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EXHIBIT 1.1
1,600,000 Units
(each Unit consisting of (i) one share of Common Stock, par
value $.001 per share and (ii) one redeemable Class A warrant to purchase
one share of Common Stock)
PIRANHA INTERACTIVE PUBLISHING, INC.
UNDERWRITING AGREEMENT
X.X. Xxxxx Investment Banking Corp. September , 1997
As Representative of the Several Underwriters
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
PIRANHA INTERACTIVE PUBLISHING, INC., a Nevada corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
(the "Underwriters") subject to the terms and conditions of this Underwriting
Agreement (the "Agreement"), for whom you are acting as representative (the
"Representative") an aggregate of 1,600,000 Units, each unit being hereinafter
referred to as a "Unit" and consisting of (i) one share of Common Stock, par
value $.001 per share, ("Shares") and (ii) one redeemable Class A warrant
("Class A Warrant") to purchase one share of Common Stock at a price of $6.50
from August __, 1997 to August __, 2002. The Class A Warrants are referred to as
the "Warrants". The Warrants are subject to redemption, in certain instances
commencing one year from the date of this Agreement. In addition, the Company
proposes to grant to the Underwriters, (or, at its option, the Representative,
individually) the option referred to in Section 2(b) to purchase all or any part
of an aggregate of 240,000 additional Units. Unless the context otherwise
indicates, the term "Units" shall include the 240,000 additional Units referred
to above.
The aggregate of 1,600,000 Units to be sold by the Company, together
with all or any part of the 240,000 Units which the Underwriters have the option
to purchase, and the Shares and the Warrants comprising such Units, are herein
called the "Units." The Common Stock of the Company to be outstanding after
giving effect to the sale of the Shares is herein called the "Common Stock." The
Shares and Warrants included in the Units (including the Units which the
Underwriters have the option to purchase) are herein collectively called the
"Securities."
You have advised the Company that you and the other Underwriters
desire to purchase, severally, the Units, and that you have been authorized by
the Underwriters to execute this agreement on their behalf. The Company confirms
the agreements made by it with respect to the purchase of the Units by the
several Underwriters on whose behalf you are signing this Agreement as follows:
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriters that:
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(a) A registration statement (File No. 333-18605) on Form SB-2
relating to the public offering of the Units, including a form of prospectus
subject to completion, copies of which have heretofore been delivered to you,
has been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission under the Act
and one or more amendments to such registration statement may have been so
filed. After the execution of this Agreement, the Company will file with the
Commission either (i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the Act,
either (A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Units that shall identify the Preliminary
Prospectus (as hereinafter defined) that it supplements containing such
information as is required or permitted by Rules 434, 430A and 424(b) under the
Act or (B) if the Company does not rely on Rule 434 under the Act a prospectus
in the form most recently included in an amendment to such registration
statement (or, if no such amendment shall have been filed, in such registration
statement), with such changes or insertions as are required by Rule 430A under
the Act or permitted by Rule 424(b) under the Act and in the case of either
clause (i)(A) or (i)(B) of this sentence, as have been provided to and approved
by the Representative prior to the execution of this Agreement, or (ii) if such
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment has been
furnished to and approved by the Representative prior to the execution of this
Agreement.
As used in this Agreement, the term "Registration Statement" means
such registration statement, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and including
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); the term
"Prospectus" means (A) if the Company relies on Rule 434 under the Act, the Term
Sheet relating to the Units that is first filed pursuant to Rule 424(b)(7) under
the Act, together with the Preliminary Prospectus identified therein that such
Term Sheet supplements; (B) if the Company does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act or (C) if the Company does not rely on Rule 434 under the Act and
if no prospectus is required to be filed pursuant to said Rule 424(b), such term
means the prospectus included in the Registration Statement; except that if such
registration statement or prospectus is amended or such prospectus is
supplemented, after the effective date of such registration statement and prior
to the Option Closing Date (as hereinafter defined), the terms "Registration
Statement" and "Prospectus" shall include such registration statement and
prospectus as so amended, and the term "Prospectus" shall include the prospectus
as so supplemented, or both, as the case may be; and the term "Term Sheet" means
any term sheet that satisfies the requirements of Rule 434 under the Act. Any
reference to the "date" of a Prospectus that includes a Term Sheet shall mean
the date of such Term Sheet.
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(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. At the time the Registration Statement
becomes effective and at all times subsequent thereto up to and on the First
Closing Date (as hereinafter defined) or the Option Closing Date, as the case
may be, (i) the Registration Statement and Prospectus will in all respects
conform to the requirements of the Act and the Rules and Regulations; and (ii)
neither the Registration Statement nor the Prospectus will include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make statements therein not misleading; provided,
however, that the Company makes no representations, warranties or agreements as
to information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Underwriters specifically for
use in the preparation thereof. It is understood that the statements set forth
in the Prospectus on page 2 with respect to stabilization, under the heading
"Underwriting" and the identity of counsel to the Underwriters under the heading
"Legal Matters" constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in the Registration Statement
and Prospectus, as the case may be.
(c) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and is duly
qualified to do business as a foreign corporation and is in good standing in all
other jurisdictions in which the nature of its business or the character or
location of its properties requires such qualification, except where failure to
so qualify will not materially affect the Company's business, properties or
financial condition.
(d) The authorized, issued and outstanding capital stock of the
Company as of June 30, 1997 is as set forth in the Prospectus under
"Capitalization"; the shares of issued and outstanding capital stock of the
Company set forth thereunder have been duly authorized, validly issued and are
fully paid and non-assessable; except as set forth in the Prospectus, no
options, warrants, or other rights to purchase, agreements or other obligations
to issue, or agreements or other rights to convert any obligation into, any
shares of capital stock of the Company have been granted or entered into by the
Company; and the capital stock conforms to all statements relating thereto
contained in the Registration Statement and Prospectus.
(e) The Units and the Shares are duly authorized, and when issued
and delivered pursuant to this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights of any
security holder of the Company. Neither the filing of the Registration Statement
nor the offering or sale of the Units as contemplated in this Agreement gives
rise to any rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock, except as described
in the Registration Statement.
The Warrants have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed, issued and
delivered and will constitute valid
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and legally binding obligations of the Company enforceable in accordance with
their terms and entitled to the benefits provided by the warrant agreement
pursuant to which such Warrants are to be issued (the "Warrant Agreement"),
which will be substantially in the form filed as an exhibit to the Registration
Statement. The shares of Common Stock issuable upon exercise of the Warrants
have been reserved for issuance upon the exercise of the Warrants and when
issued in accordance with the terms of the Warrants and Warrant Agreement, will
be duly and validly authorized, validly issued, fully paid and non-assessable
and free of preemptive rights and no personal liability will attach to the
ownership thereof. The Warrant Agreement has been duly authorized and, when
executed and delivered pursuant to this Agreement, will have been duly executed
and delivered and will constitute the valid and legally binding obligation of
the Company enforceable in accordance with its terms. The Warrants and the
Warrant Agreement conform to the respective descriptions thereof in the
Registration Statement and Prospectus.
The Shares and the Warrants contained in the Unit Purchase Option
(as hereinafter defined) have been duly authorized and, when duly issued and
delivered, such Warrants will constitute valid and legally binding obligations
of the Company enforceable in accordance with their terms and entitled to the
benefits provided by the Unit Purchase Option. The Shares included in the Unit
Purchase Option (and the shares of Common Stock issuable upon exercise of such
Warrants) when issued and sold, will be duly authorized, validly issued, fully
paid and non-assessable and free of preemptive rights and no personal liability
will attach to the ownership thereof.
(f) This Agreement, the Unit Purchase Option, the M/A Agreement, the
Escrow Agreement have been duly and validly authorized, executed and delivered
by 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 no consent, approval, authorization or other order of any
governmental authority is required in connection with such authorization,
execution and delivery or with the authorization, issue and sale of the Units or
the Unit Purchase Option, except such as may be required under the Act or state
securities laws.
(g) Except as described in the Prospectus, the Company is not in
violation, breach or default of or under, and consummation of the transactions
herein contemplated and the fulfillment of the terms of this Agreement will not
conflict with, or result in a breach or violation of, any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or assets
of the Company pursuant to the terms of any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company is a party
or by which the Company may be bound or to which any of the property or assets
of the Company is subject, nor will such action result in any violation of the
provisions of the articles of incorporation or the by-laws of the Company, as
amended, or any statute or any order, rule or regulation applicable to the
Company of any court or of any regulatory authority or other governmental body
having jurisdiction over the Company.
(h) Subject to the qualifications stated in the Prospectus, the
Company
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has good and marketable title to all properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are not materially significant or important in
relation to its business; all of the material leases and subleases under which
the Company is the lessor or sublessor of properties or assets or under which
the Company holds properties or assets as lessee or sublessee as described in
the Prospectus are in full force and effect, and, except as described in the
Prospectus, the Company is not in default in any material respect with respect
to any of the terms or provisions of any of such leases or subleases, and no
claim has been asserted by anyone adverse to rights of the Company as lessor,
sublessor, lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the right of the Company to continued
possession of the leased or subleased premises or assets under any such lease or
sublease except as described or referred to in the Prospectus; and the Company
owns or leases all such properties described in the Prospectus as are necessary
to its operations as now conducted and, except as otherwise stated in the
Prospectus, as proposed to be conducted as set forth in the Prospectus.
(i) Coopers & Xxxxxxx LLP, independent auditors, who have given
their reports on certain financial statements filed and to be filed with the
Commission as a part of the Registration Statement, which are incorporated in
the Prospectus, are with respect to the Company, independent public accountants
as required by the Act and the Rules and Regulations.
(j) The financial statements, and Schedules together with related
notes, set forth in the Prospectus (or if the Prospectus is not in existence,
the most recent Preliminary Prospectus) or the Registration Statement present
fairly the financial position and results of operations and changes in cash flow
position of the Company on the basis stated in the Registration Statement, at
the respective dates and for the respective periods to which they apply. Said
statements and Schedules and related notes have been prepared in accordance with
generally accepted accounting principles applied on a basis which is consistent
during the periods involved. The information set forth under the captions
"Dilution", "Capitalization", and "Selected Financial Data" in the Prospectus
fairly present, on the basis stated in the Prospectus, the information included
therein.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), the Company has not
incurred any liabilities or obligations, direct or contingent, not in the
ordinary course of business, or entered into any transaction not in the ordinary
course of business, which is material to the business of the Company, and there
has not been any change in the capital stock of, or any incurrence of short-term
or long-term debt by, the Company or any issuance of options, warrants or other
rights to purchase the capital stock of the Company or any adverse change or any
development involving, so far as the Company can now reasonably foresee a
prospective adverse change in the condition (financial or other), net worth,
results of operations, business, key personnel or properties of it which would
be material to the business or financial condition of the Company and the
Company has not become a party to, and neither the business nor the property of
the Company has become the subject of, any material litigation whether or not in
the ordinary course of business.
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(l) Except as set forth in the Prospectus, there is not now pending
or, to the knowledge of the Company, threatened, any action, suit or proceeding
to which the Company is a party before or by any court or governmental agency or
body, which might result in any material adverse change in the condition
(financial or other), business prospects, net worth, or properties of the
Company, nor are there any actions, suits or proceedings related to
environmental matters or related to discrimination on the basis of age, sex,
religion or race; and no labor disputes involving the employees of the Company
exist or are imminent which might be expected to adversely affect the conduct of
the business, property or operations or the financial condition or results of
operations of the Company.
(m) Except as disclosed in the Prospectus, the Company has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid all taxes shown as due thereon; and there is no tax deficiency which has
been or to the knowledge of the Company might be asserted against the Company.
(n) The Company has sufficient licenses, permits and other
governmental authorizations currently required for the conduct of its business
or the ownership of its properties as described in the Prospectus and is in all
material respects complying therewith and owns or possesses adequate rights to
use all material patents, patent applications, trademarks, service marks,
trade-names, trademark registrations, service xxxx registrations, copyrights and
licenses necessary for the conduct of such business and had not received any
notice of conflict with the asserted rights of others in respect thereof. To the
best knowledge of the Company, none of the activities or business of the Company
are in violation of, or cause the Company to violate, any law, rule, regulation
or order of the United States, any state, county or locality, or of any agency
or body of the United States or of any state, county or locality, the violation
of which would have a material adverse impact upon the condition (financial or
otherwise), business, property, prospective results of operations, or net worth
of the Company.
(o) The Company has not, directly or indirectly, at any time (i)
made any contributions to any candidate for political office, or failed to
disclose fully any such contribution in violation of law or (ii) made any
payment to any state, federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments or contributions required or allowed by applicable law. The Company's
internal accounting controls and procedures are sufficient to cause the Company
to comply in all material respects with the Foreign Corrupt Practices Act of
1977, as amended.
(p) On the Closing Dates (hereinafter defined) all transfer or other
taxes, (including franchise, capital stock or other tax, other than income
taxes, imposed by any jurisdiction) if any, which are required to be paid in
connection with the sale and transfer of the Units to the several Underwriters
hereunder will have been fully paid or provided for by the Company and all laws
imposing such taxes will have been fully complied with.
(q) All contracts and other documents of the Company which are,
under the Rules and Regulations, required to be filed as exhibits to the
Registration Statement have been so filed.
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(r) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Units hereby.
(s) The Company has no subsidiaries.
(t) The Company has not entered into any agreement pursuant to which
any person is entitled either directly or indirectly to compensation from the
Company for services as a finder in connection with the proposed public
offering.
(u) Except as previously disclosed in writing by the Company to the
Representative, no officer, director or stockholder of the Company has any
affiliation or association with any member of the National Association of
Securities Dealers Inc. ("NASD").
(v) The Company is not, and upon receipt of the proceeds from the
sale of the Units will not be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
(w) The Company has not distributed and will not distribute prior to
the First Closing Date any offering material in connection with the offering and
sale of the Units other than the Preliminary Prospectus, Prospectus, the
Registration Statement or the other materials permitted by the Act, if any.
(x) The conditions for use of Form SB-2, as set forth in the General
Instructions thereto, have been satisfied.
(y) There are no business relationships or related-party
transactions of the nature described in Item 404 of Regulation S-B2 involving
the Company, the Subsidiaries and any person described in such Item that are
required to be disclosed in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and that have not been so
disclosed.
2. Purchase, Delivery and Sale of the Units.
(a) Subject to the terms and conditions of this Agreement, and
upon the basis of the representations, warranties, and agreements herein
contained, the Company agrees to issue and sell to the Underwriters, and each
such Underwriter agrees, severally and not jointly, to buy from the Company at
$4.525 per Unit, at the place and time hereinafter specified, the number of
Units set forth opposite the names of the Underwriters in Schedule A attached
hereto (the "First Units") plus any additional Units which such Underwriters may
become obligated to purchase pursuant to the provisions of Section 9 hereof. The
First Units shall consist of 1,600,000 Units to be purchased from the Company.
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Delivery of the First Units against payment therefor shall take
place at the offices of X.X. Xxxxx Investment Banking Corp., 00 Xxxx Xxxxxx, Xxx
Xxxx, X.X. (or at such other place as may be designated by agreement between you
and the Company) at 10:00 a.m., New York time, on , 1997, or at such
later time and date as you may designate, such time and date of payment and
delivery for the First Units being herein called the "First Closing Date."
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company hereby grants an option to the several
Underwriters (or, at its option, to the Representative, individually) to
purchase all or any part of an aggregate of an additional 240,000 Units at the
same price per Unit as the Underwriters shall pay for the First Units being sold
pursuant to the provisions of subsection (a) of this Section 2 (such additional
Units being referred to herein as the "Option Units"). This option may be
exercised within 45 days after the effective date of the Registration Statement
upon notice by the Representative to the Company advising as to the amount of
Option Units as to which the option is being exercised, the names and
denominations in which the certificates for such Option Units are to be
registered and the time and date when such certificates are to be delivered.
Such time and date shall be determined by the Representative but shall not be
earlier than four nor later than ten full business days after the exercise of
said option, nor in any event prior to the First Closing Date, and such time and
date is referred to herein as the "Option Closing Date." Delivery of the Option
Units against payment therefor shall take place at the offices of X.X. Xxxxx
Investment Banking Corp., 00 Xxxx Xxxxxx, Xxx Xxxx, X.X. The number of Option
Units to be purchased by each Underwriter, if any, shall bear the same
percentage to the total number of Option Units being purchased by the several
Underwriters pursuant to this subsection (b) as the number of Units such
Underwriter is purchasing bears to the total number of the First Units being
purchased pursuant to subsection (a) of this Section 2, as adjusted, in each
case by the Representative in such manner as the Representative may deem
appropriate. The Option granted hereunder may be exercised only to cover
overallotments in the sale by the Underwriters of First Units referred to in
subsection (a) above. In the event the Company declares or pays a dividend or
distribution on its Common Stock, whether in the form of cash, shares of Common
Stock or any other consideration, prior to the Option Closing Date, such
dividend or distribution shall also be paid on the Option Units on the Option
Closing Date.
(c) The Company will make the certificates for the securities
comprising the Units to be purchased by the Underwriters hereunder available to
you for checking at least two full business days prior to the First Closing Date
or the Option Closing Date (which are collectively referred to herein as the
"Closing Dates"). The certificates shall be in such names and denominations as
you may request, at least two full business days prior to the Closing Dates.
Time shall be of the essence and delivery at the time and place specified in
this Agreement is a further condition to the obligations of each Underwriter.
Definitive certificates in negotiable form for the Units to be
purchased by the Underwriters hereunder will be delivered by the Company to you
for the accounts of the several Underwriters against payment of the respective
purchase price by the several
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Underwriters, by certified or bank cashier's checks or, at the Representative's
option, by wire transfer in New York Clearing House funds, payable to the order
of the Company.
In addition, in the event the Underwriters (or the
Representative, individually) exercise the option to purchase from the Company
all or any portion of the Option Units pursuant to the provisions of subsection
(b) above, payment for such Units shall be made to or upon the order of the
Company by certified or bank cashier's checks or, at the Representative's
option, by wire transfer payable in New York Clearing House funds at the offices
of X.X. Xxxxx Investment Banking Corp., at the time and date of delivery of such
Units as required by the provisions of subsection (b) above, against receipt of
the certificates for such Units by the Representative for the respective
accounts of the several Underwriters registered in such names and in such
denominations as the Representative may request.
It is understood that you, individually and not as Representative
of the several Underwriters, may (but shall not be obligated to) make any and
all payments required pursuant to this Section 2 on behalf of any Underwriters
whose check or checks shall not have been received by the Representative at the
time of delivery of the Units to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter or
underwriters of any of its or their obligations hereunder. It is also understood
that you individually rather than all of the Underwriters may (but shall not be
obligated to) purchase the Option Units referred to in subsection (b) of this
Section 2, but only to cover overallotments.
It is understood that the several Underwriters propose to offer
the Units to be purchased hereunder to the public upon the terms and conditions
set forth in the Registration Statement, after the Registration Statement
becomes effective.
3. Covenants of the Company. The Company covenants and agrees with
the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible. If required,
the Company will file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 434 and 424(b) under the
Act. Upon notification from the Commission that the Registration Statement has
become effective, the Company will so advise you and will not at any time,
whether before or after the effective date, file the Prospectus, Term Sheet or
any amendment to the Registration Statement or supplement to the Prospectus of
which you shall not previously have been advised and furnished with a copy or to
which you or your counsel shall have objected in writing or which is not in
compliance with the Act and the Rules and Regulations. At any time prior to the
later of (A) the completion by all of the Underwriters of the distribution of
the Units contemplated hereby (but in no event more than nine months after the
date on which the Registration Statement shall have become or been declared
effective) and (B) 25 days after the date on which the Registration Statement
shall have become or been declared effective, the Company will prepare and file
with the Commission, promptly upon your request, any amendments or supplements
to the Registration Statement or Prospectus which, in your opinion,
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may be necessary or advisable in connection with the distribution of the Units.
As soon as the Company is advised thereof, the Company will
advise you, and confirm the advice in writing, of the receipt of any comments of
the Commission, of the effectiveness of any post-effective amendment to the
Registration Statement, of the filing of any supplement to the Prospectus or any
amended Prospectus, of any request made by the Commission for amendment of the
Registration Statement or for supplementing of the Prospectus or for additional
information with respect thereto, of the issuance by the Commission or any state
or regulatory body of any stop order or other order or threat thereof suspending
the effectiveness of the Registration Statement or any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Units for offering in any jurisdiction, or of the
institution of any proceedings for any of such purposes, and will use its best
efforts to prevent the issuance of any such order, and, if issued, to obtain as
soon as possible the lifting thereof.
The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company authorizes
the Underwriters and dealers to use the Prospectus in connection with the sale
of the Units for such period as in the opinion of counsel to the several
Underwriters the use thereof is required to comply with the applicable
provisions of the Act and the Rules and Regulations. In case of the happening,
at any time within such period as a Prospectus is required under the Act to be
delivered in connection with sales by an underwriter or dealer of any event of
which the Company has knowledge and which materially affects the Company or the
securities of the Company, or which in the opinion of counsel for the Company or
counsel for the Underwriters should be set forth in an amendment of the
Registration Statement or a supplement to the Prospectus in order to make the
statements therein not then misleading, in light of the circumstances existing
at the time the Prospectus is required to be delivered to a purchaser of the
Units or in case it shall be necessary to amend or supplement the Prospectus to
comply with law or with the Rules and Regulations, the Company will notify you
promptly and forthwith prepare and furnish to you copies of such amended
Prospectus or of such supplement to be attached to the Prospectus, in such
quantities as you may reasonably request, in order that the Prospectus, as so
amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material facts necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which they
are made, not misleading. The preparation and furnishing of any such amendment
or supplement to the Registration Statement or amended Prospectus or supplement
to be attached to the Prospectus shall be without expense to the Underwriters,
except that in case any Underwriter is required, in connection with the sale of
the Units to deliver a Prospectus nine months or more after the effective date
of the Registration Statement, the Company will upon request of and at the
expense of the Underwriter, amend or supplement the Registration Statement and
Prospectus and furnish the Underwriter with reasonable quantities of
prospectuses complying with Section 10(a)(3) of the Act.
The Company will comply with the Act, the Rules and Regulations
and the Securities Exchange Act of 1934 and the rules and regulations thereunder
in connection with
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the offering and issuance of the Units.
(b) The Company will use its best efforts to qualify to register
the Units for sale under the securities or "blue sky" laws of such jurisdictions
as the Representative may designate and will make such applications and furnish
such information as may be required for that purpose and to comply with such
laws, provided the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general consent of service
of process in any jurisdiction in any action other than one arising out of the
offering or sale of the Units. The Company will, from time to time, prepare and
file such statements and reports as are or may be required to continue such
qualification in effect for so long a period as the Representative may
reasonably request.
(c) If the sale of the Units provided for herein is not
consummated for any reason caused by the Company, the Company shall pay all
costs and expenses incident to the performance of the Company's obligations
hereunder, including but not limited to, all of the expenses itemized in Section
8, including the accountable out-of-pocket expenses of the Representative.
(d) The Company will use its best efforts to (i) cause a
registration statement under the Securities Exchange Act of 1934 to be declared
effective concurrently with the completion of this offering and will notify the
Representative in writing immediately upon the effectiveness of such
registration statement, and (ii) if requested by the Representative, to obtain a
listing on the Pacific Stock Exchange and to obtain and keep current a listing
in the Standard & Poors or Xxxxx'x Industrial OTC Manual.
(e) For so long as the Company is a reporting company under
either Section 12(g) or 15(d) of the Securities Exchange Act of 1934, the
Company, at its expense, will furnish to its stockholders an annual report
(including financial statements audited by independent public accountants), in
reasonable detail and at its expense, will furnish to you during the period
ending five (5) years from the date hereof, (i) as soon as practicable after the
end of each fiscal year, a balance sheet of the Company and any of its
subsidiaries as at the end of such fiscal year, together with statements of
income, surplus and cash flow of the Company and any subsidiaries for such
fiscal year, all in reasonable detail and accompanied by a copy of the
certificate or report thereon of independent accountants; (ii) as soon as
practicable after the end of each of the first three fiscal quarters of each
fiscal year, consolidated summary financial information of the Company for such
quarter in reasonable detail; (iii) as soon as they are available, a copy of all
reports (financial or other) mailed to security holders; (iv) as soon as they
are available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission or any securities exchange or
automated quotation system on which any class of securities of the Company is
listed; and (v) such other information as you may from time to time reasonably
request.
(f) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (e) above will
be on a consolidated basis to the extent the accounts of the Company and its
subsidiary or subsidiaries are consolidated in reports
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furnished to its stockholders generally.
(g) The Company will deliver to you at or before the First
Closing Date two signed copies of the Registration Statement including all
financial statements and exhibits filed therewith, and of all amendments
thereto, and will deliver to the several Underwriters such number of conformed
copies of the Registration Statement, including such financial statements but
without exhibits, and of all amendments thereto, as the several Underwriters may
reasonably request. The Company will deliver to or upon the order of the several
Underwriters, from time to time until the effective date of the Registration
Statement, as many copies of any Preliminary Prospectus filed with the
Commission prior to the effective date of the Registration Statement as the
Underwriters may reasonably request. The Company will deliver to the
Underwriters on the effective date of the Registration Statement and thereafter
for so long as a Prospectus is required to be delivered under the Act, from time
to time, as many copies of the Prospectus, in final form, or as thereafter
amended or supplemented, as the Underwriters may from time to time reasonably
request. The Company, not later than (i) 5:00 p.m., New York City time, on the
date of determination of the public offering price, if such determination
occurred at or prior to 12:00 noon, New York City time, on such date or (ii)
6:00 p.m., New York City time, on the business day following the date of
determination of the public offering price, if such determination occurred after
12:00 noon, New York City time, on such date, will deliver to the Underwriters,
without charge, as many copies of the Prospectus and any amendment or supplement
thereto as the Underwriters may reasonably request for purposes of confirming
orders that are expected to settle on the First Closing Date.
(h) The Company will make generally available to its security
holders and to the registered holders of its Warrants and deliver to you as soon
as it is practicable to do so but in no event later than 90 days after the end
of twelve months after its current fiscal quarter, an earnings statement (which
need not be audited) covering a period of at least twelve consecutive months
beginning after the effective date of the Registration Statement, which shall
satisfy the requirements of Section 11(a) of the Act.
(i) The Company will apply the net proceeds from the sale of the
Units for the purposes set forth under "Use of Proceeds" in the Prospectus, and
will file such reports with the Commission with respect to the sale of the Units
and the application of the proceeds therefrom as may be required pursuant to
Rule 463 under the Act.
(j) The Company will, promptly upon your request, prepare and
file with the Commission any amendments or supplements to the Registration
Statement, Preliminary Prospectus or Prospectus and take any other action, which
in the reasonable opinion of Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel to
the several Underwriters, may be reasonably necessary or advisable in connection
with the distribution of the Units, and will use its best efforts to cause the
same to become effective as promptly as possible.
(k) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Unit Purchase Option outstanding from time to time.
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Page 13
(l) For a period of 13 months from the First Closing Date, no
present stockholders of the Company (except for stockholders who at the date
hereof hold an aggregate of not more than 2% of the Company's common Stock), and
no officer or director of the Company, will directly or indirectly, offer, sell
(including any short sale), grant any option for the sale of, acquire any option
to dispose of, or otherwise dispose of any shares of Common Stock without the
prior written consent of the Representative. In order to enforce this covenant,
the Company shall obtain lock-up letters in form satisfactory to the
Representative and impose stop-transfer instructions with respect to the shares
owned by such officer, director or stockholder until the end of such period.
(m) Prior to completion of this offering, the Company will make
all filings required, including registration under the Securities Exchange Act
of 1934, to obtain the listing of the Units, Common Stock, and Warrants on the
Nasdaq Small Cap Market (or a listing on such other market or exchange as the
Representative consent to), and will use its best efforts to effect and maintain
such listing for at least five years from the date of this Agreement.
(n) The Company and each of the Principal Stockholders represents
that it or he has not taken and agree that it or he will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in the stabilization or manipulation
of the price of the Units, Shares or the Warrants or to facilitate the sale or
resale of the Securities.
(o) On the First Closing Date and simultaneously with the
delivery of the Units, the Company shall execute and deliver to you the Unit
Purchase Option. The Unit Purchase Option will be substantially in the form of
the Representative's Unit Purchase Option filed as an Exhibit to the
Registration Statement (the "Unit Purchase Option").
(p) During the 18 month period commencing on the date of this
Agreement, the Company will not, without the prior written consent of the
Representative, (A) grant options to employees, officers or directors to
purchase shares of Common Stock at an exercise price less than the greater of
(i) the initial public offering price of the Units (without allocating any value
to the Warrants); and (ii) the fair market value of the Common Stock on the date
of grant or (B) issue any shares of Common Stock to its employees, officers or
directors at less than the greater of such prices or (C) grant options to
purchase shares of Common Stock (or issue shares of Common Stock) to any other
person at less than the fair market value on the date of grant or issuance
(which may be based on an average over a reasonable period prior to the date of
issuance and subsequent to the effective date of the Registration Statement.
During the three year period from the First Closing Date, the Company will not,
without the prior written consent of the Representative, offer or sell any of
its securities pursuant to Regulation S under the Act; (iii) grant registration
rights to any person which are exercisable sooner than 13 months from the First
Closing Date; or (iv) issue any securities which have per share voting rights
greater than the voting rights of the Shares (or take any corporate action which
would have this effect).
(q) Xxxxxxx X. Xxxxxxx shall be President and Xxxxx Xxxxxxxxx
shall
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Page 14
be the Chief Financial Officer of the Company on the Closing Dates. The Company
has obtained key person life insurance on the lives of each of Messrs. Xxxxxxx
X. Xxxxxxx, Xxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx and Xxxxxxx Xxxxxxx in an amount of
not less than $2 million and will use its best efforts to maintain such
insurance during the period commencing with the First Closing and ending on the
three year anniversary of such date. In the event such term of employment is
less than three years, the Company will use its best efforts to obtain a
comparable policy on the life of the such individual's successor for the balance
of the three year period. For a period of six months from the First Closing
Date, the compensation of the executive officers of the Company shall not be
increased from the compensation levels disclosed in the Prospectus.
(r) On the Closing Date and simultaneously with the delivery of
the Units the Company shall execute and deliver to you, individually and not as
representative of the Underwriters, an agreement with you regarding mergers,
acquisitions, joint ventures and certain other forms of transactions, in the
form previously delivered to the Company by you (the "M/A Agreement").
(s) So long as any Warrants are outstanding, the Company shall
use its best efforts to cause post-effective amendments to the Registration
Statement to become effective in compliance with the Act and without any lapse
of time between the effectiveness of any such post-effective amendments and
cause a copy of each Prospectus, as then amended, to be delivered to each holder
of record of a Warrant and to furnish to the several Underwriters and dealers as
many copies of each such Prospectus as such Underwriter or dealer may reasonably
request. The Company shall not call for redemption any of the Warrants unless a
registration statement covering the securities underlying the Warrants has been
declared effective by the Commission and remains current at least until the date
fixed for redemption. In addition, for so long as any Warrant is outstanding,
the Company will promptly notify the Representative of any material change in
the business, financial condition or prospects of the Company.
(t) Upon the exercise of any Warrant or Warrants after September
, 1997, the Company will pay X.X. Xxxxx Investment Banking Corp. a fee of 5% of
the aggregate exercise price of the Warrants, a portion of which may be
reallowed to the dealer who solicited in writing the exercise (which may also be
the Representative) if (i) the market price of the Company's Common Stock is
greater than the exercise price of the Warrants on the date of exercise; (ii)
the exercise of the Warrant was solicited by a member of the National
Association of Securities Dealers, Inc., (iii) the Warrant is not held in a
discretionary account; (iv) the disclosure of compensation arrangements has been
made in documents provided to customers, both as part of the original offering
and at the time of exercise, and (v) the solicitation of the Warrant was not in
violation of Rule 10b-6 promulgated under the Securities Exchange Act of 1934,
as amended. The Company agrees not to solicit the exercise of any Warrants other
than through X.X. Xxxxx Investment Banking Corp. and will not authorize any
other dealer to engage in such solicitation without the prior written consent of
X.X. Xxxxx Investment Banking Corp., unless X.X. Xxxxx Investment Banking Corp.
refuses or is unable to solicit such exercise.
(u) For a period of five (5) years from the Effective Date the
Company (i) at its expense, shall cause its regularly engaged independent
certified public accountants to
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Page 15
review (but not audit) the Company's financial statements for each of the first
three (3) fiscal quarters prior to the announcement of quarterly financial
information, the filing of the Company's 10-Q quarterly report and the mailing
of quarterly financial information to stockholders and the Company shall not
change its accounting firm to other than another Big Six firm without the prior
written consent of the Chairman or the President of the Representative.
(v) As promptly as practicable after the Closing Date, the
Company will prepare, at its own expense, hard cover "bound volumes" relating to
the offering, and will distribute at least four of such volumes to the
individuals designated by the Representative or counsel to the Representative.
(w) For a period of five years from the First Closing Date the
Representative shall have the right, but not the obligation, to designate one
director of the Board of Directors of the Company. Prior to the First Closing
Date, the Company shall engage a public relations firm.
(x) The Company shall, for a period of six years after date of
this Agreement, submit such reports to the Secretary of the Treasury and to
stockholders, as the Secretary may require, pursuant to Section 1202 of the
Internal Revenue Code, as amended, or regulations promulgated thereunder, in
order for the Company to qualify as a "small business" so that if the Company
qualifies, stockholders may realize special tax treatment with respect to their
investment in the Company. The Company does not represent or warrant that it is
a "small business" within the meaning of Section 1202 of the Code.
(y) The Company shall within nine months after the effective date
of the Registration Statement file a registration statement, registering the
sale of 750,000 Class A Warrants issuable upon the automatic conversion of the
warrants acquired by certain securityholders in the Company's private placement
in November and December 1996 (the "Selling Securityholders"), and registering
the issuance of Common Stock on exercise of such Class A Warrants, and shall
cause such registration statement to go effective within twelve months after the
effective date of the Registration Statement.
(z) With respect to the Selling Securityholders, the Company will
send all post-effective amendments or prospectus supplements disclosing actual
price and selling terms to the NASD concurrently with the filing thereof with
the Commission. The Company will notify the Representative and the NASD if the
Company becomes aware that any 5% or greater stockholder of the Company becomes
an affiliated or associated person of an NASD member participating in the
distribution of this offering.
(aa) On the First Closing Date, the right of first refusal
granted to the Underwriter pursuant to the Agency Agreement between the Company
and the Representative dated November 13, 1996 shall terminate.
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Page 16
4. Conditions of the Underwriters' Obligation. The obligations of
the several Underwriters to purchase and pay for the Units which they have
respectively agreed to purchase hereunder, are subject to the accuracy (as of
the date hereof, and as of the Closing Dates) of and compliance with the
representations and warranties of the Company herein, to the performance by the
Company of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and
you shall have received notice thereof not later than 10:00 A.M., New
York time, on the date on which the amendment to the registration
statement originally filed with respect to the Units or to the
Registration Statement, as the case may be, containing information
regarding the initial public offering price of the Units has been filed
with the Commission, or such later time and date as shall have been
agreed to by the Representative; if required, the Prospectus or any
Term Sheet that constitutes a part thereof and any amendment or
supplement thereto shall have been filed with the Commission in the
manner and within the time period required by Rule 434 and 424(b) under
the Act; on or prior to the Closing Dates no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that or a similar purpose shall have been instituted
or shall be pending or, to your knowledge or to the knowledge of the
Company, shall be contemplated by the Commission; any request on the
part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of Bachner, Tally, Xxxxxxx
& Xxxxxx LLP, counsel to the Underwriters;
(b) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of Squire, Xxxxxxx &
Xxxxxxx L.L.P., counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Nevada, with full corporate power and
authority to own its properties and conduct its business as
described in the Registration Statement and Prospectus and is
duly qualified or licensed to do business as a foreign
corporation and is in good standing in Arizona and in each
other jurisdiction in which the ownership or leasing of its
properties or conduct of its business requires such
qualification;
(ii) to the best knowledge of such counsel, (a) the
Company has obtained, or is in the process of obtaining, all
licenses, permits and other governmental authorizations
necessary to the conduct of its business as described in the
Prospectus, (b) such licenses, permits and other governmental
authorizations obtained are in full force and effect, and (c)
the Company is in all material respects complying therewith;
(iii) the authorized capitalization of the Company as
of June 30,
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Page 17
1997 is as set forth under "Capitalization" in the Prospectus;
all shares of the Company's outstanding stock requiring
authorization for issuance by the Company's board of directors
have been duly authorized, validly issued, are fully paid and
non-assessable and conform to the description thereof
contained in the Prospectus; the outstanding shares of Common
Stock of the Company have not been issued in violation of the
preemptive rights of any shareholder and the shareholders of
the Company do not have any preemptive rights or other rights
to subscribe for or to purchase, nor are there any
restrictions upon the voting or transfer of any of the Stock,
except with respect to the shares that are subject to the
irrevocable Proxy Agreement and the Voting Trust described in
the Prospectus; the Common Stock, the Warrants, the Unit
Purchase Option and the Warrant Agreement conform to the
respective descriptions thereof contained in the Prospectus;
the Shares have been, and the shares of Common Stock to be
issued upon exercise of the Warrants and the Unit Purchase
Option, upon issuance in accordance with the terms of such
Warrants, the Warrant Agreement and Unit Purchase Option have
been duly authorized and, when issued and delivered, will be
duly and validly issued, fully paid, non-assessable, free of
preemptive rights and no personal liability will attach to the
ownership thereof; all prior sales by the Company of the
Company's securities have been made in compliance with or
under an exemption from registration under the Act and
applicable state securities laws and no shareholders of the
Company have any rescission rights with respect to Company
securities; a sufficient number of shares of Common Stock has
been reserved for issuance upon exercise of the Warrants and
Unit Purchase Option and to the best of such counsel's
knowledge, neither the filing of the Registration Statement
nor the offering or sale of the Units as contemplated by this
Agreement gives rise to any registration rights or other
rights, other than those which have been waived or satisfied
for or relating to the registration of any shares of Common
Stock;
(iv) this Agreement, the Unit Purchase Option, the
Warrant Agreement and the M/A Agreement have been duly and
validly authorized, executed and delivered by the Company and,
assuming due execution by each other party hereto or thereto,
each constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
respective terms (except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application
of equitable principles in any action, legal or equitable, and
except as rights to indemnity or contribution may be limited
by applicable law;
(v) the certificates evidencing the shares of Common
Stock are in valid and proper legal form; the Warrants will be
exercisable for shares
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Page 18
of Common Stock of the Company in accordance with the terms of
the Warrants and at the prices therein provided for; at all
times during the term of the Warrants the shares of Common
Stock of the Company issuable upon exercise of the Warrants
have been duly authorized and reserved for issuance upon such
exercise and such shares, when issued upon such exercise in
accordance with the terms of the Warrants and at the price
provided for, will be duly and validly issued, fully paid and
non-assessable;
(vi) such counsel knows of no pending or threatened
legal or governmental proceedings to which the Company is a
party which could materially adversely affect the business,
property, financial condition or operations of the Company; or
which question the validity of the Securities, this Agreement,
the Warrant Agreement, the Unit Purchase Option or the M/A
Agreement, or of any action taken or to be taken by the
Company pursuant to this Agreement, the Warrant Agreement, the
Unit Purchase Option or the M/A Agreement, and no such
proceedings are known to such counsel to be contemplated
against the Company; there are no governmental proceedings or
regulations required to be described or referred to in the
Registration Statement which are not so described or referred
to;
(vii) Company is not in violation of or default
under, nor will the execution and delivery of this Agreement,
the Unit Purchase Option, the Warrant Agreement or the M/A
Agreement and the incurrence of the obligations herein and
therein set forth and the consummation of the transactions
herein or therein contemplated, result in a breach or
violation of, or constitute a default under the certificate or
articles of incorporation or by-laws, in the performance or
observance of any material obligations, agreement, covenant or
condition contained in any bond, debenture, note or other
evidence of indebtedness or in any contract, indenture,
mortgage, loan agreement, lease, joint venture or other
agreement or instrument to which the Company is a party or by
which it or any of its properties may be bound or in violation
of any material order, rule, regulation, writ, injunction, or
decree of any government, governmental instrumentality or
court, domestic or foreign;
(viii) the Registration Statement has become
effective under the Act, and to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for
that purpose have been instituted or are pending before, or
threatened by, the Commission; the Registration Statement and
the Prospectus (except for the financial statements and other
financial data contained therein, or omitted therefrom, as to
which such counsel need express no opinion) comply as to form
in all material respects with the applicable requirements of
the Act and the Rules and Regulations;
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Page 19
(ix) such counsel has participated in the preparation
of the Registration Statement and the Prospectus and nothing
has come to the attention of such counsel to cause such
counsel to have reason to believe that the Registration
Statement or any amendment thereto at the time it became
effective or as of the Closing Dates contained any untrue
statement of a material fact required to be stated therein or
omitted to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading or that the Prospectus or any supplement thereto
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make statements
therein, in light of the circumstances under which they were
made, not misleading (except, in the case of both the
Registration Statement and any amendment thereto and the
Prospectus and any supplement thereto, for the financial
statements, notes thereto and other financial information and
schedules contained therein, as to which such counsel need
express no opinion);
(x) all descriptions in the Registration Statement
and the Prospectus, and any amendment or supplement thereto,
of contracts and other documents are accurate and fairly
present the information required to be shown, and such counsel
is familiar with all contracts and other documents referred to
in the Registration Statement and the Prospectus and any such
amendment or supplement or filed as exhibits to the
Registration Statement, and such counsel does not know of any
contracts or documents of a character required to be
summarized or described therein or to be filed as exhibits
thereto which are not so summarized, described or filed;
(xi) no authorization, approval, consent, or license
of any governmental or regulatory authority or agency is
necessary in connection with the authorization, issuance,
transfer, sale or delivery of the Units by the Company, in
connection with the execution, delivery and performance of
this Agreement by the Company or in connection with the taking
of any action contemplated herein, or the issuance of the Unit
Purchase Option or the Securities underlying the Unit Purchase
Option, other than registrations or qualifications of the
Units under applicable state or foreign securities or Blue Sky
laws and registration under the Act;
(xii) the statements in the Registration Statement
under the captions "Business", "Use of Proceeds",
"Management", and "Description of Securities" have been
reviewed by such counsel and insofar as they refer to
descriptions of agreements, statements of law, descriptions of
statutes, licenses, rules or regulations or legal conclusions,
are correct in all material respects;
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Page 20
(xiii) the Units, the Common Stock and the Warrants
have been duly authorized for quotation on the Nasdaq Small
Cap Market and
(xiv) to such counsel's knowledge, there are no
business relationships or related-party transactions of the
nature described in Item 404 of Regulation S-B2 involving the
Company, any Subsidiary and any person described in such Item
that are required to be disclosed in the Prospectus and which
have not been so disclosed.
(c) All corporate proceedings and other legal matters relating
to this Agreement, the Registration Statement, the Prospectus and other related
matters shall be satisfactory to or approved by Bachner, Tally, Xxxxxxx & Xxxxxx
LLP, counsel to the Underwriters, and you shall have received from such counsel
a signed opinion, dated as of the First Closing Date, together with copies
thereof for each of the other Underwriters, with respect to the validity of the
issuance of the Units, the form of the Registration Statement and Prospectus
(other than the financial statements and other financial data contained
therein), the execution of this Agreement and other related matters as you may
reasonably require. The Company shall have furnished to counsel for the several
Underwriters such documents as they may reasonably request for the purpose of
enabling them to render such opinion.
(d) You shall have received a letter prior to the effective
date of the Registration Statement and again on and as of the First Closing Date
from Coopers & Xxxxxxx LLP, independent public accountants for the Company,
substantially in the form approved by you, and including estimates of the
Company's revenues and results of operations for the period ending at the end of
the month immediately preceding the effective date and results of the comparable
period during the prior fiscal year.
(e) At the Closing Dates, (i) the representations and
warranties of the Company contained in this Agreement shall be true and correct
with the same effect as if made on and as of the Closing Dates and the Company
shall have performed all of its obligations hereunder and satisfied all the
conditions on its part to be satisfied at or prior to such Closing Date; (ii)
the Registration Statement and the Prospectus and any amendments or supplements
thereto shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all material
respects conform to the requirements thereof, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading; (iii) there shall have been, since the respective dates as of
which information is given, no material adverse change, or any development
involving a prospective material adverse change, in the business, properties,
condition (financial or otherwise), results of operations, capital stock,
long-term or short-term debt or general affairs of the Company from that set
forth in the Registration Statement and the Prospectus, except changes which the
Registration Statement and Prospectus indicate might occur after the effective
date of the Registration Statement, and the Company shall not have incurred any
material liabilities or entered into any agreement not in the ordinary course of
business other than as referred to in the Registration Statement and Prospectus;
and (iv) except as set forth in the Prospectus, no action, suit or
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Page 21
proceeding at law or in equity shall be pending or threatened against the
Company which would be required to be set forth in the Registration Statement,
and no proceedings shall be pending or threatened against the Company before or
by any commission, board or administrative agency in the United States or
elsewhere, wherein an unfavorable decision, ruling or finding would materially
and adversely affect the business, property, condition (financial or otherwise),
results of operations or general affairs of the Company, and (v) you shall have
received, at the First Closing Date, a certificate signed by each of the
Chairman of the Board or the President and the principal financial or accounting
officer of the Company, dated as of the First Closing Date, evidencing
compliance with the provisions of this subsection (e).
(f) Upon exercise of the option provided for in Section 2(b)
hereof, the obligations of the several Underwriters (or, at its option, the
Representative, individually) to purchase and pay for the Option Units referred
to therein will be subject (as of the date hereof and as of the Option Closing
Date) to the following additional conditions:
(i) The Registration Statement shall remain effective
at the Option Closing Date, and no stop order suspending the
effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been instituted or
shall be pending, or, to your knowledge or the knowledge of
the Company, shall be contemplated by the Commission, and any
reasonable request on the part of the Commission for
additional information shall have been complied with to the
satisfaction of Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel
to the Underwriters.
(ii) At the Option Closing Date there shall have been
delivered to you the signed opinion of Squire, Xxxxxxx &
Xxxxxxx L.L.P., counsel for the Company, dated as of the
Option Closing Date, in form and substance satisfactory to
Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel to the several
Underwriters, together with copies of such opinion for each of
the other several Underwriters, which opinion shall be
substantially the same in scope and substance as the opinion
furnished to you at the First Closing Date pursuant to Section
4(b) hereof, except that such opinion, where appropriate,
shall cover the Option Units.
(iii) At the Option Closing Date there shall have
been delivered to you a certificate of the Chairman of the
Board or the President and the principal financial or
accounting officer of the Company, dated the Option Closing
Date, in form and substance satisfactory to Bachner, Tally,
Xxxxxxx & Xxxxxx LLP, counsel to the several Underwriters,
substantially the same in scope and substance as the
certificate furnished to you at the First Closing Date
pursuant to Section 4(e) hereof.
(iv) At the Option Closing Date there shall have been
delivered to you a letter in form and substance satisfactory
to you from Coopers & Xxxxxxx LLP, dated the Option Closing
Date and addressed to the
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Page 22
Underwriters confirming the information in their letter
referred to in Section 4(d) hereof and stating that nothing
has come to their attention during the period from the ending
date of their review referred to in said letter to a date not
more than five business days prior to the Option Closing Date,
which would require any change in said letter if it were
required to be dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the
Option Units shall be satisfactory in form and substance to
you, and you and Bachner, Tally, Xxxxxxx & Xxxxxx LLP, counsel
to the several Underwriters, shall have been furnished with
all such documents, certificates, and opinions as you may
request in connection with this transaction in order to
evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company or
its compliance with any of the covenants or conditions
contained herein.
(g) No action shall have been taken by the Commission or the
NASD the effect of which would make it improper, at any time prior to the
Closing Date, for members of the NASD to execute transactions (as principal or
agent) in the Units, Common Stock or the Warrants and no proceedings for the
taking of such action shall have been instituted or shall be pending, or, to the
knowledge of the Representative or the Company, shall be contemplated by the
Commission or the NASD. The Company represents that at the date hereof it has no
knowledge that any such action is in fact contemplated by the Commission or the
NASD. The Company shall have advised the Underwriters of any NASD affiliation of
any of its officers, directors, stockholders or their affiliates.
(h) If any of the conditions herein provided for in this
Section shall not have been fulfilled as of the date indicated, this Agreement
and all obligations of the several Underwriters under this Agreement may be
cancelled at, or at any time prior to, each Closing Date by the Representative.
Any such cancellation shall be without liability of the Underwriters to the
Company.
5. Conditions of the Obligations of the Company. The obligation
of the Company to sell and deliver the Units is subject to the condition that at
the Closing Dates, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued under the Act or any proceedings
therefor initiated or threatened by the Commission.
If the condition to the obligations of the Company provided for
in this Section have been fulfilled on the First Closing Date but are not
fulfilled after the First Closing Date and prior to the Option Closing Date,
then only the obligation of the Company to sell and deliver the Units on
exercise of the option provided for in Section 2(b) hereof shall be affected.
6. Indemnification.
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(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees), to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, and will reimburse, as incurred,
such Underwriters and such controlling persons for any legal or other expenses
reasonably incurred in connection with investigating, defending against or
appearing as a third party witness in connection with any losses, claims,
damages or liabilities, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in (A) the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, (B) any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify any or all of the Units under the securities laws thereof (any
such application, document or information being hereinafter called a "Blue Sky
Application"), or arise out of or are based upon the omission or alleged
omission to state in the Registration Statement, any Preliminary Prospectus,
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
not be liable in any such case to the extent, but only to the extent, that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Underwriters specifically for use in the
preparation of the Registration Statement or any such amendment or supplement
thereof or any such Blue Sky Application or any such preliminary Prospectus or
the Prospectus or any such amendment or supplement thereto. This indemnity will
be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally, but not jointly, will
indemnify and hold harmless the Company, each of its directors, each nominee (if
any) for director named in the Prospectus, each of its officers who have signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of the Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include, but not
be limited to, all costs of defense and investigation and all attorneys' fees)
to which the Company or any such director, nominee, officer or controlling
person may become subject under the Act or otherwise, and will reimburse, as
incurred, the Company and each of the aforementioned persons for any legal or
other expenses reasonably incurred in connection with investigating, defending
against or appearing as a third party witness in connection with any losses,
claims damages or liabilities, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in any Blue Sky Application or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to
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the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or in any
Blue Sky Application (i) in reliance upon and in conformity with written
information furnished to the Company by you or by any Underwriter through you
specifically for use in the preparation thereof and (ii) relates to the
transactions effected by the Underwriters in connection with the offer and sale
of the Units contemplated hereby. This indemnity agreement will be in addition
to any liability which the Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify in writing the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that the fees and expenses of such counsel shall
be at the expense of the indemnifying party if (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying party or
(ii) the named parties to any such action (including any impleaded parties)
include both the Indemnified Party and the indemnifying party and in the
judgment of the Indemnified Party, it is advisable for the Indemnified Party to
be represented by separate counsel (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
Indemnified Party, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for the Indemnified Party,
which firm shall be designated in writing by the Indemnified Party). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnifying party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnifying party.
7. Contribution.
In order to provide for just and equitable contribution under the
Act in any case in which (i) any Underwriter makes claim for indemnification
pursuant to Section 6 hereof but it is
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judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such
case, notwithstanding the fact that the express provisions of Section 6 provide
for indemnification in such case, or (ii) contribution under the Act may be
required on the part of any Underwriter, then the Company and any such
Underwriter shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees) in either such case (after
contribution from others) in such proportions that all such Underwriters are
responsible in the aggregate for that portion of such losses, claims, damages or
liabilities represented by the percentage that the underwriting discount per
Unit appearing on the cover page of the Prospectus bears to the public offering
price appearing thereon, and the Company shall be responsible for the remaining
portion, provided, however, that if such allocation is not permitted by
applicable law then the relative fault of the Company and the Underwriters and
controlling persons, in the aggregate, in connection with the statements or
omissions which resulted in such damages and other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether in the case of an untrue statement of a material fact or
the omission to state a material fact, such statement or omission relates to
information supplied by the Company, or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the Underwriters
agree (a) that it would not be just and equitable if the respective obligations
of the Company and the Underwriters to contribute pursuant to this Section 7
were to be determined by pro rata or per capita allocation of the aggregate
damages (even if the Underwriters in the aggregate were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this Section 7 and (b) that the contribution of each contributing Underwriter
shall not be in excess of its proportionate share (based on the ratio of the
number of Units purchased by such Underwriter to the number of Units purchased
by all contributing Underwriters) of the portion of such losses, claims, damages
or liabilities for which the Underwriters are responsible. No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of determining who is entitled to
receive contribution pursuant to the terms of this paragraph, the word "Company"
and the word "Underwriter" includes any officer, director, or person who
controls the Company or the Underwriters within the meaning of Section 15 of the
Act. If the full amount of the contribution specified in this paragraph is not
permitted by law, then any Underwriter and each person who controls such
Underwriter shall be entitled to contribution from the Company to the full
extent permitted by law and the Company and each person who controls the Company
shall be entitled to contribution from the Underwriters to the full extent
permitted by law. The foregoing contribution agreement shall in no way affect
the contribution liabilities of any persons having liability under Section 11 of
the Act other than the Company and the Underwriters. No contribution shall be
requested with regard to the settlement of any matter from any party who did not
consent to the settlement; provided, however, that such consent shall not be
unreasonably withheld in light of all factors of importance to such party.
8. Costs and Expenses.
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(a) Whether or not this Agreement becomes effective or the
sale of the Units to the Underwriters is consummated, the Company will pay all
costs and expenses incident to the performance of this Agreement by the Company
including, but not limited to, the fees and expenses of counsel to the Company
and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the Registration
Statement (including the financial statements therein and all amendments and
exhibits thereto), Preliminary Prospectus and the Prospectus, as amended or
supplemented, or the Term Sheet, the fee of the NASD in connection with the
filing required by the NASD relating to the offering of the Units contemplated
hereby; all expenses, including reasonable fees and disbursements of counsel to
the Underwriters (not to exceed $25,000), in connection with the qualification
of the Units under the state securities or blue sky laws which the
Representative shall designate; the cost of printing and furnishing to the
several Underwriters copies of the Registration Statement, each Preliminary
Prospectus, the Prospectus, this Agreement, the Agreement among Underwriters,
Selling Agreement, Underwriters' Questionnaire, Underwriters' Power of Attorney
and the Blue Sky Memorandum, any fees relating to the listing of the Units,
Common Stock and Warrants on the Nasdaq Small Cap Market or any other securities
exchange, the cost of printing the certificates representing the securities
comprising the Units, the fees of the transfer agent and warrant agent the cost
of publication of at least two "tombstones" of the offering (at least one of
which shall be in national business newspaper and one of which shall be in a
major New York newspaper) and the cost of preparing at least four hard cover
"bound volumes" relating to the offering, in accordance with the
Representative's request. The Company shall pay any and all taxes (including any
transfer, franchise, capital stock or other tax imposed by any jurisdiction) on
sales to the Underwriters hereunder. The Company will also pay all costs and
expenses incident to the furnishing of any amended Prospectus or of any
supplement to be attached to the Prospectus as called for in Section 3(a) of
this Agreement except as otherwise set forth in said Section.
(b) In addition to the foregoing expenses the Company shall at
the First Closing Date pay to the Representative, in its individual rather than
representative capacity, a non-accountable expense allowance of $240,000 of
which $40,000 has been paid. In the event the overallotment option is exercised,
the Company shall pay to X.X. Xxxxx Investment Banking Corp. at the Option
Closing Date an additional amount equal to 3% of the gross proceeds received
upon exercise of the overallotment option. In the event the transactions
contemplated hereby are not consummated by reason of any action by the
Representative (except if such prevention is based upon a breach by the Company
of any covenant, representation or warranty contained herein or because any
other condition to the Underwriters' obligations hereunder required to be
fulfilled by the Company is not fulfilled) the Company shall be liable for the
accountable out-of-pocket expenses of the Representative, including legal fees,
up to a maximum of $25,000. In the event the transactions contemplated hereby
are not consummated by reason of any action of the Company or because of a
breach by the Company of any covenant, representation or warranty herein, the
Company shall be liable for the accountable out-of-pocket expenses of the
Representative, including legal fees, up to a maximum of $150,000.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from the Representative or from any other person
for services as a finder in connection with the proposed offering, and the
Company and the Underwriters each agree to indemnify and hold harmless the other
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to all
reasonable costs of defense and investigation and all reasonable attorneys'
fees), to which the other (or such other person) may become subject insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the claim of any person (other than an employee
of the party claiming indemnity) or entity that he or it is entitled to a
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finder's fee in connection with the proposed offering by reason of such person's
or entity's influence or prior contact with the indemnifying party.
9. Substitution of Underwriters.
If any Underwriters shall for any reason not permitted hereunder
cancel their obligations to purchase the First Units hereunder, or shall fail to
take up and pay for the number of First Units set forth opposite their
respective names in Schedule A hereto upon tender of such First Units in
accordance with the terms hereof, then:
(a) If the aggregate number of First Units which such
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total number of First Units, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the First Units which such defaulting Underwriter or Underwriters agreed but
failed to purchase.
(b) If any Underwriter or Underwriters so default and the
agreed number of First Units with respect to which such default or defaults
occurs is more than 10% of the total number of First Units, the remaining
Underwriters shall have the right to take up and pay for (in such proportion as
may be agreed upon among them) the First Units which the defaulting Underwriter
or Underwriters agreed but failed to purchase. If such remaining Underwriters do
not, at the First Closing Date, take up and pay for the First Units which the
defaulting Underwriter or Underwriters agreed but failed to purchase, the time
for delivery of the First Units shall be extended to the next business day to
allow the several Underwriters the privilege of substituting within twenty-four
hours (including nonbusiness hours) another underwriter or underwriters
satisfactory to the Company. If no such underwriter or underwriters shall have
been substituted as aforesaid, within such twenty-four hour period, the time of
delivery of the First Units may, at the option of the Company, be again extended
to the next following business day, if necessary, to allow the Company the
privilege of finding within twenty-four hours (including nonbusiness hours)
another underwriter or underwriters to purchase the First Units which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted Underwriters to
take up the First Units of the defaulting Underwriter or Underwriters as
provided in this Section, (i) the Company or the Representative shall have the
right to postpone the time of delivery for a period of not more than seven
business days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and (ii) the respective numbers of First Units to be purchased
by the remaining Underwriters or substituted Underwriters shall be taken at the
basis of the underwriting obligation for all purposes of this Agreement.
If in the event of a default by one or more Underwriters and the
remaining Underwriters shall not take up and pay for all the First Units agreed
to be purchased by the defaulting Underwriters or substitute another underwriter
or underwriters as aforesaid, the Company shall not find or shall not elect to
seek another underwriter or underwriters for such First Units as aforesaid, then
this Agreement shall terminate.
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If, following exercise of the option provided in Section 2(b)
hereof, any Underwriter or Underwriters shall for any reason not permitted
hereunder cancel their obligations to purchase Option Units at the Option
Closing Date, or shall fail to take up and pay for the number of Option Units,
which they become obligated to purchase at the Option Closing Date upon tender
of such Option Units in accordance with the terms hereof, then the remaining
Underwriters or substituted Underwriters may take up and pay for the Option
Units of the defaulting Underwriters in the manner provided in Section 9(b)
hereof. If the remaining Underwriters or substituted Underwriters shall not take
up and pay for all such Option Units, the Underwriters shall be entitled to
purchase the number of Option Units for which there is no default or, at their
election, the option shall terminate, the exercise thereof shall be of no
effect.
As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. In the event of
termination, there shall be no liability on the part of any nondefaulting
Underwriter to the Company, provided that the provisions of this Section 9 shall
not in any event affect the liability of any defaulting Underwriter to the
Company arising out of such default.
10. Effective Date.
The Agreement shall become effective upon its execution except
that you may, at your option, delay its effectiveness until 11:00 A.M., New York
time on the first full business day following the effective date of the
Registration Statement, or at such earlier time after the effective date of the
Registration Statement as you in your discretion shall first commence the
initial public offering by the Underwriters of any of the Units. The time of the
initial public offering shall mean the time of release by you of the first
newspaper advertisement with respect to the Units, or the time when the Units
are first generally offered by you to dealers by letter or telegram, whichever
shall first occur. This Agreement may be terminated by you at any time before it
becomes effective as provided above, except that Sections 3(c), 6, 7, 8, 12, 13,
14, 15 and 16 shall remain in effect notwithstanding such termination.
11. Termination.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 12, 13,
14, 15 and 16 hereof, may be terminated at any time prior to the First Closing
Date, and the option referred to in Section 2(b) hereof, if exercised, may be
cancelled at any time prior to the Option Closing Date, by you if in your
judgment it is impracticable to offer for sale or to enforce contracts made by
the Underwriters for the resale of the Units agreed to be purchased hereunder by
reason of (i) the Company having sustained a material loss, whether or not
insured, by reason of fire, earthquake, flood, accident or other calamity, or
from any labor dispute or court or government action, order or decree; (ii)
trading in securities on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq SmallCap Market or the Nasdaq National Market having been
suspended or limited; (iii) material governmental restrictions having been
imposed on trading in securities generally (not in force and effect on the date
hereof); (iv) a banking moratorium having been declared by federal or New York
state authorities; (v) an outbreak of international hostilities or other
national or international calamity or crisis or change in economic
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or political conditions having occurred; (vi) a pending or threatened legal or
governmental proceeding or action relating generally to the Company's business,
or a notification having been received by the Company of the threat of any such
proceeding or action, which could materially adversely affect the Company; (vii)
except as contemplated by the Prospectus, the Company is merged or consolidated
into or acquired by another company or group or there exists a binding legal
commitment for the foregoing or any other material change of ownership or
control occurs; (viii) the passage by the Congress of the United States or by
any state legislative body or federal or state agency or other authority of any
act, rule or regulation, measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting institute
or board, or any governmental executive, which is reasonably believed likely by
the Representative to have a material impact on the business, financial
condition or financial statements of the Company or the market for the
securities offered pursuant to the Prospectus; (ix) any adverse change in the
financial or securities markets beyond normal market fluctuations having
occurred since the date of this Agreement, or (x) any material adverse change
having occurred, since the respective dates of which information is given in the
Registration Statement and Prospectus, in the earnings, business prospects or
general condition of the Company, financial or otherwise, whether or not arising
in the ordinary course of business.
(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 11 or in
Section 10, the Company shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
12. Unit Purchase Option.
At or before the First Closing Date, the Company will sell to
X.X. Xxxxx Investment Banking Corp., (for its own account and not as
Representative of the several Underwriters) or its designees for a consideration
of $160 and upon the terms and conditions set forth in the form of Unit Purchase
Option annexed as an exhibit to the Registration Statement, a Unit Purchase
Option to purchase an aggregate of 160,000 Units. In the event of conflict in
the terms of this Agreement and the Unit Purchase Option, the language of the
Unit Purchase Option shall control.
13. Representations, Warranties and Agreements to Survive
Delivery.
The respective indemnities, agreements, representations,
warranties and other statements of the Company or its Principal Stockholders,
where appropriate, and the undertakings set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Underwriters, the Company or any of its officers or
directors or any controlling person and will survive delivery of and payment of
the Units and the termination of this Agreement.
14. Notice.
Any communications specifically required hereunder to be in
writing, if sent to the Underwriters, will be mailed or sent via overnight
courier, delivered and confirmed to it at
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X.X. Xxxxx Investment Banking Corp., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
with a copy sent to Bachner, Tally, Xxxxxxx & Xxxxxx LLP, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or if sent to the Company, will be mailed or sent via
courier, delivered and confirmed to it at 0000 Xxxx Xxxxx, Xxxxx X, Xxxxx,
Xxxxxxx 00000.
15. Parties in Interest.
The Agreement herein set forth is made solely for the benefit of
the several Underwriters, the Company and, to the extent expressed, the
Principal Stockholders, any person controlling the Company or any of the several
Underwriters, and directors of the Company, nominees for directors (if any)
named in the Prospectus, its officers who have signed the Registration
Statement, and their respective executors, administrators, successors, assigns
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, as
such purchaser, from any of the several Underwriters of the Units. All of the
obligations of the Underwriters hereunder are several and not joint.
16. Applicable Law.
This Agreement will be governed by, and construed in accordance
with, the laws of the State of New York applicable to agreements made and to be
entirely performed within New York.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this agreement, whereupon it will become a
binding agreement between the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
PIRANHA INTERACTIVE PUBLISHING, INC.
By: __________________________________
Xxxxxxx X. Xxxxxxx
President
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
X.X. XXXXX INVESTMENT BANKING CORP.
By: __________________________________
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_________________________________
Authorized Officer
For itself and as Representative of the
several Underwriters
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SCHEDULE A
Underwriter Number of Units to be Purchased
[UNDERWRITER]
Total: _______
________ Units
