EXHIBIT 1.1
1,550,000 Shares of Common Stock
CENTENNIAL SPECIALTY FOODS CORPORATION
UNDERWRITING AGREEMENT
_____________, 2003
X.X. Xxxxxx & Company, L.L.C.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Centennial Specialty Foods Corporation, a Delaware corporation (the
"Company"), hereby confirms its agreement with you (sometimes hereinafter
referred to as the "Representative") and with the other members of the
underwriting group (the "Underwriters") named on Schedule 1 hereto as follows:
1. Introductory. Subject to the terms and conditions herein contained, the
Company proposes to sell to the several Underwriters an aggregate of 1,550,000
shares (the "Firm Shares") of the Company's common stock, par value $0.0001 per
share (the "Common Stock"). The Company also proposes to sell to the several
Underwriters not more than 232,500 additional shares of Common Stock (15% of the
number of shares constituting the Firm Shares) if requested by the
Representative as provided in Section 3 of this Agreement. Any and all shares of
Common Stock to be purchased by the Underwriters pursuant to such option are
referred to herein as the "Additional Shares." The Firm Shares and any
Additional Shares are collectively referred to herein as the "Shares."
2. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, each of the Underwriters that:
a. The Company has filed with the United States Securities and
Exchange Commission (the "Commission") a registration statement, and
may have filed one or more amendments thereto, on Form SB-2
(Registration No. 333-_____________), including in such registration
statement and each such amendment, the information called
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for by Part I, audited consolidated financial statements of Xxxxxx
Xxxxx Foods Inc. ("Xxxxxx Xxxxx") for the last two years or such other
period as is appropriate, the information called for by Part II, the
undertakings required by Form SB-2, the required signatures, the
consents of experts required by Form SB-2, the exhibits, a related
preliminary prospectus (a "Preliminary Prospectus") and any other
information or documents which are required for the registration of the
Shares, the warrants referred to in Section 5(p) (the "Representative's
Warrants") and the shares referred to in Section 5(p) purchasable upon
exercise of the Representative's Warrants (the "Representative's
Warrant Shares"), under the Securities Act of 1933, as amended (the
"Act"). As used in this Agreement, the term "Registration Statement"
means such registration statement, including incorporated documents,
all exhibits and consolidated financial statements and schedules
thereto, as amended, when it becomes effective, and shall include the
information with respect to the Shares, the Representative's Warrants,
and the Representative's Warrant Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the General Rules and Regulations
promulgated under the Act (the "Regulations"), which information is
deemed to be included therein when it becomes effective as provided by
Rule 430A; the term "Preliminary Prospectus" means each prospectus
included in the Registration Statement, or any amendments thereto,
before it becomes effective under the Act and any prospectus filed by
the Company with the consent of the Representative pursuant to Rule
424(a) of the Regulations; and the term "Prospectus" means the final
prospectus included as part of the Registration Statement, except that
if the prospectus relating to the securities covered by the
Registration Statement in the form first filed on behalf of the Company
with the Commission pursuant to Rule 424(b) of the Regulations shall
differ from such final prospectus, the term "Prospectus" shall mean the
prospectus as filed pursuant to Rule 424(b) from and after the date on
which it shall have first been used.
b. When the Registration Statement becomes effective, and at
all times subsequent thereto, to and including the Closing Date (as
defined in Section 3) and each Additional Closing Date (as defined in
Section 3), and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Underwriters
or any dealers, and during such longer period until any post-effective
amendment thereto
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shall become effective, the Registration Statement (and any
post-effective amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment or supplement to the Registration Statement or the
Prospectus) will contain all statements which are required to be stated
therein in accordance with the Act and the Regulations, will comply
with the Act and the Regulations, and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and no event will have occurred which should
have been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not then been set forth in such
an amendment or supplement; and no Preliminary Prospectus, as of the
date filed with the Commission, 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 not
misleading; except that no representation or warranty is made in this
Section 2(b) with respect to statements or omissions made in reliance
upon and in conformity with written information furnished to the
Company as stated in Section 8(b) with respect to the Underwriters by
or on behalf of the Underwriters expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto.
c. Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction has issued an order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement, or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement, or
suspending the registration or qualification of the Shares, the
Representative's Warrants, and the Representative's Warrant Shares, nor
has any of such authorities instituted or threatened to institute any
proceedings with respect to a Stop Order.
d. Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract,
agreement, instrument, lease, or license required to be filed as an
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exhibit to the Registration Statement has been filed with the
Commission as an exhibit to or has been incorporated as an exhibit by
reference into the Registration Statement.
e. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
with full power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other
tribunals, to own, lease, license, and use its properties and assets
and to carry on the business in the manner described in the Prospectus.
Following the acquisition of Xxxxxx Xxxxx by the Company which shall
occur simultaneously with the purchase and sale of the Firm Shares on
the Closing Date as provided in Section 3, the sole subsidiary of the
Company will be Xxxxxx Xxxxx ("Subsidiary"). The Subsidiary is a
corporation duly organized and validly existing in good standing under
the laws of the State of Colorado, with full corporate power and
authority to own, lease, and operate its properties and to conduct its
business as described in the Prospectus. The subsidiary has a
subsidiary, Xxxxxx Canning Company, which is duly organized and validly
existing in good standing under the laws of the State of Colorado.
Unless the context indicates otherwise, Subsidiary shall mean, for all
purposes of this Agreement, Xxxxxx Xxxxx and its subsidiary Xxxxxx
Canning Company. The Company and the Subsidiary are duly qualified to
do business and are in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets or the
conduct of its business makes such qualifications necessary.
f. The authorized capital stock of the Company consists of
47,000,000 shares of Common Stock, of which 3,500,000 shares of Common
Stock are issued and outstanding, and 2,000,000 shares of $0.0001 par
value preferred stock, none of which are issued or outstanding. No more
than 150,000 shares of the Company's common stock are issuable upon the
exercise of outstanding derivative securities. Each outstanding share
of Common Stock is validly authorized, validly issued, fully paid, and
nonassessable, without any personal liability attaching to the
ownership thereof, and has not been issued and is not owned or held in
violation of any preemptive rights of stockholders. There is no
commitment, plan, or arrangement to issue, and no outstanding option,
warrant, or other right calling for the issuance of, any share of
capital stock of the Company or any security or other instrument which
by its terms is convertible into, exercisable for, or exchangeable for
capital stock of the Company, except as set forth above, and as may be
properly described in the Prospectus.
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g. The consolidated financial statements of the Subsidiary
included in the Registration Statement and the Prospectus fairly
present with respect to the Subsidiary the consolidated financial
position, the results of operations, and the other information
purported to be shown therein at the respective dates and for the
respective periods to which they apply. The consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles, except to the extent that certain footnote
disclosures regarding any stub period may have been omitted in
accordance with the applicable rules of the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
consistently applied throughout the periods involved, are correct and
complete, and are in accordance with the books and records of the
Subsidiary. The accountants whose reports on the audited consolidated
financial statements are filed with the Commission as a part of the
Registration Statement are, and during the periods covered by their
reports included in the Registration Statement and the Prospectus were,
independent certified public accountants with respect to the Company
and the Subsidiary within the meaning of the Act and the Regulations.
The unaudited Pro Forma Consolidated Combined Financial Statements
included in the Prospectus have been prepared with the Act and the
Regulations. No other financial statements are required by Form SB-2 or
otherwise to be included in the Registration Statement or the
Prospectus. There has at no time been a material adverse change in the
consolidated financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company or
the Subsidiary from the latest information set forth in the
Registration Statement or the Prospectus, except as may be properly
described in the Prospectus.
h. There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending, or, to
the knowledge of the Company, threatened or proposed with respect to
the Company or the Subsidiary or their operations, businesses,
properties, or assets, except as may be properly described in the
Prospectus or such as individually or in the aggregate do not now have
and will not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company or the
Subsidiary. Neither the Company nor the Subsidiary is in violation of,
or in default with respect to, any law, rule, regulation, order,
judgment, or decree except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in
the future have a material adverse effect upon the operations,
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business, properties, or assets of the Company or the Subsidiary, nor
is the Company or the Subsidiary required to take any action in order
to avoid any such violation or default.
i. The Company and the Subsidiary have good and marketable
title in fee simple to all real properties and good title to all other
properties and assets which the Prospectus indicates are owned by them,
free and clear of all liens, security interests, pledges, charges,
encumbrances, and mortgages except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in
the future have a material adverse effect upon the operations,
business, properties, or assets of the Company or the Subsidiary. No
real property owned, leased, licensed, or used by the Company or the
Subsidiary lies in an area which is, or to the knowledge of the Company
will be, subject to zoning, use, or building code restrictions which
would prohibit, and no state of facts relating to the actions or
inaction of another person or entity or his or its ownership, leasing,
licensing, or use of any real or personal property exists or will, to
the knowledge of the Company, exist which would prevent, the continued
effective ownership, leasing, licensing, or use of such real property
in the business of the Company or the Subsidiary, as presently
conducted or as the Prospectus indicates they contemplate conducting,
except as may be properly described in the Prospectus or such as in the
aggregate do not now have and will not in the future have a material
adverse effect upon the operations, business, properties, or assets of
the Company or the Subsidiary.
j. Neither the Company nor the Subsidiary is, nor to the
knowledge of the Company is any other party, now or is expected by the
Company to be in material violation or breach of, or in material
default with respect to complying with, any material provision of any
contract, agreement, instrument, lease, license, arrangement, or
understanding which is material to the Company or the Subsidiary, and
each such contract, agreement, instrument, lease, license, arrangement,
and understanding is in full force and is the legal, valid, and binding
obligation of the parties thereto and is enforceable as to them in
accordance with its terms. The Company and the Subsidiary enjoys
peaceful and undisturbed possession under all leases and licenses under
which they are operating. Neither the Company nor the Subsidiary is a
party to or bound by any contract, agreement, instrument, lease,
license, arrangement, or understanding, or subject
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to any charter or other restriction, which has had or which the Company
based on its current knowledge believes may in the future have a
material adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or future
prospects of the Company or the Subsidiary. Neither the Company nor the
Subsidiary is in violation or breach of, or in default with respect to,
any term of its Certificate of Incorporation (or other charter
document) or bylaws (or other operating agreement).
k. All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises,
recipes, formulas, technology, know-how and other intangible properties
and assets (all of the foregoing being herein called "Intangibles")
that the Company or the Subsidiary owns or has pending, or under which
they are licensed, are in good standing and currently uncontested.
Except as otherwise disclosed in the Registration Statement, the
Intangibles are owned by the Company or the Subsidiary, free and clear
of all liens, security interests, pledges, and encumbrances. The
Company or the Subsidiary has registered their trademarks, "Centennial
Specialty Foods," the Centennial logo and the "Xxxxxx" and "Xxxxx"
brand names on the Principal Register of the United States Patent and
Trademark Office. There is no right under any Intangible necessary to
the business of the Company or the Subsidiary, as presently conducted
or as the Prospectus indicates they contemplate conducting (except as
may be so designated in the Prospectus). To the best knowledge of the
Company, neither the Company nor the Subsidiary has infringed and is
not infringing any Intangibles of others and the Company nor the
Subsidiary has not received notice of infringement with respect to
asserted Intangibles of others. To the knowledge of the Company, there
is no infringement by others of Intangibles of the Company or the
Subsidiary. To the knowledge of the Company, there is no Intangible of
others which has had or may in the future have a materially adverse
effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company or
the Subsidiary.
l. Neither the Company nor the Subsidiary, nor any director,
officer, agent, employee, or other person or acting with authority on
behalf of the Company or the Subsidiary has, directly or indirectly:
used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political
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activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended by the International
Anti-Bribery Act of 1998; or made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment. Neither the Company nor
the Subsidiary has accepted any material advertising allowances or
marketing allowances from suppliers to the Company or to the Subsidiary
and, to the extent any advertising allowance has been accepted, the
Company or the Subsidiary has provided proper documentation to the
supplier with respect to advertising as to which the advertising
allowance has been granted.
m. The Company has all requisite power and authority to
execute and deliver, and to perform thereunder each of this Agreement
and the Representative's Warrants. All necessary corporate proceedings
of the Company have been duly taken to authorize the execution and
delivery, and performance thereunder by the Company of this Agreement
and the Representative's Warrants. This Agreement has been duly
authorized, executed, and delivered by the Company, is a legal, valid,
and binding obligation of the Company, and is enforceable as to the
Company in accordance with its terms. The Representative's Warrants
have been duly authorized by the Company and, when executed and
delivered by the Company, will be a legal, valid, and binding
obligation of the Company, and will be enforceable against the Company
in accordance with their terms. No consent, authorization, approval,
order, license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local, or other governmental authority
or any court or other tribunal is required by the Company for the
execution and delivery, or performance thereunder, by the Company of
this Agreement or the Representative's Warrants except filings under
the Act which have been or will be made before the Closing Date and
such consents consisting only of consents under "blue sky" or
securities laws which are required in connection with the transactions
contemplated by this Agreement and which have been obtained at or prior
to the date of this Agreement. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement, or understanding to
which the Company or the Subsidiary is a party, or to which any of
their properties or assets are subject, is required for the execution
or
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delivery, or performance thereunder of this Agreement or the
Representative's Warrants; and the execution and delivery, and
performance thereunder of this Agreement and the Representative's
Warrants will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under any such
contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the
Certificate of Incorporation (or other charter document) or bylaws of
the Company or the Subsidiary (or other operating agreement), or
violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the Company or the
Subsidiary or to which any of their operations, businesses, properties,
or assets are subject.
n. The Shares, the Representative's Warrants and the
Representative's Warrant Shares are validly authorized and reserved for
issuance. The Shares, when issued and delivered in accordance with this
Agreement, and the Representative's Warrant Shares, when issued and
delivered upon exercise of the Representative's Warrants and upon
payment of the exercise price therefor, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to
the ownership thereof, and will not be issued in violation of any
preemptive rights of stockholders, and the Representative will receive
good title to the Shares purchased, the Representative will receive
good title to the Representative's Warrants purchased and any purchaser
of the Representative's Warrant Shares will upon payment of the
exercise price of the Representative's Warrants receive good title
thereto, all such title free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements,
and voting trusts.
o. The Shares, the Representative's Warrants and the
Representative's Warrant Shares conform to all statements relating
thereto contained in the Registration Statement and the Prospectus.
p. Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as may otherwise be properly described in the Prospectus, neither the
Company nor the Subsidiary has (i) issued any
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securities or incurred any liability or obligation, primary or
contingent, for borrowed money, (ii) entered into any transaction not
in the ordinary course of business, or (iii) declared or paid any
dividend on its capital stock.
q. Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take,
directly or indirectly, prior to the termination of the distribution of
securities contemplated by this Agreement, any action designed to
stabilize or manipulate the price of any security of the Company, or
which has caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate
the sale or resale of the Shares.
r. The Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by
this Agreement.
s. The Company has obtained from each stockholder who owns
shares of Common Stock or derivative securities convertible into shares
of the Common Stock, his, her or its enforceable written agreement
that for a period of 12 months from the Effective Date, he, she or it
will not, without the Representative's prior written consent, which
shall not be unreasonably withheld, offer, sell, contract to sell,
pledge, hypothecate, or grant any option to purchase, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or any
security or other instrument convertible into or exchangeable for
shares of Common Stock (except that, subject to compliance with
applicable securities laws, any such stockholder may transfer his, her
or its stock in a transaction specified in such agreement, provided
that any such transferee shall agree, as a condition to such transfer,
to be bound by the restrictions set forth in the agreement, and further
provided that the transferor, except in the case of the transferor's
death, shall continue to be deemed the beneficial owner of such shares
in accordance with Regulation 13d-(3) of the Exchange Act).
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t. Except as otherwise provided in the Registration Statement,
no person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement.
u. The Company is eligible to use Form SB-2 for registration
of the Shares, the Representative's Warrants and the Representative's
Warrant Shares.
v. No unregistered securities of the Company, of an affiliate
of the Company or of a predecessor of the Company have been sold within
three years prior to the date hereof, except as described in the
Registration Statement.
w. Except as set forth in the Registration Statement, there is
and at the Closing Date there will be no action, suit or proceeding
before any court, arbitration tribunal or governmental agency,
authority or body pending or, to the knowledge of the Company,
threatened which might result in judgments against the Company or the
Subsidiary not adequately covered by insurance or which collectively
might result in any material adverse change in the condition (financial
or otherwise), the business or the prospects of the Company or the
Subsidiary or would materially affect the properties or assets of the
Company or the Subsidiary.
x. The Company and the Subsidiary have filed all federal and
state tax returns which are required to be filed by them and have paid
all taxes shown on such returns and all assessments received by them to
the extent such taxes have become due. All taxes with respect to which
the Company or the Subsidiary is obligated have been paid or adequate
accruals have been set up to cover any such unpaid taxes.
y. Except as set forth in the Registration Statement:
i. The Company and the Subsidiary have obtained all
permits, licenses and other authorizations which are required
under the Environmental Laws for the ownership, use and
operation of each location operated or leased by the Company
or the Subsidiary (the "Property"), all such permits, licenses
and authorizations, if any, obtained are in effect, no appeal
nor any other action is pending to revoke any such permit,
license or authorization, and the Company and
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the Subsidiary are in material compliance with all material
terms and conditions of all such permits, licenses and
authorizations, if any, obtained by the Company or the
Subsidiary.
ii. The Company, the Subsidiary and the Property are
in compliance with all material provisions of Environmental
Laws including, without limitation, all restrictions,
conditions, standards, limitations, prohibitions,
requirements, obligations, schedules and timetables contained
in the Environmental Laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved
thereunder.
iii. Neither the Company nor the Subsidiary has, and
to the knowledge of the Company, no other person has,
released, placed, stored, buried or dumped any Hazardous
Substances, Oils, Pollutants or Contaminants or any other
wastes produced by, or resulting from, any business,
commercial, or industrial activities, operations, or
processes, on, beneath, or adjacent to the Property or any
property formerly owned, operated or leased by the Company or
the Subsidiary except for inventories of such substances to be
used, and wastes generated therefrom, in the ordinary course
of business of the Company or the Subsidiary (which
inventories and wastes, if any, were and are stored or
disposed of materially in accordance with applicable laws and
regulations and in a manner such that there has been no
material release of any such substances into the environment).
iv. There exists no written or tangible report,
synopsis or summary of any asbestos, toxic waste or Hazardous
Substances, Oils, Pollutants or Contaminants investigation
made with respect to all or any portion of the assets of the
Company or the Subsidiary (whether or not prepared by experts
and whether or not in the possession of the executive officers
of the Company).
v. Definitions: As used herein:
(1) Environmental Laws means all federal,
state and local laws, regulations, rules and
ordinances relating to pollution or protection of the
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environment, including, without limitation, laws
relating to Releases or threatened Releases of
Hazardous Substances, Oils, Pollutants or
Contaminants into the indoor or outdoor environment
(including, without limitation, ambient air, surface
water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous
Substances, Oils, Pollutants or Contaminants.
(2) Hazardous Substances, Oils, Pollutants
or Contaminants means all substances defined as such
in the National Oil and Hazardous Substances
Pollutant Contingency Plan, 40 C.F.R. 300.6, or
defined as such under any Environmental Law.
(3) Release means any release, spill,
emission, discharge, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environmental
(including, without limitation, ambient air, surface
water, groundwater, and surface or subsurface strata)
or into or out of any property, including the
movement of Hazardous Substances, Oils, Pollutants or
Contaminants through or in the air, soil, surface
water, groundwater or any property.
z. No authorization, approval, consent or order of, or filing
with, any Federal, state or local governmental body, authority, self
regulatory authority, agency or official (collectively, the
"Governmental Authorities") is necessary in connection with the
issuance and sale of the Shares and the consummation of the
transactions contemplated hereby, except such as may be required by the
NASD or have been obtained under the applicable laws, rules and
regulations maintained and enforced by the Governmental Authorities in
their respective jurisdictions or under the Act, state securities or
Blue Sky laws or regulations.
aa. Any pro forma financial or other information and related
notes included in the Registration Statement, each Preliminary
Prospectus and the Prospectus comply in all material respects with the
requirements of the Act and the rules and regulations of the
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Commission thereunder and present fairly the pro forma information
shown, as of the dates and for the periods covered by such pro forma
information. Such pro forma information, including any related notes
and schedules, has been prepared on a basis consistent with the
historical financial statements and other historical information, as
applicable, included in the Registration Statement, the Preliminary
Prospectus and the Prospectus, except for the pro forma adjustments
specified therein, and give effect to assumptions made on a reasonable
basis to give effect to historical and, if applicable, proposed
transactions described in the Registration Statement, each Preliminary
Prospectus and the Prospectus.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
3. Purchase, Sale, and Delivery of the Shares. On the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters, severally and not jointly, and the
Underwriters, severally and not jointly, agree to purchase from the Company the
number of Firm Shares set forth opposite the Underwriters' names in Schedule 1
hereto.
The purchase price per Firm Share to be paid by the Underwriters shall
be $______. The initial public offering price of the Shares shall be $_____.
Payment for the Firm Shares by the Underwriters shall be made by wire
transfer or by certified or official bank check in clearing house funds, payable
to the order of the Company at the offices of X.X. Xxxxxx & Company, L.L.C.,
0000 XXX Xxxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, or at such other
place as the Representative shall determine and advise the Company by at least
two full days' notice in writing, upon delivery of the Shares to the
Representative. Such delivery and payment shall be made at 10:00 a.m., Mountain
Time, on the third business day following the time of the initial public
offering, as defined in Section 10(a) hereof, unless the Commission declares the
Registration Statement effective after 4:30 p.m. Eastern time, in which event
delivery and payment shall be made on the fourth business day following the time
of the initial public offering. The time and date of such delivery and payment
are herein called the "Closing Date." Delivery of the Shares may be made, at the
option of the Representative, through the facilities of The Depository Trust
Company.
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In addition, the Company hereby grants to the Representative the option
to purchase all or a portion of the Additional Shares as may be necessary to
cover over-allotments, at the same purchase price per Additional Share as the
price per Firm Share provided for in this Section 3. The Representative may
purchase Additional Shares when exercising such option, in its sole discretion.
This option may be exercised by the Representative on the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, at any time
and from time to time on or before the 45th day following the Effective Date of
the Registration Statement, by written notice by the Representative to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the time and date, as determined
by the Representative, when such Additional Shares are to be delivered (each
such time and date are herein called an "Additional Closing Date"); provided,
however, that no Additional Closing Date shall be earlier than the Closing Date
nor earlier than the third business day after the date on which the notice of
the exercise of the option shall have been given nor later than the eighth
business day after the date on which such notice shall have been given; and
further provided, that not more than two Additional Closings shall be noticed
and held following the initial purchase of Additional Shares by the
Representative.
Payment for the Additional Shares shall be made by wire transfer or by
certified or official bank check in clearing house funds payable to the order of
the Company at the offices of X.X. Xxxxxx & Company, L.L.C., 0000 XXX Xxxxxxx,
Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, or at such other place as you
shall determine and advise the Company by at least two full days' notice in
writing, upon delivery of certificates representing the Additional Shares to
you.
Certificates for the Shares purchased shall be registered in such name
or names and in such authorized denominations as you may request in writing at
least two full business days prior to the Closing Date or Additional Closing
Date, as applicable. The Company shall permit you to examine and package such
certificates for delivery at least one full business day prior to any such
closing with respect thereto.
15
If for any reason one or more Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 10 hereof) to purchase and pay for the
number of Firm Shares agreed to be purchased by such Underwriter, the Company
shall immediately give notice thereof to the Representative, and the
non-defaulting Underwriters shall have the right within 24 hours after the
receipt by the Representative of such notice, to purchase or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon among
the Representative and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, the Firm Shares which such defaulting Underwriter or
Underwriters agreed to purchase. If the non-defaulting Underwriters fail so to
make such arrangements with respect to all such Firm Shares, the number of Firm
Shares which each non-defaulting Underwriter is otherwise obligated to purchase
under the Agreement shall be automatically increased pro rata to absorb the
remaining Firm Shares which the defaulting Underwriter or Underwriters agreed to
purchase; provided, however, that the non-defaulting Underwriters shall not be
obligated to purchase the Firm Shares which the defaulting Underwriter or
Underwriters agreed to purchase in excess of 10% of the total number of Firm
Shares which such non-defaulting Underwriter agreed to purchase hereunder, and
provided further that the non-defaulting Underwriters shall not be obligated to
purchase any Firm Shares which the defaulting Underwriter or Underwriters agreed
to purchase if such additional purchase would cause the Underwriter to be in
violation of the net capital rule of the Commission or other applicable law. If
the total number of Firm Shares which the defaulting Underwriter or Underwriters
agreed to purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company shall have the right, within the 24 hours next
succeeding the 24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to the Representative for the purchase
of such Firm Shares on the terms herein set forth. In any such case, either the
Representative or the Company shall have the right to postpone the Closing for
not more than seven business days after the date originally fixed as the Closing
in order that any necessary changes in the Registration Statement, the
Prospectus or any other documents or arrangements may be made. If neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
24-hour periods stated above for the purchase of all the Firm Shares which the
defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
16
liability on the part of the Company to any non-defaulting Underwriter, except
the Company shall be liable for actual expenses incurred by the Representative
as provided in Section 10 hereof, and without any liability on the part of any
non-defaulting Underwriter to the Company.
Nothing contained herein shall relieve any defaulting Underwriter of
its liability, if any, to the Company or to the remaining non-defaulting
Underwriters for damages occasioned by its default hereunder.
4. Offering. The Underwriters are to make a public offering of the Shares as
soon, on or after the effective date of the Registration Statement, as the
Representative deems it advisable so to do. The Shares are to be initially
offered to the public at the initial public offering price as provided for in
Section 3 (such price being herein called the "public offering price"). After
the initial public offering, you may from time to time increase or decrease the
price of the Shares in your sole discretion, by reason of changes in general
market conditions or otherwise.
5. Covenants of the Company. The Company covenants that it will:
a. Use its best efforts to cause the Registration Statement to
become effective as promptly as possible. If the Registration Statement
has become or becomes effective with a form of Prospectus omitting
certain information pursuant to Rule 430A of the Regulations, or filing
of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus, properly completed, pursuant to Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to you of such timely filing.
b. Notify you immediately, and confirm such notice in writing,
(i) when the Registration Statement and any post-effective amendment
thereto become effective, (ii) of the receipt of any comments from the
Commission or the "blue sky" or securities authority of any
jurisdiction regarding the Registration Statement, any post-effective
amendment thereto, the Prospectus, or any amendment or supplement
thereto, and (iii) of the receipt of any notification with respect to a
Stop Order or the initiation or threatening of any proceeding with
respect to a Stop Order. The Company will use its best efforts to
prevent the issuance of any Stop Order and, if any Stop Order is
issued, to obtain the lifting thereof as promptly as possible.
17
c. During the time when a prospectus relating to the Shares is
required to be delivered hereunder or under the Act or the Regulations,
comply so far as it is able with all requirements imposed upon it by
the Act, as now existing and as hereafter amended, and by the
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Shares and
Representative's Warrant Shares in accordance with the provisions
hereof and the Prospectus. If, at any time when a prospectus relating
to the Shares or Representative's Warrant Shares is required to be
delivered hereunder or under the Act or the Regulations, any event
shall have occurred as a result of which, in the reasonable opinion of
counsel for the Company or counsel for the Representative, the
Registration Statement or the Prospectus, as then amended or
supplemented, contains 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, or if, in the opinion of
either of such counsel, it is necessary at any time to amend or
supplement the Registration Statement or the Prospectus to comply with
the Act or the Regulations, the Company will immediately notify you and
promptly prepare and file with the Commission an appropriate amendment
or supplement (in form and substance satisfactory to you) which will
correct such statement or omission or which will effect such compliance
and will use its best efforts to have any such amendment declared
effective as soon as possible.
d. Deliver without charge to you at locations of your choosing
such number of copies of each Preliminary Prospectus and Prospectus as
you may reasonably request and, as soon as the Registration Statement
or any amendment thereto becomes effective or a supplement is filed,
deliver without charge to you two signed copies of the Registration
Statement or such amendment thereto, as the case may be, including
exhibits, and two copies of any supplement thereto, and deliver without
charge to you such number of copies of the Prospectus, the Registration
Statement, and amendments and supplements thereto, if any, without
exhibits, as you may reasonably request for the purposes contemplated
by the Act.
e. Endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes effective, to
qualify the Shares and Representative's Warrant Shares for offering and
sale under the "blue sky" or securities laws of such
18
jurisdictions as you may designate; provided, however, that no such
qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or
to taxation as a foreign corporation doing business in such
jurisdiction to which it is not then subject. In each jurisdiction
where such qualification shall be effected, the Company will, unless
you agree in writing that such action is not at the time necessary or
advisable, file and make such statements or reports at such times as
are or may be required by the laws of such jurisdiction.
f. Make generally available (within the meaning of Section
11(a) of the Act and the Regulations) to its security holders as soon
as practicable, but not later than 15 months after the date of the
Prospectus, an earnings statement (which need not be certified by
independent certified public accountants unless required by the Act or
the Regulations, but which shall satisfy the provisions of Section
11(a) of the Act and the Regulations) covering a period of at least 12
months beginning after the effective date of the Registration
Statement.
g. For a period of 12 months after the date of the Prospectus,
not, without your prior written consent, offer, issue, sell, contract
to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of the Company's preferred stock or
any shares of Common Stock (or any security or other instrument which
by its terms is convertible into, exercisable for, or exchangeable for
shares of Common Stock) except as provided in Section 3 and except (i)
with the Representative's prior written consent, (ii) in connection
with an acquisition, (iii) upon exercise of the Representative's
Warrants, and (iv) the grant of options and issuance of shares of
Common Stock on exercise thereof to the independent directors of the
Company under the 2003 Non-Employee Directors' Stock Option Plan.
h. For a period of five years after the Effective Date of the
registration statement, furnish you, without charge, the following,
unless and to the extent such information is posted on the Company's
web site or is accessible through the Commission's web site:
19
i. Within 90 days after the end of each fiscal year,
subject to extension for up to an additional 15 days, three
copies of consolidated financial statements certified by
independent certified public accountants, including a balance
sheet, statement of operations, and statement of cash flows of
the Company and its then existing subsidiaries, with
supporting schedules (if applicable), prepared in accordance
with generally accepted accounting principles, at the end of
such fiscal year and for the 12 months then ended;
ii. As soon as practicable after they have been sent
to stockholders of the Company or filed with the Commission,
three copies of each annual and interim financial and other
report or communication sent by the Company to its
stockholders or filed with the Commission;
iii. As soon as practicable, two copies of every
press release and every material news item and article in
respect of the Company or its affairs which was released by
the Company;
iv. Notice of any regular quarterly or special
meeting of the Company's Board of Directors concurrently with
the sending of such notice to the Company's directors;
v. As soon a practicable after filing, copies of all
materials filed with the Commission pursuant to the Exchange
Act if such material is not accessible via the Commission's
website; and
vi. Such additional documents and information with
respect to the Company and its affairs and the affairs of any
of its subsidiaries as you may from time to time reasonably
request.
i. Prior to the Effective Date, and continuing for such period
of time that the Company's Common Stock is publicly traded, designate
and maintain an Audit Committee comprised of members that comply with
the obligations impaired by applicable law and the Company's procedures
and policies, and designate and maintain a Compensation Committee, the
composition of which shall comply with applicable law
20
and the listing standards of the exchange or automated quotation system
on which the Company's shares trade, the members of which shall be
subject to your reasonable approval, which will generally supervise the
financial affairs of the Company and review executive compensation,
respectively.
j. Furnish to you as early as practicable prior to the Closing
Date and any Additional Closing Date, as the case may be, but not less
than two full business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements of the
Company which have been read by the Company's independent certified
public accountants, as stated in their letters to be furnished pursuant
to Section 7(e).
k. File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the
Effective Date of the Registration Statement, unless such filing shall
comply with the Act and the Regulations and unless you shall previously
have been advised of such filing and furnished with a copy thereof, and
you and counsel for the Representative shall have approved such filing
in writing within a reasonable time of receipt thereof.
l. Comply with all periodic reporting and proxy solicitation
requirements which may from time to time be applicable to the Company
as a result of the Company's registration under the Exchange Act on a
registration statement on Form 8-A .
m. Comply with all provisions of all undertakings contained in
the Registration Statement.
n. Prior to the Closing Date or any Additional Closing Date,
as the case may be, issue no press release or other communication,
directly or indirectly, and hold no press conference and grant no
interviews with respect to the Company, the financial condition,
results of operations, business, properties, assets, or liabilities of
the Company, or this offering, without your prior written consent.
21
o. File timely with the Commission, the National Association
of Securities Dealers, Inc. (the "NASD"), and The Nasdaq Stock Market
all reports required to be filed.
p. On or prior to the Closing Date, sell to the Representative
for a total purchase price of $10.00, Representative's Warrants
entitling the Representative or its assigns to purchase 155,000 shares
of Common Stock at a price equal to 120% of the initial public offering
price of the Shares, with the terms of the Representative's Warrants,
including exercise period, anti-dilution provisions, exercise price,
exercise provisions, transferability, and registration rights, to be in
the form filed as an exhibit to the Registration Statement.
q. Until expiration of the Representative's Warrants, keep
reserved a sufficient number of shares of Common Stock for issuance as
Representative's Warrant Shares upon full exercise of the
Representative's Warrants.
r. Upon the Closing Date, engage a financial public relations
firm acceptable to the Representative to assist the Company in
preparing regular announcements and disseminating such information to
the financial community, such engagement of such public relations firm
or another firm reasonably acceptable to the Representative to extend
for four consecutive six month terms; provided the Representative shall
have the right to reasonably approve the public relations firm before
the renewal of any six-month term, which approval shall not be
unreasonably withheld.
s. Adopt procedures for the application of the net proceeds it
receives from the sale of the Shares and apply the net proceeds from
the sale of the Shares substantially in the manner set forth in the
Registration Statement, which does not contemplate repayment of debt to
officers, directors, stockholders, derivative security holders or
affiliates of the Company, unless any deviation from such application
is in accordance with the Registration Statement and occurs only after
approval by the Board of Directors of the Company and then only after
the Board of Directors has obtained the written opinion of recognized
legal counsel experienced in federal and state securities laws as to
the propriety of any such deviation.
22
t. Within the time period which the Prospectus is required to
be delivered under the Act, comply, at its own expense, with all
requirements imposed upon it by the Act, as now or hereafter amended,
by the Rules and Regulations, as from time to time may be enforced, and
by any order of the Commission, so far as necessary to permit the
continuance of sales or dealing in the Shares.
u. At the Closing, deliver to the Representative true and
correct copies of the Certificate of Incorporation of the Company and
all amendments thereto, all such copies to be certified by the
Secretary of the Company; true and correct copies of the bylaws of the
Company and of the minutes of all meetings of the directors and
stockholders of the Company held prior to the Closing which in any way
relate to the subject matter of this Agreement or the Registration
Statement.
v. Use all reasonable efforts to comply or cause to be
complied with the conditions precedent to the several obligations of
the Underwriters in Section 7 hereof.
w. File with the Commission all required information
concerning use of proceeds of the Public Offering in Forms 10-QSB and
10-KSB (or 10-Q and 10-K as required) in accordance with the provisions
of the Exchange Act and to provide a copy of such reports to the
Representative and its counsel if such reports are not accessible on
the Company's web site or on the Commission's web site.
x. Supply to the Representative and the Representative's
counsel at the Company's cost, three leather-bound volumes each
containing material documents (including but not limited to all
documents and appropriate correspondence filed with or received from
the Commission, NASD and Nasdaq and all closing documents) relating to
the offering of the Shares within a reasonable time after the Closing,
not to exceed 120 days.
y. As soon as possible prior to the Effective Date, and as a
condition of the Underwriter's obligations hereunder, (i) have the
Company listed on an accelerated basis in the Daily News Supplement of
Standard and Poor's Corporation Records and maintain such a listing for
not less than 10 years from the Closing Date in Standard &
23
Poor's Standard Corporation Records, if required for blue sky
exemptions or qualifications; (ii) have the Common Stock authorized for
listing on The Nasdaq SmallCap Market as of the Effective Date, on the
Closing Date, on the Additional Closing Date and thereafter for at
least 10 years provided the Company is in compliance with The Nasdaq
SmallCap Market's maintenance requirements; and (iii) have appointed
Corporate Stock Transfer, Inc. in Denver, Colorado, or a firm
acceptable to the Representative as its transfer agent, subject to such
transfer agent providing the competitive pricing.
z. Continue, for a period of at least five years following the
Effective Date of the Registration Statement, to appoint such auditors
as are reasonably acceptable to the Representative, which auditors
shall (i) prepare consolidated financial statements in accordance with
Regulation S-X under the General Rules and Regulations of the Act and
(ii) review (but not audit) the Company's consolidated financial
statements for each of the first three fiscal quarters prior to the
announcement of quarterly financial information, the filing of the
Company's 10-QSB (or 10-Q as required) quarterly report and the mailing
of quarterly financial information to security holders.
aa. For a period of five years after the Effective Date,
distribute an annual report to all stockholders meeting the
requirements of Section 14a-3 of the Exchange Act and setting forth
clearly the financial position of the Company.
bb. Cause its transfer agent to furnish the Representative a
duplicate copy of the daily transfer sheets prepared by the transfer
agent during the six-month period commencing on the Effective Date of
the Registration Statement and instruct the transfer agent to timely
provide, upon the request of the Representative, duplicate copies of
such transfer sheets and/or a duplicate copy of a list of stockholders,
all at the Company's expense, for a period of 4-1/2 years after such
six-month period.
cc. Refrain from filing a Form S-8 registration statement for
a period of 12 months from the Effective Date of the Registration
Statement without the Representative's prior written consent.
24
dd. Afford the Representative the right, but not the
obligation, commencing on the Effective Date and surviving for a period
of five years, to designate an observer to attend meetings of the Board
of Directors. The designee, if any, and the Representative will receive
notice of each meeting of the Board of Directors in accordance with
Delaware law. Any such designee will receive reimbursement for all
reasonable costs and expenses incurred in attending meetings of the
Board of Directors, including but not limited to, food, lodging and
transportation, together with such other cash fee or such cash
compensation as is paid by the Company to the highest compensated
outside member of the Board of Directors. Moreover, to the extent
permitted by law, the Representative and its designee shall be
indemnified for the actions of such designee as an observer to the
Board of Directors and in the event the Company maintains a liability
insurance policy affording coverage for the acts of its officers and/or
directors, to the extent permitted under such policy, each of the
Representative and its designee shall be an insured under such policy.
During the stated five-year period, the Representative's adviser to the
Company's Board of Directors will be (i) invited to attend meetings of
the Company's Board of Directors; (ii) provided with a copy of all
actions by unanimous written consent of the Board of Directors in lieu
of an actual meeting; (iii) furnished with a copy of all public filings
by the Company and Company press releases as released unless and to the
extent such filings and press releases are posted on the Company's web
site or the Commission's web site; (iv) updated by the Company's
management on at least a quarterly basis, regarding the Company's
activities, prospects and financial condition; and (v) advised promptly
of material events to the extent consistent with applicable law. During
the initial two years after the effective date, the Company will hold
meetings of its Board of Directors at intervals of at least quarterly.
Any adviser designated by the Representative, as herein provided, shall
be acceptable to the Company so long as such person is not employed by
or affiliated with a competitor of the Company (it being understood
that affiliation shall be defined as such term is used in the Exchange
Act and shall not encompass trading in the securities of, or ownership
of less than 5% of, common stock in a competitor to the Company), which
acceptance shall not be unreasonably withheld, and such designated
adviser shall make certain representations in writing to the Company
concerning his responsibilities under the federal securities laws
25
with respect to information obtained by such adviser as a result of his
attendance at meetings of the Board of Directors of the Company and as
a result of the receipt by him of other nonpublic information
concerning the Company.
ee. Use Xxxxx of Denver as its financial printer and pay all
statements rendered by Xxxxx in accordance with the letter of intent
between the Company and the Underwriter dated February 20, 2003.
ff. Cause stockholders owning up to a majority of the
Company's shares of Common Stock outstanding prior to the offering to
place in an escrow account an aggregate of 300,000 shares of Common
Stock at or prior to the Effective Date. Such shares of Common Stock
shall be subject to release from escrow upon: (i) the Company achieving
net income exceeding $1.5 million in fiscal year 2004; or (ii) the
Company achieving net income exceeding $4.0 million in fiscal year
2005. In the event the Company fails to meet the criteria set forth
above in fiscal 2004 or fiscal 2005, the escrowed shares of Common
Stock shall be released at the earlier of: (i) seven years from the
Effective Date, or (ii) consummation of a merger, acquisition or
exchange in which the Company is not the surviving entity or in which
the shareholders of the Company own less than 50% of the outstanding
capital stock of the surviving entity following such transaction or the
sale of all or substantially all of the assets of the Company that is
approved by a majority of the holders of the outstanding shares
excluding the shares held in the escrow account.
gg. Comply in all material respects with The Nasdaq SmallCap
Market and Boston Stock Exchange listing criteria and rules of The
Nasdaq SmallCap Market and Boston Stock Exchange, including without
limitation, their corporate governance rules.
hh. Caused all officers, directors and holders of five percent
or more of the Common Stock of the Company to agree in writing not to,
and the Company agrees that it will not, sell, transfer, hypothecate or
convey any capital stock or derivative securities of the Company
through a "Regulation S" transaction for a minimum period of three
years from the Effective Date.
ii. Comply in all material respects with the representations,
warranties and covenants of the Company and the Subsidiary contained
in the Stock Purchase Agreement and Senior Loan Agreement between the
Company and Xxxxx X. Xxxxx and Xxxxx X. Xxxxx.
26
6. Payment of Expenses. The Company hereby agrees to pay all expenses (subject
to the last sentence of this Section 6) in connection with the offering,
including but not limited to (a) the preparation, printing, filing,
distribution, and mailing of the Registration Statement and the Prospectus,
including NASD, SEC, The Nasdaq SmallCap Market and Boston Stock Exchange
filings and/or application fees, and the printing, filing, distribution, and
mailing of this Agreement, any Agreement Among Underwriters, Selected Dealers
Agreement, preliminary and final Blue Sky Memorandums, material to be circulated
to the Underwriters by you and other incidental or related documents, including
the cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus, and any amendments or supplements thereto, supplied and delivered to
the Representative in quantities and locations as this Representative requests,
(b) the issuance, sale, transfer, and delivery of the Firm Shares, Additional
Shares, the Representative's Warrants and the Representative's Warrant Shares,
including, without limitation, any original issue, transfer or other taxes
payable thereon and the costs of preparation, printing and delivery of
certificates representing such securities, as applicable, (c) the qualification
of the Firm Shares, Additional Shares, the Representative's Warrants and the
Representative's Warrant Shares under state or foreign "blue sky" or securities
laws, which qualification shall be undertaken by counsel to the Representative
at the Company's expense, (d) the fees and disbursements of counsel for the
Company and the accountants for the Company, (e) the listing of the Shares on
The Nasdaq SmallCap Market and Boston Stock Exchange, and (f) the
Representative's non-accountable expense allowance equal to 3% of the aggregate
gross proceeds from the sale of the Shares. Prior to or immediately following
the Closing Date, the Company shall bear the costs of tombstone announcements if
requested to do so by the Representative. The Company shall have paid for all
expenses incurred in connection with any road shows.
The Company has previously remitted to the Representative the sum of
$50,000, which sum has been credited as a partial payment in advance of the
non-accountable expense allowance provided for in Section 6(f) above.
7. Conditions of Underwriters' Obligations. The Underwriters' obligation to
purchase and pay for the Firm Shares and Additional Shares, as provided herein,
shall be subject to the continuing accuracy of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to you, as of
27
the date hereof, as of the Closing Date and as of each Additional Closing Date,
to the performance by the Company of its obligations hereunder, and to the
following conditions:
a. The Registration Statement shall have become effective
under the Act, and the Firm shares shall have been registered under
Section 12(b) of the Exchange Act, not later than 5:00 p.m., Mountain
time, on the date of this Agreement or such later date and time as
shall be consented to in writing by you.
b. At the Closing Date and any Additional Closing Date, you
shall have received the favorable opinion of Holland & Xxxx, LLP,
counsel for the Company, dated the date of delivery, addressed to you,
and in form and scope satisfactory to your counsel, to the effect that:
i. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Delaware, with full power and authority to own,
lease, and operate its properties and to conduct its business
as described by the Registration Statement and the Prospectus,
and any amendment or supplement thereto, and counsel has no
knowledge that the Company does not have all necessary
consents, authorizations, approvals, orders, certificates, and
permits of and from, and has not made all declarations and
filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals,
to own, lease, license, and use its properties and assets and
to conduct its business in the manner described in the
Prospectus. The Company is duly qualified to do business and
is in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets
or the conduct of its business makes such qualification
necessary;
ii. The Subsidiary and its subsidiary are
corporations duly organized and validly existing in good
standing under the laws of their respective states or
incorporation or formation, with full corporate power and
authority to own, lease, and operate its properties and to
conduct their business as described in the Registration
Statement and the Prospectus (and any amendment or supplement
thereto); and all the outstanding shares of capital stock of
each have been duly authorized and validly issued, are fully
paid and
28
nonassessable, and are owned by the Company, free and clear of
any perfected security interest, or, to the best knowledge of
such counsel after reasonable inquiry, any other security
interest, lien or other encumbrance;
iii. The authorized capital stock of the Company as
of the date of this Agreement consisted of 47,000,000 shares
of Common Stock, of which 3,500,000 shares of Common Stock are
issued and outstanding, and 2,000,000 shares of Preferred
Stock, none of which are issued and outstanding; 150,000
shares of the Company's capital sock are issuable upon the
exercise of options issued or issuable and there have been no
changes in the authorized and outstanding capital stock or
options of the Company since the date of this Agreement,
except as contemplated by the Registration Statement and the
Prospectus. Each outstanding share of capital stock is validly
authorized, validly issued, fully paid, and nonassessable,
with no personal liability attaching to the ownership thereof,
has not been issued and is not owned or held in violation of
any preemptive right of stockholders. To the knowledge of
counsel, there is no commitment, plan, or arrangement to
issue, and no outstanding option, warrant, or other right
calling for the issuance of, any share of capital stock of the
Company or any security or other instrument which by its terms
is convertible into, exercisable for, or exchangeable for
capital stock of the Company, except as set forth above, and
except as is properly described in the Prospectus. There is
outstanding no security or other instrument which by its terms
is convertible into or exchangeable for capital stock of the
Company, except as described in the Prospectus;
iv. To the knowledge of counsel, there is no
litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending,
threatened, or proposed (or any basis therefor) with respect
to the Company or the Subsidiary or any of their respective
operations, businesses, properties, or assets, except as is
properly described in the Prospectus or such as individually
or in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business,
properties, or assets of the Company or the Subsidiary. To the
knowledge of counsel, neither the Company
29
nor the Subsidiary is in violation of, or in default with
respect to, any law, rule, regulation, order, judgment, or
decree, except as may be properly described in the Prospectus
and does not now have and will not in the future have a
material adverse effect upon the operations, business,
properties, or assets of the Company or the Subsidiary, nor is
the Company or the Subsidiary required to take any action in
order to avoid any such violation or default;
v. Neither the Company, nor the Subsidiary is now or
is expected by the Company to be in violation or breach of, or
in default with respect to, complying with any material
provision of any contract, agreement, instrument, lease,
license, arrangement, or understanding which is material to
the Company or the Subsidiary;
vi. Neither the Company nor the Subsidiary is in
violation or breach of, or in default with respect to, any
term of its Certificate of Incorporation (or other charter
document) or bylaws (or other operating agreement);
vii. The Company has all requisite power and
authority to execute and deliver and to perform under this
Agreement and the Representative's Warrants. All necessary
corporate proceedings of the Company have been taken to
authorize the execution and delivery and performance
thereunder by the Company of this Agreement and the
Representative's Warrants. Each of this Agreement and the
Representative's Warrants have been duly authorized, executed
and delivered by the Company, and is a legal, valid, and
binding obligation of the Company, and (subject to applicable
bankruptcy, insolvency, and other laws affecting the
enforceability of creditors' rights generally) enforceable as
to the Company in accordance with its respective terms. No
consent, authorization, approval, order, license, certificate,
or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any
court or other tribunal is required by the Company for the
execution or delivery, or performance thereunder by the
Company of this Agreement or the Representative's Warrants
(except filings under the Act which have been made prior to
the Closing Date, and
30
consents consisting only of consents under "blue sky" or
securities laws which are required in connection with the
transactions contemplated by this Agreement, and which counsel
has been advised by counsel to the Representative have been
obtained on or prior to the date the Registration Statement
becomes effective under the Act). No consent of any party to
any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company or the
Subsidiary is a party, or to which any of their properties or
assets are subject, is required for the execution or delivery,
or performance thereunder of this Agreement or the
Representative's Warrants; and the execution and delivery and
performance thereunder of this Agreement and the
Representative's Warrants will not violate, result in a breach
of, conflict with, or (with or without the giving of notice or
the passage of time or both) entitle any party to terminate or
call a default under any such contract, agreement, instrument,
lease, license, arrangement, or understanding, or violate or
result in a breach of any term of the Certificate of
Incorporation (or other charter document) or bylaws (or other
operating agreement) of the Company or the Subsidiary, or
violate, result in a breach of, or conflict with any law,
rule, regulation, order, judgment, or decree binding on the
Company or the Subsidiary or to which any of their material
operations, businesses, properties, or assets are subject;
viii. The Shares are, and the Representative's
Warrant Shares will be upon exercise of the Representative's
Warrants in accordance with their terms, validly authorized,
validly issued, fully paid, and nonassessable and are not
issued in violation of any preemptive rights of shareholders,
and the Underwriters will have received good title to the
Shares purchased by them from the Company upon payment
therefor, free and clear of all liens, security interests,
pledges, charges, encumbrances, shareholders' agreements, and
voting trusts. The Representative's Warrant Shares have been
duly and validly reserved for issuance pursuant to the terms
of the Representative's Warrants. The Shares, the
Representative's Warrants and the Representative's Warrant
Shares conform to all statements relating thereto contained in
the Registration Statement or the Prospectus;
31
ix. To the knowledge of counsel, all contracts,
agreements, instruments, leases, and licenses that are
required to be described in the Registration Statement or the
Prospectus have been properly described therein. To the
knowledge of counsel, all contracts, agreements, instruments,
leases, or licenses required to be filed as an exhibit to the
Registration Statement have been filed with the Commission as
an exhibit to or have been incorporated as an exhibit by
reference into the Registration Statement;
x. Insofar as statements in the Prospectus purport to
summarize the status of litigation or the provisions of laws,
rules, regulations, orders, judgments, decrees, contracts,
agreements, instruments, leases, or licenses such statements
have been prepared or reviewed by such counsel and accurately
reflect the status of such litigation and provisions purported
to be summarized, are correct in all material respects; and
the Company and the Subsidiary is in material compliance with
all such provisions to the knowledge of such counsel;
xi. Except as provided in the Registration Statement,
no person or entity has the right to require registration of
shares of common stock or other securities of the Company
because of the filing or effectiveness of the Registration
Statement;
xii. The Registration Statement has become effective
under the Act. No Stop Order has been issued and no
proceedings for that purpose have been instituted or
threatened;
xiii. The Registration Statement and the Prospectus,
and any amendment or supplement thereto, comply as to form in
all material respects with the requirements of the Act and the
Regulations;
xiv. Such counsel has no knowledge that either the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, contains any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading
32
(except that no opinion need be expressed as to the
consolidated financial statements and other financial or
statistical data and schedules which are or should be
contained therein);
xv. Such counsel has no knowledge of any event which
has occurred since the Effective Date which should have been
set forth in an amendment or supplement to the Registration
Statement or the Prospectus that has not been set forth in
such an amendment or supplement;
xvi. To the knowledge of counsel, the Company is not
currently offering any securities for sale except as described
in the Registration Statement;
xvii. Such counsel has no knowledge of any promoters,
affiliates, parents or subsidiaries of the Company except as
are described in the Registration Statement;
xviii. Counsel has no knowledge of any subsidiaries
of the Company except as described in the Registration
Statement;
xix. To the knowledge of counsel, the Company and the
Subsidiary own or possess, free and clear of all liens or
encumbrances and rights thereto or therein by third parties,
the requisite licenses or other rights to use all trademarks,
copyrights, service marks, service names, trade names and
licenses necessary to conduct business (including without
limitation, any such licenses or rights described in the
Registration Statement as being owned or possessed by the
Company or the Subsidiary) (all of which are collectively
referred to herein as the "Intellectual Property"); there is
no actual or, to counsel's knowledge, pending or threatened
claim, proceeding or action by any person pertaining to or
which challenges the exclusive rights of the Company or the
Subsidiary with respect to any of the Company's Intellectual
Property;
xx. The Company is not a party to any agreement
giving rise to any obligation by the Company or any subsidiary
to pay any third-party royalties or fees of any kind
whatsoever with respect to any intellectual property
developed,
33
employed, used or licensed by the Company or the Subsidiary,
other than is disclosed in the Prospectus;
xxi. The Shares have been approved for listing on The
Nasdaq SmallCap Market and the Boston Stock Exchange;
xxii. Such counsel has not been informed that Company
or the Subsidiary are not in compliance with any Environmental
Laws or that the Company is not in full compliance with all
permits, licenses and authorizations relating to Environmental
Laws; and
xxiii. To the knowledge of counsel, the issued and
outstanding shares of Common Stock and all other securities
issued and sold or exchanged by the Company were not required
to be registered under any applicable federal securities laws
and regulations when issued and sold or exchanged and were
issued and sold or exchanged in compliance with applicable
exemptions from registration under federal securities laws.
xxiv. Such counsel has not been informed that the
Company, the Subsidiary and Hoopeston Foods Denver Corp. are
not in compliance with applicable regulations relating to the
manufacture or distribution of food products, including
regulations administered by the U.S. Food and Drug
Administration and the U.S. Department of Agriculture.
In rendering such opinion, counsel for the Company may rely (A) as to
matters involving the application of laws other than the laws of the United
States and the laws of the State of Delaware, to the extent counsel for the
Company deems proper and to the extent specified in such opinion, upon an
opinion or opinions (in form and substance satisfactory to counsel for the
Representative) of other counsel, acceptable to counsel for the Representative,
familiar with the applicable laws, in which case the opinion of counsel for the
Company shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the Company and that
reliance thereon by counsel for the Company is reasonable; (B) as to matters of
fact, to the extent the Representative deems proper, on certificates of
responsible officers of the Company; and (C) to the extent they deem proper,
upon written statements or certificates 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 counsel for the Representative.
34
c. You shall have been furnished such information, documents,
certificates, and opinions as you may reasonably require for the
purpose of enabling you to review the matters referred to in this
Section 7, and in order to evidence the accuracy, completeness, or
satisfaction of any of the representations, warranties, covenants,
agreements, or conditions herein contained, or as you may reasonably
request.
d. You shall have received a certificate of the chief
executive officer and of the chief financial officer of the Company,
dated the Closing Date or such Additional Closing Date, as the case may
be, to the effect that the conditions set forth in Section 7(a) have
been satisfied, that as of the date of this Agreement and as of the
Closing Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein were and
are accurate, and that as of the Closing Date or such Additional
Closing Date, as the case may be, the obligations to be performed by
the Company hereunder on or prior thereto have been fully performed.
e. At the time this Agreement is executed and at the Closing
Date and each Additional Closing Date, as the case may be, you shall
have received letters from Xxxxxxxx Xxxxx Xxxxxxx & Xxxxxxx PC,
Certified Public Accountants, addressed to you and dated the date of
delivery but covering a period within three business days of such date,
in form and substance satisfactory to you.
f. All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Firm Shares and the Additional
Shares shall be satisfactory in form and substance to you and to
counsel for the Representative, and you shall have received a favorable
opinion from counsel to the Company, dated as of the Closing Date or
the Additional Closing Date, as the case may be, with respect to such
of the matters set forth under Sections 7(b) and with respect to such
other related matters as you may reasonably request.
35
g. The NASD, upon review of the terms of the public offering
of the Firm Shares and the Additional Shares shall not have objected to
your participation in such offering.
h. The Company shall have received notice that the Common
Stock will be quoted on The Nasdaq SmallCap Market and traded on the
Boston Stock Exchange as of the Effective Date.
Any certificate or other document signed by any officer of the Company
and delivered to you or to counsel for the Representative shall be deemed a
representation and warranty by such officer individually in his capacity as an
officer and by the Company hereunder to the Representative as to the statements
made therein. If any condition to your obligations hereunder to be fulfilled
prior to or at the Closing Date or any Additional Closing Date, as the case may
be, is not so fulfilled, you may terminate this Agreement or, if you so elect,
in writing waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.
8. Indemnification and Contribution.
a. Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Underwriters, the
Representative, and each of their officers, directors, partners,
employees, agents, managers, members, sureties and counsel, and each
person, if any, who controls the Representative or any one of the
Underwriters within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes
of this Section 8, but not be limited to, attorneys' fees, expert
witness fees, and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any
untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Prospectus, the Registration
Statement, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or (B) in any
application or other document or communication (in this Section 8
collectively called an "application") in any jurisdiction in order to
qualify the Common Stock under the "blue sky" or securities laws
thereof or filed with the
36
Commission or any securities exchange; or any omission or alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any
breach of any representation, warranty, covenant, or agreement of the
Company contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Agreement;
however, the Company shall have no liability under this Section 8 if
such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company as stated in Section
8(b) with respect to the Underwriters by or on behalf of the
Underwriters expressly for inclusion in any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or in any application, as the case may be.
If any action is brought against the Underwriters, the Representative
or any of their officers, directors, partners, employees, agents, managers,
members, sureties or Representative's counsel, or any controlling persons of an
Underwriter or the Representative (an "indemnified party") in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
such indemnified party or parties shall promptly notify the Company in writing
of the institution of such action (but the failure so to notify shall not
relieve the Company from any liability it may have other than pursuant to this
Section 8(a)) and the Company shall promptly assume the defense of such action,
including the employment of counsel (satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or the
Company shall not have promptly employed counsel satisfactory to such
indemnified party or parties to have charge of the defense of such action or
such indemnified party or parties shall have reasonably concluded that there may
be one or more legal defenses available to it or them or to other indemnified
parties which are different from or additional to those available to the
Company, in any of which events such fees and expenses shall be borne by the
Company. Anything in this paragraph to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent and shall not be liable for the fees and expenses of
more than two sets of counsel to the indemnified parties. The
37
Company agrees promptly to notify the Underwriters and the Representative of the
commencement of any litigation or proceedings against the Company or against any
of its officers, directors, control persons or affiliates in connection with the
sale of the Shares, any Preliminary Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto, or any application.
b. The Underwriters agree to indemnify and hold harmless the
Company, the Company's counsel, each director of the Company, each
officer of the Company who shall have signed the Registration
Statement, each other person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, to the same extent as the foregoing indemnity from the Company to
the Underwriters in Section 8(a), but only with respect to statements
or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement, or the Prospectus (as from time to time amended
and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written
information furnished to the Company as stated in this Section 8(b)
with respect to the Underwriters by or on behalf of the Underwriters
expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto,
or in any application, as the case may be; provided, however, that the
obligation of the Underwriters to provide indemnity under the
provisions of this Section 8(b) shall be limited to the amount which
represents the product of the number of Firm Shares and Additional
Shares sold hereunder and the initial public offering price per Share
set forth on the cover page of the Prospectus. For all purposes of this
Agreement, the amounts of the selling concession and reallowance set
forth in the Prospectus, the information under "Underwriting" and the
identification of counsel to the Representative under "Legal Matters"
constitute the only information furnished in writing by or on behalf of
the Underwriters expressly for inclusion in any Preliminary Prospectus,
the Registration Statement, or the Prospectus (as from time to time
amended or supplemented), or any amendment or supplement thereto, or in
any application, as the case may be. If any action shall be brought
against the Company or any other person so indemnified based on any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto, or any application, and in
respect
38
of which indemnity may be sought against the Underwriters pursuant to
this Section 8(b), the Underwriters shall have the rights and duties
given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 8(a).
c. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 8 is for any reason held to be unavailable to an indemnified
person in this Section 8, then the Company shall contribute to the
damages paid by the several Underwriters, and the several Underwriters
shall contribute to the damages paid by the Company; provided, however,
that 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. In determining the amount of contribution to which
the respective parties are entitled, there shall be considered the
relative benefits received by each party from the sale of the Firm
Shares and Additional Shares (taking into account the portion of the
proceeds of the offering realized by each), the parties' relative
knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent
any statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Underwriters
agree that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose). No
Underwriter or person controlling such Underwriter shall be obligated
to make contribution hereunder which in the aggregate exceeds the total
public offering price of the Firm Shares and Additional Shares
purchased by such Underwriter under this Agreement, less the aggregate
amount of any damages which such Underwriter and its controlling
persons have otherwise been required to pay in respect of the same or
any substantially similar claim. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section,
each person, if any, who controls an Underwriter within the
39
meaning of Section 15 of the Act shall have the same rights to
contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of
Section 15 of the Act, shall have the same rights to contribution as
the Company. Anything in this Section 8(c) to the contrary
notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written
consent. This Section 8(c) is intended to supersede any right to
contribution under the Act, the Exchange Act, or otherwise.
9. Representations and Agreements to Survive Delivery. All representations,
warranties, covenants, and agreements contained in this Agreement shall be
deemed to be representations, warranties, covenants, and agreements at the
Closing Date and any Additional Closing Date, and such representations,
warranties, covenants, and agreements of the Underwriters and the Company,
including the indemnity and contribution agreements contained in Section 8,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Representative, the Underwriters or
any indemnified person, or by or on behalf of the Company or any person or
entity which is entitled to be indemnified under Section 8(b), and shall survive
termination of this Agreement or the delivery of the Firm Shares and Additional
Shares to the Underwriters for a period equal to the statute of limitations for
claims related hereto, but not to exceed an aggregate of four years from the
date hereof.
10. Effective Date of This Agreement and Termination Thereof.
a. This Agreement shall be executed within 24 hours of the
Effective Date of the Registration Statement and shall become effective
on the Effective Date or at the time of the initial public offering of
the Shares, whichever is earlier. The time of the initial public
offering shall mean the time, after the Registration Statement becomes
effective, of the release by the Representative for publication of the
first newspaper advertisement which is subsequently published relating
to the Shares or the time, after the Registration Statement becomes
effective, when the Shares are first released by the Representative for
offering by dealers by letter, telegram, facsimile or e-mail, whichever
shall first occur. The Representative or the Company may prevent this
Agreement from becoming effective without liability of any party to any
other party, except as noted below in this Section 10, by giving the
notice indicated in Section 10(c) before the time this Agreement
becomes effective.
40
b. The Representative shall have the right to terminate this
Agreement at any time prior to the Closing Date or any Additional
Closing Date, as the case may be, by giving notice to the Company if
there shall have been a general suspension of, or a general limitation
on prices for, trading in securities on the New York or Boston Stock
Exchange or The Nasdaq SmallCap Market or in the over-the-counter
market; or if there shall exist major hostilities or other national or
international calamity, or terrorist activity causes significant
disruption of the financial markets; or if a banking moratorium has
been declared by a state or federal authority; or if a moratorium in
foreign exchange trading by major international banks has been
declared; or if there shall have been a material interruption in the
mail service or other means of communication within the United States;
or if the Company shall have sustained a material or substantial loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage, or
other calamity or malicious act which, whether or not such loss shall
have been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the offering, sale, or delivery of the Firm
Shares and Additional Shares, as the case may be; or if there shall
have been such material and adverse change in the market for securities
in general so as to make it inadvisable to proceed with the offering,
sale, and delivery of the Shares, as the case may be, on the terms
contemplated by the Prospectus due to the impaired investment quality
of the Shares; or if the Dow Xxxxx Industrial Average or the Nasdaq
Composite Index shall have fallen by 15% or more from its closing price
on the day immediately preceding the date that the Registration
Statement is declared effective by the Commission or on any subsequent
date prior to and including the Closing Date.
c. If the Representative elects to prevent this Agreement from
becoming effective as provided in this Section 10, or to terminate this
Agreement, it shall notify the Company promptly by telephone, telex, or
telegram, confirmed by letter. If, as so provided, the Company elects
to prevent this Agreement from becoming effective, the Company shall
notify the Representative promptly by telephone, telex, or telegram,
confirmed by letter.
d. If, prior to Closing, the Company is acquired, merges,
sells all or substantially all of its assets or otherwise effects a
corporate reorganization with any other entity and, as a result, the
offering is abandoned by the Company, then the
41
Company shall pay the Representative a financial advisory fee of
$100,000 (One Hundred Thousand Dollars) which the Company and the
Representative agree is fair compensation to the Representative. The
Representative shall act as the Company's investment banker in
connection with any such acquisition and render such services as are
customary in connection therewith in consideration for this fee. Any
fee payable with respect to a fairness opinion shall be in addition to
the advisory fee discussed above.
e. Anything in this Agreement to the contrary notwithstanding
other than Section 10(e), if this Agreement shall not become effective
by reason of an election pursuant to this Section 10 or if this
Agreement shall terminate or shall otherwise not be carried out prior
to December 31, 2003 because (i) of any reason solely within the
control of the Company or its stockholders and not due to the breach of
any representation, warranty or covenant or bad faith of the
Representative, (ii) the Company unilaterally withdraws the proposed
public offering from the Representative in favor of another
underwriter, (iii) the Company does not permit the Registration
Statement to become effective, (iv) of any material discrepancy in any
representation by the Company and/or its officers, directors,
stockholders, agents, advisers or representatives, made in writing,
including but not limited to the Registration Statement, to the
Representative, (v) the Company is, directly and/or indirectly,
negotiating with other persons or entities of whatsoever nature
relating to a possible public offering of its securities, or (vi) of
any failure on the part of the Company to perform any material covenant
or material agreement or satisfy any material condition of this
Agreement by it to be performed or satisfied, then, in any of such
events, the Company shall be obligated to reimburse the Representative
for its out-of-pocket expenses on an accountable basis including,
without limitation, its legal fees and disbursements, but not to exceed
an aggregate of $30,000 in excess of the advances paid by the Company
to the Representative in accordance with Section 6 hereof, (2) pay all
reasonable "blue sky" filing fees and expenses, including "blue sky"
legal fees of the Representative's counsel retained by the Company for
such purpose, and (3) indemnify and hold harmless the Representative
for any expenses incurred by the Company in connection with the
offering including, but not limited to, printing expenses and the
Company's accounting and legal fees. Should the Representative be
required to account for "out-of-pocket" expenses, any expense incurred
42
by the Representative shall be deemed to be reasonable and
unobjectionable upon a reasonable showing by the Representative that
such expenses were incurred, directly or indirectly, in connection with
the proposed offering and/or relationship of the parties hereto, as
described herein. The Representative will return to the Company any
portion of the $50,000 payment previously received that is not used in
the payment of accountable expenses if the offering is not completed.
f. Notwithstanding any election hereunder or any termination
of this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 2, 5(a), 6, 8, 9, 10 and 12
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. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the
Representative, shall be mailed, delivered, or sent by facsimile transmission
and confirmed by original letter, to X.X. Xxxxxx & Company, L.L.C., 0000 XXX
Xxxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx Xxxx,
with a copy to Xxxxxx X. Xxxx, Esq., Xxxx Xxxxx P.C., 000 00xx Xxxxxx, Xxxxx
0000 X. Xxxxxx, Xxxxxxxx, 00000; or if sent to the Company shall be mailed,
delivered, or telexed or telegraphed and confirmed by letter, to Centennial
Specialty Foods Corporation, 000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: J. Xxxxxxx Xxxxxx, with a copy to Xxxxxx X. Xxxxxx, Esq., Holland &
Xxxx, LLP, 0000 X. Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx
00000. All notices hereunder shall be effective upon receipt by the party to
which it is addressed.
12. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters, the Company, and the persons and entities
referred to in Section 8 who are entitled to indemnification or contribution,
and their respective successors, legal representatives, and assigns (which shall
not include any buyer, as such, of the Firm Shares and Additional Shares) 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
provision herein contained.
43
13. Construction. This Agreement shall be construed in accordance with the laws
of the State of Colorado, without giving effect to conflict of laws. Time is of
the essence in this Agreement. The parties acknowledge that this Agreement was
initially prepared by the Representative, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that, because
all parties participated in negotiating and drafting this Agreement, no rule of
construction shall apply to this Agreement which construes ambiguous language in
favor of or against any party by reason of that party's role in drafting this
Agreement.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
CENTENNIAL SPECIALTY FOODS CORPORATION
By:
J. Xxxxxxx Xxxxxx, President
Accepted as of the date first above written.
Greenwood Village, Colorado
X.X. XXXXXX & COMPANY, L.L.C.
for itself and any other Underwriters:
By:
Xxxxx Xxxx, Director of Investment Banking, Denver
44
CENTENNIAL SPECIALTY FOODS CORPORATION
(a Delaware corporation)
SCHEDULE 1
This Schedule sets forth the name of each Underwriter referred to in
the Underwriting Agreement and the number of Shares to be sold by each
underwriter.
NAME NUMBER OF SHARES
---- ----------------
X.X. Xxxxxx & Company, L.L.C.
Total 1,550,000
=========
