Exhibit 1.1
700,000 Shares
WORLDWIDE FOREST PRODUCTS, INC.
UNDERWRITING AGREEMENT
---------------------
199
Castle Securities Corp.
As Representative of the several Underwriters
named in Schedule A hereto
00 Xxxxxx Xxxxxx, Xxxxx #00
Xxxxxxxx, Xxx Xxxx 00000
The undersigned, WORLDWIDE FOREST PRODUCTS, INC. (the
"Company"), a
Colorado corporation, hereby confirms its agreement with you and
the other
underwriters named in Schedule A annexed hereto.
SECTION 1. Underwriters and Representative. The term
"Underwriters" as
used herein, will mean and refer collectively to you and to the
other several
Underwriters named in Schedule A annexed hereto and the term
"Representative"
will refer to you in your capacity as the Representative of the
several
Underwriters. Any reference to you in this Agreement shall be
solely in your
capacity as the Representative.
SECTION 2. Description of Shares. When the Registration
Statement (as
hereinafter defined) shall become effective and at the Closing
Time (as
hereinafter defined), the Company's authorized capital stock will
be
10,000,000 shares of Common Stock, $.0075 par value per share
(the "Common
Stock"), and 40,000,000 shares of Preferred Stock, $.005 par
value per share,
(the "Preferred"), as more fully described below, of which no
more than
1,486,912 shares of Common Stock and 5,908,205 shares of
Preferred are
presently issued and outstanding. In addition, 1,080,000 Class A,
792,928
Class B and 545,000 Class C Common Stock Purchase Warrants with
each of such
Warrants entitling the holders thereof to purchase one (1) share
of Common
Stock at a price of $1.00, $2.00 and $4.00, respectively, at any
time (except
200,000 Class A Warrants held by one warrant-holder which can
only be
exercisable on the date of the Prospectus pertaining to the
Offering set forth
herein) until December 1, 1996, December 1, 1997 and December 1,
1998,
respectively, are also presently issued and outstanding. The
Company proposes
to issue and to sell to the Underwriters an aggregate of 700,000
Shares of
Common Stock of the Company (the "Shares"). The Company also
proposes to grant
to the Underwriters an option (hereinafter described) to purchase
up to an
additional 70,000 Shares of Common Stock on the terms and for the
purposes set
forth in Section 5(b) hereof. The 450,000 Shares which the
Underwriters have
agreed to purchase hereunder from the Company hereinafter
sometimes are called
the "Firm Shares", the 700,000 Shares which the Underwriters have
an option to
purchase under Section 5(b) hereof hereinafter are sometimes
called the
"Option Shares", and the Firm Shares and the Option Shares are
hereinafter
sometimes together called the "Shares".
The Preferred which has been issued to one (1) holder has no
right to
dividends, amounts payable on liquidation and conversion to
Common Stock.
1,000,000 of the Preferred entitles the holder thereof to one (1)
vote per
share and provides that each time one (1) additional share of
Common Stock is
issued, the holder is to receive four (4) shares of Preferred at
no additional
consideration.
SECTION 3. Representations and Warranties. The Company
represents and
warrants to each Underwriter that:
(
i
) A registration statement (SEC File No. ) on Form SB-2,
relating
to the Shares, including a preliminary prospectus, has been
carefully prepared
by the Company under the provisions of the Securities Act of
1933, as amended
(the "Act"), the General Rules and Regulations and the General
Instructions to
Form SB-2 (collectively referred to as the "Rules and
Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder,
and has been
filed with the Commission. The Company has so prepared and filed
one or more
amendments to the Registration Statement and proposes to file a
further
amendment (the "Final Amendment"), if required, to such
registration
statement, including a proposed final prospectus, necessary to
permit the
registration statement to become effective. Copies of such
registration
statement and amendments, including the Final Amendment, and of
each related
preliminary prospectus and such proposed final prospectus have
been delivered
to the Representative. Such registration statement, including
financial
statements and exhibits, and prospectus, as amended and revised
at the time
such registration statement becomes effective, herein
respectively are called
the "Registration Statement" and the "Prospectus", except that if
the
prospectus filed by the Company pursuant to Rule 424(b) of the
Rules and
Regulations shall differ from the prospectus included in the
Registration
Statement, the term "Prospectus" shall mean the prospectus filed
pursuant to
Rule 424(b) from and after the date on which it shall have been
filed. The
date on which the Registration Statement becomes effective is
hereinafter
called the "Effective Date".
(ii) The Commission has not issued an order preventing
or suspending
the use of any preliminary prospectus with respect to the Shares,
and each
preliminary prospectus has complied 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 not
misleading.
(iii) From the Effective Date until completion of the
public
offering of the Shares or such longer period as the Prospectus
may be required
to be delivered in connection with sales by the Underwriters or a
dealer, the
Prospectus (as amended or supplemented, if the Company shall have
filed with
the Commission any amendment or supplement thereto) will comply
with the
provisions 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 any 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 not
misleading; provided,
however, that the representations and warranties in this
paragraph (iii) do
not apply to any statements in or omissions from the Prospectus
based upon and
made in conformity with information furnished in writing to the
Company by the
Representative specifically for use in connection with the
preparation of the
Prospectus. The Company acknowledges that the statements set
forth in the
table and the textual paragraph immediately below the table on
the cover page
of the Prospectus, the first paragraph of page , the paragraph
of page ,
the last paragraph of page , and under the heading
"Underwriting" in the
Prospectus constitute the only information so furnished by the
Representative.
(iv) The Company is, and at the Closing Time (as
hereinafter
defined) will be, a corporation duly organized, validly existing
and in good
standing under the laws of the State of Colorado. The Company
has, and at the
Closing Time (as hereinafter defined) will have, the power and
authority 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. The Company is, and at
the Closing
Time (as hereinafter defined) will be, duly licensed or 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 or the
character of the
assets owned or leased by it makes such license or qualification
necessary,
except where failure to be so licensed or to qualify will not
materially
affect the Company's business, properties or financial condition.
A complete
and correct copy of the charter, including all amendments
thereto, and of the
by-laws of the Company has been delivered to you, and no changes
therein will
be made subsequent to the date hereof and prior to the Closing
Time (as
hereinafter defined).
(v) Subsequent to the date hereof and prior to the
Closing Time (as
hereinafter defined), the Company will not acquire any of its
equity
securities and will not issue any of its equity securities or any
other
securities of whatsoever nature. Except as set forth or referred
to in the
Registration Statement and the Prospectus, the Company does not
have
outstanding, and at the Closing Time (as hereinafter defined)
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 the Common Stock or any
such warrants,
convertible securities or obligations.
(vi) No holders of Common Stock or of any securities of
the Company
exercisable for or convertible into Common Stock have the right
to include
such Common Stock or securities in the Registration Statement,
except for such
rights as have been surrendered or waived or as set forth or
referred to in
the Registration Statement and the Prospectus.
(vii) The consolidated financial statements of the
Company included
as part of the Registration Statement and the Prospectus present
fairly the
consolidated financial position and the consolidated results of
operations of
the Company as of the respective dates thereof for the respective
periods
covered thereby, all in conformity with generally accepted
accounting
principles applied on a consistent basis throughout the periods
presented.
Xxxxx, Xxxxxx & Company, who have reported on such financial
statements, are
independent accountants with respect to the Company as required
by the Act and
the Rules and Regulations. No other financial statements are
required to be
included in the Registration Statement and the Prospectus.
(viii) Subsequent to the respective dates as of which
information is
set forth in the Registration Statement and the Prospectus and
prior to the
Closing Time (as hereinafter defined), except as set forth in or
contemplated
by the Registration Statement and the Prospectus, (A) the Company
has not
incurred and will not have incurred any material liabilities or
obligations,
direct or contingent, other than in the ordinary course of
business, and has
not entered into and will not have entered into any material
transactions
other than as contemplated in the Registration Statement and the
Prospectus,
(B) the Company has not and will not have paid or declared any
dividends or
other distribution on its capital stock and (C) there has not
been and will
not have been any material adverse change in the business,
financial
conditions or results of operations of the Company, or in the
book value of
the assets of the Company, arising from any reason whatsoever.
(ix) Except as set forth in or contemplated by the
Registration
Statement and the Prospectus, the Company does not have, and at
the Closing
Time (as hereinafter defined) will not have, any material
contingent
obligations.
(x) The Company has one (1) subsidiary corporation and,
except as
set forth in the Registration Statement and Prospectus, it does
not have any
equity interest in any partnership, joint venture, association or
other
entity.
(xi) Except as set forth in the Registration Statement
and the
Prospectus, there are no actions, suits or proceedings pending,
or to the
knowledge of the Company threatened, against or affecting the
Company or its
business, financial condition, results of operations or material
properties,
or any of its principal officers, before or by any federal or
state court,
commission, regulatory body, administrative agency or other
governmental body,
domestic or foreign, wherein an unfavorable ruling, decision or
finding would
materially and adversely affect the Selling Shareholder and/or
the Company or
its business, financial condition, results of operations or
material
properties.
(xii) The Company is not in violation of its respective
charter or
by-laws. Neither the execution and delivery of this Agreement,
nor the issue
and sale of the Shares or the Representative's Warrants (as
hereinafter
defined hereunder, nor the consummation of any of the
transactions
contemplated herein, nor the compliance by the Company with the
terms and
provisions hereof has conflicted with or will conflict with, or
has resulted
in or will result in a breach of, any of the terms and provisions
of, or has
constituted or will constitute a default under, or has resulted
in or will
result in the creation or imposition of any lien, charge or
encumbrance upon
any property or assets of the Company pursuant to the terms of
any indenture,
mortgage, deed or trust, note, loan or credit agreement or any
other agreement
or instrument to which the Company is a party or by which the
Company may be
bound or to which any of the property or assets of the Company is
subject; nor
will such action result in any violation of the provisions of the
charter or
the by-laws of the Company or any statute or any order, rule or
regulation
applicable to the Company of any court or of any federal, state
or other
regulatory authority or other government body having jurisdiction
over the
Company.
(xiii) The outstanding Common Stock has been, and the
Shares, and
the Shares issuable upon exercise of the Representative's
Warrants (as
hereinafter defined) will be, validly issued, fully paid and
non-assessable.
The description in the Registration Statement and the Prospectus
of the Shares
is, and at the Closing Time (as hereinafter defined) will be, in
all material
respects complete and accurate. The issuance and sale of the
Shares and the
Representative's Warrants (as hereinafter defined) have been duly
and validly
authorized.
(xiv) All issued and outstanding securities of the
Company have been
duly authorized and validly issued and the Common Stock is fully
paid and
non-assessable; the holders thereof are not subject to personal
liability by
reason of being such holders; and none of such securities were
issued in
violation of the pre-emptive rights, if any, of any holders of
any security of
the Company.
(xv) The Company has good and marketable title to all
properties and
assets described in the Prospectus as owned by it, free and clear
of all
liens, charges, encumbrances or restrictions, except such liens,
changes,
encumbrances or restrictions as are described in the Registration
Statement
and the Prospectus or are not material to the business of the
Company. The
Company has valid, subsisting and enforceable leases for the
material
properties described in the Prospectus as leased by it with such
exceptions as
are not material and do not materially interfere with the use
made and
proposed to be made of such properties by the Company.
(xvi) There is no document or contract of a character
required to be
described in the Registration Statement or the Prospectus or to
be filed as an
exhibit to the Registration Statement which is not described or
filed as
required. No statement, representation, warranty or covenant made
by the
Company in this Agreement or made in any certificate or document
required by
this Agreement to be delivered to you was, when made, inaccurate,
untrue or
incorrect.
(xvii) All taxes which are due from the Company have
been paid in
full (or adequate accruals for the payment thereof have been
provided for in
their accounting records), and the Company does not have any
material tax
deficiency or claim outstanding proposed or assessed against it.
SECTION 4. Finders. The Company and the Representative
represent that no
one has acted as a finder in connection with this offering.
SECTION 5. (a) Purchase, Sale and Delivery of the Purchased
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, the
Company agrees to sell to the several Underwriters, and each of
the several
Underwriters agrees, severally and not jointly, to purchase from
the Company,
the number of Firm Shares set forth opposite the name of such
Underwriter in
Schedule A hereto at and for a purchase price of $ for each
Firm Share.
(ii) Delivery of the certificates for Shares shall be
made to you
for the accounts of the respective Underwriters, at the offices
of Castle
Securities Corp., 00 Xxxxxx Xxxxxx, Xxxxx #00, Xxxxxxxx, Xxx Xxxx
00000,
against payment by you on behalf of the respective Underwriters
of the
purchase price therefor to the Company by certified or official
bank checks
payable in New York Clearing House funds to the order of the
Company, at 10:00
a.m., Eastern Standard Time, on the third (3) business day
following the
Effective Date, or on such other time and business day (Saturdays
not being
considered business days for the purposes of this Agreement) not
later than
the fifth (5) business day following the Effective Date as you
and the Company
shall determine, which time and date are herein called the
"Closing Time". The
cost of original issue tax stamps, if any, in connection with the
issuance and
delivery of the Firm Shares by the Company to the respective
Underwriters
shall be borne by the Company. The Company will pay and save each
Underwriter,
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 and state stamp and other transfer taxes, if any, which
may be payable
or determined to be payable in connection with the original
issuance or sale
to such Underwriter of the Firm Shares.
(iii) Certificates representing the Shares shall be
registered in
such names and shall be in such denominations as the
Representative shall
request at least two full business days prior to the Closing Time
and shall
be made available to the Representative for checking and
packaging, at the
offices of American Securities Transfer, Incorporated, at least
one full
business day prior to the Closing Time.
(b) Purchase, Sale and Delivery of the Option Shares.
(
i
) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein
set forth,
the Company hereby grants to the respective Underwriters an
option (the
"Option") to purchase up to an aggregate of 70,000 Option Shares.
Said Option
may be exercised in whole or in part at any time (but not more
than once)
within forty-five (45) days after the date of the Prospectus.
Option Shares
shall be purchased, severally and not jointly, by the
Underwriters in the same
proportion as each Underwriter has agreed to purchase the Firm
Shares (as
adjusted by the Representative to eliminate fractions and to
provide that no
Underwriter shall be obligated to purchase Option Shares other
than in
integral multiples of 100 Shares) at and for a purchase price of
$ for each
Option Share. The Option may be exercised only for the purpose of
covering any
over-allotments which may have been made in connection with the
distribution
and sale of the Firm Shares.
(ii) The Option is exercisable by you at any one time
for the
purchase of all or part of the Option Shares covered thereby and
by notice,
given by you to the Company in the manner provided in Section 14
hereof,
setting forth the number of Option Shares as to which the Option
is being
exercised and the date (which shall be no more than five (5) full
business
days after the date of such notice) and time for delivery of, and
payment for
the Option Shares. The date and time set forth in such notice is
herein called
the "Option Closing Time". After the Option Closing Time the
Option shall
lapse to the extent, if any, that it shall not have been
exercised.
(iii) Upon the exercise of the Option, the Company
shall sell to
the respective Underwriters the aggregate number of Option Shares
specified in
the notice exercising such Option and the Underwriters severally
shall
purchase from the Company the number of Option Shares specified
in such
notice. The obligations of the Underwriters under this Agreement
are several
and not joint.
(iv) Delivery of the Option Shares with respect to
which the Option
shall have been exercised shall be made to you for the accounts
of the
respective Underwriters, at the offices of Castle Securities
Corp., 00 Xxxxxx
Xxxxxx, Xxxxx #00, Xxxxxxxx, Xxx Xxxx 00000, against payment by
you on behalf
of the respective Underwriters of the purchase price therefor to
the Company
by certified or official bank checks payable in New York Clearing
House funds
to the order of the Company, at the Option Closing Time. The cost
of original
issue tax stamps, if any, in connection with the issuance and
delivery of the
Option Shares by the Company to the respective Underwriters shall
be borne by
the Company. The Company will 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 and other transfer taxes, if any, which may be payable or
determined to
be payable in connection with the original issuance or sale to
such
Underwriters of the Option Shares.
(v) Certificates representing the Shares with respect
to which the
Option shall have been exercised shall be registered in such
names and shall
be in such denominations as the Representative shall request at
least two full
business days prior to the Option Closing Time and shall be made
available to
the Representative for checking and packaging, at the office of
American
Securities Transfer Incorporated, at least one full business day
prior to the
Option Closing Time.
(vi) The obligation of the respective Underwriters to
purchase and
pay for Option Shares at the Option Closing Time shall be subject
to
compliance as at the Option Closing Time with all the conditions
specified in
Section 10 hereof and the delivery to you of the opinions,
certificates and
letters specified in Section 10 hereof.
(c) Sale of Warrants to the Representative.
(
i
) At the Closing Time the Company shall issue and sell to the
Representative, for a price of $.0001 per Warrant (the
"Representative's
Warrant"), to purchase 70,000 Shares for a period of four (4)
years commencing
one (1) year from the Effective Date of the Registration
Statement at an
exercise price in cash equal to 120% of the public offering price
per Warrant.
The Representative's Warrant shall be substantially in the form
of such
Warrant filed an exhibit to the Registration Statement. The
Representative's
Warrant and the securities underlying said Warrant are covered by
the
Registration Statement.
(ii) Moreover, the Company agrees that upon written
request of the
Representative or its specific duly authorized designee, or
together with the
Representative's or its specific duly authorized designee's
consent, the
holders of at least 50% of the Representative's Warrants and/or
the holders of
the underlying securities made at any time after 12 months
following the
Effective Date and prior to 5 years after the Effective Date the
Company will
file no more than one Registration Statement under the Act or
Offering
Statement under Regulation A (or any successor thereto)
registering or
qualifying the Representative's Warrants and/or the underlying
securities, and
the Company agrees to use its best efforts to cause the filing to
become
effective. The expenses of such registration or qualification,
including but
not limited to printing charges (including sufficient number of
Prospectuses
to permit the sale of the securities), all legal fees and
disbursements of the
Company's counsel and all accounting fees, and all filing and
miscellaneous
expenses, will be borne by the Company except for sales
commissions and
non-accountable expenses incurred if the Representative's and/or
the
underlying securities, are sold and fees and expenses of their
counsel.
(iii) The Company further agrees that if at any time or
times during
a period of six (6) years commencing one (1) year from the
Effective Date it
should file a Registration Statement or Offering Statement with
the Commission
pursuant to the Act regardless of whether the Representative or
its specific
duly authorized designee or the holders of the Representative's
Warrants
and/or the underlying securities shall have theretofore availed
themselves of
the right
hereinabove
provided, the Company at its own expense will offer in
writing not less than 30 days prior to filing such Registration
Statement or
Offering Statement, the Representative or its specific duly
authorized
designee and/or the holders of the Representative's Warrants
and/or the
underlying securities the opportunity to register or qualify the
Representative's Warrants and/or the underlying securities,
limited, in the
case of a Regulation A offering, to the amount of any available
exemption, but
unless such registration or qualification includes all of the
Representative's
Warrants and/or the underlying securities it will not relieve the
Company of
such foregoing obligation to register or qualify the same. In the
event the
Company so notifies the Representative or its specific duly
authorized
designee and/or the holders of the Representative's Warrants
and/or the
underlying securities, they shall notify the Company in writing
within 15 days
of receipt of the Company's notice of their desire to have the
Representative's Warrants and/or the underlying securities
registered or
qualified and, further, advising the Company of their intended
method of
distribution. Moreover, they shall furnish such other data or
information as
the Company or its counsel shall reasonably require, and they may
request that
the registration or qualification be deferred up to 90 days.
(iv) In addition to the rights
hereinabove
provided, the Company
will cooperate with the Representative or its specific duly
authorized
designee or the holders of the Representative's Warrants and/or
the underlying
securities in preparing any additional Registration Statement or
Offering
Statement required to sell or transfer the Representative's
Warrants and/or
the underlying securities and will supply information required
therefore, but
such additional Registration Statement or Offering Statement
shall be at the
expense of the holders of the Representative's Warrants and/or
the underlying
securities and not at the expense of the Company.
SECTION 6. Offering of the Shares. The Underwriters agree
to offer the
Shares to the public as soon after the Registration Statement
becomes
effective as the Representative deems advisable at the initial
offering price
and upon the other terms set forth in the Prospectus.
SECTION 7. Registration Statement and Prospectus.
(a) The Company, without charge, will deliver to you two
fully signed
copies of the Registration Statement and of each amendment
thereto, including
all financial statements and exhibits, and to you for delivery to
each
Underwriter, the number of conformed copies of the Registration
Statement and
of each amendment thereto, excluding exhibits, as you reasonably
may request.
(b) The Company has delivered to you for delivery to each
Underwriter and
to prospective dealers, without charge, as many copies as you
have requested
of each preliminary prospectus heretofore filed with the
Commission, and will
deliver to you for delivery to each Underwriter and to others
whose names and
addresses are furnished by such Underwriter or a prospective
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 the sales 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
reasonably may
request for the purposes contemplated by the Act.
(c) The Company has authorized the Underwriters to use, and
make
available for use by prospective dealers, the preliminary
prospectuses, and
authorizes the Underwriters and the prospective dealers to use
the Prospectus,
as from time to time amended or supplemented, in connection with
the sale of
Shares in accordance with the applicable provisions of the Act,
the applicable
Rules and Regulations and applicable state law until completion
of the public
offering of the Shares and for such longer period as the
Prospectus is
required to be delivered in connection with sales of the Shares
by an
Underwriter or a dealer.
SECTION 8. Covenants. (a) The Company covenants and agrees
with each
Underwriter that:
(
i
) Promptly after the execution and delivery of this Agreement,
the
Company will file the Final Amendment, if required, with the
Commission.
Thereafter, the Company will not, either prior to the Effective
Date or
thereafter during such period as the Prospectus is required to be
delivered
under the Act in connection with sales of the Shares by an
Underwriter or
dealer, file any amendment of or supplement to the Registration
Statement or
the Prospectus unless a copy thereof shall first have been
submitted to the
Representative, and the Representative shall not have objected
thereto in a
timely manner.
(ii) The Company will use its best efforts to cause the
Registration
Statement to become effective, and will promptly advise you (A)
when the
Registration Statement or any post-effective amendment thereto
shall have
become effective, or any amendments or supplements to the
Prospectus shall
have been filed with the Commission, (B) of any request of the
Commission for
any amendment or supplement to the Registration Statement or the
Prospectus or
for additional information and the nature and substance thereof,
(C) of the
initiation or threat by the Commission of any proceeding for
issuance 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 Units or Shares or
Preferred or of
the initiation of any proceedings for such purpose, and (D) of
receipt by the
Company or any representative or attorney of the Company of any
other
communication from the Commission relating to the Company, the
Registration
Statement, any preliminary prospectus or the Prospectus. 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) 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 not untrue or misleading or to make the
Prospectus comply
with the Act and the Rules and Regulations, the Company forthwith
will
prepare, submit to the Representative, file with the Commission
and deliver to
you for delivery to the Underwriters and dealers (whose names and
addresses
the Representative will furnish to the Company) to whom Units may
have been
sold by the Underwriters, and to other dealers upon request,
without charge,
either amendments or supplements to the Prospectus, so that the
statements in
the Prospectus, as so amended or supplemented, will not be untrue
or
misleading. Delivery by Underwriters of such amendments or
supplements to the
Prospectus shall not constitute a waiver of any of the conditions
precedent to
the Closing as set forth in Section 10 hereof.
(iv) The Company will comply with all of the provisions
of any
undertakings contained in the Registration Statement.
(v) The Company will use its best efforts to qualify or
register the
Shares for sale under the securities or "blue sky" laws of such
jurisdictions
as you and the Company shall mutually agree upon, and will 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 or subject itself to
taxation 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.
(vi) During the period of five years commencing on the
Effective
Date, the Company will furnish to you and each other Underwriter
who may so
request copies of such financial statements and other periodic
and special
reports as the Company may from time to time distribute generally
to the
holders of any class of its capital stock, and will furnish to
the
Representative and each other Underwriter who may so request a
copy of each
annual or other report it shall be required to file with the
Commission.
(vii) The Company will make generally available to its
security
holders as soon as practicable, and in any event no later than
sixty (60) days
after twelve (12) months subsequent to the Effective
Date,
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 and the Rules and Regulations, as in
effect at the
time of the issuance thereof.
(viii) Prior to the Closing Time, the Company will not
issue,
directly or indirectly, without your prior consent, any press
release or other
communication or hold any press conference with respect to the
Company or its
activities or the offering of the Shares.
(ix) During the period of 10 days commencing on the
date hereof, 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 Common Stock to
facilitate the
sale or resale of any of the Shares.
(x) The Company will apply the net proceeds from the
offering
substantially in the manner set forth under "Use of Proceeds" in
the
Prospectus.
(xi) The Company shall, at its cost and expense, take
all necessary
and appropriate action such that (A) the Common Stock is included
in the
NASDAQ System not later than the Closing Time, and (B) the Common
Stock remain
included in the NASDAQ System for at least five (5) years from
the Closing
Time; provided however, that the Company meets and continues to
meet all
National Association of Securities Dealers, Inc. ("NASD")
requirements for
inclusion of the Company's securities in the NASDAQ System; and
provided
further, that the Company may, at its option and in its sole
discretion, list
the Common Stock for trading on the New York Stock Exchange or
the American
Stock Exchange and, in the event thereof, the Company may, at its
option and
in its sole discretion, have its Common Stock removed from the
NASDAQ System.
(xii) For a period of five years commencing on the
Effective Date,
the Company shall continue to employ the services of a firm of
independent
certified public accountants acceptable to the Representative in
connection
with the preparation of the financial statements to be included
in any
Registration Statement to be filed by the Company hereunder, or
any amendment
or supplement thereto. For the purposes of the foregoing, Xxxxx,
Xxxxxx &
Company and any regional accounting firm shall be deemed to be
acceptable to
the Representative.
(xiii) For a period of five years commencing on the
Effective Date,
the Company shall continue to appoint a Transfer Agent for the
Common Stock,
which entities shall agree to provisions of Paragraph 9(b) of the
Representative's Warrant, and whom shall be acceptable to the
Representative;
and further provided that any subsequent transfer and/or warrant
agent agrees
in writing to abide by any provisions of Paragraph 9(b) of the
Representative's Warrant.
(xiv) For a period of five years following the
Effective Date of the
Registration Statement, the Company shall, at its sole cost and
expense, if
requested by the Representative, instruct its Transfer Agent to
furnish to the
Representative daily transfer sheets as to the Common Stock and a
list of the
holders of Common Stock whenever such a list shall have been
prepared during
said period. The Representative covenants and agrees to hold the
information
in the foregoing materials in confidence and not use or disclose
same to the
detriment of the Company. Nothing herein shall be deemed to
prohibit
disclosure of such information by the Representative pursuant to
lawful
process served upon the Representative.
(xv) The Company will, within thirty days after the
Closing Time,
apply for listing in Standard and Poor's Corporation Records, and
will use its
best efforts to have itself listed in such reports for a period
of not less
than five (5) years from the Closing Time.
(xvi) Within ten days after the end of the first three
month period
following the Effective Date, the Company, if required, will
prepare and file
with the Securities and Exchange Commission a report on Form SR
as prescribed
by Rule 463 of Regulation C under the Securities Act of 1933.
(xvii) Within thirty days after the Closing Time, the
Company will
prepare and file with the Securities and Exchange Commission a
Registration
Statement on Form 8-A with respect to its securities pursuant to
and as
contemplated by Section 12(g) of the Securities Exchange Act of
1934, as
amended, regardless of whether the Company would be required
otherwise by the
terms of such Section to file said Statement, and the Company
will file a
request for acceleration of the Effective Date under Section
12(g) in
connection therewith. The Company shall thereafter comply with
all periodic
reporting and proxy solicitation requirements imposed by the
Commission
pursuant to the 1934 Act.
(xix) The Company will deliver to you and your counsel
bound
volumes of copies of all documents and appropriate correspondence
filed or
received from the Securities and Exchange Commission and the
NASD, and all
closing documents.
(xx) At the Closing Time, the Company shall enter into
a financial
consulting agreement with you pursuant to which you will receive
a consulting
fee in an amount equal to one (1%) percent of the total dollar
amount of the
contemplated offering payable at Closing, plus an amount equal to
one (1%)
percent based solely upon the amount raised by the
Representative, for
services for a period of one (1) year from the Effective Date
which shall
include, but not be limited to, advising the Company regarding
shareholder
relations including the preparation of the annual report and
other releases,
assisting in long-term financial planning, advice in connection
with corporate
re-organizations and expansion and capital structure, and other
financial
assistance.
(xxi) Should the Company within seven (7) years from
the Effective
Date, enter into any agreement or understanding with any person
and/or entity
introduced by the Representative to the Company within five (5)
years from the
Effective Date involving (
i
) the sale of all or substantially all of the
assets and properties of the Company, (ii) the merger or
consolidation of the
Company (other than a merger or consolidation effected for the
purpose of
changing the Company's domicile) or (iii) the acquisition by the
Company of
the assets or stock of another business entity, which agreement
or
understanding is thereafter consummated, whether or not during
such five (5)
year period, the Company, upon such consummation, shall pay to
the
Representative an amount equal to the following percentages of
the
consideration paid by the Company in connection with such
transaction:
5% of the first $1,000,000, or portion thereof, of such
consideration;
4% of the second $1,000,000, or portion thereof, of such
consideraton
;
and,
3% of such consideration in excess of the first $2,000,000
of such
consideration.
The fee payable to the Representative will be in the same
form of
consideration as that paid by or to the Company, as the case may
be, in such
transaction.
(xxii) For a period of five (5) years following the
Effective Date
or until such time as the securities of the Company are listed on
the New York
Stock Exchange or the American Stock Exchange, the Company shall
cause its
legal counsel to provide the Representative with a list, to be
updated at
least annually, of those states in which the securities of the
Company may be
traded in non-issuer transactions under the Blue Sky laws of the
states.
SECTION 9. Expenses. (a) The Company will pay and bear all
costs, fees,
taxes and expenses incident to the performance of the obligations
of the
Company under this Agreement, including, but not limited to the
expenses and
taxes incident to (
i
) the issuance, sale and delivery to the Underwriters of
the Shares to be purchased by the Underwriters, the preparation,
printing and
filing under the Act, and the delivery to the Underwriters, of
the
Registration Statement (including all exhibits thereto), each
preliminary
prospectus and the Prospectus, all amendments and supplements to
the
Registration Statement and the Prospectus, the Agreement Among
Underwriters,
this Agreement and the Selling Agreement, (ii) the issuance of
the Shares and
the preparation and delivery of certificates evidencing the
Shares, (iii) the
registration or qualification of the Shares for offer and sale
under the
securities or "blue sky" laws of the various jurisdictions
referred to in
Section 8(a)(v) above, including the fees and disbursements of
counsel in
connection therewith and the preparation and printing of
preliminary or
supplementary blue sky memoranda; (iv) the furnishing to the
Representative
and the Underwriters of copies of the Registration Statement,
each preliminary
prospectus, the Prospectus and all amendments and supplements to
the
Prospectus, and of the other documents required by this Agreement
to be so
furnished, including costs of shipping and mailing, (v) the
filing
requirements of the NASD, (vi) all transfer taxes, if any, with
respect to the
sale and delivery of the Shares to the several Underwriters and
(vii) the fees
and expenses of counsel for the Company and of the Company's
accountants, the
Transfer Agent for the Common Stock and any special agents
appointed for the
transfer of the Shares. The Company further agrees that, in
addition to the
expenses payable pursuant to this Section 9, it will pay to the
Representative
on the Closing Date on a non-accountable basis a sum equal to
three (3%)
percent of the Total Price to the Public of the Shares of which,
as of the
date hereof, the sum of $20,000 has been paid.
(b) The Company shall also bear the cost of investigative
reports (such
as Xxxxxx'x Reports) of the Company's principal executive
officers, directors
and substantial shareholders.
SECTION 10. Conditions of Your Obligations. Your
obligations hereunder
to purchase and pay for the Firm Shares are subject (as of the
date hereof and
as of the Closing Time) to the accuracy of and compliance with
the
representations and warranties of the Company and, to the
accuracy of the
statements of the Company and of officers of the Company made
pursuant to the
provisions hereof, to the performance by the Company of its
covenants and
agreements hereunder, and to the following additional conditions:
(a)(
i
) The Registration Statement shall have become effective not
later
than 5:00 p.m., Eastern Standard 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) at
or prior to the Closing Time, no stop order suspending the
effectiveness of
the Registration Statement shall have been issued by the
Commission and no
proceeding for that purpose shall have been initiated or shall be
threatened
or contemplated by the staff of the Commission; (iii) no stop
order suspending
the effectiveness of the qualification or registration of the
Units under the
securities or "blue sky" laws of any jurisdiction (whether or not
a
jurisdiction which you shall have specified) shall be threatened
or
contemplated by the authorities of any such jurisdiction or shall
have been
issued and shall remain in effect; (iv) any request for
additional information
on the part of the staff of the Commission or any such
authorities shall have
been complied with to the satisfaction of the staff of the
Commission or such
authorities; and (v) after the date hereof no amendment or
supplement to the
Registration Statement or the Prospectus shall have been filed
unless a copy
thereof was first submitted to the Representative and the
Representative did
not object thereto.
(b) Since the respective dates as of which information is
given in the
Registration Statement and Prospectus, (
i
) there shall not have been any
change in the capital stock of the Company or any material change
in the
long-term debt of the Company, except as set forth in or
contemplated by the
Registration Statement and Prospectus, (ii) there shall not have
been any
material adverse change in the general affairs, management,
financial position
or results of operations of the Company, whether or not arising
from
transactions in the ordinary course of business, in each case
other than as
set forth in or contemplated by the Registration Statement or
Prospectus, and
(iii) the Company shall not have sustained any material
interference with its
business or properties from fire, explosion, flood or other
casualty, whether
or not covered by insurance, or from any labor dispute or any
court or
legislative or other governmental action, order or decree, which
is not set
forth in the Registration Statement and Prospectus, if in the
reasonable
judgment of the Representative any such development referred to
in clauses
(
i
), (ii) or (iii) makes it impracticable or inadvisable to
consummate the
sale and delivery of the Units by the Underwriters at the public
offering
price.
(c) Since the respective dates as of which information is
given in the
Registration Statement and the Prospectus, there shall have been
no litigation
instituted against the Company or any of its officers or
directors, and since
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
or county court, commission, regulatory body, administrative
agency or other
governmental body, domestic or foreign, in which litigation or
proceeding an
unfavorable ruling, decision or finding would materially and
adversely affect
the business, material properties, financial condition or results
of
operations of the Company.
(d) Each of the representations and warranties of the
Company contained
herein shall be true and correct at the Closing Time as if made
at the Closing
Time, and all covenants and agreements herein contained to be
performed on the
part of the Company and all conditions herein contained to be
fulfilled or
complied with by the Company at or prior to the Closing Time
shall have been
duly performed, fulfilled or complied with.
(e) At the Closing Time, Xxxxxx X. Xxxxxxxxx, Esq., 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 (A) has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Colorado, (B)
is duly qualified and in good standing as a foreign corporation
in each
jurisdiction in which the nature of the activities conducted by
it or the
character of the assets owned or leased by it as described in the
Prospectus
required such qualification, except where failure to so qualify
would not
materially affect the Company's business, properties or financial
condition,
and (C) has all requisite corporate power and authority to own or
lease its
properties and conduct its business as described in the
Prospectus.
(ii) To counsel's best knowledge, no authorization,
approval,
consent or license of any governmental or regulatory body, agency
or
instrumentality (other than registration under the Act or
qualification under
state securities or "blue sky" laws) is required in connection
with the
authorization, issuance, transfer, sale or delivery of the
Shares, in
connection with the execution, delivery and performance of this
Agreement by
the Company, or in connection with the taking of any action
contemplated
herein, or if so required, all such authorizations, approvals,
consents and
licenses, specifying the same, have been obtained and are in full
force and
effect.
(iii) The Company's authorized capitalization is set
forth in the
Registration Statement and the Prospectus. The outstanding shares
of the
Common Stock (including the Shares) have been duly authorized and
validly
issued, are fully paid and non-assessable, and have not been
issued in
violation of any pre-emptive rights. The description of the
Common Stock
contained in the Registration Statement and the Prospectus
conforms to the
rights set forth in the charter and the by-laws of the Company.
The
Representative's Warrants have been duly authorized and validly
issued.
(iv) The certificates representing the Shares are in
due and proper
form.
(v) The Company has full corporate power and authority
to enter into
this Agreement, and this Agreement has been duly authorized,
executed and
delivered by or on behalf of the Company and constitutes the
legal, valid and
binding obligation of the Company subject to customary insolvency
and
enforceability
exceptions and except for Section 12 hereof.
(vi) The Registration Statement and the Prospectus
comply as to form
in material respects, with the requirements of the Act and the
Rules and
Regulations (except that no opinion need be expressed as to
financial
statements, schedules and other financial data contained in the
Registration
Statement or the Prospectus).
(vii) 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 has been issued and
no proceeding
for that purpose has been instituted or is threatened, pending or
contemplated.
(viii) The execution and delivery of this Agreement by
the Company,
the consummation by the Company of the transactions herein
contemplated and
the compliance with the terms of this Agreement do not and will
not conflict
with or result in a breach of any of the terms or provisions of,
or constitute
a default under, the charter 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 it or any of its properties is
bound, or, to
best knowledge of such counsel, any existing law, rule,
regulation or judgment
or order or decree, of any government, governmental body or
court, domestic or
foreign, having jurisdiction over the Company or any of its
respective
properties.
(ix) The letter in which such opinion is stressed shall
also state
that:
(a) such counsel has participated in the
preparation of the
Registration Statement and the Prospectus and nothing has come to
the
attention of such counsel to lead it to believe that, both as of
the Effective
Date and as of the Closing Time, either the Registration
Statement or the
Prospectus, or any amendment or supplement thereto, 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
not misleading (except that no statement need be expressed as to
financial
statements, schedules and other financial data contained in the
Registration
Statement or the Prospectus).
(b) such counsel is familiar with all contracts or
other
documents referred to in the Registration Statement and the
Prospectus and
such contracts or other documents are fairly summarized or
disclosed therein,
or filed (or incorporated by reference) as exhibits thereto as
required, and
such counsel does not know of any contracts or other documents
required to be
summarized of disclosed or filed which have not been summarized
or disclosed
or filed.
(c) to the best of the knowledge of such counsel
and except as
set forth in the Registration Statement and Prospectus, the
Company does not
own any shares of stock or other equity securities issued by any
corporation
and does not have any equity interest in any firm, partnership,
joint venture,
association or other entity.
(x) Such counsel knows of no suits or claims, not
covered by
insurance, threatened or pending against the Company in any court
or before or
by any governmental body which would materially affect the
business of the
Company or its financial condition except as forth in or
contemplated by the
Prospectus.
Such opinion shall be to such further effect with respect to
other legal
matters relating to this Agreement and the sale of the Units
hereunder as the
Representative reasonably may request. In rendering such
opinions, such
counsel may rely upon certificates of officers of the Company and
of public
officials. In rendering such opinion, such counsel may rely as to
all matters
of law other than the laws of the United States upon opinions of
counsel
satisfactory to you, in which case the opinions shall state that
such counsel
has no reason to believe that you and they are not entitled so to
rely.
(f) The Company shall supply and deliver to you and your
counsel at your
and their respective offices, all information reasonably required
to enable
you to make such investigation of the Company and its business
prospects as
you or your counsel shall desire and shall make available to you
at your
offices such person(s) as you shall deem reasonably necessary and
appropriate
in order to verify or substantiate any such information supplied.
You shall
have the right to review any materials prepared in connection
with the
offering of securities of the Company conducted prior to the
Public Offering
for compliance with applicable Federal and State Securities Laws.
(g) Concurrently with the execution and delivery of this
Agreement,
Xxxxx, Xxxxxx & Company shall have furnished to you a letter,
dated to within
three (3) business days of the Effective Date, addressed to you
and in form
and substance satisfactory to you. At the Closing Time, Xxxxx,
Xxxxxx &
Company shall have furnished to you a letter, dated as of the
date of its
delivery, which shall confirm, on the basis of a review in
accordance with the
procedures set forth in the letter from such firm referred to in
the preceding
sentence, that nothing has come to its attention during the
period from the
date of its previous letter, to a date not more than three (3)
days prior to
the Closing Time which would require any change in its letter
dated the date
hereof if it were required to be dated and delivered at the
Closing Time.
(h) Concurrently with the execution and delivery of this
Agreement and at
the Closing Time, there shall be furnished to you an accurate
certificate,
dated the date of its delivery, signed on behalf of the Company
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 (A) as of the date of such
certificate, the
statements in the Registration Statement and the Prospectus are
true and
correct in all respects and neither the Registration Statement
nor the
Prospectus omits to state a material fact required to be stated
therein or
necessary in order to make the statements therein not untrue or
misleading and
(B) in the case of the certificate delivered at the Closing Time,
since the
Effective Date no event has occurred as a result of which it is
necessary to
amend or supplement the Prospectus in order to make the
statements therein not
untrue or misleading.
(ii) No stop order suspending the effectiveness of the
Registration
Statement has been issued by the Commission and no proceeding for
that purpose
has been initiated or is threatened by the staff of the
Commission, and no
stop order suspending the effectiveness of the qualification or
registration
of the Units under the securities or "blue sky" laws of any
jurisdiction
(whether or not a jurisdiction you shall have specified) is
threatened or
contemplated by the authorities of any such jurisdiction or has
been issued
and remains in effect.
(iii) The conditions, separately set forth in such
certificate,
contained in subsections (a), (b) and (c) of this Section 10 have
been
complied with.
(iv) Each of the representations and warranties of the
Company
contained in this Agreement were when originally made and are at
the time such
certificate is dated true and correct.
(v) Each of the covenants required herein to be
performed by the
Company on or prior to the date of such certificate has been duly
and timely
performed in all respects and each condition herein required to
be complied
with by the Company on or prior to the date of such certificate
has been duly
and timely complied with in all respects.
(
i
) The Company shall have furnished to you such certificates, in
addition to those specifically mentioned herein, as you
reasonably may have
requested as to the accuracy and completeness at the Closing Time
of any
statement in the Registration Statement or the Prospectus, in
respects, as to
the accuracy at the Closing Time of the representations and
warranties of the
Company, as to the performance by the Company of its obligations
hereunder,
or as to the fulfillment of the conditions concurrent and
precedent to your
obligations hereunder.
(j) sale of the Shares by the Company to the several
Underwriters shall
be consummated simultaneously at the Closing Time in accordance
with the terms
hereof.
SECTION 11. Indemnification; Contribution. (a) The Company
agrees to
indemnify and hold harmless each Underwriter and each person, if
any, who
controls any Underwriter within the meaning of Section 15 of the
Act, 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
and other expenses incurred in connection with, and any amount
paid in
settlement of, any action, suit or proceeding or any claim
asserted), to which
they or any of them may become subject under the Act, the
Securities Exchange
Act of 1934, as amended (the "Exchange Act") or other federal or
state
statutory law or regulation, at common law or otherwise, insofar
as such
losses, claims, damages, liabilities or actions arise out of, or
are based
upon, 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 the
omission or alleged
omission to state therein a material fact required to be stated
therein or
necessary to make the statements therein not misleading;
provided, however,
that (1) the indemnity agreements of the Company contained in
this Section
11(a) shall not apply to any such losses, claims, damages,
liabilities or
actions if such statement or omission was made in reliance upon
and in
conformity with information furnished in writing to the Company
by or on
behalf of any Underwriter for use in such preliminary prospectus,
the
Registration Statement or the Prospectus, or such amendment or
supplement, as
specified in Section 3(iii) hereof, and (2) the indemnity
agreements contained
in this Section
1l
(a) with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter from whom the person
asserting any
such losses, claims, damages, liabilities or actions purchased
the Units which
are the subject thereof if at or prior to the written
confirmation of the sale
of the Units a copy of the Prospectus (or the Prospectus as
amended or
supplemented) was not sent or delivered to such person and the
untrue
statement or omission of a material fact contained in such
preliminary
prospectus was corrected in the Prospectus (or the Prospectus as
amended or
supplemented), unless such failure to deliver the Prospectus was
a result of
noncompliance by the Company with the provisions of Section 7(b).
(b) Each Underwriter agrees to indemnify and hold harmless
the Company,
its directors, its officers who shall have signed the
Registration Statement,
and each person, if any, who controls the Company within the
meaning of
Section 15 of the Act, to the same extent as the foregoing
indemnity from the
Company to such Underwriter, but only insofar as such losses,
claims, damages,
liabilities or actions arise out of or are based upon any
statement in or
omission or alleged omission from the Registration Statement, and
preliminary
prospectus, the Prospectus or any amendment or supplement thereto
in reliance
upon and in conformity with information furnished in writing to
the Company by
or on behalf of the Underwriters 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 aggregate amount which may be recovered from each
Underwriter
pursuant to the indemnification granted hereby shall be limited
to the total
price at which the Units purchased by such Underwriter hereunder
were offered
to the public.
(c) Any party which proposes to assert the right to be
indemnified under
this Section 11 will, promptly after receipt of notice of
commencement of any
action, suit or proceeding against such party in respect of which
a claim is
to be made against an indemnifying party under this Section 11,
notify each
such indemnifying party of the commencement of such action, suit
or
proceeding, enclosing a copy of all papers served, but the
omission so to
notify such indemnifying party of any such action, suit or
proceeding shall
not relieve it from any liability which it may have to any
indemnified party
otherwise than under this Section 11. In case any such action,
suit or
proceeding shall be brought against any indemnified party and it
shall notify
the indemnifying party of the commencement thereof, the
indemnifying party
shall be entitled to participate in and, to the extent that it
shall wish,
jointly with any other indemnifying party similarly notified, to
assume the
defense thereof, with counsel satisfactory to such indemnified
party, and
after notice from the indemnifying party to such indemnified
party of its
election so to assume the defense thereof the indemnifying party
shall not be
liable to such indemnified party for any legal or other expenses,
other than
reasonable costs of investigation subsequently incurred by such
indemnified
party in connection with the defense thereof. The indemnified
party shall have
the right to employ its counsel in any such action, but the fees
and expenses
of such counsel shall be at the expense of such indemnified party
unless (
i
)
the employment of counsel by such indemnified party has been
authorized by the
indemnifying parties, (ii) the indemnified party shall have
reasonably
concluded that there may be a conflict of interest between the
indemnifying
parties and the indemnified party in the conduct of the defense
of such action
(in which case the indemnifying parties shall not have the right
to direct the
defense of such action on behalf of the indemnified party) or
(iii) the
indemnifying parties shall not in fact have employed counsel to
assume the
defense of such action, in each of which cases the fees and
expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying
party shall not be liable for any settlement of any action or
claims effected
without its written consent.
(d) In order to provide for just and equitable contribution
in
circumstances in which the indemnification provided for in
Section 11(a) or
Section 11(b) for any reason is held to be unavailable from the
Company or the
Underwriters, the Company, and the Underwriters shall contribute
to the
aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses incurred in connection
with, and any
amount paid in settlement of, any action, suit or proceeding or
any claims
asserted, but after deducting any contribution received by the
Company from
persons other than the Underwriters, such as persons who control
the Company
within the meaning of the Act or the Exchange Act, officers of
the Company who
signed the Registration Statement and directors of the Company,
who may also
be liable for contribution) to which the Company, and one or more
of the
Underwriters may be subject in such proportion so that the
Underwriters are
responsible for that portion represented by the percentage that
the
underwriting discount appearing on the cover page of the
Prospectus bears to
the public offering price appearing thereon, and the Company is
responsible
for the balance; provided, however, that (
i
) in no case shall any Underwriter
(except as may be provided in the Agreement Among Underwriters)
be responsible
for any amount in excess of the underwriting discount applicable
to the Units
purchased by such Underwriter hereunder and (ii) no person guilty
of
fraudulent misrepresentation (within the meaning of Section
1l
(f) of the Act)
shall be entitled to contribution from any person who was not
guilty of such
fraudulent misrepresentation. For purposes of this Section
1l
(d), each person,
if any, who controls an Underwriter within the meaning of the Act
shall have
the same rights to contribution as such Underwriter, and each
person, if any,
who controls the Company within the meaning of the Act, each
officer of the
Company who shall have signed the Registration Statement and each
director of
the Company shall have the same rights to contribution as the
Company, subject
in each case to clauses (
i
) and (ii) of this Section 11(d). Any party entitled
to contribution will, promptly after receipt of notice of
commencement of any
action, suit or proceeding against such party in respect of which
a claim for
contribution may be made against another party or parties under
this Section
11(d), notify such party or parties from whom contribution may be
sought, but
the omission so to notify such party or parties from whom
contribution may be
sought shall not relieve the party or parties from whom
contribution may be
sought from any other obligation it or they may have hereunder or
otherwise
than under this Section 11(d). No party shall be liable for
contribution with
respect to any action or claim settled without its consent.
(e) The respective indemnity and contribution agreements by
the
Underwriters and the Company contained in this Section 11, and
the covenants,
representations and warranties of the Company set forth in
Sections 3, 8 and
10 hereof, shall remain operative and in full force and effect
regardless of
(
i
) any investigation made by any Underwriter or on its behalf or
by or on
behalf of any person who controls an Underwriter or the Company
or any
controlling person of the Company or any director or any officer
of the
Company, (ii) acceptance of any of the Shares and Warrants
comprising the
Units and payment therefor or (iii) any termination of this
Agreement, and
shall survive the delivery of the Shares and Warrants comprising
the Units,
and any successor of any Underwriter, or the Company or of any
person who
controls an Underwriter or the Company, as the case may be, shall
be entitled
to the benefit of such respective indemnity and contribution
agreements.
SECTION 12. Termination. Agreement (except for the
provisions of Sections
9 and 11 hereof) may be terminated by the Representative or by
the
Underwriters who have agreed to purchase in the aggregate at
least 50% of the
Firm Shares by notifying the Company at any time,
(a) prior to the earliest of (
i
) 11 a.m., Eastern Standard Time, on the
day following the Effective Date, (ii) the time of release by the
Representative for publication of the first newspaper
advertisement which is
subsequently published with respect to the Units, or (iii) the
time when the
Units are first generally offered by the Representative to
dealers by letter
or telegram,
(b) at or prior to the Closing Time if any of the conditions
specified in
Section 10 hereof shall not have been fulfilled when and as
required by this
Agreement to be fulfilled, or
(c) at or prior to the Closing Time if, in the judgment of
the
Representative or in the judgment of such Underwriters, as the
case may be,
payment for and delivery of the Shares is rendered impracticable
or
inadvisable because (
i
) additional material adverse governmental restrictions
not in force and effect on the date hereof shall have been
imposed upon the
trading in securities generally established on the New York Stock
Exchange,
the American Stock Exchange, NASDAQ or trading in securities
generally on such
Exchanges or NASDAQ shall have been suspended, or a banking
moratorium shall
have been established by federal or state authorities, or any
other similar
event or occurrence shall have happened which, in the discretion
and judgment
of any of such Underwriters, restricts materially adversely a
free market for
securities, or (ii) a war or other national calamity, major
catastrophe, a
substantial material and adverse change in national,
international or world
affairs, civil riot, act of God, order of a duly constituted
authority to any
armed forces of the United States to engage in any major
hostilities with any
foreign nation or power, regardless of any formal declaration of
war, or
similar event or occurrence, shall have occurred which, in the
discretion and
judgment of any of such Underwriters, has materially adversely
disrupted or
will materially adversely disrupt the financial markets of the
United States,
or (iii) in the discretion of any of such Underwriters,
substantial and
material adverse changes in the condition of the securities
market (either
generally or with reference to the sale of the securities to be
offered by the
Company hereunder) or the business condition of the Company shall
have
occurred or shall be likely to occur.
If this Agreement is terminated pursuant to any of the
provisions hereof,
except as otherwise provided herein, the Company shall not be
under any
liability (including, without limitation, liability for loss of
profits) to
any Underwriter and no Underwriter shall be under any liability
to the
Company, except that the Representative shall be reimbursed for
all of its out
of pocket expenses, including but not limited to its attorney
fees, up to an
amount not to exceed the sum of $20,000, or that (
i
) if this Agreement is
terminated by the Representative because of any failure or
refusal on the part
of the Company to comply with the terms or to fulfill any of the
conditions of
this Agreement, the Underwriters will be entitled to the sum of
$20,000
including the sum of $20,000 that the Representative has been
paid by the
Company pursuant to Section 9(a) hereof, for all reasonable
out-of-pocket
expenses (including the fees and disbursements of their counsel)
reasonably
incurred by them which shall be itemized in writing to the
Company, and (ii)
no Underwriter who shall have failed or refused to purchase the
Units agreed
to be purchased by it hereunder, without some reason sufficient
hereunder to
justify its cancellation or termination of its obligations
hereunder, shall be
relieved of liability to the Company or the other Underwriters
for damages
occasioned by its default.
SECTION 13. Default of Underwriters. (a) If one or more of
the
Underwriters shall fail (other than for a reason sufficient to
justify the
termination of this Agreement) to purchase the Shares agreed to
be purchased
by such Underwriters, the Representative may find one or more
substitute
underwriters to purchase such Shares or make such other
arrangements as it may
deem advisable or one or more of the remaining Underwriters may
agree to
purchase such Shares in such proportions as may be approved by
the
Representative, in each case upon the terms herein set forth. If
no such
arrangements have been made within 24 hours after the Closing
Time and
(
i
) the aggregate number of Shares to be purchased by the
defaulting
Underwriters shall not exceed 10% of the Shares to be purchased
by all the
Underwriters, each of the non-defaulting Underwriters shall be
obligated to
purchase such Shares on the terms herein set forth in proportion
to their
respective obligations hereunder, or
(ii) the aggregate number of the Shares to be purchased
by the
defaulting Underwriters shall exceed 10% of the Shares to be
purchased by all
the Underwriters, the Company shall be entitled to an additional
period of 24
hours within which to find one or more substitute underwriters
satisfactory to
the Representative to purchase such Shares upon the terms set
forth herein.
(b) In any such case, either the Representative or the
Company shall have
the right to postpone the Closing Time for a period of not more
than five
business days in order that necessary changes and arrangements
may be effected
by the Representative and the Company. If none of the
non-defaulting
Underwriters or the Company shall make arrangements pursuant to
this Section
13 within the period stated for the purchase of the Shares which
the
defaulting Underwriters agreed to purchase, this Agreement shall
terminate
without liability on the part of any non-defaulting Underwriter
to the Company
and without liability on the part of the Company to the
Underwriters, except
as provided in Sections 9 and 12 hereof. The provisions of this
Section 13
shall not in any way affect the liability of any defaulting
Underwriter to the
Company or the non-defaulting Underwriters arising out of such
default. A
substitute underwriter hereunder shall become an Underwriter for
all purposes
of this Agreement.
SECTION 14. Notice. Except as otherwise expressly provided
in this
Agreement, (a) whenever advice or a notice, objection,
designation, request or
report is given or is required by the provisions of this
Agreement to be given
to the Company, such advice, notice, objection, designation,
request or report
shall be in writing, or by telegraph confirmed in writing,
addressed to the
Company, and delivered at 000
Xxxxxxxx
, Xxxxxxxxxx, Xxxxxxxxxxx 00000 and (b)
whenever advice or a notice, objection, designation, request or
report is
given or is required by the provisions of this Agreement to be
given to you or
the Underwriters, such advice, notice, objection, designation,
request or
report shall be in writing, addressed to you and delivered at 00
Xxxxxx
Xxxxxx, Xxxxx #00, Xxxxxxxx, Xxx Xxxx 00000, or at such other
address as a
party hereto may give notice in accordance herewith.
SECTION 15. Miscellaneous. (a) This Agreement is made solely
for the
benefit of the Underwriters and that of 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 11, 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 the term "successors and
assigns" as used
in this Agreement shall not include any buyer, as such, of any of
the Units
from the Underwriters. All of the obligations of the Underwriters
hereunder
are several and not joint.
(b) Promptly upon obtaining knowledge thereof, the
Representative will
advise the Company of the receipt by any of the Underwriters, by
the
Representative or by counsel for the Representative of any
communication from
the Commission relating to the Registration Statement, any
preliminary
prospectus or the Prospectus.
(c) This Agreement shall supersede any agreement or
understanding, oral
or in writing, express or implied, between the Company and you
relating to the
sale of any of the Units.
(d) No change, amendment or supplement to, or waiver of,
this Agreement
or any term, provision or condition 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 laws of the State of New York and shall also be subject to
the exclusive
jurisdiction of the Courts of said State.
Please confirm that the foregoing correctly sets forth the
agreement
between the Company and you.
Very truly yours,
WORLDWIDE FOREST PRODUCTS,
INC..
---------------------------------
By: Xxxxx X.
Xxxxxxxxxx
, Chairman
Accepted as of the date first above written
Castle Securities Corp.
-------------------------------
By: Xxxxxxx X.
Xxxxxx
, President
Acting on behalf of itself and as the
Representative of the other Underwriters
named in Schedule A attached hereto.
SCHEDULE A
Number of
Name Address
Shares
-------- ---------
-------
Castle Securities Corp. 00 Xxxxxx Xxxxxx, Xxxxx #00
Xxxxxxxx, Xxx Xxxx 00000
