Superior Supplements, Inc.
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UNDERWRITING AGREEMENT
VTR Capital Inc. __________, 1997
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Gentlemen:
Superior Supplements, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to VTR Capital, Inc. ("VTR" or the "Representative")
and to each of the other underwriters named in Schedule I hereto (the
"Underwriters"), for each of whom you are acting as Representative, an
aggregate of 250,000 Units (the "Company Units"), each Unit consisting of two
shares of Common Stock, par value $.0001 ("Common Stock"), and two Redeemable
Class A Common Stock Purchase Warrants (the "Warrants") of the Company at a
public offering price of $12.00 per Unit. In addition, 250,000 Units (the
"Selling Security Holder Units") will be sold to the Underwriters named in
Schedule I by PMF, Inc. (the "Selling Security Holder") also at a public
offering price of $12.00 per Unit.
Each Warrant shall entitle the holder to purchase one share of Common
Stock for a four year period commencing one year from the Effective Date
(hereinafter defined) at a price of $5.25 per share. The Warrants will be
immediately detachable from the Common Stock on the Effective Date. The
Warrants may be called by the Company commencing one year from the Effective
Date upon at least thirty days prior written notice at a price of $.05 per
Warrant at any time provided the closing bid for the Common Stock is at least
$10.00 during each day of the twenty (20) trading day period within a period of
thirty (30) consecutive trading days ending on the fifth day preceding the date
of the written notice. The Warrant Agreement will provide that no such notice
will be given until there is a current Registration Statement and Prospectus on
file with the Securities and Exchange Commission (the "Commission") at the time
such notice is given to warrant holders and that the notice may not be mailed
to warrant holders during the aforesaid one-year period from the Effective
Date. The Company Units and the Selling Security Holder Units are hereinafter
referred to as the "Firm Units."
Upon the request of the Representative, and as provided in Section 3
hereof, the Selling Security Holder will sell to the Underwriters up to a
maximum of an additional 75,000 Units for the purpose of covering
over-allotments. Such additional Units are hereinafter sometimes referred to as
the "Optional Units." Both the Firm Units and the Optional Units are sometimes
collectively referred to herein as the "Units." All of the securities which are
the subject of this Agreement are more fully described in the Prospectus of the
Company described below. In the event that the Representative does not form an
underwriting group but decides to act as the sole Underwriter, then all
references to VTR herein as Representative shall be deemed to be to it as such
sole Underwriter and Section 14 hereof shall be deemed deleted in its entirety.
1
The Company and the Selling Security Holder understand that the
Underwriters propose to make a public offering of the Units as soon as the
Representative deems advisable after the Registration Statement hereinafter
referred to becomes effective. The Company and the Selling Security Holder
hereby confirm their agreement with the Representative and the other
Underwriters as follows:
SECTION 1. Description of Securities. The Company's authorized and
outstanding capitalization when the public offering of securities contemplated
hereby is permitted to commence, under the Securities Act of 1933, as amended
(the "Act"), and at the Closing Date (hereinafter defined) and the terms of the
Warrants and other securities will be as set forth in the Prospectus
(hereinafter defined).
SECTION 2. Representations and Warranties of the Company and the
Selling Security Holder. The Company hereby represents and warrants to, and
agrees with, the Underwriters as follows:
(a) A Registration Statement on Form SB-2 and amendments
thereto (No. 333-9761) with respect to the Units, including a form of
Prospectus relating thereto, copies of which have been previously delivered to
you, have been prepared by the Company in conformity with the requirements of
the Act, and the rules and regulations (the "Rules and Regulations") of the
Commission thereunder, and has been filed with the Commission under the Act.
The Company, subject to the provisions of Section 6(a) hereof, may file one or
more amendments to such Registration Statement and Prospectus. The Underwriters
will receive copies of each such amendment.
The date on which such Registration Statement is declared
effective under the Act and the public offering of the Units as contemplated by
this Agreement is therefore authorized to commence, is herein called the
"Effective Date." The Registration Statement and Prospectus, as finally amended
and revised immediately prior to the Effective Date, are herein called
respectively the "Registration Statement" and the "Prospectus." If, however, a
prospectus is filed by the Company pursuant to Rule 424(b) of the Rules and
Regulations which differs from the Prospectus, the term "Prospectus" shall also
include the prospectus filed pursuant to Rule 424(b).
(b) The Registration Statement (and Prospectus), at the time
it becomes effective under the Act, (as thereafter amended or as supplemented
if the Company shall have filed with the Commission an amendment or
supplement), and, with respect to all such documents, on the Closing Date
(hereinafter defined), will in all material respects comply with the provisions
of the Act and the Rules and Regulations, and will not contain an untrue
statement of a material fact and will not omit to state a 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; provided, however, that none of the representations and warranties
contained in this subsection (b) shall extend to the Underwriters in respect of
any statements in or omissions from the Registration Statement and/or the
Prospectus, based upon information furnished in writing to the Company by the
Underwriters specifically for use in connection with the preparation thereof.
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(c) The Company has been duly incorporated and is now, and on
the Closing Date will be, validly existing as a corporation in good standing
under the laws of the State of Delaware, having all required corporate power
and authority to own its properties and conduct its business as described in
the Prospectus. The Company is now, and on the Closing Date will be, duly
qualified to do business as a foreign corporation in good standing in all of
the jurisdictions in which it conducts its business or the character or
location of its properties requires such qualifications except where the
failure to so qualify would not materially adversely affect the Company's
business, properties or financial condition. The Company has no subsidiaries,
except as are set forth in the Prospectus.
(d) The financial statements of the Company (audited and
unaudited) included in the Registration Statement and Prospectus present fairly
the financial position and results of operations and changes in financial
condition of the Company at the respective dates and for the respective periods
to which they apply; and such financial statements have been prepared in
conformity with generally accepted accounting principles, consistently applied
throughout the periods involved, and are in accordance with the books and
records of the Company.
(e) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Co. LLP, independent auditors, who
have given their report on certain financial statements which are included as a
part of the Registration Statement and the Prospectus are independent public
accountants as required under the Act and the Rules and Regulations.
(f) Subsequent to the respective dates as of which
information is given in the Prospectus and prior to the Closing Date and,
except as set forth in or contemplated in the Prospectus, (i) the Company has
not incurred, nor will it incur, any material liabilities or obligations,
direct or contingent, nor has it, nor will it have entered into any material
transactions, in each case not in the ordinary course of business; (ii) there
has not been, and will not have been, any material change in the Company's
Certificate of Incorporation or in its capital stock or funded debt; and (iii)
there has not been, and will not have been, any material adverse change in the
business, net worth or properties or condition (financial or otherwise) of the
Company whether or not arising from transactions in the ordinary course of
business.
(g) Except as otherwise set forth in the Prospectus, the real
and personal properties of the Company as shown in the Prospectus and
Registration Statement to be owned by the Company are owned by the Company by
good and marketable title free and clear of all liens and encumbrances, except
those specifically referred to in the Prospectus, and except those which do not
materially adversely affect the use or value of such assets and except the lien
for current taxes not now due, or are held by the Company by valid leases, none
of which is in default. Except as disclosed in the Prospectus and Registration
Statement, the Company in all material respects has full right and licenses,
permits and governmental authorizations required to maintain and operate its
business and properties as the same are now operated and, to its best
knowledge, none of the activities or business of the Company is in material
violation of, or causes the Company to violate any laws, ordinances and
regulations applicable thereto, the violation of which would have a material
adverse impact on the condition (financial or otherwise), business, properties
or net worth of the Company.
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(h) The Company has no material contingent obligations, nor
are its properties or business subject to any material risks, which may be
reasonably anticipated, which are not disclosed in the Prospectus.
(i) Except as disclosed in the Prospectus and Registration
Statement, there are no material actions, suits or proceedings at law or in
equity of a material nature pending, or to the Company's knowledge, threatened
against the Company which are not adequately covered by insurance, which might
result in a material adverse change in the condition (financial or otherwise),
properties or net worth of the Company, and there are no proceedings pending
or, to the knowledge of the Company, threatened against the Company before or
by any Federal or State Commission, regulatory body, or administrative agency
or other governmental body, wherein an unfavorable ruling, decision or finding
would materially adversely affect the business, properties or net worth or
financial condition or income of the Company, which are not disclosed in the
Prospectus.
(j) All of the outstanding shares of Common Stock and
preferred stock are duly authorized and validly issued and outstanding, fully
paid, non-assessable, and do not have any and were not issued in violation of
any preemptive rights. All of the Common Stock as described in the Prospectus
when paid for shall be duly authorized and validly issued and outstanding,
fully paid, non-assessable, and will not have any and will not be issued in
violation of any preemptive rights. The Common Stock issuable upon exercise of
the Warrants when issued and paid for in accordance with the Warrant Agreement
shall be duly authorized and validly issued and outstanding, fully paid,
non-assessable, and will not have any and will not be issued in violation of
any preemptive rights. The Common Stock and Warrants will be delivered in
accordance with this Agreement and the Warrant Agreement between the Company
and American Stock Transfer & Trust Company. The Underwriters will receive good
and marketable title to the Units purchased by them from the Company, free and
clear of all liens, encumbrances, claims, security interests, restrictions,
stockholders' agreements and voting trusts whatsoever. Except as set forth in
the Prospectus, there are no outstanding options, warrants, or other rights,
providing for the issuance of, and no commitments, plans or arrangements to
issue, any shares of any class of capital stock of the Company, or any security
convertible into, or exchangeable for, any shares of any class of capital stock
of the Company. All of the Units of the Company to which this Agreement relates
conform to the statements relating to them that are contained in the
Registration Statement and Prospectus.
(k) The certificate or certificates required to be furnished
to the Underwriters pursuant to the provisions of Section 11 hereof will be
true and correct.
(l) The execution and delivery by the Company of this
Agreement has been duly authorized by all necessary corporate action and it is
a valid and binding obligation of the Company, enforceable against it in
accordance with its terms except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws pertaining to
creditors' rights generally.
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(m) Except as disclosed in the Prospectus, no default exists,
and no event has occurred which, with notice or lapse of time, or both, would
constitute a default in the due performance and observance of any material
term, covenant or condition by the Company or any other party, of any material
indenture, mortgage, deed of trust, note or any other material agreement or
instrument to which the Company is a party or by which it or its business or
its properties may be bound or affected, except (i) as disclosed in the
Prospectus, (ii) such defaults as have been waived by all parties who would
otherwise have a remedy or right with respect thereto or (iii) such defaults
which will not cause any material adverse change in the business, net worth,
properties or conditions (financial or otherwise), of the Company. The Company
has full power and lawful authority to authorize, issue and sell the Units to
be sold by it hereunder on the terms and conditions set forth herein and in the
Registration Statement and in the Prospectus. No consent, approval,
authorization or other order of any regulatory authority is required for such
authorization, issue or sale, except as may be required under the Act or State
securities laws. The execution and delivery of this Agreement, the consummation
of the transactions herein contemplated, and compliance with the terms hereof
will not conflict with, or constitute a default under any indenture, mortgage,
deed of trust, note or any other agreement or instrument to which the Company
is now a party or by which it or its business or its properties may be bound or
affected; the Certificate of Incorporation and any amendments thereto; the
by-laws of the Company, as amended; or any law, order, rule or regulation,
writ, injunction or decree of any government, governmental instrumentality, or
court, domestic or foreign, having jurisdiction over the Company or its
business or properties.
(n) No officer or director of the Company has taken, and each
officer and director has agreed that he will not take, directly or indirectly,
any action designed to stabilize or manipulate the price of the Units, the
Common Stock or the Warrants in the open market following the Closing Date or
any other type of action designed to, or that may reasonably be expected to
cause or result in such stabilization or manipulation, or that may reasonably
be expected to facilitate the initial sale, or resale, of any of the securities
which are the subject of this Agreement.
(o) The Warrants to be issued to the Representative (the
"Underwriters' Warrants") hereunder will be, when issued, duly and validly
authorized and executed by the Company and will constitute valid and binding
obligations of the Company, legally enforceable in accordance with their terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws pertaining to creditors rights
generally), and the Company will have duly authorized, reserved and set aside
the shares of its Common Stock issuable upon exercise of the Underwriters'
Warrants, and such stock, when issued and paid for upon exercise of the
Underwriters' Warrants in accordance with the provisions thereof, will be duly
authorized and validly issued, fully-paid and non-assessable.
(p) All of the aforesaid representations, agreements, and
warranties shall survive delivery of, and payment for, the Units.
5
The Selling Security Holder represents and warrants to, and agrees
with, the several Underwriters that:
(i) There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or investigation before any court or
beneficiary, public body or board pending, threatened, or in prospect (or any
basis therefor known to the Selling Security Holder) with respect to the
Selling Security Holder. The Selling Security Holder is not in violation of, or
in default with respect to, any law, rule, regulation, order, judgment, or
decree; nor is the Selling Security Holder required to take any action in order
to avoid such violation or default.
(ii) The Selling Security Holder has all requisite power and
authority to execute, deliver, and perform this Agreement. This Agreement has
been duly executed and delivered by or on behalf of the Selling Security
Holder, is the legal, valid and binding obligation of the Selling Security
Holder, and is enforceable as to the Selling Security Holder in accordance with
its terms. No consent, authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any federal, state, local or
other governmental authority or any court or other tribunal is required by the
Selling Security Holder for the execution, delivery or performance of this
Agreement (except filings under the Act which have been made before the
applicable Closing Date and such consents consisting only of consent under
"blue sky" or securities laws which have been obtained at or prior to the date
of this Agreement) by the Selling Security Holder. No consent of any party to
any contract, agreement, instrument, lease, license, indenture, mortgage, deed
of trust, note, arrangement or understanding to which the Selling Security
Holder is a party, or to which any of the Selling Security Holder's properties
or assets are subject, is required for the execution, delivery or performance
of this Agreement; and the execution, delivery and performance of this
Agreement will not violate, result in a breach of, conflict with, or (with or
without the giving of notice of the passage of time or both) entitle any party
to terminate or call a default under such contract, agreement, instrument,
lease, license, indenture, mortgage, deed of trust, note, arrangement or
understanding, or violate, result in a breach of, or conflict with, any law,
rule, regulation, order, judgment or decree binding on the Selling Security
Holder.
(iii) The Selling Security Holder has good title to the
Selling Security Holder Units to be sold by the Selling Security Holder
pursuant to this Agreement, free and clear or all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements and voting trusts.
(iv) Neither the Selling Security Holder nor any of the
Selling Security Holder's affiliates (as defined in the Regulations) has taken
or will take, directly or indirectly, prior to the termination of the
underwriting syndicate 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 Selling Security
Holder Units.
(v) All information furnished or to be furnished to the
Company by or on behalf of the Selling Security Holder for use in connection
with the preparation of the Registration
6
Statement and the Prospectus is true in all respects and does not and 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.
(vi) Except as may be set forth in the Prospectus, the
Selling Security Holder has not incurred any liability for a fee, commission or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement.
(vii) The Selling Security Holder has no knowledge that, and
does not believe that, any representation or warranty of the Company in Section
2 is incorrect.
(viii) The Selling Security Holder has not, directly or
indirectly: used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic government officials or employees
or to foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment.
(ix) The Selling Security Holder Units to be sold by the
Selling Security Holder pursuant to this Agreement are duly and validly
authorized and issued, fully paid and non-assessable, and have not been issued
and are not owned or held in violation of any preemptive right of stockholders,
optionholders, warrant holders or other persons.
(x) No transaction has occurred between the Selling Security
Holder and the Company that is required to be described in the Registration
Statement or the Prospectus.
SECTION 3. Issuance, Sale and Delivery of the Firm Units, the Optional
Units and the Underwriters' Warrants.
(a) Upon the basis of the representations, warranties,
covenants and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell the
Company Units and the Selling Security Holder agrees to sell the Selling
Security Holder Units to the several Underwriters, and the Underwriters,
severally and not jointly, agree to purchase from the Company and the Selling
Security Holder, the number of the Firm Units set forth opposite the respective
names of the Underwriters in Schedule I hereto, plus any additional Units which
such Underwriter may become obligated to purchase pursuant to the provisions of
Section 14 hereof.
The purchase price of the Units to be paid by the several
Underwriters shall be $10.80 per Unit ($12.00 per Unit less a ten percent
discount equal to $1.20 per Unit).
In addition, and upon the same basis, and subject to the same
terms and conditions, the Selling Security Holder hereby grants an option to
you to purchase, but only for the purpose of covering over-allotments, upon not
less than two days' notice from the Representative, the Optional Units, or any
portion thereof, at the same price per Unit as that
7
set forth in the preceding sentence; and each Underwriter agrees, severally and
not jointly, to purchase Optional Units in the same proportion in which it has
agreed to purchase Firm Units. Notwithstanding anything contained herein to the
contrary, you individually and not as Representative may provide in the
Agreement Among Underwriters for the Representative to purchase all or any part
of the Optional Units and are not obligated to offer the Optional Units to the
other Underwriters. The Optional Units may be exercised at any time, and from
time to time, thereafter within a period of 30 calendar days following the
Effective Date. The time(s) and date(s) (if any) so designated for delivery and
payment for the Optional Units shall be set forth in the notice to the Selling
Security Holder, copy to the Company. Such dates are herein defined as the
Additional Closing Date(s).
(b) Payment for the Firm Units shall be made by certified or
official bank checks in New York Clearing House funds, payable to the order of
the Company and the Selling Security Holder, as the case may be, at the offices
of the Representative, or its clearing agent, or at such other place as shall
be agreed upon by the Representative and the Company, upon delivery of the Firm
Units to the Representative for the respective accounts of the Underwriters. In
making payment to the Company with respect to the Firm Units, the
Representative may first deduct all sums due to it for the balance of the
non-accountable expense allowance and under the Financial Consulting Agreement
(as hereinafter defined). Such delivery and payment shall be made at 9:30 A.M.,
New York City Time on the third business day after the Effective Date which may
be extended by the Representative to not later than the fifth business day,
following the Effective Date (unless postponed in accordance with the
provisions of Section 14 hereof) or at such other time as shall be agreed upon
by the Representative and the Company. The time and date of such delivery and
payment are hereby defined as the Closing Date. It is understood that each
Underwriter has authorized the Representative, for the account of such
Underwriter, to accept delivery of, receipt for, and make payment of the
purchase price for, the Firm Units which it has agreed to purchase. You,
individually, and not as Representative may (but shall not be obligated to)
make payment of the purchase price for the Firm Units to be purchased by any
Underwriter whose check shall not have been received by the Closing Date, for
the account of such Underwriter, but any such payment shall not relieve such
Underwriter from its obligations hereunder.
(c) Payment for the Optional Units shall be made at the
offices of the Representative, or its clearing agent or at such other place as
shall be agreed upon by the Representative and the Selling Security Holder in
accordance with the notice delivered pursuant to Section 3(a) which shall be no
later than seven business days from the expiration of the 30-day option period.
(d) Certificates for the Firm Units and for the Optional
Units shall be registered in such name or names and in such authorized
denominations as the Representative may request in writing at least two
business days prior to the Closing Date, and the Additional Closing Date(s) (if
any). The Company shall permit the Representative to examine and package said
certificates for delivery at least one full business day prior to the Closing
Date and prior to the Additional Closing Date(s). The Company and the Selling
Security Holder shall not be obligated to sell or deliver any of the Firm Units
except upon tender of payment by the Underwriters for all of the Firm Units
agreed to be purchased by them hereunder. The
8
Representative, however, shall have the sole discretion to determine the number
of Optional Units, if any, to be purchased.
(e) At the time of making payment for the Firm Units, the
Company also hereby agrees to sell to the Representative, Warrants to purchase
50,000 Units for an aggregate purchase price of $25 (hereinafter referred to as
the "Underwriters' Warrants"). The 50,000 Units underlying the Underwriters'
Warrants shall be identical to the Units sold to the public. Each Underwriters'
Warrant shall entitle the owner thereof to purchase one Unit of the Company at
an exercise price of $19.80 per Unit. Such Underwriters' Warrants are to become
exercisable one year from the Effective Date, and shall remain exercisable for
a period of four years thereafter. From the Effective Date and until one (1)
year thereafter, such warrants may be transferred only to officers or partners
of the Underwriters and selling group members and their officers or partners.
The Underwriters' Warrants shall contain customary clauses
protecting the holders thereof in the event the Company pays stock dividends,
effects stock splits, or effects a sale of assets, merger or consolidation.
(f) On and subject to the Closing Date, the Company will give
irrevocable instructions to its transfer agent and Depository Trust Company to
deliver to the Representative (at the Company's expense) for a period of five
years from the Closing Date, daily transfer sheets showing any transfers of the
Units, Common Stock and Warrants and in the case of the transfer agent, from
time to time during the aforesaid period a complete stockholders' list will be
promptly furnished by the Company when requested by the Representative on not
more than two occasions per year.
SECTION 4. Public Offering. The several Underwriters agree, subject to
the terms and provisions of this Agreement, to offer the Units to the public as
soon as practicable after the Effective Date, at the initial offering price of
$12.00 per Unit and upon the terms described in the Prospectus. The
Representative may, from time to time, decrease the public offering price,
after the initial public offering, to such extent as the Representative may
determine, however, such decreases will not affect the price payable to the
Company and the Selling Security Holder hereunder.
SECTION 5. Registration Statement and Prospectus. The Company will
furnish the Representative, without charge, two signed copies of the
Registration Statement and of each amendment thereto, including all exhibits
thereto and such amount of conformed copies of the Registration Statement and
Amendments as may be reasonably requested by the Representative for
distribution to each of the Underwriters and Selected Dealers.
The Company will furnish, at its expense, as many printed
copies of a Preliminary Prospectus and of the Prospectus as the Representative
may request for the purposes contemplated by this Agreement. If, while the
Prospectus is required to be delivered under the Act or the Rules and
Regulations, any event known to the Company relating to or affecting the
Company shall occur which should be set forth in a supplement to or an
amendment of the Prospectus in order to comply with the Act (or other
applicable law) or with
9
the Rules and Regulations, the Company will forthwith prepare, furnish and
deliver to the Representative and to each of the other Underwriters and to
others whose names and addresses are designated by the Representative, in each
case at the Company's expense, a reasonable number of copies of such supplement
or supplements to or amendment or amendments of, the Prospectus.
The Company and the Selling Security Holder authorize the
Underwriters and the selected dealers, if any, in connection with the
distribution of the Units and all dealers to whom any of the Units may be sold
by the Underwriters or by any participating broker-dealer ("Selected Dealer")
to use the Prospectus, as from time to time amended or supplemented, in
connection with the offering and sale of the Units and in accordance with the
applicable provisions of the Act and the applicable Rules and Regulations and
applicable State securities laws.
SECTION 6. Covenants of the Company. The Company covenants and agrees
with each Underwriter that:
(a) After the date hereof, the Company will not at any time,
whether before or after the Effective Date, file any amendment to the
Registration Statement or the Prospectus, or any supplement to the Prospectus,
of which the Representative shall not previously have been advised and
furnished with a copy, or to which the Representative or the Underwriters'
counsel shall have reasonably objected in writing on the ground that it is not
in compliance with the Act or the Rules and Regulations.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective (provided, however, the Company
shall not cause the Registration Statement to become effective without the
written consent of VTR) and will advise the Representative, (i) when the
Registration Statement shall have become effective and when any amendment
thereto shall have become effective, and when any amendment of or supplement to
the Prospectus shall be filed with the Commission, (ii) when the Commission
shall make request or suggestion for any amendment to the Registration
Statement or the Prospectus or for additional information and the nature and
substance thereof, and (iii) of the issuance by the Commission of an order
suspending the effectiveness of the Registration Statement or of the initiation
of any proceedings for that purpose, and will use its best efforts to prevent
the issuance of such an order, or if such an order shall be issued, to obtain
the withdrawal thereof at the earliest possible moment.
(c) The Company will prepare and file with the Commission,
promptly upon the request of the Representative, such amendments, or
supplements to the Registration Statement or Prospectus, in form and substance
satisfactory to counsel to the Company, as in the reasonable opinion of ▇▇▇▇▇▇
▇▇▇▇▇ P.C., as counsel to the Underwriters, may be necessary or advisable in
connection with the offering or distribution of the Units, and will diligently
use its best efforts to cause the same to become effective.
(d) The Company will, at its expense, when and as requested
by the Representative, supply all necessary documents, exhibits and
information, and execute all
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such applications, instruments and papers as may be required, in the opinion of
the Underwriters' counsel, to qualify the Units or such part thereof as the
Representative may determine, for sale under the so-called "Blue Sky" Laws of
such states as the Representative shall designate, and to continue such
qualification in effect so long as required for the purposes of the
distribution of the Units, provided, however, that the Company shall not be
required to qualify as a foreign corporation or dealer in securities or to file
a consent to service of process in any state in any action other than one
arising out of the offering or sale of the Units.
(e) The Company will, at its own expense, file and provide,
and continue to file and provide, such reports, financial statements and other
information as may be required by the Commission, or the proper public bodies
of the States in which the Units may be qualified for sale, for so long as
required by applicable law, rule or regulation and will provide the
Representative with copies of all such registrations, filings and reports on a
timely basis.
(f) During the period of five years from the Effective Date,
the Company will deliver to the Underwriter a copy of each annual report of the
Company, and will deliver to the Underwriter (i) within 50 days after the end
of each of the Company's first three quarter-yearly fiscal periods, a balance
sheet of the Company as at the end of such quarter-yearly period, together with
a statement of its income and a statement of changes in its cash flow for such
period (Form 10-Q or 10-QSB), all in reasonable detail, signed by its principal
financial or accounting officer, (ii) within 105 days after the end of each
fiscal year, a balance sheet of the Company as at the end of such fiscal year,
together with a statement of its income and statement of cash flow for such
fiscal year (Form 10-K or 10-KSB), such balance sheet and statement of cash
flow for such fiscal year to be in reasonable detail and to be accompanied by a
certificate or report of independent public accountants, (who may be the
regular accountants for the Company), (iii) as soon as available a copy of
every other report (financial or other) mailed to the stockholders, and (iv) as
soon as available a copy of every non-confidential report and financial
statement furnished to or filed with the Commission or with any securities
exchange pursuant to requirements by or agreement with such exchange or the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or any regulations of the Commission thereunder. If and for so
long as the Company has one or more active subsidiaries, the financial
statements required by (i) and (ii) above shall be furnished on a consolidated
basis in respect of the Company and all of the Company's subsidiaries. The
financial statements referred to in (ii) shall also be furnished to all of the
stockholders of the Company as soon as practicable after the 105 days referred
to therein.
(g) The Company represents that, with respect to the Units,
it will prepare and file a Registration Statement with the Commission pursuant
to Section 12(g) of the 1934 Act prior to the Effective Date with a request
that such Registration Statement will become effective on the first day
following the Effective Date. The Company understands that, to register, it
must prepare and file with the Commission a General Form of Registration of
Common Stock (Form 8-A or Form 10). The Company shall comply with all periodic
reporting and proxy solicitation requirements imposed by the Commission
pursuant to the 1934 Act, and shall promptly furnish you with copies of all
material filed with the Commission pursuant to the 1934 Act or otherwise
furnished to shareholders of the Company.
11
(h) The Company will make generally available to its security
holders, as soon as practicable, but in no event later than 15 months after the
Effective Date, an earnings statement of the Company (which need not be
audited) in reasonable detail, covering a period of at least twelve months
beginning after the Effective Date, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(i) The Company will, on or about the Effective Date, apply
for listing in Standard and Poor's Corporation Records and Standard & Poor's
Monthly Stock Guide and shall use its best efforts to have the Company listed
in such reports for a period of not less than five (5) years from the Closing
Date. The Company will request accelerated treatment in the Daily News
Supplement of Standard and Poor's Corporation Records.
(j) The Company shall employ the services of an auditing firm
acceptable to the Representative in connection with the preparation of the
financial statements required to be included in the Registration Statement and
shall continue to appoint such auditors or such other auditors as are
reasonably acceptable to the Representative for a period of five (5) years
following the Effective Date of the Registration Statement. Said financial
statements shall be prepared in accordance with Regulation S-X under the
General Rules and Regulations of the 1933 Act. The firm of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ &
Co., LLP are deemed acceptable to the Underwriter. The Company shall appoint
American Stock Transfer & Trust Company transfer agent (the "Transfer Agent")
for the Common Stock and as Warrant Agent for the Warrants.
(k) Until such time as the Company's Common Stock is listed
on the New York Stock Exchange, the American Stock Exchange, or the NASDAQ/NMS;
the Company shall cause its legal counsel or an independent firm acceptable to
the Representative to provide the Representative with a survey, to be updated
upon request of the Underwriter, of those states in which the securities of the
Company may be traded in non-issuer transactions under the Blue Sky laws of the
states and the basis for such authority. The first such survey shall be
delivered at closing; the second such survey shall be delivered within five
business days of publication of the Company in Standard & Poor's Corporation
Records and, thereafter upon request of the Underwriter.
(l) As soon as practicable after the Closing Date, the
Company will deliver to the Representative and its counsel a total of two bound
volumes of copies of all documents relating to the public offering which is the
subject of this Agreement.
SECTION 7. Expenses of the Company.
(a) The Company shall be responsible for and shall bear all expenses
directly and necessarily incurred in connection with the proposed financing,
including: (i) the preparation, printing and filing of the Registration
Statement and amendments thereto, including NASD and SEC filing fees,
preliminary and final Prospectus and the printing of the Underwriting
Agreement, the Agreement Among the Underwriters and the Selected Dealers'
Agreement, a Blue Sky Memorandum and material to be circulated to the
Underwriters by us; (ii) the
12
issuance and delivery of certificates representing the Common Stock and
Warrants including original issue and transfer taxes, if any; (iii) the
qualifications of the Company's Units (covered by the "firm commitment"
offering) under State securities or "Blue Sky" laws, including counsel fees of
▇▇▇▇▇▇ ▇▇▇▇▇ P.C. relating thereto in the sum of Thirty ($30,000) Dollars
($7,500 of which has been paid, together with appropriate state filing fees)
plus disbursements relating to, but not limited to, long-distance telephone
calls, photocopying, messengers, excess postage, overnight mail and courier
services; and (iv) the fees and disbursements of counsel for the Company and
the accountants for the Company. Upon the commencement of the necessary state
Blue Sky filings by our counsel, the Company shall supply him at his request,
all necessary state filing fees.
(b) In addition, the Company shall bear each of the following costs:
(i) investigative reports (such as ▇▇▇▇▇▇'▇ Reports) of the Company's executive
officers, directors and principal shareholders, not to exceed $5,000 in the
aggregate and (ii) otherwise unreimbursed postage including mailing of
preliminary and final prospectuses incurred by or on behalf of the
Representative and the Underwriters in preparation for, or in connection with
the offering and sale and distribution of the Units on an accountable basis.
SECTION 8. Payment of Underwriters' Expenses.
On the Closing Date and Additional Closing Date(s) (if any),
the Company will pay to you an expense allowance equal to three (3%) percent of
the total gross proceeds derived from the sale of the Units contemplated by
this Agreement for the fees and disbursements of counsel to the Underwriters
and for costs of otherwise unreimbursed advertising, traveling, postage,
telephone and telegraph expenses and other miscellaneous expenses incurred by
or on behalf of the Representative and the Underwriters in preparation for, or
in connection with the offering and sale and distribution of the Units; and you
shall not be obligated to account to the Company for such disbursements and
expenses. Further, in the event that this Agreement is terminated pursuant to
Section 12 hereof, the Company will be obligated to reimburse the
Representative on an accountable basis for its reasonable out-of-pocket
expenses incurred in connection hereunder.
SECTION 9. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against any
and all losses, claims, damages and liabilities, joint or several (including
any reasonable investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they, or any of them, may become subject under
the Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus, the Registration
Statement or the statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any
13
amendment thereof or supplement thereto, or arise out of or are based upon any
omission or alleged omission to state therein such fact required to be stated
therein or necessary to make such statements therein not misleading. The
Selling Security Holder agrees to indemnify each Underwriter and each person,
if any, who controls any Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, against any and all losses, claims,
damages and liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the Act, the
Exchange Act or other Federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities, joint or
several (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact with respect to the Selling Security Holder
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto (which amendments or
supplements are furnished to the Selling Security Holder), or which arise out
of or are based upon any omission or alleged omission to state therein such
fact required to be stated therein or necessary to make such statements therein
not misleading, but only with reference to information relating to the Selling
Security Holder furnished in writing to the Company by or on behalf of the
Selling Security Holder expressly for use in connection with the preparation of
the Registration Statement and Prospectus or any amendment thereof or
supplement thereto (which amendments or supplements are furnished to the
Selling Security Holder), or which arise out of or are based upon any omission
or alleged omission to state therein such fact required to be stated therein or
necessary to make such statements therein not misleading.
(b) Such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages or liabilities arising from the sale of the Units to
any person by such Underwriter if such untrue statement or alleged untrue
statement or omission was made in such preliminary prospectus, the Registration
Statement or the Prospectus, or such amendment or supplement, in reliance upon
and in conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use therein. The
obligations of the Selling Security Holder, pursuant to this Section 9(a) shall
be limited to an amount not exceeding the product of the Per Unit Price to
Public of the Units as set forth on the cover page of the Prospectus and the
number of Units being sold by each of them. In no event shall the
indemnification agreement contained in this Section 9(a) inure to the benefit
of any Underwriter on account of any losses, claims, damages, liabilities or
actions arising from the sale of the Units upon the public offering to any
person by such Underwriter if such losses, claims, damages, liabilities or
actions arise out of, or are based upon, a statement or omission or alleged
omission in a preliminary prospectus and if, in respect to such statement,
omission or alleged omission, the Prospectus differs in a material respect from
such preliminary prospectus and a copy of the Prospectus has not been sent or
given to such person at or prior to the confirmation of such
14
sale to such person. This indemnity agreement will be in addition to any
liability which the Company and the Selling Security Holder may otherwise have.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the Company who
signs the Registration Statement and the Selling Security Holder, to the same
extent as the foregoing indemnity from the Company and the Selling Security
Holder to each Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which was made in any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration Statement or the
Prospectus, or any amendment thereof or supplement thereto, which were made in
reliance upon and in conformity with information furnished in writing to the
Company by the Representatives on behalf of any Underwriter for specific use
therein; provided, however, that the obligation of each Underwriter to
indemnify the Company (including any controlling person, director or officer
thereof) and the Selling Security Holder shall be limited to the net proceeds
received by the Company and the Selling Security Holder, respectively, from
such Underwriter. For all purposes of this Agreement, the amounts of the
selling concession and reallowance set forth in the Prospectus constitute the
only information furnished in writing by or on behalf of any Underwriter
expressly for inclusion in any Preliminary Prospectus, any Rule 430A
Prospectus, the Registration Statement or the Prospectus or any amendment or
supplement thereto.
(d) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 9(a) 9(b), or 9(c) shall be available
to any party who shall fail to give notice as provided in this Section 9(d) if
the party to whom notice was not given was unaware of the proceeding to which
such notice would have related and was prejudiced by the failure to give such
notice but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability that it may
have to any indemnified party for contribution or otherwise than under this
Section. In case any such action, suit or proceeding shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, 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 and the approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, except as provided below and except for the reasonable costs
of investigation subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of
counsel
15
by such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party, or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which
cases the reasonable fees and expenses of counsel shall be at the expense of
the indemnifying parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without its
written consent.
(e) In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Sections 9(a) and
(b) is due in accordance with its terms but for any reason is held to be
unavailable from the Company, the Selling Security Holder or the Underwriters,
the Company, the Selling Security Holder and the Underwriters shall contribute
to the aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted, but after deducting any contribution received by the Company
from persons other than the Underwriters, such as the Selling Security Holder,
persons who control the company within the meaning of the Act, officers of the
Company who signed the Registration Statement and directors of the Company, who
may also be liable for contribution) to which the Company and the Selling
Security Holder and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Security Holder on the one hand and the Underwriters on
the other from the offering of the Units or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided herein in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company and the Selling Security
Holder on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant omissions which resulted in such losses, claims, damages, liabilities
or expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Selling Security Holder and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the Offering (net of underwriting discounts but before deducting
expenses) received by the Company or the Selling Security Holder from the sale
of the Units, as set forth in the table on the cover page of the Prospectus
(but not taking into account the use of the proceeds of such sale of Units by
the Company), bear to (y) the underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company, the Selling Security Holder and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to
information supplied by the Company, the Selling Security Holder or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
16
Company, the Selling Security Holder and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable consideration referred to above. Notwithstanding
the provisions of this Section 9, (i) in no case shall any Underwriter (except
as may be provided in the Agreement Among Underwriters) be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Units purchased by such Underwriter hereunder, (ii) in no case shall the
Selling Security Holder be liable or responsible for any amount in excess of
the product of the Per Unit Price to Public of the Units as set forth on the
cover page of the Prospectus and the number of Units being sold by each of them
subject to the limitation expressed in Section 9(a), and (iii) the Company
shall be liable and responsible for any amount in excess of the underwriting
discount and the amount referred to in clause (ii) provided, however (i) that
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company 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 clauses (i),
(ii) and (iii) in the immediately preceding sentence of this Section 9. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section, notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
SECTION 10. Effectiveness of Agreement. This Agreement shall become
effective (i) at 10:00 A.M., New York Time, on the first full business day
after the Effective Date, or (ii) at the time of the initial public offering by
the Underwriters of the Units, whichever shall first occur. The time of the
initial public offering by the Underwriters of the Units for the purposes of
this Section 10, shall mean the time, after the Registration Statement becomes
effective, of the release by the Representative for publication of the first
newspaper advertisement which is subsequently published relating to the Units,
or the time, after the Registration Statement becomes effective, when the Units
are first released by the Representative for offering by the Underwriters or
dealers by letter or telegram, whichever shall first occur. The Representative
agrees to notify the Company immediately after it shall have taken any action,
by release or otherwise, whereby this Agreement shall have become effective.
This Agreement shall, nevertheless, become effective at such time earlier than
the time specified above, after the Effective Date, as the Representative may
determine by notice to the Company.
17
SECTION 11. Conditions of the Underwriters' Obligations. The
obligations of the several Underwriters to purchase and pay for the Units which
the Underwriters have agreed to purchase hereunder are subject to: the
accuracy, as of the date hereof and as of the Closing Date and the Additional
Closing Date(s), if any, (together, the "Closing Dates"), of all of the
representations and warranties of the Company and the Selling Security Holder
contained in this Agreement; the Company's compliance with, or performance of,
all of its covenants, undertakings and agreements contained in this Agreement
that are required to be complied with or performed on or prior to each of the
Closing Dates and to the following additional conditions:
(a) On or prior to the Closing Date, no order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been instituted or be pending or, to the
knowledge of the Company, shall be threatened by the Commission; any request
for additional information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to the satisfaction of the Commission; and neither the Registration
Statement nor any amendment thereto shall have been filed to which counsel to
the Underwriters shall have reasonably objected, in writing.
(b) The Representative shall not have disclosed in writing to
the Company that the Registration Statement or Prospectus or any amendment or
supplement thereto contained, as of the date thereof, an untrue statement of a
fact which, in the opinion of counsel to the Underwriters, is material, or
omits to state a fact which, in the opinion of such counsel, is material and is
required to be stated therein, or is necessary to make the statements therein
not materially misleading.
(c) Between the date hereof and the Closing Date, the Company
shall not have sustained any loss on account of fire, explosion, flood,
accident, calamity or other cause, of such character as materially adversely
affects its business or property, whether or not such loss is covered by
insurance.
(d) Between the date hereof and the Closing Date, there shall
be no litigation instituted or threatened against the Company, and there shall
be no proceeding instituted or, to the knowledge of the Company, threatened
against the Company before or by any federal or state commission, regulatory
body or administrative agency or other governmental body, domestic or foreign,
wherein an unfavorable ruling, decision or finding would materially adversely
affect the business, licenses, permits, operations or financial condition or
income of the Company.
(e) Except as contemplated herein or as set forth in the
Registration Statement and Prospectus, during the period subsequent to the
Effective Date and prior to the Closing Date, (A) the Company shall have
conducted its business in the usual and ordinary manner as the same was being
conducted on the date of the filing of the initial Registration Statement and
(B) except in the ordinary course of its business, the Company shall not have
incurred any material liabilities or obligations (direct or contingent), or
disposed of any of its
18
assets, or entered into any material transaction, and (C) the Company shall not
have suffered or experienced any material adverse change in its business,
affairs or in its condition, financial or otherwise. On the Closing Date, the
capital stock and surplus accounts of the Company shall be substantially as
great as at its last financial report without considering the proceeds from the
sale of the Units except to the extent that any decrease is disclosed in or
contemplated by the Prospectus.
(f) The authorization of the Units, the Common Stock and the
Warrants, the Registration Statement, the Prospectus and all corporate
proceedings and other legal matters incident thereto and to this Agreement,
shall be reasonably satisfactory in all respects to counsel to the
Underwriters.
(g) The Company shall have furnished to the Representative
the opinions, dated the Closing Date, and Additional Closing Date(s), addressed
to you, of its counsel that:
(i) The Company has been duly incorporated and is a
validly existing corporation in good standing under the laws of the State of
Delaware with full corporate power and authority to own and operate its
properties and to carry on its business as set forth in the Registration
Statement and Prospectus; it has authorized and outstanding capital as set
forth in the Registration Statement and Prospectus; and the Company is duly
licensed or qualified as a foreign corporation in all jurisdictions in which by
reason of maintaining an office in such jurisdiction or by owning or leasing
real property in such jurisdiction it is required to be so licensed or
qualified except where failure to be so qualified or licensed would have no
material adverse effect.
(ii) All of the outstanding shares of Common Stock
and preferred stock are duly and validly issued and outstanding, fully paid,
and non-assessable, and do not have any, and were not issued in violation of
any, preemptive rights. The Company will have duly authorized, reserved and set
aside shares of Common Stock issuable upon exercise of the Warrants and any
other outstanding options or warrants and when issued in accordance with such
terms contained in the Prospectus, will be duly and validly authorized and
issued, fully paid and non-assessable.
(iii) All of the Units of the Company to which this
Agreement relates conform to the statements relating to them that are contained
in the Registration Statement and Prospectus (excluding financial statements).
(iv) The Underwriters against payment therefor, will
receive good and marketable title to the Units purchased by them from the
Company and the Selling Security Holder in accordance with the terms and
provisions of this Agreement.
(v) To the best of the knowledge of such counsel,
except as set forth in the Prospectus, there are no outstanding options,
warrants, or other rights, providing for the issuance of, and, no commitments,
plans or arrangements to issue, any shares of any class
19
of capital stock of the Company, or any security convertible into, or
exchangeable for, any shares of any class of capital stock of the Company.
(vi) To the best of such counsel's knowledge, no
consents, approvals, authorizations or orders of agencies, officers or other
regulatory authorities are necessary for the valid authorization, issue or sale
of the Units hereunder, except such as may be required under the Act or state
securities or Blue Sky Laws.
(vii) The Registration Statement has become
effective under the Act and, to the best of the knowledge of such counsel, no
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are pending
or contemplated under the Act, and the Registration Statement and Prospectus,
and each amendment thereof and supplement thereto, comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations (except that no opinion need be expressed as to financial
statements and financial data contained in the Registration Statement or
Prospectus), and in the course of the preparation of the Registration
Statement, nothing has come to the attention of said counsel to cause them to
believe that either the Registration Statement or the Prospectus or any such
amendment or supplement contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and such counsel is familiar with
all contracts referred to in the Registration Statement or in the Prospectus
and such contracts are sufficiently summarized or disclosed therein, or filed
as exhibits thereto, as required, and such counsel does not know of any other
contracts required to be summarized or disclosed or filed; and such counsel
does not know of any legal or governmental proceedings pending or threatened to
which the Company is a party, or in which property of the Company is the
subject, of a character required to be disclosed in the Registration Statement
or the Prospectus which are not disclosed and properly described therein.
(viii) The Underwriter's Warrants to be issued to
the Representative hereunder will be, when issued against payment therefor duly
and validly authorized and executed by the Company and will constitute valid
and binding obligations of the Company, legally enforceable in accordance with
their terms (except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally), and the Company will have
duly authorized, reserved and set aside the shares of its Common Stock issuable
upon exercise of the Underwriter's Warrants and Underlying Warrants, and such
stock, when issued and paid for upon exercise of the Underwriter's Warrants and
Underlying Warrants in accordance with the provisions thereof, will be duly and
validly authorized and issued, fully-paid and non-assessable.
(ix) The Company holds by valid lease, its
properties as shown in the Prospectus, and is in all material respects
complying with all laws, ordinances and regulations applicable thereto.
20
(x) This Agreement has been duly authorized and
executed by the Company and the Selling Security Holder and is a valid and
binding agreement of the Company and the Selling Security Holder enforceable in
accordance with its terms subject to bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors rights generally and except that
no opinion need be given with regard to the enforceability of Section 9 hereof
or the availability of equitable relief.
(xi) To the best knowledge of such counsel: (a) no
default exists, and no event has occurred which, with notice or lapse of time,
or both, would constitute a default in the due performance and observance of
any material term, covenant or condition by the Company or the Selling Security
Holder, of any indenture, mortgage, deed of trust, note or any other agreement
or instrument to which the Company or the Selling Security Holder is a party or
by which it or its business or its properties may be bound or affected, except
where such default would not have a material adverse effect on the business of
the Company and except as disclosed in the Prospectus; (b) the Selling Security
Holder has full power and legal authority to sell the Selling Security Holder
Units to the Underwriters free and clear of all liens and encumbrances; (c) the
Company has full power and lawful authority to authorize, issue and sell the
Units on the terms and conditions set forth herein and in the Registration
Statement and in the Prospectus; (d) no consent, approval, authorization or
other order of any regulatory authority is required for such authorization,
issue or sale, except as may be required under the Act or State securities
laws, clearance with the NASD and such other consent, approval, authorization
or order as has been obtained and is in full force and effect; and (e) the
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated, and compliance with the terms hereof will not conflict
with, or constitute a default under, any material indenture, mortgage, deed of
trust, note or any other agreement or instrument to which the Company and the
Selling Security Holder is now a party or by which it or its business or its
properties may be bound or affected, the Certificate of Incorporation and any
amendments thereto, the by-laws of the Company or the Selling Security Holder,
or any order, rule or regulation, writ, injunction or decree of any government,
governmental instrumentality, or court, domestic or foreign, having
jurisdiction over the Company or the Selling Security Holder or its business or
properties.
(xii) Except as disclosed in the Registration
Statement and Prospectus, to the best knowledge of such counsel, there are no
material actions, suits or proceedings at law or in equity of a material nature
pending, or to such counsel's knowledge, threatened against the Company or the
Selling Security Holder which are not adequately covered by insurance and there
are no proceedings pending or, to the knowledge of such counsel, threatened
against the Company or the Selling Security Holder before or by any Federal or
State Commission, regulatory body, or administrative agency or other
governmental body, wherein an unfavorable ruling, decision or finding would
materially and adversely affect the business, operation or condition (financial
or otherwise) of the Company or the Selling Security Holder, which are not
disclosed in the Prospectus.
Such opinion shall also cover such other matters incident to
the transactions contemplated by this Agreement as the Representative shall
reasonably request. In rendering
21
such opinion, such counsel may rely upon certificates of any officer of the
Company or public officials as to matters of fact.
(h) The Company shall have furnished to the Representative
certificates of the President of the Company, dated as of the Closing Date, and
Additional Closing Date(s), to the effect that:
(i) Each of the representations and warranties of
the Company contained in Section 2 hereof is true and correct in all material
respects at and as of such Closing Date, and the Company has performed or
complied with all of its agreements, covenants and undertakings contained in
this Agreement and has performed or satisfied all the conditions contained in
this Agreement on its part to be performed or satisfied at the Closing Date;
(ii) The Registration Statement has become effective
and no order suspending the effectiveness of the Registration Statement has
been issued, and, to the best of the knowledge of the respective signers, no
proceeding for that purpose has been initiated or is threatened by the
Commission;
(iii) The respective signers have each carefully
examined the Registration Statement and the Prospectus and any amendments and
supplements thereto, and to the best of their knowledge the Registration
Statement and the Prospectus and any amendments and supplements thereto and all
statements contained therein are true and correct in all material respects, and
neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and, since the effective date of the
Registration Statement, there has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been so set forth except
changes which the Registration Statement and Prospectus indicate might occur.
(iv) Except as set forth or contemplated in the
Registration Statement and Prospectus, since the respective dates as of which,
or periods for which, information is given in the Registration Statement and
Prospectus and prior to the date of such certificate (A) there has not been any
material adverse change, financial or otherwise, in the business, business
prospects, earnings, general affairs or condition (financial or otherwise), of
the Company (in each case whether or not arising in the ordinary course of
business), and (B) the Company has not incurred any material liabilities,
direct or contingent, or entered into any material transactions, otherwise than
in the ordinary course of business other than as referred to in the
Registration Statement or Prospectus and except changes which the Registration
Statement and Prospectus indicate might occur.
(i) The Company shall have furnished to the Representative on
the Closing Date and the Additional Closing Date(s), if any, such other
certificates of executive officers of the Company additional to those
specifically mentioned herein, as the Representative may
22
have reasonably requested, as to: the accuracy and completeness of any
statement in the Registration Statement or the Prospectus, or in any amendment
or supplement thereto; the representations and warranties of the Company
herein; the performance by the Company of its obligations hereunder; or the
fulfillment of the conditions concurrent and precedent to the obligations of
the Underwriters hereunder, which are required to be performed or fulfilled on
or prior to the Closing Date.
(j) At the time this Agreement is executed, and on each
Closing Date you shall have received a letter from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Co., LLP,
addressed to the Representative, as Representative of the Underwriters, and
dated, respectively, as of the date of this Agreement and as of each Closing
Date in form and substance reasonably satisfactory to the Representative, to
the effect that:
(i) They are independent public accountants within
the meaning of the Act and the applicable published Rules and Regulations of
the Commission;
(ii) In their opinion, the financial statements and
related schedules of the Company included in the Registration Statement and
Prospectus and covered by their reports comply as to form in all material
respects with the applicable accounting requirements of the Act and the
published Rules and Regulations of the Commission issued thereunder;
(iii) On the basis of limited procedures in
accordance with standards established by the American Institute of Certified
Public Accountants, including (1) a reading of the latest available financial
statements of the Company (a copy of which shall be attached to such letter),
(2) a reading of the latest available minutes of the meetings of the
stockholders and the Board of Directors of the Company as set forth in the
minute books of the Company, officials of the Company having advised you and
them that the minutes of all such meetings through that date were set forth
therein, (3) consultations with officials of the Company responsible for
financial and accounting matters of the Company, which procedures do not
constitute an examination in accordance with generally accepted accounting
standards, and would not necessarily reveal material adverse changes in the
financial position or results of operations or inconsistencies in the
application of generally accepted accounting principles, nothing has come to
their attention which in their judgment would lead them to believe that (a) the
unaudited financial statements and related schedules of the Company included in
the Registration Statement and Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act and
the published Rules and Regulations of the Commission issued thereunder, or
were not prepared in accordance with generally accepted accounting principles
and practices consistent in all material respects with those followed in the
preparation of the comparable financial statements and schedules covered by
their reports included in the Registration Statement and Prospectus, or would
require any material adjustments for a fair presentation of the information
purported to be shown thereby or (b) during the period from the date of the
Capitalization table included in the Prospectus to a specified date not more
than four business days prior to the date of such letter, there has been any
material change in the capital stock or debt of the Company, or (c) during the
period from the date of the latest balance sheet and related statements of
operations, changes in
23
stockholders' equity and changes in financial position included in the
Prospectus and covered by their reports contained therein to the date of the
letter, there has been any material adverse change in the financial condition,
or results of operations, of the Company; and
(iv) In addition to the examination referred to in
their reports included in the Registration Statement and the Prospectus and the
limited procedures referred to in clause (iii) above, they have carried out
certain specified procedures, not constituting an audit, with respect to
certain amounts, percentages and financial information which are derived from
the general accounting records of the Company which appear in the Prospectus
under the captions "Capitalization", "Management's Discussion and Analysis of
Financial Condition and Results of Operations", "Executive Compensation",
"Certain Transactions", "Selected Financial Data," "Dilution," and "Risk
Factors," as well as such other financial information as may be specified by
the Representative, and that they have compared such amounts, percentages and
financial information with the accounting records of the Company and have found
them to be in agreement.
(k) The Selling Security Holder shall have furnished to the
Representative on the Closing Date and the Additional Closing Date(s), if any,
insofar as it applies to the Selling Security Holder, such other certificates
of executive officers of PMF, Inc., additional to those specifically mentioned
herein, as the Representative may have reasonably requested, as to: the
accuracy and completeness of any statement in the Registration Statement or the
Prospectus, or in any amendment or supplement thereto; the representations and
warranties of the Selling Security Holder herein; the performance by the
Selling Security Holder of its obligations hereunder; or the fulfillment of the
conditions concurrent and precedent to the obligations of the Underwriters
hereunder, which are required to be performed or fulfilled on or prior to the
Closing Date.
All the opinions, letters, certificates and evidence
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and substance
reasonably satisfactory to counsel to the Underwriters, whose approval shall
not be unreasonably withheld, conditioned or delayed.
If any of the conditions specified in this Section shall not
have been fulfilled when and as required by this Agreement to be fulfilled,
this Agreement and all obligations of the Underwriters hereunder may be
terminated and canceled by the Representative by notifying the Company of such
termination and cancellation in writing or by telegram at any time prior to, or
on, the Closing Date and any such termination and cancellation shall be without
liability of any party hereto to any other party, except with respect to the
provisions of Sections 7 and 8 hereof. The Representative may, of course,
waive, in writing, any conditions which have not been fulfilled or extend the
time for their fulfillment.
SECTION 12. Termination.
24
(a) This Agreement may be terminated by the Representative by
written or telegraphic notice to the Company at any time before it becomes
effective pursuant to Section 10.
(b) This Agreement may be terminated by the Representative by
written or telegraphic notice to the Company, at any time after it becomes
effective, in the event that the Company or the Selling Security Holder, after
notice from the Representative and an opportunity to cure, shall have failed or
been unable to comply with any of the terms, conditions or provisions of this
Agreement on the part of the Company or the Selling Security Holder to be
performed, complied with or fulfilled within the respective times herein
provided for, including without limitation Section 6(g) hereof, unless
compliance therewith or performance or satisfaction thereof shall have been
expressly waived by the Representative in writing. This Agreement may also be
terminated if (i) qualifications are received or provided by the Company's
independent public accountants or attorneys or the Selling Security Holder's
attorneys to the effect of either inabilities in furnishing certifications as
to material items including, without limitation, information contained within
the footnotes to the financial statements, or as affecting matters incident to
the issuance and sale of the securities contemplated or as to corporate
proceedings or other matters or (ii) there is any action, suit or proceeding,
threatened or pending, at law or equity against the Company or the Selling
Security Holder, or by any Federal, State or other commission, board or agency
wherein any unfavorable result or decision could materially adversely affect
the business, property, or financial condition of the Company which was not
disclosed in the Prospectus.
(c) This Agreement may be terminated by the Representative by
written or telegraphic notice to the Company or the Selling Security Holder at
any time after it becomes effective, if the offering of, or the sale of, or the
payment for, or the delivery of, the Units is rendered impracticable or
inadvisable because (i) additional material governmental restriction, not in
force and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or trading in securities generally
on such exchange shall have been suspended or a general banking moratorium
shall have been established by Federal or New York State authorities or (ii) a
war or other national calamity shall have occurred involving the United States
or (iii) the condition of the market for securities in general shall have
materially and adversely changed, or (iv) the condition of any matter
materially affecting the Company or the Selling Security Holder or its business
or business prospects, is such that it would be undesirable, impractical or
inadvisable to proceed with, or consummate, this Agreement or the public
offering of the Units.
(d) Any termination of this Agreement pursuant to this
Section 12 shall be without liability of any character (including, but not
limited to, loss of anticipated profits or consequential damages) on the part
of any party hereto, except that the Company shall remain obligated to pay the
costs and expenses provided to be paid by it specified in Sections 6, 7 and 8,
to the extent therein provided. In addition, the Underwriter shall account to
the Company for any advance and shall reimburse the Company for any portion of
the advance not expended for actual out-of-pocket expenses. In the event that
the Representative
25
terminates this agreement pursuant to the provisions of Section 12(b), the
Representative shall be entitled to reimbursement of expenses on an accountable
basis.
SECTION 13. Finder. The Company, the Selling Security Holder and the
Underwriters mutually represent that they know of no person who rendered any
service in connection with the introduction of the Company to the Underwriters
and that they know of no claim by anyone for a "finder's fee" or similar type
of fee, in connection with the public offering which is the subject of this
Agreement. Each party hereby indemnifies the other against any such claims by
any person known to it, and not known to the other party hereto, who shall
claim to have rendered services in connection with the introduction of the
Company to the Underwriters and/or to have such a claim.
SECTION 14. Substitution of Underwriters.
(a) If one or more Underwriters default in its or their
obligations to purchase and pay for Units hereunder and if the aggregate amount
of such Units which all Underwriters so defaulting have agreed to purchase does
not exceed 10% of the aggregate number of Units constituting the Units, the
non-defaulting Underwriters shall have the right and shall be obligated
severally to purchase and pay for (in addition to the Units set forth opposite
their names in Schedule I) the full amount of the Units agreed to be purchased
by all such defaulting Underwriters and not so purchased, in proportion to
their respective commitments hereunder. In such event the Representative, for
the accounts of the several non-defaulting Underwriters, may take up and pay
for all or any part of such additional Units to be purchased by each such
Underwriter under this subsection (a), and may postpone the Closing Date to a
time not exceeding seven full business days; or
(b) If one or more Underwriters (other than the
Representative) default in its or their obligations to purchase and pay for the
Units hereunder and if the aggregate amount of such Units which all
Underwriters so defaulting shall have agreed to purchase shall exceed 10% of
the aggregate number of Units, or if one or more Underwriters for any reason
permitted hereunder cancel its or their obligations to purchase and pay for
Units hereunder, the non-canceling and non-defaulting Underwriters
(hereinafter called the "Remaining Underwriters") shall have the right, but
shall not be obligated to purchase such Units in such proportion as may be
agreed among them, at the Closing Date. If the Remaining Underwriters do not
purchase and pay for such Units at such Closing Date, the Closing Date shall be
postponed for one business day and the remaining Underwriters shall have the
right to purchase such Units, or to substitute another person or persons to
purchase the same or both, at such postponed Closing Date. If purchasers shall
not have been found for such Units by such postponed Closing Date, the Closing
Date shall be postponed for a further two business days and the Company and the
Selling Security Holder shall have the right to substitute another person or
persons, satisfactory to you to purchase such Units at such second postponed
Closing Date. If the Company and the Selling Security Holder shall not have
found such purchasers for such Units by such second postponed Closing Date,
then this Agreement shall automatically terminate and neither the Company, nor
the Selling Security Holder nor the remaining Underwriters (including the
Representative) shall be under any obligation under this
26
Agreement (except that the Company shall remain liable to the extent provided
in Section 7 hereof). As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 14.
Nothing in this subparagraph (b) will relieve a defaulting Underwriter from its
liability, if any, to the other Underwriters for damages occasioned by its
default hereunder (and such damages shall be deemed to include, without
limitation, all expenses reasonably incurred by each Underwriter in connection
with the proposed purchase and sale of the Units) or obligate any Underwriter
to purchase or find purchasers for any Units in excess of those agreed to be
purchased by such Underwriter under the terms of Sections 3 and 14 hereof.
SECTION 15. Registration of the Warrants and/or securities
underlying the Underwriters' Warrants. The Company agrees that it will, upon
request by the Representative or the holders of a majority of the Underwriters'
Warrants and Underlying Securities within the period commencing one year after
the Effective Date, and for a period of five years from the Effective Date, on
one occasion only at the Company's sole expense, cause the Underwriters'
Warrants and/or the Underlying Securities issuable upon exercise of the
Underwriters' Warrants, to be the subject of a post-effective amendment, a new
Registration Statement, if appropriate (hereinafter referred to as the "demand
Registration Statement"), so as to enable the Representative and/or its assigns
to offer publicly the Underwriters' Warrants and/or the Underlying Securities.
The Company agrees to register such securities expeditiously and, where
possible, within forty-five (45) business days after receipt of such requests.
The Company agrees to use its "best efforts" to cause the post-effective
amendment, new Registration Statement to become effective and for a period of
nine (9) months thereafter to reflect in the post-effective amendment, new
Registration Statement, financial statements which are prepared in accordance
with Section 10(a)(3) of the Act and any facts or events arising which,
individually or in the aggregate, represent a fundamental and/or material
change in the information set forth in such post-effective amendment or new
Registration Statement. The holders of the Underwriters' Warrants may demand
registration without exercising such Warrants and, in fact, are never required
to exercise same.
The Company understands and will agree that if, at
any time within the period commencing one year after the Effective Date and
ending seven years after the Effective Date of the Company's Registration
Statement, it should file a Registration Statement with the Commission pursuant
to the Securities Act, regardless of whether some of the holders of the
Underwriters' Warrants and Underlying Securities shall have theretofore availed
themselves of the right provided above, the Company, at its own expense, will
offer to said holders the opportunity to register the Underwriters' Warrants
and Underlying Securities. This paragraph is not applicable to a Registration
Statement filed by the Commission with the Commission on Form S-8 or any other
inappropriate form.
In addition to the rights above provided, the
Company will cooperate with the then holders of the Underwriters' Warrants and
Underlying Securities in preparing and signing a Registration Statement, on one
occasion only in addition to the Registration Statements discussed above,
required in order to sell or transfer the aforesaid Underwriters' Warrants and
Underlying Securities and will supply all information required therefor, but
such
27
additional Registration Statement shall be at the then Holders' cost and
expense unless the Company elects to register additional shares of the
Company's Common Stock in which case the cost and expense of such Registration
Statement will be prorated between the Company and the Holders of the
Underwriters' Warrants and Underlying Securities according to the aggregate
sales price of the securities being issued. The Holders of the Underwriters'
Warrants may include such Warrants in any such filing without exercising the
Underwriters' Warrants, and in fact, are never required to exercise same. The
Company can, at any time for any reason, withdraw any such registration except
in connection with a Registration Statement filed pursuant to the Company's
demand Registration Statement.
SECTION 16. Other Agreements.
(a) On the Effective Date, the Company will enter into an
agreement retaining the Representative as a financial consultant pursuant to
which the Representative shall receive a consulting fee in an amount equal to
$72,000 for services for two (2) years from the Effective Date, payable in full
in advance on the Closing Date, which shall include, but not be limited to,
advising the Company in connection with possible acquisition opportunities,
advising the Company regarding shareholder relations including the preparation
of the annual report and other releases, assisting in long-term financial
planning, advice in connection with corporate re-organizations and expansion
and capital structure, and other financial assistance.
(b) If the Company shall within five (5) years from the
Effective Date, enter into any agreement or understanding with any person or
entity introduced by the Representative involving (i) the sale of all or
substantially all of the assets and properties of the Company, (ii) the merger
or consolidation of the Company (other than a merger or consolidation effected
for the purpose of changing the Company's domicile) or (iii) the acquisition by
the Company of the assets or stock of another business entity, which agreement
or understanding is thereafter consummated, whether or not during such five (5)
year period, the Company, upon such consummation, shall pay to the
Representative an amount equal to the following percentages of the
consideration paid by the Company in connection with such transaction:
5% of the first $4,000,000 or portion thereof, of such
consideration;
4% of the next $1,000,000 or portion thereof, of such
consideration;
3% of the next $1,000,00 or portion thereof, of such
consideration; and
2% of such consideration in excess of the first $1,000,000 of
such consideration.
The fee payable to the Representative will be in the same form of
consideration as that paid by or to the Company, as the case may be, in any
such transactions.
(c) Commencing twelve months after the Effective Date, the
Company will pay the Representative as its Warrant solicitation agent an amount
equal to four percent (4%) of the aggregate exercise price of each Warrant
exercised of which a portion may be allowed to the dealer who solicited the
exercise (which may also be the Representative); provided: (1)
28
the market price of the Common Stock on the date the Warrant was exercised was
greater than the Warrant exercise price on that date; (2) exercise of the
Warrant was solicited by a member of the NASD and the NASD member is designated
in writing by the Warrant holder; (3) the Warrant was not held in a
discretionary account or prior specific written approval was obtained from the
related customer; (4) disclosure of compensation arrangements was made both at
the time of the offering and at the time of exercise of the Warrant; (5) the
solicitation of the exercise of the Warrant was not in violation of Rule 10b-6
promulgated under the Securities Exchange Act of 1934; and (6) solicitation is
in compliance with NASD Notice to Members 81-38. The Company agrees to pay
over to the Representative any fees due it within five business days after
receipt by the Company of Warrant proceeds. Within ten (10) days of the last
day of each month commencing one year from the Effective Date, the Company will
instruct the Warrant Agent to notify the Representative of each Warrant
certificate which has been properly completed and delivered for exercise by
holders of Warrants during each such month. The Company will instruct the
Transfer Agent that the Representative may at any time during business hours
upon reasonable advance written notice, at its expense, examine the records of
the Company and the Warrant Agent which relate to the exercise of the Warrants.
It is understood that this agreement is on an exclusive basis to solicit the
exercise of the Warrants and that the Company may not engage other
broker-dealers to solicit the exercise of Warrants without the consent of VTR.
It is understood that no solicitation fee will be paid where the Warrant
exercise was not solicited by VTR or another member of the NASD.
SECTION 17. Notice. Except as otherwise expressly provided in this
Agreement, (a) whenever notice is required by the provisions hereof to be given
to the Company, such notice shall be given in writing, by certified mail,
return receipt requested, addressed to the Company at the address set forth
herein on the first page, copy to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; b) whenever notice is
required by the provisions hereof to be given to the Selling Security Holder,
such notice shall be given in writing, by certified mail, return receipt
requested, addressed to the Selling Security Holder at_______________________, ,
copy to_______________________; and (c) whenever notice is required by the
provisions hereof to be given to the Underwriters, such notice shall be in
writing addressed to the Representative at VTR, at the address set forth herein
on the first page copy to ▇▇▇▇▇▇ ▇▇▇▇▇, Esq., ▇▇▇▇▇▇ ▇▇▇▇▇ P.C., Suite 420, ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. Any party may change the address for
notices to be sent by giving written notice to the other persons.
SECTION 18. Representations and Agreements to Survive Delivery. Except
as the context otherwise requires, all representations, warranties, covenants,
and agreements contained in this Agreement shall be deemed to be
representations, warranties, covenants, and agreements as at the date hereof
and as at the Closing Date and the Additional Closing Date(s), and all
representations, warranties, covenants, and agreements of the several
Underwriters, the Company and the Selling Security Holder, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any of the Underwriters or any of their controlling persons,
and shall survive any termination of this Agreement (whensoever made) and/or
delivery of the Units to the several Underwriters.
29
SECTION 19. Miscellaneous. This Agreement is made solely for the
benefit of the Underwriters, the Company and the Selling Security Holder 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 "successor" or
the term "successors and assigns" as used in this Agreement shall not include
any purchaser, as such, of any of the Units. This Agreement shall not be
assignable by any party without the other party's prior written consent. This
Agreement shall be binding upon, and shall inure to the benefit of, our
respective successors and permitted assigns. The foregoing represents the sole
and entire agreement between us with respect to the subject matter hereof and
supersedes any prior agreements between us with respect thereto. This Agreement
may not be modified, amended or waived except by a written instrument signed by
the party to be charged. The validity, interpretation and construction of this
Agreement, and of each part hereof, shall be governed by the internal laws of
the State of New York, without giving effect to the conflict of laws provisions
thereof.
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same instrument. If a party signs
this Agreement and transmits an electronic facsimile of the signature page to
the other party, the party who receives the transmission may rely upon the
electronic facsimile as a signed original of this Agreement.
30
If the foregoing is in accordance with your understanding
of our agreement, kindly sign and return to us a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between the Company, the Selling Security Holder and the Underwriters in
accordance with its terms.
Very truly yours,
SUPERIOR SUPPLEMENTS, INC.
By:
--------------------------------------
(authorized officer)
PMF, INC.
BY:
--------------------------------------
CONFIRMED AND ACCEPTED, as of the
date first above written:
VTR CAPITAL, INC.
By:
----------------------------------------------
For itself and as the Representative of the
other Underwriters named in Schedule I hereto.
31
SCHEDULE I
Underwriters Number of Units to be
------------ Purchased
---------------------
VTR Capital Inc.
--------
Total 500,000
32
