EXHIBIT 1.1
2,000,000 Units, each Unit Consisting of
Two Shares of Common Stock and One Redeemable Warrant
XXXXXX MOTORCYCLE COMPANY, LTD.
UNDERWRITING AGREEMENT
New York, New York
June __, 2004
Xxxxx, Xxxxxxx & Co., Inc.
As Underwriter
00 Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Xxxxxx Motorcycle Company, Ltd., a Delaware corporation (the "Company") confirms
its agreement with Xxxxx, Xxxxxxx & Co., Inc. (the "Underwriter") with respect
to the sale by the Company as assisted by the Underwriter as agent of the
Company on a best efforts basis of a minimum of 550,000 and up to 2,000,000
units ("Units") (the "Public Offering"). Each Unit consists of two shares of the
Company's Common Stock, $0.001 par value ("Common Stock") and one warrant to
acquire one additional share of Common Stock ("Redeemable Warrants"). The shares
of Common Stock and Redeemable Warrants comprising the Units will be separately
tradable immediately after issuance. The 2,000,000 Units and the Common Stock
and the Redeemable Warrants underlying the Units are hereinafter referred to as
the "Firm Securities." Each Redeemable Warrant is exercisable commencing on [May
___, 2005 [twelve months after the date of the Prospectus] until [May ___, 2009
[five years after the date of the Prospectus], unless previously redeemed by the
Company, at an initial exercise price of $6.00 per share. The Redeemable
Warrants may be redeemed by the Company, in whole but not in part, at a
redemption price of $0.25 per warrant at any time after [November __, 2004], six
months after the date of the Prospectus, on thirty (30) days' prior written
notice, provided that the average closing sale price of the Common Stock as
reported on the American Stock Exchange ("Amex") or such other exchange or
bulletin on which the Common Stock trades equals or exceeds $10.00 per share for
twenty (20) consecutive trading days.
The Units are offered for sale at the price of $10.25 per Unit. All proceeds
from the sale of the Units will be deposited into an escrow account with HSBC
Bank USA (the "Escrow Agent"), 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, pursuant to
the Escrow Agreement, dated May __, 2004 (the "Escrow Agreement"), until we have
either sold the minimum 550,000 Units or the Public Offering has terminated. The
Public Offering will terminate ninety (90) days after the Prospectus referred to
below is effective, unless we extend the Public Offering for an additional
ninety (90) days (the "Extended Offering"). If we have not sold at least the
minimum 550,000 Units and deposited into our escrow account gross proceeds of
$5,637,500 by the termination of the Public Offering or the Extended Offering,
all proceeds held in escrow shall be promptly returned to
investors, without interest. Once we have sold the minimum 550,000 Units, we
will release all proceeds from escrow and conduct an initial closing (the
"Initial Closing"). We will continue to hold further closings on the Units sold
in excess of the first 550,000 minimum Units until the Public Offering
terminates (each such closing an "Additional Closing").
The Firm Securities (hereinafter referred to as the "Securities") are more fully
described in the Registration Statement and the Prospectus referred to below.
1. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with, the Underwriter as
of the date hereof, and as of the date of the Initial Closing (the "Initial
Closing Date") and the date of any Additional Closing (an "Additional Closing
Date"), if any, as follows:
(i) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and amendments thereto,
on Form SB-2 (SEC Registration No. 333-109119), for the registration of the
Securities under the Securities Act of 1933, as amended (the "Act"), which
registration statement and amendments have been prepared by the Company in
conformity with the requirements of the Act, and the rules and regulations (the
"Regulations") of the Commission under the Act. The Company will promptly file a
further amendment to said registration statement in the form heretofore
delivered to the Underwriter and will not, file any other amendment thereto to
which the Underwriter shall have objected in writing after having been furnished
with a copy thereof. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof
or incorporated therein (including, but not limited to those documents or
information incorporated by reference therein) and all information deemed to be
a part thereof as of such time pursuant to paragraph (b) of Rule 430(A) of the
Regulations), is hereinafter called the "Registration Statement", and the form
of prospectus in the form first filed with the Commission pursuant to Rule
424(b) of the Regulations, is hereinafter called the "Prospectus." "Preliminary
Prospectus" means each prospectus included in the Registration Statement or any
amendments thereof, before the Registration Statement becomes effective under
the Act, and any prospectus filed with the Commission by the Company with the
consent of the Underwriter pursuant to Rule 424(a) of the Rules and Regulations.
For purposes hereof, "Rules and Regulations" mean the rules and regulations
adopted by the Commission under either the Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as applicable. For purposes hereof,
"Material Adverse Effect" means a material adverse effect on the business,
condition (financial or otherwise), earnings, management, properties, assets,
results of operations, stockholders' equity or prospects of the Company.
(ii) Neither the Commission nor any state regulatory authority has issued any
order preventing or suspending the use of any Preliminary Prospectus, the
Registration Statement or the Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or to the Company's knowledge, threatened. Each of the Registration Statement
and Prospectus at the time of filing thereof conformed with the requirements of
the Act and the Rules and Regulations, and neither of the Registration Statement
or Prospectus at the time of filing thereof contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
and necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that this representation and
warranty does not apply to statements made in reliance upon and in conformity
with written information furnished to the Company with respect to the
Underwriter by the Underwriter expressly for use in such Registration Statement
or Prospectus.
(iii) When the Registration Statement becomes effective and at all times
subsequent thereto up to the Initial Closing Date and each Additional Closing
Date, if any, and during such longer period as the Prospectus may be required to
be delivered in connection with sales by the Underwriter or a dealer, the
Registration Statement and the Prospectus will contain all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations, and will conform to the requirements of the Act and the Rules and
Regulations; neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto at the time of effectiveness or filing, as the
case may be, up to the Initial Closing Date and each Additional Closing Date,
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, provided, however, that this representation and warranty does not
apply to statements made or statements omitted in reliance upon and in
conformity with information furnished to the Company in writing by or on behalf
of the Underwriter expressly for use in the Preliminary Prospectus, Registration
Statement or Prospectus or any amendment thereof or supplement thereto.
(iv) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the state of its incorporation.
The Company does not own an interest in any corporation, partnership, trust,
joint venture or other business entity. The Company is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations requires such qualification or licensing. The Company has all
requisite corporate power and authority, and the Company has obtained any and
all material authorizations, approvals, orders, licenses, including, but not
limited to liquor licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including, without limitation,
those having jurisdiction over environmental or similar matters), to own or
lease its properties and conduct its business as described in the Prospectus;
the Company is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, including, but not limited to
liquor licenses, certificates, franchises and permits and all federal, state and
local laws, rules and regulations; and the Company has not received any notice
of proceedings relating to the revocation or modification of any such
authorization, approval, order, license, including, but not limited to liquor
licenses, certificate, franchise, or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would materially
and adversely affect the condition, financial or otherwise, or the earnings,
position, prospects, value, operation, properties, business or results of
operations of the Company. The disclosures in the Registration Statement
concerning the effects of federal, state and local laws, rules and regulations,
including, but not limited to national highway safety and environmental laws and
regulations, on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made.
(v) The information set forth under "Pro Forma Capitalization" and "Description
of Securities" is true and correct and the Company is not a party to or bound by
any instrument, agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities, except for this
Agreement, the Underwriter's Warrant Agreement and as described in the
Prospectus. The Securities and all other securities issued or issuable by the
Company conform or, when issued and paid for, will conform, in all respects to
all statements with respect thereto contained in the Registration Statement and
the Prospectus. All issued and outstanding securities of the Company have been
duly authorized and validly issued and are fully paid and non-assessable and the
holders thereof have no rights of rescission with respect thereto, and are not
subject to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company or similar contractual rights granted by the
Company. The Securities are not and will not be subject to any preemptive or
other similar rights of any stockholder, have been duly authorized and, when
issued, paid for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable and will conform to the
description thereof contained in the Prospectus; the holders thereof will not be
subject to any liability solely as such holders; all corporate action required
to be taken for the authorization, issue and sale of the Securities has been
duly and validly taken; and the certificates representing the Securities will be
in due and proper form.
(vi) The financial statements, including the related notes and schedules
thereto, included in the Registration Statement and the Prospectus fairly
present the financial position, income, changes in cash flow, changes in
stockholders' equity, and the results of operations of the Company at the
respective dates and for the respective periods to which they apply and the pro
forma financial information included in the Registration Statement and
Prospectus presents fairly the information shown therein and to the extent based
upon or derived from the financial statements, have been compiled on a basis
consistent with the financial statements presented therein. Such financial
statements have been prepared in conformity with generally accepted accounting
principles and the Rules
and Regulations, consistently applied throughout the periods involved. There has
been no adverse change in the condition, financial or otherwise, or in the
earnings, position, prospects, value, operation, properties, business, or
results of operations of the Company whether or not arising in the ordinary
course of business, since the date of the financial statements included in the
Registration Statement and the Prospectus. Financial information set forth in
the Prospectus under the headings "Summary Consolidated Financial Information,"
"Pro Forma Capitalization," and "Plan of Operations," fairly present, on the
basis stated in the Prospectus, the information set forth therein, have been
derived from or compiled on a basis consistent with that of the audited
financial statements included in the Prospectus.
(vii) The Company (i) has paid all federal, state, local, and foreign taxes for
which it is liable, including, but not limited to, withholding taxes and amounts
payable under Chapters 21 through 24 of the Internal Revenue Code of 1986 (the
"Code"), and has furnished all information returns it is required to furnish
pursuant to the Code, (ii) has established adequate reserves for such taxes
which are not due and payable, and (iii) does not have any tax deficiency or
claims outstanding, proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is payable by or on
behalf of the Underwriter in connection with (i) the issuance by the Company of
the Securities, (ii) the sale by the Company through the Underwriter as agent of
the Company, (iii) the consummation by the Company of any of its obligations
under this Agreement or (iv) resales of the Securities in connection with the
distribution contemplated hereby.
(ix) The Company maintains insurance policies, including, but not limited to,
general liability and property insurance, which insures the Company and its
employees, against such losses and risks as is customary in the case of entities
engaged in the same or similar business and similarly situated. The Company (A)
has not failed to give notice or present any insurance claim with respect to any
matter, including but not limited to the Company's business, property or
employees, under the insurance policy or surety bond in a due and timely manner,
(B) does not have any disputes or claims against any underwriter of such
insurance policies or surety bonds or has not failed to pay any premiums due and
payable thereunder, or (C) has not failed to comply with all conditions
contained in such insurance policies and surety bonds. There are no facts or
circumstances under any such insurance policy or surety bond which would relieve
any insurer of its obligation to satisfy in full any valid claim of the Company.
On or before the Initial Closing, the Company shall obtain key-man life
insurance in an amount not less than one million dollars ($1,000,000) on the
life of Xxxxxx X. Xxxxxx, and the Company shall be the sole beneficiary of such
insurance.
(x) Except as described in the Registration Statement, there is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding (including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, pending or to the
Company's knowledge threatened against, or involving the properties or business
of, the Company which (i) questions the validity of the capital stock of the
Company, this Agreement or of any action taken or to be taken by the Company
pursuant to or in connection with this Agreement, (ii) is required to be
disclosed in the Registration Statement which is not so disclosed (and such
proceedings as are summarized in the Registration Statement are accurately
summarized in all material respects), or (iii) would result in a Material
Adverse Effect.
(xi) The Company has full legal right, power and authority to authorize, issue,
deliver and sell the Securities, enter into this Agreement and to consummate the
transactions provided for in such agreements; and this Agreement has been duly
and properly authorized, executed and delivered by the Company. This Agreement
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification or
contribution provisions may be limited under applicable laws or the public
policies underlying such laws and (iii) that the remedies of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings may be brought. None of the Company's issue and sale of the
Securities, execution or delivery of this Agreement, its performance hereunder
and thereunder, its consummation of the transactions contemplated herein and
therein, the Prospectus, and any amendments or supplements thereto, conflicts
with or will conflict with or results or will result in any breach or violation
of any of the terms or provisions of, or constitutes or will constitute a
default under, or result in the creation or imposition of any lien, charge,
claim, encumbrance, pledge, security interest, defect or other restriction or
equity of any kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of, (i) the certificate of
incorporation or by-laws of the Company, (ii) any license, contract, indenture,
mortgage, deed of trust, voting trust agreement, stockholders agreement, note,
loan or credit agreement or any other agreement or instrument to which the
Company is a party or by which it is or may be bound or to which any of its
properties or assets (tangible or intangible) is or may be subject, or any
indebtedness, or (iii) any statute, judgment, decree, order, rule or regulation
applicable to the Company of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, having jurisdiction over the Company or any of its
activities or properties.
(xii) Except as described in the Prospectus, no consent, approval, authorization
or order of, and no filing with, any court, regulatory body, government agency
or other body, domestic or foreign, is required for the issuance of the
Securities pursuant to the Prospectus and the Registration Statement, the
performance of this Agreement and the transactions contemplated hereby and
thereby, including without limitation, any waiver of any preemptive, first
refusal or other rights that any entity or person may have for the issue and/or
sale of any of the Securities except such as have been or may be obtained under
the Act or may be required under state securities or Blue Sky laws in connection
with the Underwriter's assistance in the sale and distribution of the Firm
Securities, and the Underwriter's Warrants to be sold by the Company hereunder.
(xiii) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which any of its assets, properties or business may be subject have
been duly and validly authorized, executed and delivered by the Company, and
constitute the legal, valid and binding agreements of the Company, enforceable
against the Company, in accordance with their respective terms. The descriptions
in the Registration Statement of agreements, contracts and other documents are
accurate in all material respects and fairly present the information required to
be shown with respect thereto by Form SB-2, and there are no contracts or other
documents which are required by the Act to be described in the Registration
Statement or filed as exhibits to the Registration Statement which are not
described or filed as required, and the exhibits which have been filed are in
all material respects complete and correct copies of the documents of which they
purport to be copies.
(xiv) Except as described in the Registration Statement, the Company is not in
violation of its articles of incorporation or bylaws or in default in any
material respect in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any agreement, indenture, lease or other instrument to which the Company is a
party or by which its assets are bound, or, except as described in the
Registration Statement and the Prospectus, in violation of any law,
administrative regulation or ruling or court decree applicable to the Company or
any of its properties. Neither the issuance nor the sale of the Securities nor
the execution and delivery of this Agreement nor the performance of the
obligations of the Company set forth herein nor the consummation of the
transactions herein contemplated require any consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
government body (except such as may be required under the Securities Act or
other securities laws or Blue Sky laws or rules of the National Association of
Securities Dealers, Inc. (the "NASD") that may be applicable to the Underwriter)
or will conflict with the articles of incorporation is a party or by which it or
its property is bound, or any law, administrative regulation or ruling or court
decree applicable to the Company or any of its properties, which conflict,
breach or default would have a material adverse effect on the business,
condition (financial or otherwise) or property of the Company taken as a whole.
(xv) Subsequent to the respective dates as of which information is set forth in
the Registration Statement and Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, (ii) entered into any transaction other than in the ordinary
course of business, or (iii) declared or paid any dividend or made any other
distribution on or in respect of its capital stock of any class, and there has
not been any change in the capital stock, or any material change in the debt
(other than as described in the Prospectus or Registration Statement) or
liabilities of the Company.
(xvi) No default exists in the due performance and observance of any term,
covenant or condition of any license, contract, indenture, mortgage, installment
sale agreement, lease, deed of trust, voting trust agreement, stockholders
agreement, partnership agreement, note, loan or credit agreement, purchase
order, or any other agreement or instrument evidencing an obligation for
borrowed money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which the property
or assets (tangible or intangible) of the Company is subject or affected.
(xvii) The Company is in compliance with all federal, state, local, and foreign
laws and regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours. There are no pending
investigations involving the Company by the U.S. Department of Labor, or any
other governmental agency responsible for the enforcement of such federal,
state, local, or foreign laws and regulations. There is no unfair labor practice
charge or complaint against the Company pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute, slowdown or stoppage
pending or threatened against or involving the Company or any predecessor
entity, and none has ever occurred. No collective bargaining agreement or
modification thereof is currently being negotiated by the Company. No grievance
or arbitration proceeding is pending under any expired or existing collective
bargaining agreements to which the Company is a party.
(xviii) Except as described in the Prospectus, the Company does not maintain,
sponsor or contribute to any program or arrangement that is an "employee pension
benefit plan," an "employee welfare benefit plan," or a "multiemployer plan" as
such terms are defined in Sections 3(2), 3(1) and 3(37), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") ("ERISA
Plans"). The Company does not maintain or contribute, now or at any time
previously, to a defined benefit plan, as defined in Section 3(35) of ERISA. No
ERISA Plan (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code, which could subject the Company to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each ERISA Plan is in
compliance with all reporting, disclosure and other requirements of the Code and
ERISA as they relate to any such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each ERISA Plan which
is intended to comply with Code Section 401(a), stating that such ERISA Plan and
the attendant trust are qualified thereunder. The Company has never completely
or partially withdrawn from a "multiemployer plan."
(xix) Neither the Company nor any of its employees, directors, stockholders,
partners, or affiliates (within the meaning of the Rules and Regulations) of any
of the foregoing has taken or will take, directly or indirectly, any action
designed to or which has constituted or which might be expected to cause or
result in, under the Exchange Act, or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities or otherwise.
(xx) Except as otherwise disclosed in the Prospectus, none of the patents,
patent applications, trademarks, service marks, service names, domain names,
trade names and copyrights and none of the licenses and rights to the foregoing
presently owned or held by the Company are in dispute or to the Company's
knowledge are in any conflict with the right of any other person or entity. The
Company (i) owns or has the right to use, free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects or other restrictions
or equities of any kind whatsoever, all patents, patent applications,
trademarks, service marks, service names, domain names, trade names and
copyrights, technology and licenses and rights with respect to the foregoing,
used in the conduct of its business as now conducted or proposed to be conducted
without infringing upon or otherwise acting adversely to the right or claimed
right of any person, corporation or other entity under or with respect to any of
the foregoing and (ii) is not obligated or under any liability whatsoever to
make any payment by way of royalties, fees or otherwise to any owner or licensee
of, or other claimant to, any patent, patent application, trademark, service
xxxx, service names, domain names, trade name, copyright, know-how, technology
or other intangible asset, with respect to the use thereof or in connection with
the conduct of its business or otherwise. There is no action, suit, proceeding,
inquiry, arbitration, investigation, litigation or governmental or other
proceeding, domestic or foreign, pending or threatened (or circumstances that
may give rise to the same) against the Company which challenges the exclusive
rights of the Company with respect to any trademarks, trade names, service
marks, service names, domain names, copyrights, patents, patent applications or
licenses or rights to the foregoing used in the conduct of its business, or
which challenge the right of the Company to use any technology presently used or
contemplated to be used in the conduct of its business.
(xxi) The Company owns and has the unrestricted right to use all trade secrets,
know-how (including all other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), inventions, technology,
designs, processes, works of authorship, computer programs and technical data
and information (collectively herein "intellectual property") that are material
to the development, manufacture, operation and sale of all products and services
sold or proposed to be sold by the Company, free and clear of and without
violating any right, lien, or claim of others, including without limitation,
former employers of its employees; provided, however, that the possibility
exists that other persons or entities, completely independently of the Company,
or its employees or agents, could have developed trade secrets or items of
technical information similar or identical to those of the Company. The Company
is not aware of any such development of similar or identical trade secrets or
technical information by others.
(xxii) The Company has good and marketable title to, or valid and enforceable
leasehold estates in, all items of real and personal property stated in the
Prospectus, to be owned or leased by it free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects, or other
restrictions or equities of any kind whatsoever, other than those referred to in
the Prospectus and liens for taxes not yet due and payable.
(xxiii) Xxxxxxxxx Xxxx Xxxxx Xxxxxx & Company ("Xxxxxxxxx"), whose report is
filed with the Commission as a part of the Registration Statement, are
independent certified public accountants as required by the Act and the Rules
and Regulations.
(xxiv) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which all of the officers and directors of
the Company, all holders of shares of Common Stock and holders of securities
exchangeable or exercisable for or convertible into shares of Common Stock have
agreed not to, directly or indirectly, offer, sell, grant any option for the
sale of, assign, transfer, pledge, hypothecate, distribute or otherwise encumber
or dispose of any shares of Common Stock or securities convertible into,
exercisable or exchangeable for or evidencing any right to purchase or subscribe
for any shares of Common Stock (either pursuant to Rule 144 of the Rules and
Regulations or otherwise) or dispose of any beneficial interest therein for a
period of not less than six (6) months following the effective date of the
Registration Statement without the prior written consent of the Underwriter and
the Company. In addition, the Company shall not sell or offer for sale any of
its securities for a period of thirteen (13) months from the effective date of
the Registration Statement without the consent of the Underwriter except
pursuant to options and warrants issued on the effective date of the
Registration Statement or which may be issued pursuant to the Company's 2004
Stock Incentive Plan. The Company will cause the Transfer Agent, as defined
below, to xxxx an appropriate legend on the face of stock certificates
representing all of such securities and to place "stop transfer" orders on the
Company's stock ledgers.
(xxv) Except as described in the Prospectus under "Underwriting," there are no
claims, payments, issuances, arrangements or understandings, whether oral or
written, for services in the nature of a finder's or origination fee with
respect to the sale of the Securities hereunder or any other arrangements,
agreements, understandings, payments or issuance with respect to the Company or
any of its officers, directors, stockholders, partners, employees or affiliates
that may affect the Underwriter's compensation, as determined by the National
Association of Securities Dealers, Inc. ("NASD").
(xxvi) Neither the Company nor any of its officers, directors employees, agents,
or any other person associated with or acting on behalf of the Company has used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(xxvii) Any certificate signed by any officer of the Company, and delivered to
the Underwriter's Counsel (as defined herein) shall be deemed a representation
and warranty by the Company to the Underwriter as to the matters covered
thereby.
(xxviii) The Company: (i) has made and kept accurate books and records; (ii) has
maintained internal and accounting controls which provide reasonable assurance
that: (A) transactions are executed in accordance with management's
authorization; (B) transactions are recorded as necessary to permit preparation
of the financial statements and to maintain accountability for its assets; (C)
access to its assets have been permitted only in accordance with management's
authorization; and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(xxix) Except and to the extent described in the Prospectus, no holders of any
securities of the Company or of any options, warrants or other convertible or
exchangeable securities of the Company have the right to include any securities
issued by the Company in the Registration Statement or any registration
statement to be filed by the Company or to require the Company to file a
registration statement under the Act and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
(xxx) The properties and business of the Company conform in all material
respects to the description thereof contained in the Registration Statement and
the Prospectus; and the Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property stated
in the Prospectus to be owned or leased by it, in each case free and clear of
all liens, charges, claims, encumbrances, pledges, security interests, defects
or other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus and liens for taxes not yet due and payable.
(xxxi) To the Company's knowledge and based on questionnaires received by the
Company from its officers, directors and 5% or greater shareholders, there are
no affiliations or associations between any member of the NASD and any of the
Company's officers, directors or 5% or greater shareholders, except as set forth
in the Registration Statement.
(xxxii) Except as described in the Prospectus, there are no claims, payments,
issuances, arrangements or understandings for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or financial consulting arrangement or any other arrangements, agreements,
understandings, payments or issuances related to the Underwriter's compensation.
(xxxiii) The Company is not and, after giving effect to the offer and sale of
the Shares, will not be an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
(xxxiv) Any statistical and market-related data included in the Prospectus are
based on or derived from sources that the Company believes to be reliable and
accurate, and the Company has obtained the written consent to the use of such
data from such sources to the extent required.
2. Sale of the Units.
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company agrees to
issue and sell a minimum of 550,000 Units (the "Minimum") and a maximum of up to
2,000,000 Units (the "Maximum") in the Public Offering. All Units to be offered
and sold in the Public Offering shall be issued and sold through the
Underwriter, as agent of the Company, to the public and the Underwriter agrees
to use its best efforts to sell the Units as agent for the Company, at the price
per unit set forth on the cover page of the Final Prospectus for the Public
Offering (the "Public Offering Price"). The Company agrees to pay the
Underwriter a commission ("Selling Commission") equal to ten percent (10%) of
the Public Offering Price of the Units sold in the Minimum and a seven percent
(7%) commission on all Units sold thereafter in each case through the
Underwriter in the Public Offering (including units sold through selected
dealers). It shall be the Underwriter's responsibility to compensate any
selected dealers out of the commissions that it receives from the Company. The
Underwriter may reject any offer to purchase the Units made through the
Underwriter or a selected dealer in whole or in part, and any such rejection
shall not be deemed a breach of the Underwriter's agreement contained herein.
(b) It is understood that, after the Registration Statement becomes effective,
the Underwriter proposes to sell the Units to the public as agent for the
Company upon the terms and conditions set forth in the Prospectus. The Escrow
procedures established by the Underwriter shall comply with Commission Rule
15c2-4 promulgated under the Exchange Act. All purchasers to whom the
Underwriter sells Units shall be instructed to make their check for payment of
the Units payable to ["Xxxxxx Motorcycle Company, Ltd. Public Offering Escrow
Account."] In addition, the Underwriter shall comply with Rule 15c2-4. The
Underwriter shall transmit all funds that it receives from purchasers to the
Escrow Agent by noon of the next business day following receipt thereof. Only
broker/dealers who are either (i) members in good standing of the NASD that are
registered with the NASD and maintain net capital pursuant to Rule 15c3-1
promulgated under the Exchange Act of not less than $25,000 or (ii) dealers with
their principal places of business located outside the United States, its
territories and its possessions and not registered as brokers or dealers under
the Exchange Act, who have agreed not to make any sales within the United
States, its territories or its possessions or to persons who are nationals
thereof or residents therein shall be designated selected dealers by the
Underwriter. The Underwriter shall require all selected dealers to comply with
Rule 15c2-4.
(c) After the sale of the minimum 550,000 Units and for any Additional Closing
the Underwriter shall direct the Escrow Agent to make payment for the Units sold
hereunder by wire transfer. Such payment is to be made at the offices of
____________________, at 10:00 a.m. local time, on or about ______________ ___,
2004, or at such other time, date and place as the Underwriter and the Company
shall agree upon, each such time and date being herein referred to as a "Closing
Date." Unless the transaction is closed book-entry through The Depository Trust
Company and no certificates are requested, in which case the procedures
applicable thereto shall be complied with, the certificates for the Units will
be delivered in such denominations and in such registrations as the Underwriter
requests in writing not later than the third (3rd) full business day prior to
any Closing Date, and will be made available for inspection by the Underwriter
at least twenty-four (24) hours prior to any Closing Date. Any such certificates
will be delivered by the Company to its transfer agent, or the Depository Trust
Company, as applicable, by 12:00 p.m. on the day prior to any Closing Date,
along with addressed labels to be used to mail the certificates to the
purchasers thereof. The Company shall direct the Escrow Agent to deliver (i)
payment of the portion of the Selling Commission due to the Underwriter by wire
transfer or certified or bank cashier's check drawn to the order of the
Underwriter in next day funds, to the Underwriter on any Closing Date and (ii)
payment of the portion of the Selling Commission due to each selected dealer by
wire transfer or certified or bank cashier's check drawn to the order of such
selected dealer in next day funds, to each selected dealer on any Closing Date.
3. Public Offering of the Units. As soon after the Registration Statement
becomes effective as the Underwriter deems advisable, the Underwriter shall make
a public offering of the Units (other than to residents of or in any
jurisdiction in which qualification of the Units is required and has not become
effective) at the price and upon the other terms set forth in the Prospectus.
The Underwriter may from time to time increase or decrease the public offering
price after distribution of the Units has been completed to such extent as the
Underwriter, in its discretion deems advisable. The Underwriter may enter into
one of more agreements as the Underwriter, in its sole discretion, deems
advisable with one or more broker-dealers who shall act as dealers in connection
with such public offering.
4. Covenants and Agreements of the Company. The Company covenants and agrees
with the Underwriter as follows:
(a) The Company shall use its best efforts to cause the Registration Statement
and any amendments thereto to become effective as promptly as practicable and
will not at any time, whether before or after the effective date of the
Registration Statement, file any amendment to the Registration Statement or
supplement to the Prospectus or file any document under the Act or Exchange Act
before termination of the offering of the Units by the Underwriter of which the
Underwriter shall not previously have been advised and furnished with a copy, or
to which the Underwriter shall have objected or which is not in compliance with
the Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof, the Company
will advise the Underwriter and confirm the notice in writing, (i) when the
Registration Statement, as amended, becomes effective, if the provisions of Rule
430A promulgated under the Act will be relied upon, when the Prospectus has been
filed in accordance with said Rule 430A and when any post-effective amendment to
the Registration Statement becomes effective, (ii) of the issuance by the
Commission of any stop order or of the initiation, or the threatening, of any
proceeding, suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of the Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, or the institution of
proceedings for that purpose, (iii) of the issuance by the Commission or by any
state securities commission of any proceedings for the suspension of the
qualification of any of the Securities for offering or sale in any jurisdiction
or of the initiation, or the threatening, of any proceeding for that purpose,
(iv) of the receipt of any comments from the Commission; and (v)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional information.
If the Commission or any state securities commission authority shall enter a
stop order or suspend such qualification at any time, the Company shall use its
best efforts to obtain the prompt withdrawal of the order.
(c) The Company shall file the Prospectus (in form and substance satisfactory to
the Underwriter) or transmit the Prospectus by a means reasonably calculated to
result in filing with the Commission pursuant to Rule 424(b)(1) (or, if
applicable and if consented to by the Underwriter, pursuant to Rule 424(b)(4))
not later than the Commission's close of business on the earlier of (i) the
second business day following the execution and delivery of this Agreement and
(ii) the fifteenth business day after the effective date of the Registration
Statement.
(d) The Company will give the Underwriter notice of its intention to file or
prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriter in connection with the offering of the Securities which differs from
the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
and will furnish the Underwriter with copies of any such amendment or supplement
a reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file any such prospectus to which the Underwriter or
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP ("Underwriter's Counsel"), shall object.
(e) The Company shall endeavor in good faith, in cooperation with the
Underwriter, at or prior to the time the Registration Statement becomes
effective, to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as the Underwriter may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such documents
and furnish such information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a foreign corporation
or file a general or limited consent to service of process in any such
jurisdiction. In each jurisdiction where such qualification shall be effected,
the Company will, unless the Underwriter agrees that such action is not at the
time necessary or advisable, use all reasonable efforts to file and make such
statements or reports at such times as are or may reasonably be required by the
laws of such jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be delivered under the Act,
the Company shall use all reasonable efforts to comply with all requirements
imposed upon it by the Act and the Exchange Act, as now and hereafter amended
and by the Rules and Regulations, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and the Prospectus, or any amendments or
supplements thereto. If at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event shall have occurred as a
result of which, in the opinion of counsel for the Company or Underwriter's
Counsel, the Prospectus, as then amended or supplemented, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend the Prospectus to comply with the Act, the Company will
notify the Underwriter promptly and prepare and file with the Commission an
appropriate amendment or supplement in accordance with Section 10 of the Act,
each such amendment or supplement to be satisfactory to Underwriter's Counsel,
and the Company will furnish to the Underwriter copies of such amendment or
supplement as soon as available and in such quantities as the Underwriter may
request.
(g) As soon as practicable, but in any event not later than 45 days after the
end of the 12-month period beginning on the day after the end of the fiscal
quarter of the Company during which the effective date of the Registration
Statement occurs (90 days in the event that the end of such fiscal quarter is
the end of the Company's fiscal year), the Company shall make generally
available to its security holders, in the manner specified in Rule 158(b) of the
Rules and Regulations, and to the Underwriter, an earnings statement which will
be in the detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations, which
statement need not be audited unless required by the Act, covering a period of
at least 12 consecutive months after the effective date of the Registration
Statement.
(h) During a period of seven years after the date hereof, in the event the
Company is not subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company will furnish to its stockholders, as soon
as practicable, annual reports (including financial statements audited by
independent public accountants) and unaudited quarterly reports of earnings, and
will deliver to the Underwriter:
(i) concurrently with furnishing such quarterly reports to its stockholders,
statements of income of the Company for each quarter in the form furnished to
the Company's stockholders and certified by the Company's principal financial or
accounting officer;
(i) concurrently with furnishing such annual reports to its stockholders, a
balance sheet of the Company as at the end of the preceding fiscal year,
together with statements of operations, stockholders' equity, and cash flows of
the Company for such fiscal year, accompanied by a copy of the certificate
thereon of independent certified public accountants;
(ii) as soon as they are available, copies of all reports (financial or other)
mailed to stockholders;
(iii) every press release and every material news item or article of interest to
the financial community in respect of the Company, or its affairs which was
released or prepared by or on behalf of the Company; and
(iv) any additional information of a public nature concerning the Company (and
any future subsidiary) or its businesses which the Underwriter may request.
(v) During such seven-year period, if the Company has an active subsidiary, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company
and its subsidiary are consolidated, and will be accompanied by similar
financial statements for any significant subsidiary which is not so
consolidated.
(vi) The Company will maintain a Transfer Agent and Warrant Agent ("Transfer
Agent") and, if necessary under the jurisdiction of incorporation of the
Company, a Registrar (which may be the same entity as the Transfer Agent) for
its Common Stock and Redeemable Warrants.
(j) The Company will furnish to the Underwriter's order, without charge, at such
place as the Underwriter may designate, copies of each Preliminary Prospectus,
the Registration Statement and any pre-effective or post-effective amendments
thereto (two of which copies will be signed and will include all financial
statements and exhibits), the Prospectus, and all amendments and supplements
thereto, including any prospectus prepared after the effective date of the
Registration Statement, in each case as soon as available and in such reasonable
quantities as the Underwriter may request.
(k) On or before the effective date of the Registration Statement, the Company
shall provide the Underwriter with true copies of duly executed, legally binding
and enforceable agreements pursuant to which, for a period of 180 days
subsequent to the date of the final closing relating to the Offering, which
Offering will terminate 90 days after the date the final Prospectus included in
the Registration Statement is declared effective under the Securities Act of
1933, as amended, unless extended for an additional 90 days, the officers and
directors of the Company, all holders of shares of Common Stock and holders of
securities exchangeable or exercisable for or convertible into shares of Common
Stock, agree that it or he or she will not directly or indirectly, issue, offer
to sell, grant an option for the sale of, assign, transfer, pledge, hypothecate,
distribute or otherwise encumber or dispose of any shares of Common Stock or
securities convertible into, exercisable or exchangeable for or evidencing any
right to purchase or subscribe for any shares of Common Stock (either pursuant
to Rule 144 of the Rules and Regulations or otherwise) or dispose of any
beneficial interest therein without the prior written consent of the Underwriter
and the Company (the "Lock-up Agreements"). For a period of 13 months from the
effective date of the Registration Statement, the Company shall not, without the
prior written consent of the Underwriter, issue, sell, grant or otherwise dilute
the securities in any offering, public or private except pursuant to options and
warrants issued on the effective date of the Registration Statement or which may
be issued thereafter pursuant to the Company's 2004 Stock Incentive Plan. On or
before any Closing Date, the Company shall deliver instructions to the Transfer
Agent authorizing it to place appropriate legends on the certificates
representing the securities subject to the Lock-up Agreements and to place
appropriate stop transfer orders on the Company's ledgers.
(l) Neither the Company, nor any of its officers, directors, stockholders, nor
any of their respective affiliates (within the meaning of the Rules and
Regulations) will take, directly or indirectly, any action prohibited by
Regulation M under the Act in connection with the offering of the Securities.
(m) The Company shall apply the net proceeds from the sale of the Securities in
the manner, and subject to the conditions, set forth under "Use of Proceeds" in
the Prospectus. Except as described in the Prospectus, no portion of the net
proceeds will be used, directly or indirectly, to acquire any securities issued
by the Company.
(n) The Company shall timely file all such reports, forms or other documents as
may be required (including, but not limited to, a Form SR as may be required
pursuant to Rule 463 under the Act) from time to time, under the Act, the
Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Act, the Exchange Act, and the Rules and Regulations.
(o) The Company shall hire a Chief Financial Officer acceptable to the
Underwriter in all respects to commence employment as of the Initial Closing
Date.
(p) The Company shall furnish to the Underwriter as early as practicable prior
to each of the date hereof, the Initial Closing Date and each Additional Closing
Date, if any, but no later than two (2) full business days prior thereto, a copy
of the latest available unaudited interim financial statements of the Company
(which in no event shall be as of a date more than thirty (30) days prior to the
date of the Registration Statement) which have been read by the Company's
independent public accountants, as stated in its letter to be furnished pursuant
to Section 6(j) hereof.
(q) For a period of one (1) year from each Closing Date, the Company shall
furnish to the Underwriter at the Underwriter's request and at the Company's
sole expense, (i) daily consolidated transfer sheets relating to the Common
Stock and the Redeemable Warrants, and (ii) the list of holders of all of the
Company's securities, to be provided by the Company on no more than four
occasions during such period.
(r) As soon as practicable, (i) but in no event more than five (5) business days
before the effective date of the Registration Statement, file a Form 8-A with
the Commission providing for the registration under the Exchange Act of the
Securities and (ii) but in no event more than 30 days from the effective date of
the Registration Statement, take all necessary and appropriate actions to be
included in Standard and Poor's Corporation Descriptions and Xxxxx'x OTC Manual
and, as long as the Company is subject to the reporting requirements under
Section 13 or 15(d) of the Exchange Act, use its best efforts to continue such
inclusion for a period of not less than three (3) years.
(s) Until the completion of the distribution of the Firm Securities, the Company
shall not without the prior written consent of the Underwriter's Counsel, issue,
directly or indirectly, any press release or other communication or hold any
press conference with respect to the Company or its activities or the offering
contemplated hereby, other than trade releases issued in the ordinary course of
the Company's business consistent with past practices with respect to the
Company's operations.
(t) For a period equal to the lesser of (i) three (3) years from the date
hereof, and (ii) the sale to the public of the Underwriter's Securities, the
Company will not take any action or actions which may prevent or disqualify the
Company's use of Form SB-2 or Form S-1 (or other appropriate form) for the
registration under the Act of the Underwriter's Securities.
(u) For a period of one (1) year after the effective date of the Registration
Statement, the Underwriter shall have the right to designate one (1) individual
to attend all meetings of the Company's Board of Directors (the
"Board"). The Company shall notify the Underwriter of each meeting of the Board
and the Company shall send to such individual all notices and other
correspondence and communications sent by the Company to members of the Board.
Such individual shall be reimbursed for all out-of-pocket expenses incurred in
connection with his attendance of meetings of the Board.
(v) For a period of thirteen (13) months after the effective date of the
Registration Statement, the Company shall not restate, amend or alter any term
of any written employment, consulting or similar agreement entered into between
the Company and any officer, director or key employee as of the effective date
of the Registration Statement in a manner which is more favorable to such
officer, director or key employee, without the prior written consent of the
Underwriter.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Initial Closing Date and any
Additional Closing Date (to the extent not paid at the Initial Closing) all
expenses and fees (other than fees of Underwriter's Counsel, except as provided
in (iv) below) incident to the performance of the obligations of the Company
under this Agreement, including, without limitation, (i) the fees and expenses
of accountants and counsel for the Company, (ii) all costs and expenses incurred
in connection with the preparation, duplication, printing, (including mailing
and handling charges) filing, delivery and mailing (including the payment of
postage with respect thereto) of the Registration Statement and the Prospectus
and any amendments and supplements thereto and the printing, mailing (including
the payment of postage with respect thereto) and delivery of this Agreement, the
Selected Dealer Agreements, and related documents, including the cost of all
copies thereof and of the Preliminary Prospectuses and of the Prospectus and any
amendments thereof or supplements thereto supplied to the Underwriter and such
dealers as the Underwriter may request, in quantities as hereinabove stated,
(iii) the printing, engraving, issuance and delivery of the Securities
including, but not limited to, (x) the consummation by the Company of any of its
obligations under this Agreement, and (y) sale of the Securities by the Company
through the Underwriter as the agent of the Company in connection with the
distribution contemplated hereby, (iv) the qualification of the Securities under
state or foreign securities or "Blue Sky" laws and determination of the status
of such securities under legal investment laws, including the costs of printing
and mailing the "Preliminary Blue Sky Memorandum," the "Supplemental Blue Sky
Memorandum" and "Legal Investments Survey," if any, and disbursements and fees
of Underwriter's Counsel in connection therewith, provided that such Blue Sky
counsel fees shall not exceed $20,000 if the Securities are listed on a national
securities exchange, (v) advertising costs and expenses, including but not
limited to costs and expenses in connection with the "road show", information
meetings and presentations, bound volumes and prospectus memorabilia and
"tomb-stone" advertisement expenses, provided that the Underwriter's road show
expenses shall not exceed $50,000, (vi) costs and expenses in connection with
due diligence investigations, including but not limited to the fees of any
independent counsel or consultant retained, (vii) fees and expenses of the
transfer agent and registrar, (viii) the fees payable to the Commission and the
NASD, and (ix) the fees and expenses incurred in connection with the quotation
of the Securities on Amex and any other exchange.
(b) If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 6 or Section 11, (i) the Company shall reimburse and
indemnify the Underwriter for all of its actual out-of-pocket expenses,
including the fees and disbursements of Underwriter's Counsel, less any amounts
already paid pursuant to Section 5(c) hereof.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 5, it will pay to the Underwriter on
each Closing Date, by deduction from the proceeds of the offering contemplated
herein a non-accountable expense allowance equal to one percent (1%) of the
gross proceeds received by the Company from the sale of the Firm Securities,
$35,000 of which has been paid to date.
6. Conditions of the Underwriter's Obligations. The obligations of the
Underwriter hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Initial Closing Date and each Additional Closing Date, if any, with
respect to the Company as if it had been made on and as of the Initial Closing
Date or each Additional Closing Date, as the case may be; the accuracy on and as
of the Initial Closing Date or each Additional Closing Date, if any, of the
statements of the officers of the Company made pursuant to the provisions
hereof; and the performance by the Company on and as of the Initial Closing Date
and each Additional Closing Date, if any, of its covenants and obligations
hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective under the Act not
later than the date of this Agreement or such later date and time as shall be
consented to in writing by the Underwriter, and, at the Initial Closing Date and
each Additional Closing Date, if any, no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or threatened by the
Commission and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
Underwriter's Counsel. If the Company has elected to rely upon Rule 430A of the
Rules and Regulations, the price of the Units and any price-related information
previously omitted from the effective Registration Statement pursuant to such
Rule 430A shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) of the Rules and Regulations within the prescribed time period, and
prior to Closing Date the Company shall have provided evidence satisfactory to
the Underwriter of such timely filing, or a post-effective amendment providing
such information shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A of the Rules and Regulations.
(b) The Underwriter shall not have advised the Company that the Registration
Statement, or any amendment thereto, contains an untrue statement of fact which,
in the Underwriter's opinion, is material, or omits to state a fact which, in
the Underwriter's opinion, is material and is required to be stated therein or
is necessary to make the statements therein not misleading, or that the
Prospectus, or any supplement thereto, contains an untrue statement of fact
which, in the Underwriter's opinion, is material, or omits to state a fact
which, in the Underwriter's opinion, 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) On or prior to the Initial Closing Date, the Underwriter shall have received
from Underwriter's Counsel, such opinion or opinions with respect to such
matters as the Underwriter may request and Underwriter's Counsel shall have
received such papers and information as they request to enable them to pass upon
such matters.
(d) At the Initial Closing Date, the Underwriter shall have received the
favorable opinion of Xxxxxx X. Xxxxxxx, Esq., counsel to the Company, dated the
Initial Closing Date, addressed to the Underwriter and in form and substance
satisfactory to Underwriter's Counsel, 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 its jurisdiction, (B) is duly
qualified and licensed and in good standing as a foreign corporation in all
states listed on Exhibit A hereto, and (C) has all requisite corporate power and
authority; and the Company has obtained any and all necessary authorizations,
approvals, orders, licenses, certificates, franchises and permits of and from
all governmental or regulatory officials and bodies (including, without
limitation, those having jurisdiction over environmental or similar matters), to
own or lease its properties and conduct its business as described in the
Prospectus; the Company is and has been doing business in material compliance
with all such authorizations, approvals, orders, licenses, certificates,
franchises and permits and all federal, state and local laws, rules and
regulations; the Company has not received any notice of proceedings relating to
the revocation or modification of any such authorization, approval, order,
license, certificate, franchise, or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect. The disclosures in the Registration Statement concerning the
effects of federal, state and local laws, rules and regulations on the Company's
business as currently conducted and as contemplated are correct in all material
respects and do not omit to state a fact necessary to make the statements
contained therein not misleading in light of the circumstances in which they
were made.
(ii) to the best of such counsel's knowledge, the Company does not own an
interest in any other corporation, partnership, joint venture, trust or other
business entity;
(iii) the Company has a duly authorized, issued and outstanding capitalization
as set forth in the Prospectus, and any amendment or supplement thereto, under
"Pro Forma Capitalization" and "Description of Securities," and the Company is
not a party to or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, and as described in the Prospectus. The
Securities, and all other securities issued or issuable by the Company conform
to all statements with respect thereto contained in the Registration Statement
and the Prospectus. All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission with respect thereto, and are
not subject to personal liability by reason of being such holders; and none of
such securities were issued in violation of the preemptive rights of any holders
of any security of the Company. The Securities to be sold by the
Company hereunder are not and will not be subject to any preemptive or other
similar rights of any stockholder; the holders thereof will not be subject to
any liability solely as such holders; and the certificates representing the Firm
Securities. The Firm Securities have been duly authorized for issuance, delivery
and sale by the Company through the Underwriter as its agent pursuant to this
Agreement, and when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be validly
issued, fully paid and non-assessable, free and clear of any pledge, lien,
charge, claim, encumbrance, security interest, or other restriction or equity of
any kind whatsoever. There are no restrictions upon the voting or transfer of
any of the Securities pursuant to the Company's certificate of incorporation or
bylaws. No transfer tax is payable by or on behalf of the Underwriter in
connection with (A) the issuance and sale by the Company of the Firm Securities
or (B) the consummation by the Company of any of its obligations under this
Agreement;
(iv) the Registration Statement is effective under the Act, and, if applicable,
filing of all pricing information has been timely made in the appropriate form
under Rule 430A, and no stop order suspending the use of the Preliminary
Prospectus, the Registration Statement or Prospectus or any part of any thereof
or suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or, to
the best of such counsel's knowledge, threatened by the Commission;
(v) each of the Preliminary Prospectus, the Registration Statement, and the
Prospectus and any amendments or supplements thereto (other than the financial
statements and other financial and statistical data included therein, as to
which no opinion need be rendered) comply as to form in all material respects
with the requirements of the Act and the Rules and Regulations;
(vi) to the best of such counsel's knowledge: (i) the descriptions in the
Registration Statement and Prospectus of statutes, legal and governmental
proceedings, contracts and other documents are accurate in all material
respects; (ii) there are no statutes, legal or governmental proceedings,
contracts or documents that are required to be described in the Prospectus, or
documents that are required to be filed as exhibits to the Registration
Statement that are not described or filed as required and the exhibits which
have been filed are correct copies of the documents of which they purport to be
copies; (iii) there is no action, suit, arbitration, proceeding, inquiry or
investigation before or by any court or governmental body or agency, domestic or
foreign, now pending or threatened against the Company or its property or
assets, which is required to be disclosed in the Registration Statement which is
not so disclosed therein, or which, if determined adversely, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect or
which would adversely affect the present or prospective ability of the Company
to perform its obligations under this Agreement.
(vii) the Company has full legal right, power and authority to enter into each
of this Agreement and to consummate the transactions provided for herein and
therein; and each of this Agreement has been duly authorized, executed and
delivered by the Company. This Agreement, assuming due authorization, execution
and delivery by each other party thereto constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law), and none of the
Company's execution or delivery of this Agreement, its performance hereunder or
thereunder, its consummation of the transactions contemplated herein or therein,
or the conduct of its business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or violation of any of the
terms or provisions of, or constitutes or will constitute a default under, or
result in the creation or imposition of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity of any kind
whatsoever upon, any property or assets (tangible or intangible) of the Company
pursuant to the terms of, (A) the certificate of incorporation or by-laws of the
Company, (B) any license, contract, indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note, loan or credit agreement or any
other agreement or instrument to which the Company is a party or by which it is
or may be bound or to which any of its respective properties or assets (tangible
or intangible) is or may be subject, or (C) any statute, judgment, decree,
order, rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over the Company or
any of its activities or properties;
(viii) except as described in the Prospectus and except as has been obtained, no
consent, approval, authorization or order of, and no filing with, any court,
regulatory body, government agency or other body (other than such as may be
required under Blue Sky laws, as to which no opinion need be rendered) is
required in connection with the issuance or sale of the Units pursuant to the
Prospectus, the issuance of the Underwriter's Warrants, and the Registration
Statement, the performance of thisAgreement, and the transactions contemplated
hereby;
(ix) to the best knowledge of such counsel, the Company is not in breach of, or
in default under, any term or provision of any license, contract, indenture,
mortgage, installment sale agreement, deed of trust, lease, voting trust
agreement, stockholders' agreement, partnership agreement, note, loan or credit
agreement or any other agreement or instrument evidencing an obligation for
borrowed money, or any other agreement or instrument to which the Company is a
party or by which the Company may be bound or to which the property or assets
(tangible or intangible) of the Company is subject or affected; and the Company
is not
in violation of any term or provision of its certificate of incorporation
by-laws, or in violation of any franchise, license, permit, judgment, decree,
order, statute, rule or regulation, except for such violations of franchises,
licenses, permits, judgments, decrees, orders, statutes, rules or regulations
which would not, individually or in the aggregate, have a Material Adverse
Effect;
(x) the statements in the Prospectus under "Business," "Management," "Security
Ownership of Certain Beneficial Owners and Management," "Related Party
Transactions," "Description of Securities" and "Shares Eligible for Future
Sales" have been reviewed by such counsel, and insofar as they refer to
statements of law, descriptions of statutes, licenses, rules or regulations or
legal conclusions, are correct in all material respects;
(xi) except as described in the Prospectus, no person, corporation, trust,
partnership, association or other entity has the right to include and/or
register any securities of the Company in the Registration Statement, require
the Company to file any registration statement or, if filed, to include any
security in such registration statement;
(xii) assuming due execution and delivery by the parties thereto other than the
Company, the Lock-up Agreements are legal, valid and binding obligations of
parties thereto, enforceable against the party and any subsequent holder of the
securities subject thereto in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law); and (xiii) except as
described in the Prospectus, the Company does not (A) maintain, sponsor or
contribute to any ERISA Plans, (B) maintain or contribute, now or at any time
previously, to a defined benefit plan, as defined in Section 3(35) of ERISA, and
(C) has never completely or partially withdrawn from a "multiemployer plan".
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
officers, representatives and accountants discussed the contents of the
Preliminary Prospectus, the Registration Statement, the Prospectus, and related
matters were discussed 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, no facts have come to the attention of such counsel which lead
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 amendment or supplement thereto as of the date of such opinion
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements and schedules and other financial and
statistical data included in the Preliminary Prospectus, the Registration
Statement or Prospectus).
Such opinion shall not state that it is to be governed or qualified by, or that
it is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991), or any comparable State bar
accord.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance satisfactory to Underwriter's Counsel) of other counsel
acceptable to Underwriter's Counsel, familiar with the applicable laws; (B) as
to matters of fact, to the extent they deem proper, on certificates and written
statements of responsible officers of the Company, and certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to Underwriter's Counsel if requested. The opinion shall also state
that the Underwriter's Counsel is entitled to rely thereon. The opinion of such
counsel for the Company shall state that the opinion of any such other counsel
is in form satisfactory to such counsel and that the Underwriter and they are
justified in relying thereon.
At each Additional Closing Date, if any, the Underwriter shall have received the
favorable opinion of Xxxxxx X. Xxxxxxx, Esq., counsel to the Company, dated the
Additional Closing Date, addressed to the Underwriter and in form and substance
satisfactory to Underwriter's Counsel, confirming as of Additional Closing Date
the statements made by Xxxxxx X. Xxxxxxx, Esq. in its opinion delivered on such
Closing Date.
(e) On or prior to each of the Closing Date and each Additional Closing Date, if
any, (i) there shall not have been, and no development shall have occurred that
could reasonably be expected to result in, any material adverse change in the
condition, financial or otherwise, prospects, stockholders' equity or the
business activities of the Company, whether or not in the ordinary course of
business, from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, from the latest date as of which the financial condition of the Company
is set forth in the Registration Statement and Prospectus which is materially
adverse to the Company; (iii) the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness;
(iv) the Company shall not have issued any securities (other than the
Securities); the Company shall not have declared or paid any dividend or made
any distribution in respect of its capital stock of any class; and there shall
not have been any change in the capital stock of the Company, or any material
change in the debt (other than as described in the Prospectus and the
Registration Statement) or liabilities or obligations of the Company (contingent
or otherwise); (v) no material amount of the assets of the Company shall have
been pledged or mortgaged, except as set forth in the Registration Statement and
Prospectus; (vi) no action, suit or proceeding, at law or in equity, shall have
been pending or threatened (or circumstances giving rise to same) against the
Company, or affecting any of its properties or business before or by any court
or federal, state or foreign commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding may result in a Material
Adverse Effect; and (vii) no stop order shall have been issued under the Act and
no proceedings therefor shall have been initiated or threatened by the
Commission.
(f) At each of the Initial Closing Date and each Additional Closing Date, if
any, the Underwriter shall have received a certificate of the Company signed by
the principal executive officer and by the chief financial or chief accounting
officer of the Company, dated the Initial Closing Date or Additional Closing
Date, as the case may be, to the effect that each of such persons has carefully
examined the Registration Statement, the Prospectus and this Agreement, and
that:
(i) The representations and warranties of the Company in this Agreement are true
and correct, as if made on and as of the Initial Closing Date or the Additional
Closing Date, as the case may be, and the Company has complied with all
agreements and covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to such Initial
Closing Date or Additional Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the Registration Statement or
any part thereof has been issued, and no proceedings for that purpose have been
instituted or are pending or, to the best of each of such person's knowledge,
threatened under the Act;
(iii) The Registration Statement and the Prospectus and, if any, each amendment
and each supplement thereto, contain all statements and information required to
be included therein, and none of the Registration Statement, the Prospectus nor
any amendment or supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and neither the
Preliminary Prospectus or any supplement thereto included any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(iv) Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, (a) the Company has not incurred up
to and including the Closing Date or any Additional Closing Date, if any, as the
case may be, other than in the ordinary course of its business, any material
liabilities or obligations, direct or contingent; (b) the Company has not paid
or declared any dividends or other distributions on its capital stock; (c) the
Company has not entered into any transactions not in the ordinary course of
business; (d) there has not been any change in the capital stock of the Company
or any material change in the debt (other than as described in the Prospectus
and the Registration Statement) of the Company; (e) the Company has not
sustained any material loss or damage to its property or assets, whether or not
insured; (g) there is no litigation which is pending or threatened (or
circumstances giving rise to same) against the Company, or any affiliated party
of any of the foregoing which is required to be set forth in an amended or
supplemented Prospectus which has not been set forth; and (h) there has occurred
no event required to be set forth in an amended or supplemented Prospectus which
has not been set forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(g) By the Closing Date, the Underwriter will have received clearance from the
NASD as to the amount of compensation allowable or payable to the Underwriter,
as described in the Registration Statement.
(h) At the time this Agreement is executed, the Underwriter shall have received
a letter, dated such date, addressed to the Underwriter in form and substance
satisfactory (including the non-material nature of the changes or decreases, if
any, referred to in clause (iii) below) in all respects to the Underwriter and
Underwriter's Counsel, from Xxxxxxxxx;
(i) confirming that they are independent certified public accountants with
respect to the Company within the meaning of the Act and the applicable Rules
and Regulations;
(ii) stating that it is their opinion that the financial statements and
supporting schedules of the Company included in the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations thereunder and that the
Underwriter may rely upon the opinion of Xxxxxxxxx with respect to such
financial statements and supporting schedules included in the Registration
Statement;
(iii) stating that, on the basis of a limited review which included a reading of
the latest available unaudited interim financial statements of the Company, a
reading of the latest available minutes of the stockholders and board of
directors and the various committees of the boards of directors of the Company,
consultations with officers and other employees of the Company responsible for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that (A)
the pro forma financial information contained in the Registration Statement and
Prospectus does not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations or
is not fairly presented in conformity with generally accepted accounting
principles applied on a basis consistent with that of the audited financial
statements of the Company or the unaudited pro forma financial information
included in the Registration Statement, (B) the unaudited financial statements
and supporting schedules of the Company included in the Registration Statement
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 substantially consistent with that of the audited financial statements
of the Company included in the Registration Statement, or (C) at a specified
date not more than five (5) days prior to the effective date of the Registration
Statement, there has been any change in the capital stock of the Company, any
change in the long-term debt of the Company, or any decrease in the
stockholders' equity of the Company or any decrease in the net current assets or
net assets of the Company as compared with amounts shown in the December 31,
2003 balance sheets included in the Registration Statement, other than as set
forth in or contemplated by the Registration Statement, or, if there was any
change or decrease, setting forth the amount of such change or decrease, and (D)
during the period from December 31, 2003 to a specified date not more than five
(5) days prior to the effective date of the Registration Statement, there was
any decrease in net revenues or net earnings of the Company or increase in net
earnings per common share of the Company, in each case as compared with the
corresponding period beginning December 31, 2003 other than as set forth in or
contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) setting forth, at a date not later than five (5) days prior to the date of
the Registration Statement, the amount of liabilities of the Company (including
a break-down of commercial paper and notes payable to banks);
(v) stating that they have compared specific dollar amounts, numbers of shares,
percentages of revenues and earnings, statements and other financial information
pertaining to the Company set forth in the Prospectus in each case to the extent
that such amounts, numbers, percentages, statements and information may be
derived from the general accounting records, including work sheets, of the
Company and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures do not constitute
an examination in accordance with generally accepted auditing standards) set
forth in the letter and found them to be in agreement; and
(vi) statements as to such other matters incident to the transaction
contemplated hereby as the Underwriter may request.
(i) At the Initial Closing Date and each Additional Closing Date, if any, the
Underwriter shall have received from Xxxxxxxxx a letter, dated as of the Initial
Closing Date or the Additional Closing Date, as the case may be, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
subsection (j) of this Section hereof except that the specified date referred to
shall be a date not more than five days prior to the Initial Closing Date or the
Additional Closing Date, as the case may be, and, if the Company has elected to
rely on Rule 430A of the Rules and Regulations, to the further effect that they
have carried out procedures as specified in clause (v) of subsection (j) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Underwriter and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (v).
(j) The Company shall have delivered to the Underwriter a letter from Xxxxxxxxx
addressed to the Company stating that they have not during the immediately
preceding two year period brought to the attention of the Company's management
any "weakness" as defined in Statement of Auditing Standards No. 60
"Communication of Internal Control Structure Related Matters Noted in an Audit,"
in any of the Company's internal controls.
(k) On each of the Initial Closing Date and Additional Closing Date, if any,
there shall be duly tendered to the Underwriter the appropriate number of
Securities.
(l) No order suspending the sale of the Securities in any jurisdiction
designated by the Underwriter pursuant to subsection (e) of Section 4 hereof
shall have been issued on either the Initial Closing Date or the Additional
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or threatened.
(m) On or before the Initial Closing Date, there shall have been delivered to
the Underwriter all of the Lock-up Agreements, in form and substance
satisfactory to Underwriter's Counsel.
If any condition to the Underwriter's obligations hereunder to be fulfilled
prior to or at the Initial Closing Date or the relevant Additional Closing Date,
as the case may be, is not so fulfilled, the Underwriter may terminate this
Agreement or, if the Underwriter so elects, it may waive any such conditions
which have not been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company, agrees to indemnify and hold harmless the Underwriter (for
purposes of this Section 7, "Underwriter" shall include the officers, directors,
partners, employees, agents and counsel of the Underwriter), and each person, if
any, who controls the Underwriter ("controlling person") within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, from and against any
and all losses, claims, damages, expenses or liabilities, joint or several (and
actions, proceedings, investigations, inquiries, and suits in respect thereof),
whatsoever (including but not limited to any and all costs and expenses
whatsoever reasonably incurred in investigating, preparing or defending against
such action, proceeding, investigation, inquiry or suit, commenced or
threatened, or any claim whatsoever), as such are incurred, to which the
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise or under the
laws of foreign countries, arising out of or based upon (A) any untrue statement
or alleged untrue statement of a material fact contained (i) in the Registration
Statement or the Prospectus (as from time to time amended and supplemented);
(ii) in any post-effective amendment or amendments or any new registration
statement and prospectus in which is included securities of the Company issued
or issuable upon exercise of the Securities; or (iii) in any application or
other document or written communication (in this Section 7 collectively called
"application") executed by the Company or based upon written information
furnished by the Company filed, delivered or used in any jurisdiction in order
to qualify the Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Amex or any other
securities exchange, (B) the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of the Prospectus, in the light of the
circumstances under which they were made), or (C) any breach of any
representation, warranty, covenant or agreement of the Company contained herein
or in any certificate by or on behalf of the Company or any of its officers
delivered pursuant hereto unless, in the case of clause (A) or (B) above, such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to the Underwriter expressly
for use in the Registration Statement or the Prospectus, or any amendment
thereof or supplement thereto, or in any application, as the case may be. The
Company and the Underwriter agree that the information included the [second] and
[sixth] paragraphs under the heading ["Underwriting"] in the Prospectus and the
[fifth] paragraph on the front cover of the Prospectus constitute the only
information furnished by the Underwriter or on their behalf for inclusion in the
Registration or the Prospectus.
The indemnity agreement in this subsection (a) shall be in addition to any
liability which the Company may have at common law or otherwise.
(b) The Underwriter agrees to indemnify and hold harmless the Company, each of
its directors, officers employees, agents and counsel, and each other person, if
any, who controls the Company within the meaning of the Act, to the same extent
as the foregoing indemnity from the Company to the Underwriter but only with
respect to statements or omissions, if any, made in the Registration Statement
or Prospectus or any amendment thereof or supplement thereto or in any
application made in reliance upon, and in strict conformity with, written
information furnished to the Company with respect to the Underwriter by the
Underwriter expressly for use in the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any such application, provided
that such written information or omissions only pertain to disclosures in the
Registration Statement or Prospectus directly relating to the transactions
effected by the Underwriter in connection with this Offering. The Company
acknowledges that the statements with respect to the public offering of the
Securities set forth under the heading "|_|" and the stabilization legend in the
Prospectus have been furnished by the Underwriter expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriter for inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in addition to any
liability which the Underwriter may have at common law or otherwise.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, suit or proceeding, such indemnified
party shall, if a claim in respect thereof is to be made against one or more
indemnifying parties under this Section 7, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action, investigation,
inquiry, suit or proceeding is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such case
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action, investigation, inquiry, suit or proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses of one
additional counsel shall be borne by the indemnifying parties. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action, investigation,
inquiry, suit or proceeding or separate but similar or related actions,
investigations, inquiries, suits or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances. Anything in this Section 7
to the contrary notwithstanding, an indemnifying party shall not be liable for
any settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, investigation, inquiry,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party form all
liability arising out of such claim, action, suit or proceeding and (ii) doe
snot include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in any case in which
(i) an indemnified party makes claim for indemnification pursuant to this
Section 7, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
this Section 7 provide for indemnification in such case, or (ii) contribution
under the Act may be required on the part of any indemnified party, then each
indemnifying party shall contribute to the amount paid as a result of such
losses, claims, damages, expenses or liabilities (or actions, investigations,
inquiries, suits or proceedings in respect thereof) (A) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand, from the offering of the Securities or (B) if the allocation
provided by clause (A) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is the contributing
party and the Underwriter is the indemnified party, the relative benefits
received by the Company on the one hand, and the Underwriter, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) bear to the total
underwriting discounts received by the Underwriter hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, or by the
Underwriter, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions, investigations, inquiries,
suits or proceedings in respect thereof) referred to above in this subdivision
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action, claim, investigation, inquiry, suit or proceeding. Notwithstanding the
provisions of this subdivision (d) the Underwriter shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by the Underwriter hereunder. 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 was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Act, each officer of the
Company who has 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 this subparagraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit, inquiry,
investigation or proceeding against such party in respect to which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have hereunder or otherwise than under this subparagraph (d), or to
the extent that such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto, shall be
deemed to be representations, warranties and agreements at the Initial Closing
Date and the Additional Closing Date, if any, as the case may be, and such
representations, warranties and agreements of the Company and the indemnity
agreements contained in Section 7 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter, the Company, any controlling person of any Underwriter or the
Company, and shall survive termination of this Agreement or the issuance and
delivery of the Securities to the purchasers of the Firm Securities and the
Underwriter.
9. Effective Date.
(a) This Agreement shall become effective at 10:00 a.m., New York City time, on
the next full business day following the date hereof, or at such earlier time
after the Registration Statement becomes effective as the Underwriter, in its
discretion, shall release the Securities for sale to the public; provided,
however, that the provisions of Sections 5, 7 and 10 of this Agreement shall at
all times be effective. For purposes of this Section 9, the Securities to be
purchased hereunder shall be deemed to have been so released upon the earlier of
dispatch by the Underwriter of telegrams to securities dealers releasing such
shares for offering or the release by the Underwriter for publication of the
first newspaper advertisement which is subsequently published relating to the
Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the Underwriter shall have the
right to terminate this Agreement, after the date hereof, (i) if any domestic or
international event or act or occurrence has materially disrupted, or in the
Underwriter's opinion will in the immediate future materially adversely disrupt
the financial markets; or (ii) any material adverse change in the financial
markets shall have occurred; or (iii) if trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Boston Stock Exchange, the
Chicago Board of Trade, the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange, the Commission or any other government authority having
jurisdiction; or (iv) if trading of any of the securities of the Company shall
have been suspended, or any of the securities of the Company shall have been
delisted, on any exchange or in any over-the-counter market; or (v) if the
United States shall have become involved in a war or major hostilities, or if
there shall have been an escalation in an existing war or major hostilities or a
national emergency shall have been declared in the United States; or (vi) if a
banking moratorium has been declared by a state or federal authority; or (vii)
if a moratorium in foreign exchange trading has been declared; or (viii) if the
Company shall have sustained a loss material or substantial to the Company by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall have been insured, will,
in the Underwriter's opinion, make it inadvisable to proceed with the delivery
of the Securities; or (viii) if there shall have occurred any outbreak or
escalation of hostilities or any calamity or crisis or there shall have been
such a material adverse change in the conditions or prospects of the Company, or
such material adverse change in the general market, political or economic
conditions, in the United States or elsewhere as in the Underwriter's judgment
would make it inadvisable to proceed with the offering, sale and/or delivery of
the Securities.
(b) If this Agreement is terminated by the Underwriter in accordance with the
provisions of Section 10(a) the Company shall promptly reimburse and indemnify
the Underwriter for all of its actual out-of-pocket expenses, including the fees
and disbursements of counsel for the Underwriter (less amounts previously paid
pursuant to Section 5(c) above). Notwithstanding any contrary provision
contained in this Agreement, if this Agreement shall not be carried out within
the time specified herein, or any extension thereof granted to the Underwriter,
by reason of any failure on the part of the Company to perform any undertaking
or satisfy any condition of this Agreement by it to be performed or satisfied
(including, without limitation, pursuant to Section 6 or Section 12) then, the
Company shall promptly reimburse and indemnify the Underwriter for all of their
actual out-of-pocket expenses, including the fees and disbursements of counsel
for the Underwriter (less amounts previously paid pursuant to Section 5(c)
above). In addition, the Company shall remain liable for all Blue Sky counsel
fees and expenses and filing fees. Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any termination of this
Agreement (including, without limitation, pursuant to Sections 6, 10 and 12
hereof), and whether or not this Agreement is otherwise carried out, the
provisions of Section 5 and Section 7 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
11. Default by the Company. If the Company shall fail at the Closing Date or at
any Additional Closing Date, as applicable, to sell and deliver the number of
Securities which it is obligated to sell hereunder on such date, then this
Agreement shall terminate without any liability on the part of any
non-defaulting party other than pursuant to Section 5, Section 7 and Section 10
hereof. No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect of such default.
12. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed to the
Underwriter at 00 Xxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: [_______]
, with a copy to Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxxxx X. Xxxxxx, Esq. Notices to the Company shall
be directed to the Company at Xxxxxxx Xxxxxx, Xxxxxxxx 0, Xxxxxxxxxxx, Xxx
Xxxxxx 00000, Attention: [________], with a copy to Xxxxxx X. Xxxxxxx, Esq.
00-00 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxx X.
Xxxxxxx, Esq.
13. Parties. This Agreement shall inure solely to the benefit of and shall be
binding upon, the Underwriter, the Company and the controlling persons,
directors and officers referred to in Section 7 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained. No
purchaser of Securities from the Underwriter shall be deemed to be a successor
by reason merely of such purchase.
14. Construction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW OR CONFLICT OF LAWS PRINCIPLES.
15. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of which taken together
shall be deemed to be one and the same instrument.
16. Entire Agreement; Amendments. This Agreement and the Underwriter's Warrant
Agreement constitute the entire agreement of the parties hereto and supersede
all prior written or oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may not be amended except
in a writing, signed by the Underwriter and the Company.
If the foregoing correctly sets forth the understanding between the Underwriter
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
XXXXXX MOTORCYCLE COMPANY, LTD.
By:
Name:
Title:
Confirmed and accepted as of
the date first above written.
XXXXX, XXXXXXX & CO., INC.
By:
Name:
Title:
American Stock Transfer & Trust Company
