Exhibit 1.1
1,000,000 Common Shares
IT STAFFING LTD.
UNDERWRITING AGREEMENT
_________, 1998
Strasbourger Xxxxxxx Tulcin Xxxxx Incorporated
As Representative of the several
Underwriters named in Schedule I
attached hereto
c/o Strasbourger Xxxxxxx Tulcin Xxxxx Incorporated
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
The undersigned, IT Staffing Ltd., a Ontario corporation (the
"Company"), hereby confirms its agreement with Strasbourger Xxxxxxx Tulcin
Xxxxx Incorporated (individually, "Strasbourger," and, as representative (the
"Representative") of the several underwriters named in Schedule I hereto (the
"Underwriters")), and the Underwriters as follows:
1. Introduction.
(a) The Company proposes to issue and sell to the
Underwriters an aggregate of 1,000,000 common shares, no par value, of the
Company (the "Common Shares"). Such Common Shares are hereinafter referred to
as the "Firm Stock".
(b) Solely for the purpose of covering
over-allotments, if any, the Company proposes to grant to the Underwriters an
option (the "Over-allotment Option") to purchase from
1
it, in the aggregate, up to an additional 150,000 Common Shares. Such Common
Shares are hereinafter referred to as the "Additional Stock." The Firm Stock and
the Additional Stock are hereinafter referred to as the "Stock."
(c) The Company proposes to sell to Strasbourger,
individually and not as Representative, warrants (the "Representative's
Warrants") to purchase up to an aggregate of 100,000 Common Shares(the "Warrant
Shares") for an aggregate purchase price of $100.00. The Representative's
Warrants shall be substantially in the form filed as an exhibit to the
Registration Statement (as hereinafter defined). The Representative's Warrants
and the Warrant Shares are hereinafter referred to collectively as the
"Representative's Securities." The Stock and the Representative's Securities are
hereinafter referred to collectively as the "Securities."
2. Representations and Warranties. The Company represents and warrants
to, and agrees with, the several Underwriters that:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(Registration No. 333-_______), and may have filed one or more amendments
thereto and a Rule 462(b) Registration Statement (as hereinafter defined) in
accordance with Rule 462(b) under the Securities Act, including in such
registration statement and each such amendment a related preliminary prospectus,
for the registration of the Securities under the Securities Act of 1933, as
amended (the "Securities Act"). As used in this Agreement, the term
"Registration Statement" shall refer to such registration statement referred to
in the first sentence of this Section 2(a), as amended, on file with the
Commission at the time such registration statement is declared by the Commission
to be effective under the Securities Act (including the prospectus, financial
statements, and exhibits filed as a part thereof, provided,
2
however, that such registration statement, at the time it is declared by the
Commission to be effective under the Securities Act, may omit such information
as is permitted to be omitted from such registration statement when it becomes
effective under the Securities Act pursuant to Rule 430A of the General Rules
and Regulations of the Commission under the Securities Act (the "Regulations"),
which information (the "Rule 430A Information") shall be deemed to be included
in such registration statement when a final prospectus is filed with the
Commission in accordance with Rules 430A and 424(b)(1) or (4) of the Regulations
and includes any Rule 462(b) Registration Statement); the term "Preliminary
Prospectus" shall refer to each prospectus included in the Registration
Statement, or any amendments thereto, before the Registration Statement is
declared by the Commission to be effective under the Securities Act, the form of
prospectus omitting Rule 430A Information included in the Registration Statement
when the Registration Statement becomes effective under the Securities Act, if
applicable (the "Rule 430A Prospectus"), and any prospectus filed by the Company
with the consent of the Representative pursuant to Rule 424(a) of the
Regulations; and the term "Prospectus" shall refer to the final prospectus
forming a part of the Registration Statement in the form first filed with the
Commission pursuant to Rule 424(b)(1) or (4) of the Regulations or, if no such
filing is required, the form of final prospectus forming a part of the
Registration Statement. As used in this Agreement, the term "Rule 462(b)
Registration Statement" means the registration statement and any amendments
thereto filed pursuant to Rule 462(b) of the Regulations relating to the
offering covered by the Initial Registration Statement.
(b) When the Registration Statement becomes effective
under the Securities Act, and at all times subsequent thereto up to and
including the Closing Date (as defined in Section 3(a) hereof) and each
Additional Closing Date (as defined in Section 3(b) hereof), and during such
longer
3
period as the Prospectus may be required to be delivered in connection with
sales by the Underwriters or a dealer, and during such longer period until any
post-effective amendment thereto shall become effective under the Securities
Act, the Registration Statement (and any post-effective amendment thereto) and
the Prospectus (as amended or as supplemented if the Company shall have filed
with the Commission any amendment or supplement to the Registration Statement or
the Prospectus) will contain all statements which are required to be stated
therein in accordance with the Securities Act and the Regulations, will comply
with the Securities Act and the Regulations, and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
no event will have occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has not then
been set forth in such an amendment or supplement; if a Rule 430A Prospectus is
included in the Registration Statement at the time it is declared by the
Commission to be effective under the Securities Act, the Prospectus filed
pursuant to Rules 430A and 424(b)(1) or (4) of the Regulations will contain all
Rule 430A Information and all statements which are required to be stated therein
in accordance with the Securities Act or the Regulations, will comply with the
Securities Act and the Regulations, and will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; and each Preliminary
Prospectus, as of the date filed with the Commission, contained all statements
required to be stated therein in accordance with the Securities Act and the
Regulations, complied with the Securities Act and the Regulations, and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading; except that no representation or
4
warranty is made in this Section 2(a)(2) with respect to statements or omissions
made in reliance upon, and in conformity with, written information furnished to
the Company as stated in Section 8(b) with respect to any Underwriter by, or on
behalf of, such Underwriter through the Representative expressly for inclusion
in the Registration Statement, any Preliminary Prospectus, or the Prospectus, or
any amendment or supplement thereto.
(c) Neither the Commission nor the "blue sky" or
securities authority of any jurisdiction has issued an order (a "Stop Order")
suspending the effectiveness of, or preventing or suspending the use of, the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, refusing to permit the effectiveness of the
Registration Statement, or suspending the registration or qualification of the
Securities, nor has any of such authorities instituted or threatened to
institute any proceedings with respect to a Stop Order.
(d) Any contract, agreement, instrument, lease, or
license required to be described in the Registration Statement or the Prospectus
has been properly described therein. Any contract, agreement, instrument, lease,
or license required to be filed as an exhibit to the Registration Statement has
been filed with the Commission as an exhibit to the Registration Statement.
(e) The following corporations are the only subsidiaries
(as defined in the Regulations) of the Company: Systemsearch Consulting, Inc., a
________ corporation ("SCI"), Systems PS Inc., a __________ corporation ("SPS"),
and International Career Specialists Ltd., a ________ corporation ("ICS," and
collectively with SCI and SPS, the "Subsidiaries"). The Company and each of the
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of its respective jurisdiction of incorporation, with
full power and authority,
5
and all necessary consents, authorizations, approvals, orders, licenses,
certificates, and permits of and from, and declarations and filings with, all
federal, state, local, and other governmental authorities and all courts and
other tribunals, to own, lease, license, and use its properties and assets and
to conduct its business in the manner described in the Prospectus. The Company
and each Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing as such in every jurisdiction in which its ownership,
leasing, licensing, or use of property and assets or the conduct of its business
makes such qualification necessary, except where the failure to so qualify will
not have a material adverse effect on the Company's business, properties, or
financial condition on a consolidated basis.
(f) The authorized capital stock of the Company consists
of 15,000,000 Common Shares, of which 1,677,876 shares are outstanding prior to
this offering, and 1,000,000 shares of preferred stock, no par value, of which
none are outstanding. Each outstanding Common Share is validly authorized and
issued, fully paid, and nonassessable, without any personal liability attaching
to the ownership thereof, has not been issued and is not owned or held in
violation of any preemptive or similar rights of shareholders. Each share of
capital stock of each Subsidiary is owned of record and beneficially by the
Company. There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance of, any
share of capital stock of the Company or any Subsidiary or any security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock of the Company, except as may be properly
described in the Prospectus. There is outstanding no security or other
instrument which by its terms is convertible into, or exercisable or
exchangeable for, capital stock
6
of the Company or any Subsidiary, except as may be properly described in the
Prospectus. The certificates evidencing the Common Shares are in due and proper
form.
(g) The consolidated financial statements of the Company
and each of the Subsidiaries included in the Registration Statement and the
Prospectus fairly present in all material respects, with respect to the Company,
the financial position, the results of operations, the cash flows, and the other
information purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
(except to the extent that certain footnote disclosures regarding any stub
period may have been omitted in accordance with the applicable rules of the
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) consistently applied throughout the periods involved, are correct and
complete in all material respects, and are in accordance with the books and
records of the Company. Xxxxxxxx Xxxxxxxx Xxxxxxx, the accountants whose reports
on the audited consolidated financial statements for the years ended and at
December 31, 1996 and 1997, are filed with the Commission as a part of the
Registration Statement, is, and during the periods covered by their reports
included in the Registration Statement and the Prospectus was, independent
certified public accountants with respect to the Company and each of the
Subsidiaries within the meaning of the Securities Act and the Regulations. No
other financial statements are required by Form S-1 or otherwise to be included
in the Registration Statement or the Prospectus. There has at no time been a
material adverse change in the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of the Company on
a consolidated basis from the latest information set forth in the Registration
Statement or the Prospectus, except as may be properly described in the
Prospectus.
7
(h) There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending,
threatened, or, to the best knowledge of the Company, in prospect (or any basis
therefor) with respect to the Company, any Subsidiary, or any of their
respective operations, businesses, properties, or assets, except as may be
properly described in the Prospectus or such as individually or in the aggregate
do not now have, and will not in the future have, a material adverse effect upon
the financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company and the Subsidiaries taken as a
whole. To the best knowledge of the Company, neither the Company nor any
Subsidiary is in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree, except as may be properly described in
the Prospectus or such as in the aggregate do not now have, and will not in the
future have, a material adverse effect upon the operations, business,
properties, or assets of the Company and the Subsidiaries taken as a whole; nor
is the Company or any Subsidiary currently required to take any action in order
to avoid any such violation or default.
(i) The Company and each Subsidiary has good and
marketable title to all properties and assets which the Prospectus indicates are
owned by it, free and clear of all liens, security interests, pledges, charges,
encumbrances, and mortgages, except as may be properly described in the
Prospectus or as are not material to the Company and the Subsidiaries taken as a
whole. No real property owned, leased, licensed, or used by the Company or any
Subsidiary lies in an area which is, or to the knowledge of the Company will be,
subject to zoning, use, or building code restrictions which would prohibit, and
no state of facts relating to the actions or inaction of another person or
entity or his or its ownership, leasing, licensing, or use of any real or
personal property exists or will exist which would prevent, the continued
effective ownership, leasing,
8
licensing, or use of such real property in the business of the Company and the
Subsidiaries, each as presently conducted or as the Prospectus indicates it
contemplates conducting, except as may be properly described in the Prospectus.
(j) Neither the Company or any Subsidiary nor, to the
knowledge of the Company, any other party, is now, or is expected by the Company
to be, in violation or breach of, or in default with respect to, any provision
of any contract, agreement, instrument, lease, license, arrangement, or
understanding which is material to the Company and the Subsidiaries taken as a
whole, and each such contract, agreement, instrument, lease, license,
arrangement, and understanding is in full force and effect and is the legal,
valid, and binding obligation of the parties thereto and is enforceable as to
them in accordance with its respective terms. The Company and each Subsidiary
enjoys peaceful and undisturbed possession under all leases and licenses under
which it is operating. Except as described in the Prospectus, neither the
Company nor any Subsidiary is a party to, or bound by, any contract, agreement,
instrument, lease, license, arrangement, or understanding, or subject to any
charter or other restriction, which has had, or may in the future have, a
material adverse effect on the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of the Company
and the Subsidiaries taken as a whole. Neither the Company nor any Subsidiary is
in violation or breach of, or in default with respect to, any term of its
respective certificate of incorporation (or other charter document) or by-laws.
(k) The Company and each Subsidiary owns or possesses
adequate rights to use all patents, patent rights, inventions, trade secrets,
licenses, know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names, and copyrights
9
described or referred to in the Prospectus as owned or used by it or which are
necessary for the conduct of its business as currently conducted as described in
the Prospectus and, to the best knowledge of the Company, its business as
contemplated as described in the Prospectus. To the best knowledge of the
Company, all such patents, patent rights, licenses, trademarks, service marks,
and copyrights are (i) valid and enforceable, (ii) not being infringed by any
third parties which infringement could, singly or in the aggregate, materially
and adversely affect the business, properties, operations, condition (financial
or otherwise), results of operations, income, or business prospects of the
Company and the Subsidiaries taken as a whole, as presently being conducted or
as proposed to be conducted as described in the Prospectus, and (iii) are
uncontested by any third party. The Company has no knowledge of, nor has it
received any notice of, infringement of, or conflict with, asserted rights of
others with respect to any patents, patent rights, inventions, trade secrets,
licenses, know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names, or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling, or finding could
materially and adversely affect the business, properties, operations, condition
(financial or otherwise), results of operations, income, or business prospects
of the Company and the Subsidiaries taken as a whole, as presently being
conducted or as proposed to be conducted as described in the Prospectus.
(l) Neither the Company or any Subsidiary, nor, to the
best knowledge of the Company, any director, officer, agent, employee, or other
person associated with, or acting on behalf of, the Company or any Subsidiary,
has, directly or indirectly: used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign
10
or domestic political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any
bribe, rebate, payoff, influence payment, kickback, or other unlawful payment.
The Company's internal accounting controls and procedures are sufficient to
cause the Company and each of the Subsidiaries to comply in all respects with
the Foreign Corrupt Practices Act of 1977, as amended.
(m) The Company has all requisite power and authority to
execute, deliver, and perform each of this Agreement, the financial advisory
agreement, between the Company, and Strasbourger, a form of which has been filed
as an Exhibit to the Registration Statement (the "Financial Advisory
Agreement"), and the Representative's Warrants. All necessary corporate
proceedings of the Company have been duly taken to authorize the execution,
delivery, and performance by the Company of this Agreement, the Financial
Advisory Agreement, and the Representative's Warrants. This Agreement has been
duly authorized, executed, and delivered by the Company and is the legal, valid,
and binding obligation of the Company. The Financial Advisory Agreement and the
Representative's Warrants have been duly authorized by the Company and, when
executed and delivered by the Company, will be legal, valid, and binding
obligations of the Company, each enforceable as to the Company in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal is
required by the Company or any Subsidiary for the execution, delivery, or
performance by the Company of this Agreement, the Financial Advisory Agreement,
or the Representative's Warrants, except filings under the Securities Act which
have been or will be made before the Closing Date, and consents consisting only
of consents under "blue sky" or securities laws which have been obtained at or
prior
11
to the date of this Agreement. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to which
the Company or any Subsidiary is a party, or to which any of their respective
properties or assets are subject, is required for the execution, delivery, or
performance of this Agreement, the Financial Advisory Agreement, and the
Representative's Warrants; and the execution, delivery, and performance of this
Agreement , the Financial Advisory Agreement, and the Representative's Warrants
will not violate, result in a breach of, conflict with, result in the creation
or imposition of any lien, charge, or encumbrance upon any properties or assets
of the Company or any Subsidiary pursuant to the terms of, or, with or without
the giving of notice or the passage of time or both, entitle any party to
terminate or call a default under, any such contract, agreement, instrument,
lease, license, arrangement, or understanding, or violate, result in a breach
of, or conflict with any term of the certificate of incorporation (or other
charter document) or by-laws of the Company, or violate, result in a breach of,
or conflict with, any law, rule, regulation, order, judgment, or decree binding
on the Company or any Subsidiary or to which any of their respective operations,
businesses, properties, or assets are subject.
(n) The Firm Stock is validly authorized and, when issued
and delivered in accordance with this Agreement, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and will not be issued in violation of any preemptive or
similar rights of shareholders, and the Underwriters will receive good title to
the shares of Firm Stock purchased by them, respectively, free and clear of all
liens, security interests, pledges, charges, encumbrances, shareholders'
agreements, and voting trusts. The Additional Stock is validly authorized and,
when issued in accordance with the terms hereof, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and
12
will not be issued in violation of any preemptive or similar rights of
shareholders. The Additional Stock has been duly and validly reserved for
issuance. The Stock conforms to all statements relating thereto contained in the
Registration Statement and the Prospectus.
(o) The Warrant Stock is validly authorized and has been
duly and validly reserved for issuance and, when issued and delivered upon
exercise of the Representative's Warrants in accordance with the terms thereof,
will be validly issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be issued in
violation of any preemptive or similar rights of shareholders; and the holders
of the Representative's Warrants will receive good title to the securities
purchased by them upon the exercise of the Representative's Warrants, free and
clear of all liens, security interests, pledges, charges, encumbrances,
shareholders' agreements, and voting trusts. The Representative's Securities
conform to all statements relating thereto contained in the Registration
Statement and the Prospectus.
(p) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, and
except as may otherwise be properly described in the Prospectus, neither the
Company nor any Subsidiary has (i) issued any securities or incurred any
material liability or material obligation, primary or contingent, for borrowed
money, (ii) entered into any material transaction not in the ordinary course of
business, (iii) declared or paid any dividend on its capital stock, except
dividends by a Subsidiary to the Company or another Subsidiary, or (iv)
experienced any adverse changes or any development which may materially
adversely effect the condition (financial or otherwise), net assets or
shareholders' equity, results of operations, business, key personnel, assets, or
properties of the Company and the Subsidiaries taken as a whole.
13
(q) Neither the Company or any Subsidiary nor any of
their respective officers, directors, or affiliates (as defined in the
Regulations), has taken or will take, directly or indirectly, prior to the
termination of the offering contemplated by this Agreement, any action designed
to stabilize or manipulate the price of any security of the Company, or which
has caused or resulted in, or which might in the future reasonably be expected
to cause or result in, stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale of any of the Firm
Stock or the Additional Stock.
(r) The Company has obtained from each of its directors,
officers, and shareholders a written agreement, in form and substance
satisfactory to counsel for the Underwriters, that, for a period of 24 months
from the date on which the Registration Statement is declared by the Commission
to be effective under the Securities Act, he, she, or it will not, without the
prior written consent of the Representative, publicly offer, pledge, sell,
contract to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any Common Shares or any security or other instrument
which by its terms is convertible into, or exercisable or exchangeable for,
Common Shares or other securities of the Company, including, without limitation,
any Common Shares issuable pursuant to the terms of any employee stock options;
provided, however, that such persons may offer, sell, contract to sell, grant an
option for the sale of, or otherwise dispose of all or any part of his, her, or
its Common Shares or other such security or instrument of the Company during
such period if such transaction is private in nature and the transferee of such
Common Shares or other securities or instruments agrees, prior to such
transaction, to be bound by all of the provisions of such agreement.
14
(s) The Company is not, and does not intend to conduct
its business in a manner in which it would be required to register as, an
"investment company" as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules and regulations
promulgated thereunder.
(t) No person or entity has the right to require
registration of Common Shares or other securities of the Company because of the
filing or effectiveness of the Registration Statement, which right has not been
waived.
(u) Except as may be set forth in the Prospectus, the
Company has not incurred any liability for a fee, commission, or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by this Agreement.
(v) Neither the Company or any Subsidiary, nor any of
their respective affiliates, is presently doing business with the government of
Cuba or with any person or affiliate located in Cuba. If, at any time after the
date on which the Registration Statement is declared by the Commission to be
effective under the Securities Act or with the Florida Department of Banking and
Finance (the "Florida Department"), whichever is later, and prior to the end of
the period referred to in the first clause of Section 2(b) hereof, the Company
and any Subsidiary commences engaging in business with the government of Cuba or
with any person or affiliate located in Cuba, the Company will so inform the
Florida Department within 90 days after such commencement of business in Cuba,
and, during the period referred to in Section 2(2) hereof, will inform the
Florida Department within 90 days after any change occurs with respect to
previously reported information.
15
(w) No officer, director, or shareholder of the Company
has any affiliation or association with the National Association of Securities
Dealers, Inc. (the "NASD") or any member thereof.
(x) Except as disclosed in the Prospectus, the Company,
each of the Subsidiaries, and all shareholders of the Company have filed all
necessary federal, state, local, and foreign income and franchise tax returns
and other reports required to be filed 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 or any Subsidiary.
(y) To the best knowledge of the Company, none of the
activities or business of the Company or any Subsidiary is in violation of, or
will cause the Company or any Subsidiary 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 effect upon the financial condition,
results of operations, business, properties, assets, liabilities, or future
prospects of the Company and the Subsidiaries taken as a whole.
(z) The Common Shares have been approved for quotation on
the Nasdaq SmallCap Market and the _________ Stock Exchange (the "Stock
Exchange").
(aa) The Company is in compliance with all U.S. and
Cannadian federal, state, local, and foreign laws and regulations respecting
employment and employment practices, terms and conditions of employment, and
wages and hours. There are no pending investigations involving the Company, by
the U.S. Department of Labor, or any other U.S. or Canadian governmental agency
responsible for the enforcement of such federal, state, local, or foreign laws
and regulations. There
16
is no unfair labor practice charge or complaint against either the Company
pending before the National Labor Regulations Board or its Canadian counterpart
or any strike, picketing, boycott, dispute, slowdown or stoppage pending or, to
the best knowledge of the Company, threatened against or involving the Company
or any predecessor entity, and none has ever occurred. No representation
question exists respecting the employees of the Company, and no collective
bargaining agreement or modification thereof is currently being negotiated by
the Company. No grievance or arbitration proceeding is pending or threatened
under any expired or existing collective bargaining agreements of the Company.
No labor dispute with the employees of the Company exists, or, is imminent.
(ab) Except as described in the Prospectus, the Company
does not maintain, sponsor or contribute to nay program or arrangement that is
an "employee pension benefit plan," an "employee welfare benefit plan," or a
"multi employer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("ERISA" Plans"). The Company does not maintain or contribute,
now or at any time previously, to a defined benefit plan, as defined in Section
3(35) of ERISA. No "accumulated funding deficiency" (as defined in Section 302
of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than
events with respect to which the 30-day notice under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan which could
reasonably be expected to have a material adverse effect of the business,
prospects, financial condition, or results of operations of the Company. No
ERISA Plan (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code, which could subject the Company to any tax penalty
17
on prohibited transactions and which has not adequately been corrected. Each
ERISA Plan is in compliance with all material reporting, disclosure and other
requirements of the Internal Revenue Code of 1986, as amended ("the "Code") and
ERISA as they relate to any such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each ERISA Plan which
is intended to comply with Code Section 401(a), stating that such ERISA Plan and
the attendant trust are qualified therunder. The Company has never completely or
partially withdrawn from a "multi employer plan."
(ac) The Company has not been notified nor is otherwise
aware that it is potentially liable, or is considered potentially liable, under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or any similar law ("Environmental Laws"). To the best
knowledge of the Company, the Company is in compliance with all applicable
existing Environmental Laws, except for such instances of non-compliance which
would not have a material adverse effect on the business, prospects, financial
condition, or results of operations. The term "Hazardous Material" means (i) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (ii) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act, as amended, (iii) any
petroleum or petroleum product, (iv) any polychlorinated biphenyl, and (v) any
pollutant or contaminant or hazardous, dangerous or toxic chemical, material,
waste or substance regulation under or within the meaning of any other
Environmental Law. To the best knowledge of the Company, no disposal, release or
discharge of Hazardous Material has occurred on, in, at or about any of the
facilities or properties of the Company except for those instances which are in
compliance with Environmental Laws or in the aggregate would not have a material
adverse effect on the
18
business, prospects, financial condition, or results of operations of the
Company. Except as described in the Prospectus, to the best knowledge of the
Company: (i) there has been no storage, disposal, generation, transportation,
handling or treatment of Hazardous Material by the Company (or to the knowledge
of the Company, and of its predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company in violation of any
applicable law, ordinance, rule, regulation, order, judgement, decree or permit
or which would require remedial action which has not been taken, under any
applicable law, ordinance, rule, regulation, order, judgement, decree or permit,
except for such violations and failures to take remedial action which would not
result in, singularly or in the aggregate, a material adverse effect on the
business, prospects, financial condition, or results of operations of the
Company; and (ii) there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environmental surrounding such property by the Company of any Hazardous
Material, except for such spills, discharge, leaks, emissions, injections,
escapes, dumping or releases which are in compliance with Environmental Laws or
would not result in, singularly or in the aggregate, a material adverse effect
the business, prospects, financial condition, or results of operations of the
Company.
(ad) None of the proceeds of the sale of the Securities
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security, for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Securities or Warrants to be
considered a "purpose credit" within the meanings of Regulation G,T,U or X of
the Board of Governors of the Federal Reserve Board.
19
3. Purchase, Sale, and Delivery of the Stock and the
Representative's Warrants.
(a) On the basis of the representations, warranties,
covenants, and agreements of the Company herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
the several Underwriters, and, the Underwriters, severally and not jointly,
agree to purchase from the Company, the numbers of shares of Firm Stock set
forth opposite the respective names of the Underwriters in Schedule I hereto.
The purchase price per share of the Firm Stock to be paid by the
several Underwriters shall be $____. The initial public offering price per share
of the Firm Stock shall be $_____.
Payment for the Firm Stock by the Underwriters shall be made by
certified or official bank check in New York Clearing House (next day) funds or
by electronic wire transfer of next day funds, payable to the order of the
Company, at the offices of Strasbourger Xxxxxxx Tulcin Xxxxx Incorporated, 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place in the New York City
metropolitan area as the Representative shall determine and advise the Company
by at least two full days' notice in writing, upon delivery of the Firm Stock to
the Representative for the respective accounts of the Underwriters. Such
delivery and payment shall be made at 9:00 a.m., New York City local time, on
the third business day following the time of the initial public offering, as
defined in Section 11(a) hereof (unless such time and date is postponed in
accordance with the provisions of Section 9(c) hereof), or at such other time as
shall be agreed upon between the Representative and the Company. The time and
date of such delivery and payment are hereinafter referred to as the "Closing
Date."
Certificates representing the Firm Stock shall be registered in such
name or names and in such authorized denominations as the Representative may
request in writing at least two full
20
business days prior to the Closing Date. The Company shall permit the
Representative to examine and package such certificates for delivery at least
one full business day prior to the Closing Date.
(b) The Company hereby grants to the Underwriters' the
Over-allotment Option to purchase up to an aggregate of 100,000 Common Shares,
as may be necessary to cover over-allotments, at the same purchase price per
share to be paid by the several Underwriters to the Company for the Firm Stock
as provided for in this Section 3 hereof. The Over-allotment Options may be
exercised only to cover over-allotments in the sale of shares by Underwriters'
and shall be exercised pro rata to the numbers of Common Shares set forth
opposite the names of such Underwriters in Schedule I hereto. The Over-allotment
Option may be exercised by the Underwriters on the basis of the representations,
warranties, covenants, and agreements of the Company herein contained, but
subject to the terms and conditions herein set forth, at any time and from time
to time on or before the forty-fifth day following the date on which the
Registration Statement becomes effective under the Securities Act, by written
notice by the Representative to the Company. Such notice shall set forth the
aggregate number of shares of Additional Stock as to which the Over-allotment
Option is being exercised, the name or names in which the certificates
representing the Additional Stock are to be registered, the authorized
denominations in which the Additional Stock is to be registered, and the time
and date, as determined by the Representative, when such shares of Additional
Stock are to be delivered (each such time and date are hereinafter referred to
as an "Additional Closing Date"); provided, however, that no Additional Closing
Date shall be earlier than the Closing Date nor earlier than the second business
day after the date on which the notice of the exercise of the Over-allotment
Option shall have been given nor later than the eighth business day after the
date on which such notice shall have been given.
21
In the event the Company declares or pays a dividend or a distribution
on the Common Shares, whether in the form of cash, Common Shares, or other
consideration, prior to the Additional Closing Date, such dividend or
distribution shall also be paid on the Additional Stock on the later of the
Additional Closing Date and the date on which such dividend or distribution is
payable.
Payment for the shares of Additional Stock by the Underwriters shall be
made by certified or official bank check in New York Clearing House (next day)
funds or by electronic wire transfer of next day funds payable to the order of
the Company at the offices of Strasbourger Xxxxxxx Tulcin Xxxxx Incorporated, 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place in the New York City
metropolitan area as the Representative shall determine and advise the Company
by at least two full days' notice in writing, upon delivery of the shares of
Additional Stock to the Underwriters' for their respective accounts.
Certificates for the shares of Additional Stock shall be registered in
such name or names and in such authorized denominations as the Representative
may request in writing at least two full business days prior to the Additional
Closing Date with respect thereto. The Company shall permit the Representative
to examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date with respect thereto.
(c) The Company hereby agrees to issue and sell to the
Representative (individually and not as the representative of the several
Underwriters) and/or its designees on the Closing Date the Representative's
Warrants to purchase the Warrant Shares for an aggregate purchase price of
$100.00.
Delivery and payment for the Representative's Warrants shall be made on
the Closing Date. The Company shall deliver to the Representative upon payment
therefor, certificates representing
22
the Representative's Warrants in the name or names and in such authorized
denominations as the Representative may request. The Representative's Warrants
shall be exercisable for a period of four years commencing one year from the
date on which the Registration Statement was declared effective under the
Securities Act at an initial exercise price per Warrant Share equal to $______.
(d) It is understood that the Representative may (but
shall not be obligated to) make any and all the payments required pursuant to
this Section 3 on behalf of any Underwriters whose check or checks shall not
have been received by the Representative at the time of delivery of the Stock to
be purchased by such Underwriter or Underwriters. Any such payment by the
Representative shall not relieve any such Underwriter or Underwriters of any of
its or their obligations hereunder.
4. Offering. The Underwriters are to make a public offering of the Firm
Stock as soon, on or after the date on which the Registration Statement becomes
effective under the Securities Act, as the Representative deems it advisable so
to do. The Firm Stock is to be initially offered to the public at the initial
public offering price as provided for in Section 3(a) (such price being
hereinafter referred to as the "public offering price"). After the initial
public offering, the Representative may from time to time increase or decrease
the public offering price, in the sole discretion of the Representative, by
reason of changes in general market conditions or otherwise.
5. Covenants. The Company covenants that it will:
(a) Use its best efforts to cause the Registration
Statement to become effective under the Securities Act as promptly as possible
and notify the Representative and counsel to the Underwriters immediately, and
confirm such notice in writing, (i) when the Registration Statement and any
post-effective amendment thereto become effective under the Securities Act, (ii)
of the
23
receipt of any comments from the Commission or the "blue sky" or securities
authority of any jurisdiction regarding the Registration Statement, any
post-effective amendment thereto, the Prospectus, or any amendment or supplement
thereto, (iii) of the filing with the Commission of any supplement to the
Prospectus, and (iv) of the receipt of any notification with respect to a Stop
Order or the initiation or threatening of any proceeding with respect to a Stop
Order. The Company will use its best efforts to prevent the issuance of any Stop
Order and, if any Stop Order is issued, to obtain the lifting thereof as
promptly as possible. If the Registration Statement has become or becomes
effective under the Securities Act with a form of prospectus omitting Rule 430A
Information, or filing of the Prospectus with the Commission is otherwise
required under Rule 424(b) of the Regulations, the Company will file with the
Commission the Prospectus, properly completed, pursuant to Rule 424(b) of the
Regulations within the time period prescribed and will provide evidence
satisfactory to the Representative of such timely filing.
(b) During the time when a prospectus relating to the
Firm Stock or the Additional Stock is required to be delivered hereunder or
under the Securities Act or the Regulations, comply with all requirements
imposed upon it by the Securities Act, as now existing and as hereafter amended,
and by the Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of, or dealings in, the Stock in accordance with
the provisions hereof and the Prospectus. If, at any time when a prospectus
relating to the Firm Stock or the Additional Stock is required to be delivered
hereunder or under the Securities Act or the Regulations, any event shall have
occurred as a result of which, in the reasonable opinion of counsel for the
Company or counsel for the Underwriters, the Registration Statement or the
Prospectus as then amended or supplemented contains any untrue statement of a
material fact or omits to state any
24
material fact required to be stated therein or necessary to make the statements
therein not misleading, or if, in the opinion of either of such counsel, it is
necessary at any time to amend or supplement the Registration Statement or the
Prospectus to comply with the Securities Act or the Regulations, the Company
will immediately notify the Representative and promptly prepare and file with
the Commission an appropriate amendment or supplement (in form and substance
satisfactory to the Representative and counsel to the Underwriters) which will
correct such statement or omission or which will effect such compliance and will
use its best efforts to have any such amendment declared effective under the
Securities Act as soon as possible.
(c) Deliver without charge to each of the several
Underwriters such number of copies of each Preliminary Prospectus as may
reasonably be requested by the Underwriters and, as soon as the Registration
Statement, or any amendment thereto, becomes effective under the Securities Act
or a supplement is filed with the Commission, deliver without charge to the
Representative two signed copies of the Registration Statement, including
exhibits, or such amendment thereto, as the case may be, and two copies of any
supplement thereto, and deliver without charge to each of the several
Underwriters such number of copies of the Prospectus, the Registration
Statement, and amendments and supplements thereto, if any, without exhibits, as
the Representative may reasonably request for the purposes contemplated by the
Securities Act.
(d) Endeavor in good faith, in cooperation with the
Representative, at or prior to the time the Registration Statement becomes
effective under the Securities Act, to qualify the Securities for offering and
sale under the "blue sky" or securities laws of such jurisdictions as may be
designated by the Representative; provided, however, that no such qualification
shall be required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general
25
process or to taxation as a foreign corporation doing business in such
jurisdiction to which it is not then subject. In each jurisdiction where such
qualification shall be effected, the Company will, unless the Representative
agrees in writing 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 be required
by the laws of such jurisdiction.
(e) Make generally available, within the meaning of
Section 11(a) of the Securities Act and the Regulations, to its security holders
as soon as practicable, but not later than _____________, an earnings statement,
which need not be certified by independent certified public accountants unless
required by the Securities Act or the Regulations, but which shall satisfy the
provisions of Section 11(a) of the Securities Act and the Regulations, covering
a period of at least 12 months beginning after the date on which the
Registration Statement was declared effective under the Securities Act.
(f) For a period of 18 months after the date of the
Prospectus, not, without the prior written consent of the Representative, offer,
issue, sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any Common Shares or other securities of the
Company, or any security or other instrument which by its terms is convertible
into, or exercisable or exchangeable for, Common Shares, except as contemplated
by Section 3 hereof and except for (i) the issuance of stock options, or Common
Shares issuable upon the exercise thereof, which have been or may be granted
pursuant to the Company's 1998 Stock Option Plan, up to an aggregate of 435,000
Common Shares, all as properly described in the Prospectus, (ii) upon the
exercise of warrants outstanding on the date hereof, as properly described in
the Prospectus, (iii)
26
the issuance of shares of Warrant Stock issuable upon exercise of the
Representative's Warrants, and (iv) the issuance of Common Shares in connection
with acquisitions by the Company.
(g) For a period of five years after the date on which
the Registration Statement was declared effective under the Securities Act
furnish the Representative without charge, the following:
(1) within 90 days after the end of each fiscal
year, one copy of financial statements certified by independent certified public
accountants, including a balance sheet, statement of operations, and statement
cash flows of the Company and its then existing subsidiaries, if any, with
supporting schedules, prepared in accordance with generally accepted accounting
principles, as at the end of such fiscal year and for the 12 months then ended,
which may be on a consolidated basis;
(2) as soon as practicable after they have been
sent to shareholders of the Company or filed with, or furnished to, the
Commission, the NASD, or the Exchange one copy of each annual and interim
financial and other report or communication sent by the Company to its
shareholders or filed with, or furnished to, the Commission, the NASD, or the
Exchange;
(3) as soon as practicable, one copy of every
press release and every material news item and article in respect of the
Company, any Subsidiary, or their respective affairs which was released by the
Company or any such Subsidiary; and
(4) such additional documents and information
with respect to the Company, any Subsidiary, and their respective affairs, as
the Representative may from time to time reasonably request; provided, however,
that such additional documents and information shall be received by the
Representative on a confidential basis, unless otherwise disclosed to the
public, and
27
shall not be used in violation of the federal securities laws and the rules and
regulations promulgated thereunder.
(h) Apply the net proceeds received by the Company from
the offering contemplated by this Agreement in the manner set forth under the
heading "Use of Proceeds" in the Prospectus.
(i) Furnish to the Representative as early as practicable
prior to the Closing Date and each Additional Closing Date, if any, as the case
may be, but not less than two full business days prior thereto, a copy of the
latest available unaudited interim financial statements of the Company which
have been read by the Company's independent certified public accountants, as
stated in their letters to be furnished pursuant to Section 7(f) hereof.
(j) File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the date on which
the Registration Statement was declared effective under the Securities Act,
unless such filing shall comply with the Securities Act and the Regulations and
unless the Representative shall previously have been advised of such filing and
furnished with a copy thereof, and the Representative shall have approved such
filing in writing. Until the later of (i) the completion by the Underwriters of
the distribution of the Stock (but in no event more than nine months after the
date on which the Registration Statement shall have been declared effective
under the Securities Act) and (ii) 25 days after the date on which the
Registration Statement shall have been declared effective under the Securities
Act, the Company will prepare and file with the Commission, promptly upon the
Representative's request, any amendments or supplements to the Registration
Statement or the Prospectus which, in the sole opinion of the Representative,
may be necessary or advisable in connection with the distribution of the Stock.
28
(k) File timely with the Commission an appropriate form
to register the Common Shares, including the Stock, pursuant to Section 12(b) of
the Exchange Act and comply with all registration, filing, and reporting
requirements of the Exchange Act, which may from time to time be applicable to
the Company.
(l) Comply with all provisions of all undertakings
contained in the Registration Statement.
(m) Prior to the later of (A) the date referred to in the
second sentence of clause (j) of this Section 5, and (B) any Additional Closing
Date, issue no press release or other communication, directly or indirectly, and
hold no press conference with respect to the Company, the financial condition,
results of operations, business, properties, assets, liabilities of any the
Company or any Subsidiary, or this offering, without the prior written consent
of the Representative.
(n) Make all filings required to maintain the inclusion
of the Common Shares on the Nasdaq SmallCap Market and the Exchange for at least
five years from the date of this Agreement.
(o) On the Closing Date, sell to the Representative,
individually and not as Representative of the several Underwriters, at the price
of $.001 per warrant, warrants to purchase the Warrant Stock, which
Representative's Warrants shall be substantially in the form set forth as an
exhibit to the Registration Statement. On the Closing Date, execute and deliver
to the Representative the Financial Advisory Agreement.
(p) Until expiration of the Representative's Warrants,
keep reserved sufficient Common Shares for issuance upon exercise of the
Representative's Warrants.
29
(q) Deliver to the Representative, without charge, within
a reasonable period after the last Additional Closing Date or the expiration of
the period during which the Representative may exercise the Over-allotment
Options, five sets of leather bound volumes of the Registration Statement and
all related materials to the individuals designated by the Representative or
counsel to the Underwriters.
(r) For a period of three years after the effective date
on which the Registration Statement is declared effective under the Securities
Act, provide, at its sole expense, to the Representative copies of the Company's
daily transfer sheets, if so requested by the Representative.
(s) Maintain key-person life insurance payable to the
Company on the life of Xx. Xxxxxx X. French, the President, Chairman of the
Board of Directors, and Chief Executive Officer of the Company, in the amount of
at least $__________ for the period of time equal to the longer of three years
from the date on which the Registration Statement becomes effective under the
Securities Act and the term of the employment agreement between the Company and
such officer.
(t) For a period of three years from the date on which
the Registration Statement becomes effective under the Securities Act, the
Representative shall have the right to designate a director or appoint a
designee as an observer of the Company's Board of Directors. Such director or
observer will have the right to attend all meetings of the Board of Directors.
Such director or observer shall be entitled to receive reimbursement for all
out-of-pocket expenses incurred in attending such meetings, including, but not
limited to, food, lodging, transportation, and any fees paid to directors for
attending meetings. The Representative shall be given notice of such meetings at
the same time and in the same manner as directors of the Company are informed.
The Representative and such director or observer shall be indemnified to the
same extent as the other
30
directors. The Company will purchase directors and officers insurance in an
amount of not less than $2,000,000, provided, however, that the Company shall
not be required to pay more than $50,000 per year in order to maintain such
insurance, and if insurance in such amount is not available at such cost, the
Company shall purchase that amount of such insurance which is available at a
cost of $50,000 per year.
(u) For a period of three years from the date on which
the Registration Statement becomes effective under the Securities Act, retain a
transfer agent reasonably acceptable to the Representative.
6. Payment of Expenses. The Company hereby agrees to pay all expenses
(other than fees of counsel for the Underwriters, except as provided in Section
6(c)) in connection with (a) the preparation, printing, filing, distribution,
and mailing of the Registration Statement and the Prospectus and the printing,
filing, distribution, and mailing of this Agreement and the Agreement Among
Underwriters, any Selected Dealer Agreement and related documents, including the
cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments or supplements thereto supplied to the
Underwriters in quantities as hereinabove stated, (b) the issuance, sale,
transfer, and delivery (as applicable) of the Securities, including, without
limitation, the purchase from the Company of the Stock by the Underwriters, the
purchase by the Representative of the Representative's Warrants, the
consummation by the Company of any of its obligations under the this Agreement,
the Financial Advisory Agreement, or under the Representative's Warrants, the
resale of the Stock by the Underwriters in connection with the distribution
contemplated by this Agreement, and any transfer or other taxes payable thereon,
(c) the qualification of the Securities under state or foreign "blue sky" or
securities laws, including the
31
costs of printing and mailing the preliminary and final "Blue Sky Survey" and
the fees of counsel for the Underwriters ($35,000) and the disbursements in
connection therewith, (d) the filing fees payable to the Commission, the NASD,
NASD Regulation, Inc. ("NASDR"), and the jurisdictions in which such
qualification is sought, (e) any fees relating to the listing of the Common
Shares on the Exchange and any other stock market or exchange, (f) the cost of
printing or engraving certificates representing the Securities, (g) the fees of
the transfer agent for the Securities, (h) advertising costs and expenses,
including, but not limited to, costs and expenses relating to the "road show,"
information meetings and presentations (including travel and hotel), bound
volumes, prospectus memorabilia, and expenses relating to tombstone
advertisements, (i) a non-accountable expense allowance equal to three percent
of the gross proceeds of the sale of the Firm Stock and the Additional Stock
(less amounts, if any, previously paid to the Representative by the Company in
respect of such non-accountable expense allowance) to the Representative on the
Closing Date. Notwithstanding the foregoing, if the offering contemplated hereby
should be terminated, the Company agrees to pay the Representative only the
out-of-pocket expenses incurred by the Underwriters in connection with this
Agreement or the proposed offer, sale, and delivery of the Securities, (j) fees
and expenses of counsel to, and independent certified public accountants of, the
Company, and (k) costs and expenses in connection with due diligence
investigations, including, but not limited to, fees of any independent counsel
or consultant retained by the Underwriters.
7. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Stock and the Additional
Stock, as provided herein, and the obligation of the Representative,
individually and not as representative of the several Underwriters, to purchase
and pay for the Representative's Warrants, each as provided herein, shall
32
be subject, in the discretion of the Representative, to the continuing accuracy
of the representations and warranties of the Company contained herein and in
each certificate and document contemplated under this Agreement to be delivered
to the Underwriters, as of the date hereof and as of the Closing Date (or any
Additional Closing Date, as the case may be), to the performance by the Company
of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become
effective under the Securities Act not later than 6:00 P.M., New York City local
time, on the date of this Agreement or such later date and time as shall be
consented to in writing by the Representative; on or prior to the Closing Date,
or any Additional Closing Date, as the case may be, no Stop Order shall have
been issued and no proceeding shall have been initiated or threatened with
respect to a Stop Order; and any request by the Commission for additional
information shall have been complied with by the Company to the reasonable
satisfaction of counsel for the Underwriters. If required, the Prospectus shall
have been filed with the Commission in the manner and within the time period
required by Rule 424(b) under the Securities Act.
(b) (i) At the Closing Date and any Additional
Closing Date, as the case may be, you shall have received the opinion of Messrs.
Gersten, Savage, Xxxxxxxxx & Xxxxxxxxxx, LLP, United Stated counsel for the
Company, dated the date of delivery, addressed to the Underwriters, and in form
and scope satisfactory to counsel for the Underwriters, with reproduced copies
or signed counterparts thereof for each of the Underwriters.
(ii) At the Closing Date and any Additional
Closing Date, as the case may be, you shall have received the opinion of Messrs.
XxXxxxxx Binch, Canadian counsel for the Company, dated the date of delivery,
addressed to the Underwriters, and in form and scope
33
satisfactory to counsel for the Underwriters, with reproduced copies or signed
counterparts thereof for each of the Underwriters.
(c) On or prior to the Closing Date and any Additional
Closing Date, as the case may be, the Underwriters shall have been furnished
such information, documents, certificates, and opinions as they may reasonably
require for the purpose of enabling them to review the matters referred to in
Section 7(b), and in order to evidence the accuracy, completeness, or
satisfaction of any of the representations, warranties, covenants, agreements,
or conditions herein contained, or as the Representative may reasonably request.
(d) At the Closing Date or any Additional Closing Date,
as the case may be, (i) 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 Securities Act and the
Regulations, and in all material respects conform to the requirements thereof,
and neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) there shall have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, no material adverse change, or any development involving a
prospective material adverse change, in the business, properties, or condition
(financial or otherwise), results of operations, capital stock, long-term or
short-term debt, or general affairs of the Company or any Subsidiary from that
set forth in the Registration Statement and the Prospectus, except changes which
the Registration Statement and Prospectus indicate might occur after the date on
which the Registration Statement becomes effective under the Securities Act, and
neither the Company nor
34
any Subsidiary shall have incurred any material liabilities or entered into any
agreements not in the ordinary course of business other than as referred to in
the Registration Statement and Prospectus, (iii) except as set forth in the
Prospectus, no litigation, arbitration, claim, governmental or other proceeding
(formal or informal), or investigation shall be pending, threatened, or in
prospect (or any basis therefor) with respect to the Company or any Subsidiary
or any of their respective operations, businesses, properties, or assets which
would be required to be set forth in the Registration Statement, wherein an
unfavorable decision, ruling, or finding would materially adversely affect the
business, property, condition (financial or otherwise), results of operations,
or general affairs of the Company or such Subsidiary, and (iv) the Stock be
listed upon the Nasdaq SmallCap Market and the Exchange.
(e) At the Closing Date and any Additional Closing Date,
as the case may be, you shall have received a certificate of the chief executive
officer, the chief financial officer, and the chief accounting officer of the
Company, dated the Closing Date or such Additional Closing Date, as the case may
be, to the effect, among other things, that (i) the conditions set forth in
Sections 7(a) and 7(d) have been satisfied, (ii) as of the date of this
Agreement and as of the Closing Date or such Additional Closing Date, as the
case may be, the representations and warranties of the Company contained herein
were and are accurate and correct in all material respects, and (iii) as of the
Closing Date or such Additional Closing Date, as the case may be, the
obligations to be performed by the Company hereunder on or prior to such time
have been fully performed.
(f) (1) At the time this Agreement is executed and
at the Closing Date and any Additional Closing Date, as the case may be, you
shall have received a letter, addressed to the Underwriters, and in form and
substance satisfactory to the Representative, with reproduced copies
35
or signed counterparts thereof for each of the Underwriters, from Xxxxxxxx
Xxxxxxxx Xxxxxxx, independent certified public accountants for the Company and
each of the Subsidiaries, dated the date of delivery, in form and substance
satisfactory to the Representative and counsel to the Underwriters.
(g) All proceedings taken in connection with the
issuance, sale, transfer, and delivery of the Securities shall be satisfactory
in form and substance to the Representative and to counsel for the Underwriters,
and the Underwriters shall have received from such counsel for the Underwriters
the opinion, dated as of the Closing Date and the Additional Closing Date, as
the case may be, with respect to such of the matters set forth under Section
7(b), and with respect to such other related matters, as the Representative may
reasonably request.
(h) NASDR, upon review of the terms of the public
offering of the Stock shall not have objected to the Underwriters' participation
in such offering.
(i) Prior to or on the Closing Date, the Company shall
have entered into the Financial Advisory Agreement and the Representative's
Warrants with the Representative.
(j) Prior to or on the Closing Date, the Company shall
have provided to you copies of the agreements referred to in Section 2(r).
Any certificate or other document signed by any officer of the Company
and delivered to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company hereunder to the
Underwriters as to the statements made therein. If any condition to the
Underwriters' obligations hereunder to be fulfilled prior to or at the Closing
Date or any Additional Closing Date, as the case may be, is not so fulfilled,
the Representative may, on behalf
36
of the several Underwriters, terminate this Agreement or, if the Representative
so elects, in writing waive any such conditions which have not been fulfilled or
extend the time for their fulfillment.
8. Indemnification and Contribution.
(a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each Underwriter, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act, against any and all loss, liability,
claim, damage, and expense whatsoever (which shall include, for all purposes of
this Section 8, but not be limited to, attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with, (i) any untrue statement or
alleged untrue statement of a material fact contained in (A) the Registration
Statement, any Preliminary Prospectus, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto or (B) any
application or other document or communication (for purposes of this Section 8,
collectively referred to as an "application") executed by, or on behalf of, the
Company or based upon written information furnished by, or on behalf of, the
Company filed in any jurisdiction in order to qualify the Securities under the
"blue sky" or securities laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon, and
in conformity with, written information furnished to the Company as stated in
Section 8(b) with respect to any Underwriter by, or on behalf of, such
37
Underwriter through the Representative expressly for inclusion in the
Registration Statement, any Preliminary Prospectus, or the Prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in this Agreement. The foregoing agreement to indemnify shall
be in addition to any liability the Company may otherwise have, including
liabilities arising under this Agreement.
If any action is brought against an Underwriter or any of its
respective officers, directors, partners, employees, agents, or counsel, or any
controlling persons of an Underwriter (an "indemnified party") in respect of
which indemnity may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company
in writing of the institution of such action (but the failure so to notify shall
not relieve the Company from any liability it may have other than pursuant to
this Section 8(a)) and the Company shall promptly assume the defense of such
action, including, without limitation, the employment of counsel satisfactory to
such indemnified party or parties and payment of expenses. Such indemnified
party or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless the employment of such counsel shall
have been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel satisfactory
to such indemnified party or parties to have charge of the defense of such
action or such indemnified party or parties shall have concluded that there may
be one or more legal defenses available to it or them or to other indemnified
parties which are different from, or in addition to, those available to the
Company, in any of which events such fees and expenses shall be borne by the
38
Company, and the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. Anything in this paragraph
to the contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written consent,
which consent shall not be unreasonably withheld. The Company shall not, without
the prior written consent of each indemnified party that is not released as
described in this sentence, settle or compromise any action, or permit a default
or consent to the entry of judgment or otherwise seek to terminate any pending
or threatened action, in respect of which indemnity may be sought hereunder
(whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify the Underwriters of the commencement of
any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of the Securities, the Registration
Statement, any Preliminary Prospectus, or the Prospectus, or any amendment or
supplement thereto, or any application.
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company, each director of the Company, each officer of the
Company who shall have signed the Registration Statement, and each other person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the several Underwriters in Section
8(a), but only with respect to statements or omissions, if any, made in the
Registration Statement, any Preliminary Prospectus, or the Prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto,
or in any application, in reliance upon, and in conformity with,
39
written information furnished to the Company as stated in this Section 8(b) with
respect to any Underwriter by, or on behalf of, such Underwriter through the
Representative expressly for inclusion in the Registration Statement, any
Preliminary Prospectus, or the Prospectus, or any amendment or supplement
thereto, or on any application, as the case may be; provided, however, that the
obligation of each Underwriter to provide indemnity under the provisions of this
Section 8(b) shall be limited to the amount which represents the product of (i)
the number of shares of Stock underwritten by such Underwriter hereunder and the
(ii) the underwriting discount per Common Share set forth on the cover page of
the Prospectus. For all purposes of this Agreement, the amounts of the selling
concession and reallowance and the name of each of the Underwriters, and the
number of shares of Firm Stock purchased by each of the Underwriters set forth
in the Prospectus constitute the only information furnished in writing by, or on
behalf of, such Underwriter expressly for inclusion in the Registration
Statement, any Preliminary Prospectus, or the Prospectus (as from time to time
amended or supplemented), or any amendment or supplement thereto, or in any
application, as the case may be. If any action shall be brought against the
Company or any other person so indemnified based on the Registration Statement,
any Preliminary Prospectus, or the Prospectus, or any amendment or supplement
thereto, or in any application, and in respect of which indemnity may be sought
against any Underwriter pursuant to this Section 8(b), such Underwriter shall
have the rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 8(a).
(c) To provide for just and equitable contribution, if
(i) an indemnified party makes a claim for indemnification pursuant to Section
8(a) or 8(b) (subject to the limitations
40
thereof), but it is found in a final judicial determination, not subject to
further appeal, that such indemnification may not be enforced in such case, even
though this Agreement expressly provides for indemnification in such case or
(ii) any indemnified or indemnifying party seeks contribution under the
Securities Act, the Exchange Act, or otherwise, then the Company (including for
this pur pose any contribution made by, or on behalf of, any director of the
Company, any officer of the Company who signed the Registration Statement, and
any controlling person of the Company), as one entity, and the Underwriters
(including for this purpose any contribution by, or on behalf of, an indemnified
party) as a second entity, shall contribute to the losses, liabilities, claims,
damages, and expenses whatsoever to which any of them may be subject, so that
the Underwriters, in the aggregate, are responsible for the proportion thereof
equal to the percentage which the underwriting discount per Common Share set
forth on the cover page of the Prospectus represents of the initial public
offering price per Common Share set forth on the cover page of the Prospectus
and the Company is responsible for the remaining portion; provided, however,
that if applicable law does not permit such allocation, then other relevant
equitable considerations such as the relative fault of the Company and the
Underwriters in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses shall also be considered. The
relative fault, in the case of an untrue statement, alleged untrue statement,
omission, or alleged omission, shall be determined by, among other things,
whether such statement, alleged statement, omission, or alleged omission relates
to information supplied by the Company or by the Underwriters, and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement, alleged statement, omission, or alleged omission. The
Company and the Underwriters agree that it would be unjust and inequitable if
the respective obligations of the Company and the Underwriters
41
for contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses (even if the
Underwriters and the other indemnified parties were treated as one entity for
such purpose) or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 8(c). No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 8(c),
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act and each officer,
director, partner, employee, agent, and counsel of any Underwriter shall have
the same rights to contribution as such Underwriter, and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
provisions of this Section 8(c). Anything in this Section 8(c) to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 8(c) is intended to supersede any right to contribution under the
Securities Act, the Exchange Act, or otherwise.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in
its or their obligation to purchase Firm Stock or Additional Stock hereunder,
and if the number of shares of Firm Stock or Additional Stock to which the
defaults of all Underwriters in the aggregate relate does not exceed 10% of the
number of shares of Firm Stock or Additional Stock, as the case may be, which
all
42
Underwriters have agreed to purchase hereunder, then such shares of Firm Stock
or Additional Stock to which such defaults relate shall be purchased by the
non-defaulting Underwriters in proportion to their respective commitments
hereunder.
(b) If such defaults exceed in the aggregate 10% of the
number of shares of Firm Stock or Additional Stock, as the case may be, which
all Underwriters have agreed to purchase hereunder, the Representative may, in
its discretion, arrange to purchase itself or for another party or parties to
purchase such shares of Firm Stock or Additional Stock, as the case may be, to
which such default relates on the terms contained herein. If the Representative
does not arrange for the purchase of such shares of Firm Stock or Additional
Stock, as the case may be, within one business day after the occurrence of
defaults relating to in excess of 10% of the Firm Stock or the Additional Stock,
as the case may be, then the Company shall be entitled to a further period of
one business day within which to procure another party or parties satisfactory
to the Representative to purchase such shares of Firm Stock or Additional Stock,
as the case may be, on such terms. If the Representative or the Company does not
arrange for the purchase of the shares of Firm Stock or Additional Stock, as the
case may be, to which such defaults relate as provided in this Section 9(b),
this Agreement may be terminated by the Representative or by the Company without
liability on the part of the Company (except that the provisions of Sections
5(a)(1), 6, 8, 10, and 13 shall survive such termination) or the several
Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter of its liability, if any, to the other several Underwriters and to
the Company for any damages occasioned by its default hereunder.
(c) If the shares of Firm Stock or Additional Stock to
which such defaults relate are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or
43
parties as aforesaid, the Representative or the Company shall have the right to
postpone the Closing Date or the Additional Closing Date, as the case may be,
for a reasonable period but not in any event 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 and
arrangements with respect to the Firm Stock or the Additional Stock, and the
Company agrees to prepare and file promptly any amendment or supplement to the
Registration Statement or the Prospectus which in the opinion of counsel for the
Underwriters may thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any party substituted under this Section 9 as if
such party had originally been a party to this Agreement and had been allocated
the number of shares of Firm Stock and Additional Stock actually purchased by it
as a result of its original commitment to purchase Firm Stock and Additional
Stock and its purchase of shares of Firm Stock or Additional Stock pursuant to
this Section 9.
10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by, or on behalf of, any Underwriter or any indemnified
person, or by, or on behalf of, the Company or any person or entity which is
entitled to be indemnified under Section 8(b), and shall survive termination of
this Agreement or the delivery of the Firm Stock and the Additional Stock, if
any, to the several Underwriters. In addition, the provisions of Sections
5(a)(1), 6, 8, 10, 11, and 13 shall survive
44
termination of this Agreement, whether such termination occurs before or after
the Closing Date or any Additional Closing Date. Notwithstanding anything in the
second sentence of Section 6 hereof to the contrary, and in addition to the
obligations assumed by the Company pursuant to the first sentence of Section 6
hereof, if the offering should be terminated, the Company shall be liable to the
Underwriters only for out-of-pocket expenses incurred by the Underwriters in
connection with this Agreement or the proposed, offer, sale, and delivery of the
Securities.
11. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective at 9:30 A.M.,
New York City local time, on the first full business day following the day on
which the Registration Statement becomes effective under the Securities Act or
at the time of the initial public offering by the Underwriters of the Firm
Stock, whichever is earlier. The time of the initial public offering shall mean
the time, after the Registration Statement becomes effective under the
Securities Act, of the release by the Representative for publication of the
first newspaper advertisement which is subsequently published relating to the
Firm Stock or the time, after the Registration Statement becomes effective under
the Securities Act, when the Firm Stock is first released by the Representative
for offering by the Underwriters or dealers by letter or telegram, whichever
shall first occur. The Representative or the Company may prevent this Agreement
from becoming effective without liability of any party to any other party,
except as noted below in this Section 11, by giving the notice indicated in
Section 11(d) before the time this Agreement becomes effective under the
Securities Act.
(b) If the purchase price of the Firm Stock has not been
determined as provided for in Section 3 prior to 4:30 p.m., New York City local
time, on the fifth full business day after the date on which the Registration
Statement becomes effective under the Securities Act, this
45
Agreement may be terminated at any time thereafter either by the Representative
or by the Company by giving notice to the other unless before such termination
the purchase price for the Firm Stock has been so determined. If the purchase
price of the Firm Stock has not been so determined prior to 4:30 p.m., New York
City local time, on the tenth full business day after the date on which the
Registration Statement becomes effective under the Securities Act, this
Agreement shall automatically terminate forthwith.
(c) In addition to the right to terminate this
Agreement pursuant to Sections 7 and 9 hereof, the Representative shall have
the right to terminate this Agreement at any time prior to the Closing Date
or any Additional Closing Date, as the case may be, by giving notice to the
Company, and, if exercised, the Over-allotment Option, at any time prior to
any Additional Closing Date, by giving notice to the Company, (i) if there
shall have been a general suspension of, or a general limitation on prices
for, trading in the Common Shares or in securities generally on the New York
Stock Exchange or the American Stock Exchange or in the over-the-counter
market; or (ii) if there shall have been an outbreak or increase in the level
of major hostilities or other national or international calamity; or (iii) if
a banking moratorium has been declared by a state or federal authority; or
(iv) if a moratorium in foreign exchange trading by major international banks
or persons has been declared; or (v) if there shall have been a material
interruption in the mail service or other means of communication within the
United States; or (vi) if the Company shall have sustained a material or
substantial loss by fire, flood, accident, hurricane, earthquake, theft,
sabotage, or other calamity or malicious act, whether or not such loss shall
have
46
been insured, or from any labor dispute or court or government action, order,
or decree, which will, in the opinion of the Representative, make it
inadvisable to proceed with the offering, sale, or delivery of the Firm Stock
or the Additional Stock, as the case may be; or (vii) if any material
governmental restrictions shall have been imposed on trading in securities in
general, which restrictions are not in effect on the date hereof; or (viii)
if there shall be passed by the Congress of the United States or by any state
legislature any act or measure, or adopted by any governmental body or
authoritative accounting institute or board, or any governmental executive,
any orders, rules, or regulations, which the Representative believes likely
to have a material adverse effect on the business, financial condition, or
financial statements of the Company or the market for the Common Shares; or
(ix) if the obligations of the Company set forth in Section 7 hereof have not
been performed, satisfied, or waived or the Company shall have failed,
refused, or been unable to perform all obligations and satisfy all conditions
on its part to be satisfied or performed hereunder prior thereto; (x) there
shall have been a material adverse effect, or any development involving a
prospective material adverse effect, in the business, prospects, financial
condition, or results of operations of the Company, or any executive officer
of the Company shall have suffered any injury or disability of a nature that
materially adversely affects his ability to function in his or her respective
capacities for the Company for more than six months, or any material action,
suit, or proceeding shall be threatened, instituted, or pending, at law or in
equity,
47
against the Company or any of its directors or executive officers, by any person
or by any federal, state, or other governmental body or entity.
(d) If the Representative elects to prevent this
Agreement from becoming effective, as provided in this Section 11, or to
terminate this Agreement pursuant to Section 7 of this Agreement or this Section
11, the Representative shall notify the Company promptly by telephone, telex, or
telegram, confirmed by letter. If, as so provided, the Company elects to prevent
this Agreement from becoming effective or to terminate this Agreement, the
Company shall notify the Representative promptly by telephone, telex, or
telegram, confirmed by letter.
(e) Anything in this Agreement to the contrary
notwithstanding other than Section 11(f), if this Agreement shall not become
effective by reason of an election pursuant to this Section 11 or if this
Agreement shall terminate or shall otherwise not be carried out within the time
specified herein by reason of any failure on the part of the Company to perform
any covenant or agreement or satisfy any condition of this Agreement by it to be
performed or satisfied, the sole liability of the Company to the several
Underwriters, in addition to the obligations the Company assumed pursuant to the
first sentence of Section 6, will be to reimburse the several Underwriters for
such out-of-pocket expenses (including the fees and disbursements of their
counsel) as shall have been incurred by them in connection with this Agreement
or the proposed offer, sale, and delivery of the Securities, and, upon demand,
the Company agrees to pay promptly the full amount thereof to the Representative
for the respective accounts of the Underwriters. Anything in this Agreement to
the contrary notwithstanding other than Section 11(f), if this Agreement shall
not be carried out within the time specified herein for any reason other than
the failure on the part of the Company to perform any covenant or agreement or
satisfy any condition of this Agreement by it to be performed
48
or satisfied, the Company shall have no liability to the several Underwriters
other than for obligations assumed by the Company pursuant to Section 6.
(f) Notwithstanding any election hereunder or any
termination of this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 5(a)(1), 6, 8, 10, and 13 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. Notwithstanding anything in the
second sentence of Section 6 hereof to the contrary, and in addition to the
obligations assumed by the Company pursuant to the first sentence of Section 6
hereof, if the offering should be terminated, the Company shall be liable to the
several Underwriters only for out-of-pocket expenses incurred by the several
Underwriters in connection with this Agreement or the proposed, offer, sale, and
delivery of the Securities.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
by letter, to such Underwriter, c/o Strasbourger Xxxxxxx Tulcin Xxxxx
Incorporated, 00 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxx
Xxxxxxxx, with a copy to Xxxxx Xxxxxxxxxxx XxXxxxxxx LLC, Xxx Xxxxxxxx Xxxxxx,
00xx Xxxxx, Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx Xxxxx; or if sent to
the Company, shall be mailed, delivered, or telexed or telegraphed and confirmed
by letter, to the Company, IT Staffing Ltd., 00 Xxxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxx X0X 0X0, Attention: Delcan A, French, with a copy to Gersten, Savage,
Xxxxxxxxx & Xxxxxxxxxx, LLP, 000 Xxxx 00xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx 00000,
Attention: Xxx X. Xxxxxxxxx, Esq. and Xxxxxx X. Xxxxxx, Esq. All notices
hereunder shall be effective upon receipt by the party to which it is addressed.
49
13. Parties. The Representative, individually and not as the
representative of the several Underwriters, represents that it is authorized to
act as the Representative on behalf of the several Underwriters named in
Schedule I hereto, and the Company shall be entitled to act and rely on any
request, notice, consent, waiver, or agreement purportedly given on behalf of
the Underwriters when the same shall have been given by the Representative on
such behalf. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the several Underwriters, the Company, and the persons and
entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any buyer, as such, of the Firm Stock or the
Additional Stock), and no other person shall have, or be construed to have, any
legal or equitable right, remedy, or claim under, in respect of, or by virtue of
this Agreement or any provision herein contained. Notwithstanding anything
contained in this Agreement to the contrary, all of the obligations of the
Underwriters hereunder are several and not joint.
14. Construction. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
conflict of laws. Time is of the essence in this Agreement.
15. Consent to Jurisdiction. The Company irrevocably consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action or proceeding arising out
of, or relating to, this Agreement, any document or instrument delivered
pursuant to, in connection with, or simultaneously with this Agreement, or a
breach of this Agreement or any such document or instrument. In any such action
or proceeding, the Company waives personal service of any summons, complaint, or
other process and agrees that
50
service thereof may be made in accordance with Section 12. Within 30 days after
such service, or such other time as may be mutually agreed upon in writing by
the attorneys for the parties to such action or proceeding, the Company shall
appear or answer such summons, complaint, or other process. Should the Company
fail to appear or answer within such 30-day period or such extended period, as
the case may be, the Company shall be deemed in default and judgment may be
entered against the Company for the amount as demanded in any summons,
complaint, or other process so served. The Company hereby irrevocably appoints
Gersten, Savage, Xxxxxxxxx & Xxxxxxxxxx, LLP, United States counsel to the
Company, as the Company's agent to receive service of process in any action
against the Company in any federal or state court of the State of New York
arising out of this offering.
51
If the foregoing correctly sets forth the understandings among the
Representative 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,
IT STAFFING LTD.
By:
---------------------------------
Name:
Title:
Accepted as of the date first above
written in New York, New York
STRASBOURGER XXXXXXX TULCIN XXXXX
INCORPORATED*
By:
------------------------------------
Name:
Title:
*On behalf of itself and the other several
Underwriters named in Schedule I hereto.
52
SCHEDULE I
Total
Number
of Shares
to be
Underwriter Purchased
----------- ---------
Total..........................................................................................1,000,000
---------
---------
53
