivered pursuant hereto, unless, in the case of clause (A) or (B)
above, such statement or omission was made in reliance upon and in strict
conformity with written information furnished to the Company with respect to any
Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment thereof or supplement thereto, or in any application, as the case may
be.
The indemnity agreement in this subsection (a) shall be in addition to
any liability which the Company or the Selling Stockholder may have at common
law or otherwise.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each other person, if
any, who controls the Company within the meaning of the Act, and the Selling
Stockholder, to the same extent as the foregoing indemnity from the Company and
the Selling Stockholder to the Underwriters but only with respect to statements
or omissions, if any, made in any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement thereto or in any
application made in reliance upon, and in strict conformity with, written
information furnished to the Company with respect to any Underwriter by such
Underwriter expressly for use in such Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement thereto or in any
such application, provided that such written information or omissions only
pertain to disclosures in the Preliminary Prospectus, the Registration Statement
or Prospectus directly relating to the transactions effected by the Underwriters
in connection with this Offering. Each of the Company and the Selling
Stockholder acknowledges that the statements with respect
- 47 -
to the public offering of the Firm Securities and the Option Securities set
forth under the heading "Underwriting" and the stabilization legend in the
Prospectus have been furnished by the Underwriters expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any claim, action, suit,
investigation, inquiry, proceeding or litigation, such indemnified party shall,
if a claim in respect thereof is to be made against one or more indemnifying
parties under this Section 7, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may have
otherwise). In case any such claim, action, suit, investigation, inquiry,
proceeding or litigation is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such case
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense thereof at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense thereof within a reasonable
time after notice of commencement thereof, or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to one or
all of the indemnifying parties (in which case the indemnifying parties shall
not have the right to direct the defense thereof on behalf of the indemnified
party or parties), in any of which events such fees and expenses of one
additional counsel shall be borne by the indemnifying parties. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one claim, action, suit,
investigation, inquiry, proceeding or litigation or separate but similar or
related claims, actions, suits, investigations, inquiries, proceedings or
litigation in the same jurisdiction arising out of the same general allegations
or circumstances. Anything in this Section 7 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim, action,
suit, investigation, inquiry, proceeding or litigation effected without its
written consent; provided, however, that such consent was not unreasonably
withheld. An indemnifying party will not, without the prior written consent of
the indemnified parties, settle, compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit,
investigation, inquiry, proceeding or litigation in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim, action, suit,
investigation, inquiry, proceeding or litigation), unless such settlement,
compromise or consent (i) includes an unconditional release
- 48 -
of each indemnified party from all liability arising out of such claim, action,
suit, investigation, inquiry, proceeding or litigation and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes claim for indemnification pursuant
to this Section 7, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Firm Securities and the Option Securities or (B) if the allocation provided
by clause (A) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each of the contributing parties, on the
one hand, and the party to be indemnified on the other hand in connection with
the statements or omissions that resulted in such losses, claims, damages,
expenses or liabilities, as well as any other relevant equitable considerations.
In any case where the Company and/or the Selling Stockholder is the contributing
party and the Underwriters are the indemnified party, the relative benefits
received by the Company and/or the Selling Stockholder, on the one hand, and the
Underwriters, on the other, shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Firm Securities and the Option
Securities (before deducting expenses) bear to the total underwriting discounts
received by the Underwriters hereunder, in each case as set forth in the table
on the Cover Page of the Prospectus. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Selling Stockholder, or by
the Underwriters, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Firm Securities and the Option Securities purchased by the Underwriters
hereunder. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7, (i) each person, if any, who controls the Company within the meaning
of the Act, each officer of the Company who has signed the Registration
Statement, and each director of the Company shall have the same rights to
contribution as the Company, (ii) each person, if any, who controls an
Underwriter within the meaning of the Act shall have
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the same rights to contribution as such Underwriter and (iii) each person, if
any, who controls the Selling Stockholder within the meaning of the Act shall
have the same rights to contribution as the Selling Stockholder, subject in each
case to this subsection (d). Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect to which a claim for contribution may be made
against another party or parties under this subsection (d), notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have hereunder or otherwise
than under this subsection (d), or to the extent that such party or parties were
not adversely affected by such omission. The contribution agreement set forth
above shall be in addition to any liabilities which any indemnifying party may
have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company or the Selling Stockholder
submitted pursuant hereto, shall be deemed to be representations, warranties and
agreements at the Closing Date and the Option Closing Date, as the case may be,
and such representations, warranties and agreements of the Company and the
Selling Stockholder, as the case may be, and the indemnity agreements contained
in Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company, the Selling Stockholder, any controlling person of any Underwriter or
the Company or the Selling Stockholder, and shall survive termination of this
Agreement or the issuance and delivery of the Securities to the Underwriters and
the Representative, as the case may be.
9. Effective Date. This Agreement shall become effective at 10:00 a.m.,
New York City time, on the next full business day following the date hereof, or
at such earlier time after the Registration Statement becomes effective as the
Representative, in its discretion, shall release the Securities for sale to the
public; provided, however, that the provisions of Sections 5, 7 and 10 of this
Agreement shall at all times be effective. For purposes of this Section 9, the
Securities to be purchased hereunder shall be deemed to have been so released
upon the earlier of dispatch by the Representative of telegrams to securities
dealers releasing such securities for offering or the release by the
Representative for publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the
Representative shall have the right to terminate this Agreement, (i) if any
domestic or international event or act or occurrence has materially adversely
disrupted, or in the Representative's opinion will in the immediate future
materially adversely disrupt, the financial markets; or (ii) if any material
adverse change in the financial markets shall have occurred; or (iii) if trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the AMEX, the NASD, the Boston Stock
Exchange, the Commission or any governmental authority
- 50 -
having jurisdiction over such matters; or (iv) if trading of any of the
securities of the Company shall have been suspended, or any of the securities of
the Company shall have been delisted, on any exchange or in any over-the-counter
market; (v) if the United States shall have become involved in a war or major
hostilities, or if there shall have been an escalation in an existing war or
major hostilities or a national emergency shall have been declared in the United
States; or (vi) if a banking moratorium has been declared by a state or federal
authority; or (vii) if a moratorium in foreign exchange trading has been
declared; or (viii) if the Company shall have sustained a loss material or
substantial to the Company by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the offering, sale and/or delivery of the
Securities; or (ix) if there shall have been such a material adverse change in
the conditions or prospects of the Company, or such material adverse change in
the general market, political or economic conditions, in the United States or
elsewhere, that, in each case, in the Representative's judgment, would make it
inadvisable to proceed with the offering, sale and/or delivery of the Securities
or (x) if any of Xxxx X. Xxxxxxx, Xxxx X. Xxxxxxx, Xxxxx X. XxXxxxxxx and
Xxxxxxxx Xxxxxxx, Ph.D. shall no longer serve the Company in their present
capacity.
(b) If this Agreement is terminated by the Representative in
accordance with the provisions of Section 10(a), the Company shall promptly
reimburse and indemnify the Representative for all of its actual out-of-pocket
expenses, including the fees and disbursements of counsel for the Underwriters
(less amounts previously paid pursuant to Section 5(c) above). Notwithstanding
any contrary provision contained in this Agreement, if this Agreement shall not
be carried out within the time specified herein, or any extension thereof
granted by the Representative, by reason of any failure on the part of the
Company or the Selling Stockholder to perform any undertaking or satisfy any
condition of this Agreement by it to be performed or satisfied (including,
without limitation, pursuant to Section 6 or Section 12) then, the Company shall
promptly reimburse and indemnify the Representative for all of its actual
out-of-pocket expenses, including the fees and disbursements of counsel for the
Underwriters (less amounts previously paid pursuant to Section 5(c) above). In
addition, the Company shall remain liable for all Blue Sky counsel fees and
disbursements, expenses and filing fees. Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any termination of this
Agreement (including, without limitation, pursuant to Sections 6, 10, 11 and 12
hereof), and whether or not this Agreement is otherwise carried out, the
provisions of Section 5 and Section 7 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
11. Substitution of the Underwriters. If one or more of the
Underwriters shall fail (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 6, Section 10 or
Section 12 hereof) to purchase the Securities which it or they are obligated to
purchase on such date under this Agreement (the "Defaulted Securities"), the
Representative shall have the right, within twenty-four (24) hours thereafter,
to make arrangement for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed
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upon and upon the terms herein set forth; if, however, the Representative shall
not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the total number of Firm Securities to be purchased on such date,
the non-defaulting Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
total number of Firm Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters (or, if such
default shall occur with respect to any Option Securities to be
purchased on an Option Closing Date, the Underwriters may at the
Representative's option, by notice from the Representative to the
Company and the Selling Stockholder, terminate the Underwriters'
obligation to purchase Option Securities from the Company and/or the
Selling Stockholder, as the case may be, on such date).
No action taken pursuant to this Section 11 shall relieve any
defaulting Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default which does not result in a termination
of this Agreement, the Representative shall have the right to postpone the
Closing Date or the Option Closing Date, as the case may be, for a period not
exceeding seven (7) days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
12. Default by the Company or the Selling Stockholder. If either the
Company or the Selling Stockholder shall fail at the Closing Date or at any
Option Closing Date, as applicable, to sell and deliver the number of Securities
which it is obligated to sell hereunder on such date, then this Agreement shall
terminate (or, if such default shall occur with respect to any Option Securities
to be purchased on an Option Closing Date, the Underwriters may at the
Representative's option, by notice from the Representative to the Company and
the Selling Stockholder, terminate the Underwriters' obligation to purchase
Option Securities from the Company and/or the Selling Stockholder, as the case
may be, on such date) without any liability on the part of any non-defaulting
party other than pursuant to Section 5, Section 7 and Section 10 hereof. No
action taken pursuant to this Section 12 shall relieve the Company and/or the
Selling Stockholder, as the case may be, from liability, if any, in respect of
such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representative at National Securities Corporation, 0000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx, Chairman, with
a copy to Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxxxx X. Xxxxxx, Esq. Notices to the Company shall be
directed to the Company at 150 East
- 00 -
00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxx,
President and Chief Executive Officer, with a copy to Greenberg, Traurig,
Hoffman, Lipoff, Xxxxx & Quentel, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx X. Xxxxx, Esq. Notices to the Selling Stockholder
shall be directed to the Selling Stockholder at 000 Xxxx 00xx Xxxxxx, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx 00000, Attention: Bentley X. Xxxx, Chairman, with a
copy to Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Quentel, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxx, Esq.
14. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriters, the Company, the Selling Stockholder
and the controlling persons, directors and officers referred to in Section 7
hereof, and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement, the Warrant Agreement
and the Representative's Warrant Agreement constitute the entire agreement of
the parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Representative,
the Selling Stockholder and the Company.
- 53 -
If the foregoing correctly sets forth the understanding between the
Underwriters, the Selling Stockholder and the Company, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
COMMODORE SEPARATION
TECHNOLOGIES, INC.
By: _____________________________________
Xxxx X. Xxxxxxx
President and Chief Executive Officer
COMMODORE ENVIRONMENTAL
SERVICES, INC., as Selling Stockholder
By: _____________________________________
As Attorney-in-Fact for the Selling Stockholder
Confirmed and accepted as of
the date first above written.
NATIONAL SECURITIES CORPORATION
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By: ______________________________________
Xxxxxx X. Xxxxxxxxx
Chairman
- 54 -
SCHEDULE A
Number of
Number of Redeemable
Shares Warrants
Name of Underwriters to be Purchased to be Purchased
-------------------- --------------- ---------------
National Securities Corporation..........
Total.................................... 5,000,000 5,000,000
========= =========
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SCHEDULE B
[FORM OF INTELLECTUAL PROPERTY OPINION]
___________________, 1996
NATIONAL SECURITIES CORPORATION
As Representative of the several
Underwriters named in Schedule A
to the Underwriting Agreement
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Re: Initial Public Offering of 5,000,000 Shares of Common Stock and
5,000,000 Redeemable Common Stock Purchase Warrants of Commodore
Separation Technologies, Inc.
Gentlemen:
We have acted as special counsel to Commodore Separation
Technologies, Inc., a Delaware corporation (the "Company"), in connection with
the entering into by the Company of that certain Underwriting Agreement by and
among National Securities Corporation (as representative of the several
underwriters named therein) (the "Representative"), Commodore Environmental
Services, Inc., as selling stockholder, and the Company, dated _______________,
1996 (the "Underwriting Agreement"). This opinion is provided to you pursuant to
Section 6(e) of the Underwriting Agreement.
For the purpose of rendering the opinions set forth below we
have reviewed the following (collectively, the "Documents"):
(i) the Underwriting Agreement;
(ii) that certain registration statement on Form S-1 as filed
by the Company with the Securities and Exchange Commission on
September 12, 1996, together with any and all exhibits and
schedules and all heretofore filed amendments thereto
(collectively, the "Registration Statement");
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_____________, 1996
(iii) the Company's prospectus dated _______________, 1996
(the "Prospectus");
(iv) a search of the United States Patent and Trademark Office
records relevant to ownership of any and all:
patents and patent applications (including, without
limitation, the patents and patent applications listed
on Schedule A annexed hereto and hereby incorporated
by reference herein (collectively, the "Patents")),
and trademarks, trademark applications, service marks
and service xxxx applications (collectively, the
"Marks") (including, without limitation, the Marks
listed on Schedule B annexed hereto and hereby
incorporated by reference herein (collectively, the
"Trademarks")),
owned, purportedly owned or licensed by the Company
(including, those patents, patent applications and Marks
licensed, without limitation, pursuant to the licenses listed
on Schedule C annexed hereto and hereby incorporated by
reference herein (collectively, the "Licenses")), conducted by
______________________________ and certified as true and
correct as of _______________________, 1996 (no earlier than 5
days prior to the effective date of the Registration
Statement);
(v) a search of the United States Copyright Office records
relevant to ownership of any and all copyrighted material
(including, without limitation, the copyright in, or license
permitting the Company's actual use of, the material licensed
or otherwise distributed by the Company and listed on Schedule
D annexed hereto and hereby incorporated by reference herein
(collectively, the "Copyrighted Material")), owned,
purportedly owned or licensed by the Company conducted by
_____________________ and certified as true and correct as of
__________________, 1996 (no earlier than 5 days prior to the
effective date of the Registration Statement);
(vi) an intellectual property litigation search with respect
to all Patents, Trademarks, Licenses and Copyrighted Material,
listed on Schedules A, B, C and D, respectively;
(vii) a search of the Uniform Commercial Code ("UCC")
recordation offices, in the following jurisdictions --
Delaware, Tennessee, New York and Ohio, with respect to the
following two categories of general intangibles:
(a) the intellectual property general intangibles of
the Company, including, without limitation, the
Company's patents, patent applications,
-3-
_____________, 1996
inventions, know how, trademarks, service marks,
copyrights, service and trade names, intellectual
property licenses and other rights, and
(b) the intellectual property general intangibles
licensed to the Company, including, without
limitation, the patents, patent applications,
inventions, know how, trademarks, service marks,
copyrights, service and trade names and other
intellectual property rights licensed to the Company
pursuant to the Licenses (listed on Schedule C),
said search certified to us as complete and accurate by
________________ and current through ________________________,
1996 (no earlier than 5 days prior to the effective date of
the Registration Statement) and said jurisdictions being the
only jurisdictions in which filing of UCC financing statements
or other documents may be filed to effectively evidence a
security or other interest in said general intangibles; and
(viii) any and all records, documents, instruments and
agreements in our possession or under our control relating to
the Company.
We have also examined such corporate records, documents,
instruments and agreements, and inquired into such other matters, as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
Whenever our opinion herein is qualified by the phrase "to the best of our
knowledge" or "to the best of our knowledge, after due inquiry," such language
means that, based upon (i) our inquiries of officers of the Company, (ii) our
review of the Documents, and (iii) our review of such other corporate records,
documents, instruments and agreements described in the first sentence of this
paragraph, we believe that such opinions are factually correct.
To the best of our knowledge, as to all matters of fact
represented to you by the Company, we advise you that nothing has come to our
attention that would cause us to believe that such facts are incorrect,
incomplete or misleading or that reliance thereon is not warranted under the
circumstances. We call to your attention that our opinion is limited to such
facts as they exist on the date hereof and do not take into account any change
of circumstances, fact or law subsequent thereto.
Based upon and subject to the foregoing, we are of the opinion
that:
1. To the best of our knowledge, after due inquiry,
except as described in the Prospectus, the Company owns or has
the right to use, free and clear of all liens, encumbrances,
pledges, security interests, defects or other restrictions or
equities of any kind whatsoever,
-4-
_____________, 1996
(i) all patents and patent applications (including,
without limitation, the Patents),
(ii) all trademarks and service marks (including,
without limitation, the Trademarks),
(iii) all copyrights (including, without limitation,
the Copyrighted Material),
(iv) all service and trade names, and
(v) all intellectual property licenses (including,
without limitation, the Licenses),
used in, or required for, the conduct of the Company's
respective business.
2. To the best of our knowledge, after due inquiry,
the Company possesses all material intellectual property
licenses or rights used in, or required for, the conduct of
its respective business (including, the Licenses and without
limitation, any such licenses or rights described in the
Prospectus as being owned, possessed or licensed by the
Company) and such licenses and rights are in full force and
effect.
3. To the best of our knowledge, after due inquiry,
there is no claim or action, pending, threatened or potential,
which affects or could affect the rights of the Company with
respect to any trademarks, service marks, copyrights, service
names, trade names, patents, patent applications or licenses
used in, or required for, the conduct of the Company's
business.
4. To the best of our knowledge, after due inquiry,
there is no intellectual property based claim or action,
pending, threatened or potential, which affects or could
affect the rights of the Company with respect to any products,
services, processes or licenses, including, without
limitation, the Licenses used in the conduct of the Company's
business.
5. To the best of our knowledge, after due inquiry,
except as described in the Prospectus, the Company is not
under any obligation to pay royalties or fees to any third
party with respect to any material, technology or intellectual
properties developed, employed, licensed or used by the
Company.
6. To the best of our knowledge, after due inquiry,
the statements in the Prospectus under the headings, "Risk
Factors - Unpredictability of Patent
-5-
_____________, 1996
Protection and Proprietary Technology," "Risk Factors-Royalty
Obligation" and "Business - Intellectual Property", are
accurate in all material respects, fairly represent the
information disclosed therein and do not omit to state any
fact necessary to make the statements made therein complete
and accurate.
7. To the best of our knowledge, after due inquiry,
the statements in the Registration Statement and Prospectus do
not contain any untrue statement of a material fact with
respect to the intellectual property position of the Company
or omit to state any material fact relating to the
intellectual property position of the Company which is
required to be stated in the Registration Statement and the
Prospectus or is necessary to make the statements therein not
misleading.
We call your attention to the fact that the members of this
firm are licensed to practice law in the State of ______________ and before the
United States Patent and Trademark Office as Registered Patent Attorneys.
Accordingly, we express no opinion with respect to the laws, rules and
regulations of any jurisdictions other than the State of ___________ and the
United States of America.
The opinions expressed herein are for the sole benefit of, and
may be relied upon only by, the several Underwriters named in Schedule A to the
Underwriting Agreement and Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP.
Very truly yours,
