VOTAN CORPORATION
0000 Xxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
UNDERWRITING AGREEMENT
_____________, 1997
X.X. Xxxxxx & Co., Inc.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned, Votan Corporation, a Delaware corporation (the
"Company"), and Moscom Corporation, a Delaware corporation (the "Selling
Stockholder"), hereby confirm their agreement with you and the other
underwriters named in Schedule A. annexed hereto.
Section 1. Underwriters and Representative. The term "Underwriters", as
used herein, will mean and refer collectively to you and the other underwriters
named in Schedule A annexed hereto and the term "Representative" will refer to
you in your capacity as the representative of the Underwriters. Except as may
be expressly set forth below, any reference to "you" in this Agreement shall be
solely in your capacity as the Representative.
Section 2. Shares Offered. The Company proposes to issue and sell to the
Underwriters an aggregate of 1,600,000 shares of its authorized and unissued
common stock, $0.01 par value per share (the "Common Stock") (the "Firm
Shares"). The Selling Stockholder proposes to grant to the Underwriters an
Option (hereinafter defined) to purchase up to an additional aggregate of
240,000 shares (the "Option Shares") of Common Stock on the terms and for the
purposes set forth in Section 4(b) hereof. The Firm Shares and the Option
Shares are hereinafter sometimes together called the "Shares."
Section 3. Representations and Warranties. (a) The Company and the Selling
Stockholder, jointly and severally, represent and warrant to each Underwriter
that:
(i) A registration statement (File No. 333-07137) on Form S-1
relating to the Shares, including a preliminary prospectus, has been
prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules, regulations
and instructions (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed by
the Company with the Commission. One or more amendments to such
registration statement, including in each case a revised preliminary
prospectus, have
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been so prepared and filed. If such registration statement has not become
effective as of the execution and delivery of this Agreement, and the
filing of a further amendment (the "Final Amendment") to such registration
statement is necessary to permit such registration statement to become
effective, such amendment will promptly be filed by the Company with the
Commission. If such registration statement has become effective and any
post-effective amendment has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent such amendment
has been declared effective by the Commission. If such registration
statement has become effective, either (A) if the Company relies on Rule
434 under the Act, a Term Sheet (hereinafter defined) relating to the
Shares, that shall identify the preliminary prospectus (hereinafter
defined) that it supplements containing such information as is required or
permitted by Rules 434, 430A and 424(b) under the Act, will be promptly
filed with the Commission by the Company or (B) if the Company does not
rely on Rule 434 under the Act, a final prospectus (the "Rule 430A
Prospectus") containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will promptly be
filed by the Company pursuant to Rule 424(b) of the Rules and Regulations.
The term "preliminary prospectus" as used herein means each prospectus
subject to completion included at any time as part of such registration
statement or any amendment thereto or filed with the Commission pursuant
to Rule 424(a) of the Rules and Regulations; such registration statement,
as amended at the time that it becomes or became effective, or, if
applicable, as amended at the time the most recent post-effective
amendment to such registration statement filed with the Commission prior
to the execution and delivery of this Agreement became effective,
including financial statements and all exhibits and information deemed to
be a part thereof at such time pursuant to Rule 430A of the Rules and
Regulations is herein called the "Registration Statement"; the term "Term
Sheet" as used herein means any term sheet that satisfies the requirements
of Rule 434 under the Act; and the term "Prospectus" as used herein means
(x) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Shares that is first filed pursuant to Rule 424(b)(7)
under the Act, together with the preliminary prospectus identified therein
that such Term Sheet supplements; (y) if the Company does not rely on Rule
434 under the Act, the final prospectus relating to the Shares in the form
first filed with the Commission pursuant to Rule 424(b)(1) or (4) of the
Rules and Regulations; or (z) if no such filing is required, the form of
final prospectus included in the Registration Statement at the Effective
Date (as hereinafter defined). The date on which the Registration
Statement becomes effective is hereinafter called the "Effective Date."
Any reference herein to the "date" of a Prospectus that includes a Term
Sheet shall mean the date of such Term Sheet.
(ii) When the Registration Statement becomes effective, and at all
subsequent times to and including the Closing Time (hereinafter defined),
and at each Option Exercise Time (hereinafter defined), or for such longer
period as the Prospectus may be required to be delivered in connection
with sales of the Shares by the Underwriters or a dealer, the Registration
Statement and the Prospectus, including
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any Term Sheet that is a part thereof (as amended or as supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto; provided, that no amendment or supplement to the
Registration Statement or the Prospectus, including as a result of the
filing of a Term Sheet, shall be made without prior consultation with you,
and your approval), will comply with the requirements of the Act and the
Rules and Regulations, will contain all statements required to be stated
therein in accordance with the Act and the Rules and Regulations, will not
contain an untrue statement of a material fact and will not omit to state
a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the
representations and warranties in this subsection (ii) do not apply to
statements or omissions in the Registration Statement or the Prospectus
based upon and made in conformity with written information furnished to
the Company by or on behalf of any Underwriter specifically for inclusion
therein.
(iii) The Commission has not issued an order preventing or suspending
the use of any preliminary prospectus with respect to the Shares and has
not instituted or threatened to institute any proceedings with respect to
such an order. Each preliminary prospectus, when filed with the
Commission, conformed in all material respects with the requirements of
the Act and the Rules and Regulations and, as of its date, did not include
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this sentence do not apply to statements
or omissions in each such preliminary prospectus based upon and made in
conformity with written information furnished to the Company through the
Representative by or on behalf of any Underwriter specifically for
inclusion therein.
(iv) The Company is, and at the Closing Time, and at each Option
Exercise Time will be, a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company has,
and at the Closing Time and at each Option Exercise Time will have, the
power and authority (corporate, governmental, regulatory and otherwise)
and all necessary approvals, orders, licenses, certificates, permits and
other governmental authorizations to conduct all of the activities
conducted by it, to own or lease all of the assets owned or leased by it
and to conduct its business as described in the Registration Statement and
the Prospectus; and is, and at the Closing Time and at each Option
Exercise Time will be, duly qualified to do business and in good standing
as a foreign corporation in all jurisdictions in which the nature of the
activities conducted by it and/or the character of the assets owned and
leased by it makes such qualification necessary, or in which the failure
to so qualify would have a material adverse effect on the business,
results of operations or financial condition of the Company. The Company
does not own, and at the Closing Time and at each Option Exercise Time
will not own, any shares of stock or any other securities of any
corporation or have any equity interest in any
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firm, partnership, association or other entity, except as otherwise set
forth in the Prospectus. A complete and correct copy of the certificate of
incorporation of the Company and by-laws of the Company as currently in
effect have been delivered to you and no changes therein will be made
subsequent to the date hereof and prior to the Closing Time or each Option
Exercise Time.
(v) The Company is, and at the Closing Time and at the Option
Exercise Time will be, authorized to issue only 20,000,000 shares of
Common Stock and 1,000,000 shares of preferred stock, $0.01 par value (the
"Preferred Stock"), and has heretofore validly issued, and has
outstanding, and at the Closing Time and at each Option Exercise Time will
have outstanding, fully paid and nonassessable, 1,600,000 shares of the
Common Stock, without giving effect to the issuance of Shares by the
Company pursuant to this Agreement, and has no shares of Preferred Stock
outstanding. The Company has, and at the Closing Time and at each Option
Exercise Time will have, reserved for issuance 450,000 shares of Common
Stock under the Company's 1996 Stock Option Plan, of which 172,480 options
to purchase shares are outstanding on the date hereof. Except for options
to be granted under the Company's 1996 Stock Option Plan, as disclosed in
the Prospectus, subsequent to the date hereof and prior to the Closing
Time and each Option Exercise Time, the Company will not issue or acquire
any securities. Except the Warrants (as hereinafter defined) and options
under the Company's 1996 Stock Option Plan, the Company does not have
outstanding, and at the Closing Time and at each Option Exercise Time the
Company will not have outstanding, any options to purchase, or any rights
or warrants to subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell shares of capital
stock or any warrants, convertible securities or obligations.
(vi) The financial statements of the Company (including the footnotes
thereto) filed with and as part of the Registration Statement and the
Prospectus present fairly the financial position of the Company as of the
respective dates thereof and the statements of operations, statements of
changes in stockholder's equity and statements of cash flows of the
Company for the respective periods covered thereby, all in conformity with
generally accepted accounting principles applied on a basis consistent
with prior periods. Xxxxxx Xxxxxxxx L.L.P. (the "Company's accountants"),
who have reported on certain of such financial statements, are independent
accountants with respect to the Company as required by the Act and the
Rules and Regulations.
(vii) The Company has a duly authorized and outstanding
capitalization as disclosed in the Prospectus under "Capitalization" and
will have the adjusted capitalization set forth therein at the Closing
Time (based on the assumptions set forth therein). The financial and
numerical information and data set forth in the Prospectus under
"Prospectus Summary," "Risk Factors," "Capitalization," "Dilution,"
"Selected Financial Data," "Management's Discussion and Analysis of
Financial
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Condition and Results of Operations," and "Business" are fairly presented
and prepared on a basis consistent with the audited financial statements
of the Company.
(viii) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the
Closing Time and to each Option Exercise Time, except as set forth in or
contemplated by the Registration Statement and the Prospectus, (A) the
Company has and will have conducted its business in substantially the same
manner as on December 31, 1996; (B) the Company has not incurred and will
not incur any material liabilities or obligations, direct or contingent,
or enter into any material transactions not in the ordinary course of
business; (C) the Company has not paid or declared and will not pay or
declare any dividends or other distributions on its capital stock; and (D)
there has not been and will not have been any change in the capitalization
of the Company or any material adverse change in the business, business
prospects, financial condition or results of operations of the Company.
(ix) Except as set forth in or contemplated by the Registration
Statement and the Prospectus, the Company has not, at the Closing Time and
at each Option Exercise Time will not have, any material contingent
obligations.
(x) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings at law or in equity
pending, or to the knowledge of the Company, threatened, against the
Company, any of its assets or any of its officers or directors, which have
not been disclosed to you, before or by any federal, state, county or
local commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling,
decision or finding would materially adversely affect the Company or its
business, business prospects, financial condition or results of
operations. The Company is not involved in any labor dispute and, to its
knowledge, no such dispute is threatened, which dispute would have a
material adverse effect upon the business, financial condition or results
of operations of the Company. (xi) The Company has, and at the Closing
Time and at each Option Exercise Time will have, complied in all respects
with all laws, regulations and orders applicable to it or its business,
the violation of which would have a material adverse effect upon its legal
existence or its business, financial condition or results of operations.
The Company has, at the Closing Time and at each Option Exercise Time will
have, in all respects performed all of the material obligations required
to be performed by it, and is not, and at the Closing Time and at each
Option Exercise Time will not be, in default under (there being no
existing state of facts which with notice or lapse of time or both would
constitute a default under) any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, letter of credit agreement, bond,
debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument to which it is a party or by
which it or any of its property is bound which would have a material
adverse effect upon the business, financial condition or results of
operations of the Company, and, to the knowledge of the Company and the
Selling Stockholder,
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no other party under any such agreement or instrument to which the Company
is a party is in default in any respect thereunder which would have a
material adverse effect upon the business, financial condition or results
of operations of the Company.
(xii) The Company (i) keeps books, records and accounts that, in
reasonable detail, accurately and fairly reflect the transactions and
disposition of the assets of the Company and (ii) maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's general
or specific authorization, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets,
(C) access to assets is permitted only in accordance with management's
general or specific authorization and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The Company
has not made any payment to any state, federal or foreign governmental
officer or official or other person charged with similar public or
quasi-public duties (other than payments required or permitted by the laws
of the United States or any jurisdiction thereof). (xiii) The Company is
not in violation of its certificate of incorporation or by-laws, in each
case as amended as of the date hereof.
(xiv) The outstanding shares of the Common Stock (including the
Shares to be sold by the Selling Stockholder) have been, and all of the
Shares, and the shares of Common Stock issuable upon exercise of the
Warrants, will, upon issuance and payment therefor, be, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights or similar contractual rights to purchase securities issued by the
Company. The shares of Common Stock issuable upon exercise of the Warrants
have been duly and validly reserved for issuance. The Common Stock and the
Shares conform, and when the Registration Statement becomes effective and
at the Closing Time and at each Option Exercise Time will conform, to all
statements with regard thereto contained in the Registration Statement and
the Prospectus; and the issuance and sale of the Shares to be issued and
sold by the Company have been duly and validly authorized.
(xv) The Company has the power and authority to execute and deliver
the Warrants on the terms and conditions set forth herein and in the
Warrants, and has taken all corporate action necessary therefor; no
consent, approval, authorization or other order of any regulatory agency
is required for such execution or delivery except as may be required under
the Act; and when executed and delivered pursuant to the provisions of
this Agreement, the Warrants will constitute the valid, binding and
legally enforceable obligation of the Company.
(xvi) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the
Company enforceable in accordance with its terms; the performance of the
obligations of the Company
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under this Agreement and the consummation of the transactions contemplated
hereby will not conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under (there being no
existing state of events which with notice or lapse of time or both would
constitute a default) or result (or with the giving of notice or lapse of
time or both will result) in the creation or imposition of any lien,
charge or encumbrance upon the assets or properties of the Company
pursuant to any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, letter of credit agreement, bond, debenture,
note agreement or other evidence of indebtedness, lease, contract or other
agreement or instrument to which the Company is a party or by which the
Company or any of its properties is bound, or under the certificate of
incorporation or by-laws of the Company or under any statute or under any
order, rule or regulation applicable to the Company or its business or
properties or of any court or other governmental body; and no consent,
approval, authorization or order of any court or governmental agency or
body is required for the consummation by the Company of the transactions
on its part herein contemplated, except such as may be required under the
Act or under state securities or blue sky laws.
(xvii) The Company has good and marketable title to all properties
and assets owned by it, free and clear of all liens, charges, encumbrances
or restrictions, except such as are described in or referred to in the
Prospectus or are not material or important in relation to the business of
the Company. The Company has valid, subsisting and enforceable leases for
the properties described in the Prospectus as leased by it, with such
exceptions as are not material and do not interfere with the use made, and
proposed to be made, of such properties by it.
(xviii) There is no document or contract of a character required to
be described in the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required; and no
statement, representation, warranty or covenant made by the Company in
this Agreement or in any certificate or document required by this
Agreement to be delivered to you is, was when made, or as of the Closing
Time or any Option Exercise Time will be, inaccurate, untrue or incorrect.
No transaction has occurred between or among the Company and the Selling
Stockholder and any of their officers, directors or stockholders or any
affiliate of any such officer, director or stockholder that is required to
be described in and is not described in the Registration Statement and the
Prospectus.
(xix) The Company has sufficient trademarks, trade names, registered
service marks, patents, patent applications, patent rights, licenses,
permits, copyright protection and governmental or other authorizations
currently required for the conduct of its business, and the Company is in
all material respects complying therewith and, to the best knowledge of
the Company and the Selling Stockholder and except as otherwise set forth
in the Prospectus, the products and services, and the marks associated
therewith, used by the Company do not violate or infringe any trademarks,
trade names, registered service marks, patents, patent rights, licenses,
permits or copyrights held or owned by any other party. Other than as
disclosed in the Prospectus, the Company has not received any notice of
violation or infringement of or conflict with asserted rights of others
with respect to any trademarks, trade names, registered service marks,
patents, patent rights, licenses,
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permits, copyrights or authorizations owned or used by the Company, or any
other person. Other than as disclosed in the Prospectus, the expiration of
any such trademarks, trade names, registered service marks, patents,
patents rights, licenses, permits, copyrights and governmental or other
authorizations would not materially adversely affect the business,
financial condition or results of operations of the Company.
(xx) The Company intends to apply its proceeds from the sale of the
Shares for the purposes set forth in the Prospectus under "Use of
Proceeds."
(xxi) The Company is not, and does not intend to conduct its business
in a manner in which it would become, an "investment company" as defined
in Section 3(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(xxii) All issuances and sales of securities by the Company
heretofore have been exempt from registration under the Act and complied
in all respects with the provisions of all applicable federal and state
securities laws. No holder of any securities of the Company has the right
to require registration of shares of the Common Stock or other securities
of the Company because of the filing or effectiveness of the Registration
Statement.
(xxiii) Neither the Company nor any of its officers or directors or
affiliates (as defined in the Rules and Regulations) has taken or will
take, directly or indirectly, any action designed to stabilize or
manipulate the price of any security of the Company, or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company,
to facilitate the sale or resale of any of the Shares.
(xxiv) Other than its obligations to the Representative pursuant to
the Financial Consulting Agreement dated as of even date herewith between
the Company and the Representative, and as set forth in the Prospectus,
the Company has not, and at the Closing Time and at each Option Exercise
Time will not have, incurred any liability for financial consulting fees,
finder's or brokerage fees or agent's commissions in connection with the
offer and sale of the Shares, this Agreement or the transactions hereby
contemplated, except for the Underwriters' discounts and commissions
provided for in this Agreement.
(xxv) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and
have paid all taxes due thereon, and no tax deficiency has been, nor does
the Company have any knowledge of any tax deficiency which might be
asserted against the Company which could
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materially adversely affect the business, financial condition or results
of operations of the Company.
(xxvi) For a period of thirty-six (36) months from the First Closing
Date, the Company shall allow the Representative to designate two (2)
members to the Board of Directors which designees shall be acceptable to
the Company. Such directors shall be reimbursed for all out-of-pocket
expenses incurred in attending such meetings and in the event the Company
establishes a policy of compensating
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directors in the future, such directors shall be eligible for such
compensation. The Company shall hold at least four (4) meetings per year
and the directors will be indemnified by the Company against any claims
arising out of their participation at Board meetings.
(xxvii) The Company will not implement a "poison pill" or other
device designed to prevent a hostile takeover of the Company, or increase
the size of the Company's Board of Directors, or increase the compensation
of or introduce severance packages for its directors and officers without
the approval of those members of the Company's Board of Directors who are
not employees of the Company, for a period of three years from the Closing
Time.
(b) The Selling Stockholder represents and warrants to each Underwriter that:
(i) The Selling Stockholder (A) has the power and authority to
execute and deliver this Agreement on the terms and conditions set
forth herein; (B) is, and when the Registration Statement shall
become effective and at the Closing Time will be, the owner of the
Shares to be sold by the Selling Stockholder to the respective
Underwriters pursuant to the terms hereof, in each case free and
clear of all liens, charges, encumbrances and restrictions; (C) has
paid to the Company the full purchase price or consideration required
to be paid for such Shares; and (D) has, and when the Registration
Statement shall become effective and at the Closing Time will have,
the power and authority to convey good and valid title to such
Shares, in each case free and clear of all liens, charges,
encumbrances and restrictions.
(ii) The Selling Stockholder is, and at the Closing Time, and at
each Option Exercise time will be, a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(iii) Neither the execution and delivery or performance of this
Agreement or the consummation of the transactions herein contemplated
nor the compliance with the terms hereof by the Selling Stockholder
will conflict with, or result in a material breach of any of the
terms or provisions of, or constitute a material default under, any
indenture, mortgage, deed of trust, guaranty, purchase agreement or
other agreement or instrument to which the Selling Stockholder or any
of such Selling Stockholder's property is bound, or under the
certificate of incorporation or by-laws of the Selling Stockholder or
under any statute, order, rule or regulation applicable to the
Selling Stockholder or any of the Selling Stockholder's property of
any court or other governmental agency; and no consent, approval,
authorization or order of any court or governmental agency or body is
required for the consummation by the Selling Stockholder of the
transactions on the Selling Stockholder's part herein or therein
contemplated, except such as may be required under the Act or under
state securities or blue sky laws.
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(iv) At the Closing Time, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection
with the sale and transfer of the Shares to be sold by the Selling
Stockholder to the several Underwriters hereunder will have been
fully paid or provided for by the Selling Stockholder and all laws
imposing such taxes will have been fully complied with.
(v) The Selling Stockholder has not, and at the Closing Time
will not have, taken, directly or indirectly, any action to cause or
result in, or which has constituted, or might reasonably be expected
to constitute, the stabilization or manipulation of the price of the
shares of the Common Stock to facilitate the sale or the resale of
any of the Shares.
Section 4. (a) Purchase, Sale and Delivery of the Firm Shares; Closing
Time.
(i) On the basis of the representations and warranties contained in
this Agreement, and subject to the terms and conditions herein set forth,
the Company agrees to sell to the Underwriters, and the Underwriters agree
to purchase from the Company, 1,600,000 Shares at and for a price of $___
per Share. The number of Shares to be purchased from the Company (as
adjusted by the Representative to eliminate fractions), by each of the
Underwriters shall be determined by multiplying the aggregate number of
such Shares to be sold by the Company or the Selling Stockholder, as set
forth above by a fraction, the numerator of which is the total number of
Firm Shares set forth opposite the name of such Underwriter in Schedule A
hereto and the denominator of which is the aggregate number of Firm
Shares. The obligations of the Underwriters under this Agreement are
several and not joint.
(ii) Delivery of the Firm Shares shall be made to you for the
accounts of the respective Underwriters, at your offices at 1895 Mt. Hope
Avenue, Rochester, New York, or such other location as you shall advise
the Company by at least one full business days' notice in writing, against
payment by you on behalf of the respective Underwriters of the purchase
price therefor to the Company by wire transfer in immediately available
funds to the Company of the amount to which it is entitled, at 10:00 A.M.,
New York City Time, on _________ __, 1997, or on such other time and
business day (Saturdays, Sundays and legal holidays in the City or State
of New York not being considered business days for the purposes of this
Agreement), as the Representative and the Company may agree upon or as the
Representative may determine pursuant to Section 12 hereof, which time and
date are herein called the "Closing Time." Delivery of the Firm Shares
shall be made in registered form in such name or names and in such
denominations as you shall request by at least two full business days'
notice in writing. The cost of original issue tax stamps and transfer
stamps, if any, in connection with the issuance and delivery or sale of
the Firm Shares by the Company to the respective Underwriters shall be
borne by the Company; the cost of transfer stamps, if any, in connection
with the sale of the Firm Shares by the Selling Stockholder to the
respective Underwriters shall be borne by
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the Selling Stockholder. The Company and the Selling Stockholder will,
severally, pay and save each Underwriter or its nominees, and any
subsequent holder of the Firm Shares, harmless from any and all
liabilities with respect to or resulting from any failure or delay in
paying federal or state stamp and other transfer taxes, if any, which may
be payable or determined to be payable in connection with the sale by the
Company or the Selling Stockholder to such Underwriter of the Firm Shares
or any portion thereof.
(iii) The Company will make the certificates for the Firm Shares
available to you for examination at the offices of X.X. Xxxxxx & Co.,
Inc., at 1895 Mt. Hope Avenue, Rochester, New York, or at such other place
as you shall request, not later than 2:00 P.M., New York City Time, on the
business day next preceding the Closing Time.
(b) Purchase, Sale and Delivery of the Option Shares.
(i) The Selling Stockholder hereby grants to the respective
Underwriters an option (the "Option") to purchase from the Selling
Stockholder up to 240,000 Option Shares, in the same proportion as each
Underwriter has agreed to purchase the Firm Shares, at and for a price of
$______ for each Option Share; provided, however, that the Option may be
exercised only for the purpose of covering any over-allotments which may
be made by you in connection with the distribution and sale of the Firm
Shares.
(ii) The Option is exercisable by you in whole or in part at any time
or times on or before 12:00 noon, New York City time, on the day prior to
the Closing Time, and at any time or times thereafter during the period
ending 30 days after the date of the Prospectus (or if such 30th day shall
be a Saturday, Sunday or holiday, on the next business day thereafter when
the New York Stock Exchange is open for trading), in each case by giving
notice to the Company in the manner provided in Section 13 hereof, setting
forth the number of Option Shares as to which the Option is being
exercised, the name or names in which the certificates for such Option
Shares are to be registered, the denominations of such certificates and
the date of delivery of such Option Shares, which date, if not the Closing
Time, shall not be less than two nor more than three business days after
such notice.
(iii) Upon each exercise of the Option, the Selling Stockholder shall
sell to the respective Underwriters the aggregate number of Option Shares
specified in the notice exercising the Option and the Underwriters, on the
basis of the representations and warranties of the Company and the Selling
Stockholder contained herein and in each certificate and document
contemplated under this Agreement to be delivered to you, but subject to
the terms and conditions of this Agreement, shall purchase from the
Selling Stockholder the aggregate number of Option Shares specified in
such notice.
- 12 -
(iv) Delivery of the Option Shares with respect to which the Option
shall have been exercised shall be made to you for the account of the
respective Underwriters, at your offices at 1895 Mt. Hope Avenue,
Rochester, New York, or such other location as you shall determine and
advise the Selling Stockholder, against payment by you, on behalf of the
respective Underwriters, of the purchase price therefor to the Selling
Stockholder by wire transfer in immediately available funds to the Selling
Stockholder in the amount to which the Selling Stockholder is entitled, at
10:00 A.M., New York City Time, on the date designated in the notice given
by you as above provided for, unless some other place, time and date is
agreed upon (such time and date being herein called an "Option Exercise
Time"). The cost of original issue tax stamps or transfer stamps, if any,
in connection with each issuance and delivery of the Option Shares by the
Selling Stockholder to the respective Underwriters shall be borne by the
Selling Stockholder. The Company and the Selling Stockholder will,
severally, pay and save each Underwriter, and any subsequent holder of
Option Shares, harmless from any and all liabilities with respect to or
resulting from any failure or delay in paying federal and state stamp
taxes, if any, which may be payable or determined to be payable as a
result of the sale by the Selling Stockholder to such Underwriter of the
Option Shares or any portion thereof.
(v) The Selling Stockholder will make the certificates for the Option
Shares to be purchased at each Option Exercise Time available to you for
examination at the offices of X.X. Xxxxxx & Co., Inc., at 0000 Xx. Xxxx
Xxxxxx, Xxxxxxxxx, New, or such other place as you shall request, not
later than 2:00 P.M., New York City time, on the business day next
preceding each Option Exercise Time.
(vi) The obligation of the respective Underwriters to purchase and
pay for Option Shares at each Option Exercise Time shall be subject to
compliance as of such date with all the conditions specified in Section 9
hereof and the delivery to you of opinions, certificates and letters, each
dated the respective Option Exercise Time, substantially similar in scope
to those specified in Section 9 hereof, and to the absence of any
occurrence referred to in Section 11 hereof.
(c) Wire Transfer Payment; Closing. The Company hereby acknowledges that
the wire transfer by or on behalf of the Underwriters of the purchase price for
any Shares does not constitute closing of a purchase and a sale of the Shares.
Only execution and delivery of a receipt for Shares by the Representative
indicates completion of the closing of a purchase of the Shares from the
Company. Furthermore, in the event that the Underwriters wire funds to the
Company prior to the completion of the closing of a purchase of Shares, the
Company hereby acknowledges that until the Underwriters execute and deliver a
receipt for the Shares, by facsimile or otherwise, which receipt shall be
promptly executed and delivered by the Representative to the Company upon the
receipt of the Shares, the Company will not be entitled to the wired funds and
shall return the wired funds to the Underwriters as soon as practicable (by
wire transfer of same-day funds) upon demand. In the event that the closing of
a purchase of Shares is not completed and the wire funds are not returned by
the Company to the Underwriters on the same day the wired funds were
- 13 -
received by the Company, the Company agrees to pay to the Underwriters in
respect of each day the wire funds are not returned by it, in same-day funds,
interest on the amount of such wire funds in an amount representing the
Underwriters' cost of financing as reasonably determined by X.X. Xxxxxx & Co.,
Inc.
Section 5. Warrants. In order to induce you to enter into this Agreement,
the Company shall execute and deliver to you, in your individual capacity and
not as the Representative, for an aggregate purchase price of $5.00, five-year
warrants (the "Warrants") to purchase an aggregate of 160,000 shares of the
Common Stock at an exercise price per share equal to 120% of the initial public
offering price per share set forth on the cover page of the Prospectus. The
Warrants shall be exercisable beginning one year from the date of the
Prospectus. The Warrants shall be in the form of Exhibit 4.3 to the
Registration Statement. Execution and delivery of Warrants, registered in your
name or the names of such of your officers as you shall notify the Company in
writing, shall be made to you, x/x X.X. Xxxxxx & Co., Inc., at their offices at
1895 Mt. Hope Avenue, Rochester, New York, at the Closing Time. The cost of
original issue tax stamps, if any, in connection with the execution and
delivery of the Warrants shall be borne by the Company.
Section 6. Registration Statement and Prospectus.
(a) The Company will deliver to you, without charge, four fully signed
copies of the Registration Statement and of each amendment thereto, including
all financial statements and exhibits, and to each Underwriter the number of
conformed copies of the Registration Statement and of each amendment thereto,
including all financial statements, but excluding exhibits, as each Underwriter
may reasonably request.
(b) The Company has delivered to each Underwriter, and each of the
Selected Dealers (hereinafter defined), without charge, as many copies as you
have requested of each preliminary prospectus heretofore filed with the
Commission and will deliver to each Underwriter and to others whose names and
addresses are furnished by such Underwriter or a Selected Dealer, without
charge, on the Effective Date, and thereafter from time to time during the
period in which the Prospectus is required by law to be delivered in connection
with sales of Shares by an Underwriter or a dealer, as many copies of the
Prospectus (and, in the event of any amendment of or supplement to the
Prospectus, of such amended or supplemented Prospectus) as you may reasonably
request; without limiting the application of this Section 6(b), the Company,
not later than (i) 6:00 PM, New York City time, on the date of determination of
the public offering price, if such determination occurred at or prior to 12:00
Noon, New York City time, on such date or (ii) 9:00 AM, New York City time, on
the business day following the date of determination of the public offering
price, if such determination occurred after 12:00 Noon, New York City time, on
such date, will deliver to the Representative, without charge, as many copies
of the Prospectus and any amendment or supplement thereto as the Representative
may reasonably request for purposes of confirming orders that are expected to
settle at the Closing Time.
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(c) The Company has authorized the Underwriters to use, and make available
for use by prospective dealers, the preliminary prospectuses, and authorizes
each Underwriter, all dealers (the "Selected Dealers") selected by you in
connection with the distribution of the Shares and all dealers to whom any of
such Shares may be sold by the Underwriters or by any Selected Dealer, to use
the Prospectus, as from time to time amended or supplemented, in connection
with the sale of the Shares in accordance with the applicable provisions of the
Act, the applicable Rules and Regulations and applicable state law until
completion of the public offering of the Shares and for such longer period as
you may request if the Prospectus is required to be delivered in connection
with sales of the Shares by an Underwriter or a dealer.
Section 7. Covenants. (a) The Company covenants and agrees with each
Underwriter that:
(i) After the execution and delivery of this Agreement, the Company
will not, at any time, whether before or after the Effective Date, file
any Term Sheet or any amendment of or supplement to the Registration
Statement or the Prospectus of which you shall not previously have been
advised and furnished with a copy, or which you or Freshman, Marantz,
Orlanski, Xxxxxx & Xxxxx, a law corporation ("counsel for the
Underwriters") shall not have approved, or which is not in compliance with
the Act or the Rules and Regulations.
(ii) If the Registration Statement has not become effective, the
Company will promptly file the Final Amendment with the Commission and
will use its best efforts to cause the Registration Statement to become
effective. If the Registration Statement has become effective, the Company
will file the Rule 430A Prospectus or other Prospectus or any Term Sheet
that constitutes a part thereof with the Commission as promptly as
practicable, but in no event later than that permitted by Rules 434 and
424(b). The Company will promptly advise you (A) when the Registration
Statement, or any post effective amendment thereto, shall have become
effective, or any Term Sheet or any amendments or supplements to the
Prospectus shall have been filed with the Commission; (B) of any request
of the Commission or any state or other regulatory body for any amendment
or supplement of the Registration Statement or the Prospectus or for
additional information and the nature and substance thereof; (C) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or prohibiting the offer or sale of any
of the Shares or of the initiation of any proceedings for such purpose;
(D) of any receipt by the Company of any notification with respect to the
suspension of qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose; and (E)
of the happening of any event during the periods in which the Prospectus
is to be used in conjunction with the offer or sale of Shares which makes
any material statement made in the Registration Statement or the
Prospectus untrue or which requires the making of any changes in the
Registration Statement or the Prospectus in order to make the
- 15 -
statements therein not misleading. The Company will use its best efforts
to prevent the issuance of any stop order or any order preventing or
suspending the use of the Registration Statement or Prospectus and, if
such order is issued, to obtain the lifting thereof as promptly as
possible.
(iii) The Company will prepare and file with the Commission, upon
your request, any such amendments of or supplements to the Registration
Statement or the Prospectus, in form and substance reasonably satisfactory
to Xxxxxxx, Phleger & Xxxxxxxx L.L.P. ("special counsel for the Company"),
as in the reasonable opinion of counsel for the Underwriters may be
necessary or advisable, and will use its best efforts to cause the same to
become effective as promptly as possible.
(iv) The Company will comply with the Act and the Rules and
Regulations and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder so as to permit
the continuance of sales of and dealings in the Shares under the Act and
the Exchange Act. If at any time when a prospectus is required to be
delivered under the Act an event shall have occurred as a result of which
it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in light of the circumstances existing at the time of
delivery of the Prospectus not untrue or misleading or to make the
Prospectus comply with the Act, the Company will notify you promptly
thereof and will, subject to the provisions of Section 7(a)(i) hereof,
furnish to you an amendment or supplement which will correct such
statement in accordance with the requirements of Section 10 of the Act.
(v) The Company will comply with all of the provisions of any
undertakings contained in the Registration Statement.
(vi) The Company will take all reasonable and necessary actions to
furnish to whomever you direct, when and as requested by you, all
necessary documents, exhibits, information, applications, instruments and
papers as may be required or, in the opinion of counsel for the
Underwriters, reasonably required to permit or facilitate the sale of the
Shares. The Company will use its best efforts to qualify or register the
Shares for sale under the so-called blue sky laws of such jurisdictions as
you shall request, to make such applications, file such documents and
furnish such information as may be required for such purpose and to comply
with such laws so as to continue such qualification in effect so long as
required for the purposes of the distribution of the Shares; provided,
however, that the Company shall not be required to qualify as a foreign
corporation in any jurisdiction or to file a consent to service of process
in any jurisdiction in any action other than one arising out of the
offering or sale of the Shares.
(vii) During the period of five years commencing on the Effective
Date, the Company will furnish to each Representative, in such number of
copies as such Representative may reasonably request, (A) within 120 days
after the end of each
- 16 -
fiscal year of the Company, either (1) a consolidated balance sheet of the
Company and its then consolidated subsidiaries, and a separate balance
sheet of each subsidiary, if any, of the Company the accounts of which are
not included in such consolidated balance sheet, as of the end of such
fiscal year, and consolidated statements of income and stockholders'
equity of the Company and its consolidated subsidiaries, and separate
statements of income and stockholders' equity of each of the subsidiaries,
if any, of the Company the accounts of which are not included in such
consolidated statements, for the fiscal year then ended, all in reasonable
detail, prepared in accordance with generally accepted accounting
principles, consistently applied, and all certified by independent
accountants (within the meaning of the Act and the Rules and Regulations),
or (2) the Company's Form 10-K for such fiscal year as filed with the
Commission in accordance with the Exchange Act; (B) within 60 days after
the end of each of the first three fiscal quarters of each fiscal year,
either (1) similar balance sheets as of the end of such fiscal quarter and
similar statements of income and stockholders' equity for the fiscal
quarter then ended, all in reasonable detail, and all certified by the
Company's principal financial officer or the Company's principal
accounting officer as having been prepared in accordance with generally
accepted accounting principles, consistently applied, or (2) the Company's
Form 10-Q for such fiscal quarter as filed with the Commission in
accordance with the Exchange Act; (C) as soon as available, each report
furnished to or filed with the Commission or any securities exchange and
each report and financial statement furnished to the Company's
stockholders generally; and (D) as soon as available, such other material
as such Underwriter may from time to time reasonably request regarding the
financial condition and operations of the Company and its subsidiaries;
provided, however, nothing contained in this subsection (D) shall require
the Company to disclose any material to any Underwriter to the extent that
disclosure is prohibited under applicable federal or state securities
laws, rules or regulations.
(viii) The Company will make generally available to its security
holders and to the Representative as soon as practicable, but not later
than 45 days after the end of the 12-month period beginning at the end of
the fiscal quarter of the Company during which the Effective Date occurs
(or 90 days, if such 12-month period coincides with the Company's fiscal
year), an earnings statement of the Company, which will be in reasonable
detail, but need not be audited, and will cover a period of 12 months
commencing after the Effective Date. Such earnings statement shall comply
with the requirements of Section 11(a) of the Act or Rule 158 of the Rules
and Regulations. During the period of five years commencing on the
Effective Date, the Company will furnish to its stockholders (A) within 75
days after the end of the first three fiscal quarters of each fiscal year,
quarterly reports containing unaudited financial information, and (B)
within 120 days after the end of each fiscal year, an annual report
containing audited financial information.
(ix) Counsel for the Company, counsel for the Selling Stockholder,
the Company's accountants and the officers of the Company will
respectively furnish the
- 17 -
opinions, the letters and the certificates referred to in subsections (e),
(f), (g), (h), (i) and (j) of Section 9 hereof, and, in the event that the
Company shall file any amendment to the Registration Statement relating to
the offering of the Shares or any amendment or supplement to the
Prospectus relating to the offering of the Shares subsequent to the
Effective Date, whether pursuant to subsection (iii) of this Section 7(a)
or otherwise, such counsel, such accountants and such officers will, at
the time of such filing or at such subsequent time as you shall specify,
respectively, furnish to you such opinions, letters and certificates, each
dated the date of its delivery, of the same nature as the opinions, the
letters and the certificates referred to in said subsections (e), (f),
(g), (h), (i) and (j) respectively, as you may reasonably request, or, if
any such opinion, letter or certificate cannot be furnished by reason of
the fact that such counsel or such accountants or any such officer
believes that the same would be inaccurate, such counsel or such
accountants or any such officer will furnish an accurate opinion, letter
or certificate with respect to the same subject matter.
(x) Prior to the later to occur of the termination of the Option and
the Option Exercise Time, the Company will not issue, directly or
indirectly, without your prior consent and that of counsel for the
Underwriters, any press release or other communication or hold any press
conference with respect to the Company or its activities or this offering.
(xi) The Company will not, without your prior written consent, sell,
contract to sell or otherwise dispose of any securities, including shares
of Common Stock, except the sale of the Shares, the issuance of options
pursuant to the Company's 1996 Stock Option Plan (as described in the
Prospectus) or the issuance of the Warrants as described in the
Prospectus, for a period of one year after the date of this Agreement; and
the Company has caused the Selling Stockholder and any affiliate thereof,
to deliver to you on or before the date of this Agreement an agreement,
satisfactory in form and substance to you and counsel for the
Underwriters, whereby each agrees, for a period of one year after the date
of this Agreement, not to offer, pledge, sell or contract to sell,
transfer or otherwise dispose of any shares of Common Stock, directly or
indirectly, without your prior written consent, except for the sale of
Shares to the Underwriters pursuant to this Agreement.
(xii) The Company will not at any time, directly or indirectly, take
any action designed to or which will constitute or which might reasonably
be expected to cause or result in the stabilization of the price of the
Shares to facilitate the sale or resale of any of the Shares.
(xiii) The Company will apply the net proceeds from the sale of the
Shares in the manner set forth under "Use of Proceeds" in the Prospectus.
Prior to the application of such net proceeds, the Company will invest or
reinvest such proceeds only in Eligible Investments (hereinafter defined).
"Eligible Investments" shall mean
- 18 -
the following investments so long as they have maturities of one year or
less: (A) obligations issued or guaranteed by the United States or by any
person controlled or supervised by or acting as an instrumentality of the
United States pursuant to authority granted by Congress; (B) obligations
issued or guaranteed by any state or political subdivision thereof rated
either Aa or higher, or MIG 1 or higher, by Xxxxx'x Investors Service,
Inc. or AA or higher, or an equivalent, by Standard & Poor's Corporation,
both of New York, New York, or their successors; (C) commercial or finance
paper which is rated either Prime-1 or higher or an equivalent by Xxxxx'x
Investors Service, Inc. or A-1 or higher or an equivalent by Standard &
Poor's Corporation, both of New York, New York, or their successors; and
(D) certificates of deposit or time deposits insured by the Federal
Deposit Insurance Corporation or issued by banks or trust companies,
organized under the laws of the United States, having a minimum equity of
$500,000,000.
(xiv) The Company has caused the Common Stock to be duly included for
quotation on the Nasdaq Stock Market's SmallCap Market (the "Nasdaq
SmallCap").
(xv) On or before the Closing Time, the Company shall have (i)
executed and delivered to the Representative the Financial Consulting
Agreement, in the form filed as an Exhibit to the Registration Statement
and (ii) paid the Representative the full non-refundable fee pursuant to
the Financial Consulting Agreement.
(xvi) On or before the Closing Time, the Company shall have amended its
by-laws to include a provision to prevent the Company from performing any of
the following actions without the approval of those members of the Company's
Board of Directors who are not employees of the Company for a period of three
years: (i) implementing a "poison pill" or other device designed to prevent a
hostile takeover of the Company, (ii) increasing the size of the Board of
Directors, (iii) increase the compensation of or introduce severance packages
for its directors and officers.
(b) The Selling Stockholder covenants and agrees with each Underwriter
that:
(i) The Selling Stockholder will not, directly or indirectly, take
any action designed to or which will constitute or which might reasonably
be expected to cause or result in the stabilization of the price of the
Shares to facilitate the sale or the resale of any of the Shares.
(ii) If, subsequent to the date hereof, the Selling Stockholder shall
believe or have any reasonable grounds to believe that the Prospectus (as
amended or as supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto) contains any
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or that any of the representations and warranties of the
- 19 -
Company or the Selling Stockholder contained herein or in any certificate
or document contemplated under this Agreement to be delivered to you are
false, the Selling Stockholder will immediately notify you, as the
Representative, to such effect.
(iii) The Selling Stockholder will not, without your prior written
consent, directly or indirectly, offer, pledge, sell, contract to sell,
transfer or otherwise dispose of any shares of Common Stock or any
securities convertible into, or exchangeable or exchangeable for shares of
Common Stock, except the sale of Shares to the Underwriters pursuant to
this Agreement, for a period of one year after the Effective Date.
(iv) The Selling Stockholder will furnish the certificates referred
to in subsections (i) and (j) of Section 9 hereof.
Section 8. Expenses. Except as otherwise set forth herein, the Company
will pay and bear all costs, fees, taxes and expenses incident to the
performance of the obligations of the Company and the Selling Stockholder under
this Agreement, including, but not limited to: (a) the costs incident to the
issuance, sale and delivery to the Underwriters of the Shares (except that the
Company will not be responsible for the underwriting discounts and commissions
with respect to shares of Common Stock being sold by the Selling Stockholder);
(b) the costs incident to the preparation, printing and filing under the Act of
each preliminary prospectus, the Prospectus, the Registration Statement and any
amendments or supplements thereof and exhibits thereto; (c) the costs of
distributing the Registration Statement and any post-effective amendments
thereto; (d) the costs of printing and distributing to the Representative, the
other Underwriters and any Selected Dealers copies of any preliminary
prospectus, the Prospectus, the Registration Statement and any amendment or
supplement to the Prospectus or Registration Statement required by this
Agreement or the Act; (e) the costs of preparation, printing, mailing,
delivery, filing and distribution of preliminary and final blue sky memoranda,
Underwriter's Questionnaires and Powers of Attorney, letters to prospective
Underwriters, the Agreement Among Underwriters, the Selling Agreement, this
Agreement and all documents related thereto; (f) the filing fees of the
Commission; (g) the costs of qualification or registration of the Shares in the
jurisdictions referred to in subsection (a)(vi) of Section 7 hereof, including
the legal fees and expenses of counsel for the Underwriters in connection
therewith, and all filing fees in connection therewith; (h) the cost of
preparation, excluding the legal fees and expenses of counsel for the
Underwriters in connection therewith, of all filings with the National
Association of Securities Dealers, Inc. ("NASD") and all filing fees in
connection therewith; (i) fees and expenses of counsel for the Company, the
Company's accountants and the Company's consultants; (j) fees in connection
with the quotation of the Common Stock on the National Market; and (k) all
other costs and expenses incurred or to be incurred by the Company in
connection with the transactions contemplated by this Agreement.
- 20 -
If the Firm Shares are not sold to the Underwriters because the conditions
in Section 9 are not satisfied or this Agreement is terminated pursuant to
Section 11 or Section 12, or by reason of any failure, refusal or inability on
the part of the Company or the Selling Stockholder to perform any undertaking
or satisfy any condition of this Agreement or to comply with any of the terms
hereof on their part to be performed, unless such failure to satisfy the
condition or to comply with said terms be due to the default of any
Underwriter, then (and only then) the Company will pay all reasonable
accountable out-of-pocket expenses which you may incur in connection with this
Agreement and the transactions hereby contemplated, including all fees and
expenses of counsel for the Underwriters in connection therewith. The
provisions of this Section 8 are intended to relieve the Underwriters from
payment of the costs and expenses which the Company hereby agrees to pay and
shall not effect any agreement between the Company and the Selling Stockholder
for the sharing of such costs and expenses.
Section 9. Conditions of the Underwriters' Obligations. The Underwriters'
obligations hereunder to purchase and pay for the Shares are subject (as of the
date hereof, the Closing Time and each Option Exercise Time) to the accuracy of
and compliance with the representations and warranties of the Company and the
Selling Stockholder herein and in each certificate and document contemplated
under this Agreement to be delivered, to the accuracy of the statements of the
Company, of the Selling Stockholder and of the officers of the Company made
pursuant to the provisions hereof, to the performance by the Company and the
Selling Stockholder of their respective covenants and agreements hereunder and
under each such certificate and document, and to the following additional
conditions:
(a) (i) The Registration Statement shall have become effective not
later than 5:00 P.M., New York City time, on the date of this Agreement,
or at such later time or on such later date as you may agree to in
writing; (ii) if required, the Prospectus or any Term Sheet that
constitutes a part thereof shall have been filed with the Commission
pursuant to Rules 434 and 424(b)(1) or (4) of the Rules and Regulations
within the applicable time period prescribed for such filing thereunder
and in accordance with the provisions of Section 7(a)(ii) hereof; (iii) at
or prior to the Closing Time, no stop order suspending the effectiveness
of the Registration Statement or the qualification or registration of the
Shares under the blue sky laws of any jurisdiction (whether or not a
jurisdiction which you shall have specified) shall have been issued and no
proceeding for that purpose shall have been initiated or shall be
threatened or contemplated by the Commission or the authorities of any
such jurisdiction; (iv) any request for additional information on the part
of the Commission or any such authorities shall have been complied with to
the satisfaction of the Commission or such authorities and counsel for the
Underwriters; (v) the NASD, upon review of the terms of the public
offering of Shares, shall not have objected to such offering, such terms
or the Underwriters' participation in the same; and (vi) after the date
hereof, no amendment or supplement to the Registration Statement or the
Prospectus shall have been filed without your prior consent.
- 21 -
(b) You shall not have advised the Company, and the Selling
Stockholder shall not have advised any Underwriter or the Company, that
the Registration Statement or the Prospectus or any amendment thereof or
supplement thereto contains an untrue statement of a fact which is
material, or omits to state a fact which is material and is required to be
stated therein or is necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) Between the time of the execution and delivery of this Agreement
and the Closing Time, there shall be no litigation instituted against the
Company or any of its officers or directors, and between such dates there
shall be no proceeding instituted or threatened against the Company or any
of its officers or directors before or by any federal, state, county or
local commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding could materially adversely
affect the Company or its business, financial condition or results of
operations.
(d) Each of the representations and warranties of the Company and the
Selling Stockholder contained herein and in each certificate and document
contemplated under this Agreement to be delivered shall be true and
correct at the Closing Time as if made at the Closing Time, and all
covenants and agreements contained herein, and in each such certificate
and document, to be performed on the part of the Company or the Selling
Stockholder and all conditions contained herein and in each such
certificate and document to be fulfilled or complied with by the Company
or the Selling Stockholder at or prior to the Closing Time shall have been
duly performed, fulfilled or complied with.
(e) At the Closing Time, special counsel for the Company shall
furnish to you an opinion, in form and substance satisfactory to you,
dated as of the date of its delivery, to the effect that:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation. The Company has the corporate power and authority to
conduct all of the activities conducted by it, own or lease all of
the assets owned or leased by it, and conduct its business as
described in the Registration Statement and the Prospectus; and is
duly qualified to do business and in good standing as a foreign
corporation in all jurisdictions in which the nature of the
activities conducted by it and/or the character of the assets owned
and leased by it makes such qualification necessary.
(ii) No authorization, approval, consent or license of any
governmental or regulatory body, except as may be required under the
Act or the blue sky laws of the various jurisdictions (with respect
to which such counsel need express no opinion), is required in
connection with the (A) authorization,
- 22 -
issuance, transfer, sale or delivery of the Shares to be sold by the
Company; (B) authorization, issuance or delivery of the Warrants or
issuance of shares of Common Stock upon exercise of the Warrants; or
(C) taking of any action contemplated herein or if so required all
such authorizations, approvals, consents and licenses have been
obtained and are in full force and effect.
(iii) The Company has authorized and outstanding capital stock,
stock options and warrants as set forth in the Registration Statement
and the Prospectus. The outstanding shares of the Common Stock
(including the Shares to be sold by the Selling Stockholder) have
been, and all of the Shares will, upon sale or issuance, and payment
therefor, be, duly authorized, validly issued, fully paid and
nonassessable, are not subject to pre-emptive rights and have not
been issued in violation of any statutory pre-emptive rights or, to
the best of such counsel's knowledge, similar contractual rights. The
issue and sale of the Shares by the Company have been duly and
validly authorized. The Common Stock has been duly authorized for
quotation on the Nasdaq SmallCap Market. All issuances of securities
by the Company were exempt from, or complied in all respects with,
the provisions of all applicable federal and state securities laws.
Such opinion delivered at the Closing Time shall state that each of
the Shares is duly and validly issued, fully paid and nonassessable
and not subject to preemptive rights.
(iv) To the best of such counsel's knowledge, no holder of any
securities of the Company has the right to require registration of
shares of the Common Stock or other securities of the Company because
of the filing or effectiveness of the Registration Statement. The
description of the Common Stock and the Shares contained in the
Registration Statement and the Prospectus conforms to the rights set
forth in the instruments defining the same and is in conformity with
the requirements of Item 9 of the Registration Statement.
(v) The Company is not an "investment company" as defined in
Section 3(a) of the Investment Company Act and, if the Company
conducts its business as set forth in the Registration Statement and
the Prospectus, will not become an "investment company" and will not
be required to register under the Investment Company Act; the Company
has not been required to make any filings pursuant to the Exchange
Act.
(vi) The Company has full corporate power and authority to enter
into the Warrants. The Warrants have been duly authorized, and upon
due execution, issuance and delivery, will constitute the valid,
binding and legally enforceable obligation of the Company. Such
opinion delivered at the Closing Time shall state that the Warrants
have been duly executed, issued and delivered and constitute the
valid and legally enforceable obligation of the Company. The shares
of Common Stock required to be sold or issued by the
- 23 -
Company upon exercise of the Warrants have been duly authorized and
reserved for sale or issuance, and, when sold or issued and delivered
upon payment of the exercise price therefor as provided in the
Warrants, will be duly and validly issued, fully paid and
nonassessable.
(vii) The Company has full corporate power and authority to
enter into this Agreement and this Agreement has been duly
authorized, executed and delivered by the Company.
(viii) The Registration Statement and the Prospectus, and each
amendment thereof or supplement thereto, comply as to form with, and
appear on their face to be appropriately responsive in all material
respects, to the requirements of the Act and the Rules and
Regulations (except that no opinion need be expressed as to financial
statements and other financial data contained in the Registration
Statement or the Prospectus).
(ix) All contracts filed as exhibits to the Registration
Statement and the Prospectus have been fairly summarized or described
therein, conform in all material respects to the descriptions thereof
contained therein and such counsel does not know of any contracts or
documents required to be so summarized or disclosed or so filed which
have not been so summarized or disclosed or so filed, and such
counsel does not know of any statutes or regulations or pending or
threatened legal or governmental proceedings required to be disclosed
in the Prospectus which have not been described as required.
(x) The Registration Statement has become effective under the
Act, and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement or use of the
Prospectus has been issued and no proceedings for that purpose have
been instituted or are threatened, pending or contemplated. The
opinion delivered at the Closing Time shall state that all filings
required by Rule 434, Rule 424 and Rule 430A of the Rules and
Regulations have been made.
(xi) The execution and delivery of this Agreement by the Company
and the Warrants by the Company, the consummation by the Company of
the transactions herein or therein contemplated, as applicable, and
the compliance with the terms of this Agreement, the Warrants do not
and will not conflict with or result in a breach of any of the terms
or provisions of or violate or constitute a default under, the
certificate of incorporation or by-laws of the Company or any
indenture, mortgage or other agreement or instrument known to such
counsel to which the Company is a party or by which the Company or
any of its properties is bound.
- 24 -
(xii) To the best knowledge of such counsel, the Company has
obtained all trademarks, trade names, patents, patent rights,
licenses, permits and governmental or other authorizations as set
forth in the Prospectus; to the best knowledge of such counsel, such
trademarks, trade names, patents, patent rights, licenses, permits
and governmental or other authorizations are in full force and effect
and the Company is in all material respects complying therewith.
(xiii) The real properties described in the Registration
Statement and the Prospectus as being leased by the Company are held
under valid, subsisting and enforceable leases with only such
exceptions as are not material.
Such counsel shall state that such counsel has participated in conferences
with officers and other representatives of the Company and representatives of
the independent public accountants for the Company, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the preliminary prospectus, the Registration
Statement, the Prospectus, and related matters and, although such counsel is
not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and Prospectus, on the basis of the foregoing, nothing has come to
the attention of such counsel which leads them to believe that either the
Registration Statement or any amendment thereto, at the time such Registration
Statement or amendment became effective or the Prospectus or any amendment or
supplement thereto as of its date or the date of such opinion contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion with
respect to the financial statements and schedules and other financial and
accounting data included in the Registration Statement or Prospectus).
Such opinion shall be to such further effect with respect to other legal
matters relating to this Agreement and the sale of the Shares hereunder as
counsel for the Underwriters may reasonably request. In rendering the opinions
set forth above, such counsel may rely upon certificates of the Selling
Stockholder, officers of the Company and public officials as to matters of
fact. In rendering such opinion, such counsel may rely as to all matters of law
other than the law of the United States or of the States of New York and
Delaware upon opinions of counsel satisfactory to you, in which case the
opinion shall state that they have no reason to believe that you and they are
not entitled so to rely.
(f) At the Closing Time, Xxxxxxx, Xxxxxxx & Xxxxxxxx, counsel for the
Selling Stockholder shall furnish you an opinion, in the form and
substance satisfactory to you, dated as of the date of its delivery, to
the effect that:
- 25 -
(i) The Selling Stockholder is a corporation, validly existing and in
good standing under the laws of the State of Delaware.
(ii) No authorization, approval, consent or license of any
governmental or regulatory body, except as may be required under the Act
or the blue sky laws of the various jurisdictions (with respect to which
such counsel need express no opinion), is required in connection with (A)
the transfer, sale or delivery of the Shares to be sold by the Selling
Stockholder; (B) the execution, delivery and performance of this Agreement
by the Selling Stockholder; or (C) the taking of any action contemplated
herein by the Selling Stockholder, or if so required all such
authorizations, approvals, consents and licenses have been obtained and
are in full force and effect.
(iii) Upon delivery of the certificates for the Shares to be sold by
the Selling Stockholder, duly endorsed or accompanied by duly executed
stock powers, and payment therefor in accordance with the terms hereof,
each of the Underwriters will acquire good title thereto free and clear of
any adverse claim assuming that such Underwriters purchased such Shares in
good faith and without notice (in each case as such term is defined in the
Uniform Commercial Code in effect in the State of New York) of such
adverse claim.
(iv) The Selling Stockholder has full corporate power and authority
to execute and deliver this Agreement and to sell, transfer and deliver
the Shares being sold by the Selling Stockholder in accordance with the
terms hereof and all actions necessary to effect the transfer of title to
such Shares, free and clear of all claims, encumbrances and defects in
title, in accordance with this Agreement, have been duly completed; and
such opinion delivered at the Closing Time shall state that the Selling
Stockholder has taken all corporate action necessary to authorize the
execution and delivery of this Agreement and the transactions contemplated
hereby.
(v) The execution and delivery of this Agreement by the Selling
Stockholder, the consummation by the Selling Stockholder of the
transactions herein contemplated and the compliance with the terms of this
Agreement do not result in a breach of any of the terms or provisions of
or violate or constitute a default under, the certificate of incorporation
or by-laws of the Selling Stockholder.
In rendering such opinions, Xxxxxxx, Xxxxxxx & Xxxxxxxx may rely as to
factual matters on the representations and warranties contained in this
Agreement and on certificates of the Selling Stockholder, officers of the
Company and public officials.
- 26 -
(g) Concurrently with the execution and delivery of this Agreement
and at the Closing Time, the Company's accountants shall have furnished to
you a letter, dated as of the date of its delivery, addressed to you and
in form and substance satisfactory to you, to the effect that:
(i) Such accountants are independent certified public
accountants with respect to the Company as required by the Act and
the Rules and Regulations, and the answer to Item 10 of the
Registration Statement is correct insofar as it relates to them.
(ii) In their opinion the financial statements and schedules and
notes examined by them and included in the Registration Statement and
the Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and
Regulations with respect to registration statements on Form S-1.
(iii) On the basis of inquiries and procedures conducted by
them, including a reading of the latest available unaudited interim
financial statements of the Company inquiries of officials of the
Company and the Selling Stockholder responsible for operational,
financial and accounting matters, a reading of the minute books of
the Company and other specified procedures and inquiries, nothing has
come to their attention that caused them to believe that (A) any
unaudited financial statements of the Company set forth in the
Registration Statement and the Prospectus do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and the Rules and Regulations or are not fairly presented in
conformity with generally accepted accounting principles applied on a
basis consistent with that of the audited financial statements; and
(B) during the period from December 31, 1996 to a specified date not
more than five days prior to the date of such letter there was any
change in the capital stock or debt of the Company, or any decrease
in the total assets or stockholder's equity of the Company, each as
compared with the amounts shown in the balance sheet as of December
31, 1996, included in the Registration Statement or any decrease from
January 1, 1997 to the specified date, on a proportional basis with
the year ended December 31, 1996 in sales, loss from operations, net
loss and net income per share, except in all instances for changes,
decreases or increases which the Registration Statement and the
Prospectus disclose have occurred or may occur and except for such
other changes, decreases or increases which you shall in your sole
discretion accept.
(iv) In addition to their examination referred to in their
reports included in the Registration Statement and the Prospectus and
the inquiries and limited procedures referred to in clause (iii)
above, they have performed other procedures, not constituting an
audit, with respect to certain numerical data and financial
information appearing in the Registration Statement and
- 27 -
the Prospectus, requested by you and specified in such letter and
have compared such data and information with the accounting records
of the Company and found them to be in agreement.
(h) At the Closing Time, there shall be furnished to you, on behalf
of the Company, an accurate certificate, dated the date of its delivery,
signed by each of the chief executive officer and the chief financial
officer of the Company, in form and substance satisfactory to you, to the
effect that:
(i) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) to his knowledge,
as of the date of such certificate, the statements in the
Registration Statement and the Prospectus are and were true and
correct and neither the Registration Statement nor the Prospectus
omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading; (B) in the case of a certificate delivered
after the date of this Agreement, since the Effective Date, no event
has occurred of which he has knowledge and which was required by the
Act or the Rules and Regulations to be set forth in a supplement to
or amendment of the Prospectus but which has not been so set forth;
and (C) since the dates as of which and the periods for which
information is given in the Registration Statement and the
Prospectus, there has not been to his knowledge any adverse change in
the business, business prospects, financial condition or results of
operations of the Company from that set forth in the Registration
Statement and the Prospectus, other than changes which the
Registration Statement and the Prospectus specifically disclose have
occurred or may occur subsequent to the Effective Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been commenced or are, to the knowledge of each signer
of such certificate, threatened or contemplated by the Commission.
(iii) No stop order suspending the qualification or registration
of any of the Shares under the blue sky laws of any jurisdiction
(whether or not a jurisdiction you shall have specified) has been
issued, and no proceedings for such purpose have been commenced or
are, to the knowledge of each signer of such certificate, threatened
or contemplated by any jurisdiction.
(iv) The conditions, separately set forth in such certificate,
contained in subsections (a), (c) and (k) of this Section 9 have been
complied with.
(v) There has been no breach of any of the terms or provisions
of the agreements referred to in Section 7(a)(xi) and 7(b)(iii)
hereof.
- 28 -
(vi) Each of the representations and warranties of the Company
contained in this Agreement and in each certificate and document
contemplated under this Agreement to be delivered to you was, when
originally made and is, at the time such certificate is dated, true
and correct.
(vii) Each of the covenants required herein to be performed by
the Company on or prior to the date of such certificate has been
duly, timely and fully performed and each condition herein required
to be complied with by the Company on or prior to the date of such
certificate has been duly, timely and fully complied with by the
Company.
(i) The Selling Stockholder shall have performed all of the covenants
contained herein and in any certificate or document contemplated under
this Agreement to be delivered to you and required to be performed by the
Selling Stockholder at or prior to the Closing Time, and you shall have
received at the Closing Time a certificate of the Selling Stockholder,
dated as of the Closing Time, to the effect that the representations and
warranties of the Selling Stockholder contained in this Agreement and in
each such certificate and document are true and correct in all respects on
and as of the date of such certificate as if made on and as of such date,
and each of the covenants and conditions required to be performed or
complied with by the Selling Stockholder on or prior to the date of such
certificate has been duly, timely and fully performed or complied with.
(j) The Company and the Selling Stockholder shall have furnished to
you such certificates, in addition to those specifically mentioned herein,
as you may have reasonably requested in a timely manner as to the accuracy
and completeness, at the Closing Time, of any statement in the
Registration Statement or the Prospectus; as to the accuracy, at the
Closing Time, of the representations and warranties of the Company and the
Selling Stockholder herein and in each certificate and document
contemplated under this Agreement to be delivered to you; as to the
performance by the Company and the Selling Stockholder of their respective
obligations hereunder and under each such certificate and document; or as
to the fulfillment of the conditions concurrent and precedent to your
obligations hereunder.
(k) Except as contemplated by the Registration Statement and the
Prospectus, since the date hereof, there shall not have been any change in
the capitalization of the Company or any material adverse change in the
business, financial condition or results of operations of the Company or
in the value of the assets of the Company, or any material change, without
your consent, in the conduct of the business of the Company, arising for
any reason whatsoever.
(l) Each of the agreements referred to in Section 7(a)(xi) and
7(b)(iii) hereof shall have been delivered to you and there shall have
been no breach of any such agreement.
- 29 -
(m) All corporate proceedings and other legal matters relating to the
sale and transfer of the Shares, this Agreement, the Warrants, the
Registration Statement, the Prospectus and other related matters shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters, who shall have furnished to you at the Closing Time such
opinion, in form and substance reasonably satisfactory to you, with
respect to the sufficiency of the aforementioned corporate proceedings and
other legal matters as you may reasonably require; and the Company shall
have furnished to such counsel such records and documents as such counsel
may have reasonably requested in a timely manner for the purpose of
enabling them to pass upon such matters.
(n) The Common Stock shall be authorized for quotation on the Nasdaq
SmallCap Market.
All of the opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters. You reserve the right to waive
any condition hereinabove set forth. Each opinion, certificate, letter or other
document required to be delivered at the Closing Time shall also be required to
be delivered at each Option Exercise Time.
Section 10. Indemnification and Contribution.
(a) The Company and the Selling Stockholder, jointly and
severally, agree to indemnify and hold harmless each Underwriter and
each person who controls an Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act and each and all of
them, from and against any and all losses, claims, damages,
liabilities or actions, joint or several (including any
investigation, legal or other expense incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding
or any claim asserted), to which an Underwriter or they or any of
them may become subject under the Act, the Exchange Act or otherwise
but only insofar as such losses, claims, damages, liabilities or
actions arise out of, or are based upon, (i) any untrue statement or
alleged untrue statement made by the Company or the Selling
Stockholder in Section 3 of this Agreement, (ii) any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus, the Prospectus or
any amendment or supplement thereto or in any application or other
document executed by the Company or the Selling Stockholder based
upon written information furnished by or on behalf of the Company or
the Selling Stockholder filed in any jurisdiction in order to
register or qualify the Shares under the securities laws thereof or
filed with the Commission, or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii)
the employment by the Company or the Selling Stockholder of any
device, scheme or artifice to defraud, or the engaging by the Company
or the Selling Stockholder in any
- 30 -
act, practice or course of business which operates or would operate
as a fraud or deceit, or any conspiracy with respect thereto, in
which the Company or the Selling Stockholder shall participate, in
connection with the issuance and sale of any of the Shares; provided,
however, that the indemnity agreement contained in this subsection
shall not extend to any Underwriter in respect of any such losses,
claims, damages, liabilities or actions (including any investigation,
legal or other expense incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted) arising out of, or based upon, any such untrue statement or
alleged untrue statement or any such omission or alleged omission, if
such statement or omission was made in reliance upon information
furnished in writing to the Company through you or on behalf of any
Underwriter specifically for use in connection with the preparation
of the Registration Statement, any preliminary prospectus or the
Prospectus or any such amendment or supplement thereto, and provided,
further, that if any preliminary prospectus or Prospectus contained
any alleged untrue statement or allegedly omitted to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading and such statement or omission
shall have been corrected in a revised preliminary prospectus or in
the Prospectus or in an amended or supplemented Prospectus, the
Company and the Selling Stockholder shall not be liable to any
Underwriter or controlling person under this subsection (a) with
respect to such alleged untrue statement or alleged omission to the
extent that any such loss, claim, damage or liability of such
Underwriter or controlling person results from the fact that such
Underwriter sold Shares to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, such
revised preliminary prospectus or Prospectus or amended or
supplemented Prospectus. The Company and the Selling Stockholder
agree to pay any legal and other expenses for which it is liable
under this subsection (a) from time to time (but not more frequently
than monthly) within 30 days after its receipt of a xxxx therefor.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of its directors, each
of its officers who shall have signed the Registration Statement,
each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act and the
Selling Stockholder to the same extent as the foregoing indemnity
from the Company and the Selling Stockholder to such Underwriter, but
in each case to the extent, and only to the extent, that any
statement in or omission from or alleged omission from the
Registration Statement, any preliminary prospectus, the Prospectus or
any amendment or supplement thereto was made in reliance upon
information furnished in writing to the Company by such Underwriter
specifically for use in connection with the preparation of the
Registration Statement, any preliminary prospectus or the Prospectus
or any such amendment or supplement thereto; provided, however, that
the obligation of each Underwriter to indemnify the Company and the
Selling Stockholder under the provisions of this subsection (b) shall
be limited to the product of the number of Shares purchased by such
Underwriter and the initial public offering price set forth on the
cover page of the
- 31 -
Prospectus. Each Underwriter agrees to pay any legal and other
expenses for which it is liable under this subsection (b) from time
to time (but not more frequently than monthly) within 30 days after
receipt of a xxxx therefor.
(c) If any action is brought against a person entitled to
indemnification pursuant to the foregoing subsections (a) or (b) (an
"indemnified party") in respect of which indemnity may be sought
against a person granting indemnification (an "indemnifying party")
pursuant to such subsections, such indemnified party shall promptly
notify such indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party of any
such action shall not release the indemnifying party from any
liability it may have to such indemnified party otherwise than on
account of the indemnity agreement contained in subsection (a) or (b)
of this Section 10. In case any such action is brought against an
indemnified party and it notifies an indemnifying party of the
commencement thereof, the indemnifying party against which a claim is
to be made will be entitled to participate therein at its own expense
and, to the extent that it may wish, to assume at its own expense the
defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that (i) if the defendants in
any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded based upon advice of counsel that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them, the indemnified party shall have the right to select separate
counsel to assume such legal defenses and otherwise to participate in
the defense of such action on behalf of such indemnified party or
parties; and (ii) in any event, the indemnified party shall be
entitled to have counsel chosen by such indemnified party participate
in, but not conduct, the defense at such indemnified party's own
expense. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under
this Section 10 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with
proviso (i) to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel); (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action; or (iii)
the indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying party. An
indemnifying party shall not be liable for any settlement of any
action or proceeding effected without its written consent.
- 32 -
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in
subsection (a) or (b) of this Section 10 is unavailable in accordance
with its terms, the Company, the Selling Stockholder and, subject to
the limitations set forth below, the Underwriters shall contribute to
the aggregate losses, claims, damages and liabilities, of the nature
contemplated by said indemnity agreement, incurred by the Company,
the Selling Stockholder and one or more Underwriters, in such
proportions as are applicable to reflect the relative benefits
received by the Company and the Selling Stockholder, on the one hand,
and the Underwriters, on the other hand, from the offering of the
Shares; provided, however, that if such allocation is not permitted
by applicable law or if the indemnified party failed to give the
notice required under subsection (c) of this Section 10, then the
relative fault of the Company and the Selling Stockholder, on the one
hand, and the Underwriters, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims,
damages and liabilities and other relevant equitable considerations
will be considered together with such relative benefits. The relative
benefits received by the Company and the Selling Stockholder, on the
one hand, and the Underwriters, on the other hand, shall be deemed to
be in such proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses)
received by the Company and the Selling Stockholder bear to the total
underwriting discount received by the Underwriters, in each case as
set forth in the table on the cover page of the Prospectus and in the
notes thereto. The relative fault of the Company and the Selling
Stockholder, on the one hand, and of the Underwriters, on the other,
shall be determined by reference to, among other things, whether in
the case of an untrue statement or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact, such statement or omission relates to information supplied by
the Company or the Selling Stockholder, on the one hand, or by the
Underwriters, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company, the Selling
Stockholder and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were
determined by pro-rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in this subsection (d). The amount paid or payable by the
indemnified party as a result of the losses, claims, damages or
liabilities referred to above in this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
against or appearing as a third-party witness in any such action or
claim. Notwithstanding the provisions of this subsection (d), (i) no
Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Shares purchased by
it were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay in respect of any
loss, claim, damage, liability or action covered by this Section and
(ii) no person guilty of fraudulent misrepresentation within the
meaning of Section 11(f) of the Act shall be entitled to contribution
from any person
- 33 -
who is not guilty of such fraudulent misrepresentation. For purposes
of this subsection (d), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20
of the Exchange Act shall have the same rights to contribution as
such Underwriter. The Underwriters' obligations to contribute
pursuant to this subsection (d) are several in proportion to their
respective underwriting commitments and not joint.
(e) The respective indemnity and contribution agreements by the
Underwriters, the Selling Stockholder and the Company contained in
subsections (a), (b), (c) and (d) of this Section 10, and the
respective covenants, representations and warranties of the Company
and the Selling Stockholder set forth in Sections 2, 3, 4, 5, 6, 7
and 8 hereof, shall remain operative and in full force and effect
regardless of (i) any investigation made by any Underwriter, on its
behalf or by or on behalf of any person who controls an Underwriter,
the Company or any controlling person of the Company, any director or
officer of the Company or the Selling Stockholder; (ii) acceptance of
any of the Shares and payment therefor; or (iii) any termination of
this Agreement, and shall survive the delivery of the Shares, and any
successor of any Underwriter or the Company, or of any person who
controls any Underwriter or the Company, as the case may be, or the
Selling Stockholder shall be entitled to the benefit of such
respective indemnity and contribution agreements. The respective
indemnity and contribution agreements by the Underwriters, the
Company and the Selling Stockholder contained in subsections (a),
(b), (c) and (d) of this Section 10 shall be in addition to any
liability which the Underwriters, the Company and the Selling
Stockholder may otherwise have.
Section 11. Termination. This Agreement (except for the provisions of
Sections 8 and 10 hereof) may be terminated by you by notifying the Company and
the Selling Stockholder at any time:
(a) prior to the earliest of (i) 11:00 a.m., New York City time,
on the business day immediately following the date hereof, (ii) the
time of release by the Representative for publication of the first
newspaper advertisement which subsequently is published with respect
to the Shares or (iii) the time when the Shares are first generally
released by the Representative to dealers.
(b) at or prior to the Closing Time if any of the conditions
specified in Section 9 hereof shall not have been fulfilled when and
as required by this Agreement to be fulfilled or if any of the
covenants, representations or warranties contained herein or in any
certificate or document contemplated under this Agreement to be
delivered to you shall not have been satisfied or fulfilled within
the respective times herein provided for, unless compliance therewith
or performance or satisfaction thereof shall have been expressly
waived by you in writing; or
(c) at or prior to the Closing Time if any one or more of the
following shall have occurred or have been established between the
time of your execution of this
- 34 -
Agreement and the Closing Time and in your judgment the same has made
or makes it inadvisable or impracticable for you generally to proceed
with the offering, sale, delivery, or collection of payment for, the
Shares pursuant to the public offering contemplated by this
Agreement: (i) a general suspension of, or a general limitation on
prices for, trading in securities on the New York Stock Exchange,
American Stock Exchange, the National Market, the Nasdaq SmallCap
Market or in the over-the-counter market; (ii) any new legal or
regulatory restriction adversely affecting the distribution of
securities generally or of the Shares; (iii) a material adverse
change in general market or economic conditions, either domestic or
foreign, from such conditions on the date hereof; (iv) a declaration
of a banking moratorium by Federal or New York State authorities; (v)
any outbreak of major hostilities or other national or international
calamity; (vi) a material interruption in the mail service or other
means of communications within the United States; (vii) an action by
any government in respect of its monetary affairs which, in your
reasonable opinion, has a material adverse effect on the United
States securities markets; or (viii) any material adverse change or
any material adverse development involving a prospective change not
contemplated in the Registration Statement in or affecting
particularly the business or properties of the Company.
Section 12. Default of Underwriters. If any Underwriter or Underwriters
default in their obligation to take and pay for Firm or Option Shares and the
aggregate number of Firm or Option Shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the aggregate
number of Firm or Option Shares, as the case may be, the other Underwriters
shall be obligated severally in proportion to their respective commitments
hereunder to purchase the Firm or Option Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase. If any Underwriter
or Underwriters so default and the aggregate number of Firm or Option Shares
with respect to which such default or defaults occur is more than 10% of the
aggregate number of Firm or Option Shares, as the case may be, and arrangements
satisfactory to you for the purchase of such Firm or Option Shares by other
persons (who may include one or more of the non-defaulting Underwriters
including you) are not made within 36 hours after such default, this Agreement
may be terminated by you without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be paid or reimbursed by
the Company pursuant to Section 8 and except for the provisions of Section 10
hereof. In the event of any default by one or more Underwriters as described in
this Section 12, the Representative shall have the right to postpone the
Closing Time or the Option Exercise Time, as the case may be, established as
provided in Section 4 hereof for not more than seven business days in order
that any necessary changes may be made in the arrangements or documents for the
purchase and delivery of the Firm Shares or Option Shares, as the case may be.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 12. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.
Section 13. Notice. Except as otherwise expressly provided in this
Agreement, whenever advice or a notice, objection, designation, request or
report is given or is required
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by the provisions of this Agreement to be given, such advice, notice,
objection, designation, request or report shall be in writing and shall be
delivered by first-class mail, postage prepaid, nationally recognized courier
or by telecopy, (a) if to the Company, addressed to it and delivered at Votan
Corporation, 0000 Xxxx Xxxxxx Xxxxxxx, # 000, Xxxxxxxxxx, Xxxxxxxxxx, 00000
(telecopier number (000) 000-0000), Attention: Xxxx X. Xxxxx, President and
Chief Executive Officer, with a copy to Xxxxxxx, Xxxxxxx & Xxxxxxxx L.L.P.,
Spear Xxxxxx Xxxxx, Xxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (telecopier number
(000) 000-0000), Attention: Xxxxxxx X. Xxxxxx, Esq.; (b) if to the Selling
Stockholder, addressed to it and delivered at Moscom Corporation, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (telecopier number (000) 000-0000),
Attention: Xxxxxx X. Xxxxxxxxxxxx, President and Chief Executive Officer, with
a copy to Xxxxxx X. Xxxxx, Esq., at the same address; and (c) if to you or the
Underwriters, addressed to X.X. Xxxxxx & Co., Inc., and delivered at 0000 Xx.
Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx (telecopier number * -*- *), Attention: Xxxxx
X. Xxxxxx, with a copy to Xxxxxx X. Xxxxxxx, Esq., Freshman, Marantz, Orlanski,
Xxxxxx & Xxxxx, 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000-X, Xxxxxxx Xxxxx, Xxxxxxxxxx
00000 (telecopier number 310-274-8357); or at such other address or telecopier
number as a party hereto may give notice in accordance herewith.
Section 14. Miscellaneous.
(a) This Agreement is made solely for the benefit of the
Underwriters, the Selling Stockholder and the Company, the Company's
directors, the Company's officers who shall have signed the Registration
Statement and any controlling person referred to in Section 10 hereof, and
their respective successors and assigns, and no other person, partnership,
association or corporation shall acquire or have any right under or by
virtue of this Agreement. The term "successor" or the term "successors and
assigns" as used in this Agreement shall not include any buyer, as such,
of any of the Shares from the Underwriters. All of the obligations of the
Underwriters hereunder are several and not joint.
(b) The information in the Prospectus under the section
"Underwriting" with respect to (i) the names of, and number of Shares to
be purchased by, each of the Underwriters and (ii) the amounts of the
selling concession and reallowance shall constitute the only information
furnished in writing by or on behalf of the several Underwriters for use
in connection with the preparation of the Registration Statement as
originally filed or in any amendment thereto, any preliminary prospectus
or the Prospectus as the case may be.
(c) This Agreement shall supersede any agreement or understanding,
oral or in writing, express or implied, between the Company, the Selling
Stockholder and you relating to the sale of any of the Shares.
(d) No change, amendment or supplement to, or waiver of, this
Agreement or any term, provision or condition contained herein, shall be
valid or of any effect unless in writing and signed by the party against
whom such is asserted.
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(e) This Agreement shall be governed by and construed in accordance
with the law of the State of New York applicable to contracts made and to
be performed therein without giving effect to the principles of conflicts
of law thereof. If any action or proceeding shall be brought by any of the
Underwriters in order to enforce any right or remedy under this Agreement,
the Company and the Selling Stockholder hereby consent to and submit to,
the jurisdiction of the courts of the State of New York and of any federal
court sitting in the Borough of Manhattan, City of New York. The Company
and the Selling Stockholder agree that process in any such action or
proceeding may be served in the manner provided by New York law for
service on foreign persons, as appropriate.
(f) This Agreement may be signed in two or more counterparts with the
same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original
of this Agreement.
Please confirm that the foregoing correctly sets forth the agreement
between the Company, the Selling Stockholder and you.
Very truly yours,
Votan Corporation
By:___________________________
Xxxx X. Xxxxx
President and Chief
Executive Officer
MOSCOM Corporation
By:________________________________
Xxxxxx X. Xxxxxxxxxxxx
President and Chief
Executive Officer
Accepted as of the date
first above written
X.X. XXXXXX CO., INC.
By: X.X. Xxxxxx, Co., Inc.
By:___________________________________
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Acting on behalf of itself and as the
Representative of the other Underwriters
named in Schedule A attached hereto.
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SCHEDULE A
Number
Name of Underwriter of Shares
X.X. Xxxxxx & Co., Inc.
---------
Total 1,600,000
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