3,000,000 SHARES OF COMMON STOCK
AND
4,000,000 WARRANTS
XXXXXXXXXXX.XXX, INC.
UNDERWRITING AGREEMENT
New York, New York
_____________, 2001
Xxxxx & Company, Inc.
As Representative of the
Several Underwriters listed
on Schedule A hereto
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
xXxxxxxxxxx.xxx, Inc., a Nevada corporation (the "Company") confirms
its agreement with Xxxxx & Company, Inc. ("Xxxxx") and each of the several
underwriters named in Schedule A hereto (collectively, the "Underwriters", which
term shall also include any underwriter substituted as hereinafter provided in
Section 11) for whom Xxxxx is acting as representative (in such capacity, Xxxxx
shall hereinafter be referred to as "you" or the "Representative"), with respect
to the sale by the Company of 2,333,333 shares of its common stock ("Common
Stock") and 4,000,000 Common Stock purchase warrants ("Warrants"), each to
purchase one share of Common Stock and the sale by certain Stockholders listed
in Schedule B hereto ("Selling Stockholders") severally an aggregate of 666,667
outstanding shares of Common Stock ("Stockholder Shares") and the purchase by
the Underwriters, acting severally and not jointly, of such Common Stock and
Warrants. The Common Stock and Warrants will be offered for sale to the public
as units ("Units"), each Unit consisting of three shares of Common Stock and
four Warrants. The shares of Common Stock and Warrants comprising the Units will
be separately tradable two hundred and seventy (270) days after issuance, unless
earlier released by you. The 1,700,000 Units and the Common Stock and Warrants
underlying the Units are hereinafter referred to as the "Firm Securities." Each
Redeemable Warrant is exercisable commencing on ____________ months after the
date of the Prospectus until ______________ (ten years after the date of the
Prospectus), at an initial exercise price of $_______ per share.
Upon the Representative's request, as provided in Section 2(c) of this
Agreement, the Company shall also sell to the Underwriters up to an additional
150,000 Units consisting of 450,000 shares of Common Stock and 600,000 Warrants
for the purpose of covering over-allotments, if any (the "Option Securities").
The Company also proposes to issue and sell warrants to the Representative (the
"Representative's Warrants") pursuant to the Representative's Warrant Agreement
(the "Representative's Warrant Agreement") for the purchase of an additional
170,000 Units. The shares of Common Stock and Warrants issuable upon exercise of
the Representative's Warrants are hereinafter referred to as the
"Representative's Securities." The Firm Securities, the Option Securities, the
Representative's Warrants and the Representative's Securities (collectively,
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
Representative as of the date hereof, and as of the Closing Date (hereinafter
defined) and the Option Closing Date (hereinafter defined), if any, as follows:
(i) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an amendment or
amendments thereto, on Form SB-2 (No. 333-_______), for the registration of the
Securities under the Securities Act of 1933, as amended (the "Act"), which
registration statement and amendment or 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 Representative and will not, file any other
amendment thereto to which the Representative 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 Representative 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
Underwriters by or on behalf of the Underwriters 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 Closing Date and each Option Closing Date, if any,
and during such longer period as the Prospectus may be required to be delivered
in connection with sales by the Underwriters 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 Closing Date and Option 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 any Underwriters expressly for use
in the, 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 necessary authorizations, approvals, orders, licenses, including, but not
limited to 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 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 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 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 Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, under "Capitalization" and
"Description of Securities" and will have the adjusted capitalization set forth
therein on the Closing Date and the Option Closing Date, if any, based upon the
assumptions set forth therein, 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 Representative'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.
Upon the issuance and delivery pursuant to the terms hereof of the Securities to
be sold by the Company hereunder, the Underwriters will acquire good and
marketable title to such Securities free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity of
any kind whatsoever.
(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 or development involving a
material prospective 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 and the outstanding debt, the
property, both tangible and intangible, and the business of the Company conform
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. Financial information set forth in
the Prospectus under the headings "Summary Financial Data," "Selected Financial
Data," "Capitalization," and "Management's Discussion and Analysis of Financial
Condition and Results 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, which if determined
adversely to the Company may have a Material Adverse Effect.
(viii) No transfer tax, stamp duty or other similar tax is payable by or on
behalf of the Underwriters in connection with (i) the issuance by the Company of
the Securities, (ii) the purchase by the Underwriters of the Firm Securities and
Option Securities, and the purchase by the Representative of the
Representative's Warrants from the Company, (iii) the consummation by the
Company of any of its obligations under this Agreement or the Representative's
Warrant Agreement, or (iv) resales of the Firm Securities and the Option
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.
(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 circumstances that
may give rise to the same), or involving the properties or business of, the
Company which (i) questions the validity of the capital stock of the Company,
this Agreement or the Representative's Warrant Agreement or of any action taken
or to be taken by the Company pursuant to or in connection with this Agreement
or the Representative's Warrant 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 reasonably be expected to have 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 the
Representative's Warrant Agreement and to consummate the transactions provided
for in such agreements; and this Agreement and the Representative's Warrant
Agreement have each been duly and properly authorized, executed and delivered by
the Company. Each of this Agreement and the Representative's Warrant 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 or the Representative's
Warrant 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 Firm Securities and the Option Securities pursuant to the
Prospectus and the Registration Statement, the issuance of the Representative's
Warrants, the performance of this Agreement and the Representative's Warrant
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 Firm
Securities and the Option Securities, or the Representative's Warrants, 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 Underwriters' purchase
and distribution of the Firm Securities and the Option Securities, and the
Representative'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) 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
(long or short term) or liabilities or material adverse change in or affecting
the business, condition (financial or otherwise), earnings, management,
properties, assets, results of operations, stockholders' equity or prospects of
the Company.
(xv) 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.
(xvi) 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.
(xvii) 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."
(xviii) 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.
(xix) 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.
(xx) 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.
(xxi) 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.
(xxii) Xxxxxxxxx Xxxxx Xxxxxxx LLP ("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.
(xxiii) 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, Liviakis Financial Communications, Inc. and Thomson Kernaghan &
Co., Ltd., as agent [?] 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 Representative 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 Representative except pursuant to options and warrants issued and
outstanding on the effective date of the Registration Statement, and except that
the Company may conduct a secondary offering of its securities in an amount not
less than thirty million dollars ($30,000,000) if the Representative is given
the opportunity to participate in the secondary offering. 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.
(xxiv) 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 Underwriters'
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
(xxv) The Common Stock and Redeemable Warrants have been approved for
quotation on the __________________________________.
(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) Except as set forth in the Prospectus, no officer, director or
stockholder of the Company, or any "affiliate" or "associate" (as these terms
are defined in Rule 405 promulgated under the Rules and Regulations) of any of
the foregoing persons or entities has, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by
the Company, or (B) purchases from or sells or furnishes to the Company any
goods or services, or (ii) a beneficial interest in any contract or agreement to
which the Company is a party or by which it may be bound or affected. Except as
set forth in the Prospectus under "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company and any officer, director, or Principal Stockholder (as such term is
defined in the Prospectus) of the Company or any partner, affiliate or associate
of any of the foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company, and
delivered to the Representative or to Underwriters' Counsel (as defined herein)
shall be deemed a representation and warranty by the Company to the
Representative as to the matters covered thereby.
(xxix) 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.
(xxx) 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.
(xxxii) 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.
(b) Each Selling Stockholder, for such Selling Stockholder only and not for
any other Selling Stockholder, represents and warrants to, and agrees with, each
Underwriter that:
(i) Such Selling Stockholder has full right, power and authority to enter
into the Power of Attorney and the Custody Agreement in the forms heretofore
furnished to you (the "Power of Attorney and the Custody Agreement") and to
enter into this Agreement, and on the date hereof such Selling Stockholder has
and, at the time of delivery of the Stockholder Shares to the Underwriters
hereunder, such Selling Stockholder will have full right, power and authority to
sell and deliver the Stockholder Shares to be sold by such Selling Stockholder
to the Underwriters, and at the date hereof such Selling Stockholder is, and at
the time of delivery of the Stockholder Shares to the Underwriters such Selling
Stockholder will be, the lawful owner of and has and will have marketable title
to the Stockholder Shares to be sold by such Selling Stockholder free and clear
of any claims, liens, encumbrances or security interests.
(ii) The performance of this Agreement, the Power of Attorney and the
Custody Agreement, and the consummation of the transactions herein and therein
contemplated, will not conflict with or result in a breach of, or default under,
any agreement, indenture or other instrument to which such Selling Stockholder
is a party or by which such Selling Stockholder is bound, or any law, rule,
administrative regulation or court decree. This Agreement, the Power of Attorney
and the Custody Agreement have been validly authorized, executed and delivered
by such Selling Stockholder and each constitutes a legal, valid and binding
obligation of such Selling Stockholder enforceable against such Selling
Stockholder in accordance with its terms.
(iii) When the Registration Statement became effective and at all times
subsequent thereto, the Registration Statement, any post-effective amendment
thereto and the Effective Prospectuses and Final Prospectuses as amended and
supplemented, did not and will not contain any untrue statement of a material
fact regarding such Selling Stockholder or omit to state a material fact
regarding such Selling Stockholder required to be stated therein or necessary in
order to make the statements therein not misleading, and such Selling
Stockholder is, and shall be, unaware of any untrue statement of a material fact
in such documents or the omission from such documents of any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(iv) Such Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or that might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
(v) Certificates in negotiable form representing all of the Firm Shares to
be sold by such Selling Stockholder have been placed in custody under the Power
of Attorney and the Custody Agreement duly executed and delivered by such
Selling Stockholder to and appointing ______, as custodian (the "Custodian"),
with authority to deliver and receive payment for the Firm Shares and Option
Shares to be sold by such Selling Stockholder hereunder, and appointing
__________ and _________________ or either of them, as such Selling
Stockholders' attorney-in-fact (the "Attorney-in-Fact") with authority to
execute and deliver this Agreement and any other documents necessary or
desirable in connection with the transactions contemplated hereby on behalf of
such Selling Stockholder, and otherwise to act on behalf of such Selling
Stockholder and take all actions that may be necessary or desirable in
connection with the transactions contemplated by this Agreement, the Power of
Attorney and the Custody Agreement.
(vi) The Firm Shares represented by the certificates held in custody for
such Selling Stockholder under the Power of Attorney and the Custody Agreement
are subject to the interests of the Underwriters hereunder, and the arrangements
made by such Selling Stockholder for such custody, as well as the appointment by
such Selling Stockholder of the Attorney-in-Fact, are, to that extent,
irrevocable. Each Selling Stockholder specifically agrees that the obligations
of the Selling Stockholders hereunder shall not be terminated by operation of
law, whether by the death or incapacity of any individual Selling Stockholder or
by the occurrence of any other event. If any Selling Stockholder should die or
become incapacitated, or if any other similar event should occur before the
delivery of the Firm Shares hereunder, certificates representing such Shares
shall be delivered by or on behalf of such Selling Stockholder in accordance
with the terms and conditions of this Agreement and of the Power of Attorney and
the Custody Agreement, and the actions taken by the Attorney-in-Fact pursuant to
the Power of Attorney and the Custody Agreement shall be as valid as if such
death, incapacity or other event had not occurred, whether or not the Custodian
or the Attorney-in-Fact shall have received notice of such death, incapacity or
other event.
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES AND REPRESENTATIVE'S
WARRANTS.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company and each Selling Stockholder agrees to sell to each
Underwriter, and each Underwriter agrees severally and not jointly to purchase
from the Company and each Selling Stockholder at a price of $____ per share of
Common Stock and $___________ per Redeemable Warrant, that number of Firm
Securities (rounded up or down, as determined by the Representative in its
discretion, in order to avoid fractions) obtained by multiplying 2,333,333
shares of Common Stock and 4,000,000 Warrants in the case of the Company and
666,667 shares of Common Stock, in the case of a Selling Stockholder, in each
case by a fraction the numerator of which is the number of shares of Common
Stock and Redeemable Warrants set forth opposite the name of such Underwriter in
Schedule A hereto and the denominator of which is the total number of shares of
Common Stock and Redeemable Warrants, determined separately.
(b) Certificates in negotiable form for the Common Stock to be sold by the
Selling Stockholders have been placed in custody, for delivery under this
Agreement, under Custody Agreements made with ______________________, as
custodian ("Custodian"). Each such Selling Stockholder agrees that the shares
represented by the certificates held in custody for such Selling Stockholder
under such Custody Agreements are subject to the interests of the Underwriters
hereunder, that the arrangements made by such Selling Stockholder for such
custody are to that extent irrevocable, and that the obligations of such Selling
Stockholder hereunder shall not be terminated by operation of law, whether by
the death of any such individual Selling Stockholder or the occurrence of any
other event, or in the case of a trust, by the death of any trustee or trustees
or the termination of such trust. If any such individual Selling Stockholder or
any such trustee or trustees should die, or if any other such event should
occur, or if any of such trusts should terminate, before the delivery of the
Common Stock hereunder, certificates for such Common Stock shall be delivered by
the Custodian in accordance with the terms and conditions of this Agreement as
if such death or other event or termination had not occurred, regardless of
whether or not the Custodian shall have received notice of such death or other
event or termination.
(c) In addition, on the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters to purchase
all or any part of an additional 150,000 Units (450,000 shares of Common Stock
and 600,000 Warrants) at a price of $___ per Unit. The option granted hereby
will expire 45 days after (i) the date the Registration Statement becomes
effective, if the Company has elected not to rely on Rule 430A under the Rules
and Regulations, or (ii) the date of this Agreement if the Company has elected
to rely upon Rule 430A under the Rules and Regulations, and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Securities upon notice by the Representative to the
Company setting forth the number of Option Securities as to which Representative
is then exercising the option and the time and date of payment and delivery for
any such Option Securities. Any such time and date of delivery (an "Option
Closing Date") shall be determined by the Representative, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Date, as hereinafter defined, unless otherwise agreed
upon by the Representative and the Company. Nothing herein contained shall
obligate the Underwriters to make any over-allotments. No Option Securities
shall be delivered unless the Firm Securities shall be simultaneously delivered
or shall theretofore have been delivered as herein provided.
(d) The Company and the Custodian will deliver the Firm Securities to the
Representative in the forms described below for the accounts of the
Underwriters, against payment of the purchase price in Federal (same day) funds
by official bank check or checks or wire transfer to an account at a bank
acceptable to the Representative drawn to the order of the Company, in the case
of the Firm Securities to be sold by the Company and to the Custodian, in the
case of the Firm Securities to be sold by the Selling Stockholders, at the
office Xxxxx & Company, Inc., 000 Xxxxxxx Xxxxxx, xxx Xxxx, XX at 9:30 AM, New
York time, on _________, 2001, or at such other time not later than seven full
business days thereafter as you and the Company determine, such time being
herein referred to as the "Closing Date". In addition, in the event that any or
all of the Option Securities are purchased by the Underwriters, payment of the
purchase price for, and delivery of certificates for, such Option Securities
shall be made at the above-mentioned office of the Representative or at such
other place as shall be agreed upon by the Representative and the Company on
each Option Closing Date as specified in the notice from the Representative to
the Company. Delivery of the certificates for the Firm Securities and the Option
Securities, if any, shall be made to the Underwriters against payment by the
Underwriters of the purchase price for the Firm Securities and the Option
Securities, if any, to the order of the Company and the Selling Stockholders for
the Firm Securities of the Company and the Option Securities, if any, by New
York Clearing House funds. Certificates for the Firm Securities and the Option
Securities, if any, shall be in definitive, fully registered form, shall bear no
restrictive legends and shall be in such denominations and registered in such
names as the Representative may request in writing at least two (2) business
days prior to the Closing Date or the relevant Option Closing Date, as the case
may be. The certificates for the Firm Securities and the Option Securities, if
any, shall be made available to the Representative at such office or such other
place as the Representative may designate for inspection, checking and packaging
no later than 9:30 a.m. on the last business day prior to Closing Date or the
relevant Option Closing Date, as the case may be.
(e) On the Closing Date, the Company shall issue and sell the
Representative's Warrants to the Representative at a purchase price in the
aggregate of $50.00, such warrants shall entitle the holders thereof to purchase
up to 170,000 Units consisting of 510,000 shares of Common Stock and 680,000
Warrants. The Representative's Warrants shall be exercisable for a period of
four years commencing one year from the effective date of the Registration
Statement at a price equaling one hundred twenty percent (120%) of the initial
public offering price of the Units. The Representative's Warrant Agreement and
form of Warrant Certificate shall be substantially in the form filed as Exhibit
1.2 to the Registration Statement. Payment for the Representative's Warrants
shall be made on the Closing Date.
3. PUBLIC OFFERING OF THE SHARES. As soon after the Registration Statement
becomes effective as the Representative deems advisable, the Underwriters 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 Representative 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 Representative, in its discretion deems advisable. The Underwriters may
enter into one of more agreements as the Underwriters, in each of their sole
discretion, deem 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 AND SELLING STOCKHOLDERS. The
Company and Selling Stockholders covenant and agree with each of the
Underwriters 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 Underwriters of which the Representative
shall not previously have been advised and furnished with a copy, or to which
the Representative 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 Representative 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 use its best
efforts to obtain prompt the withdrawal of the order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representative) 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 Representative, 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 Representative 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
Representative 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 Representative 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
Representative or Schifino and Xxxxxxxxx, P.A. ("Underwriters' Counsel"), shall
object.
(e) The Company shall endeavor in good faith, in cooperation with the
Representative, 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 Representative 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 Representative 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
Underwriters' 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 Representative 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
Underwriters' Counsel, and the Company will furnish to the Representative copies
of such amendment or supplement as soon as available and in such quantities as
the Representative 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 Representative, 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 five years after the date hereof, 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 Representative:
(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;
(ii) 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;
(iii) as soon as they are available, copies of all reports (financial or
other) mailed to stockholders;
(iv) as soon as they are available, copies of all reports and financial
statements furnished to or filed with the Commission, the NASD or any securities
exchange;
(v) 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
(vi) any additional information of a public nature concerning the Company
(and any future subsidiary) or its businesses which the Representative may
request.
(vii) During such five-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.
(i) 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 Representative or on Representative's
order, without charge, at such place as the Representative 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 Representative may request.
(k) On or before the effective date of the Registration Statement, the
Company shall provide the Representative with true copies of duly executed,
legally binding and enforceable agreements pursuant to which, for a period of
six (6) months from the effective date of the Registration Statement, the
officers and directors of the Company and the Selling Stockholders, agree that
it or he or she will not directly or indirectly, issue, offer to sell, 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
Representative and the Company (the "Lock-up Agreements"). During the thirteen
(13) month period commencing with the effective date of the Registration
Statement, the Company shall not, without the prior written consent of the
Representative, sell, contract or offer to sell, issue, transfer, assign,
pledge, hypothecate, distribute, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any options, rights or warrants with
respect to any shares of Common Stock, except that the Company may conduct a
secondary offering of its securities in an amount of not less than thirty
million dollars ($30,000,000) if the Representative is given the opportunity to
participate in the secondary offering. On or before the 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 and Selling
Stockholders, nor any of their respective affiliates (within the meaning of the
Rules and Regulations) will take, directly or indirectly, any action designed
to, or which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any securities of the Company.
(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 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 furnish to the Representative as early as practicable
prior to each of the date hereof, the Closing Date and each Option 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(k) hereof.
(p) The Company shall cause the Common Stock and the Redeemable Warrants to
be quoted on ____________ and for a period of five (5) years from the date
hereof, use its best efforts to maintain the _______________ quotation of the
Common Stock and the Redeemable Warrants to the extent outstanding.
(q) For a period of five (5) years from the Closing Date, the Company shall
furnish to the Representative at the Representative's request and at the
Company's sole expense, (i) weekly consolidated transfer sheets relating to the
Common Stock and the Redeemable Warrants (ii) the list of holders of all of the
Company's securities and (iii) a Blue Sky "Trading Survey" for secondary sales
of the Company's securities prepared by counsel to the Company.
(r) Until the completion of the distribution of the Firm Securities and the
Option Securities, the Company shall not without the prior written consent of
the Representative and Underwriters' 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.
(s) 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 Representative'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 Representative's Securities.
(t) For a period of one (1) year after the effective date of the
Registration Statement, the Representative 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 Representative 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.
(u) Each Selling Stockholder agrees to deliver to you on or prior to the
First Closing Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(v) Each Selling Stockholder agrees, for a period of six (6) months after
the date hereof, that such Selling Stockholder will not, without the prior
written consent of the Representative, offer, sell, contract to sell, pledge,
hypothecate, grant any option to purchase or otherwise dispose of, (or enter
into any transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or any affiliate
of the Company or any person in privity with the Company or any affiliate of the
Company) directly or indirectly, any additional Securities of the Company or
Securities convertible into or exchangeable or exercisable for any Securities
(including, without limitation, securities of the Company which may be deemed to
be beneficially owned by such Selling Stockholder in accordance with the rules
and regulations of the Securities and Exchange Commission and securities which
may be issued upon exercise of a stock option or warrant), or publicly disclose
the intention to make any such offer, sale, pledge, hypothecation, grant or
disposal.
(w) Each Selling Stockholder will advise you promptly, and if requested by
you, will confirm such advice in writing, of any change in condition (financial
or other), business, properties or results of operations of the Company or of
any change in information relating to such Selling Stockholder or the Company or
any new information relating to the Company or relating to any matter stated in
the Prospectus or any amendment or supplement thereto that comes to the
attention of such Selling Stockholder that suggests that any statement made in
the Registration Statement or the Prospectus (as then amended or supplemented,
if amended or supplemented) is or may be untrue in any material respect or that
the Registration Statement or Prospectus (as then amended or supplemented, if
amended or supplemented) omits or may omit to state a material fact or a fact
necessary to be stated therein on order to make the statements therein not
misleading in any material respect, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented, if amended or supplemented) in
order to comply with the Act or any other law.
5. PAYMENT OF EXPENSES.
(a) The Company hereby agrees to pay on each of the Closing Date and the
Option Closing Date (to the extent not paid at the Closing Date) all expenses
and fees (other than fees of Underwriters' Counsel, except as provided in (iv)
below) incident to the performance of the obligations of the Company under this
Agreement and the Representative's Warrant 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 Agreement Among
Underwriters, 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
Underwriters and such dealers as the Underwriters may request, in quantities as
hereinabove stated, (iii) the printing, engraving, issuance and delivery of the
Securities including, but not limited to, (x) the purchase by the Underwriters
of the Firm Securities and the Option Securities and the purchase by the
Representative of the Representative's Warrants from the Company, (y) the
consummation by the Company of any of its obligations under this Agreement and
the Representative's Warrant Agreement, and (z) resale of the Firm Securities
and the Option Securities by the Underwriters 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 $15,000 if the Securities are listed on a national
securities exchange or $30,000 if the Securities are listed on the Nasdaq Small
Cap Market or traded on the Bulletin Board, (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
Representative'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 Nasdaq or any other exchange.
(b) If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 6 or Section 11, (i) the Company shall reimburse and
indemnify the Representative for all of its actual out-of-pocket expenses,
including the fees and disbursements of Underwriters' 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 Representative
on the Closing Date by certified or bank cashier's check or, at the election of
the Representative, by deduction from the proceeds of the offering contemplated
herein a non-accountable expense allowance equal to three percent (3.0%) of the
gross proceeds received by the Company from the sale of the Firm Securities,
$50,000 of which has been paid to date. In the event the Representative elects
to exercise the over-allotment option described in Section 2(b) hereof, the
Company agrees to pay to the Representative on the Option Closing Date (by
certified or bank cashier's check or, at the Representative's election, by
deduction from the proceeds of the Option Securities) a non-accountable expense
allowance equal to three percent (3.0%) of the gross proceeds received by the
Company from the sale of the Option Securities.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters 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 Closing Date and each Option Closing Date, if any, with respect to the
Company as if it had been made on and as of the Closing Date or each Option
Closing Date, as the case may be; the accuracy on and as of the Closing Date or
Option 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 Closing Date and each Option Closing Date, if any, of its
covenants and obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
on the date of this Agreement or such later date and time as shall be consented
to in writing by the Representative, and, at Closing Date and each Option
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
Underwriters' Counsel. If the Company has elected to rely upon Rule 430A of the
Rules and Regulations, the price of the Shares 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 the Closing Date the Company shall have provided evidence satisfactory
to the Representative 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 Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representative's opinion, is material, or omits to state a
fact which, in the Representative'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 Representative's opinion, is material, or omits to state a
fact which, in the Representative'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 Closing Date, the Representative shall have received
from Underwriters' Counsel, such opinion or opinions with respect to such
matters as the Representative may request and Underwriters' Counsel shall have
received such papers and information as they request to enable them to pass upon
such matters.
(d) At Closing Date, the Underwriter shall have received the favorable
opinion of Johnson, Blakely, Pope, Bokor, Xxxxxx & Xxxxx, P.A. ("Xxxxxxx
Xxxxxxx"), counsel to the Company, dated the Closing Date, addressed to the
Underwriters and in form and substance satisfactory to Underwriters' 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 and (B) 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,;
(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 "Capitalization" and "Description of Securities," and the
Company, to the best knowledge of Counsel, 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 Representative's Warrant Agreement and as described in the Prospectus. The
Securities, and all other securities issued or issuable by the Company conform
in all material 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; 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 Firm
Securities, the Option Securities, the Representative's Warrants and the
Representative's Securities to be sold by the Company hereunder and under the
Representative's Warrant Agreement 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 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 by the Company of the Firm
Securities, the Option Securities, the Representative's Warrants and the
Representative's Securities has been duly and validly taken; and the
certificates representing the Firm Securities, the Option Securities and the
Representative's Warrants are in due and proper form. The Representative's
Warrants constitute valid and binding obligations of the Company to issue and
sell, upon exercise thereof and payment therefor, the number and type of
securities of the Company called for thereby. The Securities have been duly
authorized for issuance and sale to the Underwriters 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, pledge, 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 Underwriters in
connection with (A) the issuance by the Company of the Firm Securities, the
Option Securities, and the Representatives' Warrants (B) the purchase by the
Underwriters of the Firm Securities, the Option Securities and the
Representative's Warrants, respectively, from the Company, (C) the consummation
by the Company of any of its obligations under this Agreement or the
Representative's Warrant Agreement, or (D) resales of the Firm Securities and
the Option Securities in connection with the distribution contemplated hereby;
(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 discussed 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, 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 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 the Representative's Warrant Agreement and to
consummate the transactions provided for herein and therein; and each of this
Agreement and the Representative's Warrant Agreement has been duly authorized,
executed and delivered by the Company. Each of this Agreement and the
Representative's Warrant 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 and the Representative's
Warrant 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, and to such
Counsel's best knowledge (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, 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 Shares pursuant to the Prospectus, the issuance
of the Representative's Warrants, the performance of this Agreement and the
Representative's Warrant Agreement, and the transactions contemplated hereby and
thereby except as have been obtained;
(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 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, permit, judgment, decree, order,
statute, rule or regulation;
(x) the statements in the Prospectus under "BUSINESS," "MANAGEMENT,"
"PRINCIPAL STOCKHOLDERS," "CERTAIN TRANSACTIONS," "DESCRIPTION OF SECURITIES,"
"RESALES BY SELLING STOCKHOLDERS" and "SHARES ELIGIBLE FOR FUTURE SALE" 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) the Firm Securities and Option Securities have been accepted for
quotation on ____________________________;
(xii) 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;
(xiii) To the best of counsel's knowledge, 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 that may affect the Underwriters' compensation, as determined by the
NASD;
(xiv) 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
(xv) 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 Underwriters' Counsel) of
other counsel acceptable to Underwriters' 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 Underwriters' Counsel if requested. The opinion shall also
state that the Underwriters' 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 Underwriters and
they are justified in relying thereon.
At each Option Closing Date, if any, the Underwriters shall have received
the favorable opinion of Xxxxxxx Xxxxxxx, counsel to the Company, dated the
Option Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, confirming as of Option Closing Date the
statements made by Xxxxxxx Xxxxxxx in its opinion delivered on the Closing Date.
(e) The Representative shall have received an executed copy of the opinion
contemplated by the Power of Attorney executed and delivered by or on behalf of
each Selling Stockholder party to the Custody Agreement to the effect that:
(i) each Selling Stockholder has the legal capacity power and authority to
sell the Common Stock to be sold by it;
(ii) each such Selling Stockholder is the sole registered owner of the
Common Stock to be sold by it; and upon payment and transfer as contemplated by
the Underwriting Agreement, the Underwriters will acquire a security entitlement
with respect to such Common Stock and no action based on an adverse claim
(within the meaning of the New York UCC) to such security entitlement may be
asserted against the Underwriters (this opinion may be based on the following
assumptions: (A) The Depository Trust Company ("DTC") is a "clearing
corporation" and, consequently, a "securities intermediary," as defined in
Section 8-102 of the Uniform Commercial Code as in effect in the State of New
York (the "New York UCC"), (B) such Offered Securities are registered at the
closing in the name of DTC or its nominee, and DTC or another person on behalf
of DTC maintains possession of certificates representing such Offered
Securities, (C) DTC indicates by book entry that security entitlements with
respect to such Offered Securities have been credited at the closing to the
Underwriters' securities accounts at DTC and (D) the Underwriters acquire such
security entitlements without notice of any adverse claim);
(iii) no consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required to be obtained or made by
such Selling Stockholder for the consummation of the transactions contemplated
by this Agreement or the Custody Agreement in connection with the sale of the
Common Stock sold by such Selling Stockholder, except such as have been obtained
and made under the Act and such as may be required under state securities laws;
(iv) the execution, delivery and performance of this Agreement and the
Custody Agreement and the consummation of the transaction therein and herein
contemplated will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any rule, regulation
or order of any governmental agency or body or any court having jurisdiction
over such Selling Stockholder or any of its properties or any agreement or
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of the properties of such Selling
Stockholder is subject, or the charter or by-laws of such Selling Stockholder
which is a corporation;
(v) the Power of Attorney and related Custody Agreement with respect to
each Selling Stockholder has been duly authorized, executed and delivered by
such Selling Stockholder and constitute valid and legally binding obligations of
each such Selling Stockholder enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
(vi) this Agreement has been duly authorized, executed and delivered by
such Selling Stockholder.
(f) On or prior to each of the Closing Date and the Option
Closing Date, if any, Underwriters' Counsel shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of the Company, or herein contained.
(g) On or prior to each of the Closing Date and each Option Closing Date,
if any, (i) there shall have been no material adverse change nor development
involving a prospective 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 (long or short term) 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 could reasonably be expected to have 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.
(h) At each of the Closing Date and each Option Closing Date, if any, the
Underwriters 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 Closing Date or Option 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 Closing Date or the Option 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 Closing Date or Option 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 the Option Closing Date, 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 (long or short-term) 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 (h) are to such documents as amended and
supplemented at the date of such certificate.
(i) By the Closing Date, the Underwriters will have received clearance from
the NASD as to the amount of compensation allowable or payable to the
Underwriters, as described in the Registration Statement.
(j) At the time this Agreement is executed, the Underwriters shall have
received from Xxxxxxxxx a letter, dated such date, addressed to the Underwriters
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 Underwriters and Underwriters' Counsel;
(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
Underwriters 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 October 31, 2000
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 October 31, 2000 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 August 1, 1999 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 Underwriters may reasonably request.
(k) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from Xxxxxxxxx a letter, dated as of the
Closing Date or the Option 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 Closing Date or the Option 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 Underwriters 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).
(l) The Company shall have delivered to the Representative 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.
(m) On each of the Closing Date and Option Closing Date, if any, there
shall be duly tendered to the Representative the appropriate number of
Securities.
(n) No order suspending the sale of the Securities in any jurisdiction
designated by the Representative pursuant to subsection (e) of Section 4 hereof
shall have been issued on either the Closing Date or the Option Closing Date, if
any, and no proceedings for that purpose shall have been instituted or
threatened.
(o) On or before the Closing Date, the Company shall have executed and
delivered to the Representative, (i) the Representative's Warrant Agreement
substantially in the form filed as Exhibit 1.2 to the Registration Statement in
final form and substance satisfactory to the Representative, and (ii) the
Representative's Warrants in such denominations and to such designees as shall
have been provided to the Company.
(p) On or before the Closing Date, the Common Stock and the Redeemable
Warrants shall have been duly approved for quotation on _____________________,
subject to official notice of issuance.
(q) On or before the Closing Date, there shall have been delivered to the
Representative all of the Lock-up Agreements, in form and substance satisfactory
to Representative's Counsel.
If any condition to the Representative's obligations hereunder to be
fulfilled prior to or at the Closing Date or the relevant Option Closing Date,
as the case may be, is not so fulfilled, the Representative may terminate this
Agreement or, if the Representative 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 and the Selling Stockholders agree to indemnify and hold
harmless each of the Underwriters (for purposes of this Section 7,
"Underwriters" shall include the officers, directors, partners, employees,
agents and counsel of the Underwriters, including specifically each person who
may be substituted for an Underwriter as provided in Section 11 hereof), 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, 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,
or any 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 any Underwriter by or on
behalf of such Underwriters expressly for use in the Registration Statement or
any Prospectus, or any amendment thereof or supplement thereto, or in any
application, as the case may be. Notwithstanding the foregoing, the liability of
each Selling Stockholder under the foregoing indemnity agreement shall be
limited to an amount equal to the initial public offering price of the Common
Stock sold by such Selling Stockholder, less the underwriting discount as set
forth on the cover page of 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) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company and each selling Stockholder, each of
their directors, officers employees, agents and counsel, and each other person,
if any, who controls the Company or each Selling Stockholder within the meaning
of the Act, to the same extent as the foregoing indemnity from the Company and
Selling Stockholders 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 any Underwriter by such 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 Underwriters 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
"Underwriting" has been furnished by the Underwriter expressly for use therein
and constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in addition to any
liability which the Underwriters 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) does
not 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 and Selling Stockholders
are the contributing party and the Underwriters are the indemnified party, the
relative benefits received by the Company and Selling Stockholders, on the one
hand, and the Underwriters, 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) received by the Company and the Selling Stockholders bear to
the total underwriting discounts received by the Underwriters 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, the Selling Stockholders or by the Underwriters, 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 Underwriters shall not be required to contribute any
amount in excess of the underwriting discount applicable to the Securities
purchased by the Underwriters 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 Underwriter's obligations in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations and not
joint. The liability of each Selling Stockholder for contribution hereunder
shall be limited to an aggregate amount equal to the initial public offering
price of the Securities sold by such Selling Stockholder, less the underwriting
discount, as set forth on the front cover page of the Prospectus. 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 Closing Date and
the Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company, the Selling Stockholders and the
Underwriters 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, the Selling Stockholders
and any controlling person of any Underwriter, or the Company, or Selling
Stockholder and shall survive termination of this Agreement or the issuance and
delivery of the Securities to the Underwriters.
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
Representative, 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 Representative of telegrams to securities
dealers releasing such shares for offering or the release by the Representative
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 Representative 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 adversely
disrupted, or in the Representative's opinion will in the immediate future
materially adversely disrupt the financial markets; or (ii) 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 (iii) if trading of any of the securities of the Company shall have been
suspended; or (iv) 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 (v) if a banking moratorium has been declared by a state or
federal authority; or (vi) if a moratorium in foreign exchange trading has been
declared; or (vii) 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 Representative'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 such material adverse change in the general market, political or
economic conditions, in the United States or elsewhere as in the
Representative'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 Representative in accordance
with the provisions of Section 10(a) the Company shall promptly reimburse and
indemnify the Representative for all of its actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriters (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 Representative, by reason of any failure on the part of the Company or
Selling Stockholder 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. SUBSTITUTION OF THE UNDERWRITERS. If one or more of the
Underwriters shall fail otherwise than for a reason sufficient to justify the
termination of this Agreement (under the provisions of Section 6, Section 10 or
Section 12 hereof) to purchase the Securities which it or they are obligated to
purchase on such date under this Agreement (the "Defaulted Securities"), the
Representative shall have the right, within 24 hours thereafter, to make
arrangement for one or more of the non-defaulting Underwriters, or any other
Underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the total
number of Firm Securities to be purchased on such date, the non-defaulting
Underwriters shall be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total number
of Firm Securities, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default which does not result in a termination of
this Agreement, the Representative shall have the right to postpone the Closing
Date for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements.
12. DEFAULT BY THE COMPANY OR SELLING STOCKHOLDERS. If the Company or
Selling Stockholders shall fail at the Closing Date or at any Option 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
(or, if such default shall occur with respect to any Option Securities to be
purchased on an Option Closing Date, the Underwriters may at their option, by
notice from the Underwriters or the Representative to the Company, terminate the
Underwriters' obligation to purchase Option Securities from the Company on such
date) 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 or any Selling Stockholder from
liability, if any, in respect of such default.
13. 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 Representative shall be directed to the
Representative at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx
Xxxxx, with a copy to Schifino and Xxxxxxxxx, P.A., One Tampa City Center, 000
Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000, Attention: Xxxxxxx X.
Xxxxxxxx, Esq. Notices to the Company shall be directed to the Company at 0000
Xxx. 00 X., Xxxxx 000, Xxxx Xxxxxx, Xxxxxxx 00000, Attention: Xxxx Xxxxxx,
President, with a copy to Johnson, Blakely, Pope, Bokor, Xxxxxx & Xxxxx, P.A.,
000 Xxxxxxxx Xxxxxx, XX Xxx 0000, Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxxxxx
Xxxxxx, Esq.
14. PARTIES. This Agreement shall inure solely to the benefit of and shall
be binding upon, the Underwriters, the Company, the Selling Stockholders 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 Underwriters shall be
deemed to be a successor by reason merely of such purchase.
15. 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.
16. 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.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Representative'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 writing, signed by the Representative and the Company.
If the foregoing correctly sets forth the understanding between the
Underwriters 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,
XXXXXXXXXXX.XXX, INC.
By:
-------------------------
Name:
------------------------
Title:
-----------------------
XXXXXX XXXXXXXXX & CO., LTD
By:
------------------------
Name:
------------------------
Title:
------------------------
Confirmed and accepted as of the date first above written.
XXXXX & COMPANY, INC.
-----------------------------
-----------------------------
-----------------------------
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SCHEDULE A
No. of Shares of Common Stock No. of Warrants
Underwriter to be Purchased to be Purchased
----------- --------------- ---------------
Xxxxx & Co., Inc.
--------------------- -------------------
Total 3,000,000 Shares 4,000,000 Warrants
SCHEDULE B
Selling Stockholder No. of Shares of
Common Stock
to be Sold
----------------------- ----------
Liviakis Financial Communications, Inc.
Xxxxxx Xxxxxxxxx & Co., Ltd
-----------------------
Total 666,667 Shares
