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:
VOTAN CORPORATION, a Delaware corporation (the "Company"), proposes
to issue and sell pursuant to this Underwriting Agreement (the "Agreement"),
an aggregate of 1,600,000 shares of Common Stock, par value $0.01 per share
(the "Shares"), commencing on the effective date of the Registration Statement
(the "Effective Date"). In addition, the Company proposes to grant the option
referred to in Section 2(b) to purchase all or any part of an aggregate of
240,000 additional Shares.
The aggregate of 1,600,000 Shares, together with all or any part of
the 240,000 Shares which you have the option to purchase, are herein called
the "Shares." The Common Stock of the Company to be outstanding after giving
effect to the sale of the Shares (including the 240,000 Shares that the
Underwriters have the option to purchase) is herein called the "Common Stock."
You have advised the Company that you desire to purchase the Shares.
The Company confirms the agreements made by it with respect to the purchase of
the Shares by you, as follows:
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with you
that:
(a) A registration statement (File No. 333-7137) on Form S-1
relating to the public offering of the Shares, including a preliminary form of
prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act") and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange
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Commission (the "Commission") thereunder, and has been filed with the
Commission under the Act. "Preliminary Prospectus" shall mean each prospectus
filed pursuant to Rule 430 of the Rules and Regulations. The registration
statement (including all financial schedules and exhibits) as amended at the
time it becomes effective and the final prospectus included therein are
respectively referred to as the "Registration Statement" and the "Prospectus",
except that (i) if the prospectus first filed by the Company pursuant to Rule
424(b) or Rule 430A of the Rules and Regulations or otherwise utilized and not
required to be so filed shall differ from said prospectus as then amended, the
term "Prospectus" shall mean the prospectus first filed pursuant to Rule
424(b) or Rule 430A or so utilized from and after the date on which it shall
have been filed or utilized, and (ii) if such registration statement or
prospectus is amended or such prospectus is supplemented, after the effective
date of such registration statement and prior to the Option Closing Date (as
defined in Section 2(b)), the term "Registration Statement" shall include such
registration statement as so amended, and the term "Prospectus" shall include
the prospectus as so amended or supplemented, or both, as the case may be.
(b) At the time the Registration Statement becomes effective
and at all times subsequent thereto up to the Option Closing Date (hereinafter
defined), (i) the Registration Statement and Prospectus will in all material
respects conform to the requirements of the Act and the Rules and Regulations;
and (ii) neither the Registration Statement nor the Prospectus will include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made; provided,
however, that the Company makes no representations, warranties or agreements
as to information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of you specifically for use in the
preparation thereof. It is understood that the statements set forth in the
Prospectus with respect to stabilization, the material set forth under the
heading "Underwriting" and the identity of counsel to you under the heading
"Legal Matters" constitute the only information furnished in writing by you
for inclusion in the Registration Statement and Prospectus, as the case may
be.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction
of its incorporation, with full power and authority (corporate and other) to
own its properties and conduct its business as described in the Prospectus and
is duly qualified to do business as a foreign corporation and is in good
standing in all other jurisdictions in which the nature of its business or the
character or location of its properties requires such qualification, except
where failure to so qualify is not reasonably likely to materially adversely
affect the Company's business, properties or financial condition.
(d) The authorized capital stock of the Company as of the
Effective Date was as set forth under "Capitalization" in the Prospectus. The
shares of issued and outstanding capital stock of the Company set forth
thereunder have been duly authorized, validly issued and are fully paid and
non-assessable; except as set forth in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue,
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or agreements or other rights to convert any obligation into, any shares of
capital stock of the Company have been granted or entered into by the Company.
The Shares and Underwriter's Warrant conform in all material respects to all
statements relating thereto contained in the Registration Statement and
Prospectus.
(e) The Shares are duly authorized and, when issued,
delivered and paid for pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights of
any security holder of the Company. The certificates evidencing the Shares are
and will be in valid and proper legal form. The Underwriter's Warrant (as
defined in Section 11) will be exercisable for shares of Common Stock of the
Company in accordance with the terms of the Underwriter's Warrant and at the
prices therein provided for. The shares of Common Stock have been duly
authorized and reserved for issuance upon such exercise, and such shares, when
issued upon such exercise in accordance with the terms of the Underwriter's
Warrant and when the price is paid, shall be fully paid and non-assessable.
Neither the filing of the Registration Statement nor the offering or sale of
the Shares as contemplated in this Agreement gives rise to any rights, other
than those which have been waived or satisfied, for or relating to the
registration of any securities of the Company, except as described in the
Registration Statement.
(f) This Agreement and the Underwriter's Warrant have been
duly and validly authorized, executed and delivered by the Company, and
assuming due execution by the other party or parties hereto and thereto,
constitute valid and binding obligations of the Company enforceable against
the Company in accordance with their respective terms, except as rights to
indemnity and contribution hereunder may be limited by applicable law and
except as enforceability may be limited by bankruptcy, insolvency or other
laws affecting the rights of creditors generally or by general equitable
principles. The Company has full power and lawful authority to authorize,
issue and sell the Shares to be sold by it hereunder on the terms and
conditions set forth herein, and no consent, approval, authorization or other
order of any governmental authority is required in connection with such
authorization, execution and delivery or with the authorization, issue and
sale of the Shares or the Underwriter's Warrant, except such as may be
required under the Act or state securities laws.
(g) Except as described in the Prospectus, the Company is
not in material violation, breach or default of or under, and consummation of
the transactions herein contemplated and the fulfillment of the terms of this
Agreement and the Underwriter's Warrant will not conflict with, or result in a
breach of, any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance
pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or
by which the Company may be bound or to which any of the property or assets of
the Company are subject, which would have a material adverse effect on the
business, properties or financial condition of the Company, nor will such
action result in any violation of the provisions of the certificate of
incorporation or the by-laws of the Company, as amended, or any statute or any
order, rule or regulation applicable to the Company of any court or of any
regulatory
3
authority or other governmental body having jurisdiction over the Company,
which would have a material adverse effect on the business, properties or
financial condition of the Company.
(h) The Company owns no real property and, subject to the
qualifications stated in the Prospectus, the Company has good and marketable
title to all properties and assets described in the Prospectus as owned by it,
free and clear of all liens, charges, encumbrances or restrictions, except
such as are not materially significant or important in relation to its
business; all of the leases and subleases under which the Company is the
lessor or sublessor of properties or assets or under which the Company holds
properties or assets as lessee or sublessee as described in the Prospectus are
in full force and effect, and, except as described in the Prospectus, the
Company is not in default in any respect with respect to any of the terms or
provisions of any of such leases or subleases which would have a material
adverse effect on the business, properties or financial condition of the
Company, and no claim has been asserted by anyone adverse to rights of the
Company as lessor, sublessor, lessee or sublessee under any of the leases or
subleases mentioned above, or affecting or questioning the right of the
Company to continued possession of the leased or subleased premises or assets
under any such lease or sublease except as described or referred to in the
Prospectus, which would have a material adverse effect on the business
properties or financial condition of the Company; and the Company owns or
leases all such properties described in the Prospectus as are necessary to its
operations as now conducted and, except as otherwise stated in the Prospectus,
as proposed to be conducted as set forth in the Prospectus.
(i) Xxxxxx Xxxxxxxx LLP, who have given their report on
certain financial statements filed and to be filed with the Commission as a
part of the Registration Statement, which are included in the Prospectus, are
with respect to the Company independent public accountants as required by the
Act and the Rules and Regulations.
(j) The financial statements and schedules, together with
related notes, set forth in the Prospectus or the Registration Statement
present fairly the financial position and results of operations and changes in
financial position of the Company on the basis stated in the Registration
Statement, at the respective dates and for the respective periods to which
they apply. Said statements and schedules and related notes have been prepared
in accordance with generally accepted accounting principles applied on a basis
which is consistent during the periods involved.
(k) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, the Company
has not incurred any liabilities or obligations, direct or contingent, not in
the ordinary course of business, or entered into any transaction not in the
ordinary course of business, which is material to the business of the Company,
and there has not been any change in the capital stock of, or any incurrence
of long-term debt by, the Company or any issuance of options, warrants or
other rights to purchase the capital stock of the Company or any adverse
change or any development involving, so far as the Company can now reasonably
foresee, a prospective adverse change in the condition (financial or other),
net worth, results of operations, business, key personnel
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or properties of it which would be material to the business or financial
condition of the Company, and the Company has not become party to, and neither
the business nor the property of the Company has become the subject of, any
material litigation whether or not in the ordinary course of business.
(l) Except as set forth in the Prospectus, there is not now
pending nor, to the knowledge of the Company, threatened, any action, suit or
proceeding (including those related to environmental matters or discrimination
on the basis of age, sex, religion or race) to which the Company is a party
before or by any court or governmental agency or body, which, if adversely
determined, would result in any material adverse change in the condition
(financial or other), business prospects, net worth or properties of the
Company; and, except as set forth in the Prospectus, no labor disputes
involving the employees of the Company exist which, if adversely determined,
would result in any material adverse change in the condition (financial or
otherwise), business prospects, net worth or property of the Company.
(m) Except as disclosed in the Prospectus, the Company has
filed all necessary federal, state and foreign income and franchise tax
returns and has paid all taxes shown as due thereon; and there is no tax
deficiency which has been or to the knowledge of the Company might be asserted
against the Company which has not been adequately reserved for on the
Company's balance sheet.
(n) The Company has sufficient licenses, permits and other
governmental authorizations currently required for the conduct of its business
or the ownership of its property as described in the Prospectus and is in all
material respects complying therewith and owns or possesses adequate rights to
use all material patents, patent applications, trademarks, xxxx registrations,
copyrights and licenses necessary for the conduct of such business and has not
received any notice of conflict with the asserted rights of others in respect
thereof. To the best knowledge of the Company, none of the activities or
business of the Company is in violation of, or causes the Company to violate,
any law, rule, regulation or order of the United States, any state, county or
locality, or of any agency or locality, the violation of which would have a
material adverse effect upon the condition (financial or otherwise), business
prospects, net worth or properties of the Company.
(o) The Company has not, directly or indirectly, at any time
(i) made any contributions to any candidate for foreign political office, or
if made, failed to disclose fully any such contribution made in violation of
law, or (ii) 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 or contributions required or allowed
by applicable law. The Company's internal accounting controls and procedures
are sufficient to cause the Company to comply in all material respects with
the Foreign Corrupt Practices Act of 1977, as amended.
(p) On the Closing Dates (as defined in Section 2(c)), all
transfer or other taxes (including franchise, capital stock or other tax,
other than income taxes imposed by any jurisdiction), if any, which are
required to be paid in connection with the sale and
5
transfer of the Shares to the Underwriters hereunder will have been fully paid
or provided for by the Company and all laws imposing such taxes will have been
fully complied with.
(q) All contracts and other documents of the Company which
are, under the Rules and Regulations, required to be filed as exhibits to the
Registration Statement have been so filed.
(r) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Shares or to facilitate the
sale or resale of the Shares.
(s) The Company has no subsidiaries.
(t) Except for this Agreement and other agreements with you,
the Company has not entered into any agreement pursuant to which any person is
entitled either directly or indirectly to compensation from the Company for
services as a finder in connection with the proposed public offering.
2. Purchase, Delivery and Sale of the Shares.
(a) Subject to the terms and conditions of this Agreement,
and upon the basis of the representations, warranties and agreements herein
contained, the Company agrees to issue and sell to you, and you agree to buy
from the Company at $_____ per Share at the place and time hereinafter
specified, the number of Shares set forth opposite your name in Schedule I
hereto (the "Firm Shares").
Delivery of the Firm Shares against payment
therefor shall take place at the offices of X.X. Xxxxx & Co., Inc., 0000 Xx.
Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (or at such other place as may be
designated by agreement between you and the Company) at 10:00 a.m. New York
time on ____________ ___, 1997, or at such other time and date, not later than
10 business days thereafter, as you may designate, such time and date of
payment and delivery for the Firm Shares being herein called the "First
Closing Date." Time shall be of the essence and delivery at the time and place
specified in this subsection (a) is a further condition to your obligations
hereunder.
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and
agreements herein contained, the Company hereby grants you an option to
purchase all or any part of an aggregate of 240,000 additional Shares at the
same price per Share as you shall pay for the Shares being sold pursuant to
the provisions of sub section (a) of this Section 2 (such additional Shares
being referred to herein as the "Option Shares"). This option may be exercised
on one occasion within 30 business days after the Effective Date upon notice
by you to the Company advising it as to the amount of Option Shares as to
which the option is being exercised, the names and denominations in which the
certificates for such Option Shares are to be registered and the time and date
when such certificates are to be delivered. Such time and
6
date shall be determined by you but shall not be earlier than four and not
later than ten full business days after the exercise of said option, nor in
any event prior to the First Closing Date, and such time and date is referred
to herein as the "Option Closing Date." Delivery of the Option Shares against
payment therefor shall take place at the offices of X.X. Xxxxxx & Co., Inc.,
0000 Xx. Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000. Time shall be of the essence
and delivery at the time and place specified in this subsection (b) is a
further condition to your obligations hereunder.
The Option granted hereunder may be exercised only
to cover over-allotments in the sale by you of Firm Shares referred to in
subsection (a) above.
(c) The Company will make the certificates for the Shares to
be purchased by you hereunder available to you for checking at least two full
business days prior to the First Closing Date or the Option Closing Date
(which are collectively referred to herein as the "Closing Dates" and
individually as a "Closing Date"), as the case may be. The certificates shall
be in such names and denominations as you may request, at least two full
business days prior to the relevant Closing Dates. Time shall be of the
essence and the availability of the certificates at the time and place
specified in this Agreement is a further condition to your obligations.
Definitive engraved certificates in negotiable form
for the Shares to be purchased by you hereunder will be delivered by the
Company to you for your account against payment of the purchase price by you,
at your option, by certified or bank cashier's checks in New York Clearing
House funds or by wire transfer, payable to the order of the Company.
In addition, in the event you exercise the option to
purchase from the Company all or any portion of the Option Shares pursuant to
the provisions of subsection (b) above, payment for such Option Shares shall
be made to or upon the order of the Company by you, at your option, by
certified or bank cashier's checks payable in New York Clearing House funds or
by wire transfer, at the offices of X.X. Xxxxxx & Co., Inc. at the time and
date of delivery of such Option Shares as required by the provisions of
subsection (b) above, against receipt of the certificates for such Option
Shares by you, registered in such names and in such denominations as you may
request.
It is understood that you propose to offer the
Shares to be purchased hereunder to the public upon the terms and conditions
set forth in the Registration Statement, after the Registration Statement
becomes effective.
3. Covenants of the Company.
The Company covenants and agrees with you that:
(a) Company will use its best efforts to cause the
Registration Statement to become effective and, upon notification from the
Commission that the Registration Statement has become effective, will so
advise you and will not at any time, whether before
7
or after the Effective Date, file any amendment to the Registration Statement
or supplement to the Prospectus of which you shall not previously have been
advised and furnished with a copy or to which you or your counsel shall have
reasonably objected in writing or which is not in compliance with the Act and
the Rules and Regulations. At any time prior to the later of (A) the
completion by you of the distribution of the Shares contemplated hereby (but
in no event more than nine months after the Effective Date) and (B) 25 days
after the Effective Date, the Company will prepare and file with the
Commission, promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus which, in your reasonable opinion, may be
necessary or advisable in connection with the distribution of the Shares.
Promptly after you or the Company is advised
thereof, you will advise the Company or the Company will advise you, as the
case may be, and confirm the advice in writing, of the receipt of any comments
of the Commission, of the effectiveness of any post-effective amendment to the
Registration Statement, of the filing of any supplement to the Prospectus or
any amended Prospectus, of any request made by the Commission for amendment of
the Registration Statement or for supplementing of the Prospectus or for
additional information with respect thereto, of the issuance by the Commission
or any state or regulatory body of any stop orders or other order suspending
the effectiveness of the Registration Statement or any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or of the
suspension of the qualification of the Shares for offering in any
jurisdiction, or the institution of any proceedings for any of such purposes,
and will use its best efforts to prevent the issuance of any such order and,
if issued, to obtain as soon as possible the lifting thereof.
The Company has caused to be delivered to you copies
of each Preliminary Prospectus, and the Company has consented and hereby
consents to the use of such copies for the purposes permitted by the Act. The
Company authorizes you and selected dealers to use the Prospectus in
connection with the sale of the Shares for such period not to exceed nine
months from the Effective Date as in the reasonable opinion of counsel for you
the use thereof is required to comply with the applicable provisions of the
Act and the Rules and Regulations. In case of the happening, at any time
within such period as a Prospectus is required under the Act to be delivered
in connection with sales by an underwriter or dealer, of any event of which
the Company has knowledge and which materially affects the Company or the
Shares, or which in the opinion of counsel for the Company or counsel for you
should be set forth in an amendment to the Registration Statement or a
supplement to the Prospectus in order to make the statements therein not then
misleading, in light of the circumstances existing at the time the Prospectus
is required to be delivered to a purchaser of the Shares, or in case it shall
be necessary to amend or supplement the Prospectus to comply with the Act or
with the Rules and Regulations, the Company will notify you promptly and
forthwith prepare and furnish to you copies of such amended Prospectus or of
such supplement to be attached to the Prospectus, in such quantities as you
may reasonably request, in order that the Prospectus, as so amended or
supplemented, will not contain any untrue statement of a material fact or omit
to state any material facts necessary in order to make the statements in the
Prospectus, in the light of the circumstances under which they are made, not
misleading. The preparation and
8
furnishing of any such amendment or supplement to the Registration Statement
or amended Prospectus or supplement to be attached to the Prospectus shall be
without expense to the Underwriters, except that in case you are required, in
connection with the sale of the Shares, to deliver a Prospectus nine months or
more after the Effective Date, the Company will upon request of and at your
expense, amend or supplement the Registration Statement and Prospectus and
furnish you with reasonable quantities of prospectuses complying with Section
10(a)(3) of the Act.
(b) The Company will comply with the Act, the Rules and
Regulations and the Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations thereunder in connection with the offering and
issuance of the Shares.
The Company will use its best efforts to qualify or
register the Shares for sale under the securities or "blue sky" laws of such
jurisdictions as you may have designated in writing prior to the execution
hereof and will make such applications and furnish such information to counsel
for you as may be required for that purpose and to comply with such laws,
provided that the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general consent to
service process in any jurisdiction. The Company will, from time to time,
prepare and file such statements and reports as are or may be required to
continue such qualification in effect for so long a period as you may
reasonably request. Legal fees for such qualifications shall be itemized based
on the time expended and costs incurred, shall be reasonable and shall not in
any event exceed $35,000.00, exclusive of filing fees (unless otherwise
agreed).
(c) The Company will instruct its transfer agent to provide
you with copies of the Depository Trust Company stock transfer sheets on a
weekly basis for a period of six months from the First Closing Date and on a
monthly basis thereafter for six additional months.
(d) The Company will use its best efforts to cause a
Registration Statement under the Exchange Act to be declared effective on the
Effective Date.
(e) For so long as the Company is a reporting company under
either Section 12(g), 13 or 15(d) of the Exchange Act, the Company, at its
expense, will furnish to its stockholders an annual report (including
financial statements audited by independent public accountants), in reasonable
detail and at its expense, will furnish to you during the period ending five
years from the date hereof, (i) as soon as practicable after the end of each
fiscal year, a balance sheet of the Company and any subsidiaries as at the end
of such fiscal year, together with statements of income, stockholders, equity
and cash flows of the Company and any subsidiaries as at the end of such
fiscal year, all in reasonable detail and accompanied by a copy of the
certificate or report thereon of independent accountants; (ii) as soon as they
are available, a copy of all reports (financial or other) mailed to security
holders; (iii) as soon as they are available, a copy of all non-confidential
reports and financial statements furnished to or filed with the Commission;
and (iv) such other information of a public nature as you may from time to
time reasonably request.
9
(f) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (e) above
will be on a consolidated basis to the extent the accounts of the Company and
its subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
(g) The Company will deliver to you at or before the First
Closing Date one signed copy of the Registration Statement including all
financial statements and exhibits filed therewith, and of all amendments
thereto. The Company will deliver to or upon your order, from time to time
until the Effective Date as many copies of any Preliminary Prospectus filed
with the Commission prior to the Effective Date as the Underwriters may
reasonably request. The Company will deliver to you on the Effective Date and
thereafter for so long as a Prospectus is required to be delivered under the
Act, from time to time, as many copies of the Prospectus, in final form, or as
thereafter amended or supplemented, as you may from time to time reasonably
request.
(h) The Company will make generally available to its
security holders and deliver to you as soon as it is practicable to do so, but
in no event later than 90 days after the end of 12 months after its current
fiscal quarter, an earnings statement (which need not be audited) covering a
period of at least 12 consecutive months beginning after the Effective Date
which shall satisfy the requirements of Section 11(a) of the Act.
(i) The Company will apply the net proceeds from the sale of
the Shares substantially for the purposes set forth under "Use of Proceeds" in
the Prospectus, and will file such reports with the Commission with respect to
the sale of the Shares and the application of the proceeds therefrom as may be
required pursuant to Rule 463 of the Rules and Regulations.
(j) The Company will, promptly upon your request, prepare
and file with the Commission any amendments or supplements to the Registration
Statement, preliminary Prospectus or Prospectus and take any other action,
which in the opinion of Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, counsel
to you may be reasonably necessary or advisable in connection with the
distribution of the Shares and will use its best efforts to cause the same to
become effective as promptly as possible.
(k) Prior to the Effective Date, the Company will use its
best efforts to cause all the stockholders of the Company to enter into a
written agreement with you, which, among other things, shall provide that for
a period of (3) months following the closing date of the offering, such
stockholders will not sell, assign, hypothecate or pledge any of the shares of
Common Stock of the Company owned by them on the Effective Date, or
subsequently acquired by the exercise of any options or warrants or conversion
of any convertible security of the Company held by them on the Effective Date
directly or indirectly, except with your prior written consent and such
stockholders will permit all certificates evidencing those shares to be
stamped with an appropriate restrictive legend, and will cause the transfer
agent for the Company to note such restrictions on the transfer books and
records of the Company.
10
(l) The Company shall, upon the initial filing of the
Registration Statement, make all filings required to obtain approval for the
quotation of the Shares on the National Association of Securities Dealers,
Inc. ("NASDAQ") SmallCap Market and will use its best efforts to effect and
maintain the aforesaid approval for at least five (5) years from the date of
this Agreement. Within ten (10) days after the Effective Date, the Company
shall cause the Company to be listed in the Xxxxx'x OTC Industrial Manual and
cause such listing to be maintained for five years from the date of this
Agreement.
(m) The Company represents that it has not taken, and agrees
that it will not take, directly or indirectly, any action designed to or which
has constituted or which might reasonably be expected to cause or result in
the stabilization or manipulation of the price of the Shares or to facilitate
the sale or resale the Shares.
(n) During the period of the offering, and for a period of
twelve (12) months from the Effective Date, the Company will not sell or
otherwise dispose of any securities of the Company (except for shares of
Common Stock issuable upon exercise of options or warrants or conversion of
convertible securities outstanding on the Effective Date or upon exercise of
options granted or the grant of options for up to ___________ shares under
said plan less any options to purchase shares granted prior to the Effective
Date, pursuant to the Company's Stock Option Plan) without your prior written
consent, which consent shall not be unreasonably withheld. For a period of
twenty-four (24) months from the Effective Date, the Company will not issue,
sell or otherwise dispose of any securities of the Company pursuant to
Regulation S under the Act without your prior written consent.
(o) Prior to the filing of the Registration Statement, the
Company shall retain a public relations firm acceptable to you, and shall
continue to retain such firm, or any alternate firm acceptable to you, for a
minimum period of one (1) year.
(p) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Representative's Warrant outstanding from time to time.
(q) The Company shall deliver to you, at the Company's
expense, three (3) bound volumes in form and content acceptable to you,
containing the Registration Statement and all exhibits filed therewith, and
all amendments thereto, and all other material correspondence, filings,
certificates and other documents filed and/or delivered in connection with
this offering. The Company shall use its best efforts to deliver such volumes
with one hundred eighty (180) days of the First Closing Date.
(r) For a period of thirty-six (36) months from the First
Closing Date, the Company shall allow the Underwriter 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 directors in the future, such
11
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.
4. Conditions of Obligations of X.X. Xxxxxx & Co., Inc.
Your obligations to purchase and pay for the Shares which
they have agreed to purchase hereunder are subject to the accuracy (as of the
date hereof, and as of the Closing Dates) of and compliance with the
representations and warranties of the Company herein, to the performance by
the Company of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective
and you shall have received notice thereof not later than 10:00 a.m., New York
time, on the date of this Agreement, or at such later time or on such later
date as to which you may Agree in writing; on the Closing Dates, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that or any similar purpose shall have been
instituted or shall be pending or, to the knowledge of any Underwriter or to
the knowledge of the Company, shall be contemplated by the Commission; any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of Freshman, Marantz,
Orlanski, Xxxxxx & Xxxxx, counsel to you; and no stop order shall be in effect
denying or suspending effectiveness of the Registration Statement nor shall
any stop order proceedings with respect thereto be instituted or pending or
threatened under the Act.
(b) At the First Closing Date, you shall have received the
opinion, dated as of the First Closing Date, of Xxxxxxx, Phleger & Xxxxxxxx
LLP, counsel for the Company, in form and substance reasonably satisfactory to
counsel for you, to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware and is duly qualified or licensed to do
business as a foreign corporation in good standing in each other
jurisdiction in which the ownership or leasing of its properties or
the conduct of its business requires such qualification, except where
failure to so qualify will not have a material adverse effect in the
business, properties or financial condition of the Company;
(ii) the authorized capitalization of the Company as
of the date of the Prospectus was as set forth in the Prospectus; all
of the shares of the Company's outstanding stock requiring
authorization for issuance by the Company's Board of Directors have
been duly authorized and validly issued, are fully paid and
non-assessable and conform to the description thereof contained in
the Prospectus; the outstanding shares of Common Stock of the Company
to such counsels knowledge, have not been issued in violation of the
preemptive rights of any stockholder and the shareholders of the
Company do not have any preemptive rights or other rights to
12
subscribe for or to purchase; except for the transfer restrictions
regarding "affiliates" contained in Rule 144 promulgated under the
Act, there are no restrictions upon the voting or transfer of, any of
the Shares; the Common Stock and the Underwriter's Warrants conform
in all material respects to the respective descriptions thereof
contained in the Prospectus; the Shares to be issued as contemplated
in the Registration Statement and this Agreement have been duly
authorized and, when paid, will be validly issued, fully paid and
non-assessable and free of preemptive rights contained in the
Company's certificate of incorporation or By-laws, or any other
document, instrument or agreement known to counsel; a sufficient
number of shares of Common Stock has been reserved for issuance upon
exercise of the Representative's Warrant; to such counsels knowledge,
neither the filing of the Registration Statement nor the offering or
sale of the Shares as contemplated by this Agreement gives rise to
any registration rights or other rights, other than those
contemplated by the Underwriter's Warrant or which have-been waived
or satisfied, for or relating to the registration of the Shares;
(iii) this Agreement and the Underwriter's Warrant
(sometimes hereinafter collectively referred to as the
"Representative Agreements") have been duly and validly authorized,
executed and delivered by the Company, and assuming due execution and
delivery of this Agreement by you, such agreements are, or when duly
executed will be, the valid and legally binding obligations of the
Company except as enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws affecting the rights of
creditors, or by general equitable principles; provided that no
opinion need be expressed as to the enforceability of the indemnity
provisions contained in Section 6 or the contribution provisions
contained in Section 7 of this Agreement;
(iv) the certificates evidencing the Shares are in
valid and proper legal form; the Underwriter's Warrants will be
exercisable for shares of Common Stock of the Company in accordance
with the terms of the Underwriter's Warrants and at the prices
therein provided for; the shares of Common Stock of the Company
issuable upon exercise of the Underwriter's Warrants have been duly
authorized and reserved for issuance upon such exercise, and such
shares, when issued upon such exercise in accordance with the terms
of the Underwriter's Warrants and when the price is paid shall be
fully paid and non-assessable;
(v) Such counsel knows of no pending or threatened
legal or governmental proceedings to which the Company is a party
which are required to be described or referred to in the Registration
Statement which are not so described or referred to;
(vi) The execution and delivery of this Agreement
and the Underwriter's Warrant and the incurrence of the obligations
herein and therein set forth and the consummation of the transactions
herein or therein contemplated will not result in a violation of, or
constitute a default under, the certificate or articles of
incorporation or by-laws of the Company, or in a material violation
of or default
13
under any obligation, agreement, covenant or condition contained in
any bond, debenture, note or other evidence of indebtedness or in any
of the contracts, indentures, mortgages, loan agreements, leases,
joint ventures or other agreements or instruments to which the
Company is a party that are filed as Exhibits to the Registration
Statement or otherwise known to counsel;
(vii) The Registration Statement has become
effective under the Act, and to such counsels knowledge, no stop order
suspending the effectiveness of the Registration Statement is in
effect, no proceedings for that purpose have been instituted or are
pending before, or threatened by, the Commission and the Registration
Statement and the Prospectus (except, in the case of both the
Registration Statement and any Amendment thereto, and the Prospectus
and any supplement thereto for the financial statements and notes and
schedules thereto, and other financial information or statistical
data contained therein, or omitted therefrom, as to which such
counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the Rules
and Regulations;
(viii) All descriptions in the Registration
Statement and the Prospectus, and any amendment or supplement
thereto, of contracts and other documents are accurate and fairly
present the information required to be shown, and such counsel is
familiar with all contracts and other documents referred to in the
Registration Statement and the Prospectus and any such amendment or
supplement, or filed as exhibits to the Registration Statement, and
such counsel does not know of any contracts or documents of a
character required to be summarized or described therein or to be
filed as exhibits thereto which are not so summarized, described or
filed;
(ix) No authorization, approval, consent or license
of any governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the
execution, delivery and performance of this Agreement or the
Underwriter's Warrant by the Company or in connection with the taking
of any action contemplated herein or therein, or the issuance of the
Underwriter's Warrant or the Shares underlying the Underwriter's
Warrant, other than registration or qualification of the Shares under
applicable state or foreign securities or blue sky laws (as to which
such counsel need express no opinion) and registration under the Act;
and
(x) The statements in the Registration Statement
under the caption "Description of Capital Stock," to the extent that
such statements constitute a matter of law or legal conclusion have
been reviewed by such counsel and are correct in all material
respects; and
Such counsel has participated in the preparation of
the Registration Statement and the Prospectus and although such counsel has not
reviewed the accuracy or
14
completeness of the statements contained in the Registration Statement or
Prospectus nothing has come to the attention of such counsel that caused such
counsel to have reason to believe that the Registration Statement or any
amendment thereto at the time it became effective contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading
or that the Prospectus or any supplement thereto contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make statements therein in light of the circumstances under which they were
made not misleading (except, in the case of both the Registration Statement
and any amendment thereto and the Prospectus and any supplement thereto, for
the financial statements, notes and schedules thereto and other financial
information and statistical data contained therein, as to which such counsel
need express no opinion);
In rendering such opinion, such counsel may rely
upon certificates of any officer of the Company or public officials as to
matters of fact; and in rendering such opinion may either (i) rely as to all
matters of law other than the law of the United States or of the State of
California or of the State of 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 to so rely or (ii) assume that the
laws of any state other than the State of California or of the State of
Delaware are identical to the laws of the State of California, in rendering
such opinion.
(c) All corporate proceedings and other legal matters
relating to this Agreement, the Registration Statement, the Prospectus, and
other related matters shall be reasonably satisfactory to or approved by
Freshman, Marantz, Orlanski, Xxxxxx Xxxxx, counsel to you, and you shall have
received from such counsel a signed opinion, dated as of the First Closing
Date, with respect to the validity of the issuance of the Shares, the form of
the Registration Statement and Prospectus (other than the financial statements
and other financial data contained therein), the execution of this Agreement
and other related matters as you may reasonably require. The Company shall
have furnished to counsel for you such documents as they may reasonably
request for the purpose of enabling them to render such opinion.
(d) You shall have received a letter on and as of the
Effective Date and again on and as of the First Closing Date, in each instance
describing procedures carried out to a date within five (5) days of the date
of the letter, from Xxxxxx Xxxxxxxx LLP, independent public accountants for
the Company, substantially in the form approved by you.
(e) At each of the Closing Dates, (i) the representations
and warranties of the Company contained in this Agreement shall be true and
correct with the same effect as if made on and as of such Closing Date, and
the Company shall have performed all of its obligations hereunder and
satisfied all the conditions on its part to be satisfied at or prior to such
Closing Date; (ii) the Registration Statement and the Prospectus and any
amendments or supplements thereto shall contain all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations, and shall in all material respects conform to the requirements
thereof, and neither the Registration Statement nor
15
the Prospectus nor any amendment or supplement thereto shall contain any
untrue statements of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made; (iii)
there shall have been, since the respective dates as of which information is
given, no material adverse change in the business, properties, condition
(financial or otherwise), results of operations, capital stock, long-term or
short-term debt or general affairs of the Company from that set forth in the
Registration Statement and the Prospectus, except changes which the
Registration Statement and Prospectus indicate might occur after the Effective
Date and the Company shall not have incurred any material liabilities nor
entered into any agreement not in the ordinary course of business other than
as referred to in the Registration Statement and Prospectus; and (iv) except
as set forth in the Prospectus, no action, suit or proceeding at law shall be
pending or threatened against the Company which would be required to be
disclosed in the Registration Statement, and no proceedings shall be pending
or threatened against the Company before or by any commission, board or
administrative agency in the United States or elsewhere, wherein an
unfavorable decision, ruling or finding would materially and adversely affect
the business, property, condition (financial or otherwise), results of
operations or general affairs of the Company. In addition, you shall have
received, at the First Closing Date, a certificate signed by the President and
the principal financial or accounting officer of the Company, dated as of the
First Closing Date, evidencing compliance with the provisions of this
subsection (e).
(f) Upon exercise of the option provided for in Section 2(b)
hereof, your obligations to purchase and pay for the Option Shares referred to
therein will be subject (as of the date hereof and as of the Option Closing
Date) to the following additional conditions:
(i) The Registration Statement shall remain
effective at the Option Closing Date, no stop order suspending the
effectiveness thereof shall have been issued, and no proceedings for
that purpose shall have been instituted or shall be pending, or, to
your knowledge or the knowledge of the Company, shall be contemplated
by the Commission, and any reasonable request on the part of the
Commission for additional information shall have been complied with
to the reasonable satisfaction of Freshman, Marantz, Orlanski, Xxxxxx
& Xxxxx, counsel to you.
(ii) At the Option Closing Date there shall have
been delivered to you the signed opinion of Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP, counsel for the Company, dated as of the Option Closing
Date, in form and substance reasonably satisfactory to Freshman,
Marantz, Orlanski, Xxxxxx & Xxxxx, counsel to you, which opinion
shall be substantially the same in scope and substance as the opinion
furnished to you at the First Closing Date pursuant to Section 4(b)
hereof, except that such opinion, where appropriate, shall cover the
Option Shares rather than the Firm Shares. If the First Closing Date
is the same as the Option Closing Date, such opinions may be
combined.
16
(iii) At the Option Closing Date, there shall have
been delivered to you a certificate of the President and the Chairman
of the Board of the Company dated the Option Closing Date, in form
and substance reasonably satisfactory to Freshman, Marantz, Orlanski,
Xxxxxx & Xxxxx, counsel to you, substantially the same in scope and
substance as the certificate furnished to you at the First Closing
Date pursuant to Section 4(e) hereof.
(iv) At the Option Closing Date, there shall have
been delivered to you a letter in form and substance satisfactory to
you from Xxxxxx Xxxxxxxx LLP, dated the Option Closing Date and
addressed to you, confirming the information in their letter referred
to in Section 4(d) hereof as of the date thereof and stating that,
without any additional investigation required, nothing has come to
their attention during the period from the ending date of their
review referred to in said letter to a date not more than five-(5)
days prior to the Option Closing Date which would require any change
in said letter if it were required to be dated the Option Closing
Date.
(v) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the Option
Shares shall be reasonably satisfactory in form and substance to you,
and you and Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, counsel to
you, shall have been furnished with all such documents and
certificates as you may request in connection with this transaction
in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company or its
compliance with any of the covenants or conditions contained therein.
(g) If any of the conditions herein provided for in this
Section shall not have been completely fulfilled as of the date indicated,
this Agreement and all obligations of the Underwriters under this Agreement
may be cancelled at, or at any time prior to, each Closing Date by your
notifying the Company of such cancellation in writing or by telegram at or
prior to the applicable Closing Date. Any such cancellation shall be without
liability of any Underwriter to the Company, except as otherwise provided
herein.
5. Conditions of the Obligations of the Company.
The obligation of the Company to sell and deliver the Shares
is subject to the following conditions:
(a) The Registration Statement shall have become effective
not later than 9:00 a.m. New York time, on the date of this Agreement, or on
such later date or time as you and the Company may agree in writing.
(b) on the Closing Dates, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
Act or any proceedings therefor initiated or threatened by the Commission.
17
If the conditions to the obligations of the Company provided
for in this Section have been fulfilled on the First Closing Date but are not
fulfilled after the First Closing Date and prior to the Option Closing Date,
then only the obligation of the Company to sell and deliver the Option Shares
on exercise of the option provided for in Section 2(b) hereof shall be
affected.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless you
and each person, if any, who controls you, within the meaning of the Act, from
and against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys, fees), to
which you or such controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in (A) the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment thereof or supplement thereto, (B) any blue sky application or other
document executed by the Company specifically for that purpose or based upon
written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof (any such application, document or information being hereinafter
called a "Blue Sky Application"), or arise out of or are based upon the
omission or alleged omission to state in the Registration Statement, or any
supplement thereto, or in any Blue Sky Application, a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any such
case to the extent, but only to the extent, that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company through you
specifically for use in the preparation of the Registration Statement or any
such amendment or supplement thereof or any such Blue Sky Application or any
such Preliminary Prospectus or the Prospectus or any such amendment or
supplement thereto and provided further, that the indemnity agreement provided
in this Section 6(b) with respect to any preliminary Prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any
losses, claims, charges, liabilities or litigation based upon any untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission to state therein a material fact purchased Shares, if a copy
of the Prospectus in which such untrue statement or alleged untrue statement
or omission or alleged omission was corrected has not been sent or given to
such person within the time required by the Act and the Rules and Regulations
thereunder. This indemnity will be in addition to any liability which the
Company may otherwise have.
(b) You agree to indemnify and hold harmless the Company,
each of its directors, each nominee (if any) for director named in the
Prospectus, each of its officers who have signed the Registration Statement,
and each person, if any, who controls the Company, within the meaning of the
Act, from and against any losses, claims, damages or liabilities (which shall,
for all purposes of this Agreement, shall include, but not be limited
18
to, all reasonable costs of defense and investigation and all reasonable
attorneys, fees) to which the Company or any such director, nominee, officer
or controlling person may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged untrue
statement or omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or omission or
alleged untrue statement or omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company through you specifically for use in preparation thereof. This
indemnity agreement will be in addition to any liability which you may
otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section, notify in writing the indemnifying
party of the commencement thereof,, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, subject to the provisions herein stated, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. The indemnified party shall have the right
to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the indemnified
party; provided that if the indemnified party is any Underwriter or a person
who controls any Underwriter within the meaning of the Act, the fees and
expenses of such counsel shall be at the expense of the indemnifying party if
(i) the employment of such counsel has been specifically authorized in writing
by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both such Underwriter or such
controlling persona nd the indemnifying party, and in your judgment, it is
advisable for such Underwriter or controlling persons to be represented by
separate counsel (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of such Underwriter or
such controlling person, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the
19
reasonable fees and expenses of more than one separate firm of attorneys). No
settlement of any action against an indemnified party shall be made without
the consent of the indemnified party, which shall be unreasonably withheld.
7. Contribution.
In order to provide for just and equitable contribution
under the Act in any case in which (i) the indemnified party makes claims for
indemnification pursuant to Section 6 hereof but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case,
notwithstanding the fact that the express provisions of Section 6 provide for
indemnification in such case, or (ii) contribution under the Act may be
required on the part of you, then the Company and each person who controls the
Company, in the aggregate, and you shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees) in
either such case (after contribution from others) in such proportions that
such Underwriter is responsible in the aggregate for that portion of such
losses, claims, damages or liabilities represented by the percentage that the
underwriting discount per Unit appearing on the cover page of the Prospectus
bears to the public offering price per Unit appearing thereon, and the Company
shall be responsible for the remaining portion, provided, however, that if
such allocation is not permitted by applicable law, then the relative fault of
the Company and you and controlling persons, in the aggregate, in connection
with the statements or omissions which resulted in such damages and other
relevant equitable considerations shall also be considered. The relative fault
shall be determined by reference to, among other things, whether in the case
of an untrue statement of a material fact or the omission to state a material
fact, such statement or omission relates to information supplied by the
Company or you, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriters agree (a) that it would not be just
and equitable if the respective obligations of the Company and you to
contribute pursuant to this Section 7 were to be determined by pro rata or per
capita allocation of the aggregate damages (even if the Underwriters have to
be 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 the first sentence of this Section 7 and (b) that the contribution of
any Underwriter shall not be in excess of its proportionate share of the
portion of such losses, claims, damages or liabilities for which you are
responsible. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation. As used in
this paragraph, the word "Company" within the meaning of Section 15 of the
Act. Your obligations to contribute pursuant to this Section 7 are several in
proportion to their respective underwriting obligations and not joint. If the
full amount of the contribution specified in this paragraph is not permitted
by law, then you and each person who controls you shall be entitled to
contribution from the Company to the full extent permitted by law. The
foregoing contribution agreement shall in no way affect the contribution
liabilities of any persons
20
having liability under Section 11 of the Act other
than the Company and you. No contribution shall be requested with regard to
the settlement of any matter from any party who did not xxxxxxx.xx the
settlement; provided, however, that such consent shall not be unreasonably
withheld.
8. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the
sale of the Shares to you is consummated, the Company will pay all costs and
expenses incident to the performance of this Agreement by the Company,
including but not limited to the fees and expenses of counsel to the Company
and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the
Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), each Preliminary Prospectus and the
Prospectus, as amended or supplemented, the fee of the National Association of
Securities Dealers, Inc. ("NASD") in connection with the filing required by
the NASD relating to the offering of the Shares contemplated hereby; all
expenses, including reasonable fees (but not in excess of the amount set forth
in Section 3(b)) and disbursements of counsel to you, in connection with the
qualification of the Shares under the State Securities or Blue Sky Laws which
you shall designate; the cost of printing and furnishing to you copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus, this
Agreement, the Warrant Agreement and the Blue Sky Memorandum; the cost of
printing the certificates representing the Shares, the expenses of Company due
diligence meetings and presentations, (but not of you or your counsel in
connection therewith) and the expense (which shall not exceed $5,000) of
placing one or more "tombstone" advertisements as directed by you. The Company
and shall pay any and all taxes (including any transfer, franchise, capital
stock or other tax imposed by any jurisdiction) on sales to you hereunder. The
Company will also pay all costs and expenses incident to the furnishing of any
amended Prospectus or of any supplement to be attached to the Prospectus as
called for in Section 3(a) of this Agreement except as otherwise set forth in
said Section.
(b) In addition to the foregoing expenses, the Company shall
at the First Closing Date pay to you the balance of a non-accountable expense
allowance three (3%) of the gross proceeds of the offering, of which $_____
has been paid. In the event the over-allotment option is exercised in part or
in full, the Company shall pay to you at the Option Closing Date an additional
amount equal to three (3%) of the gross proceeds received upon exercise of the
overallotment option. In the event the transactions contemplated hereby are
not consummated for any reason, the Company shall be liable for your actual
accountable out-of-pocket expenses (with credit given to the $_____ paid),
including legal fees, provided however, that any portion of the $_____ paid by
the Company that has not been utilized by you in connection with the offering
on an accountable basis shall be refunded by you to the Company; and further
provided that if the contemplated transactions are not consummated by reason
of breach by the Company of this Agreement or of any representation, warranty,
covenant or condition contained herein, the Company shall be liable for all of
your accountable expenses.
21
(c) No person is entitled either directly or indirectly to
compensation from the Company, from any Underwriter or from any other person
for services as a finder in connection with the proposed offering, and the
Company agrees to indemnify and hold harmless you, and you agree to indemnify
and hold harmless, severally and not jointly, the Company from and against any
losses, claims, damages or liabilities, joint or several (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees), to
which the indemnified party may become subject insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon the claim of any person (other than an employee of the party
claiming indemnity) or entity that he or it is entitled to a finder's fee in
connection wit the proposed offering by reason of such person's or entity's
influence or prior contact with the indemnifying party.
9. Effective Date.
The Agreement shall become effective upon its execution,
except that you may, at your option, delay its effectiveness until the earlier
to occur of 10:00 A.M., New York time on the first full business day following
the Effective Date as you in your discretion shall first commence the initial
public offering by you of any of the Shares. The time of the initial public
offering shall mean the time of release by you of the first newspaper
advertisement with respect to the Shares, or the time when the Shares are
first generally offered by you to dealers by letter or telecopier, whichever
shall first occur. This Agreement may be terminated by you at any time before
it becomes effective as provided above, except that Sections 3(c), 6, 7, 8,
12, 13, 14 and 15 shall remain in effect notwithstanding such termination.
10. Termination.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 12,
13, 14 and 15, may be terminated at any time prior to the First Closing Date,
and the option referred to in Section 2(b), if exercised, may be cancelled, at
any time prior to the Option Closing Date, by you if in your judgment it is
impracticable to offer for sale or to enforce contracts made by you for the
resale of the Shares agreed to be purchased hereunder, by reason of (i) the
Company having sustained a material loss, whether or not insured, by reason of
fire, earthquake, flood, accident or other calamity, or from any labor dispute
or court or government action, order or decree, (ii) trading in securities on
the New York Stock Exchange or the American Stock Exchange having been
suspended or limited, (iii) material governmental restrictions having been
imposed on trading in securities generally which are not in force and effect
on the date hereof, (iv) a banking moratorium having been declared by federal
of New York State authorities, (v) an outbreak of major international
hostilities or other national or international calamity having occurred, (vi)
the passage by the Congress of the United States or by any state legislative
body of similar impact, of any act or measure, or the adoption of any orders,
rules or regulations by any governmental body or any authoritative accounting
institute or board, or any governmental executive, which is reasonably
believed likely by you to have a material adverse impact on the business,
financial condition or financial statements of the Company, (vii) any material
adverse
22
change in the financial or securities markets beyond normal fluctuations in
the United States having occurred since the date of this Agreement, or (viii)
any material adverse change having occurred, since the respective dates for
which information is given in the Registration Statement and Prospectus, in
the earnings, business, prospects or general condition of the Company,
financial or otherwise, whether or not arising in the ordinary course of
business.
(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10 or in
Section 9, the Company shall be promptly notified by you, by telephone or
facsimile transmission, confirmed by letter.
11. Underwriter's Warrant.
On the First Closing Date, the Company will issue to you,
for a consideration of $5.00 and upon the terms and conditions set forth in
the form of Underwriter's Warrant annexed as an exhibit to the Registration
Statement, an Underwriter's Warrant to purchase 160,000 Shares. In the event
of conflict in the terms of this Agreement and the Underwriter's Warrant, the
language of the Underwriter's Warrant shall control.
12. Representations, Warranties and Agreements to Survive
Delivery.
The respective indemnities, agreements, representations,
warranties and other statements of the Company or its Existing Shareholders,
where appropriate, and you, set forth in or made pursuant to this Agreement
will remain in full force and effect regardless of any investigation made by
or on behalf of you, the Company or any of its officers or directors or any
controlling persons and will survive delivery of and payment for the Shares
and the termination of this Agreement.
13. Notice.
All communications hereunder will be in writing and, except
as otherwise expressly provided herein, if sent to you, will be mailed,
delivered or telecopied and confirmed to it at X.X. Xxxxxx & Co., Inc., 0000
Xx. Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000-0000, with a copy sent to Xxxxxx X.
Xxxxxxx, Esq. at Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, 0000 Xxxxxxxx
Xxxxxxxxx, 0xx Xxxxx Xxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000, of if sent to
the Company, will be mailed, delivered, or facsimiled and confirmed to Xxxx X.
Xxxxx of Votan Corporation, 0000 Xxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxxxx 00000, with copy sent to Xxxxxxx X. Xxxxxx, Esq. of Xxxxxxx,
Xxxxxxx & Xxxxxxxx LLP, at Xxxxx Xxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000.
14. Parties in Interest.
The Agreement herein set forth is made solely for your
benefit, the Company and, to the extent expressed, the Existing Shareholders,
any person controlling the Company, or you, and directors of the Company,
nominees for directors of the Company (if any) named in the Prospectus, the
officers of the Company who have signed the Registration Statement, and their
respective executors, administrators, successors and
23
assigns, and no other person shall acquire for have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include
any purchaser, as such purchaser, from you of the Shares.
15. Applicable Law.
This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements
made and to be entirely performed within New York.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return this Underwriting Agreement, whereupon
it will become a binding agreement between the Company and you in accordance
with its terms.
Very truly yours,
Votan Corporation
Dated: ______________, 1995 By:________________________________
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
X.X. Xxxxxx & Co., Inc.
Dated: ______________, 1995 By:________________________________
Authorized Officer
SCHEDULE I
Underwriting Agreement dated ___________ ___, 1997
Number of Firm
Shares
Underwriter to be Purchased
---------------
X.X. Xxxxxx & Co., Inc. 1,600,000
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