F&J DRAFT
September 30, 1996
2,850,000 Shares
VOTAN CORPORATION
Common Stock
UNDERWRITING AGREEMENT
New York, New York
September 30, 1996
Ladenburg, Xxxxxxxx & Co. Inc.
Xxxxxxx Bros., L.P.
As Representatives of the several Underwriters
named in Schedule A hereto
x/x Xxxxxxxxx, Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
The undersigned, Votan Corporation, a Delaware corporation
(the "Company"), and Moscom Corporation, a Delaware corporation (the "Selling
Stockholder"), hereby confirm their agreement with you and the other
underwriters named in Schedule A annexed hereto.
Section 1. Underwriters and Representatives. The term
"Underwriters", as used herein, will mean and refer collectively to you and the
other underwriters named in Schedule A annexed hereto and the term
"Representatives" will refer to you in your capacity as the representatives of
the Underwriters. Except as may be expressly set forth below, any reference to
"you" in this Agreement shall be solely in your capacity as the
Representatives.
Section 2. Shares Offered. The Company proposes to issue and
sell to the Underwriters an aggregate of 2,000,000 shares of its authorized and
unissued common stock, $0.01 par value per share (the "Common Stock"), and the
Selling Stockholder proposes to sell to the Underwriters an aggregate of
850,000 issued and outstanding shares of Common Stock (collectively, the "Firm
Shares"). The Selling Stockholder also proposes to grant to the Underwriters an
Option (hereinafter defined) to purchase up to an
additional aggregate of 427,500 shares (the "Option Shares") of Common Stock on
the terms and for the purposes set forth in Section 4(b) hereof. The Firm
Shares and the Option Shares are hereinafter sometimes together called the
"Shares."
Section 3. Representations and Warranties. (a) The Company
and the Selling Stockholder, jointly and severally, represent and warrant to
each Underwriter that:
(i) A registration statement (File No. 333-07137) on
Form S-1 relating to the Shares, including a preliminary
prospectus, has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules, regulations and
instructions (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder and has
been filed by the Company with the Commission. One or more
amendments to such registration statement, including in each
case a revised preliminary prospectus, have been so prepared
and filed. If such registration statement has not become
effective as of the execution and delivery of this Agreement,
and the filing of a further amendment (the "Final Amendment")
to such registration statement is necessary to permit such
registration statement to become effective, such amendment
will promptly be filed by the Company with the Commission. If
such registration statement has become effective and any
post-effective amendment has been filed with the Commission
prior to the execution and delivery of this Agreement, the
most recent such amendment has been declared effective by the
Commission. If such registration statement has become
effective, either (A) if the Company relies on Rule 434 under
the Act, a Term Sheet (hereinafter defined) relating to the
Shares, that shall identify the preliminary prospectus
(hereinafter defined) that it supplements containing such
information as is required or permitted by Rules 434, 430A
and 424(b) under the Act, will be promptly filed with the
Commission by the Company or (B) if the Company does not rely
on Rule 434 under the Act, a final prospectus (the "Rule 430A
Prospectus") containing information permitted to be omitted
at the time of effectiveness by Rule 430A of the Rules and
Regulations will promptly be filed by the Company pursuant to
Rule 424(b) of the Rules and Regulations. The term
"preliminary prospectus" as used herein means each prospectus
subject to completion included at any time as part of such
registration statement or any amendment thereto or filed with
the Commission pursuant to Rule 424(a) of the Rules and
Regulations; such registration statement, as amended at the
time that it becomes or became effective, or, if
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applicable, as amended at the time the most recent
post-effective amendment to such registration statement filed
with the Commission prior to the execution and delivery of
this Agreement became effective, including financial
statements and all exhibits and information deemed to be a
part thereof at such time pursuant to Rule 430A of the Rules
and Regulations is herein called the "Registration
Statement"; the term "Term Sheet" as used herein means any
term sheet that satisfies the requirements of Rule 434 under
the Act; and the term "Prospectus" as used herein means (x)
if the Company relies on Rule 434 under the Act, the Term
Sheet relating to the Shares that is first filed pursuant to
Rule 424(b)(7) under the Act, together with the preliminary
prospectus identified therein that such Term Sheet
supplements; (y) if the Company does not rely on Rule 434
under the Act, the final prospectus relating to the Shares in
the form first filed with the Commission pursuant to Rule
424(b)(1) or (4) of the Rules and Regulations; or (z) if no
such filing is required, the form of final prospectus
included in the Registration Statement at the Effective Date
(as hereinafter defined). The date on which the Registration
Statement becomes effective is hereinafter called the
"Effective Date." Any reference herein to the "date" of a
Prospectus that includes a Term Sheet shall mean the date of
such Term Sheet.
(ii) When the Registration Statement becomes effective,
and at all subsequent times to and including the Closing Time
(hereinafter defined), and at each Option Exercise Time
(hereinafter defined), or for such longer period as the
Prospectus may be required to be delivered in connection with
sales of the Shares by the Underwriters or a dealer, the
Registration Statement and the Prospectus, including any Term
Sheet that is a part thereof (as amended or as supplemented
if the Company shall have filed with the Commission any
amendment thereof or supplement thereto; provided, that no
amendment or supplement to the Registration Statement or the
Prospectus, including as a result of the filing of a Term
Sheet, shall be made without prior consultation with you, and
your approval), will comply with the requirements of the Act
and the Rules and Regulations, will contain all statements
required to be stated therein in accordance with the Act and
the Rules and Regulations, will not contain an untrue
statement of a material fact and will not omit to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this
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subsection (ii) do not apply to statements or omissions in
the Registration Statement or the Prospectus based upon and
made in conformity with written information furnished to the
Company by or on behalf of any Underwriter specifically for
inclusion therein.
(iii) The Commission has not issued an order preventing
or suspending the use of any preliminary prospectus with
respect to the Shares and has not instituted or threatened to
institute any proceedings with respect to such an order. Each
preliminary prospectus, when filed with the Commission,
conformed in all material respects with the requirements of
the Act and the Rules and Regulations and, as of its date,
did not include any untrue statement of a material fact or
omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the
representations and warranties in this sentence do not apply
to statements or omissions in each such preliminary
prospectus based upon and made in conformity with written
information furnished to the Company through the
Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(iv) The Company is, and at the Closing Time, and at
each Option Exercise Time will be, a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has, and at the
Closing Time and at each Option Exercise Time will have, the
power and authority (corporate, governmental, regulatory and
otherwise) and all necessary approvals, orders, licenses,
certificates, permits and other governmental authorizations
to conduct all of the activities conducted by it, to own or
lease all of the assets owned or leased by it and to conduct
its business as described in the Registration Statement and
the Prospectus; and is, and at the Closing Time and at each
Option Exercise Time will be, duly qualified to do business
and in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted
by it and/or the character of the assets owned and leased by
it makes such qualification necessary, or in which the
failure to so qualify would have a material adverse effect on
the business, results of operations or financial condition of
the Company. The Company does not own, and at the Closing
Time and at each Option Exercise Time will not own, any
shares of stock or any other securities of any corporation or
have any equity interest in any firm, partnership,
association or other entity, except as otherwise set forth in
the Prospectus. A
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complete and correct copy of the certificate of incorporation
of the Company and by-laws of the Company as currently in
effect have been delivered to you and no changes therein will
be made subsequent to the date hereof and prior to the
Closing Time or each Option Exercise Time.
(v) The Company is, and at the Closing Time and at the
Option Exercise Time will be, authorized to issue only
20,000,000 shares of Common Stock and 1,000,000 shares of
preferred stock, $0.01 par value (the "Preferred Stock"), and
has heretofore validly issued, and has outstanding, and at
the Closing Time and at each Option Exercise Time will have
outstanding, fully paid and nonassessable, 5,500,000 shares
of the Common Stock, without giving effect to the issuance of
Shares by the Company pursuant to this Agreement, and has no
shares of Preferred Stock outstanding. The Company has, and
at the Closing Time and at each Option Exercise Time will
have, reserved for issuance 825,000 shares
of Common Stock under the Company's 1996 Stock Option Plan,
of which no options to purchase shares are outstanding on the
date hereof. Except for options to be granted under the
Company's 1996 Stock Option Plan, as disclosed in the
Prospectus, subsequent to the date hereof and prior to the
Closing Time and each Option Exercise Time, the Company will
not issue or acquire any securities. Except the Warrants (as
hereinafter defined) and options under the Company's 1996
Stock Option Plan, the Company does not have outstanding, and
at the Closing Time and at each Option Exercise Time the
Company will not have outstanding, any options to purchase,
or any rights or warrants to subscribe for, or any securities
or obligations convertible into, or any contracts or
commitments to issue or sell shares of capital stock or any
warrants, convertible securities or obligations.
(vi) The financial statements of the Company (including
the footnotes thereto) filed with and as part of the
Registration Statement and the Prospectus present fairly the
financial position of the Company as of the respective dates
thereof and the statements of operations, statements of
changes in stockholder's equity and statements of cash flows
of the Company for the respective periods covered thereby,
all in conformity with generally accepted accounting
principles applied on a basis consistent with prior periods.
Xxxxxx Xxxxxxxx L.L.P. (the "Company's accountants"), who
have reported on certain of such financial statements, are
independent accountants with respect to the Company as
required by the Act and the Rules and Regulations.
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(vii) The Company has a duly authorized and outstanding
capitalization as disclosed in the Prospectus under
"Capitalization" and will have the adjusted capitalization
set forth therein at the Closing Time (based on the
assumptions set forth therein). The financial and numerical
information and data set forth in the Prospectus under
"Prospectus Summary," "Risk Factors," "Capitalization,"
"Dilution," "Selected Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and "Business" are fairly presented and prepared
on a basis consistent with the audited financial statements
of the Company.
(viii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus and prior to the Closing Time and to each Option
Exercise Time, except as set forth in or contemplated by the
Registration Statement and the Prospectus, (A) the Company
has and will have conducted its business in substantially the
same manner as on June 30, 1996; (B) the Company has not
incurred and will not incur any material liabilities or
obligations, direct or contingent, or enter into any material
transactions not in the ordinary course of business; (C) the
Company has not paid or declared and will not pay or
declare any dividends or other distributions on its capital
stock; and (D) there has not been and will not have been any
change in the capitalization of the Company or any material
adverse change in the business, business prospects, financial
condition or results of operations of the Company.
(ix) Except as set forth in or contemplated by the
Registration Statement and the Prospectus, the Company has
not, at the Closing Time and at each Option Exercise Time
will not have, any material contingent obligations.
(x) Except as set forth in the Registration Statement
and the Prospectus, there are no actions, suits or
proceedings at law or in equity pending, or to the knowledge
of the Company, threatened, against the Company, any of its
assets or any of its officers or directors, which have not
been disclosed to you, before or by any federal, state,
county or local commission, regulatory body, administrative
agency or other governmental body, domestic or foreign,
wherein an unfavorable ruling, decision or finding would
materially adversely affect the Company or its business,
business prospects, financial condition or results of
operations. The Company is not involved in any labor dispute
and, to
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its knowledge, no such dispute is threatened, which dispute
would have a material adverse effect upon the business,
financial condition or results of operations of the Company.
(xi) The Company has, and at the Closing Time and at
each Option Exercise Time will have, complied in all respects
with all laws, regulations and orders applicable to it or its
business, the violation of which would have a material
adverse effect upon its legal existence or its business,
financial condition or results of operations. The Company
has, at the Closing Time and at each Option Exercise Time
will have, in all respects performed all of the material
obligations required to be performed by it, and is not, and
at the Closing Time and at each Option Exercise Time will not
be, in default under (there being no existing state of facts
which with notice or lapse of time or both would constitute a
default under) any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, letter of credit agreement,
bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or
instrument to which it is a party or by which it or any of
its property is bound which would have a material adverse
effect upon the business, financial condition or results of
operations of the Company, and, to the knowledge of the
Company and the Selling Stockholder, no other party under any
such agreement or instrument to which the Company is a party
is in default in any respect thereunder which would have a
material adverse effect upon the business, financial
condition or results of operations of the Company.
(xii) The Company (i) keeps books, records and accounts
that, in reasonable detail, accurately and fairly reflect the
transactions and disposition of the assets of the Company and
(ii) maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's
general or specific authorization, (B) transactions are
recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (C)
access to assets is permitted only in accordance with
management's general or specific authorization and (D) the
recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Company
has not made any payment to any state, federal or foreign
governmental officer or official or other person charged
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with similar public or quasi-public duties (other than
payments required or permitted by the laws of the United
States or any jurisdiction thereof).
(xiii) The Company is not in violation of its
certificate of incorporation or by-laws, in each case as
amended as of the date hereof.
(xiv) The outstanding shares of the Common Stock
(including the Shares to be sold by the Selling Stockholder)
have been, and all of the Shares, and the shares of Common
Stock issuable upon exercise of the Warrants, will, upon
issuance and payment therefor, be, duly authorized, validly
issued, fully paid and nonassessable and not subject to
preemptive rights or similar contractual rights to purchase
securities issued by the Company. The shares of Common Stock
issuable upon exercise of the Warrants have been duly and
validly reserved for issuance. The Common Stock and the
Shares conform, and when the Registration Statement becomes
effective and at the Closing Time and at each Option Exercise
Time will conform, to all statements with regard thereto
contained in the Registration Statement and the Prospectus;
and the issuance and sale of the Shares to be issued and sold
by the Company have been duly and validly authorized.
(xv) The Company has the power and authority to execute
and deliver the Warrants on the terms and conditions set
forth herein and in the Warrants, and has taken all corporate
action necessary therefor; no consent, approval,
authorization or other order of any regulatory agency is
required for such execution or delivery except as may be
required under the Act; and when executed and delivered
pursuant to the provisions of this Agreement, the Warrants
will constitute the valid, binding and legally enforceable
obligation of the Company.
(xvi) This Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and
binding agreement of the Company enforceable in accordance
with its terms; the performance of the obligations of the
Company under this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or
result in a breach or violation of any of the terms and
provisions of, or constitute a default under (there being no
existing state of events which with notice or lapse of time
or both would constitute a default) or result (or with the
giving of notice or lapse of time or both will result) in the
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creation or imposition of any lien, charge or encumbrance
upon the assets or properties of the Company pursuant to any
indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, letter of credit agreement, bond, debenture,
note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which the
Company is a party or by which the Company or any of its
properties is bound, or under the certificate of
incorporation or by-laws of the Company or under any statute
or under any order, rule or regulation applicable to the
Company or its business or properties or of any court or
other governmental body; and no consent, approval,
authorization or order of any court or governmental agency or
body is required for the consummation by the Company of the
transactions on its part herein contemplated, except such as
may be required under the Act or under state securities or
blue sky laws.
(xvii) The Company has good and marketable title to all
properties and assets owned by it, free and clear of all
liens, charges, encumbrances or restrictions, except such as
are described in or referred to in the Prospectus or are not
material or important in relation to the business of the
Company. The Company has valid, subsisting and enforceable
leases for the properties described in the Prospectus as
leased by it, with such exceptions as are not material and do
not interfere with the use made, and proposed to be made, of
such properties by it.
(xviii) There is no document or contract of a character
required to be described in the Prospectus or to be filed as
an exhibit to the Registration Statement which is not
described or filed as required; and no statement,
representation, warranty or covenant made by the Company in
this Agreement or in any certificate or document required by
this Agreement to be delivered to you is, was when made, or
as of the Closing Time or any Option Exercise Time will be,
inaccurate, untrue or incorrect. No transaction has occurred
between or among the Company and the Selling Stockholder and
any of their officers, directors or stockholders or any
affiliate of any such officer, director or stockholder that
is required to be described in and is not described in the
Registration Statement and the Prospectus.
(xix) The Company has sufficient trademarks, trade names,
registered service marks, patents, patent applications,
patent rights, licenses, permits, copyright protection and
governmental or other authorizations currently required for
the conduct of its business, and
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the Company is in all material respects complying therewith
and, to the best knowledge of the Company and the Selling
Stockholder and except as otherwise set forth in the
Prospectus, the products and services, and the marks
associated therewith, used by the Company do not violate or
infringe any trademarks, trade names, registered service
marks, patents, patent rights, licenses, permits or
copyrights held or owned by any other party. Other than as
disclosed in the Prospectus, the Company has not received any
notice of violation or infringement of or conflict with
asserted rights of others with respect to any trademarks,
trade names, registered service marks, patents, patent
rights, licenses, permits, copyrights or authorizations owned
or used by the Company, or any other person. Other than as
disclosed in the Prospectus, the expiration of any such
trademarks, trade names, registered service marks, patents,
patents rights, licenses, permits, copyrights and
governmental or other authorizations would not materially
adversely affect the business, financial condition or results
of operations of the Company.
(xx) The Company intends to apply its proceeds from the
sale of the Shares for the purposes set forth in the
Prospectus under "Use of Proceeds."
(xxi) The Company is not, and does not intend to conduct
its business in a manner in which it would become, an
"investment company" as defined in Section 3(a) of the
Investment Company Act of 1940, as amended (the "Investment
Company Act").
(xxii) All issuances and sales of securities by the
Company heretofore have been exempt from registration under
the Act and complied in all respects with the provisions of
all applicable federal and state securities laws. No holder
of any securities of the Company has the right to require
registration of shares of the Common Stock or other
securities of the Company because of the filing or
effectiveness of the Registration Statement.
(xxiii) Neither the Company nor any of its officers or
directors or affiliates (as defined in the Rules and
Regulations) has taken or will take, directly or indirectly,
any action designed to stabilize or manipulate the price of
any security of the Company, or which has constituted or
which might 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
Shares.
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(xxiv) Other than its obligations to Xxxxx & Xxxxx, Inc.
("Xxxxx & Hatch") pursuant to the letter agreement dated as
of September 4, 1996 between the Selling Stockholder and
Xxxxx & Xxxxx, and as set forth in the Prospectus, the
Company has not, and at the Closing Time and at each Option
Exercise Time will not have, incurred any liability for
finder's or brokerage fees or agent's commissions in
connection with the offer and sale of the Shares, this
Agreement or the transactions hereby contemplated, except for
the Underwriters' discounts and commissions provided for in
this Agreement.
(xxv) The Company has filed all federal, state and local
income and franchise tax returns required to be filed through
the date hereof and have paid all taxes due thereon, and no
tax deficiency has been, nor does the Company have any
knowledge of any tax deficiency which might be asserted
against the Company which could materially adversely affect
the business, financial condition or results of operations of
the Company.
(b) The Selling Stockholder represents and warrants
to each Underwriter that:
(i) The Selling Stockholder (A) has the power and
authority to execute and deliver this Agreement on the terms
and conditions set forth herein; (B) is, and when the
Registration Statement shall become effective and at the
Closing Time will be, the owner of the Shares to be sold by
the Selling Stockholder to the respective Underwriters
pursuant to the terms hereof, in each case free and clear of
all liens, charges, encumbrances and restrictions; (C) has
paid to the Company the full purchase price or consideration
required to be paid for such Shares; and (D) has, and when
the Registration Statement shall become effective and at the
Closing Time will have, the power and authority to convey
good and valid title to such Shares, in each case free and
clear of all liens, charges, encumbrances and restrictions.
(ii) The Selling Stockholder is, and at the Closing Time, and
at each Option Exercise time will be, a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware.
(iii) Neither the execution and delivery or performance of
this Agreement or the consummation of the transactions herein
contemplated nor the compliance with the terms hereof by the
Selling Stockholder will conflict with, or result in a
material breach of any of the terms
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or provisions of, or constitute a material default under, any
indenture, mortgage, deed of trust, guaranty, purchase
agreement or other agreement or instrument to which the
Selling Stockholder or any of such Selling Stockholder's
property is bound, or under the certificate of incorporation
or by-laws of the Selling Stockholder or under any statute,
order, rule or regulation applicable to the Selling
Stockholder or any of the Selling Stockholder's property of
any court or other governmental agency; and no consent,
approval, authorization or order of any court or governmental
agency or body is required for the consummation by the
Selling Stockholder of the transactions on the Selling
Stockholder's part herein or therein contemplated, except
such as may be required under the Act or under state
securities or blue sky laws.
(iv) At the Closing Time, all stock transfer or other
taxes (other than income taxes) which are required to be paid
in connection with the sale and transfer of the Shares to be
sold by the Selling Stockholder to the several Underwriters
hereunder will have been fully paid or provided for by the
Selling Stockholder and all laws imposing such taxes will
have been fully complied with.
(v) The Selling Stockholder has not, and at the Closing
Time will not have, taken, directly or indirectly, any action
to cause or result in, or which has constituted, or might
reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of the Common Stock
to facilitate the sale or the resale of any of the Shares.
Section 4. (a) Purchase, Sale and Delivery of the Firm
Shares; Closing Time. (i) On the basis of the representations and warranties
contained in this Agreement, and subject to the terms and conditions herein set
forth, (A) the Company agrees to sell to the Underwriters, and the Underwriters
agree to purchase from the Company, 2,000,000 Shares at and for a price of $___
per Share; and (B) the Selling Stockholder agrees to sell to the Underwriters,
and the Underwriters agree to purchase from the Selling Stockholder, 850,000
Shares at and for a price of $____ per Share. The number of Shares to be
purchased from the Company and the number of Shares to be purchased from the
Selling Stockholder, respectively (as adjusted by the Representative to
eliminate fractions), by each of the Underwriters shall be determined by
multiplying the aggregate number of such Shares to be sold by the Company or
the Selling Stockholder, as set forth above by a fraction, the numerator of
which is the total number of Firm Shares set forth opposite the name of such
Underwriter in Schedule A hereto and the denominator of which is the aggregate
number of Firm Shares. The obligations of the Underwriters under this Agreement
are several and not joint.
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(ii) Delivery of the Firm Shares shall be made to you for the
accounts of the respective Underwriters, at your offices at 540 Madison Avenue,
New York, New York, or such other location in the New York metropolitan area as
you shall advise the Company by at least one full business days' notice in
writing, against payment by you on behalf of the respective Underwriters of the
purchase price therefor to the Company and the Selling Stockholder by wire
transfer in immediately available funds to the Company or the Selling
Stockholder of the respective amounts to which they are entitled, at 10:00
A.M., New York City Time, on October 8, 1996, or on such other time and
business day (Saturdays, Sundays and legal holidays in the City or State of New
York not being considered business days for the purposes of this Agreement), as
the Representatives and the Company may agree upon or as the Representatives
may determine pursuant to Section 12 hereof, which time and date are herein
called the "Closing Time." Delivery of the Firm Shares shall be made in
registered form in such name or names and in such denominations as you shall
request by at least two full business days' notice in writing. The cost of
original issue tax stamps and transfer stamps, if any, in connection with the
issuance and delivery or sale of the Firm Shares by the Company to the
respective Underwriters shall be borne by the Company; the cost of transfer
stamps, if any, in connection with the sale of the Firm Shares by the Selling
Stockholder to the respective Underwriters shall be borne by the Selling
Stockholder. The Company and the Selling Stockholder will, severally, pay and
save each Underwriter or its nominees, and any subsequent holder of the Firm
Shares, harmless from any and all liabilities with respect to or resulting from
any failure or delay in paying federal or state stamp and other transfer taxes,
if any, which may be payable or determined to be payable in connection with the
sale by the Company or the Selling Stockholder to such Underwriter of the Firm
Shares or any portion thereof.
(iii) The Company and the Selling Stockholder will make the
certificates for the Firm Shares available to you for examination at the
offices of Ladenburg, Thalmann, & Co., Inc., at 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, or at such other place as you shall request, not later than 2:00
P.M., New York City Time, on the business day next preceding the Closing Time.
(b) Purchase, Sale and Delivery of the Option Shares. (i) The
Selling Stockholder hereby grants to the respective Underwriters an option (the
"Option") to purchase from the Selling Stockholder up to 427,500 Option Shares,
in the same proportion as each Underwriter has agreed to purchase the Firm
Shares, at and for a price of $______ for each Option Share; provided, however,
that the Option may be exercised only for the purpose of covering any
over-allotments which may be made by you in connection with the distribution
and sale of the Firm Shares.
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(ii) The Option is exercisable by you in whole or in part at
any time or times on or before 12:00 noon, New York City time, on the day prior
to the Closing Time, and at any time or times thereafter during the period
ending 30 days after the date of the Prospectus (or if such thirtieth day shall
be a Saturday, Sunday or holiday, on the next business day thereafter when the
New York Stock Exchange is open for trading), in each case by giving notice to
the Company in the manner provided in Section 13 hereof, setting forth the
number of Option Shares as to which the Option is being exercised, the name or
names in which the certificates for such Option Shares are to be registered,
the denominations of such certificates and the date of delivery of such Option
Shares, which date, if not the Closing Time, shall not be less than two nor
more than three business days after such notice.
(iii) Upon each exercise of the Option, the Selling
Stockholder shall sell to the respective Underwriters the aggregate number of
Option Shares specified in the notice exercising the Option and the
Underwriters, on the basis of the representations and warranties of the Company
and the Selling Stockholder contained herein and in each certificate and
document contemplated under this Agreement to be delivered to you, but subject
to the terms and conditions of this Agreement, shall purchase from the Selling
Stockholder the aggregate number of Option Shares specified in such notice.
(iv) Delivery of the Option Shares with respect to which the
Option shall have been exercised shall be made to you for the account of the
respective Underwriters, at your offices at 540 Madison Avenue, New York, New
York, or such other location in the New York metropolitan area as you shall
determine and advise the Selling Stockholder, against payment by you, on behalf
of the respective Underwriters, of the purchase price therefor to the Selling
Stockholder by wire transfer in immediately available funds to the Selling
Stockholder in the amount to which the Selling Stockholder is entitled, at
10:00 A.M., New York City Time, on the date designated in the notice given by
you as above provided for, unless some other place, time and date is agreed
upon (such time and date being herein called an "Option Exercise Time"). The
cost of original issue tax stamps or transfer stamps, if any, in connection
with each issuance and delivery of the Option Shares by the Selling Stockholder
to the respective Underwriters shall be borne by the Selling Stockholder. The
Company and the Selling Stockholder will, severally, pay and save each
Underwriter, and any subsequent holder of Option Shares, harmless from any and
all liabilities with respect to or resulting from any failure or delay in
paying federal and state stamp taxes, if any, which may be payable or
determined to be payable as a result of the sale by the Selling Stockholder to
such Underwriter of the Option Shares or any portion thereof.
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(v) The Selling Stockholder will make the certificates for
the Option Shares to be purchased at each Option Exercise Time available to you
for examination at the offices of Ladenburg, Xxxxxxxx & Co., Inc., at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or such other place as you shall request,
not later than 2:00 P.M., New York City time, on the business day next
preceding each Option Exercise Time.
(vi) The obligation of the respective Underwriters to
purchase and pay for Option Shares at each Option Exercise Time shall be
subject to compliance as of such date with all the conditions specified in
Section 9 hereof and the delivery to you of opinions, certificates and letters,
each dated the respective Option Exercise Time, substantially similar in scope
to those specified in Section 9 hereof, and to the absence of any occurrence
referred to in Section 11 hereof.
(c) Wire Transfer Payment; Closing. The Company hereby
acknowledges that the wire transfer by or on behalf of the Underwriters of the
purchase price for any Shares does not constitute closing of a purchase and a
sale of the Shares. Only execution and delivery of a receipt for Shares by the
Representatives indicates completion of the closing of a purchase of the Shares
from the Company. Furthermore, in the event that the Underwriters wire funds to
the Company prior to the completion of the closing of a purchase of Shares, the
Company hereby acknowledges that until the Underwriters execute and deliver a
receipt for the Shares, by facsimile or otherwise, which receipt shall be
promptly executed and delivered by the Representatives to the Company upon the
receipt of the Shares, the Company will not be entitled to the wired funds and
shall return the wired funds to the Underwriters as soon as practicable (by
wire transfer of same-day funds) upon demand. In the event that the closing of
a purchase of Shares is not completed and the wire funds are not returned by
the Company to the Underwriters on the same day the wired funds were received
by the Company, the Company agrees to pay to the Underwriters in respect of
each day the wire funds are not returned by it, in same-day funds, interest on
the amount of such wire funds in an amount representing the Underwriters' cost
of financing as reasonably determined by Ladenburg, Xxxxxxxx & Co., Inc.
Section 5. Warrants. In order to induce you to enter into
this Agreement, the Company shall execute and deliver to you, in your
individual capacity and not as the Representatives, for an aggregate purchase
price of $2,850, five-year warrants (the "Warrants") to purchase an aggregate
of 285,000 shares of the Common Stock at an exercise price per share equal to
the greater of $10.00 or 125% of the initial public offering price per share
set forth on the cover page of the Prospectus. The Warrants shall be
exercisable beginning one year from the date of the Prospectus. The Warrants
shall be in the form of Exhibit 10.7 to the
-15-
Registration Statement. Execution and delivery of Warrants, registered in your
name or the names of such of your officers as you shall notify the Company in
writing, shall be made to you, x/x Xxxxxxxxx, Xxxxxxxx & Co., Inc., at their
offices at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at the Closing Time. The
cost of original issue tax stamps, if any, in connection with the execution and
delivery of the Warrants shall be borne by the Company.
Section 6. Registration Statement and Prospectus. (a) The
Company will deliver to you, without charge, four fully signed copies of the
Registration Statement and of each amendment thereto, including all financial
statements and exhibits, and to each Underwriter the number of conformed copies
of the Registration Statement and of each amendment thereto, including all
financial statements, but excluding exhibits, as each Underwriter may
reasonably request.
(b) The Company has delivered to each Underwriter, and each
of the Selected Dealers (hereinafter defined), without charge, as many copies
as you have requested of each preliminary prospectus heretofore filed with the
Commission and will deliver to each Underwriter and to others whose names and
addresses are furnished by such Underwriter or a Selected Dealer, without
charge, on the Effective Date, and thereafter from time to time during the
period in which the Prospectus is required by law to be delivered in connection
with sales of Shares by an Underwriter or a dealer, as many copies of the
Prospectus (and, in the event of any amendment of or supplement to the
Prospectus, of such amended or supplemented Prospectus) as you may reasonably
request; without limiting the application of this Section 6(b), the Company,
not later than (i) 6:00 PM, New York City time, on the date of determination of
the public offering price, if such determination occurred at or prior to 12:00
Noon, New York City time, on such date or (ii) 9:00 AM, New York City time, on
the business day following the date of determination of the public offering
price, if such determination occurred after 12:00 Noon, New York City time, on
such date, will deliver to the Representatives, without charge, as many copies
of the Prospectus and any amendment or supplement thereto as the
Representatives may reasonably request for purposes of confirming orders that
are expected to settle at the Closing Time.
(c) The Company has authorized the Underwriters to use, and
make available for use by prospective dealers, the preliminary prospectuses,
and authorizes each Underwriter, all dealers (the "Selected Dealers") selected
by you in connection with the distribution of the Shares and all dealers to
whom any of such Shares may be sold by the Underwriters or by any Selected
Dealer, to use the Prospectus, as from time to time amended or supplemented, in
connection with the sale of the Shares in accordance with the applicable
provisions of the Act, the applicable Rules and Regulations and applicable
state law until
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completion of the public offering of the Shares and for such
longer period as you may request if the Prospectus is required to be delivered
in connection with sales of the Shares by an Underwriter or a dealer.
Section 7. Covenants. (a) The Company covenants and agrees
with each Underwriter that:
(i) After the execution and delivery of this Agreement,
the Company will not, at any time, whether before or after
the Effective Date, file any Term Sheet or any amendment of
or supplement to the Registration Statement or the Prospectus
of which you shall not previously have been advised and
furnished with a copy, or which you or Fulbright & Xxxxxxxx
L.L.P. ("counsel for the Underwriters") shall not have
approved, or which is not in compliance with the Act or the
Rules and Regulations.
(ii) If the Registration Statement has not become
effective, the Company will promptly file the Final Amendment
with the Commission and will use its best efforts to cause
the Registration Statement to become effective. If the
Registration Statement has become effective, the Company will
file the Rule 430A Prospectus or other Prospectus or any Term
Sheet that constitutes a part thereof with the Commission as
promptly as practicable, but in no event later than that
permitted by Rules 434 and 424(b). The Company will promptly
advise you (A) when the Registration Statement, or any post
effective amendment thereto, shall have become effective, or
any Term Sheet or any amendments or supplements to the
Prospectus shall have been filed with the Commission; (B) of
any request of the Commission or any state or other
regulatory body for any amendment or supplement of the
Registration Statement or the Prospectus or for additional
information and the nature and substance thereof; (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary
prospectus or prohibiting the offer or sale of any of the
Shares or of the initiation of any proceedings for such
purpose; (D) of any receipt by the Company of any
notification with respect to the suspension of qualification
of the Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and (E) of
the happening of any event during the periods in which the
Prospectus is to be used in conjunction with the offer or
sale of Shares which makes any material statement made in the
Registration Statement or the
-17-
Prospectus untrue or which requires the making of any
changes in the Registration Statement or the Prospectus in
order to make the statements therein not misleading. The
Company will use its best efforts to prevent the issuance of
any stop order or any order preventing or suspending the use
of the Registration Statement or Prospectus and, if such
order is issued, to obtain the lifting thereof as promptly as
possible.
(iii) The Company will prepare and file with the
Commission, upon your request, any such amendments of or
supplements to the Registration Statement or the Prospectus,
in form and substance reasonably satisfactory to Xxxxxxx,
Phleger & Xxxxxxxx L.L.P. ("special counsel for the
Company"), as in the reasonable opinion of counsel for the
Underwriters may be necessary or advisable, and will use its
best efforts to cause the same to become effective as
promptly as possible.
(iv) The Company will comply with the Act and the Rules
and Regulations and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations
thereunder so as to permit the continuance of sales of and
dealings in the Shares under the Act and the Exchange Act. If
at any time when a prospectus is required to be delivered
under the Act an event shall have occurred as a result of
which it is necessary to amend or supplement the Prospectus
in order to make the statements therein, in light of the
circumstances existing at the time of delivery of the
Prospectus not untrue or misleading or to make the Prospectus
comply with the Act, the Company will notify you promptly
thereof and will, subject to the provisions of Section
7(a)(i) hereof, furnish to you an amendment or supplement
which will correct such statement in accordance with the
requirements of Section 10 of the Act.
(v) The Company will comply with all of the provisions of
any undertakings contained in the Registration Statement.
(vi) The Company will take all reasonable and necessary
actions to furnish to whomever you direct, when and as
requested by you, all necessary documents, exhibits,
information, applications, instruments and papers as may be
required or, in the opinion of counsel for the Underwriters,
reasonably required to permit or facilitate the sale of the
Shares. The Company will use its best efforts to qualify or
register the Shares for sale under the so-called blue sky
laws of such
-18-
jurisdictions as you shall request, to make such
applications, file such documents and furnish such
information as may be required for such purpose and to comply
with such laws so as to continue such qualification in effect
so long as required for the purposes of the distribution of
the Shares; provided, however, that the Company shall not be
required to qualify as a foreign corporation in any
jurisdiction or to file a consent to service of process in
any jurisdiction in any action other than one arising out of
the offering or sale of the Shares.
(vii) During the period of five years commencing on the
Effective Date, the Company will furnish to each
Representative, in such number of copies as such
Representative may reasonably request, (A) within 120 days
after the end of each fiscal year of the Company, either (1)
a consolidated balance sheet of the Company and its then
consolidated subsidiaries, and a separate balance sheet of
each subsidiary, if any, of the Company the accounts of which
are not included in such consolidated balance sheet, as of
the end of such fiscal year, and consolidated statements of
income and stockholders' equity of the Company and its
consolidated subsidiaries, and separate statements of income
and stockholders' equity of each of the subsidiaries, if any,
of the Company the accounts of which are not included in such
consolidated statements, for the fiscal year then ended, all
in reasonable detail, prepared in accordance with generally
accepted accounting principles, consistently applied, and all
certified by independent accountants (within the meaning of
the Act and the Rules and Regulations), or (2) the Company's
Form 10-K for such fiscal year as filed with the Commission
in accordance with the Exchange Act; (B) within 60 days after
the end of each of the first three fiscal quarters of each
fiscal year, either (1) similar balance sheets as of the end
of such fiscal quarter and similar statements of income and
stockholders' equity for the fiscal quarter then ended, all
in reasonable detail, and all certified by the Company's
principal financial officer or the Company's principal
accounting officer as having been prepared in accordance with
generally accepted accounting principles, consistently
applied, or (2) the Company's Form 10-Q for such fiscal
quarter as filed with the Commission in accordance with the
Exchange Act; (C) as soon as available, each report furnished
to or filed with the Commission or any securities exchange
and each report and financial statement furnished to the
Company's stockholders generally; and (D) as soon as
available, such other material as such Underwriter may from
time to
-19-
time reasonably request regarding the financial condition
and operations of the Company and its subsidiaries; provided,
however, nothing contained in this subsection (D) shall
require the Company to disclose any material to any
Underwriter to the extent that disclosure is prohibited under
applicable federal or state securities laws, rules or
regulations.
(viii) The Company will make generally available to its
security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of
the Company during which the Effective Date occurs (or 90
days, if such 12-month period coincides with the Company's
fiscal year), an earnings statement of the Company, which
will be in reasonable detail, but need not be audited, and
will cover a period of twelve months commencing after the
Effective Date. Such earnings statement shall comply with the
requirements of Section 11(a) of the Act or Rule 158 of the
Rules and Regulations. During the period of five years
commencing on the Effective Date, the Company will furnish to
its stockholders (A) within 75 days after the end of the
first three fiscal quarters of each fiscal year, quarterly
reports containing unaudited financial information, and (B)
within 120 days after the end of each fiscal year, an annual
report containing audited financial information.
(ix) Counsel for the Company, counsel for the Selling
Stockholder, the Company's accountants and the officers of
the Company will respectively furnish the opinions, the
letters and the certificates referred to in subsections (e),
(f), (g), (h), (i) and (j) of Section 9 hereof, and, in the
event that the Company shall file any amendment to the
Registration Statement relating to the offering of the Shares
or any amendment or supplement to the Prospectus relating to
the offering of the Shares subsequent to the Effective Date,
whether pursuant to subsection (iii) of this Section 7(a) or
otherwise, such counsel, such accountants and such officers
will, at the time of such filing or at such subsequent time
as you shall specify, respectively, furnish to you such
opinions, letters and certificates, each dated the date of
its delivery, of the same nature as the opinions, the letters
and the certificates referred to in said subsections (e),
(f), (g), (h), (i) and (j) respectively, as you may
reasonably request, or, if any such opinion, letter or
certificate cannot be furnished by reason of the fact that
such counsel or such accountants or any such officer believes
that the same would be inaccurate,
-20-
such counsel or such accountants or any such officer will
furnish an accurate opinion, letter or certificate with
respect to the same subject matter.
(x) Prior to the later to occur of the termination of the
Option and the Option Exercise Time, the Company will not
issue, directly or indirectly, without your prior consent and
that of counsel for the Underwriters, any press release or
other communication or hold any press conference with respect
to the Company or its activities or this offering.
(xi) The Company will not, without your prior written
consent, sell, contract to sell or otherwise dispose of any
securities, including shares of Common Stock, except the sale
of the Shares, the issuance of options pursuant to the
Company's 1996 Stock Option Plan (as described in the
Prospectus) or the issuance of the Warrants as described in
the Prospectus, for a period of one year after the date of
this Agreement; and the Company has caused the Selling
Stockholder and any affiliate thereof, to deliver to you on
or before the date of this Agreement an agreement,
satisfactory in form and substance to you and counsel for the
Underwriters, whereby each agrees, for a period of one year
after the date of this Agreement, not to offer, pledge, sell
or contract to sell, transfer or otherwise dispose of any
shares of Common Stock, directly or indirectly, without your
prior written consent, except for the sale of Shares to the
Underwriters pursuant to this Agreement.
(xii) The Company will not at any time, directly or
indirectly, take any action designed to or which will
constitute or which might reasonably be expected to cause or
result in the stabilization of the price of the Shares to
facilitate the sale or resale of any of the Shares.
(xiii) The Company will apply the net proceeds from the
sale of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus. Prior to the application of such
net proceeds, the Company will invest or reinvest such
proceeds only in Eligible Investments (hereinafter defined).
"Eligible Investments" shall mean the following investments
so long as they have maturities of one year or less: (A)
obligations issued or guaranteed by the United States or by
any person controlled or supervised by or acting as an
instrumentality of the United States pursuant to authority
granted by Congress; (B) obligations issued or guaranteed by
any state or political subdivision thereof rated either Aa or
higher, or MIG 1 or higher, by Xxxxx'x Investors Service,
Inc. or
-21-
AA or higher, or an equivalent, by Standard & Poor's
Corporation, both of New York, New York, or their successors;
(C) commercial or finance paper which is rated either Prime-1
or higher or an equivalent by Xxxxx'x Investors Service, Inc.
or A-1 or higher or an equivalent by Standard & Poor's
Corporation, both of New York, New York, or their successors;
and (D) certificates of deposit or time deposits insured by
the Federal Deposit Insurance Corporation or issued by banks
or trust companies, organized under the laws of the United
States, having a minimum equity of $500,000,000.
(xiv) During the period of 180 days commencing on the date
hereof, the Company will not, without the prior written
consent of the Representatives, grant options to purchase
shares at a price less than (i) the initial public offering
price per share set forth on the cover page of the
Prospectus, or (ii) in the case of stock options granted
pursuant to the Company's 1996 Stock Option Plan, 85% of the
initial public offering price per share set forth on the
cover page of the Prospectus.
(xv) The Company has caused the Common Stock to be duly
included for quotation on the Nasdaq Stock Market's National
Market (the "National Market").
(b) The Selling Stockholder covenants and agrees with each
Underwriter that:
(i) The Selling Stockholder will not, directly or
indirectly, take any action designed to or which will
constitute or which might reasonably be expected to cause or
result in the stabilization of the price of the Shares to
facilitate the sale or the resale of any of the Shares.
(ii) If, subsequent to the date hereof, the Selling
Stockholder shall believe or have any reasonable grounds to
believe that the Prospectus (as amended or as supplemented if
the Company shall have filed with the Commission any
amendment thereof or supplement thereto) contains any untrue
statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading, or that any of
the representations and warranties of the Company or the
Selling Stockholder contained herein or in any certificate or
document contemplated under this Agreement to be delivered to
you are false, the Selling Stockholder will immediately
notify you, as the Representatives, to such effect.
-22-
(iii) The Selling Stockholder will not, without your prior
written consent, directly or indirectly, offer, pledge, sell,
contract to sell, transfer or otherwise dispose of any shares
of Common Stock or any securities convertible into, or
exchangeable or exchangeable for shares of Common Stock,
except the sale of Shares to the Underwriters pursuant to
this Agreement, for a period of one year after the Effective
Date.
(iv) The Selling Stockholder will furnish the certificates
referred to in subsections (i) and (j) of Section 9 hereof.
Section 8. Expenses. Except as otherwise set forth herein,
the Company will pay and bear all costs, fees, taxes and expenses incident to
the performance of the obligations of the Company and the Selling Stockholder
under this Agreement, including, but not limited to: (a) the costs incident to
the issuance, sale and delivery to the Underwriters of the Shares (except that
the Company will not be responsible for the underwriting discounts and
commissions with respect to shares of Common Stock being sold by the Selling
Stockholder); (b) the costs incident to the preparation, printing and filing
under the Act of each preliminary prospectus, the Prospectus, the Registration
Statement and any amendments or supplements thereof and exhibits thereto; (c)
the costs of distributing the Registration Statement and any post-effective
amendments thereto; (d) the costs of printing and distributing to the
Representatives, the other Underwriters and any Selected Dealers copies of any
preliminary prospectus, the Prospectus, the Registration Statement and any
amendment or supplement to the Prospectus or Registration Statement required by
this Agreement or the Act; (e) the costs of preparation, printing, mailing,
delivery, filing and distribution of preliminary and final blue sky memoranda,
Underwriter's Questionnaires and Powers of Attorney, letters to prospective
Underwriters, the Agreement Among Underwriters, the Selling Agreement, this
Agreement and all documents related thereto; (f) the filing fees of the
Commission; (g) the costs of qualification or registration of the Shares in the
jurisdictions referred to in subsection (a)(vi) of Section 7 hereof, including
the legal fees and expenses of counsel for the Underwriters in connection
therewith, and all filing fees in connection therewith; (h) the cost of
preparation, excluding the legal fees and expenses of counsel for the
Underwriters in connection therewith, of all filings with the National
Association of Securities Dealers, Inc. ("NASD") and all filing fees in
connection therewith; (i) fees and expenses of counsel for the Company, the
Company's accountants and the Company's consultants; (j) fees in connection
with the quotation of the Common Stock on the National Market; and (k) all
other costs and expenses incurred or to be incurred by the Company in
connection with the transactions contemplated by this Agreement.
-23-
If the Firm Shares are not sold to the Underwriters because the conditions in
Section 9 are not satisfied or this Agreement is terminated pursuant to Section
11 or Section 12, or by reason of any failure, refusal or inability on the part
of the Company or the Selling Stockholder to perform any undertaking or satisfy
any condition of this Agreement or to comply with any of the terms hereof on
their part to be performed, unless such failure to satisfy the condition or to
comply with said terms be due to the default of any Underwriter, then (and only
then) the Company will pay all reasonable accountable out-of-pocket expenses
which you may incur in connection with this Agreement and the transactions
hereby contemplated, including all fees and expenses of counsel for the
Underwriters in connection therewith. The provisions of this Section 8 are
intended to relieve the Underwriters from payment of the costs and expenses
which the Company hereby agrees to pay and shall not effect any agreement
between the Company and the Selling Stockholder for the sharing of such costs
and expenses.
Section 9. Conditions of the Underwriters' Obligations. The
Underwriters' obligations hereunder to purchase and pay for the Shares are
subject (as of the date hereof, the Closing Time and each Option Exercise Time)
to the accuracy of and compliance with the representations and warranties of
the Company and the Selling Stockholder herein and in each certificate and
document contemplated under this Agreement to be delivered, to the accuracy of
the statements of the Company, of the Selling Stockholder and of the officers
of the Company made pursuant to the provisions hereof, to the performance by
the Company and the Selling Stockholder of their respective covenants and
agreements hereunder and under each such certificate and document, and to the
following additional conditions:
(a) (i) The Registration Statement shall have become
effective not later than 5:00 P.M., New York City time, on the date of this
Agreement, or at such later time or on such later date as you may agree to in
writing; (ii) if required, the Prospectus or any Term Sheet that constitutes a
part thereof shall have been filed with the Commission pursuant to Rules 434
and 424(b)(1) or (4) of the Rules and Regulations within the applicable time
period prescribed for such filing thereunder and in accordance with the
provisions of Section 7(a)(ii) hereof; (iii) at or prior to the
Closing Time, no stop order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Shares under the blue sky
laws of any jurisdiction (whether or not a jurisdiction which you shall have
specified) shall have been issued and no proceeding for that purpose shall have
been initiated or shall be threatened or contemplated by the Commission or the
authorities of any such jurisdiction; (iv) any request for additional
information on the part of the Commission or any such authorities shall have
been complied with to the satisfaction of the Commission or such authorities
and counsel for the
-24-
Underwriters; (v) the NASD, upon review of the terms of the public offering of
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same; and (vi) after the date hereof, no
amendment or supplement to the Registration Statement or the Prospectus shall
have been filed without your prior consent.
(b) You shall not have advised the Company, and the
Selling Stockholder shall not have advised any Underwriter or the Company, that
the Registration Statement or the Prospectus or any amendment thereof or
supplement thereto contains an untrue statement of a fact which is material, or
omits to state a fact which is material and is required to be stated therein or
is necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) Between the time of the execution and delivery
of this Agreement and the Closing Time, there shall be no litigation instituted
against the Company or any of its officers or directors, and between such dates
there shall be no proceeding instituted or threatened against the Company or
any of its officers or directors before or by any federal, state, county or
local commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, in which litigation or proceeding an unfavorable
ruling, decision or finding could materially adversely affect the Company or
its business, financial condition or results of operations.
(d) Each of the representations and warranties of
the Company and the Selling Stockholder contained herein and in each
certificate and document contemplated under this Agreement to be delivered
shall be true and correct at the Closing Time as if made at the Closing Time,
and all covenants and agreements contained herein, and in each such certificate
and document, to be performed on the part of the Company or the Selling
Stockholder and all conditions contained herein and in each such certificate
and document to be fulfilled or complied with by the Company or the Selling
Stockholder at or prior to the Closing Time shall have been duly performed,
fulfilled or complied with.
(e) At the Closing Time, special counsel for the
Company shall furnish to you an opinion, in form and substance satisfactory to
you, dated as of the date of its delivery, to the effect that:
(i) The Company is a corporation duly
organized, validly existing and in good standing
under the laws of the state of its incorporation.
The Company has the corporate power and authority to
conduct all of the activities conducted by it, own
or lease all of the assets owned or leased by
-25-
it, and conduct its business as described in the
Registration Statement and the Prospectus; and is
duly qualified to do business and in good standing
as a foreign corporation in all jurisdictions in
which the nature of the activities conducted by it
and/or the character of the assets owned and leased
by it makes such qualification necessary.
(ii) No authorization, approval, consent or
license of any governmental or regulatory body,
except as may be required under the Act or the blue
sky laws of the various jurisdictions (with respect
to which such counsel need express no opinion), is
required in connection with the (A) authorization,
issuance, transfer, sale or delivery of the Shares
to be sold by the Company; (B) authorization,
issuance or delivery of the Warrants or issuance of
shares of Common Stock upon exercise of the
Warrants; or (C) taking of any action contemplated
herein or if so required all such authorizations,
approvals, consents and licenses have been obtained
and are in full force and effect.
(iii) The Company has authorized and
outstanding capital stock, stock options and
warrants as set forth in the Registration Statement
and the Prospectus. The outstanding shares of the
Common Stock (including the Shares to be sold by the
Selling Stockholder) have been, and all of the
Shares will, upon sale or issuance, and payment
therefor, be, duly authorized, validly issued, fully
paid and nonassessable, are not subject to
pre-emptive rights and have not been issued in
violation of any statutory pre-emptive rights or, to
the best of such counsel's knowledge, similar
contractual rights. The issue and sale of the Shares
by the Company have been duly and validly
authorized. The Common Stock has been duly
authorized for quotation on the National Market. All
issuances of securities by the Company were exempt
from, or complied in all respects with, the
provisions of all applicable federal and state
securities laws. Such opinion delivered at the
Closing Time shall state that each of the Shares is
duly and validly issued, fully paid and
nonassessable and not subject to preemptive rights.
(iv) To the best of such counsel's
knowledge, no holder of any securities of the
Company has the right to require registration of
shares of the Common Stock or other securities of
the Company
-26-
because of the filing or effectiveness of the
Registration Statement. The description of the
Common Stock and the Shares contained in the
Registration Statement and the Prospectus conforms
to the rights set forth in the instruments defining
the same and is in conformity with the requirements
of Item 9 of the Registration Statement.
(v) The Company is not an "investment
company" as defined in Section 3(a) of the
Investment Company Act and, if the Company conducts
its business as set forth in the Registration
Statement and the Prospectus, will not become an
"investment company" and will not be required to
register under the Investment Company Act; the
Company has not been required to make any filings
pursuant to the Exchange Act.
(vi) The Company has full corporate power
and authority to enter into the Warrants. The
Warrants have been duly authorized, and upon due
execution, issuance and delivery, will constitute
the valid, binding and legally enforceable
obligation of the Company. Such opinion delivered at
the Closing Time shall state that the Warrants have
been duly executed, issued and delivered and
constitute the valid and legally enforceable
obligation of the Company. The shares of Common
Stock required to be sold or issued by the Company
upon exercise of the Warrants have been duly
authorized and reserved for sale or issuance, and,
when sold or issued and delivered upon payment of
the exercise price therefor as provided in the
Warrants, will be duly and validly issued, fully
paid and nonassessable.
(vii) The Company has full corporate power
and authority to enter into this Agreement and this
Agreement has been duly authorized, executed and
delivered by the Company.
(viii) The Registration Statement and the
Prospectus, and each amendment thereof or supplement
thereto, comply as to form with, and appear on their
face to be appropriately responsive in all material
respects, to the requirements of the Act and the
Rules and Regulations (except that no opinion need
be expressed as to financial statements and other
financial data contained in the Registration
Statement or the Prospectus).
-27-
(ix) All contracts filed as exhibits to the
Registration Statement and the Prospectus have been
fairly summarized or described therein, conform in
all material respects to the descriptions thereof
contained therein and such counsel does not know of
any contracts or documents required to be so
summarized or disclosed or so filed which have not
been so summarized or disclosed or so filed, and
such counsel does not know of any statutes or
regulations or pending or threatened legal or
governmental proceedings required to be disclosed in
the Prospectus which have not been described as
required.
(x) The Registration Statement has become
effective under the Act, and, to the knowledge of
such counsel, no stop order suspending the
effectiveness of the Registration Statement or use
of the Prospectus has been issued and no proceedings
for that purpose have been instituted or are
threatened, pending or contemplated. The opinion
delivered at the Closing Time shall state that all
filings required by Rule 434, Rule 424 and Rule 430A
of the Rules and Regulations have been made.
(xi) The execution and delivery of this
Agreement by the Company and the Warrants by the
Company, the consummation by the Company of the
transactions herein or therein contemplated, as
applicable, and the compliance with the terms of
this Agreement, the Warrants do not and will not
conflict with or result in a breach of any of the
terms or provisions of or violate or constitute a
default under, the certificate of incorporation or
by-laws of the Company or any indenture, mortgage or
other agreement or instrument known to such counsel
to which the Company is a party or by which the
Company or any of its properties is bound.
(xii) To the best knowledge of such
counsel, the Company has obtained all trademarks,
trade names, patents, patent rights, licenses,
permits and governmental or other authorizations as
set forth in the Prospectus; to the best knowledge
of such counsel, such trademarks, trade names,
patents, patent rights, licenses, permits and
governmental or other authorizations are in full
force and effect and the Company is in all material
respects complying therewith.
-28-
(xiii) The real properties described in the
Registration Statement and the Prospectus as being
leased by the Company are held under valid,
subsisting and enforceable leases with only such
exceptions as are not material.
Such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company, at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the preliminary prospectus, the
Registration Statement, the Prospectus, and related matters and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus, on the basis of the
foregoing, nothing has come to the attention of such counsel which leads them
to believe that either the Registration Statement or any amendment thereto, at
the time such Registration Statement or amendment became effective or the
Prospectus or any amendment or supplement thereto as of its date or the date of
such opinion contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel
need express no opinion with respect to the financial statements and schedules
and other financial and accounting data included in the Registration Statement
or Prospectus).
Such opinion shall be to such further effect with respect to
other legal matters relating to this Agreement and the sale of the Shares
hereunder as counsel for the Underwriters may reasonably request. In rendering
the opinions set forth above, such counsel may rely upon certificates of the
Selling Stockholder, officers of the Company and public officials as to matters
of fact. In rendering such opinion, such counsel may rely as to all matters of
law other than the law of the United States or of the States of New York and
Delaware upon opinions of counsel satisfactory to you, in which case the
opinion shall state that they have no reason to believe that you and they are
not entitled so to rely.
(f) At the Closing Time, Xxxxxx, Beach & Xxxxxx, counsel for
the Selling Stockholder shall furnish you an opinion, in the form and substance
satisfactory to you, dated as of the date of its delivery, to the effect that:
(i) The Selling Stockholder is a corporation, validly
existing and in good standing under the laws of the State of
Delaware.
-29-
(ii) No authorization, approval, consent or license of
any governmental or regulatory body, except as may be
required under the Act or the blue sky laws of the various
jurisdictions (with respect to which such counsel need
express no opinion), is required in connection with (A) the
transfer, sale or delivery of the Shares to be sold by the
Selling Stockholder; (B) the execution, delivery and
performance of this Agreement by the Selling Stockholder; or
(C) the taking of any action contemplated herein by the
Selling Stockholder, or if so required all such
authorizations, approvals, consents and licenses have been
obtained and are in full force and effect.
(iii) Upon delivery of the certificates for the Shares to
be sold by the Selling Stockholder, duly endorsed or
accompanied by duly executed stock powers, and payment
therefor in accordance with the terms hereof, each of the
Underwriters will acquire good title thereto free and clear
of any adverse claim assuming that such Underwriters
purchased such Shares in good faith and without notice (in
each case as such term is defined in the Uniform Commercial
Code in effect in the State of New York) of such adverse
claim.
(iv) The Selling Stockholder has full corporate power and
authority to execute and deliver this Agreement and to sell,
transfer and deliver the Shares being sold by the Selling
Stockholder in accordance with the terms hereof and all
actions necessary to effect the transfer of title to such
Shares, free and clear of all claims, encumbrances and
defects in title, in accordance with this Agreement, have
been duly completed; and such opinion delivered at the
Closing Time shall state that the Selling Stockholder has
taken all corporate action necessary to authorize the
execution and delivery of this Agreement and the transactions
contemplated hereby.
(v) The execution and delivery of this Agreement by the
Selling Stockholder, the consummation by the Selling
Stockholder of the transactions herein contemplated and the
compliance with the terms of this Agreement do not result in
a breach of any of the terms or provisions of or violate or
constitute a default under, the certificate of incorporation
or by-laws of the Selling Stockholder.
-30-
In rendering such opinions, Xxxxxx, Beach & Xxxxxx may rely
as to factual matters on the representations and warranties contained in this
Agreement and on certificates of the Selling Stockholder, officers of the
Company and public officials.
(g) Concurrently with the execution and delivery of this
Agreement and at the Closing Time, the Company's accountants shall have
furnished to you a letter, dated as of the date of its delivery, addressed to
you and in form and substance satisfactory to you, to the effect that:
(i) Such accountants are independent certified
public accountants with respect to the Company as
required by the Act and the Rules and Regulations, and
the answer to Item 10 of the Registration Statement is
correct insofar as it relates to them.
(ii) In their opinion the financial statements and
schedules and notes examined by them and included in the
Registration Statement and the Prospectus comply as to
form in all material respects with the applicable
accounting requirements of the Act and the Rules and
Regulations with respect to registration statements on
Form S-1.
(iii) On the basis of inquiries and procedures
conducted by them, including a reading of the latest
available unaudited interim financial statements of the
Company inquiries of officials of the Company and the
Selling Stockholder responsible for operational,
financial and accounting matters, a reading of the minute
books of the Company and other specified procedures and
inquiries, nothing has come to their attention that
caused them to believe that (A) any unaudited financial
statements of the Company set forth in the Registration
Statement and the Prospectus do not comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations or
are not fairly presented in conformity with generally
accepted accounting principles applied on a basis
consistent with that of the audited financial statements;
and (B) during the period from June 30, 1996 to a
specified date not more than five days prior to the date
of such letter there was any change in the capital stock
or debt of the Company, or any decrease in the total
assets or stockholder's equity of the Company, each as
compared with the amounts shown in the balance
-31-
sheet as of June 30, 1996 included in the
Registration Statement or any decrease from July 1, 1996
to the specified date, on a proportional basis with the
fiscal quarter ended June 30, 1996 in sales, loss from
operations, net loss and net income per share, except in
all instances for changes, decreases or increases which
the Registration Statement and the Prospectus disclose
have occurred or may occur and except for such other
changes, decreases or increases which you shall in your
sole discretion accept.
(iv) In addition to their examination referred to in
their reports included in the Registration Statement and
the Prospectus and the inquiries and limited procedures
referred to in clause (iii) above, they have performed
other procedures, not constituting an audit, with respect
to certain numerical data and financial information
appearing in the Registration Statement and the
Prospectus, requested by you and specified in such letter
and have compared such data and information with the
accounting records of the Company and found them to be in
agreement.
(h) At the Closing Time, there shall be furnished to you,
on behalf of the Company, an accurate certificate, dated the date of its
delivery, signed by each of the chief executive officer and the chief financial
officer of the Company, in form and substance satisfactory to you, to the
effect that:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus
and (A) to his knowledge, as of the date of such
certificate, the statements in the Registration Statement
and the Prospectus are and were true and correct and
neither the Registration Statement nor the Prospectus
omits to state a material fact necessary in order to make
the statements therein, in light of the circumstances
under which they were made, not misleading; (B) in the
case of a certificate delivered after the date of this
Agreement, since the Effective Date, no event has
occurred of which he has knowledge and which was required
by the Act or the Rules and Regulations to be set forth
in a supplement to or amendment of the Prospectus but
which has not been so set forth; and (C) since the dates
as of which and the periods for which information is
given in the Registration Statement and the Prospectus,
there has not been to his knowledge any adverse
-32-
change in the business, business prospects,
financial condition or results of operations of the
Company from that set forth in the Registration Statement
and the Prospectus, other than changes which the
Registration Statement and the Prospectus specifically
disclose have occurred or may occur subsequent to the
Effective Date.
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued, and no
proceedings for such purpose have been commenced or are,
to the knowledge of each signer of such certificate,
threatened or contemplated by the Commission.
(iii) No stop order suspending the qualification or
registration of any of the Shares under the blue sky laws
of any jurisdiction (whether or not a jurisdiction you
shall have specified) has been issued, and no proceedings
for such purpose have been commenced or are, to the
knowledge of each signer of such certificate, threatened
or contemplated by any jurisdiction.
(iv) The conditions, separately set forth in such
certificate, contained in subsections (a), (c) and (k) of
this Section 9 have been complied with.
(v) There has been no breach of any of the terms or
provisions of the agreements referred to in Section
7(a)(xi) and 7(b)(iii) hereof.
(vi) Each of the representations and warranties of
the Company contained in this Agreement and in each
certificate and document contemplated under this
Agreement to be delivered to you was, when originally
made and is, at the time such certificate is dated, true
and correct.
(vii) Each of the covenants required herein to be
performed by the Company on or prior to the date of such
certificate has been duly, timely and fully performed and
each condition herein required to be complied with by the
Company on or prior to the date of such certificate has
been duly, timely and fully complied with by the Company.
(i) The Selling Stockholder shall have performed all of
the covenants contained herein and in any certificate or document contemplated
under this Agreement to be delivered to you
-33-
and required to be performed by the Selling Stockholder at or prior to the
Closing Time, and you shall have received at the Closing Time a certificate of
the Selling Stockholder, dated as of the Closing Time, to the effect that the
representations and warranties of the Selling Stockholder contained in this
Agreement and in each such certificate and document are true and correct in all
respects on and as of the date of such certificate as if made on and as of such
date, and each of the covenants and conditions required to be performed or
complied with by the Selling Stockholder on or prior to the date of such
certificate has been duly, timely and fully performed or complied with.
(j) The Company and the Selling Stockholder shall
have furnished to you such certificates, in addition to those specifically
mentioned herein, as you may have reasonably requested in a timely manner as to
the accuracy and completeness, at the Closing Time, of any statement in the
Registration Statement or the Prospectus; as to the accuracy, at the Closing
Time, of the representations and warranties of the Company and the Selling
Stockholder herein and in each certificate and document contemplated under this
Agreement to be delivered to you; as to the performance by the Company and the
Selling Stockholder of their respective obligations hereunder and under each
such certificate and document; or as to the fulfillment of the conditions
concurrent and precedent to your obligations hereunder.
(k) Except as contemplated by the Registration
Statement and the Prospectus, since the date hereof, there shall not have been
any change in the capitalization of the Company or any material adverse change
in the business, financial condition or results of operations of the Company or
in the value of the assets of the Company, or any material change, without your
consent, in the conduct of the business of the Company, arising for any reason
whatsoever.
(l) Each of the agreements referred to in Section
7(a)(xi) and 7(b)(iii) hereof shall have been delivered to you and there shall
have been no breach of any such agreement.
(m) All corporate proceedings and other legal
matters relating to the sale and transfer of the Shares, this Agreement, the
Warrants, the Registration Statement, the Prospectus and other related matters
shall be reasonably satisfactory in all material respects to counsel for the
Underwriters, who shall have furnished to you at the Closing Time such opinion,
in form and substance reasonably satisfactory to you, with respect to the
sufficiency of the aforementioned corporate proceedings and other legal matters
as you may reasonably require; and the Company shall have furnished to such
counsel such records and documents as such counsel may have reasonably
requested in a timely manner for the purpose of enabling them to pass upon such
matters.
-34-
(n) The Common Stock shall be authorized for
quotation on the National Market.
All of the opinions, letters, evidence and certificates
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and substance
reasonably satisfactory to counsel for the Underwriters. You reserve the right
to waive any condition hereinabove set forth. Each opinion, certificate, letter
or other document required to be delivered at the Closing Time shall also be
required to be delivered at each Option Exercise Time.
Section 10. Indemnification and Contribution. (a) The Company and the
Selling Stockholder, jointly and severally, agree to indemnify and hold
harmless each Underwriter and each person who controls an Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act and each
and all of them, from and against any and all losses, claims, damages,
liabilities or actions, joint or several (including any investigation, legal or
other expense incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which an
Underwriter or they or any of them may become subject under the Act, the
Exchange Act or otherwise but only insofar as such losses, claims, damages,
liabilities or actions arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement made by the Company or the Selling
Stockholder in Section 3 of this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement thereto or in any application or other document executed by the
Company or the Selling Stockholder based upon written information furnished by
or on behalf of the Company or the Selling Stockholder filed in any
jurisdiction in order to register or qualify the Shares under the securities
laws thereof or filed with the Commission, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; or (iii) the employment by the Company or the
Selling Stockholder of any device, scheme or artifice to defraud, or the
engaging by the Company or the Selling Stockholder in any act, practice or
course of business which operates or would operate as a fraud or deceit, or any
conspiracy with respect thereto, in which the Company or the Selling
Stockholder shall participate, in connection with the issuance and sale of any
of the Shares; provided, however, that the indemnity agreement contained in
this subsection shall not extend to any Underwriter in respect of any such
losses, claims, damages, liabilities or actions (including any investigation,
legal or other expense incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted) arising
out of, or based upon,
-35-
any such untrue statement or alleged untrue statement or any such omission or
alleged omission, if such statement or omission was made in reliance upon
information furnished in writing to the Company through you or on behalf of any
Underwriter specifically for use in connection with the preparation of the
Registration Statement, any preliminary prospectus or the Prospectus or any
such amendment or supplement thereto, and provided, further, that if any
preliminary prospectus or Prospectus contained any alleged untrue statement or
allegedly omitted to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading and such
statement or omission shall have been corrected in a revised preliminary
prospectus or in the Prospectus or in an amended or supplemented Prospectus,
the Company and the Selling Stockholder shall not be liable to any Underwriter
or controlling person under this subsection (a) with respect to such alleged
untrue statement or alleged omission to the extent that any such loss, claim,
damage or liability of such Underwriter or controlling person results from the
fact that such Underwriter sold Shares to a person to whom there was not sent
or given, at or prior to the written confirmation of such sale, such revised
preliminary prospectus or Prospectus or amended or supplemented Prospectus. The
Company and the Selling Stockholder agree to pay any legal and other expenses
for which it is liable under this subsection (a) from time to time (but not
more frequently than monthly) within 30 days after its receipt of a xxxx
therefor.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who shall have signed the Registration Statement, each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act and the Selling Stockholder to the same extent as the
foregoing indemnity from the Company and the Selling Stockholder to such
Underwriter, but in each case to the extent, and only to the extent, that any
statement in or omission from or alleged omission from the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement thereto was made in reliance upon information furnished in writing
to the Company by such Underwriter specifically for use in connection with the
preparation of the Registration Statement, any preliminary prospectus or the
Prospectus or any such amendment or supplement thereto; provided, however, that
the obligation of each Underwriter to indemnify the Company and the Selling
Stockholder under the provisions of this subsection (b) shall be limited to the
product of the number of Shares purchased by such Underwriter and the initial
public offering price set forth on the cover page of the Prospectus. Each
Underwriter agrees to pay any legal and other expenses for which it is liable
under this subsection (b) from time to time (but not more frequently than
monthly) within 30 days after receipt of a xxxx therefor.
-36-
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing subsections (a) or (b) (an
"indemnified party") in respect of which indemnity may be sought against a
person granting indemnification (an "indemnifying party") pursuant to such
subsections, such indemnified party shall promptly notify such indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party of any such action shall not release the indemnifying party
from any liability it may have to such indemnified party otherwise
than on account of the indemnity agreement contained in subsection (a) or (b)
of this Section 10. In case any such action is brought against an indemnified
party and it notifies an indemnifying party of the commencement thereof, the
indemnifying party against which a claim is to be made will be entitled to
participate therein at its own expense and, to the extent that it may wish, to
assume at its own expense the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that (i) if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
based upon advice of counsel that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them, the indemnified party shall have the right to select
separate counsel to assume such legal defenses and otherwise to participate in
the defense of such action on behalf of such indemnified party or parties; and
(ii) in any event, the indemnified party shall be entitled to have counsel
chosen by such indemnified party participate in, but not conduct, the defense
at such indemnified party's own expense. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 10 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with proviso (i) to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel); (ii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action; or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. An indemnifying party shall not be liable
for any settlement of any action or proceeding effected without its written
consent.
-37-
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in subsection
(a) or (b) of this Section 10 is unavailable in accordance with its terms, the
Company, the Selling Stockholder and, subject to the limitations set forth
below, the Underwriters shall contribute to the aggregate losses, claims,
damages and liabilities, of the nature contemplated by said indemnity
agreement, incurred by the Company, the Selling Stockholder and one or more
Underwriters, in such proportions as are applicable to reflect the relative
benefits received by the Company and the Selling Stockholder, on the one hand,
and the Underwriters, on the other hand, from the offering of the Shares;
provided, however, that if such allocation is not permitted by applicable law
or if the indemnified party failed to give the notice required under subsection
(c) of this Section 10, then the relative fault of the Company and the Selling
Stockholder, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages and liabilities and other
relevant equitable considerations will be considered together with such
relative benefits. The relative benefits received by the Company and the
Selling Stockholder, on the one hand, and the Underwriters, on the other hand,
shall be deemed to be in such proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Stockholder bear to the total
underwriting discount received by the Underwriters, in each case as set forth
in the table on the cover page of the Prospectus and in the notes thereto. The
relative fault of the Company and the Selling Stockholder, on the one hand, and
of the Underwriters, on the other, shall be determined by reference to, among
other things, whether in the case of an untrue statement or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact, such statement or omission relates to information supplied by
the Company or the Selling Stockholder, on the one hand, or by the
Underwriters, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The Company, the Selling Stockholder and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro-rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in this subsection (d). The amount paid or payable by the
indemnified party as a result of the losses, claims, damages or liabilities
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending against or appearing as a third-party witness
in any such action or claim. Notwithstanding the provisions of this subsection
(d), (i) no Underwriter shall be required to
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contribute any amount in excess of the amount by which the total price at which
the Shares purchased by it were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay in respect of
any loss, claim, damage, liability or action covered by this Section and (ii)
no person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the Act shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this subsection
(d), each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter. The Underwriters' obligations to
contribute pursuant to this subsection (d) are several in proportion to their
respective underwriting commitments and not joint.
(e) The respective indemnity and contribution agreements by
the Underwriters, the Selling Stockholder and the Company contained in
subsections (a), (b), (c) and (d) of this Section 10, and the respective
covenants, representations and warranties of the Company and the Selling
Stockholder set forth in Sections 2, 3, 4, 5, 6, 7 and 8 hereof, shall remain
operative and in full force and effect regardless of (i) any investigation made
by any Underwriter, on its behalf or by or on behalf of any person who controls
an Underwriter, the Company or any controlling person of the Company, any
director or officer of the Company or the Selling Stockholder; (ii) acceptance
of any of the Shares and payment therefor; or (iii) any termination of this
Agreement, and shall survive the delivery of the Shares, and any successor of
any Underwriter or the Company, or of any person who controls any Underwriter
or the Company, as the case may be, or the Selling Stockholder shall be
entitled to the benefit of such respective indemnity and contribution
agreements. The respective indemnity and contribution agreements by the
Underwriters, the Company and the Selling Stockholder contained in subsections
(a), (b), (c) and (d) of this Section 10 shall be in addition to any liability
which the Underwriters, the Company and the Selling Stockholder may otherwise
have.
Section 11. Termination. This Agreement (except for the
provisions of Sections 8 and 10 hereof) may be terminated by you by notifying
the Company and the Selling Stockholder at any time:
(a) prior to the earliest of (i) 11:00 a.m., New
York City time, on the business day immediately following the date hereof, (ii)
the time of release by the Representatives for publication of the first
newspaper advertisement which subsequently is published with respect to the
Shares or (iii) the time when the Shares are first generally released by the
Representatives to dealers.
-39-
(b) at or prior to the Closing Time if any of the
conditions specified in Section 9 hereof shall not have been fulfilled when and
as required by this Agreement to be fulfilled or if any of the covenants,
representations or warranties contained herein or in any certificate or
document contemplated under this Agreement to be delivered to you shall not
have been satisfied or fulfilled within the respective times herein provided
for, unless compliance therewith or performance or satisfaction thereof shall
have been expressly waived by you in writing; or
(c) at or prior to the Closing Time if any one or
more of the following shall have occurred or have been established between the
time of your execution of this Agreement and the Closing Time and in your
judgment the same has made or makes it inadvisable or impracticable for you
generally to proceed with the offering, sale, delivery, or collection of
payment for, the Shares pursuant to the public offering contemplated by this
Agreement: (i) a general suspension of, or a general limitation on prices for,
trading in securities on the New York Stock Exchange, American Stock Exchange,
the National Market or in the over-the-counter market; (ii) any new legal or
regulatory restriction adversely affecting the distribution of securities
generally or of the Shares; (iii) a material adverse change in general market
or economic conditions, either domestic or foreign, from such conditions on the
date hereof; (iv) a declaration of a banking moratorium by Federal or New York
State authorities; (v) any outbreak of major hostilities or other national or
international calamity; (vi) a material interruption in the mail service or
other means of communications within the United States; (vii) an action by any
government in respect of its monetary affairs which, in your reasonable
opinion, has a material adverse effect on the United States securities markets;
or (viii) any material adverse change or any material adverse development
involving a prospective change not contemplated in the Registration Statement
in or affecting particularly the business or properties of the Company.
Section 12. Default of Underwriters. If any Underwriter or
Underwriters default in their obligation to take and pay for Firm or Option
Shares and the aggregate number of Firm or Option Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the aggregate number of Firm or Option Shares, as the case may be, the other
Underwriters shall be obligated severally in proportion to their respective
commitments hereunder to purchase the Firm or Option Shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so default and the aggregate number of Firm or
Option Shares with respect to which such default or defaults occur is more than
10% of the aggregate number of Firm or Option Shares, as the case may be, and
arrangements satisfactory to you for the purchase of such Firm or Option Shares
by other persons (who may include one or more of the
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non-defaulting Underwriters including you) are not made within 36 hours after
such default, this Agreement may be terminated by you without liability on the
part of any non-defaulting Underwriter or the Company, except for the expenses
to be paid or reimbursed by the Company pursuant to Section 8 and except for
the provisions of Section 10 hereof. In the event of any default by one or more
Underwriters as described in this Section 12, the Representatives shall have
the right to postpone the Closing Time or the Option Exercise Time, as the case
may be, established as provided in Section 4 hereof for not more than seven
business days in order that any necessary changes may be made in the
arrangements or documents for the purchase and delivery of the Firm Shares or
Option Shares, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 12. Nothing herein shall relieve a defaulting Underwriter from
liability for its default.
Section 13. Notice. Except as otherwise expressly provided in
this Agreement, whenever advice or a notice, objection, designation, request or
report is given or is required by the provisions of this Agreement to be given,
such advice, notice, objection, designation, request or report shall be in
writing and shall be delivered by first-class mail, postage prepaid, nationally
recognized courier or by telecopy, (a) if to the Company, addressed to it and
delivered at Votan Corporation, 0000 Xxxx Xxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxxxxx, 00000 (telecopier number (000) 000-0000), Attention: Xxxx X. Xxxxx,
President and Chief Executive Officer, with a copy to Xxxxxxx, Xxxxxxx &
Xxxxxxxx L.L.P., 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(telecopier number (000) 000-0000), Attention: Xxxxxxx X. Xxxxxxxxx, Esq.; (b)
if to the Selling Stockholder, addressed to it and delivered at Moscom
Corporation, 0000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (telecopier number
(000) 000-0000), Attention: Xxxxxx X. Xxxxxxxxxxxx, President and Chief
Executive Officer, with a copy to Xxxxxx X. Xxxxx, Esq., at the same address;
and (c) if to you or the Underwriters, addressed to Ladenburg, Xxxxxxxx & Co.
Inc., and delivered at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (telecopier
number 212-872-1730), Attention: Xxxxx X. Xxxxxx, with a copy to Fulbright &
Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(telecopier number 212-752-5958), Attention: Xxxxxxx X. Xxxxxx, Esq.; or at
such other address or telecopier number as a party hereto may give notice in
accordance herewith.
Section 14. Miscellaneous. (a) This Agreement is made solely
for the benefit of the Underwriters, the Selling Stockholder and the Company,
the Company's directors, the Company's officers who shall have signed the
Registration Statement and any controlling person referred to in Section 10
hereof, and their respective successors and assigns, and no other person,
partnership, association or corporation shall acquire or have any right under
or by virtue of this Agreement. The term "successor" or
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the term "successors and assigns" as used in this Agreement shall not include
any buyer, as such, of any of the Shares from the Underwriters. All of the
obligations of the Underwriters hereunder are several and not joint.
(b) The information in the Prospectus under the section
"Underwriting" with respect to (i) the names of, and number of Shares to be
purchased by, each of the Underwriters and (ii) the amounts of the selling
concession and reallowance shall constitute the only information furnished in
writing by or on behalf of the several Underwriters for use in connection with
the preparation of the Registration Statement as originally filed or in any
amendment thereto, any preliminary prospectus or the Prospectus as the case may
be.
(c) This Agreement shall supersede any agreement or
understanding, oral or in writing, express or implied, between the Company, the
Selling Stockholder and you relating to the sale of any of the Shares.
(d) No change, amendment or supplement to, or waiver of, this
Agreement or any term, provision or condition contained herein, shall be valid
or of any effect unless in writing and signed by the party against whom such is
asserted.
(e) This Agreement shall be governed by and construed in
accordance with the law of the State of New York applicable to contracts made
and to be performed therein without giving effect to the principles of
conflicts of law thereof. If any action or proceeding shall be brought by any
of the Underwriters in order to enforce any right or remedy under this
Agreement, the Company and the Selling Stockholder hereby consent to and submit
to, the jurisdiction of the courts of the State of New York and of any federal
court sitting in the Borough of Manhattan, City of New York. The Company and
the Selling Stockholder agree that process in any such action or proceeding may
be served in the manner provided by New York law for service on foreign
persons, as appropriate.
(f) This Agreement may be signed in two or more counterparts
with the same effect as if the signatures to each counterpart were upon a
single instrument, and all such counterparts together shall be deemed an
original of this Agreement.
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Please confirm that the foregoing correctly sets forth the
agreement between the Company, the Selling Stockholder and you.
Very truly yours,
Votan Corporation
By:___________________________
Xxxx X. Xxxxx
President and Chief
Executive Officer
MOSCOM Corporation
By:________________________________
Xxxxxx X. Xxxxxxxxxxxx
President and Chief
Executive Officer
Accepted as of the date
first above written
LADENBURG, XXXXXXXX & CO. INC.
XXXXXXX BROS., L.P.
By: Ladenburg, Xxxxxxxx & Co. Inc.
By:___________________________________
Acting on behalf of itself and as the
Representative of the other Underwriters
named in Schedule A attached hereto.
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SCHEDULE A
Number
Name of Underwriter of Shares
Ladenburg, Xxxxxxxx & Co. Inc.
Xxxxxxx Bros., L.P.
---------
Total 2,850,000
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