Exhibit 1.1
1,500,000 Shares
XXXXXXXXX.XXX, INC.
Common Stock
UNDERWRITING AGREEMENT
New York, New York
October __, 1998
Strasbourger Xxxxxxx Tulcin
Xxxxx Incorporated
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxxxx.xxx, Inc., a Delaware corporation (the "Company"), hereby
confirms its agreement with you. The Company proposes to issue and sell to you
(the "Underwriter") pursuant to this Underwriting Agreement (the "Agreement") an
aggregate of 1,500,000 shares (the "Shares") of the Company's Common Stock,
par value $.001 per share (the "Common Stock").
You have advised the Company that you desire to purchase the Shares.
The Company confirms the agreement made by it with respect to the purchase of
the Shares by the Underwriter, as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriter that:
(a) A registration statement on Form S-1 (File No. 333-36209)
with respect to the Shares, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act") and in
conformity with the requirements of the Act and the rules and regulations of the
Commission thereunder (the "Rules and Regulations"), and one or more amendments
to such registration statement may have been so filed and such registration
statement has been delivered to you. After the execution of this Agreement, the
Company will file with the Commission either (i) if such registration statement,
as it may have been amended, has been declared by the Commission to be effective
under the Act, either (A) if the Company relies on Rule 434 under the Act, a
Term Sheet (as hereinafter defined) relating to the Shares, that shall identify
the Preliminary Prospectus (as hereinafter defined) that it supplements
containing such information as is required or permitted by Rules 434, 430A and
424(b) under the Act or (B)
if the Company does not rely on Rule 434 under the Act, a prospectus in the form
most recently included in an amendment to such registration statement (or, if no
such amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or permitted by
Rule 424(b) under the Act, and in the case of either clause (i)(A) or (i)(B) of
this sentence as have been provided to and approved by you prior to the
execution of this Agreement, or (ii) if such registration statement, as it may
have been amended, has not been declared by the Commission to be effective under
the Act, an amendment to such registration statement, including a form of
prospectus, a copy of which amendment has been furnished to and approved by you
prior to the execution of this Agreement. The Company may also file a related
registration statement with the Commission pursuant to Rule 462(b) under the Act
for the purpose of registering certain additional Shares, which registration
shall be effective upon filing with the Commission. As used in this Agreement,
the term "Registration Statement" means the registration statement initially
filed relating to the Shares, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and including
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined), and including any
registration statement filed with the Commission pursuant to Rule 462(b); the
term "Preliminary Prospectus" means each prospectus subject to completion filed
with such registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration Statement
or any amendment thereto at the time it was or is declared effective); the term
"Prospectus" means:
i) if the Company relies on Rule 434 under the Act, the Term
Sheet relating to the Shares that is first filed pursuant to Rule
424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
ii) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act; or
iii) if the Company does not rely on Rule 434 under the Act and
if no prospectus is required to be filed pursuant to Rule 424(b) under
the Act, the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending use of the Registration Statement or any Preliminary Prospectus.
When any Preliminary Prospectus was filed with the Commission it (i) contained
all statements required to be stated therein in accordance with, and complied in
all material respects with the requirements of, the Act and the Rules and
Regulations and (ii) did not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration Statement or any
amendment thereto was or is declared
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effective, it (i) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material respects
with the requirements of, the Act and the Rules and Regulations and (ii) did not
or will 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 not misleading. When the Prospectus or any Term Sheet that is a part
thereof or any amendment or supplement to the Prospectus is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or part thereof or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such amendment or
supplement to the Prospectus was or is declared effective) and on the Closing
Date, the Prospectus, as amended or supplemented at any such time, (i) contained
or will contain all statements required to be stated therein in accordance with,
and complied or will comply in all material respects with the requirements of,
the Act and the Rules and Regulations and (ii) did not or will not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing provisions of this paragraph (b) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration Statement or any
amendment thereto or the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by you specifically for use therein. It is understood that the
statements set forth in the Prospectus on the cover page with respect to fees
and discounts, paragraph three (3) under the heading "Underwriting" and the
identity of counsel to the Underwriter under the heading "Legal Matters"
constitute the only information furnished in writing by or on behalf of the
Underwriter for inclusion in the Registration Statement, the Preliminary
Prospectus and Prospectus, as the case may be.
(c) If the Company has elected to rely on Rule 462(b) and the
Registration Statement has not been declared effective (i) the Company has filed
a Registration Statement in compliance with, and that is effective upon filing
pursuant, to Rule 462(b) and has received confirmation of its receipt and (ii)
the Company has given irrevocable instructions for transmission of the
applicable filing fee in connection with the filing of the Rule 462(b)
Registration Statement, in compliance with Rule 111 promulgated under the Act or
the Commission has received payment of such filing fee.
(d) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority (corporate and other) to own its
properties and conduct its business as described in the Registration Statement
and Prospectus and is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each other jurisdiction in which the
nature of its business or the character or location of its properties requires
such qualification, except where the failure to so qualify will not materially
affect the condition (financial or otherwise), business, properties, prospects,
net worth or results of operations of the Company. The Company does not
control, directly or indirectly, any corporation, partnership, joint venture,
association or other business organization.
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(e) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization;" the shares of
issued and outstanding capital stock of the Company set forth thereunder have
been duly authorized, validly issued and are fully paid and nonassessable;
except as set forth in the Prospectus, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or agreements or other
rights to convert any obligation into, any shares of capital stock of the
Company have been granted or entered into by the Company; and the Common Stock
conforms to all statements relating thereto contained in the Registration
Statement and Prospectus.
(f) The Shares and the shares of Common Stock to be issued upon
exercise of the Underwriter's Warrants (as hereinafter defined) when issued and
delivered pursuant to this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights of any security
holder of the Company. The Underwriter's Warrants when issued, paid for and
delivered in accordance with the terms of the Warrant Agreement (as hereinafter
defined), will be duly authorized, validly issued, fully paid and nonassessable
and free of preemptive rights of any security holder of the Company. Neither
the filing of the Registration Statement nor the offering or sale of the Shares
as contemplated in this Agreement gives rise to any rights, other than those
which have been waived or satisfied, for or relating to the registration of any
shares of Common Stock, except as described in the Registration Statement.
(g) Each of this Agreement and the Warrant Agreement have been
duly and validly authorized, executed and delivered by the Company and, assuming
due execution by the other party hereto and thereto, constitute valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or other laws affecting the rights of creditors generally
and the discretion of the courts in granting equitable remedies. The Company
has full power and lawful authority to authorize, issue and sell the Shares to
be sold by it hereunder on the terms and conditions set forth herein. No
consent, approval, authorization or order of, or any filing or declaration with,
any governmental authority is required for the consummation of the transactions
contemplated by this Agreement or in connection with the issuance and sale of
the Shares or the Underwriter's Warrants by the Company, except such as have
been obtained under the Act or the Rules and Regulations and such as may be
required under state securities or Blue Sky laws or the bylaws and rules of the
National Association of Securities Dealers, Inc. (the "NASD") in connection with
the purchase and distribution by the Underwriter of the Shares and the
Underwriter's Warrants to be sold by the Company.
(h) Except as described in the Prospectus, the Company is not in
violation, breach or default (which includes any event that has occurred which,
with notice or lapse of time or both, would constitute a default) of or under,
and consummation of the transactions herein contemplated and the fulfillment of
the terms of this Agreement or the terms of any agreement contemplated hereby
will not conflict with, or result in a breach of, any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of the property or assets of the
Company pursuant to
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the terms of any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the property or assets of the Company is
subject, nor will such action result in any violation of the provisions of the
articles of incorporation or any order, rule or regulation applicable to the
Company of any court or any regulatory authority or other governmental body
having jurisdiction over the Company.
(i) Subject to the qualifications stated in the Prospectus, the
Company has good and marketable title to all properties and assets described in
the Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are not materially significant or
important in relation to its business; all of the material leases and subleases
under which the Company is the lessor or sublessor of properties or assets or
under which the Company holds properties or assets as lessee or sublessee as
described in the Prospectus are in full force and effect, and, except as
described in the Prospectus, the Company is not in default in any material
respect with respect to any of the terms or provisions of any of such leases or
subleases, and no claim has been asserted by anyone adverse to rights of the
Company as lessor, sublessor, lessee or sublessee under any of the leases or
subleases mentioned above, or affecting or questioning the right of the Company
to continued possession of the leased or subleased premises or assets under any
such lease or sublease except as described or referred to in the Prospectus; and
the Company owns or leases all such properties described in the Prospectus as
are necessary to its operations as now conducted and, except as otherwise stated
in the Prospectus, as proposed to be conducted as set forth in the Prospectus.
(j) King Xxxxxxx & Xxxxxxx P.C. who has given its report on
certain financial statements filed and to be filed with the Commission as a part
of the Registration Statement, which are incorporated in the Prospectus, are
with respect to the Company, independent public accountants as required by the
Act and the Rules and Regulations.
(k) The consolidated financial statements and the related notes
of the Company, any supplementary financial information, any related schedules
and the pro forma financial statements of the Company set forth in the
Registration Statement and the Prospectus present fairly the consolidated
financial position and results of operations and changes stockholder's equity
and cash flows in of the Company on the basis stated in the Registration
Statement, at the respective dates and for the respective periods to which they
apply. Said financial statements and notes, supplementary financial
information, related schedules and pro forma financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a basis which is consistent during the periods involved. The
financial data with respect to the Company set forth in the Prospectus under the
captions "Summary Financial Information," "Capitalization," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" fairly
present, on the basis stated in the Prospectus, the information set forth
therein and have been compiled on a basis consistent with that of the audited
financial statements included in the Prospectus. No other financial statements
are required by Form S-1 or otherwise to be included in the Registration
Statement or the Prospectus. There has been no material adverse change in the
condition (financial or otherwise), business, properties, prospects, net worth
or results of operations of the
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Company, from the latest information set forth in the Registration Statement or
the Prospectus, except as properly described in the Prospectus; and there is no
fact known to the Company which could reasonably be expected to have a material
and adverse effect on the future prospects of the Company (other than political
or economic matter of general applicability or as properly described in the
Prospectus).
(l) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, the Company has not paid
or declared any dividends or other distributions of any kind on any class of its
capital stock nor has it incurred any liabilities or obligations, direct or
contingent, not in the ordinary course of business, or entered into any
transaction not in the ordinary course of business, which is material to the
business of the Company, and there has not been any change in the capital stock
of, or any material incurrence of long-term debt by the Company or any material
issuance of options, warrants or other rights to purchase the capital stock of
the Company or any material adverse change or any material development
involving, so far as the Company can now reasonably foresee, a prospective
adverse change in the condition (financial or otherwise), net worth, results of
operations, business, key personnel or properties of the Company which would be
material to the business or condition (financial or otherwise) of the Company,
and the Company has not become a party to, and neither the business nor the
property of the Company has become the subject of, any material litigation
whether or not in the ordinary course of business.
(m) Except as set forth in the Prospectus, there is not now
pending or threatened, any action, suit or proceeding to which the Company is a
party before or by any court or governmental agency or body, which might result
in any material adverse change in the condition (financial or otherwise),
business, properties, prospects, net worth, or results of operations of the
Company, nor are there any actions, suits or proceedings related to
environmental matters or related to discrimination on the basis of age, sex,
religion or race; and no labor disputes involving the employees of the Company
exist or are threatened which might be expected to materially adversely affect
the condition (financial or otherwise), business, properties, prospects, net
worth or results of operations of the Company.
(n) Except as disclosed in the Prospectus, the Company has
sufficient licenses, permits, certificates and other governmental authorizations
as are required for the conduct of its business or the ownership of its property
as described in the Prospectus and are in all material respects complying
therewith. The Company has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or permit
nor, to the knowledge of the Company, none of the activities or business of the
Company are in violation of, or cause the Company to violate, any law, rule,
regulation or order of the United States, any state, county or locality, or of
any agency or body of the United States or of any state, county or locality, the
violation of which would have a material adverse impact upon the condition
(financial or otherwise), business, properties, prospects, net worth or results
of operations of the Company, taken as a whole.
(o) The Company has not directly or indirectly, at any time
(i) made any contributions to any candidate for political office, or failed to
disclose fully any such contribution in violation of law or (ii) made any
payment to any state, federal or foreign
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governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments or contributions required or allowed by
applicable law. The Company's internal accounting controls and procedures are
sufficient to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.
(p) On the Closing Date (as hereinafter defined) all transfer or
other taxes (including franchise, capital stock or other tax, other than income
taxes, imposed by any jurisdiction), if any, which are required to be paid in
connection with the sale and transfer of the Shares to the Underwriter hereunder
will have been fully paid or provided for by the Company and all laws imposing
such taxes will have been fully complied with.
(q) There is no document or contract of a character required to
be described in the Registration Statement or Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required.
(r) The Company has not taken nor will take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Shares. The Company has not distributed and
will not distribute any offering material in connection with the offering and
sale of the Shares other than the Preliminary Prospectus and the Registration
Statement, the Prospectus or other materials permitted or required by the Act.
(s) The Company has not entered into any agreement pursuant to
which any person is entitled, either directly or indirectly, to compensation
from the Company for services as a finder in connection with the public offering
referred to herein.
(t) There are no holders of shares of Common Stock or other
securities of the Company having rights to register such Common Stock or other
securities under the Registration Statement.
(u) The Company has entered into employment contracts with its
principal executive officers, including Xx X. Xxxxx, Xxxxx X. Xxx and Xxxxxxx X.
Xxxxxx, and the description of such employment agreements in the Prospectus is
true, correct and complete.
(v) No labor dispute with the employees of the Company exists or
is threatened or imminent that could result in a material adverse change in the
condition (financial or otherwise), business, properties, prospects, net worth
or results of operations of the Company, except as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(w) The Company owns or possesses, or can acquire on reasonable
terms, all material patents, patent applications, trademarks, service marks,
trade names, licenses, copyrights and proprietary or other confidential
information currently employed by them in connection with their respective
businesses, and the Company has not received any notice of infringement of or
conflict with asserted rights of any third party with respect to any
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of the foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material adverse
change in the condition (financial or otherwise), business, properties,
prospects, net worth or results of operations of the Company, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(x) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged; the Company has not
been refused any insurance coverage sought or applied for; and the Company has
no reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the condition (financial or
otherwise), business, properties, prospects, net worth or results of operations
of the Company, except as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus).
(y) The Company will conduct its operations in a manner that
will not subject it to registration as an investment company under the
Investment Company Act of 1940, as amended, and this transaction will not cause
the Company to become an investment company subject to registration under such
Act.
(z) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a material
adverse effect on the Company) and have paid all taxes required to be paid and
any other assessment, fine or penalty levied, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(aa) Any certificate signed by any officer of the Company and
delivered to the Underwriter or to counsel for the Underwriter shall be deemed a
representation and warranty made by the Company to the Underwriter as to the
matters covered thereby and shall be deemed incorporated herein in its entirety
and shall be effective as if such representation and warranty were made herein.
(bb) The Company owns no shares of stock or any other equity
securities of any corporation or has any equity interest in any firm,
partnership, association or other entity, except as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(cc) The books, records and accounts and systems of internal
accounting controls of the Company currently comply with the requirements of
Section 13(b)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (1) transactions are executed in
accordance with management's general or
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specific authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (3) access to assets
is permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(dd) No statement, representation, warranty or covenant made by
the Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Underwriter is or will be, when made,
inaccurate, untrue or incorrect in any material respect, unless such statement,
representation, warranty or covenant is qualified as to materiality, in which
case it is not or will not be, when made, inaccurate, untrue or incorrect.
(ee) The Shares have been approved for listing on the NASDAQ
SmallCap Market under the symbol "CLAI," and the Boston Stock Exchange under the
symbol "CLA" subject only to notice of issuance.
(ff) The business, operations and facilities of the Company have
been and are being conducted in compliance in all material respects with all
applicable laws, ordinances, rules, regulations, licenses, permits, approvals,
plans, authorizations or requirements relating to occupational safety and
health, or pollution, or protection of health or the environment (including,
without limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic
substances, materials or wastes into ambient air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, gaseous or liquid in nature) of any governmental department, commission,
board, bureau, agency or instrumentality of the United States or any state or
political subdivision thereof, and all applicable judicial or administrative
agency or regulatory decrees, awards, judgments and orders relating thereto; and
the Company has not received any notice from any governmental instrumentality or
any third party alleging any violation thereof or liability thereunder
(including, without limitation, liability for costs of investigating or
remediating sites containing hazardous substances and/or damages to natural
resources), which violation would have, or could reasonably be expected to have,
a material adverse effect on the condition (financial or otherwise), business,
properties, prospects, net worth or results of operations of the Company. The
intended use and occupancy of each of the facilities owned or operated by the
Company complies in all material respects with all applicable codes and zoning
laws and regulations and there is no pending or, to the knowledge of the
Company, threatened condemnation, zoning change, environmental or other
proceeding or action that will in any material respect adversely affect the size
of, use of, improvements on, construction on, or access to such facilities.
(gg) Each executive officer, director and shareholder of the
Company has delivered to the Underwriter an agreement (the "Lockup Agreement"),
in substantially the form of Annex A, to the effect that he, she or it will not,
for a period of two years after the date hereof, without the prior written
consent of the Underwriter, offer to sell,
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sell, contract to sell, grant any option to purchase or otherwise dispose (or
announce any offer, sale, grant of any option to purchase or other disposition)
of any shares of Common Stock or securities convertible into, or exchangeable or
exercisable for, shares of Common Stock, except for bona fide private sales or
transfers of Common Stock to purchasers or transferees provided that such person
agrees in writing to be bound by the terms of the Lockup Agreement.
(hh) No transaction has occurred between or among the Company or
any of its affiliates, officers or directors or any affiliate or affiliates of
any such officer or director that is required to be described in and is not
described in the registration Statement and the Prospectus.
2. PURCHASE, DELIVERY AND SALE OF THE SHARES.
(a) Subject to the terms and conditions of this Agreement, and
upon the basis of the representations, warranties and agreements herein
contained, the Company agrees to issue and sell to the Underwriter, and the
Underwriter agrees to buy from the Company, at $7.00 per share, at the place and
time hereinafter specified, 1,500,000 shares of Common Stock.
(b) Delivery of the Shares against payment therefor shall take
place at the offices of Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx
Xxxx, Xxx Xxxx (or at such other place as may be designated by agreement between
you and the Company) at 10:00 a.m., New York time, on October __, 1998, or at
such later time and date as you may designate but not later than ten (10) days
from the effective date of the Registration Statement (the "Effective Date"),
such time and date of payment and delivery for the Shares being herein called
the "Closing Date."
(c) The Company will make the certificates for the Shares to be
purchased by the Underwriter hereunder available to you for inspection at least
one (1) full business day prior to the Closing Date. The certificates shall be
in such names and denominations as you may request at least two (2) full
business days prior to the Closing Date. Time shall be of the essence, and
delivery of the certificates representing the Shares at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriter.
If so requested by you, definitive certificates in negotiable
form for the Shares, to be purchased by the Underwriter hereunder will be
delivered by the Company to you on the Closing Date, against payments of the
purchase price therefor, by certified or bank cashier's checks in New York
Clearing House funds, payable to the order of the Company or by wire transfer.
However, if eligible, the Shares may be delivered in book entry form using the
Full Fast facilities of The Depository Trust Company.
It is understood that the Underwriter proposes to offer the
Shares to be purchased hereunder to the public, upon the terms and conditions
set forth in the Registration Statement, after the Registration Statement
becomes effective.
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(d) On the Closing, the Company will further issue and sell to
you or, at your direction, to your respective bona fide officers, for a total
purchase price of $150.00, warrants entitling the holders thereof to purchase
150,000 shares of Common Stock, at an initial exercise price of $7.70 per share
(the "Underwriter's Warrants") for a period of four (4) years, such period to
commence twelve (12) months after the Effective Date. Such Underwriter's
Warrants shall contain such other terms and provisions as may be set forth in an
agreement with respect thereto (the "Warrant Agreement") executed and delivered
by the Company and you simultaneously with the execution and delivery of this
Agreement. As provided in the Warrant Agreement, you may designate that the
Underwriter's Warrants be issued in varying amounts directly to your respective
bona fide officers and not to you. Such designation will be made by you only if
you determine that such issuances would not violate the interpretations of the
National Association of Securities Dealers, Inc. relating to the review of
corporate financing arrangements. The holders of the Underwriter's Warrants
will be entitled to the registration rights set forth in Section 10 of the
Warrant Agreement.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Underwriter as to the matters set forth in subparagraphs (a) through (r)
below:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and any
amendments thereto to become effective as promptly as possible. If required,
the Company will file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 434 and 424(b) under the
Act. During any time when a prospectus relating to the Shares is required to be
delivered under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act and the Rules and Regulations to the extent necessary
to permit the continuance of sales of or dealings in the Shares in accordance
with the provisions hereof and of the Prospectus, as then amended or
supplemented, and (ii) except as required by law, will not file with the
Commission the Prospectus, Term Sheet or the amendment referred to in the second
sentence of Section 1(a) hereof, any amendment or supplement to such Prospectus,
Term Sheet or any amendment to the Registration Statement of which the
Underwriter previously have been advised and furnished with a copy for a
reasonable period of time prior to the proposed filing and as to which filing
the Underwriter shall not have given their consent. The Company will prepare
and file with the Commission, in accordance with the Rules and Regulations,
promptly upon request by the Underwriter or counsel for the Underwriter, any
amendments to the Registration Statement or amendments or supplements to the
Prospectus that may be necessary or advisable in connection with the
distribution of the Shares by the Underwriter, and will use its best efforts to
cause any such amendment to the Registration Statement to be declared effective
by the Commission as promptly as possible. The Company will advise the
Underwriter, promptly after receiving notice thereof, of the time when the
Registration Statement or any amendment thereto has been filed or declared
effective or the Prospectus or any amendment or supplement thereto has been
filed and will furnish the Underwriter with copies of such documents and provide
evidence satisfactory to the Underwriter of each such filing or effectiveness.
-11-
The Company will advise the Underwriter, promptly after receiving
notice or obtaining knowledge thereof, of (i) the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or any
amendment thereto or any stop order or any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, (ii) the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, (iii) the institution, threatening or
contemplation of any proceeding for any such purpose or (iv) any request made by
the Commission for amending the Registration Statement, for amending or
supplementing the Prospectus or for additional information. The Company will
use its best efforts to prevent the issuance of any such stop order and, if any
such order or stop order is issued, to obtain the withdrawal thereof as promptly
as possible.
The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company
authorizes the Underwriter and dealers to use the Prospectus in connection with
the sale of the Shares for such period as, in the opinion of counsel to the
Underwriter, the use thereof is required to comply with the applicable
provisions of the Act and the Rules and Regulations. In case of the happening,
at any time within such period as a Prospectus is required under the Act to be
delivered in connection with sales by an underwriter, of any event of which the
Company has knowledge and which materially affects the Company or the securities
of the Company or which, in the opinion of counsel for the Company or counsel
for the Underwriter, should be set forth in an amendment of the Registration
Statement or a supplement to the Prospectus in order to make the statements
therein not then misleading, in light of the circumstances existing at the time
the Prospectus is required to be delivered to a purchaser of the Shares, or in
case it shall be necessary to amend or supplement the Prospectus to comply with
law or with the Rules and Regulations, the Company will notify you promptly and
forthwith prepare and furnish to you copies of such amended Prospectus or of
such supplement to be attached to the Prospectus, in such quantities as you may
reasonably request, in order that the Prospectus, as so amended or supplemented,
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements in the Prospectus, in
light of the circumstances under which they were made, not misleading. The
preparation and furnishing of any such amendment or supplement to the
Registration Statement or amended Prospectus or supplement to be attached to the
Prospectus shall be without expense to the Underwriter, except that in case the
Underwriter is required, in connection with the sale of the stock, to deliver a
Prospectus ninety (90) days or more after the effective date of the Registration
Statement, the Company will upon request of and at the expense of the
Underwriter, amend or supplement the Registration Statement and Prospectus and
furnish the Underwriter with reasonable quantities of prospectuses complying
with Section 10(a)(3) of the Act.
The Company will comply with the Act, the Rules and Regulations
and the Exchange Act and the rules and regulations thereunder in connection with
the offering and issuance of the Shares.
-12-
(b) The Company will use its best efforts to qualify to register
the Shares for sale under the securities or "blue sky" laws of such
jurisdictions as the Underwriter may reasonably designate and will make such
application and furnish such information as may be required for that purpose and
to comply with such laws, provided the Company shall not be required to qualify
as a foreign corporation or a dealer in securities or to execute a general
consent to service of process in any jurisdiction in any action other than one
arising out of the offering or sale of the Shares. The Company will, from time
to time, prepare and file such statements and reports as are or may be required
to continue such qualification in effect for so long a period as the Underwriter
may reasonably request.
(c) If the sale of the Shares provided for herein is not
consummated for any reason caused by the Company, the Company shall pay all
costs and expenses incident to the performance of the Company's obligations
hereunder including, but not limited to, all of the expenses itemized in Section
8, including the accountable expenses of the Underwriter, including legal fees,
but in no event shall such costs and expenses exceed the sum of $______, less a
credit for any amounts previously paid to the Underwriter.
(d) For so long as the Company is a reporting company under
either Section 12(g) or 15(d) of the Exchange Act, the Company, at its expense,
will furnish to its stockholders an annual report (including financial
statements audited by independent public accountants) in reasonable detail and,
at its own expense, will furnish to you during the period ending five (5) years
from the date hereof; (i) as soon as practicable after the end of each fiscal
year, a balance sheet of the Company as at the end of such fiscal year, together
with statements of income, Changes in Stockholder's Equity and Cash Flows of the
Company for such fiscal year, all in reasonable detail and accompanied by a copy
of the certificate or report thereon of independent accountants; (ii) as soon as
they are available, a copy of all reports (financial or other) mailed to
security holders; (iii) as soon as they are available, a copy of all
nonconfidential reports and financial statements furnished to or filed with the
Commission; and (iv) such other information as you may from time to time
reasonably request.
(e) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (d) above will
be furnished on a consolidated basis to the extent the accounts of the Company
and its subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
(f) The Company will deliver to you at or before the Closing
Date two (2) signed copies of the Registration Statement, including all
financial statements and exhibits filed therewith, and of all amendments
thereto, and will deliver to the Underwriter such number of copies of the
Registration Statement, including financial statements but without exhibits, as
the Underwriter may reasonably request. The Company will deliver to or upon the
order of the Underwriter, from time to time until the effective date of the
Registration Statement, as many copies of any Preliminary Prospectus as the
Underwriter may reasonably request. The Company will deliver to the Underwriter
on the effective date of the Registration Statement and thereafter for so long
as a Prospectus is required to be delivered under the Act, from time to time, as
many copies of the Prospectus, in final form, or as thereafter amended or
supplemented, as the Underwriter may from time to time reasonably request.
-13-
(g) 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 ninety (90) days after the end of twelve (12) months after its
current fiscal quarter, an earnings statement (which need not be audited)
covering a period of at least twelve (12) consecutive months beginning after the
effective date of the Registration Statement, which shall satisfy the
requirements of Section 11(a) of the Act.
(h) The Company will apply the net proceeds from the sale of the
Shares for the purposes set forth under "Use of Proceeds" in the Prospectus, and
will file 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.
(i) The Company will promptly, upon your written request,
prepare and file with the Commission any amendments or supplements to the
Registration Statement, Preliminary Prospectus or Prospectus and take any other
action which, in the reasonable opinion of Stroock & Stroock & Xxxxx LLP,
counsel to the Underwriter, may be reasonably necessary or advisable in
connection with the distribution of the Shares, and will use its best efforts to
cause the same to become effective as promptly as possible.
(j) The Company will reserve and keep available that maximum
number of its authorized but unissued shares of Common Stock which are issuable
upon exercise of the Underwriter's Warrants outstanding from time to time.
(k) Upon completion of this offering, the Company will make all
filings required, including registration under the Exchange Act, to obtain the
listing of its Common Stock on the NASDAQ SmallCap Market and the Boston Stock
Exchange, and will effect and will use its best efforts to maintain such
listings for at least five (5) years from the date of this Agreement.
(l) The Company represents that it has not taken and agrees that
it will not take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in the stabilization or manipulation
of the price of the Shares or to facilitate the sale or resale of the Shares.
The Company has not distributed and will not distribute any offering material in
connection with the offering and sale of the Shares other than the Preliminary
Prospectus and the Registration Statement, the Prospectus or other materials
permitted or required by the Act.
(m) On the Closing Date and simultaneously with the delivery of
the Shares, the Company shall execute and deliver to Strasbourger Xxxxxxx Tulcin
Xxxxx Incorporated and its designees the Underwriter's Warrants for an initial
exercise price of $7.70 per share. The Underwriter's Warrants will be in the
form as filed as an exhibit to the Registration Statement.
(n) During the one hundred eighty (180) day period commencing on
the Closing Date, the Company will not, without the prior written consent of the
Underwriter, grant options to purchase shares of Common Stock at a price less
than the initial public offering
-14-
price except as may be provided by the Company's currently existing stock option
plan as described in the Prospectus. To the extent that such stock option plan
allows, the Company may issue shares upon exercise of the options.
(o) For a period of two (2) years from the Effective Date, when
deemed necessary by the Chief Financial Officer of the Company, the Company, at
its expense, shall cause its regularly engaged independent certified public
accountants to review (but not audit) the Company's financial statements for
each of the first three (3) fiscal quarters prior to the announcement of
quarterly financial information, the filing of the Company's 10-Q quarterly
report and the mailing of quarterly financial information to stockholders.
(p) Pending completion of the offering and for a period of
ninety (90) days thereafter, the Company will not issue press releases or engage
in other publicity without the Underwriter's prior consent.
(q) For a period of two years from the Closing Date, the Company
will not, nor will it allow, without the prior written consent of the
Underwriter, the executive officers, directors or certain holders of any class
of equity securities of the Company to, sell, grant any option or warrant for
the sale, or otherwise dispose of, directly or indirectly, any shares of Common
Stock or other equity securities of the Company (including any shares obtained
through the exercise of options granted under the Company's Stock Incentive Plan
(as such term is defined in the Prospectus) or any securities convertible into,
exercisable for or exchangeable for shares of Common Stock or other equity
securities of the Company, PROVIDED, HOWEVER, that with respect to any issuances
of securities by the Company such consent may not be unreasonably withheld, and
the Company may issue options for up to [250,000] shares of Common Stock under
its Stock Incentive Plan without such consent.
(r) On the Closing Date, the Company will furnish you with a
Lock-up Agreement, substantially in the form of Annex A hereto, from each of the
officers, directors and certain holders of any class of equity securities of the
Company not to sell any shares of Common Stock or other equity securities of the
Company, held by each prior to the Effective Date or obtained through exercise
of options granted under the Stock Incentive Plan, for a period of twenty-four
(24) months from the Closing Date, without your prior written consent, which
consent may not be unreasonably withheld; provided, however, the aforementioned
restrictions do not apply to private sales or transfers of Common Stock to
purchasers or transferees who agree in writing to be bound by the terms of such
Lock-up Agreement.
4. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriter to purchase and pay for the Shares which it has agreed to purchase
hereunder, are subject to the accuracy (as of the date hereof and as of the
Closing Date of and compliance with the representations and warranties of the
Company herein, to the performance by the Company of its obligations hereunder,
and to the following conditions:
(a) The Registration Statement shall have become effective, and
you shall have received notice thereof not later than 10:00 a.m., New York time,
on the day following the date of this Agreement, or at such later time or on
such later date as to which you
-15-
may agree in writing; on or prior to the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued, and no
proceedings for that or any similar purpose shall have been instituted or shall
be pending or, to your knowledge or to the knowledge of the Company, shall be
contemplated by the Commission; any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of Stroock & Stroock & Xxxxx LLP, counsel to the Underwriter; and
no stop order shall be in effect denying or suspending the effectiveness of such
qualification, nor shall any stop order proceedings with respect thereto be
instituted or pending or threatened under such law.
(b) On the Closing Date, you shall have received the opinion,
dated as of the Closing Date, of Xxxxx Xxxxxxxxxxx XxXxxxxxx LLC, counsel for
the Company, in form and substance satisfactory to counsel for the Underwriter,
to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with full power and authority
(corporate and other) to own its properties and conduct its business
as described in the Registration Statement and Prospectus and is duly
qualified or licensed to do business as a foreign corporation and is
in good standing in each other jurisdiction in which the nature of its
business or the character or location of its properties requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the condition (financial or otherwise),
business, properties, prospects, net worth or results of operations of
the Company.
(ii) (a) The Company has obtained, or is in the process of
obtaining, all licenses, permits and other governmental authorizations
as are required for to the conduct of its business or the ownership of
its properties as described in the Prospectus; (b) such licenses,
permits and other governmental authorizations obtained are in full
force and effect; (c) to such counsel's knowledge, the Company is in
all material respects in compliance therewith.
(iii) The authorized capitalization of the Company is as set
forth under "Capitalization" in the Prospectus; all shares of the
Company's outstanding stock requiring authorization for issuance by
the Company's board of directors have been duly authorized, validly
issued, are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus; the outstanding
shares of Common Stock of the Company have not been issued in
violation of the preemptive rights of any shareholder, and the
shareholders of the Company do not have any preemptive rights or other
rights to subscribe for or to purchase, nor are there any restrictions
upon the voting or transfer of any of the Shares; the Shares conform
to the description thereof contained in the Prospectus; the Shares
have been duly authorized and, when issued and delivered pursuant to
this Agreement, will be duly and validly issued, fully paid,
nonassessable, free of preemptive rights and no personal liability
will attach to the ownership thereof; and to the best of such
counsel's knowledge,
-16-
neither the filing of the Registration Statement nor the offering or
sale of the Shares as contemplated by this Agreement gives rise to any
registration rights or other rights, other than those which have been
waived or satisfied for or relating to the registration of any shares
of Common Stock
(iv) This Agreement and the Warrant Agreement have been duly
and validly authorized, executed and delivered by the Company and,
assuming due execution and delivery of this Agreement and the Warrant
Agreement by the other parties thereto, payment by the Underwriter for
the Shares offered pursuant to this Agreement and payment by the
Underwriter for the Underwriter's Warrants, are the valid and legally
binding obligations of the Company, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights in general; and except that no
opinion is expressed as to the enforceability of the indemnity
provisions contained in Section 6 or the contribution provisions
contained in Section 7 of this Agreement.
(v) The certificates evidencing the Shares are in due and
proper form; the Underwriter's Warrants will be exercisable for shares
of Common Stock of the Company in accordance with the terms of the
Warrant Agreement and at the prices therein provided for; the shares
of Common Stock of the Company issuable upon exercise of the
Underwriter's Warrants have been duly authorized and reserved for
issuance upon such exercise, and such shares, when issued upon
exercise in accordance with the terms of such warrants and at the
price provided for, will be duly and validly issued, fully paid and
nonassessable.
(vi) Such counsel knows of no pending or threatened legal or
governmental proceedings to which either the Company is a party which
could materially adversely affect the condition (financial or
otherwise), business, properties, prospects, net worth or results of
operations of the Company, or which question the validity of the
Common Stock of the Company, the Shares, this Agreement, the Warrant
Agreement, the Underwriter's Warrants or of any action taken or to be
taken by the Company pursuant to this Agreement, the Warrant
Agreement, or the Underwriter's Warrants, and no such proceedings are
known to such counsel to be contemplated against the Company; to such
counsel's knowledge, there are no governmental proceedings or
regulations required to be described or referred to in the
Registration Statement which are not so described or referred to.
(vii) The Company is not in violation of or default under,
nor will the execution and delivery of this Agreement, the Warrant
Agreement or the Underwriter's Warrants, and the incurrence of the
obligations herein or therein set forth and the consummation of the
transactions herein or therein contemplated, result in a violation of,
or constitute a default under the Company's articles of incorporation
or by-laws.
-17-
(viii) The Registration Statement has become effective
under the Act, and no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for that
purpose have been instituted or are pending before, or threatened by,
the Commission; the Registration Statement and the Prospectus (except
for the financial statements and other financial 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 and the Rules and Regulations.
(ix) All descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and
other documents are accurate and fairly present the information
required to be shown, and such counsel is familiar with all contracts
and other documents referred to in the Registration Statement, and
such counsel does not know of any contracts or documents of a
character required to be summarized or described therein or to be
filed as exhibits thereto which are not so summarized, described or
filed.
(x) No authorization, approval, consent, or license of any
governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the
execution, delivery and performance of this Agreement or the Warrant
Agreement by the Company, or in connection with the taking of any
action contemplated herein or therein, or the issuance of the
Underwriter's Warrants or the Common Stock underlying the
Underwriter's Warrants, other than registrations or qualifications of
such stock under applicable state or foreign securities or "Blue Sky"
laws and registration under the Act.
(xi) The statements in the Registration Statement under the
captions "Business," "Management," "Principal Shareholders," "Certain
Transactions," "Description of Securities" and "Shares Eligible for
Future Sale" have been reviewed by such counsel and, insofar as they
refer to descriptions of agreements, statements of law, descriptions
of statutes, licenses, rules or regulations or legal conclusions, are
correct in all material respects.
Such counsel shall also state that such counsel has participated
in the preparation of the Registration Statement and the Prospectus, and nothing
has come to the attention of such counsel to cause such counsel to have reason
to believe that the Registration Statement or any amendment thereto at the time
it became effective contained any untrue statement of a material fact required
to be stated therein or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any supplement thereto contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (except, in the case of both the Registration Statement and any
amendment thereto and the Prospectus and any supplement
-18-
thereto, for the financial statements, notes thereto and other financial
information and statistical data contained therein, as to which such counsel
need express no opinion).
Such opinion shall also cover such matters incident to
the transactions contemplated hereby as the Underwriter or counsel for the
Underwriter shall reasonably request. In rendering such opinion, such
counsel may rely upon certificates of any officer of the Company or public
officials as to matters of fact; and may rely as to all matters of law other
than the law of the United States or of the State of Delaware upon opinions
of counsel satisfactory to you, in which case the opinion shall state that
they have no reason to believe that you and they are not entitled to so rely.
(c) All corporate proceedings and other legal matters relating
to this Agreement, the Registration Statement, the Prospectus and other related
matters shall be satisfactory to or approved by Stroock & Stroock & Xxxxx LLP,
counsel to the Underwriter, and you shall have received from such counsel a
signed opinion, dated as of the Closing Date, with respect to the validity of
the issuance of the Shares, the form of the Registration Statement and
Prospectus (other than the financial statements, notes thereto and other
financial data contained therein), the execution of this Agreement and other
related matters as you may reasonably require. The Company shall have furnished
to counsel for the Underwriter such documents as they may reasonably request for
the purpose of enabling them to render such opinion.
(d) You shall have received a letter on and as of Effective Date
of the Registration Statement and again on and as of the Closing Date from King
Xxxxxxx & Xxxxxxx P.C. independent public accountants for the Company,
substantially in the form approved by you.
(e) At the Closing Date, (i) the representations and warranties
of the Company contained in this Agreement shall be true and correct with the
same effect as if made on and as of the Closing Date, and the Company shall have
performed all of its obligations hereunder and satisfied all the conditions on
its part to be satisfied at or prior to such Closing Date; (ii) 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 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; (iii)
there shall have been, since the respective dates as of which information is
given, no material adverse change in the condition (financial or otherwise),
business, properties, prospects, net worth, results of operations, capital
stock, long-term or short-term debt or general affairs of the Company, from that
set forth in the Registration Statement and the Prospectus, except changes which
the Registration Statement and Prospectus indicate might occur after the
effective date of the Registration Statement, and the Company shall not have
incurred any material liabilities or agreement not in the ordinary course of
business other than as referred to in the Registration Statement and Prospectus;
(iv) except as set forth in the Prospectus, 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
-19-
Company before or by any commission, board or administrative agency in the
United States or elsewhere, wherein an unfavorable decision, ruling or finding
would materially adversely affect the condition (financial or otherwise),
business, properties, prospects, net worth or results of operations of the
Company; and (v) you shall receive at the Closing Date a certificate signed by
each of the Chairman of the Board or the President and the principal financial
or accounting officer of the Company, dated as of the Closing Date, evidencing
compliance with the provisions of this subsection (e).
(f) If any of the conditions herein provided for in this Section
shall not have been fulfilled as of the date indicated, this Agreement and all
obligations of the Underwriter under this Agreement may be canceled at, or at
any time prior to, the Closing Date by the Underwriter by notifying the Company
of such cancellation in writing or by telegram at or prior to the Closing Date.
Any such cancellation shall be without liability of the Underwriter to the
Company.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS. The obligation of the
Company to sell and deliver the Shares is subject to the following conditions:
(a) The Registration Statement shall have become effective not
later than 10:00 a.m., New York time, on the day following the date of this
Agreement, or on such later date as the Company and the Underwriter may agree to
in writing.
(b) At the Closing Date no stop orders suspending the
effectiveness of the Registration Statement shall have been issued under the Act
or any proceedings therefor initiated or threatened by the Commission.
(c) The Company shall have received payment for the Shares from
the Underwriter.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Act, the Underwriter's counsel and the Company's counsel against
any losses, claims, damages or liabilities, joint or several (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all attorneys' fees), to which the
Underwriter, any controlling person, the Underwriter's counsel or the Company's
counsel may become subject, under the Act or otherwise, insofar, as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in (i) the Registration Statement, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto; (ii) any "Blue Sky"
application or other document executed by the Company specifically for the
purpose or based upon written information furnished by the Company filed in any
state or other jurisdiction in order to qualify any or all of the Shares, under
the securities laws thereof (any such application, document or information being
hereinafter called a "Blue Sky Application"),
-20-
or arise out of or are based upon the omission or alleged omission to state in
the Registration Statement, any Preliminary Prospectus, Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, a material fact
required to be stated therein or necessary to make the statements therein not
misleading; PROVIDED, HOWEVER, that the Company will not be liable in any such
case to the extent, but only to the extent, that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written or oral information furnished to the Company by or on
behalf of the Underwriter or oral misrepresentations or omissions in connection
therewith specifically for use in the preparation of the Registration Statement
or any such amendment or supplement thereof or any such Blue Sky Application or
any such Preliminary Prospectus or the Prospectus of any such amendment or
supplement thereto. The Company shall not be obligated to indemnify the
Underwriter for a violation of state securities or "Blue Sky" laws for liability
occasioned by reason of such Underwriter's (or its agent's) failure to have been
registered as a broker-dealer (or agent) or the failure of the securities to
have been registered or qualified in a jurisdiction where such Underwriter (or
its agent) is determined to have sold such security. This indemnity will be in
addition to any liability which the Company may otherwise have.
(b) The Underwriter will indemnify and hold harmless the
Company, each of its directors, each nominee (if any) for director named in the
Prospectus, each of its officers who have signed the Registration Statement,
each person, if any, who controls the Company within the meaning of the Act, the
Underwriter's counsel and the Company's counsel against any losses, claims,
damages or liabilities (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees) to which the Company, any such director, nominee, officer or
controlling person, the Underwriter's counsel or the Company's counsel may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by you specifically for use in the preparation thereof.
The Underwriter shall indemnify the Company for any violation of state
securities or "Blue Sky" laws for liability occasioned by reason of such
Underwriter's (or its agent's) failure to have been registered as a
broker-dealer (or agent) or the failure of the securities to have been
registered or qualified in a jurisdiction which such Underwriter (or agent) is
determined to have sold such security. This indemnity will be in addition to any
liability which the Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify in writing the
-21-
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this Section. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions herein stated, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than the
reasonable costs of investigation. The indemnified party shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified party;
provided that if the indemnified party is the Underwriter or a person who
controls the Underwriter within the meaning of the Act, the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party or (ii) the named parties to any such action (including any
impleaded parties) include both the Underwriter or such controlling person and
the indemnifying party and, the Underwriter reasonably determines that it is
advisable for the Underwriter or controlling persons to be represented by
separate counsel (in which case the indemnifying party shall not have the right
to assume the defense of such action on behalf of the Underwriter or such
controlling person, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for the Underwriter and
controlling persons, which firm shall be designated in writing by you). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnifying party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnified party.
(d) If the Closing occurs, the Company will not have liability
to the Underwriter (for indemnification or otherwise) with respect to any
representation or warranty unless on or before the third anniversary of the date
hereof the Underwriter notifies the Company of a claim of breach of a
representation or warranty.
7. CONTRIBUTION. In order to provide for just and equitable
contribution under the Act in any case in which (i) the Underwriter makes claim
for indemnification pursuant to Section 6 hereof but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case, notwithstanding the
fact that the express provisions of Section 6 provide for indemnification in
such case or (ii) contribution under the Act may be required on the part of the
Underwriter or the Company in circumstances for which indemnification is
provided for pursuant to Section 6,
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then the Company, in the aggregate, and the Underwriter shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(which shall for all purposes of this Agreement include, but not be limited to,
all reasonable costs of defense and investigation and all reasonable attorneys'
fees) in either such case (after contribution from others) in such proportions
that the Underwriter is responsible in the aggregate for that portion of such
losses, claims, damages or liabilities represented by the percentage that the
underwriting discount per share appearing on the cover page of the Prospectus
bears to the public offering price appearing thereon, and the Company shall be
responsible for the remaining portion; provided, however, that, if such
allocation is not permitted by applicable law, then the relative fault of the
Company and the Underwriter, in the aggregate, in connection with the statements
or omissions which resulted in such damages and other relevant equitable
considerations shall also be considered. The relative fault shall be determined
by reference to, among other things, whether in the case of an untrue statement
or a material fact or the omission to state a material fact, such statement or
omission relates to information supplied by the Company or the Underwriter, and
the parties' relevant intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Company and the
Underwriter agree that it would not be just and equitable if the respective
obligations of the Company and the Underwriter to contribute pursuant to this
Section 7 were to be determined by pro rata or per capital allocation of the
aggregate damages (even if the Underwriter and its controlling persons in the
aggregate were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the first sentence of this Section 7. 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 the purposes of this paragraph, each officer, director,
or other person who controls the Underwriter within the meaning of Section 15 of
the Act shall have the same rights to contribution as such Underwriter, and each
officer, director, or other person. If the full amount of the contribution
specified in this paragraph is not permitted by law, then the Underwriter and
each person who controls the Underwriter shall be entitled to contribution from
the Company to the full extent permitted by law. The foregoing contribution
agreement shall in no way affect the contribution liabilities of any persons
having liability under Section 11 of the Act other than the Company and the
Underwriter. No contribution shall be requested with regard to the settlement
of any matter from any party who did not consent to the settlement; provided,
however, that such consent shall not be unreasonably withheld in light of all
factors of importance to such party.
8. COSTS AND EXPENSES.
(a) Whether or not this Agreement becomes effective or the sale
of the Shares to the Underwriter is consummated, the Company will pay all costs
and expenses incident to the performance of this Agreement including, but not
limited to, the fees and expenses of counsel to the Company and of the Company's
accountants; the costs and expenses incident to the preparation, printing,
filing and distribution under the Act of the Registration Statement (including
the financial statements therein and all amendments and exhibits thereto),
Preliminary Prospectus and Prospectus, as amended or supplemented; all expenses,
including fees, disbursements and other charges of counsel to the Underwriter,
in connection with any
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filing required by the NASD relating to the offering of the Shares contemplated
hereby; all expenses, including fees, disbursements and other charges of counsel
to the Underwriter, in connection with the qualification of the Shares under the
state securities or blue sky laws which the Underwriter shall designate; the
cost of printing and furnishing to the Underwriter copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus, this Agreement, and the
Blue Sky Memorandum and the cost of printing the certificates representing the
Shares. The Company shall pay any and all taxes (including any transfer,
franchise, capital stock or other tax imposed by any jurisdiction) on sales to
the Underwriter hereunder. The Company will also pay all costs and expenses
incident to the furnishing of any amended Prospectus or of any supplement to be
attached to the Prospectus as called for in Section 3(a) of this Agreement
except as otherwise set forth in said Section.
(b) In addition to the foregoing expenses the Company shall at
the Closing Date pay to Strasbourger Xxxxxxx Tulcin Xxxxx Incorporated a
non-accountable expense allowance equal to 3% of the gross proceeds of the sale
of the Shares of which $50,000 has been paid. In the event the transactions
contemplated hereby are not consummated by reason of any action by the
Underwriter (except if such prevention is based upon a breach by the Company of
any covenant, representation or warranty contained herein or because any other
condition to the Underwriter's obligations hereunder required to be fulfilled by
the Company is not fulfilled), the Company shall not be liable to the
Underwriter for any out-of-pocket accountable expenses except that the
Underwriter may retain all monies paid to it prior to the termination of the
underwriting, but only to the extent of out-of-pocket accountable expenses
incurred by the Underwriter, and the Underwriter shall return to the Company all
monies received in excess of its out-of-pocket accountable expenses. In the
event the transactions contemplated hereby are not consummated by reason of any
action of the Company or because of a breach by the Company of any covenant,
representation or warranty contained herein, the Company shall be liable for the
out-of-pocket accountable expenses incurred by the Underwriter, including
attorneys' fees, but which in no event shall exceed the sum of $_______, less a
credit of any amounts previously paid by the Company to the Underwriter, and the
Underwriter shall return to the Company all monies received in excess of its
out-of-pocket accountable expenses.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from the Underwriter or from any other person for
services as a finder in connection with the proposed offering, and the Company
agrees to indemnify and hold harmless the Underwriter against any losses,
claims, damages or liabilities, joint or several, which shall, for all purposes
of this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees, to which the Company, the Underwriter or
person may become subject insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon the claim of any
person (other than an employee of the party claiming indemnity) or entity that
he or it is entitled to a finder's fee in connection with the proposed offering
by reason of such person's or entity's influence or prior contact with the
indemnifying party.
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9. EFFECTIVE DATE. This Agreement shall become effective upon its
execution, except that you may, at your option, delay its effectiveness until
11:00 a.m., New York time, on the first full business day following the
Effective Date of the Registration Statement, or at such earlier time after the
Effective Date of the Registration Statement as you in your discretion shall
first commence the initial public offering by the Underwriter of any of the
Shares. The time of the initial public offering shall mean the time of release
by you of the first newspaper advertisement with respect to the Shares, or the
time when the Shares are first generally offered by you to dealers by letter or
telegram, whichever shall first occur. This Agreement may be terminated by you
at any time before it becomes effective as provided above, except that Sections
3(c), 6, 7, 8, 12, 13, 14 and 15 hereof shall remain in effect notwithstanding
such termination.
10. TERMINATION.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 12, 13,
14 and 15 hereof, may be terminated by you at any time prior to the Closing Date
if in your judgment it is impracticable to offer for sale or to enforce
contracts made by the Underwriter for the resale of the Shares agreed to be
purchased hereunder by reason of (i) the Company having sustained a material
loss, whether or not insured, by reason of fire, earthquake, flood, accident or
other calamity, or from any labor dispute or court or government action, order
or decree; (ii) trading in securities on the New York Stock Exchange, the
American Stock Exchange, and/or the NASDAQ SmallCap Market having been generally
suspended or limited; (iii) material governmental restrictions having been
imposed on trading in securities generally (not in force and effect on the date
hereof); (iv) a banking moratorium having been declared by federal or New York
State authorities; (v) an outbreak of major international hostilities or other
national or international calamity having occurred; (vi) the passage by the
Congress of the United States, or by any state legislative body of similar
impact, of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting institute
or board, or any governmental executive, which is reasonably believed likely by
the Underwriter to have a material impact on the condition (financial or
otherwise), business, properties, prospects or financial statements of the
Company or on the market for the securities offered hereby; (vii) any material
adverse change in the financial or securities markets in the United States,
particularly in the over-the-counter market, having occurred since the date of
this Agreement, or (viii) any material adverse change having occurred, since the
respective dates of which information is given in the Registration Statement and
Prospectus, in the condition (financial or otherwise), business, properties,
prospects, net worth or results of operations of the Company, whether or not
arising in the ordinary course of business.
(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10 or in
Section 9, the Company shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
11. WARRANTS. At or before the Closing Date, the Company will sell
to Strasbourger Xxxxxxx Tulcin Xxxxx Incorporated the Underwriters' Warrants to
purchase an aggregate of 150,000 shares of the Common Stock of the Company for a
consideration of $150.00 upon the terms and conditions set forth in the Warrant
Agreement. In the event of
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conflict in the terms of this Agreement and the Underwriter's Warrants, the
language of the Underwriter's Warrants shall control.
12. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
Except as may be limited by Section 6(d), the respective indemnities,
agreements, representations, warranties and other statements of the Company and
the Underwriter set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriter, the Company or any of its officers or directors or any
controlling person and will survive delivery of and payment for the Shares and
the termination of this Agreement.
13. NOTICES. Any communications specifically required hereunder to
be in writing, if sent to the Underwriter, will be mailed, delivered or
telegraphed and confirmed to them at Strasbourger Xxxxxxx Tulcin Xxxxx
Incorporated, 00 Xxxxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, with a copy
sent to Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, Attention: Xxxxx X. Xxxxxxxxx or if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at Xxxxxxxxx.xxx, inc.,
00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxx, Xxxxx 00000, Attention: Xx X. Xxxxx,
President, with a copy to Xxxxx Xxxxxxxxxxx XxXxxxxxx LLC, One Citicorp Center,
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Xxxxxx X. Xxxxx.
14. PARTIES IN INTEREST. The Agreement herein set forth is made
solely for the benefit of the Underwriter, the Company and any person
controlling the Company or the Underwriter, and the directors of the Company,
nominees for directors (if any) named in the Prospectus, its officers who have
signed the Registration Statement, and their respective executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, as such purchaser, from the
Underwriter of the Shares.
15. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE ENTIRELY PERFORMED WITHIN NEW YORK.
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this agreement, whereupon it will become a
binding agreement among the Company and the Underwriter in accordance with its
terms.
Very truly yours,
XXXXXXXXX.XXX, INC.
By:
------------------------------
Name: Xx X. Xxxxx
Title: President
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
STRASBOURGER XXXXXXX TULCIN
XXXXX INCORPORATED
By:
-----------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
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FORM OF LOCK-UP
Strasbourger Xxxxxxx Tulcin Xxxxx
Incorporated
00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated October __, 1998
(the "Underwriting Agreement"), between Xxxxxxxxx.Xxx, Inc., a Delaware
corporation (the "Company"), and Strasbourger Xxxxxxx Tulcin Xxxxx Incorporated
(the "Underwriter"). Capitalized terms used herein and not defined herein shall
have the same meanings ascribed to them in the Underwriting Agreement.
1. In consideration of the Underwriting Agreement, the undersigned hereby
agrees not to, without the prior written consent of the Underwriter and except
as set forth in Section 2, offer, sell or otherwise dispose of any shares of the
Company's Common Stock, without par value (the "Common Stock"), or any
securities convertible into or exercisable or exchangeable for, or any rights to
purchase or acquire, Common Stock owned by the undersigned for a period of
twenty-four (24) months after the date of the Underwriting Agreement.
2. The restrictions set forth in Section 1 shall not apply to private
sales or transfers of Common Stock to purchasers or transferees who agree in
writing to be bound by the terms set forth herein.
Dated: October __, 1998
Very truly yours,
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