HARBOUR ENTERTAINMENT, INC.
Up To 1,715,000 Shares of Common Stock
UNDERWRITING AGREEMENT
As of April 12, 2000
XXXXX SECURITIES, INC.
000 Xxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Dear Sirs:
HARBOUR ENTERTAINMENT, INC., a Delaware corporation (the "Company") hereby
confirms the agreement made with respect to the retention of Xxxxx Securities
Inc. (the "Underwriter") as the exclusive agent of the Company to publicly offer
and sell, pursuant to the terms of this Underwriting Agreement (the
"Agreement"), an aggregate of up to 1,715,000 shares of Common Stock, $.01 par
value per share (the "Securities"), of the Company on a "best efforts, all or
none" basis. The offering of the Securities contemplated hereby may sometimes be
referred to as the "Offering."
1. Description of the Securities.
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(a) The Common Stock.
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Each share of Common Stock will be offered for sale to the public at an
anticipated price of $7.00 per share with a minimum number of shares equal to
sum of $8,000,000 up to a maximum number of shares equal to $12,000,000. The
Offering does not have an expiration date, and there are no minimum purchase
requirements. Number of shares offered to the public represents approximately
twenty percent (20%) of the total number of outstanding shares of Common Stock.
(b) Underwriter's Warrants.
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The Company will sell to the Underwriter, an amount equal to ten percent
(10%) of the total number of shares sold at the Offering (to a maximum of
171,500 shares, "Warrant Shares"), commencing for a period of twelve (12) months
from the effective date and terminating four (4) years thereafter at a price of
$_______ per share.
2. Representations and Warranties of the Company.
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The Company represents and warrants to the Underwriter that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission"), a registration statement on Form SB-2 (File No. 333-35932),
including any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Securities under the Securities Act of 1933 (the "Act"). The
Company will file further amendments to said registration statement in the form
to be delivered to you and will not, before the registration statement becomes
effective, file any other amendment thereto to which you shall have objected in
writing after having been furnished with a copy thereof. Except as the context
may otherwise require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, exhibits, and all other documents filed as
a part thereof or incorporated therein), is hereinafter called the "Registration
Statement", and the prospectus, in the form filed with the Commission pursuant
to Rule 424(b) of the General Rules and Regulations of the Commission under the
Act (the "Regulations") or, if no such filing is made, the definitive prospectus
used in the Offering, is hereinafter called the "Prospectus." The Company has
delivered to you copies of each Preliminary Prospectus as filed with the
Commission and has consented to the use of such copies for purposes permitted by
the Act.
(b) The Commission has not issued any orders preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects with the requirements of the Act and has not
included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, subject to the provisions set forth below and except as such untrue
statement or omission has been cured in the subsequent preliminary prospectus or
in the final prospectus.
(c) When the Registration Statement becomes effective under the Act
and at all times subsequent thereto, including the Closing Date (hereinafter
defined), and for such longer periods, as in the opinion of counsel for the
Underwriter a Prospectus is required to be delivered in connection with the sale
of the Securities by the Underwriter, the Registration Statement and Prospectus,
and any amendment thereof or supplement thereto, will contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations, and will in all material respects conform to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, will
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,
in light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Company by you, for use in connection with the
preparation of the Registration Statement or Prospectus, or in any amendment
thereof or supplement thereto. It is understood that the statements set forth
under the heading "Underwriting" in the Prospectus with respect to (i) the
amounts of the selling concession; (ii) the identity of counsel to the
Underwriter under the heading "Legal Matters"; and (iii) the information
concerning the NASD affiliation of the Underwriter constitute for purposes of
this Section the only information furnished in writing by or on behalf of the
Underwriter for inclusion in the Registration Statement and Prospectus, as the
case may be.
(d) The Company at the Closing Date will be a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Company is duly qualified or licensed and
in good standing as foreign corporations in each jurisdiction in which its
ownership or leasing of any properties or the character of its operations
requires such qualification or licensing, except those jurisdictions in which
the failure to so qualify would not have a material adverse effect. The Company
has all requisite corporate power and authority, and, except as set forth in the
Registration Statement, the Company and its employees have all material and
necessary authorizations, approvals, orders, licenses, certificates, and permits
of and from all governmental regulatory officials and bodies to own or lease
their properties and conduct their businesses as described in the Prospectus,
and the Company is doing business and have been doing business during the period
described in the Registration Statement in compliance with all such material
authorizations, approvals, orders, licenses, certificates, and permits and all
material federal, state, and local laws, rules, and regulations concerning the
businesses in which the Company is engaged. The disclosures in the Registration
Statement concerning the effects of federal, state, and local regulation on the
Company's business as currently conducted and as contemplated are correct in all
material respects and do not omit to state a material fact. The Company has all
corporate power and authority to enter into this Agreement and carry out the
provisions and conditions hereof, and all consents, authorizations, approvals,
and orders required in connection therewith have been obtained or will have been
obtained prior to the Closing Date.
(e) This Agreement has been duly and validly authorized and executed
by the Company. The Securities have been duly authorized and, when issued and
paid for in accordance with this Agreement and will not be subject to the
preemptive rights of any stockholder of the Company and conform, and at all
times up to and including their issuance will conform, in all material respects
to all statements with regard thereto contained in the Registration Statement
and Prospectus; and all corporate action required to be taken for the
authorization, issuance, and sale of the Securities has been taken, and this
Agreement constitutes a valid and binding obligation of the Company, enforceable
in accordance with its terms, to issue and sell, upon exercise in accordance
with the terms thereof, the number and kind of securities called for thereby,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws affecting the rights of creditors
generally and the discretion of courts in granting equitable remedies and except
that enforceability of the indemnification provisions and the contribution
provisions set forth in the Underwriting Agreement may be limited by the federal
securities laws or public policy underlying such laws;
(f) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
the Certificate of Incorporation, as amended, or the Bylaws of the Company or of
any evidence of indebtedness, lease, contract, or other agreement or instrument
to which the Company is a party or by which the Company or any of its properties
is bound, or under any applicable law, rule, regulation, judgment, order, or
decree of any government, professional advisory body, administrative agency, or
court, domestic or foreign, having jurisdiction over the Company or its
properties, or result in the creation or imposition of any lien, charge, or
encumbrance upon any of the properties or assets of the Company; and no consent,
approval, authorization, or order of any court or governmental or other
regulatory agency or body is required for the consummation by the Company of the
transactions on its part herein contemplated, except such as may be required
under the Act or under state securities or blue sky laws, except where a breach,
violation, or failure to obtain such consent would not have a material adverse
effect upon the business or operation of the Company.
(g) Subsequent to the date hereof and prior to the Closing Date, the
Company will not issue or acquire any equity securities except that the Company
may make short-term investments as contemplated in the "Use of Proceeds" section
of the Prospectus or otherwise described in the Prospectus. Except as described
in the Registration Statement, the Company does not have, and at the Closing
Date the Company will not have, outstanding any options to purchase or rights or
warrants to subscribe for, or any securities or obligations convertible into, or
any contracts or commitments to issue or sell shares of its Common Stock, or any
such options, warrants, convertible securities, or obligations.
(h) The financial statements and notes thereto included in the
Registration Statement and the Prospectus fairly present the financial position
and the results of operations of the Company at the respective dates and for the
respective periods to which they apply, and such financial statements have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved.
(i) Except as set forth in the Registration Statement, the Company is
not, and at the Closing Date will not be, in violation or breach of, or in
default in, the due performance and observance of any term, covenant, or
condition of any indenture, mortgage, deed of trust, note, loan, or credit
agreement or any other agreement or instrument evidencing an obligation for
borrowed money or any 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, which violations, breaches, default or
defaults, singularly or in the aggregate, would have a material adverse effect
on the Company . The Company has not and will not have taken any action in
material violation of the provisions of the Certificate of Incorporation, as
amended, or the Bylaws of the Company or any statute or any order, rule, or
regulation of any court or regulatory authority or governmental body having
jurisdiction over or application to the Company its businesses, or properties.
(j) The Company has, and at the Closing Date will have, 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, claims,
security interests, restrictions and defects, of any material nature whatsoever,
except such as are described or referred to in the Prospectus and liens for
taxes not yet due and payable. 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 as described in the
Prospectus are, and will on the Closing Date be, in full force and effect, and
except as described in the Prospectus, the Company is not and will not be in
default in respect to any of the terms or provisions of any of such leases or
subleases (which would have a material adverse effect on the business, business
prospects, or operations of the Company taken as a whole), 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 continue 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 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 (which would have a material adverse effect on the
business, business prospects, or operations of the Company taken as a whole).
(k) The authorized, issued, and outstanding capital stock of the
Company as of the date of the Prospectus is as set forth in the Prospectus under
"Capitalization"; the shares of issued and outstanding capital stock of the
Company set forth thereunder have been duly authorized and 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.
(l) Except as described in the Prospectus, the Company does not own or
control any capital stock or securities of, or have any proprietary interest in,
or otherwise participate in any other corporation, partnership, joint venture,
firm, association, or business organization; provided, however, that this
provision shall not be applicable to the investment, if any, of the net proceeds
from the sale of the Securities sold by the Company in certificates of deposits,
savings deposits, short-term obligations of the United States Government, money
market instruments, or other short-term investments.
(m) Xxxxxxx X. Xxxxxx & Company, LLP who has given its report on
certain financial statements filed and to be filed with the Commission as a part
of the Registration Statement, which are incorporated in the Prospectus, are
with respect to the Company, independent public accountants as required by the
Act and the Rules and Regulations.
(n) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as may otherwise
be indicated or contemplated herein or therein, the Company has not (i) issued
any securities or incurred any liability or obligation, direct or contingent,
for borrowed money; or (ii) entered into any transaction other than in the
ordinary course of business; or (iii) declared or paid any dividend or made any
other distribution on or in respect to its capital stock.
(o) There is no litigation or governmental proceeding pending or to
the knowledge of the Company threatened against, or involving the properties or
business of the Company in which an unfavorable ruling or finding would have a
material adverse effect on the value, assets, or the operation of the properties
or the business of the Company, except as referred to in the Prospectus.
Further, except as referred to in the Prospectus, there are no pending actions,
suits, or proceedings related to environmental matters or related to
discrimination on the basis of age, sex, religion, or race; nor is the Company
charged with or, to its knowledge, under investigation with respect to any
violation of any statutes or regulations of any regulatory authority having
jurisdiction over its business or operations, and no labor disturbances by the
employees of the Company exist or, to the knowledge of the Company, have been
threatened.
(p) The Company has, and at the Closing Date will have, filed all
necessary federal, state, and foreign income and franchise tax returns or has
requested extensions thereof (except in any case where the failure to so file
would not have a material adverse effect on the Company) and has paid all taxes
which it believes in good faith were required to be paid by it except for any
such tax that currently is being contested in good faith or as described in the
Prospectus.
(q) The Company has not at any time (i) made any contribution to any
candidate for political office or failed to disclose fully any such
contribution, in violation of law; or (ii) made any payment to any state,
federal, foreign governmental, or professional regulatory agency, officer, or
official or other person charged with similar public, quasi-public, or
professional regulatory duties, other than payments or contributions required or
allowed by applicable law.
(r) Except as set forth in the Registration Statement, to the
knowledge of the Company, neither the Company nor any officer, director,
employee, or agent of the Company has made any payment or transfer of any funds
or assets of the Company or conferred any personal benefit by use of the
Company's assets or received any funds, assets, or personal benefit in violation
of any law, rule, or regulation, which is required to be stated in the
Registration Statement or which is necessary to make the statements therein not
misleading.
(s) On the Closing Date, all transfer or other taxes, if any (other
than income tax), which are required to be paid and are due and payable in
connection with the sale and transfer of the Securities by the Company to the
Underwriters, will have been fully paid or provided for by the Company as the
case may be, and all laws imposing such taxes will have been fully complied with
in all material respects.
(t) There are no contracts or other documents of the Company of a
character required to be described in the Registration Statement or Prospectus
or filed as exhibits to the Registration Statement which have not been so
described or filed.
(u) The Company will apply the net proceeds from the sale of the
Securities sold by it for the purposes and substantially in the manner set forth
in the Registration Statement and Prospectus under the heading "Use of
Proceeds."
(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (1) transactions are executed in
accordance with management's general or specified authorizations; (2)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (3) access to assets is permitted only in
accordance with management's general or specific authorizations; and (4) the
recorded accountability for assets is compared with existing assets at
reasonable intervals, and appropriate action is taken with respect to any
differences.
(w) Except as set forth in the Prospectus, no holder of any securities
of the Company has the right to require registration of any securities because
of the filing or effectiveness of the Registration Statement.
(x) To the Company's knowledge, there are no claims for services in
the nature of a finder's origination fee with respect to the sale of the
Securities hereunder, except as set forth in the Prospectus.
(y) Other than the right of first refusal granted by the Company to
the Underwriter (as set forth in Section 3(t) hereof), no right of first refusal
exists with respect to any sale of securities by the Company.
(z) No statement, representation, warranty, or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to Underwriter was, when made, or as of the
Closing Date or as of the Option Closing Date will be, materially inaccurate,
untrue, or incorrect.
3. Covenants of the Company.
The Company covenants and agrees that:
(a) It will deliver to the Underwriter, without charge, two conformed
copies of each Registration Statement and of each amendment or supplement
thereto, including all financial statements and exhibits.
(b) The Company has delivered to the Underwriter, and each of the
Selected Dealers (as hereinafter defined) without charge, as many copies as have
been requested of each Preliminary Prospectus heretofore filed with the
Commission in accordance with and pursuant to the Commission's Rule 430 under
the Act and will deliver to the Underwriter and to others whose names and
addresses are furnished by the Underwriter or a Selected Dealer, without charge,
on the Effective Date, and thereafter from time to time during such reasonable
period as you may request if, in the opinion of counsel for the Underwriter, the
Prospectus is required by law to be delivered in connection with sales by the
Underwriter or a dealer, as many copies of the Prospectus (and, in the event of
any amendment of or supplement to the Prospectus, of such amended or
supplemented Prospectus) as the Underwriter may request for the purposes
contemplated by the Act. The Company will take all necessary actions to furnish
to whomever directed by the Underwriter, when and as requested by the
Underwriter, all necessary documents, exhibits, information, applications,
instruments, and papers as may be reasonably required or, in the opinion of
counsel to the Underwriter, desirable, in order to permit or facilitate the sale
of the Securities.
(c) The Company has authorized the Underwriter to use, and make
available for use by prospective dealers, the Preliminary Prospectus and
authorizes the Underwriter, all dealers selected by you in connection with the
distribution of the Securities (the "Selected Dealers") to be purchased by the
Underwriter and all dealers to whom any of such Securities may be sold by the
Underwriter or by any Selected Dealer, to use the Prospectus, as from time to
time amended or supplemented, in connection with the sale of the Securities in
accordance with the applicable provisions of the Act, the applicable
Regulations, and applicable state law, until completion of the distribution of
the Securities and for such longer period as you may request if the Prospectus
is required under the Act, the applicable Regulations, or applicable state law
to be delivered in connection with sales of the Securities by the Underwriter or
the Selected Dealers.
(d) The Company will use its best efforts to cause the Registration
Statement to become effective and will notify the Underwriter immediately and
confirm the notice in writing: (i) when the Registration Statement or any
post-effective amendment thereto becomes effective; (ii) of the issuance by the
Commission of any stop order or of the initiation, or to the Company's
knowledge, the threatening of any proceedings for that purpose; (iii) of the
suspension of the qualification of the Securities or underlying securities for
offering or sale in any jurisdiction or of the initiating, or to the Company's
knowledge, the threatening of any proceeding for that purpose; and (iv) of the
receipt of any comments from the Commission. If the Commission shall enter a
stop order at any time, the Company will make every reasonable effort to obtain
the lifting of such order at the earliest possible moment.
(e) During the time when a prospectus is required to be delivered
under the Act, the Company will comply with all requirements imposed upon it by
the Act and the Securities Exchange Act of 1934 (the "Exchange Act"), as now and
hereafter amended, and by the Regulations, as from time to time in force, as
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and the Prospectus. If at any time when a
prospectus relating to the Securities is required to be delivered under the Act,
any event shall have occurred as a result of which, in the opinion of counsel
for the Company or counsel for the Underwriter, the Prospectus as then amended
or supplemented includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify you promptly and prepare and
file with the Commission an appropriate amendment or supplement in accordance
with Section 10 of the Act and will furnish to you copies thereof.
(f) The Company will endeavor in good faith, in cooperation with you,
at or prior to the time the Registration Statement becomes effective, to qualify
the Securities for offering and sale under the securities laws or blue sky laws
of such jurisdictions as you may reasonably designate. In each jurisdiction
where such qualification shall be effected, the Company will, unless you agree
that such action is not at the time necessary or advisable, file and make such
statements or reports at such times as are or may reasonably be required by the
laws of such jurisdiction.
(g) The Company will make generally available to its security holders,
as soon as practicable, but in no event later than the first day of the
fifteenth full calendar month following the Effective Date of the Registration
Statement, an earnings statement of the Company, which will be in reasonable
detail but which need not be audited, covering a period of at least twelve
months beginning after the Effective Date of the Registration Statement, which
earnings statements shall satisfy the requirements of Section 11(a) of the Act
and the Regulations as then in effect. The Company may discharge this obligation
in accordance with Rule 158 of the Regulations.
(h) During the period of five years commencing on the Effective Date
of the Registration Statement, the Company will furnish to its stockholders an
annual report (including financial statements audited by its independent public
accountants), in reasonable detail, and, at its expense, will furnish each of
the Underwriters: (i) within 90 days after the end of each fiscal year, or as
soon thereafter as is practicable, of the Company, a balance sheet of the
Company and statements of operations, stockholders' equity, and cash flows of
the Company for the fiscal year then ended all in reasonable detail and all
certified by independent accountants (within the meaning of the Act and the
Regulations); (ii) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, or as soon thereafter as is practicable,
similar balance sheets as of the end of such fiscal quarter and similar
statements of operations, stockholders' equity, and cash flows for the fiscal
quarter then ended, all in reasonable detail, and subject to year end
adjustment, all certified by the Company's principal financial officer or the
Company's principal accounting officer as having been prepared in accordance
with generally accepted accounting principles applied on a consistent basis;
(iii) as soon as available, each report furnished to, or filed with, the
Commission or any securities exchange and each report and financial statement
furnished to the Company's shareholders generally; and (iv) as soon as
available, such other material as the Underwriter may from time to time
reasonably request regarding the financial condition and operations of the
Company.
(i) For a period of eighteen months from the Closing Date, the
Company, at its expense, shall cause its regularly engaged independent certified
public accountants to review (but not audit), the Company's financial statements
for each of the first three quarters prior to the announcement of quarterly
financial information, the filing of the Company's 10-QSB quarterly report, and
the mailing of quarterly financial information to stockholders.
(j) The Company will deliver to you, prior to filing, any amendment or
supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date of the Registration Statement and will not file any
such amendment or supplement to which you shall reasonably object after being
furnished such copy.
(k) During the period of 120 days commencing on the date hereof, the
Company will not at any time take, directly or indirectly, any action designed
to, or which will constitute or which might reasonably be expected to cause or
result in, stabilization or manipulation of the price of the Securities to
facilitate the sale or resale of any of the Securities.
(l) The Company will apply the net proceeds from the Offering received
by it substantially in the manner set forth under "Use of Proceeds" in the
Prospectus.
(m) Counsel for the Company, the Company's accountants, and the
officers and directors of the Company will, respectively, furnish the opinions,
the letters, and the certificates referred to in subsections of Paragraph 10
hereof, and in the event that the Company shall file any amendment to the
Registration Statement relating to the offering of the Securities or any
amendment or supplement to the Prospectus relating to the offering of the
Securities subsequent to the Effective Date of the Registration Statement, such
counsel, such accountants, such officers and directors, respectively, will, at
the time of such filing or at such subsequent time as you shall specify, so long
as securities being registered by such amendment or supplement are being
underwritten by the Underwriter, furnish to you such opinions, letters, and
certificates, each dated the date of its delivery, of the same nature as the
opinions, the letters, and the certificates referred to in said Paragraph 10, as
you may reasonably request, or, if any such opinion or letter or certificate
cannot be furnished by reason of the fact that such counsel or such accountants
or any such officer or director believes that the same would be inaccurate, such
counsel or such accountants or such officer or director will furnish an accurate
opinion or letter or certificate with respect to the same subject matter.
(n) The Company will comply with all of the provisions of any
undertakings contained in the Registration Statement in all material respects.
(o) The Company agrees that it will, upon the Closing Date, for a
period of no less than three (3) years, engage a designee of the Underwriter as
an advisor (the "Advisor") to its Board of Directors where such Advisor shall
attend meetings of the Board, receive all notices and other correspondence and
communications sent by the Company to members of its Board of Directors, and
shall be entitled to receive compensation therefor equal to the entitlement of
all non- employee directors. Such Advisor shall also be entitled to receive
reimbursement for all reasonable costs incurred in attending such meetings
including, but not limited to, food, lodging, and transportation. The Company
further agrees that during said three (3) year period, it shall schedule no less
than four (4) meetings of its Board of Directors in each such year. Further,
during such three (3) year period, the Company shall give notice to the
Underwriter with respect to any proposed acquisitions, mergers, reorganizations,
or other similar transactions.
(p) The Company agrees to indemnify and hold the Underwriter and such
Advisor harmless against any and all claims, actions, damages, costs and
expenses, and judgments arising solely out of the attendance and participation
of your designee at any such meeting described herein. In the event the Company
maintains a liability insurance policy affording coverage for the acts of its of
officers and directors, it agrees, if possible, to include the Underwriter's
designee as an insured under such policy.
(q) The Company's Securities shall be listed on the NASDAQ, or on a
stock exchange, not later than the Closing Date. Prior to the Closing Date, the
Company will make all filings required, including registration under the
Exchange Act, to obtain the listing of the Securities on the NASDAQ and any such
exchange, and will effect and use its reasonable efforts to maintain such
listings (unless the Company is acquired) for at least five years from the date
of this Agreement.
(r) The Company will list on Standard and Poors Corporation Reports
and shall use its reasonable efforts to have the Company included in such
publications for at least five years from the Closing Date.
(s) Except as described in the Prospectus and except for the issuance
of shares of capital stock by the Company in connection with a dividend,
recapitalization, reorganization, or similar transactions or as a result of the
exercise of warrants or options disclosed in or issued or granted pursuant to
plans disclosed in the Registration Statement, the Company shall not, for a
period of twelve (12) months following the Closing Date, directly or indirectly,
offer, sell, issue, or transfer any shares of its capital stock, or any security
exchangeable or exercisable for, or convertible into, shares of the capital
stock or register any of its capital stock (under any form of registration
statement, including Form S-8), for the benefit of any officers of the Company
without the prior written consent of the Representative. Options granted
pursuant to plans must be exercisable at the fair market value on the date of
grant.
(t) During the two-year period from the Effective Date, the
Underwriter shall have a right of first refusal to act as underwriter or agent
of any and all public or private offerings of the securities of the Company, or
any successor to or subsidiary of the Company or any other entity in which the
Company has a controlling equity interest (collectively referred to herein as
the "Company"), by the Company. Underwriter must notify the Company of its
intention to exercise this right within fifteen (15) days after being notified
by the Company of the proposed public or private offering.
(u) The Company will use its reasonable efforts to obtain, as soon
after the Closing Date as is reasonably possible, liability insurance covering
its officers and directors.
(v) The Company agrees that any conflict of interest arising between a
member of the Company's Board of Directors and the Company in connection with
such Director's dealing with, or obligations to, the Company shall be resolved
by a vote of the majority of the independent members of the Board of Directors.
(w) The Company agrees that it will employ the services of a financial
public relations firm for a period of at least twelve months following the
Effective Date.
4. Appointment of Agent to Sell the Securities.
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(a) Subject to the terms and conditions of this Agreement, and upon
the basis of the representations, warranties, and agreements herein contained,
the Company hereby appoints the Underwriter as its exclusive agent for a period
of 90 days from the Effective Date, subject to an extension by mutual agreement
of the Company and the Underwriter for an additional period not to exceed 90
days (the "Offering Period"), to sell the Securities, and the Underwriter, on
the basis of the representations and warranties of the Company herein, accepts
such appointment and agrees to use its best efforts on an _____ or none basis to
find purchasers for the Securities. The price at which the Underwriter shall
sell the Securities to the public as agent for the Company shall be $7.00 per
share, less an underwriting discount of ten percent (10%) of the offering price
for each security. The Underwriter may allow selected dealers who are members of
the National Association of Securities Dealer, Inc. ("NASD"), and to certain
foreign dealers, but all such sales by selected dealers shall be made by the
Company, acting through the Underwriter as agent, and not for the account of the
Underwriter.
(b) Provided that all of the Securities offered hereby are sold and
paid for, the Company agrees to pay the Underwriter for its expenses a
non-accountable expense allowance equal to 3% of the gross proceeds of the
offering, subject to the provisions of Paragraph 9 herein.
(c) It is a condition of this Agreement that the Underwriter shall use
its best efforts to sell the Securities on behalf of the Company, that any and
all funds received from such sale, without any deduction there from whatsoever,
including, but not limited to, any underwriting commission or any dealer
concession or otherwise, shall be forthwith deposited into an escrow account
with Staten Island Savings Bank, as Escrow Agent, pursuant to the terms of an
Escrow Agreement entered into by and among the Company, the Underwriter, and the
Escrow Agent. In the event _____ of the Securities offered hereby are not sold
within the Offering Period, all funds will be promptly refunded to the
subscribers in full, without deduction therefrom or interest thereon.
Certificates will be issued to purchasers only if the proceeds from at least
_____ of the Securities offered hereby are released from escrow to the Company.
Until such time as the funds have been released and the certificates delivered
to the purchasers thereof, such purchasers, if any, will be deemed subscribers
and not stockholders. The funds in escrow will be held for the benefit of those
subscribers until released to the Company and will not be subject to creditors
of the Company or utilized for the expenses of this Offering. When certificates
for the Securities are to be issued in the name of a participating dealer for
the benefit of its customer, the Escrow Agent may hold such funds with the
dealer reflected as the subscriber.
5. Delivery and Payment.
--------------------
(a) In the event at least _____ of the Securities offered hereby are
sold during the Offering Period, delivery of the Certificates representing the
shares of the Securities against payment therefor shall take place at the
offices of Xxxxx Securities, Inc. (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 such
date after the Offering has been completed as the Underwriter shall designate,
on at least five (5) full business days' prior written notice, such time and
date of payment and delivery of the Securities being herein called the "Closing
Date."
(b) The Company will make the certificates for the shares of the
Securities sold hereunder available to the Underwriter for checking at least two
full business days prior to the Closing Date at the offices of the Company's
transfer agent. The certificates shall be in such names and denominations as you
may request.
(c) The cost of original issue tax stamps, if any, in connection with
the issuance and delivery of the Securities by the Company to the Underwriter
shall be borne by the Company. The Company will pay and hold the Underwriter,
and any subsequent holder of the Securities, harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
federal and state stamp taxes, if any, which may be payable or determined to be
payable in connection with the original issuance or sale to the Underwriter of
the Securities or any portions thereof.
6. Offering of Securities on Behalf of the Company.
-----------------------------------------------
It is understood that the Underwriter proposes to offer the Securities to
the public solely as agent for the Company, upon the terms and conditions set
forth in the Registration Statement. The Underwriter shall commence making such
offer as agent for the Company on the Effective Date, or as soon thereafter as
the Underwriter deems advisable.
7. Intentionally Left Blank.
8. Representations and Warranties of the Underwriter.
-------------------------------------------------
The Underwriter represents and warrants to the Company that:
(a) The Underwriter is a member in good standing of the National
Association of Securities Dealers, Inc. and has complied with all NASD
requirements concerning net capital and compensation to be received in
connection with the Offering.
(b) To the Underwriter's knowledge, there are no claims for services
in the nature of a finder's origination fee with respect to the sale of the
Securities hereunder to which the Company is, or may become, obligated to pay.
9. Payment of Expenses.
-------------------
(a) Whether or not this Agreement becomes effective or the sale of the
Securities by the Company is completed, the Company will pay and bear all costs,
fees, taxes and expenses incident to and in connection with: (i) the issuance,
offer, sale, and delivery of the Securities, including all expenses and fees
incident to the preparation, printing, filing, and mailing (including the
payment of postage with respect to such mailing) of the Registration Statement
(including all exhibits thereto), each Preliminary Prospectus, the Prospectus,
and amendments and post-effective amendments thereof and supplements thereto,
and this Agreement and related documents, Preliminary and Final Blue Sky
Memoranda, including the cost of preparing and copying all copies thereof in
quantities deemed necessary by the Underwriter; (ii) the costs of preparing and
printing all "Tombstone" and other appropriate advertisements; (iii) the
printing, engraving, issuance, and delivery of the Common Stock, including any
transfer or other taxes payable thereon in connection with the original issuance
thereof; (iv) the qualification of the Securities under the state or foreign
securities or "Blue Sky" laws selected by the Underwriter and the Company and
disbursements and reasonable fees of counsel for the Underwriter in connection
therewith plus the filing fees for such states; (v) the preparation of a
secondary trading memorandum; (vi) fees and disbursements of counsel and
accountants for the Company; (vii) other expenses and disbursements incurred on
behalf of the Company; (viii) the filing fees payable to the Commission and the
National Association of Securities Dealers, Inc. ("NASD"); or on NASDAQ.
(b) In addition to the expenses to be paid and borne by the Company
referred to in Paragraph 9(a) above, the Company shall reimburse you at the
Closing Date for expenses incurred by you in connection with the Offering (for
which you need not make any accounting), in the amount of 3% of the price to the
public of the Securities sold in the Offering. This 3% non-accountable expense
allowance shall cover the fees of your legal counsel but shall not include any
expenses for which the Company is responsible under Paragraph 9(a) above,
including the reasonable fees and disbursements of your legal counsel with
respect to Blue Sky matters. As of the date hereof, no funds have been advanced
by the Company to the Underwriter with respect to such non-accountable expense
allowance.
(c) In the event (i) that the Company does not or cannot for any
reason whatsoever, other than a default by the Underwriters, expeditiously
proceed with the Offering; or (ii) any of the representations, warranties, or
covenants of the Company contained in this Agreement are not materially correct
or cannot be complied with by the Company; or (iii) business prospects or
obligations of the Company are adversely affected and the Company does not
commence or continue with the Offering at any time or terminates the proposed
transaction prior to the Closing Date, the Company shall not be responsible to
reimburse the Underwriter for its reasonable out-of-pocket expenses in
connection with the Underwriting.
10. Conditions of Underwriter's Obligations.
---------------------------------------
The obligations of the Underwriter to consummate the transactions
contemplated by this Agreement shall be subject to the continuing accuracy of
the representations and warranties of the Company contained herein as of the
date hereof and as of the Closing Date, the accuracy of the statements of the
Company and its officers and directors made pursuant to the provisions hereof,
and to the performance by the Company of its covenants and agreements hereunder
and under each certificate, opinion, and document contemplated hereunder and to
the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., New York time, on the date following the date of this Agreement,
or such later date and time as shall be consented to in writing by you, and on
or prior to the Closing Date, no stop order suspending the effectiveness of the
Registration Statement or the qualification or registration of the Securities
under the securities laws of any jurisdiction 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 or any such authorities of any jurisdiction and any request on the
part of the Commission or any such authorities for additional information shall
have been complied with to the reasonable satisfaction of the Commission or such
authorities and counsel to the Underwriter, and after the date hereof, no
amendment or supplement shall have been filed to the Registration Statement or
Prospectus without your prior consent.
(b) The Registration Statement or the Prospectus or any amendment
thereof or supplement thereto shall not contain an untrue statement of a fact
which is material or omit to state a fact which is material and is required to
be stated therein or is necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) Between the time of the execution and delivery of this Agreement
and the Closing Date, there shall be no litigation instituted against the
Company or any of its officers or directors, and between such dates there shall
be no proceeding instituted or, to the Company's knowledge, threatened against
the Company or any of its officers or directors before or by any federal, state,
or county commission, regulatory body, administrative agency, or other
governmental body, domestic or foreign, in which litigation or proceeding an
unfavorable ruling, decision, or finding would have a material adverse effect on
the Company or its business, business prospects, or properties or have a
material adverse effect on the financial condition or results of operation of
the Company.
(d) Each of the representations and warranties of the Company
contained herein and each certificate and document contemplated under this
Agreement to be delivered to you shall be true and correct at the Closing Date
as if made at the Closing Date, and all covenants and agreements contained
herein and in each such certificate and document to be performed on the part of
the Company, and all conditions contained herein and in each such certificate
and document to be fulfilled or complied with by the Company at or prior to the
Closing Date shall be fulfilled or complied with in all material respects..
(e) At the Closing Date, you shall have received the opinion of Blau,
Kramer, Wactlar & Xxxxxxxxx, PC, counsel to the Company, dated as of such
Closing Date, addressed to the Underwriter and in form and substance
satisfactory to counsel to the Underwriter, to the effect that:
(i) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation with full corporate power and authority, and it has all material
licenses, permits, certifications, registrations, approvals and consents to own
or lease and operate its properties and to conduct its businesses as described
in the Registration Statement. To our knowledge, the Company is duly qualified
to do business as foreign corporations and are in good standing in all
jurisdictions wherein such qualification is necessary and failure so to qualify
could have a material adverse effect on the financial condition, results of
operations, business or properties of the Company.
(ii) The Company has full corporate power and authority to
execute, deliver, and perform the Underwriting Agreement and the Warrant
Agreement and to consummate the transactions contemplated thereby. The
execution, delivery, and performance of the Underwriting Agreement and the
Warrant Agreement by the Company, the consummation by the Company of the
transactions therein contemplated, and the compliance by the Company with the
terms of the Underwriting Agreement and the Warrant Agreement have been duly
authorized by all necessary corporate action, and each of the Underwriting
Agreement and the Warrant Agreement have been duly executed and delivered by the
Company. Each of the Underwriting Agreement and the Warrant Agreement is a valid
and binding obligation of the Company, enforceable in accordance with their
respective terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws affecting the
rights of creditors generally and the discretion of courts in granting equitable
remedies and except that enforceability of the indemnification provisions and
the contribution provisions set forth in the Underwriting Agreement may be
limited by the federal securities laws or public policy underlying such laws;
(iii) The execution, delivery, and performance of the
Underwriting Agreement and the Warrant Agreement by the Company, the
consummation by the Company of the transactions therein contemplated, and the
compliance by the Company with the terms of the Underwriting Agreement and the
Warrant Agreement do not, and will not, with or without the giving of notice or
the lapse of time, or both, (A) result in a violation of the Certificate of
Incorporation, or Bylaws of the Company; (B) to our knowledge, result in a
breach of, or conflict with, any terms or provisions of or constitute a default
under, or result in the modification or termination of, or result in the
creation or imposition of any lien, security interest, charge, or encumbrance
upon any of the properties or assets of the Company pursuant to, any indenture,
mortgage, note, contract, commitment, or other material agreement or instrument
to which the Company is a party or by which the Company or any of its properties
or assets are or may be bound or affected, except where any of the foregoing
would not result in a material adverse effect upon the Company's business or
operations.
(iv) To our knowledge, no authorization, approval, consent,
order, registration, license, or permit of any court or governmental agency or
body (other than under the Act, the Regulations, and applicable state securities
or Blue Sky laws) is required for the valid authorization, issuance, sale, and
delivery of the Securities, and the Warrant Shares, and the consummation by the
Company of the transactions contemplated by the Underwriting Agreement and the
Warrant Agreement;
(v) The Registration Statement was declared effective on
_________, 2000; to our knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending, threatened, or contemplated under the Act
or applicable state securities laws;
(vi) The Registration Statement and the Prospectus, as of the
Effective Date (except for the financial statements and other financial and
statistical data included therein or omitted therefrom, as to which we express
no opinion), comply as to form in all material respects with the requirements of
the Act and Regulations and the conditions for use of a registration statement
on Form SB-2 have been satisfied by the Company;
(vii) The description in the Registration Statement and the
Prospectus of statutes, regulations, contracts, and other documents have been
reviewed by us, and, based upon such review, are accurate in all material
respects and present fairly the information required to be disclosed, and to our
knowledge, there are no material statutes or regulations, or, to our knowledge,
material contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not so described or filed as required.
To our knowledge, none of the material provisions of the contracts or
instruments described above violates any existing applicable law, rule, or
regulation or judgment, order, or decree known to us of any United States
governmental agency or court having jurisdiction over the Company or any of its
assets or businesses;
(viii) The outstanding common stock of the Company have been duly
authorized and validly issued. To our knowledge, except as set forth in the
Prospectus, no holders of any of the Company's securities has any rights,
"demand," "piggyback," or otherwise, to have such securities registered under
the Act;
(ix) The issuance and sale of the Securities, and the Warrant
Shares have been duly authorized, and when issued, same will be validly issued,
fully paid, and non-assessable, and the holders thereof will not be subject to
personal liability solely by reason of being such holders. The Securities are
not subject to preemptive rights of any stockholder of the Company. The
certificates representing the Securities are in proper legal form;
(x) The issuance and sale of the Warrant Shares have been duly
authorized and, when paid for, issued, and delivered pursuant to the terms of
the Warrants, the Warrant Shares will constitute the valid and binding
obligations of the Company, enforceable in accordance with their terms, to issue
and sell the Warrants and the Warrant Shares subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws affecting the rights of creditors generally and the discretion of
courts in granting equitable remedies and except that enforceability of the
indemnification provisions and the contribution provisions set forth in the
Underwriting Agreement may be limited by the federal securities laws or public
policy underlying such laws. All corporate action required to be taken for the
authorization, issuance, and sale of the securities has been duly, validly, and
sufficiently taken. The Warrants Shares conform to the descriptions thereof
contained in the Registration Statement and Prospectus;
(xi) Intentionally left blank;
(xii) To our knowledge, there are no claims, actions, suits,
proceedings, arbitrations, investigations, or inquiries before any governmental
agency, court, or tribunal, foreign or domestic, or before any private
arbitration tribunal, pending or threatened against the Company or involving its
properties or businesses, other than as described in the Prospectus, such
description being accurate, and other than litigation incident to the kind of
business conducted by the Company which, individually and in the aggregate, is
not material, and, except as otherwise disclosed in the Prospectus and the
Registration Statement, the Company has complied with all federal and state
laws, statutes, and regulations material to its business;
(xiii) We have participated in reviews and discussions in connection with
the preparation of the Registration Statement and the Prospectus. Although we
are not passing upon and do not assume responsibility for the accuracy,
completeness, or fairness of the statements contained in the Registration
Statement, no facts came to our attention which lead us to believe that (A) the
Registration Statement (except as to the financial statements and other
financial and statistical data contained therein, as to which we express no
opinion), on the Effective Date, contained any untrue statement of a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, or
that (B) the Prospectus (except as to the financial statements and other
financial and statistical data contained therein, as to which we express no
opinion) contains any untrue statement or a material fact or omits to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(f) Intentionally Left Blank.
(g) On or prior to the Closing Date, counsel for the Underwriter shall have
been furnished such documents, certificates, and opinions as it may reasonably
require for the purpose of enabling it to review the matters referred to in
subparagraph (e) of this Paragraph 10, or in order to evidence the accuracy,
completeness, or satisfaction of any of the representations, warranties, or
conditions herein contained.
(h) Prior to the Closing Date:
(i) There shall have been no material adverse change in the condition or
prospects or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus;
(ii) There shall have been no transaction, outside the ordinary course of
business, entered into by the Company from the latest date as of which the
financial condition of the Company is set forth in the Registration Statement
and Prospectus which is material to the Company, which is either (a) required to
be disclosed in the Prospectus or Registration Statement and is not so
disclosed, or (b) likely to have material adverse effect on the Company's
business or financial condition;
(iii) The Company shall not be in default under any material provision of
any instrument relating to any outstanding indebtedness, except as described in
the Prospectus;
(iv) No material amount of the assets of the Company shall have
been pledged, mortgaged, or otherwise encumbered, except as set forth in the
Registration Statement and Prospectus;
(v) No action, suit, or proceeding, at law or in equity, shall
have been pending or to the Company's knowledge threatened against the Company
or affecting any of its properties or businesses before or by any court or
federal or state commission, board, or other administrative agency wherein an
unfavorable decision, ruling, or finding would materially and adversely affect
the business, operations, prospects, or financial condition or income of the
Company, taken as a whole, except as set forth in the Registration Statement and
Prospectus; and
(vi) No stop order shall have been issued under the Act, and no
proceedings therefor shall have been initiated or, to the Company's knowledge,
threatened by the Commission.
(vii) Each of the representations and warranties of the Company
contained in this Agreement and in each certificate and document contemplated
under this Agreement to be delivered to you was, when originally made, and is at
the time such certificate is dated, true and correct.
(i) Concurrently with the execution and delivery of this Agreement and
at the Closing Date, you shall have received a certificate of the Company signed
by the Chief Executive Officer of the Company and the principal financial
officer of the Company, dated as of the Closing Date, to the effect that the
conditions set forth in subparagraph (h) above have been satisfied and that, as
of the Closing Date, the representations and warranties of the Company set forth
in Paragraph 2 herein and the statements in the Registration Statement and
Prospectus were and are true and correct. Any certificate signed by any officer
of the Company and delivered to you or for counsel for the Underwriter shall be
deemed a representation and warranty by the Company to the Underwriter as to the
statements made therein.
(j) At the time this Agreement is executed, and at the Closing Date,
you shall have received a letter, addressed to the Underwriter and in form and
substance satisfactory in all respects to you and counsel for the Underwriter,
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, from
Xxxxxxx X. Xxxxxx, LLP, dated as of the date of this Agreement and as of the
Closing Date.
(k) All proceedings taken in connection with the authorization,
issuance, or sale of the Common Stock, and Warrant Shares as herein contemplated
shall be satisfactory in form and substance to you and to counsel to the
Underwriter, and the Underwriter shall have received from such counsel an
opinion, dated as the Closing Date with respect to such of these proceedings as
you may reasonably require.
(l) The Company shall have furnished to you such certificates,
additional to those specifically mentioned herein, as you may have reasonably
requested in a timely manner as to the accuracy and completeness, at the Closing
Date, of any statement in the Registration Statement or the Prospectus, as to
the accuracy, at the Closing Date, of the representations and warranties of the
Company herein and in each certificate and document contemplated under this
Agreement to be delivered to you, as to the performance by the Company of its
obligations hereunder and under each such certificate and document or as to the
fulfillment of the conditions concurrent and precedent to your obligations
hereunder.
(m) On the Closing Date there shall have been duly tendered to you for
your account the appropriate number of shares constituting the Securities.
11. Indemnification and Contribution.
--------------------------------
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Underwriter and each person, if any, who
controls the Underwriter ("controlling person") within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act, against any and all
losses, liabilities, claims, damages, actions, and expenses or liability, joint
or several, whatsoever (including but not limited to any and all expense
whatsoever reasonably incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever), joint or
several, to which it or such controlling persons may become subject under the
Act, the Exchange Act, or under any other statute or at common law or otherwise
or under the laws of foreign countries, arising out of or based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in (A)
the Registration Statement or any Preliminary Prospectus or the Prospectus (as
from time to time amended and supplemented); (B) in any post-effective amendment
or amendments or any new registration statement and prospectus in which is
included the Warrant Shares of the Company issued or issuable upon exercise of
the Warrants; or (C) in any application or other document or written
communication (in this Paragraph 10 collectively called "application") executed
by the Company; or (ii) based upon written information furnished by the Company
filed in any jurisdiction in order to qualify the Common Stock, and Warrant
Shares, under the securities laws thereof or filed with the Commission or any
securities exchange; or (iii) based upon the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement or
omission was made in reliance upon or in conformity with written information
furnished to the Company with respect to the Underwriter by or on behalf of the
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in
application, as the case may be. Notwithstanding the foregoing, the Company
shall have no liability under this Paragraph 11(a) if any such untrue statement
or omission made in a Preliminary Prospectus is cured in the Prospectus and the
Underwriter failed to deliver to the person or persons alleging the liability
upon which indemnification is being sought, at or prior to the written
confirmation of such sale, a copy of the Prospectus. This indemnity will be in
addition to any liability which the Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the Company
and each of the officers and directors of the Company who have signed the
Registration Statement and each other person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, to the same extent as the foregoing indemnity from the Company to the
Underwriter in Paragraph 11(a), but only with respect to any untrue statement or
alleged untrue statement of any material fact contained in, or any omission or
alleged omission to state a material fact required to be stated in (i) any
Preliminary Prospectus, the Registration Statement, or Prospectus or any
amendment or supplement thereof or necessary to make the statements therein not
misleading; or (ii) in any application made solely in reliance upon, and in
conformity with, written information furnished to the Company by you
specifically for use in the preparation of such Preliminary Prospectus, the
Registration Statement, or Prospectus directly relating to the transactions
effected by the Underwriter in connection with this Offering. This indemnity
agreement will be in addition to any liability which the Underwriter may
otherwise have. Notwithstanding the foregoing, the Underwriter shall have no
liability under this Paragraph 11(b) if any such untrue statement or omission
made in a Preliminary Prospectus is cured in the Prospectus and the Prospectus
is delivered to the person or persons alleging the liability upon which
indemnification is being sought.
(c) If any action is brought against any indemnified party (the
"Indemnitee") in respect of which indemnity may be sought against another party
pursuant to the foregoing (the "Indemnitor"), the Indemnitor shall assume the
defense of the action, including the employment and fees of counsel (reasonably
satisfactory to the Indemnitee) and payment of expenses. Any Indemnitee shall
have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Indemnitee unless the
employment of such counsel shall have been authorized in writing by the
Indemnitor in connection with the defense of such action. If the Indemnitor
shall have employed counsel to have charge of the defense or shall previously
have assumed the defense of any such action or claim, the Indemnitor shall not
thereafter be liable to any Indemnitee in investigating, preparing, or defending
any such action or claim. Each Indemnitee shall promptly notify the Indemnitor
of the commencement of any litigation or proceeding against the Indemnitee in
connection with the issue and sale of the Securities or in connection with the
Registration Statement or Prospectus.
(d) In order to provide for just and equitable contribution under the
Act in any case in which: (i) the Underwriter makes a claim for indemnification
pursuant to Paragraph 11 hereof, but it is judicially determined (by the entry
of a final judgment or decree by a court of competent jurisdiction and the time
to appeal has expired or the last right of appeal has been denied) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Paragraph 11 provides for indemnification of such case; or (ii)
contribution under the Act may be required on the part of the Underwriter in
circumstances for which indemnification is provided under this Paragraph 11,
then, and in each such case, the Company and the Underwriter shall contribute to
the aggregate losses, claims, damages, or liabilities to which they may be
subject (after any contribution from others) in such proportion so that the
Underwriter is responsible for the portion represented by dividing the total
compensation received by the Underwriter herein by the total purchase price of
all Securities sold in the public offering and the Company is responsible for
the remaining portion; provided, that in any such case, 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 was not guilty of such
fraudulent misrepresentation.
The foregoing contribution agreement shall in no way affect the
contribution liabilities of any persons having liability under Section 11 of the
Act other than the Company and the Underwriter. If the full amount of the
contribution specified in this paragraph is not permitted by law, then the
Underwriter and each person who controls the Underwriter shall be entitled to
contribution from the Company to the full extent permitted by law. No
contribution shall be requested with regard to the settlement of any matter from
any party who did not consent to the settlement.
(e) Within fifteen (15) days after receipt by any party to this
Agreement (or its representative) of notice of the commencement of any action,
suit, or proceeding, such party will, if a claim for contribution in respect
thereof is made against another party (the "contributing party"), notify the
contributing party of the commencement thereof, but the omission so to notify
the contributing party will not relieve it from any liability it may have to any
other party other than for contribution hereunder.
In case any such action, suit, or proceeding is brought against any party,
and such party notifies a contributing party or his or its representative of the
commencement thereof within the aforesaid fifteen (15) days, the contributing
party will be entitled to participate therein with the notifying party and any
other contributing party similarly notified. Any such contributing party shall
not be liable to any party seeking contribution on account of any settlement of
any claim, action, or proceeding effected by such party seeking contribution
without the written consent of such contributing party. The indemnification
provisions contained in this Paragraph 11 are in addition to any other rights or
remedies which either party hereto may have with respect to the other or
hereunder.
12. Representations Warranties Agreements to Survive Delivery.
---------------------------------------------------------
The respective indemnity and contribution agreements by the Underwriter and
the Company contained in Paragraph 11 hereof and the covenants, representations,
and warranties of the Company and the Underwriter set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
investigation made by the Underwriter or on its behalf or by or on behalf of any
person who controls the Underwriter or by the Company or any controlling person
of the Company or any director or any officer of the Company; (ii) acceptance of
any of the Securities and payment therefor; or (iii) any termination of this
Agreement, and same shall survive the delivery of the Securities, and any
successor of the Underwriter or the Company or of any person who controls you or
the Company or any other indemnified party, as the case may be, shall be
entitled to the benefit of such respective indemnity and contribution
agreements. The respective indemnity and contribution agreements by the
Underwriter and the Company contained in this Paragraph 12 shall be in addition
to any liability which the Underwriter and the Company may otherwise have.
13. Effective Date of This Agreement and Termination Thereof.
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(a) This Agreement shall become effective at 10:00 A.M., New York
time, on the first full business day following the day on which you and the
Company receive notification that the Registration Statement became effective.
(b) This Agreement may be terminated by the Underwriter, by notifying
the Company at any time on or before the Closing Date, if any domestic or
international event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, securities markets; or
if trading on the New York Stock Exchange, the American Stock Exchange, or in
the over-the-counter market shall have been suspended or minimum or maximum
prices for trading shall have been fixed or maximum ranges for prices for
securities shall have been required on the over-the-counter market by the NASD
or NASDAQ, an exchange, or by order of the Commission or any other governmental
authority having jurisdiction; or if a moratorium in foreign exchange trading by
major international banks or persons has been declared; or if the Company shall
have sustained a loss material or substantial to the Company taken as a whole by
fire, flood, accident, hurricane, earthquake, theft, sabotage, or other calamity
or malicious act which, whether or not such loss shall have been insured, will,
in your opinion, make it inadvisable to proceed with the delivery of the
Securities; or if there shall have been a material adverse change in the
conditions of the securities market in general, as in your reasonable judgment
would make it inadvisable to proceed with the offering, sale, and delivery of
the Securities; or if there shall have been a material adverse change in the
financial or securities markets, particularly in the over-the-counter market, in
the United States having occurred since the date of this Agreement.
(c) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Paragraph 13, the Company shall
be notified promptly by you by telephone or facsimile, and such notification
shall be confirmed by letter.
(d) If this Agreement shall not become effective by reason of an
election of the Underwriter pursuant to this Paragraph 13 or if this Agreement
shall not be carried out within the time specified herein by reason of any
failure on the part of the Company to perform any undertaking or to satisfy any
condition of this Agreement by it to be performed or satisfied, the sole
liability of the Company to the Underwriter shall be pursuant to Paragraph 9
herein.
Notwithstanding any contrary provision contained in this Agreement, any
election hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Paragraph 9 and 11 hereof
shall not be in any way affected by such election or termination or failure to
carry out the terms of this Agreement or any part hereof.
14. Notices.
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All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to the Underwriter, shall be mailed,
delivered, or telegraphed and confirmed to the Underwriter at Xxxxx Securities,
Inc. 000 Xxxx Xxxx Xxxxxx Xxxxxx, XX 00000, and, if sent to the Company, shall
be mailed, delivered, or telegraphed and confirmed to the Company at 000X Xxxx
Xxx Xxxxxxxxxx, Xxx Xxxx 00000, Att: Xxxxxxx X. Xxxxxx with a copy thereof to
Blau, Kramer, Wactlar & Xxxxxxxxx, P.C. 000 Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000 Att: Xxxxx Xxxxxxxxx.
15. Parties.
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This Agreement shall inure solely to the benefit of and shall be binding
upon the Underwriter and the Company, and their respective successors, legal
representatives, and assigns, and no other person shall have or be construed to
have any legal or equitable right, remedy, or claim under or in respect of or by
virtue of this Agreement or any provision herein contained.
16. Construction.
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This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York and shall supersede any
agreement or understanding, oral or in writing, express or implied, between the
Company and you relating to the sale of any of the Securities.
17. Jurisdiction and Venue.
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The Company agrees that the courts of the State of New York shall have
jurisdiction over any litigation arising from this Agreement, and venue shall be
proper in the Southern or Eastern Districts of New York.
18. Counterparts.
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This agreement may be executed in counterparts.
If the foregoing correctly sets forth the understanding between the
Underwriter and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between
us.
Very truly yours,
Harbour Entertainment, Inc
By:
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Xxxxxxx X. Xxxxxx, President
Accepted as of the date first
above written:
Xxxxx Securities, Inc.
By:
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