UNDERWRITING AGREEMENT
Dated: 2000
MAY XXXXX GROUP, INC.
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ARTESIA SECURITIES S.A./NV
WTC- Tower I
Boulevard du Rui Xxxxxx XX, 30 -B18
X-0000 Xxxxxxxx, Xxxxxxx
Ladies and Gentlemen:
Pursuant to this Underwriting Agreement (this "Agreement"), Utek
Corporation, a Delaware corporation (the "Company"), proposes to issue and sell
to May Xxxxx Group, Inc. ("May Xxxxx") and Artesia Securities S.A./NV
("Artesia", May Xxxxx and Artesia are collectively known as the "Underwriters"
or "you"), an aggregate of 1,000,000 shares (the "Firm Securities") of the
common stock, par value $.001 per share, of the Company (the "Common Stock").
In addition, the Company proposes to grant to the Underwriters the
Over-Allotment Option, referred to and defined in Section 2(c) hereof, to
purchase all or any part of an aggregate of 150,000 additional shares of Common
Stock (the "Option Securities").
The Firm Securities and the Option Securities are herein collectively
called the "Shares." The Firm Securities are collectively referred herein as the
"Firm Securities" and the Option Securities are collectively referred to herein
as the "Option Securities." The Firm Securities and the Option Securities are
collectively referred to herein as the "Securities". Additionally, the Company
proposes to issue to each of you the Underwriters Warrant, referred to and
defined in Section 12 hereof, to purchase additional shares of Common Stock. The
term "Underwriters' Counsel" shall mean the firm of XxXxxxxxxx & Xxxxx, LLP,
counsel to the Underwriters, and the term "Company Counsel" shall mean the firm
of Xxxxxxx, Savage & Xxxxxxxxx, LLP,, counsel to the Company. Unless the context
otherwise requires, all references herein to a "Section" shall mean the
appropriate Section of this Agreement.
You have advised the Company that the Underwriters desire to purchase
the Firm Securities as herein provided. The Company confirms the agreement made
by it with respect to the purchase of the Firm Securities as well as the Option
Securities by the Underwriters, as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to, and agrees with, the
Underwriters that:
(i) Registration Statement; Prospectus. A
registration statement (File No. 333-93913 ) on Form N-2 relating to the public
offering of the Securities (the "Offering"), including a preliminary form of
prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933 (the "Act"), and the rules and regulations of the Securities and
Exchange Commission (the "Commission") promulgated thereunder (the "Rules and
Regulations"), and has been filed with the Commission under the Act. As used
herein, the term "Preliminary Prospectus" shall mean each prospectus filed
pursuant to Rule 430 or Rule 424(a) of the Rules and Regulations. The
Preliminary Prospectus bore the legend required by Item 501 of Regulation S-K
under the Act and the Rules and Regulations. Such registration statement
(including all financial statements, schedules and exhibits) as amended at the
time it becomes effective and the final prospectus included therein are herein
respectively called the "Registration Statement" and the "Prospectus," except
that (i) if the prospectus filed by the Company pursuant to Rule 424(b) or Rule
430A of the Rules and Regulations shall differ from such final prospectus as
then amended, then the term "Prospectus" shall instead mean the prospectus first
filed pursuant to said Rule 424(b) or Rule 430A, and (ii) if such registration
statement is amended or such prospectus is amended or supplemented after the
effective date of such registration statement and prior to the Option Closing
Date (as defined in Section 2(c) hereto) then (unless the context necessarily
requires otherwise) the term "Registration Statement" shall include such
registration statement as so amended, and the term "Prospectus" shall include
such prospectus as so amended or supplemented, as the case may be.
(ii) Contents of Registration Statement. On the
Effective Date, and at all times subsequent thereto for so long as the delivery
of a prospectus is required in connection with the offering or sale of any of
the Securities, (a) the Registration Statement and the Prospectus shall in all
material respects conform to the requirements of the Act and the Rules and
Regulations, and (b) neither the Registration Statement nor the Prospectus shall
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make statements therein in
light of the circumstances in which they were made, not misleading; provided,
however, that the Company, makes no representations, warranties or agreements as
to information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Underwriters specifically for
use in the preparation thereof. It is understood that the statements set forth
in the Prospectus with respect to stabilization, the material set forth under
the caption "UNDERWRITING," the information on the cover page of the Prospectus
regarding the underwriting arrangements and the identity of the Underwriters'
Counsel under the caption "LEGAL MATTERS," which information the Underwriters
hereby represents and warrants to the Company is true and correct in all
material respects and does not omit to state any material fact required to be
stated therein or necessary to make statements therein, in light of the
circumstances in which they were made, not misleading, constitute the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Registration Statement and Prospectus, as the case may be.
2
(iii) Organization, Standing, Etc. The Company and each of its
subsidiaries (the "Subsidiaries") have been duly incorporated and are validly
existing as corporations in good standing under the laws of their respective
jurisdictions of incorporation, with full power and corporate authority to own
their properties and conduct their business as described in the Prospectus, and
are duly qualified or licensed to do business as foreign corporations and are in
good standing in each other jurisdiction in which the nature of their businesses
or the character or location of their properties requires such qualification,
except where failure so to qualify will not have a material adverse effect on
the business, properties or financial condition of the Company or its
Subsidiaries.
(iv) Capitalization. The authorized, issued and outstanding capital
stock of the Company as of the date of the Prospectus is as set forth in the
Prospectus under the caption "CAPITALIZATION." The shares of Common Stock issued
and outstanding on the Effective Date have been duly authorized, validly issued
and are fully paid and non-assessable. No options, warrants or other rights to
purchase, agreements or other obligations to issue, or agreements or other
rights to convert any obligation into, any shares of capital stock of the
Company have been granted or entered into by the Company, except as expressly
described in the Prospectus. The Securities conform to all statements relating
thereto contained in the Registration Statement or the Prospectus.
(v) Securities. The Securities and the Underwriters' Warrant have been
duly authorized and, when issued and delivered against payment therefor pursuant
to this Agreement, or the Underwriters' Warrant, as the case may be, will be
duly authorized, validly issued, fully paid and non-assessable and free of
preemptive rights of any security holder of the Company. Neither the filing of
the Registration Statement nor the offering or sale of any of the Securities or
the Underwriters' Warrant as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied, for or relating to
the registration of any securities of the Company, except as described in the
Registration Statement.
(vi) Authority, Etc. This Agreement, the Underwriters' Warrant and the
Financial Consulting Agreement (as hereinafter defined), have been duly and
validly authorized, executed and delivered by the Company and, assuming due
execution of this Agreement and such other agreements by the other party or
parties hereto and thereto, constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms. The Company has full right, power and lawful authority to authorize,
issue and sell the Securities and the Underwriters' Warrant on the terms and
conditions set forth herein. All consents, approvals, authorizations and orders
of any court or governmental authority which are required in connection with the
authorization, execution and delivery of such agreements, the authorization,
issue and sale of the Securities and the Underwriters' Warrant, and the
consummation of the transactions contemplated hereby have been obtained.
(vii) No Conflict. Except as described in the Prospectus, the Company
is not in violation, breach or default of or under, and consummation of the
transactions hereby contemplated and fulfillment of the terms of this Agreement
3
will not conflict with or result in a breach of, any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance pursuant to the terms of, any contract,
indenture, mortgage, deed of trust, loan agreement or other material agreement
or instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary may be bound or to which any of the property or assets
of the Company or any Subsidiary is subject, nor will such action result in any
violation of the provisions of the Articles of Incorporation or the By-laws of
the Company or any Subsidiary, as amended to date, or any statute or any order,
rule or regulation applicable to the Company or any Subsidiary, or of any court
or of any regulatory authority or other governmental body having jurisdiction
over the Company or any Subsidiary.
(viii) Assets. Subject to the qualifications stated in the Prospectus:
(a) the Company and each Subsidiary have good and marketable title to all
properties and assets described in the Prospectus as owned by them, including
without limitation intellectual property, free and clear of all liens, charges,
encumbrances or restrictions, except such as do not materially affect the value
of such properties or assets and do not materially interfere with the use made
or proposed to be made of such assets or properties by the Company and/or the
Subsidiaries or are not materially significant or important in relation to the
business of the Company or the Subsidiaries; (b) all of the material leases and
subleases under which the Company and/or the Subsidiaries is the lessor or
sublessor of properties or assets or under which the Company and/or the
Subsidiaries holds properties or assets as lessee or sublessee, as described in
the Prospectus, are in full force and effect and, except as described in the
Prospectus, the Company and/or the Subsidiaries are not in default in any
material respect with respect to any of the terms or provisions of any of such
leases or subleases, and no claim has been asserted by any party adverse to the
rights of the Company and/or the Subsidiaries as lessor, sublessor, lessee or
sublessee under any such lease or sublease, or affecting or questioning the
right of the Company and/or the Subsidiaries to continued possession of the
leased or subleased premises or assets under any such lease or sublease, except
as described or referred to in the Prospectus; and (c) the Company and each
Subsidiary, owns or leases all such assets and properties, described in the
Prospectus, as are necessary to their operations as now conducted and, except as
otherwise stated in the Prospectus, as proposed to be conducted as set forth in
the Prospectus.
(ix) Independent Accountants. Ernst & Young, LLP, who have given their
report on certain financial statements filed or to be filed with the Commission
as a part of the Registration Statement, and which are included in the
Prospectus, are with respect to the Company and its Subsidiaries, independent
public accountants as required by the Act and the Rules and Regulations.
(x) Financial Statements. The financial statements, together with
related notes, set forth in the Registration Statement and the Prospectus
present fairly the financial position, results of operations, changes in
stockholders' equity and cash flows of the Company and the Subsidiaries on the
basis stated in the Registration Statement, at the respective dates and for the
respective periods to which they apply. Such financial statements and related
notes have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the entire period involved,
except to the extent disclosed therein. The Selected Financial Data included in
4
the Registration Statement and the Prospectus present fairly the information
shown therein and have been prepared on a basis consistent with that of the
financial statements included in the Registration Statement and the Prospectus.
(xi) No Material Change. Except as otherwise set forth in the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary have: (i) incurred any material liability or obligation, direct or
contingent, or entered into any material transaction other than in the ordinary
course of business; (ii) effected or experienced any change in its capital stock
or incurred any long-term debt, (iii) issued any options, warrants or other
rights to acquire its capital stock; (iv) declared, paid or made any dividend or
distribution of any kind on its capital stock; or (v) effected or experienced
any material adverse change, or development involving a prospective material
adverse change, in its financial position, net worth, results of operations,
business or business prospects, assets or properties or key personnel.
(xii) Litigation. Except as set forth in the Prospectus, there is not
now pending nor, to the knowledge of the Company or any Subsidiary, threatened,
any action, suit or proceeding (including any related to environmental matters
or discrimination on the basis of age, sex, religion or race), whether or not in
the ordinary course of business, to which the Company or any Subsidiary is a
party or its business or property is subject, before or by any court or
governmental authority, which, if determined adversely to the Company or any
Subsidiary, would have a material adverse effect on the financial position, net
worth, or results of operations, business or business prospects, assets or
property of the Company or any Subsidiary; and no labor disputes involving the
employees of the Company or any Subsidiary exist which would materially
adversely affect the business, property, financial position or results of
operations of the Company or any Subsidiary.
(xiii) No Unlawful Prospectuses. The Company has not distributed any
prospectus or other offering material in connection with the Offering
contemplated herein, other than any Preliminary Prospectus, the Prospectus or
other material permitted by the Act and the Rules and Regulations.
(xiv) Taxes. Except as disclosed in the Prospectus, the Company and
each Subsidiary have filed all necessary federal, state, local and foreign
income and franchise tax returns and have paid all taxes shown as due thereon on
or before the date such taxes are due to be paid; and there is no tax deficiency
which has been or, to the knowledge of the Company or any Subsidiary, might be
asserted against the Company or any Subsidiary.
(xv) Licenses, Etc. The Company and each Subsidiary have in effect
all necessary licenses, permits and other governmental authorizations currently
required for the conduct of their businesses or the ownership of their property,
as described in the Prospectus, and are in all material respects in compliance
therewith. The Company and each Subsidiary own or possess adequate rights to use
all material patents, patent applications, trademarks, xxxx registrations,
copyrights and licenses disclosed in the Prospectus and/or which are necessary
for the conduct of such business, and except as disclosed in the Prospectus
neither the Company nor any Subsidiary have received any notice of conflict with
the asserted rights of others in respect thereof. To the knowledge of the
5
Company, none of the activities or business of the Company and its Subsidiaries
is in violation of, or would cause the Company or any Subsidiary to violate, any
law, rule, regulation or order of the United States, any country, state, county
or locality, the violation of which would have a material adverse effect upon
the financial position, net worth, results of operations, business or business
prospects, assets or property of the Company.
(xvi) No Prohibited Payments. The Company has not, directly or
indirectly at any time: (i) made any contribution to any candidate for political
office, or failed to disclose fully any such contribution in violation of law;
or (ii) made any payment to any federal, state, local or foreign governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments or contributions required or allowed by applicable
law. The internal accounting controls and procedures of the Company are
sufficient to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.
(xvii) Transfer Taxes. On the Closing Dates (as defined in Section
2(d) hereof), all transfer and other taxes (including franchise, capital stock
and other taxes, other than income taxes, imposed by any jurisdiction), if any,
which are required to be paid in connection with the sale and transfer of the
Shares to the Underwriters hereunder shall have been fully paid or provided for
by the Company, and all laws imposing such taxes shall have been fully complied
with.
(xviii) Exhibits. All contracts and other documents of the Company
which are, under the Rules and Regulations, required to be filed as exhibits to
the Registration Statement have been so filed.
(xix) Stockholder Agreements, Registration Rights. Except as described
in the Prospectus, no security holder of the Company has any rights with respect
to the purchase, sale or registration of any Securities, and all registration
rights with respect to the Offering have been waived or complied with.
(xx) No Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to cause or result
in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of the Securities hereunder.
(xxi) No Finders. Except for this Agreement and any other agreements
with the Underwriters, the Company has not entered into any agreement pursuant
to which any person is entitled either directly or indirectly to compensation
from the Company for services as a finder in connection with the proposed public
offering.
6
2. PURCHASE, DELIVERY AND SALE OF THE SECURITIES.
Purchase Price for the Firm Securities.
The Firm Securities shall be sold to and purchased by the Underwriters
hereunder at the purchase price of $5.40 per Share (that being the public
offering price of $6.00 per Share less an underwriting discount of 10 percent)
(the "Purchase Price").
(b) Firm Securities.
(i) Subject to the terms and conditions of this Agreement, and
on the basis of the representations, warranties and agreements herein contained
the Company agrees to issue and sell to the Underwriters, and the Underwriters
agree to buy from the Company at the Purchase Price, the Firm Securities. Each
of the Underwriters shall be responsible to purchase 500,000 Firm Securities.
The obligations of the Underwriters in the agreement are several and not joint
and are undertaken on the basis of the representations and are subject to the
conditions of this Agreement.
(ii) Delivery of the Firm Securities against payment therefor
shall take place at the offices of the Underwriters (or at such other place as
may be designated by agreement between you and the Company) at 10:00 a.m.,
Eastern Daylight Time, on _______ , 2000, or at such later time and date, not
later than five (5) business days after the Effective Date, as you may designate
(such time and date of payment and delivery for the Firm Securities being herein
called the "First Closing Date"). Time shall be of the essence and delivery of
the Firm Securities at the time and place specified in this Section 2(b)(ii) is
a further condition to the obligations of the Underwriters hereunder.
(c) Option Securities.
(i) In addition, subject to the terms and conditions of this
Agreement, and on the basis of the representations, warranties and agreements
herein contained, the Company hereby grants to the Underwriters an option (the
"Over-Allotment Option"), to purchase from the Company all or any part of
150,000 Option Securities at the Purchase Price, including 75,000 which may be
purchased by each Underwriter.
(ii) The Over-Allotment Option may be exercised by the
Underwriters, in whole or in part, within 45 calendar days after the Effective
Date, upon written notice by you to the Company, advising the Company of the
number of Option Securities as to which the Over-Allotment Option is being
exercised, the names and denominations in which the certificates for the Option
Securities are to be registered, and the time and date when such certificates
are to be delivered. Such time and date shall be determined by you but shall not
be less than two nor more than 10 business days after exercise of the
Over-Allotment Option, nor in any event prior to the First Closing Date (such
time and date being herein called the "Option Closing Date"). Delivery of the
Option Securities against payment therefor shall take place at the Underwriters'
Offices. Time shall be of the essence and delivery at the time and
7
place specified in this Section 2(c)(ii) is a further condition to the
obligations of the Underwriters hereunder.
(iii) The Over-Allotment may be exercised only to cover
over-allotments in the sale by the Underwriters of Firm Securities.
(d) Delivery of Certificates; Payment.
(i) The Company shall make the certificates for the Securities
to be purchased hereunder available to you for checking at least one full
business day prior to the First Closing Date or the Option Closing Date (each, a
"Closing Date"), as the case may be. The certificates shall be in such names and
denominations as you may request at least two business days prior to the
relevant Closing Date. Time shall be of the essence and the availability of the
certificates at the time and place specified in this Section 2(d)(1) is a
further condition to the obligations of the Underwriters hereunder.
(ii) On the First Closing Date, the Company shall deliver to
you for the account of the Underwriters definitive engraved certificates in
negotiable form representing all of the Securities comprising the Firm
Securities to be sold by the Company against payment of the Purchase Price
therefor by you, for your account, by certified or bank cashier's checks payable
in New York Clearing House funds to the order of the Company in the appropriate
amount.
(iii) In addition, if and to the extent that the Underwriters
exercise the Over-Allotment Option, then on the Option Closing Date the Company
shall deliver to you for your account, definitive engraved certificates in
negotiable form representing the Securities comprising the Option Securities to
be sold by the Company, against payment of the Purchase Prices therefor by you
for your account, by certified or bank cashier's checks payable in next day
funds to the order of the Company.
(iv) It is understood that the Underwriters propose to offer
the Firm Securities to be purchased hereunder to the public, upon the terms and
conditions set forth in the Registration Statement, after the Registration
Statement becomes effective.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Underwriters that:
(a) Registration.
(i) The Company shall use its best efforts to cause the
Registration Statement to become effective and, upon notification from the
Commission that the Registration Statement has become effective, shall so advise
you and shall not at any time, whether before or after the Effective Date, file
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus of which you shall not previously have been advised and furnished
8
with a copy, or to which you or Underwriters' Counsel shall have objected in
writing, or which is not in compliance with the Act and the Rules and
Regulations.
(ii) Promptly after you or the Company shall have been advised
thereof, you shall advise the Company or the Company shall advise you, as the
case may be, and confirm such advice in writing, of (A) the receipt of any
comments of the Commission, (B) the effectiveness of any post-effective
amendment to the Registration Statement, (C) the filing of any supplement to the
Prospectus or any amended Prospectus, (D) any request made by the Commission for
amendment of the Registration Statement or amendment or supplementing of the
Prospectus, or for additional information with respect thereto, or (E) the
issuance by the Commission or any state or regulatory body of any stop order or
other order denying or suspending the effectiveness of the Registration
Statement, or preventing or suspending the use of any Preliminary Prospectus, or
suspending the qualification of the Securities for offering in any jurisdiction,
or otherwise preventing or impairing the Offering, or the institution or threat
of any proceeding for any of such purposes. The Company and you shall not
acquiesce in such order or proceeding, and shall instead actively defend such
order or proceeding, unless the Company and you agree in writing to such
acquiescence.
(iii) The Company has caused to be delivered to you copies of
each Preliminary Prospectus, and the Company has consented and hereby consents
to the use of such copies for the purposes permitted by the Act. The Company
authorizes the Underwriters and selected dealers to use the Prospectus in
connection with the sale of the Securities for such period as in the opinion of
Underwriters' Counsel the use thereof is required to comply with the applicable
provisions of the Act and the Rules and Regulations. In case of the happening,
at any time within such period as a prospectus is required under the Act to be
delivered in connection with sales by the Underwriters or a dealer, of any event
of which the Company has knowledge and which materially affects the Company or
the Securities, or which in the opinion of Company Counsel or of Underwriters'
Counsel should be set forth in an amendment to the Registration Statement or an
amendment or supplement to the Prospectus in order to make the statement made
therein not then misleading, in light of the circumstances existing at the time
the Prospectus is required to be delivered to a purchaser of the Securities, or
in case it shall be necessary to amend or supplement the Prospectus to comply
with the Act or the Rules and Regulations, the Company shall notify you promptly
and forthwith prepare and furnish to the Underwriters copies of such amended
Prospectus or of such supplement to be attached to the Prospectus, in such
quantities as you may reasonably request, in order that the Prospectus, as so
amended or supplemented, shall not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which they
are made, not misleading. The preparation and furnishing of each such amendment
to the Registration Statement, amended Prospectus or supplement to be attached
to the Prospectus shall be without expense to the Underwriters. If the
Underwriters are required, in connection with the sale of the Securities, to
deliver a prospectus nine months or more after the Effective Date, the Company
shall upon your request, amend the Registration Statement and amend or
supplement the Prospectus, or file a new registration statement, if necessary,
and furnish the Underwriters with reasonable quantities of prospectuses
complying with section 10(a)(3) of the Act.
9
(iv) The Company will deliver to you at or before the First
Closing Date two signed copies of the Registration Statement including all
financial statements and exhibits filed therewith, and of all amendments
thereto. The Company will deliver to or upon your order, from time to time until
the Effective Date as many copies of any Preliminary Prospectus filed with the
commission prior to the Effective Date as you may reasonably request. The
Company will deliver to you on the Effective Date and thereafter for so long as
a Prospectus is required to be delivered under the Act, from time to time, as
many copies of the Prospectus, in final form, or as thereafter amended or
supplemented, as the Underwriters may from time to time reasonably request.
(v) The Company shall comply with the Act, the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder in connection with
the offering and issuance of the Securities in all material respects.
(b) Blue Sky. The Company shall, at its own expense, use its
best efforts to qualify or register the Securities for sale (or obtain an
exemption from registration) under the securities or "blue sky" laws of such
jurisdictions as you may designate, and shall make such applications and furnish
such information to Underwriters' Counsel as may be required for that purpose,
and shall comply with such laws; provided, however, that the Company shall not
be required to qualify as a foreign corporation or a dealer in securities or to
execute a general consent to service of process in any jurisdiction in any
action other than one arising out of the offering or sale of the Securities. The
Company shall bear all of the expense of such qualifications and registrations,
including without limitation the legal fees and disbursements of Underwriters'
Counsel, which fees, exclusive of disbursements, shall not exceed $35,000
(unless otherwise agreed). After each Closing Date the Company shall, at its own
expense, from time to time prepare and file such statements and reports as may
be required to continue each such qualification (or maintain such exemption from
registration) in effect for so long a period as required by law, regulation or
administrative policy in connection with the offering of the Securities. In
addition, the Company shall engage Underwriters' Counsel to provide the
Underwriters, at the Closing and quarterly thereafter, until such time as the
Common Stock is listed on the New York Stock Exchange or the American Stock
Exchange or quoted on NASDAQ/NMS, with a memorandum, setting forth those states
in which the Common Stock may be traded in non-issuer transactions under the
Blue Sky laws of the 50 states. The Company shall pay such counsel a one-time
fee of $7,500 at the Closing for such opinions.
(c) Prospectus Copies. The Company shall deliver to you on or before
the First Closing Date a copy of the Registration Statement including all
financial statements, schedules and exhibits filed therewith, and of all
amendments thereto. The Company shall deliver to or on the order of the
Underwriters, from time to time until the Effective Date, as many copies of any
10
Preliminary Prospectus filed with the Commission prior to the Effective Date as
the Underwriters may reasonably request. The Company shall deliver to the
Underwriters on the Effective Date, and thereafter for so long as a prospectus
is required to be delivered under the Act, from time to time, as many copies of
the Prospectus, in final form, or as thereafter amended or supplemented, as the
Underwriters may from time to time reasonably request.
(d) Amendments and Supplements. The Company shall, promptly upon your
request, prepare and file with the Commission any amendments to the Registration
Statement, and any amendments or supplements to the Preliminary Prospectus or
the Prospectus, and take any other action which in the reasonable opinion of
Underwriters' Counsel and Company Counsel may be reasonably necessary or
advisable in connection with the distribution of the Securities, and shall use
its best efforts to cause the same to become effective as promptly as possible.
(e) Certain Market Practices. The Company has not taken, and shall not
take, directly or indirectly, any action designed, or which might reasonably be
expected, to cause or result in, or which has constituted, the stabilization or
manipulation of the price of the Securities to facilitate the sale or resale
thereof.
(f) Certain Representations. Neither the Company nor any representative
of the Company has made or shall make any written or oral representation in
connection with the Offering and sale of the Securities or the Underwriters'
Warrant that is not contained in the Prospectus, which is otherwise inconsistent
with or in contravention of anything contained in the Prospectus, or which shall
constitute a violation of the Act, the Rules and Regulations, the Exchange Act
or the rules and regulations promulgated under the Exchange Act.
(g) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Securities substantially for the purposes set forth in the
Prospectus under the caption "USE OF PROCEEDS," and shall file such reports with
the Commission with respect to the sale of the Securities and the application of
the proceeds therefrom as may be required pursuant to Rule 463 of the Rules and
Regulations.
(h) Twelve Months' Earnings Statement. The Company shall make generally
available to its security holders and deliver to you as soon as it is
practicable so to do, but in no event later than 90 days after the end of twelve
months after the close of its Current fiscal quarter, an earnings statement
(which need not be audited) covering a period of at least 12 consecutive months
beginning after the Effective Date, which shall satisfy the requirements of
section 11 (a) of the Act.
(i) NASDAQ Exchange Listings, Etc. The Company shall immediately make
all filings required to seek approval for the quotation of the Securities on the
NASDAQ Small Cap Market ("NASDAQ") and shall use its best efforts to effect and
maintain such approval for at least five years from the Effective Date. Within
10 days after the Effective Date, the Company shall also use its best efforts to
list itself in Xxxxx'x OTC Industrial Manual, Standard & Poor's or other
recognized securities manual acceptable to the Underwriters and to cause such
listing to be maintained for five years from the Effective Date.
11
(j) Board of Directors. For a period of three (3) years from the
Effective Date, the Company shall allow an observer designated by May Xxxxx to
receive notice of and to attend all meetings of the Board of Directors of the
Company or, during the three (3) years after the Effective Date, require the
Company to use its best efforts to elect May Xxxxx' nominee to the Company's
Board of Directors, and shall be compensated in the same manner as are other
directors of the Company.
(k) Periodic Reports. For so long as the Company is a reporting company
under section 12(g) or section 15(d) of the Exchange Act, the Company shall, at
its own expense, furnish to its stockholders an annual report (including
financial statements audited by certified public accountants) in reasonable
detail. In addition, during the period ending five years from the date hereof,
the Company shall, at its own expense, furnish to you: (i) within 90 days of the
end of each fiscal year, a balance sheet of the Company and its Subsidiaries as
at the end of such fiscal year, together with statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries as at
the end of such fiscal year, all in reasonable detail and accompanied by a copy
of the certificate or report thereon of certified public accountants; (ii) as
soon as they are available, a copy of all reports (financial or otherwise)
distributed to security holders; (iii) as soon as they are available, a copy of
all non-confidential reports and financial statements furnished to or filed with
the Commission; and (iv) such other information as you may from time to time
reasonably request. The financial statements referred to herein shall be on a
consolidated basis to the extent the accounts of the Company and its
Subsidiaries are consolidated in reports furnished to its stockholders
generally.
(l) Future Sales. For a period of two (2) years following the First
Closing Date, the Company shall not issue, sell or otherwise dispose of any
securities of the Company without May Xxxxx' prior written consent, which
consent shall not be unreasonably withheld; provided, however, that the Company
may at any time issue shares of Common Stock pursuant to the exercise of the
Underwriters' Warrant, and options, warrants or conversion rights issued and
outstanding on the Effective Date and described in the Prospectus. May Xxxxx
agrees to not unreasonably withhold or unduly delay its consent to the issuance
of securities as part of the purchase price of the Company's acquisition of
assets.
(m) Available Shares. The Company shall reserve and at all times keep
available that maximum number of its authorized but unissued Securities which
are issuable upon exercise of the Underwriters' Warrant, in each case taking
into account the anti-dilution provisions thereof.
(n) Financial Consulting Agreement. On the First Closing Date and
simultaneously with the delivery of the Firm Securities, the Company shall
execute and deliver to May Xxxxx an agreement with May Xxxxx, in the form
previously delivered to the Company by May Xxxxx, regarding its services as a
financial consultant to the Company (the "Financial Consulting Agreement").
(o) Stock Transfer Sheets. The Company shall instruct its transfer
agent to deliver to you copies of all advance sheets showing the daily transfer
of the outstanding shares of Common Stock sold by the Company in the public
offering and shall, at its own expense, furnish you with Depository Trust
Company stock transfer sheets on a weekly basis for the period ending three (3)
years from the First Closing Date.
12
(p) Bound Volumes. Within 120 days from the First Closing Date, the
Company shall deliver to each Underwriter, at the Company's expense, two bound
volumes, and two bound volumes to Underwriters' Counsel, in form and content
acceptable to you, containing the Registration Statement and all exhibits filed
therewith and all amendments thereto, and all other agreements, correspondence,
filings, certificates and other documents filed and/or delivered in connection
with the Offering.
(q) In addition to the fundamental policies listed above, we have
agreed with the Underwriters, that for the 12 month period following this
offering, we will not, without the prior written consent of May Xxxxx:
o invest more than $500,000 of our net assets in any single
portfolio company;
o permit a portfolio company to commit significant amounts of
the funds we have invested towards payment to third parties
for the acquisition of the rights to a technology or the
further development of the technology, until we have an
agreement in place to resell the technology or to merge the
technology with an acquiring company or at least an executed
letter of intent; or
o invest more than 10% of the proceeds of this offering in
portfolio companies which will merge with privately owned
companies.
4. CONDITIONS TO UNDERWRITERS' OBLIGATIONS. The obligations of the Underwriters
to purchase and pay for the Securities which they have agreed to purchase
hereunder are subject to the accuracy (as of the date hereof and as of each
Closing Date) of and compliance with the representations and warranties of the
Company contained herein, the performance by the Company of all of its
respective obligations hereunder and the following further conditions:
(a) Effective Registration Statement; No Stop Order. The Registration
Statement shall have become effective and you shall have received notice thereof
not later than 6:00 p.m., New York time, on the date of this Agreement, or at
such later time or on such later date as to which you may agree in writing. In
addition, on each Closing Date (i) no stop order denying or suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceedings for that or any similar purpose shall have been instituted or shall
be pending or, to your knowledge or to the knowledge of the Company, shall be
contemplated by the Commission, and (ii) all requests on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Underwriters' Counsel.
(b) Opinion of Company Counsel. On the First Closing Date, you shall
have received the opinion, dated as of the First Closing Date, of Company
Counsel, in form and substance satisfactory to the Underwriters' Counsel, to the
effect that:
13
(i) the Company and its Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, with
full corporate power and authority to own their properties and conduct
their business as described in the Prospectus, and are duly qualified
or licensed to do business as foreign corporations and are in good
standing in each other jurisdiction in which the nature of their
business or the character or location of their properties requires such
qualification, except where failure to so qualify will not have a
material adverse effect on the business, properties or financial
condition of the Company or its Subsidiaries;
(ii) (A) the authorized capitalization of the Company
as of the date of the Prospectus was as is set forth in the Prospectus
under the caption "CAPITALIZATION;" (B) all of the shares of capital
stock now outstanding have been duly authorized and validly issued, are
fully paid and non-assessable, conform in all material respects to the
description thereof contained in the Prospectus, have not been issued
in violation of the preemptive rights of any stockholder and, except as
described in the Prospectus, are not subject to any restrictions upon
the voting or transfer thereof; (C) all have been duly authorized and,
when issued and delivered to the Underwriters against payment therefor
as provided herein, shall be validly issued, fully paid and
non-assessable, shall not have been issued in violation of the
preemptive rights of any stockholder, and no personal liability shall
attach to the ownership thereof; (D) the stockholders of the Company do
not have any preemptive rights or other rights to subscribe for or
purchase, and except for the transfer restrictions imposed by Rule 144
of the Rules and Regulations promulgated under the Act, there are no
restrictions upon the voting or transfer of, any of the Securities; (E)
the Securities and the Underwriters' Warrant conform in all material
respects to the respective descriptions thereof contained in the
Prospectus; (F) all issuances of the Company's securities have been
made in compliance with, or under an exemption from, the Act and
applicable state securities laws; (G) a sufficient number of shares of
Common Stock has been reserved, for all times when the Underwriters'
Warrant is outstanding, for issuance upon exercise of the Underwriters'
Warrant; and (H) to the knowledge of such counsel, neither the filing
of the Registration Statement nor the offering or sale of the
Securities as contemplated by this Agreement gives rise to any
registration rights or other rights, other than those which have been
effectively waived or satisfied or described in the Prospectus, for or
relating to the registration of any securities of the Company;
(iii) the certificates evidencing the Securities are each in
valid and proper legal form;
(iv) this Agreement, the Underwriters' Warrant and the
Financial Consulting Agreement have been duly and validly authorized,
executed and delivered by the Company and assuming due execution and
delivery thereof by the Underwriters all of such agreements are, or
when duly executed shall be, the valid and legally binding obligations
of the Company, enforceable in accordance with their respective terms
14
(except as enforceability may be limited by bankruptcy, insolvency or
other laws affecting the rights of creditors generally); provided,
however, that no opinion need to be expressed as to the enforceability
of the indemnity provisions contained in Section 6 or the contribution
provisions contained in Section 7;
(v) to the knowledge of such counsel, other than as described
in the Prospectus (A) there is no pending, threatened or contemplated
legal or governmental proceeding affecting the Company which could
materially and adversely affect the business, property, operations,
condition (financial or otherwise) or earnings of the Company, or which
questions the validity of the Offering, the Securities, this Agreement,
the Underwriters' Warrant or the Financial Consulting Agreement or of
any action taken or to be taken by the Company pursuant thereto; and
(B) there is no legal or governmental regulatory proceeding required to
be described or referred to in the Registration Statement which is not
so described or referred to;
(vi) to the knowledge of such counsel, (A) the Company is not
in violation of or in default under this Agreement, the Underwriters'
Warrant or the Financial Consulting Agreement; and (B) to the knowledge
of such counsel, the execution and delivery hereof and thereof and
consummation of the transactions herein or therein contemplated shall
not result in a material violation of, or constitute a default under,
the Certificate of Incorporation or By-laws of the Company, both as
amended to date, or any material obligation, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness, or in any material contract, indenture, mortgage, loan
agreement, lease, joint venture or other agreement or instrument to
which the Company is a party or by which the assets of the Company is
bound, or any material order, rule, regulation, writ, injunction or
decree of any government, governmental instrumentality or court
applicable to the Company;
(vii) to the knowledge of such counsel, (a) the Company and
each Subsidiary has obtained, or is in the process of obtaining, all
licenses, permits and other governmental authorizations necessary to
the conduct of their business as described in the Prospectus, (b) such
obtained licenses, permits and other governmental authorizations are in
full force and effect, and (c) the Company and each Subsidiary is in
all material respects complying therewith;
(viii) the Registration Statement has become effective under
the Act, and to the knowledge of such counsel, no stop order denying or
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for that or any similar purpose have been
instituted or are pending before or threatened by the Commission;
(ix) the Registration Statement and the Prospectus (except for
the financial statements, notes thereto and other financial information
and statistical data contained therein, as to which counsel need not
express an opinion) comply as to form in all material respects with the
Act and the Rules and Regulations;
15
(x) all descriptions contained in the Registration Statement
and the Prospectus, and any amendments or supplements thereto, of
contracts and other documents are accurate and fairly present the
information required to be described, and such counsel is familiar with
all contracts and other documents referred to in the Registration
Statement and the Prospectus, and any such amendment or supplement, or
filed as exhibits to the Registration Statement and, to the knowledge
of such counsel, no contract, document, license or permit of a
character required to be summarized or described therein or to be filed
as an exhibit thereto is not so summarized, described or filed.
(xi) the statements in the Registration Statement and
the Prospectus under the captions "Risk Factors," "Use of Proceeds,"
"Business," "Management," and "Description of Securities," which
purport to summarize the provisions of agreements, licenses, statutes
or rules and regulations, have been reviewed by such counsel and are
accurate summaries in all material respects;
(xii) except for registration under the Act and the Investment
Company Act of 1940 (the "40 Act") and registration or qualification of
the Securities under applicable state or foreign securities or blue sky
laws, no authorization, approval, consent or license of any
governmental or regulatory authority or agency is necessary in
connection with: (A) the authorization, issuance, sale, transfer or
delivery of the Securities by the Company in accordance with this
Agreement; (B) the execution, delivery and performance of this
Agreement by the Company or the taking of any action contemplated
herein; (C) the issuance of the Underwriters' Warrant in accordance
with this Agreement or the Securities issuable upon exercise thereof;
or the taking of any action contemplated herein.
(xiii) the Company is an investment company registered under
the Investment Company Act of 1940.
Such opinion shall also state that Company Counsel's examination of the
Registration Statement and its discussions with the Company and its independent
auditors did not disclose any information which gives Company Counsel reason to
believe that the Registration Statement (other than the financial statements and
other financial and statistical information as to which counsel need not express
an opinion) at the time it became effective contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus (other than the schedules, financial statements and other financial
and statistical information as to which no view is expressed) at the time it
became effective contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (other than the
financial statements and other financial and statistical information as to which
counsel need not express an opinion) contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
16
misleading. In addition, such opinion shall also cover such matters incident to
the transactions contemplated hereby as you or Underwriters' Counsel shall
reasonably request. In rendering such opinion, Company Counsel may rely as to
matters of fact upon certificates of officers of the Company, and of public
officials, and may rely as to all matters of law other than the law of the
United States and the General Corporation law of the State of Delaware upon
opinions of counsel satisfactory to you, in which case the opinion shall state
that they have no reason to believe that you and they are not entitled so to
rely.
(e) Corporate Proceedings. All corporate proceedings and other legal
matters relating to this Agreement, the Registration Statement, the Prospectus
and other related matters shall be reasonably satisfactory to or approved by
Underwriters' Counsel.
(f) Comfort Letters. Prior to the Effective Date, and again on and as
of the First Closing Date, you shall have received letters from Ernst & Young,
LLP, certified public accountants for the Company in form and substance
satisfactory to Underwriters' Counsel.
(g) Bring Down. At each of the Closing Dates, (i) the representations
and warranties of the Company contained in this Agreement shall be true and
correct with the same effect as if made on and as of such Closing Date, and the
Company shall have performed all of its obligations hereunder and satisfied all
the conditions to be satisfied at or prior to such Closing Date; (ii) the
Registration Statement and the Prospectus shall contain all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations, and shall in all material respects conform to the requirements of
the Act and the Rules and Regulations, and neither the Registration Statement
nor the Prospectus shall contain any untrue statement of a material fact or omit
to state any material fact required to be stated or which they were made, not
misleading; (iii) there shall have been, since the respective dates as of which
information is given, no material adverse change in the business, property,
operations, condition (financial or otherwise), earnings, capital stock,
long-term or short-term debt or general affairs of the Company from that set
forth in the Registration Statement and the Prospectus, except changes which the
Registration Statement and Prospectus indicate might occur after the Effective
Date, and the Company shall not have incurred any material liabilities or
entered into any material agreement other than as referred to in the
Registration Statement and Prospectus other than in the ordinary course of
business; and (iv) except as set forth in the Prospectus, no action, suit or
proceeding shall be pending or threatened against the Company before or by any
commission, board or administrative agency in the United States or elsewhere,
wherein an unfavorable decision, ruling or finding would materially adversely
affect the business, property, operations, condition (financial or otherwise),
earnings or general affairs of the Company. In addition, you shall have
received, at the First Closing Date, certificates signed by the respective
principal executive officers and principal financial officers of the Company,
dated as of the First Closing Date, evidencing compliance with the provisions of
this Section 4(g).
(h) Transfer and Warrant Agent. On or before the Effective Date, the
Company shall have appointed Continental Stock Transfer & Trust Company (or
17
other agent mutually acceptable to the Company and you), as its transfer agent
and warrant agent to transfer all of the Securities issued and sold by the
Company in the Offering, as well as to transfer other shares of the Common Stock
and Warrants outstanding from time to time.
(i) Certain Further Matters. On each Closing Date, Underwriters'
Counsel shall have been furnished with all such other documents and certificates
as they may reasonably request for the purpose of enabling them to render their
legal opinion to the Underwriters and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements, the
performance of any of the covenants, or the fulfillment of any of the
conditions, herein contained.
(j) Additional Conditions. Upon exercise of the Over-Allotment Option,
the Underwriters' obligations to purchase and pay for the Option Securities
shall be subject (as of the date hereof and as of the Option Closing Date) to
the following conditions:
(i) The Registration Statement shall remain effective at the
Option Closing Date, no stop order denying or suspending the effectiveness
thereof shall have been issued, and no proceedings for that or any similar
purpose shall have been instituted or shall be pending or, to your knowledge or
the knowledge of the Company, shall be contemplated by the Commission, and all
reasonable requests on the part of the Commission for additional information
shall have been complied with to the satisfaction of Underwriters' Counsel.
(ii) On the Option Closing Date there shall have been
delivered to you the signed opinion of Company Counsel, dated as of the Option
Closing Date, in form and substance satisfactory to Underwriters' Counsel, which
opinion shall be substantially the same in scope and substance as the opinion
furnished to you on the First Closing Date pursuant to Section 4(b), except that
such opinion, where appropriate, shall cover the Option Securities rather than
the Firm Securities. If the First Closing Date is the same as the Option Closing
Date, such opinions may be combined.
(iii) All proceedings taken at or prior to the Option Closing
Date in connection with the same and issuance of the Option Securities shall be
satisfactory in form and substance to you and you and Underwriters' Counsel
shall have been furnished with all such documents, certificates and opinions as
you may reasonably request in connection with this transaction in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements of the Company or its compliance with any of the covenants or
conditions contained herein.
(iv) On the Option Closing Date there shall have been
delivered to you letters in form and substance satisfactory to May Xxxxx from
Xxxxx & Xxxxx, LLP dated the Option Closing Date and addressed to you,
confirming the information in their letters referred to in Section 4(f) as of
the date thereof and stating that, without any additional investigation
required, nothing has come to their attention during the period from the ending
18
date of their review referred to in such letters to a date not more than five
(5) banking days prior to the Option Closing Date which would require any change
in such letters if they were required to be dated the Option Closing Date.
If any of the conditions herein provided for in this Section shall not
have been completely fulfilled as of the date indicated, this Agreement and all
obligations of the Underwriters under this Agreement may be canceled at, or at
any time prior to, each Closing Date by your notifying the Company of such
cancellation in writing or by telecopy at or prior to the applicable Closing
Date. Any such cancellation shall be without liability of the Underwriters,
except as otherwise provided herein.
5. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the Company
to sell and deliver the Securities are subject to the following conditions:
(a) Effective Registration Statement. The Registration Statement shall
have become effective not later than 6:00 p.m. Eastern time, on the date of this
Agreement, or at such later time or on such later date as the Company and you
may agree in writing.
(b) No Stop Order. On the applicable Closing Date, no stop order
denying or suspending the effectiveness of the Registration Statement shall have
been issued under the Act or any proceedings therefor initiated or threatened by
the Commission.
(c) Payment for Securities. On the applicable Closing Date, you shall
have made payment, for the account of the Underwriters, of the aggregate
Purchase Price for the Securities then being purchased by certified or bank
cashier's checks payable in next day funds to the order of the Company.
If the conditions to the obligations of the Company provided by this
Section 5 have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the Option Closing Date, then only the
obligation of the Company to sell and deliver the Option Securities upon
exercise of the Over-Allotment Option shall be affected.
6. INDEMNIFICATION.
(a) Indemnification by the Company. As used in this Agreement, the term
"Liabilities" shall mean any and all losses, claims, damages and liabilities,
and actions and proceedings in respect thereof (including without limitation all
reasonable costs of defense and investigation and all attorneys' fees) including
without limitation those asserted by any party to this Agreement against any
other party to this Agreement. The Company hereby indemnifies and holds harmless
the Underwriters and each person, if any, who controls the Underwriters within
the meaning of the Act, from and against all Liabilities, joint or several, to
which the Underwriters or such controlling person may become subject, under the
Act or otherwise, insofar as such Liabilities arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material fact, in
light of the circumstances in which it was made, contained in (A) the
19
Registration Statement or any amendment thereto, or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto, or (B) any "blue
sky" application or other document executed by the Company specifically for that
purpose, or based upon written information furnished by the Company, filed in
any state or other jurisdiction in order to qualify any or all of the Securities
under the securities laws thereof (any such application, document or information
being herein called a "Blue Sky Application"); or (ii) the omission or alleged
omission to state in the Registration Statement or any amendment thereto, or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or in any Blue Sky Application, a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which it was made, not misleading; provided, however, that the
Company shall not be liable in any such case to the extent, but only to the
extent, that any such Liabilities arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission (x) made
in reliance upon and in conformity with written information furnished to the
Company through you by or on behalf of the Underwriters specifically for use in
the preparation of the Registration Statement or any such amendment thereto, or
the Prospectus or any such Preliminary Prospectus, or any such amendment or
supplement thereto, or any such Blue Sky Application or (y) corrected by the
final Prospectus and the failure of the Underwriters to deliver the final
Prospectus. The foregoing indemnity shall be in addition to any other liability,
which the Company may otherwise have.
(b) Indemnification by Underwriters. Each Underwriter hereby
indemnifies and holds harmless the Company, each of its directors, each nominee
(if any) for director named in the Prospectus, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, from and against all Liabilities to which
the Company or any such director, nominee, officer or controlling person may
become subject under the Act or otherwise, insofar as such Liabilities arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment thereto,
or the Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
any such Liabilities arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company through you,
by or on behalf of the Underwriters, specifically for use in the preparation
thereof. In no event shall the Underwriters be liable under this Section 6(b)
for any amount in excess of the compensation received by such Underwriters, in
the form of underwriting discounts or otherwise, pursuant to this Agreement or
any other agreement contemplated hereby. The foregoing indemnity shall be in
addition to any other liability, which any Underwriters may otherwise have.
(c) Procedure. Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify in writing the indemnifying
20
party of the commencement thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 6 unless the rights of
the indemnifying party have been prejudiced by such omission or delay. In case
any, such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions hereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the indemnified party; provided,
however, that the fees and expenses of such counsel shall be at the expense of
the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both such
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it which
are different from or in addition to those available to the indemnifying party
or that the indemnified and indemnifying party have conflicting interests which
would make it inappropriate for the same counsel to represent both of them (in
which case the indemnifying party shall have the right to assume the defense of
such action on behalf of the indemnified party, it being understood, however,
that the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnified party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnified party.
7. CONTRIBUTION. In order to provide for just and equitable contribution under
the Act in any case in which (a) any indemnified party makes claims for
indemnification pursuant to Section 6 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 Section 6 provide for indemnification in such
case, or (b) contribution under the Act may be required on the part of any
indemnified party, then such indemnified party and each indemnifying party (if
more than one) shall contribute to the aggregate Liabilities to which it may be
subject, in either such case (after contribution from others) in such
proportions that the Underwriters is responsible for the portion of such
Liabilities represented by the percentage that the underwriting discount per
Share and per Warrant appearing on the cover page of the Prospectus bears to the
public offering price per Share and per Warrant, appearing thereon, and the
Company shall be responsible for the remaining portion; provided, however, that
if such allocation is not permitted by applicable law, then the relative fault
of the Company and the Underwriters in connection with the statements or
21
omissions which resulted in such Liabilities and other relevant equitable
considerations shall also be considered. The relative fault shall be determined
by reference to, among other things, whether in the case of an untrue statement
of material fact or the omission to state a material fact, such statement or
omission relates to information supplied by the Company, or the Underwriters,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if the
respective obligations of the Company, and the Underwriters to contribute
pursuant to this Section 7 were to be determined by pro rata or per capita
allocation of the aggregate Liabilities or by any other method of allocation
that does not take account of the equitable considerations referred to in the
first sentence of this Section 7. However, the contribution of the Underwriters
shall not be in excess of the cash compensation received by the Underwriters, in
the form of underwriting discounts or otherwise, pursuant to this Agreement or
any other agreement contemplated hereby. No person guilty of a fraudulent
misrepresentation (within the meaning of section 11 (f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. As used in this Section 7, the term "Company" shall include
any officer, director or person who controls the Company within the meaning of
section 15 of the Act. If the full amount of the contribution specified in this
Section 7 is not permitted by law, then each indemnified party and each person
who controls an indemnified party shall be entitled to contribution from each
indemnifying party to the fullest extent permitted by law. The foregoing
contribution agreement shall in no way affect the contribution liabilities of
any persons having liability under section 11 of the Act other than the Company
and the Underwriters. No contribution shall be requested with regard to the
settlement of any matter from any party who did not consent to the settlement
provided, however, that such consent shall not be unreasonably withheld in light
of all factors of importance to such party.
8. COSTS AND EXPENSES.
(a) Certain Costs and Expenses. Whether or not this Agreement becomes
effective or the sale of the Securities to the Underwriters is consummated, the
Company shall pay all costs and expenses incident to the issuance, offering,
sale and delivery of the Securities and the performance of its obligations under
this Agreement, including without limitation: (i) all fees and expenses of the
Company's legal counsel and accountants; (ii) all costs and expenses incident to
the preparation, printing, filing, distribution and mailing of the Registration
Statement (including the financial statements contained therein and all exhibits
and amendments thereto), each Preliminary Prospectus and the Prospectus, each as
amended or supplemented, this Agreement and the other underwriting documents, as
well as the other agreements and documents referred to herein and the Blue Sky
Memorandum; each in such quantities as you shall deem necessary; (iii) all fees
of NASD required in connection with the filing required by NASD to be made by
the Underwriters with respect to the Offering; (iv) all expenses, including fees
(but not in excess of the amount set forth in Section 3(b) and disbursements of
Underwriters' Counsel in connection with the qualification of the Securities
under the "blue sky" laws which you shall designate; (v) all costs and expenses
22
of printing the respective certificates representing the Securities; (vi) the
expense of placing one or more "tombstone" advertisements or promotional
materials as directed by you and of Offering memorabilia; (vii) all costs and
expenses associated with due diligence meetings and presentations (including the
payment for road show conference centers); (viii) any and all taxes (including
without limitation any transfer, franchise, capital stock or another tax imposed
by any jurisdiction) on sales of the Securities to the Underwriters hereunder;
and (ix) all costs and expenses incident to the furnishing of any amended
Prospectus or any supplement to be attached to the Prospectus as required by
Sections 3(a) and 3(d), except as otherwise provided by said Sections.
(b) Underwriters' Expense Allowance. In addition to the expenses
described in Section 8(a), the Company shall on the First Closing Date pay to
the Underwriters, based on the number of Firm Securities to be sold by the
Company, the balance of a non-accountable expense allowance (which shall include
fees of Underwriters' Counsel exclusive of the fees referred to in Section 3(b)
of an aggregate of $180,000 (that being an amount equal to three percent (3%) of
the gross proceeds received upon sale of the Firm Securities), of which $50,000
has been paid to May Xxxxx prior to the date hereof. In the event that the
Over-Allotment Option is exercised, then the Company shall on the Option Closing
Date pay to May Xxxxx, based on the number of Option Securities sold by the
Company, an additional amount equal to three percent (3%) of the gross proceeds
received upon sale of any of the Option Securities sold to the Underwriters by
the Company. In the event that the transactions contemplated hereby fail to be
consummated for any reason, then you shall return to the Company that portion of
$50,000 heretofore paid by the Company to the extent that it has not been
utilized by you in connection with the Offering for accountable out-of-pocket
expenses; provided, however, that if such failure is due to a breach by the
Company of any covenant, representation or warranty contained herein or because
any other condition to the Underwriters' obligations hereunder required to be
fulfilled by the Company is not fulfilled, then the Company shall be liable for
your accountable out-of-pocket expenses to the full extent thereof (with credit
given to the $50,000 paid).
(c) No Finders. No person is entitled either directly or indirectly to
compensation from the Company, the Underwriters or any other person for services
as a finder in connection with the Offering, and the Company hereby indemnifies
and holds harmless the Underwriters, and the Underwriters hereby indemnifies and
holds harmless the Company from and against all Liabilities, joint or several,
to which the indemnified party may become subject insofar as such Liabilities
arise out of or are based upon the claim of any person (other than an employee
of the party claiming indemnity) or entity that he or it is entitled to a
finder's fee in connection with the Offering by reason of such person's or
entity's influence or prior contact with the indemnifying party.
9. [RESERVED].
10. EFFECTIVE DATE. The Agreement shall become effective upon its execution,
except that you may, at your option, delay its effectiveness until 10:00 a.m.,
23
Eastern time, on the first full business day following the Effective Date, or at
such earlier time after the Effective Date as you in your discretion shall first
commence the Public Offering by the Underwriters of any of the Securities. The
time of the Public Offering shall mean the time of release by you of the first
newspaper advertisement with respect to the Securities, or the time when the
Securities are first generally offered by you to dealers by letter or telegram,
whichever shall first occur. This Agreement may be terminated by you at any time
before it becomes effective as provided above, except that the provisions of
Sections 6, 7, 8, 13, 14, 15, 16 and 17 shall remain in effect notwithstanding
such termination.
11. TERMINATION.
(a) Grounds for Termination. This Agreement, except for Sections 6,
7, 8, 13, 14, 15, 16 and 17, may be terminated at any time prior to the First
Closing Date, and the Over-Allotment Option, if exercised, may be canceled at
any time prior to the Option Closing Date, by you if it is impracticable to
offer for sale or to enforce contracts made by the Underwriters for the resale
of the Securities agreed to be purchased hereunder, by reason of: (i) the
Company having sustained a material loss, whether or not insured, by reason of
fire, earthquake, flood, accident or other calamity, or from any labor dispute
or court or government action, order or decree; (ii) trading in securities on
the Nasdaq Stock Market having been suspended or limited; (iii) material
governmental restrictions having been imposed on trading in securities generally
which are not in force and effect on the date hereof; (iv) a banking moratorium
having been declared by federal or New York State authorities; (v) an outbreak
or significant escalation of major international hostilities or other national
or international calamity having occurred; (vi) the passage by the Congress of
the United States or by any state legislative body of similar impact, of any act
or measure, or the adoption of any orders, rules or regulations by any
governmental body or any authoritative accounting institute or board, or any
governmental executive, which is reasonably believed likely by you to have a
material adverse impact on the business, financial condition or financial
statements of the Company; (vii) any material adverse change in the financial or
securities markets beyond normal fluctuations in the United States having
occurred since the date of this Agreement; or (viii) any material adverse change
having occurred, since the respective dates for which information is given in
the Registration Statement and Prospectus, in the earnings, business, prospects
or condition (financial or otherwise) of the Company, whether or not arising in
the ordinary course of business.
(b) Notification. If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided by this Section 11 or by
Section 10, the Company shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
12. UNDERWRITERS' WARRANT. On the First Closing Date, the Company shall issue
and sell to each of you, for a total purchase price of $10.00, and upon the
terms and conditions set forth in the form of Underwriters' Warrant filed as an
exhibit to the Registration Statement, a warrant entitling you to purchase up to
50,000 Shares and/or 50,000 Warrants (the "Underwriters' Warrants"), for an
aggregate of 100,000 Shares and Warrants. The 100,000 shares of Common Stock in
24
the aggregate underlying the Underwriters' Warrant received by the Underwriters
will be restricted from sale, transfer, assignment or hypothecation for a period
of one year from the effective date of the offering except to officers or
partners (not directors) of the Underwriters' and members of the selling group
and/or their officers or partners in accordance with Rule 2710(C)(7)(A) of the
NASD Conduct Rules. In the event of conflict in the terms of this Agreement and
the Underwriters' Warrant, the terms and conditions of the Underwriters' Warrant
shall control.
13. DEFAULT BY AN UNDERWRITER. If either of the Underwriters shall fail or
refuse to purchase any of the Firm Securities that it has severally agreed to
purchase and arrangements satisfactory to the non-defaulting Underwriter and the
Company for the purchase of such amount of Firm Securities are not made within
48 hours after such default, this Agreement will terminate without liability on
the part of the non-defaulting Underwriter for the purchase or sale of any of
the Firm Securities under this Agreement. In any such case, either the
non-defaulting Underwriter or the Company shall have the right to postpone
Closing Date I but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or in
any other documents or arrangements may be effected. Any action taken under this
section shall not relieve the defaulting Underwriter from liability in respect
of its default under this Agreement.
14. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company, and the Underwriters set forth in Sections 3,
6, 7 and 8 of this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any other party, and shall survive
delivery of and payment for the Securities and the termination of this
Agreement. The Company hereby indemnifies and holds harmless the Underwriters
from and against all Liabilities, joint or several, to which the Underwriters
may become subject insofar as such Liabilities arise out of or are based upon
the breach or failure of any of the provisions of Sections 3, 6, 7 and 8.
15. NOTICES. All communications hereunder shall be in writing and, except as
otherwise expressly provided herein, if sent to you, shall be mailed, delivered
or telegraphed and confirmed to you at the address first set forth above, to the
attention of the President, with a copy sent to Xxx X. Xxxxxxxxx, Esq., Xxxxxxx,
Savage & Xxxxxxxxx, LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or if
sent to the Company, shall be mailed, delivered, or telegraphed and confirmed to
it at Utek Corporation, 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxx 00000,
with a copy sent to XxXxxxxxxx & Xxxxx, LLP, Attention: Xxxxxx X. Xxxxxxxx, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
16. PARTIES IN INTEREST. This Agreement is made solely for the benefit of the
Underwriters, the Company, and, to the extent expressed, any person controlling
the Company or the Underwriters, as the case may be, and the directors of the
Company, nominees for directors of the Company (if any) named in the Prospectus,
officers of the Company who have signed the Registration Statement, and their
respective executors, administrators, successors and assigns; and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" shall not include any purchaser, as such, from the
Underwriters of the Securities.
25
17. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely within such State. Any actions brought with respect
to any disputes arising under this Agreement shall be brought in the Southern
District of New York or the state courts of the State of New York. The parties
hereto consent to the jurisdiction of the Southern District of New York or the
courts of the State of New York with respect to all disputes arising out of this
Agreement.
18. COUNTERPARTS. This Agreement may be executed in two or more counterpart
copies, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Agreement, whereupon it will become a
binding agreement between the parties in accordance with its terms.
Very truly yours,
UTEK CORPORATION
By:______________________________
Name:
Title:
Accepted as of the date first above written:
MAY XXXXX GROUP, INC.
By: ____________________________
Name:
Title:
ARTESIA SECURITIES S.A./N.A.
By:__________________________
Name:
Title:
26
