UNDERWRITING AGREEMENT
________________, 1997
Nichols, Safina, Xxxxxx & Co., Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
International Meta Systems, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you, _________ shares of the common stock, $.0001 par value (the "Common
Stock") of the Company (the "Firm Shares"). In addition, solely for the purpose
of covering over-allotments, the Company proposes to grant to you the option to
purchase up to ____________ additional shares of Common Stock (the "Additional
Shares"). The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "Shares". The Shares are more fully described
in the Registration Statement and Prospectus referred to below.
The Company confirms as follows its agreement with you:
1. REGISTRATION STATEMENT AND PROSPECTUS: The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission"), in
accordance with the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder (the "Rules and
Regulations", and together with said Act, the "Act"), a registration statement
on Form S-1 (File No. ______) and may have filed one or more amendments thereto,
including in such registration statement and in certain amendments thereto a
related preliminary prospectus for the registration under the Act of the Shares.
In addition, subject to the provisions of Section 4(e) hereof, the Company has
filed or will promptly file a further amendment to such registration statement
prior to the effectiveness of such registration statement, unless an amendment
is not required pursuant to Rule 430A of the Rules and Regulations. As used in
this Agreement, the term "Registration Statement" means such registration
statement, including the prospectus, financial statements and schedules thereto,
exhibits and other documents filed as part thereof, as amended when, and in the
form in which, it is declared effective by the Commission, and, in the event any
post-effective amendment thereto is filed thereafter and on or before the
Closing Date (as hereinafter defined), shall also mean (from and after the date
such post-effective amendment is effective under the Act) such registration
statement as so amended, provided that such Registration Statement, at the time
it becomes effective, may omit such information as is permitted to be omitted
from the Registration Statement when it becomes effective pursuant to Rule 430A
of the Rules and Regulations, which information ("Rule 430 Information") shall
be deemed to be included in such Registration Statement when a final prospectus
is filed with the Commission in accordance with Rules 430A and 424(b)(1) or (4)
of the Rules and Regulations; the term "Preliminary Prospectus" means each
prospectus included in the Registration Statement, or any amendments thereto,
before it becomes effective under the Act, the form of prospectus omitting Rule
430A Information included in the Registration Statement when it becomes
effective, if applicable (the "Rule 430A Prospectus"), and any prospectus filed
by the Company with your consent pursuant to Rule 424(a) of the Regulations; the
term "Prospec-
tus" means the final prospectus included as part of the Registration Statement,
except that (i) if any prospectus (including any preliminary prospectus) which
differs from such prospectus included in the Registration Statement is provided
to you for use in connection with the offering of the Shares (whether or not
such differing prospectus is required to be filed by the Company pursuant to
Rule 424(b) under the Act), the term "Prospectus" as used herein shall mean such
differing prospectus from and after the date on which it shall have been first
used, and (ii) in the event any supplement to or amendment of such prospectus is
made after the date on which the Registration Statement is declared effective
and on or prior to the Closing Date, the term "Prospectus" shall also mean (with
respect to any supplement, from and after the date such supplement is first used
or, with respect to any amendment, the date such amendment is effective under
the Act) such prospectus as so supplemented or amended; and the term "Effective
Date" means (i) if the Company and you have determined not to proceed pursuant
to Rule 430A under the Act, the date on which the Registration Statement
becomes effective, or (ii) if the Company and you have determined to proceed
pursuant to Rule 430A under the Act, the date of this Agreement.
2. AGREEMENTS TO SELL AND PURCHASE: Subject to the terms and conditions
herein set forth, the Company agrees to sell to you and each of you agree,
severally and not jointly, to purchase from the Company, at a purchase price of
$____ per Firm Share, the number of Shares (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying the aggregate number of
Firm Shares to be sold by a fraction, the numerator of which is the aggregate
number of Firm Shares to be purchased by each of you as set forth opposite your
respective names in Schedule I hereto and the denominator of which is the
aggregate number of Firm Shares to be purchased hereunder.
Subject to the terms and conditions herein set forth, the Company agrees
to sell to you, and you shall have the right to purchase from the Company, up to
____________ Additional Shares at a purchase price of $______ per Additional
Share. Additional Shares may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each of you, severally, agrees to
purchase from the Company that proportion (subject to such adjustments as you
may both determine to avoid fractional Additional Shares) of the number of
Additional Shares to be purchased which the number of Firm Shares set forth
opposite your name in Schedule I bears to the aggregate number of Firm Shares to
be purchased from the Company hereunder. Additional Shares may be purchased at
any time and from time to time on or before the thirtieth business day following
the date of this Agreement upon written notice from you to the Company
specifying the number of Additional Shares to be purchased.
You will offer the Shares for sale at the initial public offering price
set forth on the cover of the Prospectus. After the initial public offering,
you may from time to time increase or decrease the public offering price, in
your sole discretion, by reason of changes in general market conditions or
otherwise.
3. DELIVERY AND PAYMENT: Delivery of and payment for the Firm Shares
shall be made at the offices of Nichols, Safina, Xxxxxx & Co., Inc. ("NSL") at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other place as shall be
mutually agreed upon) at such time and date, not later than the third full
business day following the Effective Date (unless the time of effectiveness is
after 4:00 P.M. New York time, in which case the date of closing shall be no
later than four business days following the Effective Date), as you shall
designate by at least forty-eight hours prior notice to the Company (the
"Closing Date").
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Delivery of and payment for Additional Shares shall be made at said
offices of NSL, or at such other place, and at such time(s) and date(s) (each an
"Optional Closing Date") as may be agreed upon in writing by you and the
Company; PROVIDED, HOWEVER, that in no event may an Optional Closing Date be (i)
earlier than the Closing Date or (ii) later than three business days after the
date on which the related notice to purchase Additional Shares is given.
The Closing Date and the time and place of delivery of and payment for
the Shares may be varied by agreement between you and the Company. The Optional
Closing Date and the time and place of delivery of and payment for the
Additional Shares may be varied by agreement between you and the Company.
Delivery of certificates for the Shares (in definitive form, registered in such
names and in such denominations as you shall request at least two business days
prior to the Closing Date by written notice to the Company) shall be made to you
against payment of the purchase price therefor by certified or official bank
check or checks payable in New York Clearing House funds to the order of the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at the offices of NSL at least 24 hours prior to the
Closing Date and each Optional Closing Date, as the case may be.
On the Closing Date, at the time of the delivery and payment for the Firm
Shares, (i) the Company shall pay to you as a non-accountable expense allowance
a sum equal to $___ per Share for each Firm Share purchased by you hereunder (or
an aggregate of $_______ in respect of the Firm Shares), less the $______
heretofore paid to you in respect thereof, by certified or official bank check
or checks payable in New York Clearing House funds payable to the order of, and
in accordance with instructions from, you and (ii) the Company shall issue, sell
and deliver to you, for an aggregate purchase price of $10, a warrant to
purchase up to an aggregate of _______ Shares (the "Underwriters' Warrant") in
substantially in the form filed as an exhibit to the Registration Statement.
The shares of Common Stock issuable upon exercise of the Underwriters' Warrant
are hereinafter referred to collectively as the "Underwriters' Warrant Shares".
The Underwriters' Warrant will be exercisable at an initial exercise price of
$_______ per Share at any time and from time to time, in whole or in part,
during a four-year period commencing one year following the Effective Date. The
Company has granted you certain registration rights with respect to the
Underwriters' Warrant and the securities issuable upon exercise thereof, as set
forth in said Underwriters' Warrant.
On each Additional Closing Date, at the time of the delivery and payment
for the Additional Shares, the Company shall pay to you as a non-accountable
expense allowance, a sum equal to $___ per Additional Share for each Additional
Share purchased by you on such date by certified or official bank check or
checks payable in New York Clearing House funds payable to the order of, and in
accordance with instructions from, you.
4. COVENANTS AND AGREEMENTS OF THE COMPANY: (A) The Company covenants
and agrees with you as follows:
(a) The Company will notify you promptly by telephone and (if requested by
you) will confirm such advice in writing, (1) when the Registration
Statement has become effective and when any post-effective amendment
thereto becomes effective, (2) if Rule 430A under the Act is used, or the
Prospectus is otherwise required to be filed with the Commission pursuant
to Rule 424(b) under the Act, when the Prospectus is filed with the
Commission pursuant to Rule 424(b) under the Act, (3) of any request by
the Commission for amendments or supplements to the Registration
3
Statement or the Prospectus or for additional information, (4) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement, preventing or suspending the use of the
Preliminary Prospectus, the Prospectus, the Registration Statement or any
amendment or supplement thereto, or refusing to permit the effectiveness
of the Registration Statement ("Stop Order"), or the initiation of any
proceedings for any of those purposes, (5) of the happening of any event
during the period mentioned in paragraph (f) below which in the
reasonable judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue or which requires the
making of any changes in the Registration Statement or the Prospectus in
order to make the statements therein not misleading, and (6) of the
receipt of any comments from the Commission or the Blue Sky or securities
authorities of any jurisdiction regarding the Registration Statement, any
post-effective amendment thereto, the Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto. The Company will use
its best efforts to prevent the issuance of any Stop Order by the
Commission or any notification from the Blue Sky or securities
authorities of any jurisdiction suspending the qualification or
registration of the Shares for sale in such jurisdictions, and if at any
time the Commission shall issue any Stop Order, or if the Blue Sky or
securities authorities of any jurisdiction shall issue notification
suspending the qualification or registration of the Shares, the Company
will make every reasonable effort to obtain the withdrawal of such Stop
Order or notification at the earliest possible moment. The Company will
promptly advise you of its receipt of any notification with respect to
the suspension of the qualification or registration of the Shares for
offer or sale in any jurisdiction or the initiation or threatening of any
action or proceeding for such purpose.
(b) Prior to any public offering of the Shares by you, the Company will
cooperate with you and your counsel in registering or qualifying the
Shares for offer or sale under the Blue Sky or securities laws, rules or
regulations of such jurisdictions as you may reasonably request; provided
that in no event shall the Company be obligated to register or qualify to
do business as a foreign corporation in any jurisdiction where it is not
now so registered or qualified or to take any action which would subject
it to general service of process, or to taxation as a foreign corporation
doing business, in any jurisdiction where it is not now so subject. The
Company will pay all fees and expenses relating to the registration or
qualification of the Shares under such Blue Sky or securities laws of
such jurisdictions as you may designate (including the legal fees,
expenses and disbursements of counsel to you for the registration or
qualification of the Shares in such jurisdictions as you shall
determine). After registration, qualification or exemption of the Shares
for offer and sale in such jurisdictions, and for as long as any offering
pursuant to this Agreement continues, the Company, at your reasonable
request, will file and make such statements or reports, and pay the fees
applicable thereto, at such times as are or may be required by the laws,
rules or regulations of such jurisdictions in order to maintain and
continue in full force and effect the registration, qualification or
exemption for offer or sale of the Shares in such jurisdictions. After
the termination of the offering contemplated hereby, and as long as any
of the Shares are outstanding, the Company will file and make, and pay
all fees applicable thereto, such statements and reports and renewals of
registration as are or may be required by the laws, rules or regulations
of such jurisdictions to maintain and continue in full force and effect
the registration, qualification or exemption for secondary market
transactions in the Shares, in the various jurisdictions in which the
Shares were originally registered, qualified or exempted for offer or
sale.
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(c) The Company will furnish to you, without charge, four manually-signed
copies of the Registration Statement as originally filed on Form SB-2 and
of any amendments (including post-effective amendments thereto),
including financial statements and schedules, if any, and all consents,
certificates and exhibits (including those incorporated therein by
reference to the extent not previously furnished to you), heretofore or
hereafter made, signed by or on behalf of its officers whose signatures
are required thereon and a majority of its board of directors.
(d) The Company will use its best efforts to cause the Registration Statement
to become effective under the Act. Upon such effectiveness, if the
Company and you have determined not to proceed pursuant to Rule 430A
under the Act, the Company will timely file a Prospectus pursuant to, and
in conformity with, Rule 424(b), if required, and if the Company and you
have determined to proceed pursuant to Rule 430A under the Act, the
Company will timely file a Prospectus pursuant to, and in conformity
with, Rules 424(b) and 430A under the Act.
(e) The Company will give you and your counsel advance notice of its
intention to file any amendment to the Registration Statement or any
amendment or supplement to the Prospectus, whether before or after the
effective date of the Registration Statement, and will not file any such
amendment or supplement unless the Company shall have first delivered
copies of such amendment or supplement to you and your counsel and you
and your counsel shall have given your consent to the filing of such
amendment or supplement. Any such amendment or supplement shall comply
with the Act.
(f) From and after the Effective Date, the Company will deliver to you,
without charge, as many copies of the Prospectus or any amendment or
supplement thereto as you may reasonably request. The Company consents
to the use of the Prospectus or any amendment or supplement thereto by
you and by all dealers to whom the Shares may be sold, both in connection
with the offering or sale of the Shares and for such period of time
thereafter as the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any event shall
occur which in the judgment of you or your counsel should be set forth in
the Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with law, the
Company will forthwith prepare and duly file with the Commission an
appropriate supplement or amendment thereto, and will deliver to each of
you, without charge, such number of copies thereof as you may reasonably
request.
(g) The Company will promptly pay all expenses in connection with (1) the
preparation, printing, filing, distribution and mailing (including,
without limitation, express delivery service) of the Registration
Statement, each preliminary prospectus, the Prospectus, and the
preliminary and final forms of Blue Sky memoranda (if any); (2) the
issuance and delivery of the Shares; (3) the fees and expenses of legal
counsel and independent accountants for the Company relating to, among
other things, opinions of counsel, audits, review of unaudited financial
statements and cold comfort review; (4) the fees and expenses of a
registrar or transfer agent for the Common Stock; (5) the printing,
filing, distribution and mailing (including, without limitation, express
delivery service) of this Agreement, the Agreement Among Underwriters, if
any, and the Selected Dealers Agreement; (6) furnishing such copies of
the Registration Statement, the Prospectus and any preliminary
prospectus, and all amendments and supplements thereto, as may be
requested for use in connection with the offering and sale of the Shares
by you or by dealers to whom Shares
5
may be sold; (7) any fees and communication expenses with respect to
filings required to be made by you with the National Association of
Securities Dealers Regulatory, Inc. (the "NASDR"); and (8) the quotation
of the Shares on NASDR's Automated Quotation System ("NASDAQ").
(h) On the Closing Date, the Company shall sell to you, the Underwriters'
Warrant to purchase _______ Shares for an aggregate purchase price of
$10.
(i) If this Agreement shall be terminated pursuant to any of the provisions
hereof (otherwise than by notice given by you pursuant to Section 8
hereof) or if for any reason the Company shall be unable to perform its
obligations hereunder, the Company will reimburse you for all of your
out-of-pocket expenses (including the fees and expenses of your counsel)
reasonably incurred by you in connection herewith; PROVIDED, HOWEVER, the
Company shall not be so obligated to reimburse you if this Agreement is
terminated by reason of a failure to satisfy the condition set forth in
Section 7(k) hereinbelow by reason of your unwillingness to modify the
underwriting arrangements pertaining to sale of the Shares and/or the
participation by you in the sale of the Shares, as may be requested by
the NASDR.
(j) For a period of ninety (90) days after the commencement of the public
offering of the Shares by you, without your prior written consent, the
Company will not offer, issue, sell, contract to sell, grant any option
for the sale of, or otherwise dispose of, directly or indirectly, any
securities of the Company, except as provided for and as contemplated by
this Agreement, as specifically disclosed in the Registration Statement
respecting certain post-offering issuances to Company employees, or for
stock options granted to employees pursuant to the Company's Stock Option
Plan attached as an exhibit to the Registration Statement.
(k) On or prior to the Closing Date, the Company shall obtain from each of
its officers and directors, his or her enforceable written agreement, in
form and substance satisfactory to your counsel, that for a period of
twenty-four (24) months after the Effective Date (or any longer period
required by any jurisdiction in which the offer and sale of the Shares is
to be registered or qualified), he or she will not offer for sale, sell,
contract to sell, assign, pledge, transfer, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, any securities of
the Company (including without limitation any shares of Common Stock),
owned by him or her as of the Closing Date, whether upon exercise of
warrants, stock options or otherwise, without Nichols, Safina, Xxxxxx &
Co., Inc.'s prior written consent (the "Lock-up Letter").
(l) The Company has reserved and shall continue to reserve and keep available
the maximum number of shares of its authorized but unissued Common Stock
and other securities for issuance upon exercise of the Underwriters'
Warrant.
(m) For a period of five years after the date of this Agreement, the Company
shall:
(1) retain Singer Lewak Xxxxxxxxx & Xxxxxxxxx LLP or another
nationally recognized firm of independent public accountants, as
its auditors, and at its own expense, shall cause such independent
certified public accountants to review the Company's financial
statements for each of the first three fiscal quarters of each
fiscal year prior to the announcement of quarterly financial
information, the filing of the Company's 10-Q quarterly reports
and the mailing of quarterly financial information to its
shareholders;
6
(2) cause the Company's Board of Directors to meet not less frequently
than quarterly, upon proper notice, and cause an agenda and
minutes of the preceding meeting to be distributed to directors
prior to each such meeting;
(3) distribute to its security holders, within 120 days after the end
of each fiscal year, an annual report (containing certified
financial statements of the Company) prepared in accordance with
those required under Rule 14a-3(b) of Regulation 14A promulgated
by the Commission under the Securities Exchange Act of 1934, as
amended; and
(4) appoint a transfer agent for the Common Stock, in each case
acceptable to you.
(n) For a period of five years after the date of this Agreement, the Company
shall furnish you, free of charge, with the following:
(1) within 90 days after the end of each fiscal year, financial
statements for the Company certified by the independent certified
public accountants referred to in Section 4(m)(1) above, including
a balance sheet, statement of operations, statement of
shareholders' equity and statement of cash flows, for the Company,
with supporting schedules, prepared in accordance with generally
accepted accounting principles, as at the end of such fiscal year
and for the twelve months then ended, accompanied by a copy of the
certificate or report thereon of such independent certified public
accountants;
(2) (x) for so long as the Company is a reporting company under any of
Sections 12(b), 12(g) or 15(d) of the Securities Exchange Act, as
amended, and the rules and regulations of the Commission
promulgated thereunder (collectively, the "Exchange Act"),
promptly after filing with the Commission, copies of all reports
and proxy soliciting material which the Company is required to
file under the Exchange Act, or (y) at such times as the Company
is not a reporting company under the aforesaid provisions of the
Exchange Act, as soon as practicable after the end of each of the
first three fiscal quarters of each fiscal year, financial
statements of the Company, including a balance sheet, statement of
operations, statement of shareholders' equity and statement of
cash flows as at the end of, or for each such fiscal quarter and
the comparable period of the preceding year, which statements need
not be audited;
(3) as soon as practicable after they have first been distributed to
shareholders of the Company, copies of each annual and interim
financial or other report or communication sent by the Company to
its shareholders (except to the extent duplicative of information
furnished pursuant to any other clause of this Section 4(n));
(4) as soon as practicable following release or other dissemination,
copies of every press release and every material news item and
article in respect of the Company or its affairs released or
otherwise disseminated by the Company;
(5) promptly following receipt thereof, copies of the Company's daily
transfer sheets prepared by the Company's transfer agent and a
list of shareholders; and
7
(6) such additional documents and information with respect to the
Company and its affairs, if any, as you may from time to time
reasonably request.
(o) On or prior to the Effective Date, the Company will have accomplished the
quotation of the Shares on the NASDAQ National Market, subject only to
notice of issuance and the registration of such securities under the
Exchange Act. For a period of five years from the date of this
Agreement, the Company agrees, at its sole cost and expense, to take all
necessary and appropriate action such that its securities continue to be
quoted on NASDAQ, provided that the Company otherwise complies with the
prevailing requirements of NASDAQ.
(p) For a period of two years after the date of this Agreement, the Company
will not seek to amend its certificate of incorporation to authorize the
issuance of any other class of its capital stock, including, without
limitation, any preferred stock, without your prior written consent.
(q) The Company agrees, at its own cost and expense, to deliver to you and
your counsel, within a reasonable period after the Optional Closing Date,
or the expiration of the period in which you may exercise the
over-allotment option, five bound volumes containing copies of all
documents and correspondence filed with, or received from, the Commission
and the NASDR relating to the offering of the Shares and the closing
thereof, including related matters.
(r) The Company will make generally available to its security holders and
deliver to you as soon as it is practicable to do so (but in no event
later than the 45th day after the end of the twelve-month period
beginning at end of fiscal quarter of the Company during which the
Registration Statement becomes effective, or, if the Registration
Statement becomes effective during the Company's last fiscal quarter, the
90th day after the end of such twelve-month period), an earnings
statement of the Company (which need not be audited) covering a period of
at least twelve consecutive months commencing after the effective date of
the Registration Statement, which shall satisfy the requirements of
Section 11(a) of the Act.
(s) The Company will, promptly upon your request, prepare and file with the
Commission any amendments or supplements to the Registration Statement,
any Preliminary Prospectus or the Prospectus and take any other action,
which in the reasonable opinion of Xxxxxx & Eilen, counsel to you, may be
reasonably necessary or advisable in connection with the distribution of
the Shares, and will cause the same to become effective as promptly as
possible.
(t) The Company will furnish to you as early as practicable prior to the
Closing Date and any Optional Closing Date, as the case may be, but no
less than two full business days prior thereto, a copy of the latest
available unaudited interim financial statements of the Company which
have been reviewed by the Company's independent certified public
accountants, as stated in their letters to be furnished pursuant to
Section 7(d) hereof.
(u) The Company will apply the net proceeds from the issuance and sale of the
Shares for the purposes and in the manner set forth under the caption
"Use of Proceeds" in the Prospectus, and will file on a timely basis such
reports with the Commission with respect to the sale of the Shares and
the application of the proceeds therefrom as may be required pursuant to
Rule 463 under the Act. The Company will operate its business in such a
manner and, pending application of the net proceeds of the offering for
the purposes and in the manner set forth under the caption "Use
8
of Proceeds" in the Prospectus, will invest such net proceeds in certain
types of securities so as not to become an "investment company" as such
term is defined under the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(v) The Company has filed a registration statement on Form 8-A covering the
Shares pursuant to Section 12(b) of the Exchange Act and will use its
best efforts to cause said registration statement to become effective on
the Effective Date. The Company will comply with all registration,
filing and reporting requirements of the Exchange Act, which may from
time to time be applicable to the Company. The Company shall comply with
the provisions of all undertakings contained in the Registration
Statement.
(w) Prior to the Closing Date or any Optional Closing Date, as the case may
be, the Company shall neither issue any press release or other
communication, directly or indirectly, nor hold any press conference with
respect to the offering of the Shares, the Company or its business,
results of operations, condition (financial or otherwise), property,
assets, liabilities or prospects of the Company, without your prior
written consent.
(x) For a period of ninety (90) days after the date hereof, the Company will
not, directly or indirectly, take any action designed, or which will
constitute or which might reasonably be expected to cause or result in,
stabilization or manipulation of the market price of the Shares, or the
facilitation of the sale or resale of the Shares.
(y) 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 preparation of financial
statements in conformity with generally accepted accounting principles
and to maintain asset accountability; (iii) access to cash and cash
equivalents is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for cash and
cash equivalents is compared with the existing cash and cash equivalents
at reasonable intervals and appropriate action is taken with respect to
any differences.
(z) There are no business relationships or related party transactions of the
nature described in Item 404 of Regulation S-B of the Rules and
Regulations involving the Company and any person referred to in Items 401
or 404, except as required to be described in the Prospectus and as so
described.
(aa) The Company will not grant any person or entity registration rights with
respect to any of its securities, except such rights as are subordinate
to the registration rights contained in the Underwriters' Warrant and are
exercisable no earlier than six months after the securities to be
registered upon exercise of such registration rights have been offered
for sale pursuant to an effective registration statement under the Act
and registered or qualified for sale under the Blue Sky or state
securities law, rules or regulations of the jurisdictions in which such
securities are to be offered for sale.
9
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY: (A) The Company
represents and warrants to you that:
(a) When the Registration Statement becomes effective, and at all times
subsequent thereto to and including the Closing Date and each Optional
Closing Date, and during such longer period as the Prospectus may be
required to be delivered in connection with sales by you or any dealer,
and during such longer period until any post-effective amendment thereto
shall become effective, the Registration Statement (and any
post-effective amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment or supplement to the Registration Statement or the Prospectus)
will contain all statements which are required to be stated therein in
accordance with the Act, will comply with the Act, and will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and no event will have occurred which should have
been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not then been set forth in such an
amendment or supplement; if a Rule 430A Prospectus is included in the
Registration Statement at the time it becomes effective, the Prospectus
filed pursuant to Rules 430A and 424(b) (1) or (4) will contain all Rule
430A Information and all statements which are required to be stated
therein in accordance with the Act, will comply with the Act, and will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; and each Preliminary Prospectus, as of
the date filed with the Commission, did not include 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 circumstances under which they were made, not misleading; except that
no representation or warranty is made in this Section 5(A)(a) with
respect to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company as stated in
Section 6(b) with respect to you expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or
any amendment or supplement thereto.
(b) Neither the Commission nor the Blue Sky or securities authorities of any
jurisdiction has issued an order suspending the effectiveness of the
Registration Statement, preventing or suspending the use of any
Preliminary Prospectus, the Prospectus, the Registration Statement, or
any amendment or supplement thereto, refusing to permit the effectiveness
of the Registration Statement, or suspending the registration or
qualification of the Shares, nor has the Commission or any of such
authorities instituted or threatened to institute any proceedings with
respect to such an order.
(c) The Company is a corporation duly incorporated and validly existing in
good standing under the laws of Delaware, its jurisdiction of
incorporation. The Company has full corporate power and authority and
has obtained all necessary consents, authorizations, approvals, orders,
licenses, certificates, declarations and permits of and from, and have
made all required filings with, all federal, state, local and other
governmental authorities and all courts and other tribunals, to own,
lease, license and use its properties and assets and to carry on its
business in the manner described in the Prospectus. All such consents,
authorizations, approvals, orders, licenses, certificates, declarations,
permits and filings are in full force and effect and the Company is in
all material respects complying therewith. The Company is duly
registered or qualified to do business as a foreign corporation and is in
good standing in each other jurisdiction in which their
10
ownership, leasing, licensing, or use of property and assets or the
conduct of its business requires such registration or qualification.
(d) The authorized capital stock of the Company consists of 70,000,000 shares
of Common Stock, of which _________ shares are outstanding, and 1,000,000
shares of Preferred Xxxxx, x.0000 par value, of which no shares are
outstanding. The Company does not have any subsidiaries or own any
capital stock or equity interest in any other corporation, partnership,
limited liability company or other entity. Each outstanding share of
Common Stock, are validly authorized, validly issued, fully paid, and
nonassessable, without any personal liability attaching to the ownership
thereof, and has not been issued and is not owned or held in violation of
any preemptive rights of shareholders. There is no commitment, plan or
arrangement to issue, and no outstanding option, warrant or other right
calling for the issuance of, any share of capital stock of the Company or
any security or other instrument which by its terms is convertible into,
exercisable for, or exchangeable for capital stock of the Company, except
as disclosed in the Prospectus. There is outstanding no security or
other instrument which by its terms is convertible into or exchangeable
for capital stock of the Company.
(e) The financial statements of the Company included in the Registration
Statement and the Prospectus fairly present the financial position, the
results of operations and the other information purported to be shown
therein at the respective dates and for the respective periods to which
they apply. Such financial statements have been prepared in accordance
with generally accepted accounting principles and are prepared in
accordance with the books and records of the Company. The accountants
whose reports on the audited financial statements are filed with the
Commission as a part of the Registration Statement are, and during the
periods covered by their report(s) included in the Registration Statement
and the Prospectus were, independent certified public accountants with
respect to the Company within the meaning of the Act. No other financial
statements are required by Form S-1 or otherwise to be included in the
Registration Statement or the Prospectus. Except as disclosed in the
Prospectus, there has at no time been a material adverse change in the
condition (financial or otherwise), results of operations, business,
property, assets, liabilities or prospects of the Company from the latest
information set forth in the Registration Statement or the Prospectus.
(f) There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, threatened, or
in prospect (or any basis therefor known to the Company) with respect to
or affecting the Company, its operation, business, property or assets,
except as disclosed in the Prospectus or such as individually or in the
aggregate do not now have and are not expected to have a material adverse
effect upon the operations, businesses, property, assets, condition
(financial or otherwise) or prospects of the Company. The Company is not
in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree, except as disclosed in the
Prospectus or such as individually or in the aggregate do not now have
and are not expected to have a material adverse effect upon the
operations, businesses, property, assets, condition (financial or
otherwise) or prospects of the Company; nor is the Company required to
take any action in order to avoid any such violation or default.
11
(g) The Company has good and marketable title in fee simple absolute to all
real properties and good title to all other properties and assets which
the Prospectus indicates are owned by them, free and clear of all liens,
security interests, pledges, charges, mortgages and other encumbrances
(except as may be required to be disclosed in the Prospectus). The
properties held under lease by the Company are held by it under valid and
enforceable leases and the interests of the Company in such leases are
free and clear of all liens, encumbrances and defects, except as
disclosed in the Prospectus, and the Company is in full compliance with
all material terms and conditions thereunder and such leases are in full
force and effect. No real property owned, leased, licensed or used by
the Company is situated in an area which is, or to the knowledge of the
Company, will be, subject to zoning, use, or building code restrictions
which would prohibit (and no state of facts relating to the actions or
inaction of another person or entity or his or its ownership, leasing,
licensing, or use of any real or personal property exists or will exist
which would prevent) the continued effective ownership, leasing,
licensing, or use of such real property in the business of the Company as
presently conducted or as the Prospectus indicates any of them
contemplate conducting, except as disclosed in the Prospectus).
(h) Neither the Company nor any other party is now or is expected by the
Company to be in violation or breach of, or in default with respect to
complying with, any material provision of any indenture, mortgage, deed
of trust, debenture, note or other evidence of indebtedness, contract,
agreement, instrument, lease or license, or arrangement or understanding
which is material to the Company, and each such indenture, mortgage, deed
of trust, debenture, note or other evidence of indebtedness, contract,
agreement, instrument, lease or license is in full force and is the
legal, valid and binding obligation of the Company, and to the knowledge
of the Company, of the other contracting party and is enforceable as to
them in accordance with its terms. The Company enjoys peaceful and
undisturbed possession under all leases and licenses under which they are
operating. The Company is not a party to or bound by any contract,
agreement, instrument, lease, license, arrangement or understanding, or
subject to any charter or other restriction, which has had or is expected
in the future to have a material adverse effect on the condition
(financial or otherwise), results of operations, businesses, property,
assets or liabilities of the Company. The Company is not in violation or
breach of, or in default with respect to, any term of its Certificate of
Incorporation or By-laws.
(i) The Company does not own or have any licensed rights to, in or under any
patents, patent applications, trademarks, servicemarks, trademark or
servicemark applications, trade names, service marks, copyrights,
technology, know-how or other intangible properties or assets (all of the
foregoing being herein called "Intangibles") that are material to the
business of the Company. There is no right under any Intangibles of the
Company necessary to the business of the Company as presently conducted
or as proposed to be conducted as indicated in the Prospectus, except as
may be disclosed in the Prospectus. The Company have not received notice
of infringement with respect to asserted Intangibles of others. To the
knowledge of the Company, there is no infringement by others of
Intangibles of the Company. To the knowledge of the Company, there is no
Intangible of others which has had or may in the future have a materially
adverse effect on the condition (financial or otherwise), results of
operations, businesses, property, assets, liabilities or prospects of the
Company.
12
(j) Neither the Company, any director or officer of the Company, or to the
best knowledge of the Company, any agent, employee, or other person
authorized to act on behalf of the Company have, directly or indirectly:
used any corporate funds of the Company for unlawful contributions,
gifts, entertainment, or other unlawful expenses relating to political
activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from corporate funds of the Company; violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended, as relates to the
business of the Company; or made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment in connection with the
business of the Company.
(k) Any contract, agreement, instrument, lease or license required to be
described in the Registration Statement or the Prospectus has been
properly described therein. Any contract, agreement, instrument, lease
or license required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to or has been
incorporated as an exhibit by reference into the Registration Statement.
(l) The Company has all requisite corporate power and authority to execute,
deliver and perform under the terms and conditions of this Agreement and
the Underwriters' Warrant. All necessary corporate proceedings of the
Company have been duly taken to authorize the execution, delivery and
performance by the Company of this Agreement and the Underwriters'
Warrant. This Agreement has been duly authorized, executed and delivered
by the Company, is a legal, valid, and binding agreement of the Company,
and is enforceable as to the Company in accordance with its terms. The
Underwriters' Warrant has been duly authorized by the Company and, when
executed and delivered by the Company, assuming the due execution and
delivery thereof by the other parties thereto, will be a legal, valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms. No consent, authorization, approval, order,
license, certificate, declaration or permit of or from, or filing with,
any governmental or regulatory authority, agent, board or other body is
required for the issue and sale of the Shares by the Company and the
execution, delivery or performance by the Company of this Agreement or
the Underwriters' Warrant (except filings with and orders of the
Commission pursuant to the Act which have been or will be made or
obtained prior to the Closing Date, and such filings, consents or permits
as are required under Blue Sky or securities laws in connection with the
transactions contemplated by this Agreement). No consent of any party to
any contract, agreement, instrument, lease, license, arrangement or
understanding to which the Company is a party, or to which any of their
properties or assets are subject, is required for the execution, delivery
or performance of this Agreement or the Underwriters' Warrant; and the
execution, delivery and performance of this Agreement and the
Underwriters' Warrant will not violate, result in a breach of, conflict
with, or (with or without the giving of notice or the passage of time or
both) entitle any party to terminate or call a default under any such
contract, agreement, instrument, lease, license, arrangement or
understanding, result in the creation or imposition of, any lien,
security interest, pledge, charge, or other encumbrance upon any of the
property or assets of the Company pursuant to the terms of any indenture,
mortgage, deed of trust, loan or credit agreement, lease or other
agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the Company
is subject or violate or result in a breach of any term of the
Certificate of Incorporation or By-laws of the Company, or violate,
result in a breach of, or conflict with any law, rule, regulation, order,
judgment or
13
decree binding on the Company or to which its operations, business,
properties or assets are subject.
(m) The Shares are validly authorized, and when issued, paid for and
delivered in accordance with this Agreement, will be validly issued,
fully paid, and nonassessable, without any personal liability attaching
to the ownership thereof, and will not be issued in violation of any
preemptive rights of shareholders. You will receive good title to the
Shares and the Underwriters' Warrant purchased by it, upon payment of the
purchase price therefor in accordance with the provisions of this
Agreement, free and clear of all liens, security interests, pledges,
charges, encumbrances, shareholders' agreements and voting trusts
(collectively, "Encumbrances").
(n) The Underwriters' Warrant Shares are validly authorized and reserved for
issuance and, when issued, paid for and delivered upon exercise of the
Underwriters' Warrant, in accordance with the provisions of the
Underwriters' Warrant will be validly issued, fully paid and
non-assessable and will not be issued in violation of any preemptive
rights of shareholders; and the holders of the Underwriters' Warrant
Shares will receive good title to them, free and clear of all
Encumbrances.
(o) The Shares and the Underwriters' Warrant conform to all statements
relating thereto contained in the Registration Statement and the
Prospectus.
(p) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as otherwise may be
stated therein, (i) the Company has not entered into any transaction or
incurred any liability or obligation, contingent or otherwise, which is
material to the Company, except in the ordinary course of business, (ii)
there has not been any change in the outstanding capital stock of the
Company, or any issuance of options, warrants or rights to purchase the
capital stock of the Company, or any material increase in the long-term
debt of the Company, or any material adverse change in the business,
condition (financial or otherwise) or results of operations of the
Company, (iii) no loss or damage (whether or not insured) to the
properties of the Company has been sustained which is material to the
Company, (iv) the Company has not paid or declared any dividend or other
distribution with respect to its stock, and (v) there has not been any
change, contingent or otherwise, in the direct or indirect control of the
Company nor, to the best knowledge of the Company, do there exist any
circumstances which would likely result in such a change.
(q) Neither the Company nor any officers or directors of the Company or
Affiliates (as defined in Rule 405 of the Rules and Regulations), have
taken or will take, directly or indirectly, prior to the termination of
the offering contemplated by this Agreement, any action designed to
stabilize or manipulate the price of any security of the Company, or
which has caused or resulted in, or which might in the future reasonably
be expected to cause or result in, stabilization or manipulation of the
price of any security of the Company, to facilitate the sale or resale of
any of the Shares.
(r) The Company has not incurred, directly or indirectly, any liability for a
fee, commission or other compensation on account of the employment of a
broker or finder in connection with the offering of the Shares
contemplated by this Agreement, except as contemplated by this Agreement
or as disclosed in the Registration Statement.
14
(s) The Company is not, and does not intend to conduct its business in a
manner in which it would become, an "investment company" as defined in
Section 3(a) of the Investment Company Act.
(t) The Company has obtained, or prior to the Closing Date will obtain a
Lock-up Letter, from each of its officers and directors who owns shares
of Common Stock.
(u) No person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing or
effectiveness of the Registration Statement.
(v) The Company has adequately insured its properties against loss or damage
by fire, maintain adequate insurance against liability for negligence and
maintain such other insurance as is usually maintained by companies
engaged in the same or similar businesses, including product liability
insurance.
(w) The Company has filed all federal, state and local tax returns required
to be filed (or have obtained extensions therefor) and have paid all
taxes shown on such returns and all assessments received by it to the
extent that payment has become due. The Company and its subsidiaries
have made adequate accruals for all taxes which may be owed by it but has
not been paid.
(y) Singer Lewak Xxxxxxxxx & Xxxxxxxxx LLP who have certified certain
financial statements of the Company are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder.
6. INDEMNIFICATION AND CONTRIBUTION:
(a) The Company agrees to indemnify and hold harmless you, your
officers, directors, partners, employees, agents and counsel, and each
person, if any, who controls you within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, against any and all loss, liability,
claim, damage, and expense whatsoever (which shall include, for all purposes
of this Section 6, but not be limited to, attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact contained (1) in any
Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement,
or the Prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or (2) in any application or other document
or communication (in this Section 6 collectively called an "application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order
to qualify the Shares under the Blue Sky or securities laws thereof (or the
rules and regulations promulgated thereunder) or filed with the Commission or
any securities exchange or automated quotation system; or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with
written information furnished to the Company as stated in Section 6(b) by you
for inclusion in any Preliminary Prospectus, the Rule 430A Prospectus, the
Registration Statement, of the Prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (ii) any breach of any
representation, warranty, covenant or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall
15
be in addition to any liability the Company may otherwise have, including
liabilities arising under this Agreement.
If any action is brought against you or any of your officers, directors,
partners, employees, agents or counsel, or any of your controlling persons
(each, an "indemnified party") in respect of which indemnity may be sought
against the Company pursuant to the foregoing paragraph, such indemnified party
or parties shall promptly notify the Company in writing of the institution of
such action (but the failure so to notify shall not relieve the Company from any
liability it may have pursuant to this Section 6(a)) and the Company shall
promptly assume the defense of such action, including the employment of counsel
(satisfactory to such indemnified party or parties) and payment of expenses.
Such indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties, unless the employment of
such counsel shall have been authorized in writing by the Company in connection
with the defense of such action or the Company shall not have promptly employed
counsel satisfactory to such indemnified party or parties to have charge of the
defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be one or more legal defenses available to
it or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this paragraph to the contrary notwithstanding, the
Company shall not be liable for any settlement of any such claim or action
effected without its written consent. The Company agrees promptly to notify you
of the commencement of any litigation or proceedings against the Company or any
of its officers or directors in connection with the sale of the Shares, any
Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto, or any application.
(b) You agree to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall have signed
the Registration Statement, and each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, to the same extent as the foregoing indemnity from the Company
to you in Section 6(a), but only with respect to statements or omissions, if
any, made in any Preliminary Prospectus, the Rule 430A Prospectus, the
Registration Statement, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application,
in reliance upon and in conformity with written information furnished to the
Company by you expressly for inclusion in any Preliminary Prospectus, the
Rule 430A Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or in any application, as the case may be.
For all purposes of this Agreement, the public offering price, the amounts of
the selling concession and reallowance set forth in the Prospectus and the
information in the third paragraph under "Underwriting" constitute the only
information furnished in writing by or on your behalf expressly for inclusion
in any Preliminary Prospectus, the Rule 430A Prospectus, the Registration
Statement or the Prospectus (as from time to time amended or supplemented),
or any amendment or supplement thereto, or in any application, as the case
may be. If any action shall be brought against the Company or any other
person so indemnified based upon any Preliminary Prospectus, the Rule 430A
Prospectus, the Registration Statement, or the Prospectus, or any amendment
or supplement thereto, or any application, and in respect of which indemnity
may be sought against you pursuant to this Section 6(c), you shall have the
rights and duties given to the Company, and the Company and each other person
so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 6(a).
16
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 6(a), or
6(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act, or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed the Registration
Statement, and any controlling person of the Company), as one entity, and you,
as a second entity, shall contribute to the losses, liabilities, claims, damages
and expenses whatsoever to which any of them may be subject, so that you are
responsible for the proportion thereof equal to the percentage which the
aggregate underwriting discount set forth on the cover page of the Prospectus
represents of the initial public offering price of the Shares set forth on the
cover page of the Prospectus and the Company shall be responsible for the
remaining portion, in proportion to the net proceeds from the offering received
by them; PROVIDED, HOWEVER, that if applicable law does not permit such
allocation, then other relevant equitable considerations such as the relative
fault of the Company and you in the aggregate in connection with the facts which
resulted in such losses, liabilities, claims, damages and expenses shall also be
considered. The relative fault, in the case of an untrue statement, alleged
untrue statement, omission, or alleged omission, shall be determined by, among
other things, whether such statement, alleged statement, omission, or alleged
omission relates to information supplied by the Company or by you, and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement, alleged statement, omission or alleged
omission. The Company and you agree that it would be unjust and inequitable if
the respective obligations of the Company and you for contribution were
determined by PRO RATA or PER CAPITA allocation of the aggregate losses,
liabilities, claims, damages and expenses or by any other method of allocation
that does not reflect the equitable considerations referred to in this Section
6(d). 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. For purposes of this
Section 6(d), each person, if any, who controls you within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company, shall have the same rights to contribution as the Company, subject
in each case to the provisions of this Section 6(d). Anything in this Section
6(d) to the contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without its
written consent. This Section 6(d) is intended to supersede any right to
contribution under the Act, the Exchange Act, or otherwise.
7. CONDITIONS OF YOUR OBLIGATIONS: Your obligations hereunder are
subject to the continuing accuracy of the representations and warranties of the
Company contained herein and in each certificate and document contemplated under
this Agreement to be delivered to you, as of the date hereof, as of the Closing
Date, and each Optional Closing Date, as the case may be, to the performance by
the Company of their respective obligations hereunder, and to the following
additional conditions:
(a) Notification that the Registration Statement has become effective shall
be received by you not later than 6:30 p.m., New York City time, on the
date of this Agreement or at such later date and time as shall be
consented to in writing by you. If the Company has elected to rely upon
Rule 430A of the Rules and Regulations, the price of the Shares 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
17
have provided evidence satisfactory to you 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 Commission shall not have issued a Stop Order and no Blue Sky or
securities authority of any jurisdiction shall have issued an order
suspending the registration or qualification of the Securities, and no
proceedings for such purpose shall have been instituted or shall be
pending, or to the knowledge of the Company, be threatened or
contemplated by the Commission or the Blue Sky or securities authorities
of any such jurisdiction.
(c) You shall have received an opinion, dated the Closing Date and
satisfactory in form and substance to your counsel from Matthias & Xxxx
LLP, counsel to the Company, to the effect that:
(1) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of Delaware, its
jurisdiction of incorporation, with full corporate power and
authority to own its property and conduct its business in the
manner described in the Prospectus. To the knowledge of such
counsel, the Company has obtained all necessary consents,
authorizations, approvals, orders, licenses, certificates,
declarations and permits of and from, and has made all required
filings with, all federal, state, local and other governmental
authorities and all courts and other tribunals, to own, lease,
license and use its properties and assets and to carry on its
business in the manner described in the Prospectus. The Company
is duly registered or qualified to do business as a foreign
corporation and is in good standing in each other jurisdiction in
which the ownership, leasing, licensing, or use of its property
and assets or the conduct of its business require such
registration or qualification.
(2) The authorized capital stock of the Company consists of 70,000,000
shares of Common Stock, of which_________ shares are outstanding,
and 1,000,000 shares of Preferred Xxxxx, x.0000 par value, of
which no shares are outstanding. Each outstanding share of Common
Stock is validly authorized, validly issued, fully paid, and
nonassessable, with no personal liability attaching to the
ownership thereof, has not been issued and is not owned or held in
violation of any preemptive right of shareholders. There is no
commitment, plan or arrangement to issue, and no outstanding
option, warrant or other right calling for the issuance of, any
share of capital stock of the Company or any security or other
instrument which by its terms is convertible into, exercisable
for, or exchangeable for capital stock of the Company, except as
disclosed in the Prospectus. There is outstanding no security or
other instrument which by its terms is convertible into or
exchangeable for capital stock of the Company.
(3) To the knowledge of such counsel, there is no litigation,
arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending or threatened, with respect to
the Company or any of its operations, business, property or
assets, except as disclosed in the Prospectus or such as
individually or in the aggregate do not now have and are not
expected to have a material adverse effect on the operations,
business, property, assets or condition (financial or otherwise)
of the Company. The Company is not in violation of, or in default
with respect to, any law, rule or regulation, or to the knowledge
of such counsel, after reasonable investigation, any order,
judgment or decree,
18
except as disclosed in the Prospectus or such as individually or
in the aggregate do not now have and are not expected to have a
material adverse effect on the operations, businesses, property,
assets or condition (financial or otherwise) of the Company; nor
is the Company required to take any action in order to avoid any
such violation or default.
(4) Except as disclosed in the Prospectus, the Company is not now in
violation or breach of, or in default with respect to complying
with, any material provision of any indenture, mortgage, deed of
trust, debenture, note or other evidence of indebtedness,
contract, agreement, instrument, lease or license, or arrangement
or understanding which is material to the Company, and each such
indenture, mortgage, deed of trust, debenture, note or other
evidence of indebtedness, contract, agreement, instrument, lease
or license is in full and force and is the legal, valid and
binding obligation of the Company.
(5) The Company is not in violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation or
By-laws.
(6) The Company has all requisite corporate power and authority to
execute, deliver and perform this Agreement and the Underwriters'
Warrant. All necessary corporate proceedings of the Company have
been taken to authorize the execution, delivery, and performance
by the Company of this Agreement and the Underwriters' Warrant.
This Agreement and the Underwriters' Warrant have been duly
authorized, executed and delivered by the Company, constitute
legal, valid, and binding agreements of the Company, and (subject
to applicable bankruptcy, insolvency, reorganization and other
laws affecting the enforceability of creditors' rights generally,
and the application of equitable principles affecting the
enforceability of remedies in the nature of specific enforcement,
and except as the enforceability of the indemnification and
contribution provisions of this Agreement and the Underwriters'
Warrant may be limited under applicable securities laws) is
enforceable as to the Company in accordance with its terms. The
Underwriters' Warrant has been duly authorized by the Company and,
when executed, issued and delivered by the Company and paid for by
you in accordance with the provisions of this Agreement, will be a
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency,
registration and other laws affecting the enforceability of
creditors' rights generally and the application of equitable
principles affecting the availability of remedies in the nature of
specific enforcement.
(7) All legally required proceedings in connection with the
authorization, issue and sale of the Shares by the Company in
accordance with the provisions of this Agreement have been taken,
and no consent, authorization, approval, order, license,
certificate, declaration or permit of or from, or filing with, any
governmental or regulatory authority, agency, board, bureau or
other body or is required for the execution, delivery or
performance by the Company of this Agreement and the Underwriters'
Warrant (except filings with and orders of the Commission pursuant
to the Act which have been made or received and matters under Blue
Sky or state securities laws, rules or regulations, as to which
such counsel need not express an opinion).
19
(8) No consent of any party to any material contract, agreement,
instrument, lease or license, or arrangement or understanding
known to such counsel, to which the Company is a party, or to
which any of the property or assets of the Company is subject, is
required for the execution, delivery or performance of this
Agreement or the Underwriters' Warrant; and the execution,
delivery and performance of this Agreement and the Underwriters'
Warrant will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or
both) entitle any party to terminate or call a default under any
such contract, agreement, instrument, lease, license, arrangement
or understanding, result in the creation or imposition of any
lien, security interest, pledge, charge or other encumbrance upon
any of the property or assets of the Company pursuant to the terms
of any indenture, mortgage, deed of trust, loan or credit
agreement, lease or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which
any of the property or assets of the Company is subject, known to
such counsel, or violate or result in a breach of any term of the
Certificate of Incorporation or By-laws of the Company, or
violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment or decree binding on the Company or to
which the operations, business, property or assets of the Company
are subject to.
(9) The Shares are validly authorized. Upon payment of the purchase
price thereunder in accordance with the provisions of this
Agreement, the Underwriters' Warrant will be duly delivered. The
Shares, when issued, paid for and delivered in accordance with the
provisions of this Agreement, will be validly issued, fully paid
and nonassessable, without any personal liability attaching to the
ownership thereof, and will not be issued in violation of any
preemptive rights of shareholders. Upon payment of the purchase
price therefor in accordance with the provisions of this
Agreement, you will receive good title to the Shares and the
Underwriters' Warrant purchased by it from the Company, free and
clear of all Liens.
(10) The Underwriters' Warrant Shares are validly authorized and have
been duly and validly reserved for issuance, and when issued, paid
for and delivered upon exercise of the Underwriters' Warrant in
accordance with the provisions of the Underwriters' Warrant will
be validly authorized, validly issued, fully paid, and
nonassessable, with no personal liability attaching to the
ownership thereof, and will not have been issued in violation of
any preemptive rights of shareholders, and the holders of the
Underwriters' Warrant Shares will receive good title to them, free
and clear of all Encumbrances.
(11) The Shares and the Underwriters' Warrant Shares conform to all
statements relating thereto contained in the Registration
Statement and the Prospectus.
(12) To the knowledge of such counsel, any contract, agreement,
instrument, lease or license required to be described in the
Registration Statement or the Prospectus has been properly
described therein. To the knowledge of such counsel, any
contract, agreement, instrument, lease, or license required to be
filed as an exhibit to the Registration Statement has been filed
with the Commission as an exhibit to or has been incorporated as
an exhibit by reference into the Registration Statement.
20
(13) The Shares are duly authorized for quotation on the NASDAQ
National Market, subject to notice of issuance.
(14) To the knowledge of such counsel, no person or entity has the
right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness
of the Registration Statement who has not waived such right.
(15) The Company is not an "investment company" by reason of its assets
and operations as defined in Section 3(a) of the Investment
Company Act.
(16) None of the shares of Common Stock issued by the Company prior to
the date hereof have been offered and sold by the Company in
violation of the Act or applicable Blue Sky or state securities
laws or rules or regulations. All shares of Common Stock
outstanding as of the date hereof have been duly authorized and
validly issued, and are fully paid and non-assessable, with no
personal liability attaching to the ownership thereof, and have
not been issued in violation of any preemptive rights of
shareholders.
(17) The statements in the Prospectus under captions "Business", "Risk
Factors", "Use of Proceeds", "Management" and "Description of
Capital Stock" have been reviewed by such counsel and insofar as
such statements refer to descriptions of agreements, instruments
or leases, summarize the status of litigation or other
proceedings, or the provisions of orders, judgments or decrees, or
constitute statements of law, descriptions of statutes, rules or
regulations, or conclusions of law, such statements fairly present
the information called for and are accurate and complete in all
material respects.
(18) (except for liabilities and obligations incurred in the ordinary
course of business, to the knowledge of such counsel, after due
inquiry, there are no claims (absolute, accrued, contingent or
otherwise), except as disclosed in the Prospectus or such as
individually or in the aggregate do not have and are not expected
to have a material adverse effect upon the operations, businesses,
property, assets or condition (financial or otherwise) of the
Company; and
(19) The Registration Statement has become effective under the Act, and
to the knowledge of such counsel, no Stop Order has been issued
and no proceedings for that purpose have been instituted or
threatened.
(20) The Registration Statement, any Rule 430A Prospectus, and the
Prospectus, and any amendment or supplement thereto (except for
the financial statements and the notes and schedules related
thereto, and other financial information and statistical data
contained therein or omitted therefrom, as to which such counsel
need express no opinion), comply as to form in all material
respects with the applicable requirements of the Act.
(21) Such counsel has participated in the preparation of the
Registration Statement and the Prospectus and any amendments or
supplements thereto, and in the course thereof participated in
conferences with officers and other representatives of the
Company, representatives of the independent certified public
accountants for the Company and your representatives at which the
contents of the Registration Statement and Prospectus and
21
related matters were discussed 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 Registration Statement and Prospectus, or any amendment or
supplement thereto, 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 such amendment became
effective or the Prospectus as of its date or any amendment or
supplement thereto as of its date contained an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (it being understood that such counsel need express no
comment with respect to the financial statements, and the notes
and schedules related thereto, and other financial information and
statistical data included in the Registration Statement or
Prospectus).
(22) To the knowledge of such counsel, since the effective date of the
Registration Statement, no event has occurred which should have
been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not been set forth in such
an amendment or supplement.
In rendering such opinion, counsel for the Company may rely (i) as to
matters involving the application of laws other than the laws of the United
States, to the extent counsel for the Company deems proper and to the extent
specified in such opinion, upon an opinion or opinions of local counsel (in form
and substance satisfactory to your counsel) acceptable to your counsel, familiar
with the applicable laws, in which case the opinion of counsel for the Company
shall state that the opinion or opinions of such other counsel are satisfactory
in scope, form and substance to counsel for the Company and that reliance
thereon by counsel for the Company is reasonable; (ii) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company; and (iii) to the extent they deem proper, upon written statements or
certificates of officers of departments of various jurisdictions having custody
of documents respecting the corporate existence or good standing of the Company,
provided that copies of any such statements or certificates shall be delivered
to your counsel.
(d) You shall have received letters addressed to you and dated the date
hereof and the Closing Date from Singer Lewak Xxxxxxxxx & Xxxxxxxxx LLP,
independent certified public accountants for the Company, addressed to
you, and in form and substance satisfactory to you, to the effect that:
(1) Such accountants are independent public accountants as required by
the Act and the rules and regulations of the Commission thereunder
and no information need be supplied with respect to them in answer
to Item ___ of Form S-1.
(2) In their opinion, the financial statements and related notes of
the Company examined by them, at all dates and for all periods
referred to in their report therein, and included in the
Registration Statement and the Prospectus on their authority as
experts comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and
Regulations of the Commission promulgated thereunder.
22
(3) On the basis of limited procedures not constituting an audit,
including a reading of the latest available unaudited interim
financial statements of the Company and the financial data and
accounting records of the Company, inquiries of officials of the
Company and others responsible for financial and accounting
matters, a reading of the minute books of the Company, including
without limitation the minutes (if any) of meetings or consents in
lieu of meetings of the shareholders and of the Board of Directors
(and any committees thereof) of the Company, and other specified
procedures and inquiries requested by you, if any, nothing has
come to their attention which causes them to believe that:
(i) except as disclosed in or contemplated by the Registration
Statement and the Prospectus, during the period from the
date of the last audited balance sheet of the Company
included in the Registration Statement and Prospectus to a
specified date not more than five (5) days prior to the
date of such letter, there were any decreases, as compared
with the corresponding period of the preceding year, in net
sales, cost of goods sold, operating, selling, general and
administrative expenses, earnings from operations, the
total or per share amounts of net earnings, or the weighted
average number of shares outstanding;
(ii) except as disclosed in or contemplated by the Registration
Statement and the Prospectus, during the period from the
date of the last audited balance sheet of the Company
included in the Registration Statement and Prospectus to a
specified date not more than five (5) days prior to the
date of such letter, there has been any change in the
capital stock or other securities of the Company or any
payment or declaration of any dividend or other
distribution in respect thereof or in exchange therefor, or
any increase in the long-term debt of the Company or any
decrease in the net current assets or net assets of the
Company as compared with the amounts shown on the last
audited balance sheet of the Company, included in the
Registration Statement and the Prospectus (other than in
the ordinary course of business); and
(iii) On the basis of their examinations referred to in their
report and consent included in the Registration Statement
and Prospectus and the indicated procedures and inquiries
referred to above, nothing has come to their attention
which, in their judgment, would cause them to believe or
indicate that the financial statements and related notes
and schedules of the Company included in the Registration
Statement and Prospectus do not present fairly the
financial position and results of operations of the
Company, as at the dates and for the periods indicated, in
conformity with generally accepted accounting principles
applied on a consistent basis, and are not in all material
respects a fair presentation of the information purported
to be shown.
(4) In addition to their examination referred to in their report
included in the Registration Statement and the Prospectus and the
inquiries and limited procedures referred to in clause (ii) of
this Section 7(e), they have performed other procedures, not
constituting an audit, with respect to certain numerical data,
percentages, dollar amounts and other financial information
appearing in the Registration Statement and the Prospectus, which
are derived from the general accounting records of the Company,
and have compared
23
certain of such data and information with the accounting records
of the Company and found them to be in agreement.
(5) Such other matters as you may have reasonably requested.
(e) The representations and warranties of the Company in this Agreement shall
be true and correct with the same effect as if made on and as of the
Closing Date and the Company shall have complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to the Closing Date.
(g) The Registration Statement and the Prospectus and any amendments or
supplements thereto shall contain all statements which are required to be
stated therein in accordance with the Act and the Rules and Regulations,
and shall in all material respects conform to the requirements thereof,
and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(h) There shall have been, since the respective dates as of which information
is given in the Registration Statement and the Prospectus, no material
adverse change in the business, property, condition (financial or
otherwise), results of operations, capital stock, long-term or short-term
debt or general affairs of the Company, except changes which the
Registration Statement and the Prospectus indicate might occur after the
effective date of the Registration Statement, and the Company shall not
have incurred any material liabilities or entered into any agreements not
in the ordinary course of business, except as disclosed in the
Registration Statement and the Prospectus.
(i) No action, suit or proceeding, at law or in equity, shall be pending or
threatened against the Company which would be required to be set forth in
the Registration Statement, and no proceedings 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 have a materially adverse
affect on the business, property, condition (financial or otherwise),
results of operations or general affairs of the Company.
(j) The Company shall have furnished to you or caused to be furnished to you
at the Closing Date, certificates of the President and chief financial
officer of the Company, in form and substance satisfactory to you, as to
the accuracy of the representations and warranties of the Company, herein
at and as of the Closing Date and as to the performance by the Company of
all its respective obligations hereunder to be performed at or prior to
the Closing Date and the Company shall have furnished to you a
certificate of the President and chief financial officer of the Company
satisfactory to you as to the matters set forth in Sections 7(a) and (b)
above.
(k) The NASDR, upon review of the terms of the public offering of the Shares,
shall have indicated that it has no objections to the underwriting
arrangements pertaining to the sale of the Shares and the participation
by you in the sale of the Shares.
(l) Prior to or on the Closing Date, the Company shall have executed and
delivered the Underwriters' Warrant to you.
24
(m) Prior to or on the Closing Date, the Company shall have delivered to you
executed copies of the Lock-up Letters.
(n) Subsequent to the date hereof, there shall not have occurred any change,
or any development involving a prospective change, in or affecting
particularly the business or financial affairs of the Company which would
materially and adversely affect the market for the Shares.
(o) Subsequent to the date hereof, no executive officer of the Company listed
as such in the Prospectus shall have died, become physically or mentally
disabled, resigned or have been removed or discharged.
(p) The Company shall furnish you with such further certificates and
documents as you or your counsel shall have reasonably requested.
All opinions, certificates, letters and other documents required by this
Section 7 to be delivered to you by the Company will be in compliance with the
provisions hereof only if they are satisfactory in form and substance to you and
your counsel. The Company will furnish you with such conformed copies of such
opinions, certificates, letters and other documents as you shall reasonably
request.
(q) Upon the exercise, in whole or in part, by you of the option to purchase
the Additional Shares, referred to in Section 2 hereof, your obligations
to purchase and pay for the Additional Shares will be subject to the
continuing accuracy of the representations and warranties of the Company
and contained herein and in each certificate and document contemplated
under this Agreement to be delivered to you, as of the date hereof and as
of each Optional Closing Date, to the performance by the Company of its
obligations hereunder, and the following additional conditions:
(1) The Registration Statement shall remain effective at the Optional
Closing Date, and no Stop Order shall have been issued by the
Commission and no proceedings for that 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 any reasonable request on the part of the Commission for
additional information shall have been complied with to the
satisfaction of Xxxxxx & Xxxxx, your counsel.
(2) You shall have received an opinion, dated the Optional Closing
Date and satisfactory in form and substance to counsel to you,
from Matthias & Xxxx LLP, counsel to the Company, which opinion
shall be substantially the same in scope and substance as the
opinion furnished to you on the Closing Date pursuant to Section
7(c) hereof, except that such opinion, where appropriate, shall
cover the Additional Shares.
(3) You shall have received a letter in form and substance
satisfactory to you from Singer Lewak Xxxxxxxxx & Xxxxxxxxx LLP,
independent certified public accountants for the Company, dated
the Optional Closing Date and addressed to you confirming the
information in their letter referred to in Section 7(d) hereof and
stating that nothing has come to their attention during the period
from the ending date of their review referred to in said letter to
a date not more than five (5) days prior to the Optional Closing
Date,
25
which would require any change in said letter if it were required
to be dated the Optional Closing Date.
(4) You shall have received a certificate of the President and chief
financial officer of the Company, dated the Optional Closing Date,
in form and substance satisfactory to you, substantially the same
in scope and substance as the certificate furnished to you on the
Closing Date pursuant to Section 7(j) hereof.
8. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective at 9:30 A.M., New York City
time, on the first full business day following the day on which the Registration
Statement becomes effective or at the time of the initial public offering by you
of the Shares, whichever is earlier. The time of the initial public offering
shall mean the time, after the Registration Statement becomes effective, of the
release by you for publication of the first newspaper advertisement which is
subsequently published relating to the Shares or the time, after the
Registration Statement becomes effective, when the Shares are first released by
you for offering by you or dealers by letter or telegram, whichever shall first
occur. You or the Company may prevent this Agreement from becoming effective
without liability of any party to any other party, except as noted below in this
Section 8, by giving the notice indicated in Section 8(c) before the time this
Agreement becomes effective.
(b) In addition to the right to terminate this Agreement pursuant to
Section 7 hereof by reason of the Company's failure, refusal or inability to
perform all obligations and satisfy all conditions on their part to be performed
or satisfied hereunder prior to the Closing Date or Optional Closing Date, as
the case may be, you shall have the right to terminate this Agreement at any
time prior to the Closing Date or any Optional Closing Date, as the case may be,
by giving notice to the Company, if the Company shall have sustained a material
loss or material adverse interference with its business or properties from fire,
flood, accident, hurricane, earthquake, theft, sabotage, or other calamity or
malicious act, including the death or disability of Xxxxxx X. Xxxxx, whether or
not covered by insurance, or from any labor dispute or any court or governmental
action, order or decree, of such a character as to have a material adverse
effect with the conduct of the business and operations of the Company; or if
there shall have been a general suspension of, or a general limitation on prices
for, trading in securities on the New York Stock Exchange, the American Stock
Exchange or in the over-the-counter market; or if a banking moratorium has been
declared by a state or federal authority; or if there shall have been an
outbreak of major hostilities between the United States and any foreign power,
or any other insurrection, armed conflict or national calamity, which in the
judgment of a majority-in-interest of the underwriters, makes it impracticable
or inadvisable to proceed with the offering, sale or delivery of the Firm Shares
or the Additional Shares, as the case may be.
(c) If you elect to prevent this Agreement from becoming effective as
provided in this Section 8, or to terminate this Agreement pursuant to Section 7
or this Section 8, you shall notify the Company promptly by telephone,
telecopier, telex, or telegram, confirmed by letter. If, as so provided in this
Section 8, the Company elects to prevent this Agreement from becoming effective,
the Company shall notify you promptly by telephone, telecopier, telex, or
telegram, confirmed by letter.
26
(d) Anything in this Agreement to the contrary notwithstanding other
than Section 8(e), if this Agreement shall not become effective by reason of an
election pursuant to this Section 8 or if this Agreement shall terminate or
shall otherwise not be carried out within the time specified herein by reason of
any failure on the part of the Company to perform any covenant or agreement or
satisfy any condition of this Agreement by it to be performed or satisfied, the
sole liability of the Company to you, in addition to the obligations the Company
assumed pursuant to Section 4(g), will be to reimburse you for such
out-of-pocket expenses (including the fees and disbursements of their counsel)
as shall have been incurred by them in connection with this Agreement or the
proposed offer, sale, and delivery of the Shares, and upon demand the Company
agrees to pay promptly the full amount thereof to you.
(e) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 4(b), 4(g), 6, 10(b) and 10(c) 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.
9. SUBSTITUTION OF UNDERWRITERS.
If any one or more of the Underwriters shall fail or refuse to purchase
any of Shares which it or they have agreed to purchase hereunder, and the number
of Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of
Shares, the other Underwriters shall be obligated, severally, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase, in the proportions which the number of Shares which they
have respectively agreed to purchase pursuant to Section 2 hereof bears to the
aggregate number of Shares which all such non-defaulting Underwriters have so
agreed to purchase or in such other proportions as you may specify, provided
that in no event shall the maximum number of Shares which any Underwriter has
become obligated to purchase pursuant to Section 2 hereof be increased pursuant
to this Section 9 by more than one-ninth of such number of Shares, without the
written consent of such Underwriter. If any Underwriter or Underwriters shall
fail or refuse to purchase any Shares and the aggregate number of Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase exceeds one-tenth of the aggregate number of Shares and arrangements
satisfactory to you and the Company for the purchase of such Shares are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company for the
purchase or sale of any Shares under this Agreement. In any such case either
you or the Company shall have the right to postpone the Closing Date, but in no
event for longer than five business days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
10. MISCELLANEOUS: (a) Notices required to be in writing shall be
mailed or delivered (i) to the Company at the Company's office at 000 Xxxxx
Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xx Xxxxxxx, XX 00000, with copies to Matthias &
Xxxx LLP, 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000 or (ii) to
you, at the office of Nichols, Safina, Xxxxxx & Co., Inc., 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxx, Director of Corporation with
copies to: Xxxxxx & Eilen, 00 Xxxxxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxx Xxxx 00000, Attention: Xxxx Xxxxxx, Esq., and shall be deemed given when
received. Any notice not required to be in writing, including but not limited
to notices under Section 7(a) or 8 hereof, may be made by telex, telecopier or
telephone and shall
27
be deemed given at the time the telex, or telecopied communication is received
or the telephone call is made, but if so made shall be subsequently confirmed in
writing.
(b) The representations, warranties, covenants and agreements of the
Company, and the indemnity and contribution agreements, contained in Sections
4, 5 and 6 of this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of you, the Company or any of its
officers or directors or any controlling persons of you or the Company and
will survive acceptance of and payment for any of the Shares and the
termination of this Agreement.
(c) This Agreement has been and is made solely for the benefit of you,
the Company and the controlling persons, directors and officers referred to
in Section 6 hereof and their respective 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" as used in this Agreement shall not include
a purchaser, as such purchaser, of Shares from you.
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, applicable to contracts made and to be
performed entirely with such State, without regard to conflict of laws
provisions thereof.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and you.
Very truly yours,
INTERNATIONAL META SYSTEMS, INC.
By:__________________________________________
Xxxxxx X. Xxxxx, Chief Executive Officer
Confirmed, as of the date first above mentioned.
XXXXXXX, SAFINA & XXXXXX, INC.
By:___________________________________________
Xxxxxx X. Xxxxx, Director of Corporations
28
SCHEDULE I
Underwriting Agreement, dated _____________________________
Underwriter Number of Firm Shares
----------- ---------------------
Nichols, Safina, Xxxxxx & Co., Inc . . . . . . .
Total . . . . . . . . . . . . . . . .
29
