EXHIBIT 1.1
GENISYS RESERVATION SYSTEMS, INC.
UNDERWRITING AGREEMENT
800,000 Shares of Common Stock and
2,100,000 Redeemable Warrants
, 1996
X.X. Xxxxx & Co., Inc.
000 Xxxxx Xxxxxx - 0xx. Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Genisys Reservation Systems, Inc., a New Jersey corporation (the
"Company"), confirms its
agreement with X.X. Xxxxx & Co., Inc. ("X.X. Xxxxx") ( the "Underwriter") with
respect to the sale
by the Company and the purchase by the Underwriter of 800,000 shares (the
"Shares") of the
Company's common stock, $.0001 par value per share (the "Common Stock"), and
2,100,000
redeemable warrants to acquire one additional share of Common Stock ("Public
Warrants"). The
shares of Common Stock and Public Warrants will be immediately separable and
tradeable upon
issuance and will not trade as units. The Public Warrants will be comprised
of 1,300,000 Class A
Redeemable Warrants (the "Class A Warrants") and 800,000 Class B Redeemable
Warrants (the
"Class B Warrants"). Each Public Warrant is exercisable from , 1997 until,
, 2001. Each Class
A Warrant will have an initial exercise price of $5.75 for one (1) share of
Common Stock, and each
Class B Warrant shall have an initial exercise price of $6.75 for one (1) share
of Common Stock. The
Public Warrants will be subject to prior redemption by the Company as more
fully described in the
Registration Statement and Prospectus referred to below. The Shares, Class A
Warrants and Class
B Warrants are hereinafter referred to as the "Firm Securities." Upon your
request, as provided in
Section 2(b) of this Agreement, the Company shall also issue and sell to you up
to an additional
120,000 Shares and/or 195,000 Class A Warrants and 120,000 Class B Warrants for
the purpose of
covering over-allotments, if any, in the sale of the Firm Securities. Such
120,000 Shares and/or
195,000 Class A Warrants and 120,000 Class B Warrants are hereinafter referred
to as the "Option
Securities" The Firm Securities and the Options Securities are hereinafter
collectively referred to as
the "Public Offering Securities." The Company also proposes to issue and sell
to you warrants (the
"Underwriter's Warrants") pursuant to the Underwriter's Warrant Agreement dated
, 1996
between the Underwriter and the Company (the "Underwriter's Warrant Agreement"
for the
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purchase of an additional 80,000 Shares and/or 130,000 Class A Warrants and
80,000 Class B
Warrants. The Shares and/or Public Warrants issuable upon exercise of the
Underwriter's Warrants
are hereinafter referred to as the "Underwriter's Securities." The shares of
Common Stock issuable
upon exercise of the Public Warrants (including the Public Warrants issuable
upon exercise of the
Underwriter's Warrants) are hereinafter sometimes referred to as the "Warrant
Shares." The Public
Offering Securities, the Shares, the Public Warrants, the Underwriter's
Warrants, the Underwriter's
Securities and the Warrant Shares are more fully described in the Registration
Statement and the
Prospectus referred to below.
1. Representations and Warranties. (a) The Company represents and
warrants to, and agrees
with, each of the Underwriters as of the date hereof, and as of the Closing
Date (hereinafter defined)
and the Option Closing Date (hereinafter defined), if any, as follows:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the
"Commission") a registration statement, and an amendment or amendments thereto,
on Form SB-2
(No. 333- ), including any related preliminary prospectus ("Preliminary
Prospectus"), for the
registration of the Shares, the Public Warrants, the Underwriter's Securities
and the Warrant Shares
under the Securities Act of 1933, as amended (the "Act"), which registration
statement and
amendment or amendments have been prepared by the Company in conformity with
the
requirements of the Act, and the Rules and Regulations of the Commission
thereunder. The
Company will promptly file a further amendment to said registration statement
in the form
heretofore delivered to the Underwriter and will not file any other amendment
thereto to which the
Underwriter shall have objected in writing after having been furnished with a
copy thereof. Except
as the context may otherwise require, such registration statement, as amended,
on file with the
Commission at the time the registration statement becomes effective (including
the prospectus,
financial statements, schedules, exhibits and all other documents or
information incorporated by
reference therein) and all information deemed to be a part thereof as of such
time pursuant to
paragraph (b) of Rule 430(A) of the rules and regulations) is hereinafter
called the "Registration
Statement", and the form of prospectus in the form first filed with the
Commission pursuant to Rule
424(b) of the rules and regulations is hereinafter called the "Prospectus."
For purposes hereof,
"Rules and Regulations" mean the rules and regulations adopted by the
Commission under either
the Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as applicable.
(ii) Neither the Commission nor any state regulatory authority has
issued any order preventing
or suspending the use of any Preliminary Prospectus, the Registration Statement
or Prospectus or
any part of any thereof and no proceedings for a stop order suspending the
effectiveness of the
Registration Statement or any of the Company's securities have been instituted
or are pending or
threatened. Each of the Preliminary Prospectus, the Registration Statement and
Prospectus at the
time of filing thereof conformed with the requirements of the Acts and the
Rules and Regulations,
and none of the Preliminary Prospectus, the Registration Statement or
Prospectus at the time of filing
thereof contained an untrue statement of a material fact or omitted to state a
material fact required
to be stated therein and necessary to make the statements therein, in light of
the circumstances under
which they were made, not misleading, except that this representation and
warranty does not apply
to statements made in reliance upon and in conformity with written information
furnished to the
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Company with respect to the Underwriter by or on behalf of the Underwriter
expressly for use in
such Preliminary Prospectus, Registration Statement or Prospectus or any
amendment or supplement
thereto. It is understood that the statements set forth in the Prospectus on
page 2 with respect to
stabilization, under the heading "Underwriting" and the identity of counsel to
the Underwriter under
the heading "Legal Matters" constitute the only information furnished in
writing by or on behalf of
the Underwriter for inclusion in the Registration Statement and Prospectus, as
the case may be.
(iii) When the Registration Statement becomes effective and at all
times subsequent thereto
up to the Closing Date (hereinafter defined) and each Option Closing Date
(hereinafter defined), if
any, and during such longer period as the Prospectus may be required to be
delivered in connection
with sales by the Underwriter or a dealer, the Registration Statement and the
Prospectus will contain
all statements which are required to be stated therein in accordance with the
Act and the Rules and
Regulations, and will conform to the requirements of the Act and the Rules and
Regulations; neither
the Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, contains
or will contain any untrue statement of a material fact or omit to state any
material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under
which they were made, not misleading, provided, however, that this
representation and warranty
does not apply to statements made or statements omitted in reliance upon and in
conformity with
information furnished to the Company in writing by or on behalf of the
(as set forth in
paragraph 1(a)(ii) hereof) expressly for use in the Preliminary Prospectus,
Registration Statement
or Prospectus or any amendment thereof or supplement thereto.
(iv) The Company has been duly organized and is validly existing as
a corporation in good
standing under the laws of the state of its incorporation. The Company does
not own an equity
interest in any corporation, partnership, trust, joint venture or other business
entity. The Company
is duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations require such
qualification or licensing except where the failure(s) to be so qualified,
licensed and in good
standing, individually or in the aggregate, would not materially and adversely
affect the condition,
financial or otherwise, or the earnings, business affairs, position, prospects,
value, operation,
properties, business or results of operations of the Company. The Company has
all requisite power
and authority (corporate and other), and has obtained any and all
authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all governmental or
regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar
matters), necessary to own or lease its properties and conduct its business as
described in the
Prospectus; the Company is and has been doing business in compliance with all
such authorizations,
approvals, orders, licenses, certificates, franchises and permits and all
federal, state, local and foreign
laws, rules and regulations and the Company has not received any notice of
proceedings relating to
the revocation or modification of any such authorization, approval, order,
license, certificate,
franchise, or permit which, singly or in the aggregate, if the subject of an
unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the
earnings, business affairs, position, prospects, value, operations, properties,
business, or results of
operations of the Company. The disclosures in the Registration Statement
concerning the effects
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of federal, state, local, and foreign laws, rules and regulations on the
Company's business as
currently conducted and as contemplated are correct in all material respects
and do not omit to state
a material fact necessary to make the statements contained therein not
misleading in light of the
circumstances in which they were made.
(v) The Company has a duly authorized, issued and outstanding
capitalization as set forth in
the Prospectus, and will have the adjusted capitalization set forth therein on
the Closing Date
(hereinafter defined) and the Option Closing Date (hereinafter defined), if any,
based upon the
assumptions set forth therein, and the Company is not a party to or bound by
any instrument,
agreement or other arrangement providing for it to issue any capital stock,
rights, warrants, options
or other securities, except for this Agreement and as described in the
Prospectus. The Common
Stock, the Shares, the Public Warrants, the Underwriter's Warrants, the
Underwriter's Securities and
the Warrant Shares (collectively, hereinafter sometimes referred to as the
"Securities") and all other
securities issued or issuable by the Company conform or, when issued and paid
for, will conform,
in all respects to all statements with respect thereto contained in the
Registration Statement and the
Prospectus. All issued and outstanding securities of the Company have been
duly authorized and
validly issued and are fully paid and non-assessable and the holders thereof
have no rights of
rescission with respect thereto, and are not subject to personal liability by
reason of being such
holders; and none of such securities were issued in violation of the preemptive
rights of any holders
of any security of the Company or similar contractual rights granted by the
Company. The
Securities are not and will not be subject to any preemptive or other similar
rights of any
stockholder, have been duly authorized and, when issued, paid for and delivered
in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable and will
conform to the
description thereof contained in the Prospectus; the holders thereof will not be
subject to any liability
solely as such holders; all corporate action required to be taken for the
authorization, issue and sale
of the Securities has been duly and validly taken; and the certificates
representing the Securities are
in due and proper form. Upon the issuance and delivery pursuant to the terms
hereof of the
Securities to be sold by the Company hereunder, the Underwriter will acquire
good and marketable
title to such Securities free and clear of any lien, charge, claim, encumbrance,
pledge, security
interest, defect or other restriction or equity of any kind whatsoever.
(vi) The financial statements of the Company together with the
related notes and schedules
(if any) thereto, included in the Registration Statement, each Preliminary
Prospectus and the
Prospectus fairly present the financial position, income, changes in cash flow,
changes in
stockholders' equity and the results of operations of the Company at the
respective dates and for the
respective periods to which they apply and the pro forma financial information
included in the
Registration Statement, each Preliminary Prospectus and the Prospectus presents
fairly on a basis
consistent with that of the audited financial statements included therein, the
Company's pro forma
net income or loss per share, as the case may be, pro forma net tangible book
value, and the pro
forma capitalization and such financial statements have been prepared in
conformity with generally
accepted accounting principles and the Rules and Regulations, consistently
applied throughout the
periods involved. There has been no material adverse change or development
involving a material
change in the condition, financial or otherwise, or in the earnings, business
affairs, position,
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prospects, value, operation, properties, business or results of operation of
the Company whether or
not arising in the ordinary course of business, since the date of the financial
statements included in
the Registration Statement and the Prospectus, and the outstanding debt, the
property, both tangible
and intangible, and the business of the Company conforms in all material
respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
(vii) The Company (A) has paid all federal, state, local, and foreign
taxes for which it is
liable, including, but not limited to, withholding taxes and amounts payable
under Chapters 21
through 24 of the Internal Revenue Code of 1986, as amended (the "Code"), and
has furnished all
information returns it is required to furnish pursuant to the Code, (B) has
established adequate
reserves for such taxes which are not due and payable, and (C) does not have
any tax deficiency or
claims outstanding, proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is payable
by or on behalf of the
Underwriter in connection with (A) the issuance by the Company of the
Securities, (B) the purchase
by the Underwriter of the Public Offering Securities, the Shares, the Public
Warrants and the
Warrant Shares and the purchase by the Underwriter of the Underwriter's Warrants
from the
Company, (C) the consummation by the Company of any of its obligations under
this Agreement,
or (D) resales of the Securities in connection with the distribution
contemplated hereby.
(ix) The Company maintains insurance policies, including, but not
limited to, general liability,
product liability and property insurance, which insures the Company and its
employees, against such
losses and risks generally insured against by comparable businesses. The
Company (A) has not
failed to give notice or present any insurance claim with respect to any matter,
including but not
limited to the Company's business, property or employees, under the insurance
policy or surety bond
in a due and timely manner, (B) does not have any disputes or claims against
any underwriter of such
insurance policies or surety bonds or has not failed to pay any premiums due
and payable thereunder,
or (C) has not failed to comply with all conditions contained in such insurance
policies and surety
bonds. There are no facts or circumstances under any such insurance policy or
surety bond which
would relieve any insurer of its obligation to satisfy in full any valid claim
of the company.
(x) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or
governmental proceeding (including, without limitation, those having
jurisdiction over
environmental or similar matters), domestic or foreign, pending or threatened
against (or
circumstances that may give rise to the same), or involving the properties or
business of the
Company which (A) questions the validity of the capital stock of the Company or
this Agreement,
the Underwriter's Warrant Agreement, the Warrant Agreement (as defined in
Section 1(xxxiii)
below) or of any action taken or to be taken by the Company pursuant to or in
connection with this
Agreement, the Underwriter's Warrant Agreement, or the Warrant Agreement, (B) is
required to be
disclosed in the Registration Statement which is not so disclosed (and such
proceedings as are
summarized in the Registration Statement are accurately summarized in all
material respects), or (C)
if adversely determined, might materially and adversely affect the condition,
financial or otherwise,
or the business affairs or business prospects, earnings, liabilities, prospects,
stockholders' equity,
5
value, properties, business or assets of the Company.
(xi) The Company has full legal right, power and authority to
authorize, issue, deliver and
sell the Securities, enter into this Agreement, the Underwriter's Warrant
Agreement and the Warrant
Agreement and to consummate the transactions provided for herein and therein;
and each of this
Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement have
been duly and
properly authorized, executed and delivered by the Company. This Agreement,
the Underwriter's
Warrant Agreement and the Warrant Agreement each constitute a legal, valid and
binding agreement
of the Company enforceable against the Company in accordance with its terms, and
neither the
Company's issue and sale of the Securities or execution or delivery of this
Agreement, the
Underwriter's Warrant Agreement and the Warrant Agreement or its performance
hereunder and
thereunder, its consummation of the transactions contemplated herein and
therein, or the conduct of
its business as described in the Registration Statement, the Prospectus, and
any amendments or
supplements thereto, conflicts with or will conflict with or results or will
result in any breach or
violation of any of the terms or provisions of, or constitutes or will
constitute a default under, or
result in the creation or imposition of any lien, charge, claim, encumbrance,
pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible
or intangible) of the Company pursuant to the terms of, (A) the certificate of
incorporation or by-
laws of the Company, (B) any license, contract, indenture, mortgage, deed of
trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any other
agreement or
instrument to which the Company is a party or by which it is or may be bound or
the which is
properties or assets (tangible or intangible) is or may be subject, or any
indebtedness, or (C) any
statute, judgment, decree, order, rule or regulation applicable to the Company
of any arbitrator,
court, regulatory body or administrative agency or other governmental agency or
body (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or
foreign, having jurisdiction over the Company or any of its activities or
properties, in each case
except for conflicts, breaches, violations, defaults, creations or impositions
which do not and would
not have a material adverse effect on the condition, financial or otherwise, or
the earnings, business
affairs, position, shareholder's equity, value, operation, properties, business
or results of operations
of the Company.
(xii) No consent, approval, authorization or order of, and no
filing with, any court, regulatory
body, government agency or other body, domestic or foreign, is required for the
issuance of the
Securities pursuant to the Prospectus and the Registration Statement, the
issuance of the
Underwriter's Warrants, the execution, delivery or performance of this
Agreement, the Underwriter's
Warrant Agreement and the Warrant Agreement, and the transactions contemplated
hereby and
thereby, including, without limitation, any waiver of any preemptive, first
refusal or other rights that
any entity or person may have for the issue and/or sale of any of the
Securities, except such as have
been or may be obtained under the Act or may be required under state securities
or Blue Sky laws
in connection with the Underwriter's purchase and distribution of the Securities
and the
Underwriter's purchase of the Underwriter's Warrants to be sold by the Company
hereunder and
thereunder.
6
(xiii) All executed agreements, contracts or other documents or
copies of executed
agreements, contracts or other documents filed as exhibits to the Registration
Statement to which
the Company is a party or by which it may be bound or to which its assets,
properties or business
may be subject have been duly and validly authorized, executed and delivered by
the Company and
constitute the legal, valid and binding agreements of the Company, enforceable
against the
Company, in accordance with their respective terms. The descriptions in the
Registration Statement
of agreements, contracts and other documents and statutes and regulations are
accurate and fairly
present the information required to be shown with respect thereto by Form SB-2,
and there are no
contracts or other documents which are required by the Act to be described in
the Registration
Statement or filed as exhibits to the Registration Statement which are not
described or filed as
required, and the exhibits which have been filed are complete and correct
copies of the documents
of which they purport to be copies.
(xiv) Subsequent to the respective dates as of which information is
set forth in the
Registration Statement and Prospectus, and except as may otherwise be indicated
or contemplated
herein or therein, the Company has not (A) issued any securities or incurred
any liability or
obligation, direct or contingent, for borrowed money, (B) entered into any
transaction other than in
the ordinary course of business, or (C) declared or paid any dividend or made
any other distribution
on or in respect of its capital stock of any class, and there has not been any
change in the capital
stock, or any change in the debt (long or short term) or liabilities or material
change in or affecting
the business affairs or prospects, management, stockholders' equity, properties,
business, financial
operations or assets of the Company.
(xv) No default exists in the due performance and observance of any
term, covenant or
condition of any license, contract, indenture, mortgage, installment sale
agreement, lease, deed of
trust, voting trust agreement, stockholders agreement, partnership agreement,
note, loan or credit
agreement, purchase order, or any other material agreement or instrument
evidencing an obligation
for borrowed money, or any other material agreement or instrument to which the
Company is a party
or by which the Company may be bound or to which the property or assets
(tangible or intangible)
of the Company is subject or affected, which default would have a material
adverse effect on the
condition, financial or otherwise, earnings, business affairs, position,
shareholder's equity, value,
operation, properties, business or results of operations of the Company.
(xvi) The Company has generally enjoyed a satisfactory
employer-employee relationship
with its employees and is in compliance in all material respects with all
federal, state, local, and
foreign laws and regulations respecting employment and employment practices,
terms and conditions
of employment and wages and hours. There are no pending investigations
involving the Company,
by the U.S. Department of Labor, or any other governmental agency responsible
for the enforcement
of such federal, state, local, or foreign laws and regulations. There is no
unfair labor practice charge
or complaint against the Company pending before the National Labor Relations
Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the
Company, or any predecessor entity, and none has ever occurred. No
representation question exists
respecting the employees of the Company and no collective bargaining agreement
or modification
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thereof is currently being negotiated by the Company. No grievance or
arbitration proceeding is
pending under any expired or existing collective bargaining agreements of the
Company. No labor
dispute with the employees of the Company exists, or, to the knowledge of the
Company is
imminent.
(xvii) Except as described in the Prospectus, the Company does not
maintain, sponsor or
contribute to any program or arrangement that is an "employee pension benefit
plan," an "employee
welfare benefit plan," or a "multiemployer plan" as such terms are defined in
Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended
("ERISA") ("ERISA Plans"). The Company does not maintain or contribute, now or
at any time
previously, to a defined benefit plan, as defined in Section 3(35) of ERISA.
No ERISA Plan (or any
trust created thereunder) has engaged in a "prohibited transaction" within the
meaning of Section 406
of ERISA or Section 4975 of the Code, which could subject the Company to any
tax
penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in
compliance with all material reporting, disclosure and other requirements of
the
Code and ERISA
as they relate to any such ERISA Plan. Determination letters have been received
from the Internal
Revenue Service with respect to each ERISA Plan which is intended to comply with
Code Section
401(a), stating that such ERISA Plan and the attendant trust are qualified
thereunder. The Company
has never completely or partially withdrawn from a "multiemployer plan."
(xviii) Neither the Company nor any of its employees, directors,
stockholders, or affiliates
(within the meaning of the Rules and Regulations) of any of the foregoing has
taken or will take,
directly or indirectly, any action designed to or which has constituted or
which
might be expected
to cause or result in, under the Exchange Act, or otherwise, stabilization or
manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities or otherwise.
(xix) None of the patents, patent applications, trademarks, service
marks, trade names and
copyrights, and licenses and rights to the foregoing presently owned or held by
the Company are in
dispute or are in any conflict with the right of any other person or entity.
The Company (i) owns or
has the license or other right to use, free and clear of all liens, charges,
claims, encumbrances,
pledges, security interests, defects or other restrictions or equities of any
kind whatsoever, all
patents, trademarks, service marks, trade names and copyrights, technology and
licenses and rights
with respect to the foregoing, used in the conduct of its business as now
conducted or proposed to
be conducted without infringing upon or otherwise acting adversely to the right
or claimed right of
any person, corporation or other entity under or with respect to any of the
foregoing and (ii) except
as set forth in the Prospectus, is not obligated or under any liability
whatsoever to make any
payments by way of royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any
patent, trademark, service xxxx, tradename, copyright, know-how, technology or
other intangible
asset, with respect to the use thereof or in connection with the conduct of its
business or otherwise.
(xx) The Company has not received any notice of infringement of or
conflict with asserted
rights of others with respect to any trademark, service xxxx, trade name or
copyright or other
intangible asset used or held for use by it in connection with the conduct of
its businesses which,
8
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, might have a
material adverse effect on the condition, financial or otherwise, or the
business affairs, position,
properties, stockholder's equity, financial operations or assets of the Company.
(xxi) The Company has good and marketable title to, or valid and
enforceable leasehold
estates in, all items of real and personal property stated in the Prospectus,
to be owned or leased by
it free and clear of all liens, charges, claims, encumbrances, pledges,
security interest, defects, or
other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus
and liens for taxes not yet due and payable.
(xxii) Wiss & Company, LLP., Certified Public Accountants, whose
report is filed with the
Commission as a part of the Registration Statement, are independent certified
public accountants as
required by the Act and the Rules and Regulations.
(xxiii) The Company has caused to be duly executed legally binding and
enforceable
agreements pursuant to which each of its officers, directors or any person or
entity deemed to be an
affiliate of the Company and any stockholders of the Company has agreed not to,
directly or
indirectly, offer to sell, sell, grant any option for the sale of, assign,
transfer, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock (either pursuant to
Rule 144 of the
Rules and Regulations or otherwise) or dispose of any beneficial interest
therein for a period of not
less than 18 months following the effective date of the Registration Statement
without the prior
written consent of the Underwriter and that any Common Stock which has been
issued and is
outstanding on the effective date of the Registration Statement and is to be
sold or otherwise
disposed of pursuant to such Rule 144 with the consent of the Underwriter shall
only be sold or
otherwise disposed of through the Underwriter. The Company will cause the
Transfer Agent, as
defined below, to xxxx an appropriate legend on the face of stock certificates
representing all of such
securities and to place "stop transfer" orders on the Company's stock ledgers.
(xxiv) There are no claims, payments, issuances, arrangements or
understandings, whether
oral or written, for services in the nature of a finder's or origination fee
with respect to the sale of the
Securities hereunder or any other arrangements, agreements, understandings,
payments or issuance
with respect to the Company, or any of its officers, directors, stockholders,
partners, employees or
affiliates that may affect the Underwriter' compensation, as determined by the
National Association
of Securities Dealers, Inc. ("NASD") and the Company is aware that the
Underwriter and each of
the Underwriter's shall compensate any of their respective personnel who may
have acted in such
capacities as they shall determine in their sole discretion.
(xxv) The Shares, the Common Stock and the Public Warrants have been
approved for
quotation on the Nasdaq SmallCap Market and upon notice of issuance, listing on
the Boston Stock
Exchange ("BSE").
(xxvi) Neither the Company, nor any of its officers, employees,
agents or any other person
acting on behalf of the Company has, directly or indirectly, given or agreed to
give any money, gift
9
or similar benefit (other than legal price concessions to customers in the
ordinary course of business)
to any customer, supplier, employee or agent of a customer or supplier, or
official or employee of
any governmental agency (domestic or foreign) or instrumentality of any
government (domestic or
foreign) or any political party or candidate for office (domestic or foreign)
or other person who was,
is, or may be in a position to help or hinder the business of the Company (or
assist the Company in
connection with any actual or proposed transaction) which (A) might subject the
Company, or any
other such person to any damage or penalty in any civil, criminal or
governmental litigation or
proceeding (domestic or foreign), (B) if not given in the past, might have had
a materially adverse
effect on the assets, business, operations or prospects of the Company, or (C)
if not continued in the
future, might adversely affect the assets, business, operations or prospects of
the Company. The
Company's internal accounting controls are sufficient to cause the Company to
comply with the
Foreign Corrupt Practices Act of 1977, as amended.
(xxvii) Except as set forth in the Prospectus, no officer, director,
or stockholder of the
Company, or any "affiliate" or "associate" (as these terms are defined in Rule
405 promulgated under
the Rules and Regulations) of any of the foregoing persons or entities has or
has had, either directly
or indirectly, (A) an interest in any person or entity which (1) furnishes or
sells services or products
which are furnished or sold or are proposed to be furnished or sold by the
Company, or (2) purchases
from or sells or furnishes to the Company any goods or services, or (B) a
beneficiary interest in any
contract or agreement to which the Company is a party or by which it may b
e bound or affected.
Except as set forth in the Prospectus under "Certain Transactions," there are
no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings
or transactions, between or among the Company, and any officer, director,
Principal Security Holder
(as such term is defined in the Prospectus) of the Company, or any partner,
affiliate or associate of
any of the foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company and
delivered to the
Underwriter or to Scheichet & Xxxxx, P.C. ("Underwriter' Counsel") shall be
deemed a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby.
(xxix) The minute books of the Company have been made available to
the Underwriter and
contain a complete summary of all meetings and actions of the directors and
stockholders of the
Company, since the time of its incorporation, and reflects all transactions
referred to in such minutes
accurately in all material respects.
(xxx) Except and to the extent described in the Prospectus, no
holders of any securities of
the Company or of any options, warrants or other convertible or exchangeable
securities of the
Company have the right to include any securities issued by the Company in the
Registration
Statement or any registration statement under the Act and no person or entity
holds any anti-dilution
rights with respect to any securities of the Company.
(xxxi) The Company has as of the effective date of the
Registration Statement (a) entered
into employment agreements with Xxxxxx Xxxxxxx and Xxxx Xxxxx providing for
annual salaries
10
of $100,000, each on terms and conditions satisfactory to the Underwriter, and
(ii) purchased "Key-
Man" insurance on the lives of Xxxxxx Xxxxxxx and Xxxx Xxxxx which name the
Company as the
sole beneficiary on terms and conditions satisfactory to the Underwriter.
(xxxii) The Company has entered into a warrant agreement with respect
to the Public
Warrants, substantially in the form filed as Exhibit to the
Registration Statement ("Warrant
Agreement") with Continental Stock Transfer and Trust Company in form and
substance satisfactory
to the Underwriter.
(xxxiii) Immediately prior to the effective date of the
Registration Statement there shall be
no more than an aggregate of 2,511,650 shares of Common Stock issued and
outstanding (including
280,485 Shares of Common Stock held by non-management members of the public).
Except for
the Underwriter's Warrants, an option held by Xxxx Xxxxx to acquire 5,000
shares of Common Stock
upon conversion of a $10,000 promissory note, an option held by Xxxx Xxxxxxx to
acquire 10,000
shares of Common Stock upon conversion of a $20,000 promissory note, an option
held by Xxxx
Xxxxx to purchase 25,000 shares of the Company's Common Stock at an exercise
price of $.60 per
share, an option held by Loeb Holding Corp., as agent, to acquire 420,728
shares of Common Stock
upon conversion of certain interim loan agreements (the "Interim Loans") into
two long-term
promissory notes, an option held by Loeb Holding Corp., as agent, to acquire up
to 15% of the issued
and outstanding shares of Common Stock of the Company upon conversion of one of
the promissory
notes to be issued upon conversion of the Interim Loans, a warrant held by an
unaffiliated equipment
lessor to acquire 13,000 shares of Common Stock at an exercise price of $2.00
per share and
575,000 Class A Redeemable Warrants to purchase shares of Common Stock to be
issued to lenders
in the recent bridge financing of the Company, there are no securities with
equivalent rights as the
Common Stock, Common Stock or such equivalent securities, issuable upon the
exercise of options,
warrants and other contract rights, or securities convertible directly or
indirectly into Common Stock
or such equivalent securities issued or outstanding.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein
contained, but subject to the terms and conditions herein set forth, the
Company agrees to sell to
each Underwriter, and each Underwriter, severally and not jointly, agrees to
purchase from the
Company at a price of $4.50 per Share, $.18 per Class A Warrant and $.09 per
Class B Warrant, that
number of Firm Securities set forth above, subject to such adjustment as the
Underwriter in its sole
discretion shall make to eliminate any sales or purchases of fractional shares.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements,
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants
an option to the Underwriter to purchase all or any part of an additional
120,000 Shares at a price
of $4.50 per Share and/or 195,000 Class A Warrants and 120,000 Class B Warrants
at a price of $.18
per Class A Warrant and $.09 per Class B Warrant. The option granted hereby
will expire 45 days
after the date the Registration Statement becomes effective and may be
exercised in whole or in part
11
from time to time upon notice by the Underwriter to the Company setting forth
the number of Option
Securities as to which the several Underwriter are then exercising the option
and the time and date
of payment and delivery for any such Option Securities. Any such time and date
of delivery (an
"Option Closing Date") shall be determined by the Underwriter, but shall not be
later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Date (hereinafter
defined), unless otherwise agreed upon by the Underwriter and the Company.
Nothing herein
contained shall obligate the Underwriter to make any over-allotments. No
Option Securities shall
be delivered unless the Firm Securities shall be simultaneously delivered or
shall theretofore have
been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates
evidencing the Firm
Securities shall be made at the offices of X.X. Xxxxx & Co., Inc. at
0 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or at such other place as shall be agreed upon by the Underwriter
and the Company.
Such delivery and payment shall be made at 10:00 a.m. (New York City time)
on , 1996 or at
such other time and date as shall be agreed upon by the Underwriter and the
Company, but no less
than three (3) nor more than ten (10) full business days after the effective
date of the Registration
Statement (such time and date of payment and delivery being herein called
"Closing Date"). In
addition, in the event that any or all of the Option Securities are purchased
by the Underwriter,
payment of the purchase price for, and delivery of certificates for, such
Option Securities shall be
made at the above mentioned office of the Underwriter or at such other place
as shall be agreed upon
by the Underwriter and the Company on each Option Closing Date as specified in
the notice from
the Underwriter to the Company. Delivery of the certificates for the Firm
Securities and the Option
Securities if any, shall be made to the Underwriter against payment by the
Underwriter, severally
and not jointly, of the purchase price for the Firm Securities and the Option
Securities if any, to the
order of the Company by New York Clearing House Funds. In the event such
option is exercised,
the Underwriter shall purchase that number of Option Securities then being
purchased subject to
such adjustments as the Underwriter in its discretion shall make to eliminate
any sales or purchases
of fractional shares. Certificates for the Firm Securities and the Option
Securities if any, shall be
in definitive, fully registered form, shall bear no restrictive legends and
shall be in such
denominations and registered in such names as the Underwriter may request in
writing at least two
(2) business days prior to Closing Date or the relevant Option Closing Date,
as the case may be. The
certificates for the Firm Securities and the Option Securities if any, shall
be made available to the
Underwriter at such office or such other place as the Underwriter may designate
for inspection,
checking and packaging no later than 9:30 a.m. on the last business day prior
to Closing Date or the
relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Underwriter the
Underwriter's Warrants at a purchase price of $.0001 per warrant, which
warrants shall entitle the
holders thereof to purchase an aggregate of 80,000 Shares and/or 130,000
Class A Warrants and
80,000 Class B Warrants. The Underwriter's Warrants shall be exercisable for
a period of four (4)
years commencing one (1) year from the Closing Date at a price of $6.00 per
Share, $.24 per Class
A Warrant and $.12 per Class B Warrant. The Underwriter's Warrant Agreement
and form of
Warrant Certificates with respect to each of the (i) Underwriter's Warrants to
purchase Shares and
12
(ii) Underwriter's Warrants to purchase Public Warrants, shall be substantially
in the form filed as
Exhibit to the Registration Statement. Payment for the
Underwriter's Warrants shall be
made on the Closing Date.
3. Public Offering of the Public Offering Securities. As soon after the
Registration Statement
becomes effective as the Underwriter deems advisable, the Underwriter shall
make a public offering
of the Firm Securities and such of the Option Securities as it may determine
(other than to residents
of or in any jurisdiction in which qualification of the Shares and Public
Warrants are required and
has not become effective) at the price and upon the other terms set forth in
the Prospectus. The
Underwriter may from time to time increase or decrease the public offering
price after distribution
of the Public Offering Securities has been completed to such extent as the
Underwriter, in its sole
discretion deems advisable. The Underwriter may enter into one or more
agreements as it
Underwriter, in its sole discretion, deems advisable with one or more
broker-dealers who shall act
as dealers in connection with such public offering. Investors in the public
offering will be required
to purchase at leastone Share and one Public Warrant together or in multiples
thereof. Such Public
Offering Securities of Securities will be immediately separable and tradeable
upon issuance and will
not be registered or listed on any exchange for trading as units.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with
each of the Underwriter as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any
amendments thereto to become effective as promptly as practicable (such
Registration Statement to
be in form and substance satisfactory to the Underwriter and Underwriter's
Counsel) and will not at
any time, whether before or after the effective date of the Registration
Statement, file any
amendment to the Registration Statement or supplement to the Prospectus or
file any document
under the Act or Exchange Act before termination of the offering of the Public
Offering Securities
by the Underwriter of which the Underwriter shall not previously have been
advised and furnished
with a copy, or to which the Underwriter shall have objected or which is not
in compliance with the
Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof
the Company will
advise the Underwriter and confirm by notice in writing, (i) when the
Registration Statement, as
amended, becomes effective, if the provisions of Rule 430A promulgated under
the Act will be relied
upon, when the Prospectus has been filed in accordance with said Rule 430A and
when any post-
effective amendment to the Registration Statement becomes effective, (ii) of
the issuance by the
Commission of any stop order or of the initiation, or the threatening, of any
proceeding, suspending
the effectiveness of the Registration Statement or any order preventing or
suspending the use of the
Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or the institution
of proceedings for that purpose (iii) of the issuance by the Commission or by
any state securities
commission of any proceedings for the suspension of the qualification of any of
the Securities for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that
purpose, (iv) of the receipt of any comments from the Commission; and (v) of
any request by the
13
Commission for any amendment to the Registration Statement or any amendment or
supplement to
the Prospectus or for additional information. If the Commission or any state
securities commission
authority shall enter a stop order or suspend such qualification at any time,
the Company will make
every effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the
Underwriter and Underwriter' Counsel) or transmit the Prospectus by a means
reasonably calculated
to result in filing with the Commission pursuant to Rule 424 (b)(1) (or, if
applicable and if consented
to by the Underwriter, pursuant to Rule 424 (b)(47) not later than the
Commission's close of business
on the earlier of (i) the second business day following the execution and
delivery of this Agreement
and (ii) the fifth business day after the effective date of the Registration
Statement.
(d) The Company will give the Underwriter notice of its intention to
file or prepare any
amendment to the Registration Statement (including any post-effective
amendment) or any
amendment or supplement to the Prospectus (including any revised prospectus
which the Company
proposes for use by the Underwriter in connection with the offering of the
Securities which differs
from the corresponding prospectus on file at the Commission at the time the
Registration Statement
becomes effective, whether or not such revised prospectus is required to be
filed pursuant to Rule
424(b) of the Rules and Regulations), and will furnish the Underwriter with
copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the
case may be, and will not file any such prospectus to which the Underwriter or
Underwriter' Counsel,
shall reasonably object.
(e) The Company shall take all action, in cooperation with the
Underwriter, at or prior to the
time the Registration Statement becomes effective, to qualify the Public
Offering Securities for
offering and sale under the securities laws of such jurisdictions as the
Underwriter may designate
to permit the continuance of sales and dealings therein for as long as may be
necessary to complete
the distribution, and shall make such applications, file such documents and
furnish such information
as may be required for such purpose; provided, however, the Company shall not
be required to
qualify as a foreign corporation or file a general or limited consent to
service of process in any such
jurisdiction. In each jurisdiction where such qualification shall be effected,
the Company will,
unless the Underwriter agrees that such action is not at the time necessary or
advisable, use all
reasonable efforts to file and make such statements or reports at such times as
are or may reasonably
be required by the laws of such jurisdiction to continue such qualification.
It is agreed that
Underwriter's Counsel (or its designees) shall perform all such required
Blue Sky legal services.
(f) During the time when a prospectus is required to be delivered
under the Act, the Company
shall use all reasonable efforts to comply with all requirements imposed upon
it by the Act and the
Exchange Act, as now and hereafter amended and by the Rules and Regulations, as
from time to time
in force, so far as necessary to permit the continuance of sales of or dealings
in the Securities in
accordance with the provisions hereof and the Prospectus, or any amendments or
supplements
thereto. If at any time when a prospectus relating to the Securities is
required to be delivered under
the Act, any event shall have occurred as a result of which, in the reasonable
opinion of counsel for
14
the Company or Underwriter' Counsel, the Prospectus, as then amended or
supplemented, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the
Act and the Rules and Regulations, the Company will notify the Underwriter
promptly and prepare
and file with the Commission an appropriate amendment or supplement in
accordance with Section
10 of the Act, each such amendment or supplement to be satisfactory to
Underwriter' Counsel, and
the Company will furnish to the Underwriter copies of such amendment or
supplement as soon as
available and in such quantities as the Underwriter may request.
(g) As soon as practicable, but in any event not later than 45 days
after the end of the 12-
month period beginning on the day after the end of the fiscal quarter of the
Company during which
the effective date of the Registration Statement occurs (90 days in the event
that the end of such
fiscal quarter is the end of the Company's fiscal year), the Company shall make
generally available
to its security holders, in the manner specified in Rule 158(b) of the Rules
and Regulations, and to
the Underwriter, an earnings statement which will be in the detail required by,
and will otherwise
comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the
Rules and
Regulations, which statement need not be audited unless required by the Act,
covering a period of
at least 12 consecutive months after the effective date of the Registration
Statement.
(h) During a period of seven years after the date hereof, the
Company will furnish to its
stockholders, as soon as practicable, annual reports (including financial
statements audited by
independent public accountants) and unaudited quarterly reports of earnings,
and will deliver to the
Underwriter:
(i) concurrently with furnishing such quarterly reports to its
stockholders, statements of
income of the Company for each quarter in the form furnished to the Company's
stockholders and
certified by the Company's principal financial or accounting officer;
(ii) concurrently with furnishing such annual reports to its
stockholders, a balance sheet
of the Company as at the end of the preceding fiscal year, together with
statements of operations,
stockholders' equity, and cash flows of the Company for such fiscal year,
accompanied by a copy
of the certificate thereon of independent certified public accountants;
(iii) as soon as they are available, copies of all reports
(financial or other) mailed to
stockholders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished
to or filed with the Commission, the NASD or any securities exchange;
(v) every press release and every material news item or article
of interest to the financial
community in respect of the Company or its affairs which was released or
prepared by or on behalf
of the Company; and
15
(vi) any additional information of a public nature concerning
the Company (and any future
subsidiaries) or its businesses which the Underwriter may reasonably request.
During such seven-year period, if the Company has active subsidiaries, the
foregoing financial
statements will be on a consolidated basis to the extent that the accounts of
the Company and its
subsidiaries are consolidated, and will be accompanied by similar financial
statements for any
significant subsidiary which is not so consolidated.
(i) The Company will maintain a Transfer Agent, counsel, accounting
firm, financial printer
and, if necessary under the jurisdiction of incorporation of the Company, a
Registrar (which may be
the same entity as the Transfer Agent) for its Public Offering Securities,
Common Stock and Public
Warrants all of whom shall be reasonably acceptable to the Underwriter. Such
Transfer Agent shall,
for a period of five years following the Closing Date, deliver to the
Underwriter the monthly
securities position of the Company's stockholders of record.
(j) The Company will furnish to the Underwriter or on the
Underwriter's order, without
charge, at such place as the Underwriter may designate, copies of each
Preliminary Prospectus, the
Registration Statement any pre-effective or post-effective amendments thereto
(two of which copies
will be signed and will include all financial statements and exhibits), the
Prospectus, and all
amendments and supplements thereto, including any Prospectus prepared after
the effective date of
the Registration Statement, in each case as soon as available and in such
quantities as the
Underwriter may reasonably request.
(k) On or before the effective date of the Registration Statement,
the Company shall provide
the Underwriter with true copies of duly executed, legally binding and
enforceable agreements
pursuant to which for a period of not less than 18 months after the effective
date of the Registration
Statement, each holder of securities issued by the Company and outstanding at
the effective date of
the Registration Statement (including securities convertible into Common Stock
of the Company)
agrees that it or he or she will not, directly or indirectly, issue, offer to
sell, sell, grant an option for
the sale of, assign, transfer, pledge, hypothecate or otherwise encumber or
dispose of any of such
securities (either pursuant to Rule 144 of the Rules and Regulations or
otherwise) or dispose of any
beneficial interest therein without the prior written consent of the
Underwriter (collectively, the
"Lock-up Agreements"). The Lock-up Agreements shall also provide that any
such securities that
may be sold pursuant to Rule 144 (with the Underwriter's consent) shall be
executed through the
Underwriter. The commission for any such open market transactions shall not
exceed 5% and the
sales price shall be reasonably related to the market. During the three year
period commencing with
the effective date of the Registration Statement, the Company shall not issue
any securities under
Regulation S and not, without the prior written consent of the Underwriter,
sell, contract or offer to
sell, issue, transfer, assign, pledge, distribute, or otherwise dispose of,
directly or indirectly, any debt
security of the Company or any shares of Common Stock or any issue of preferred
stock of the
Company, or any options, rights or warrants with respect to any shares of
Common Stock or any
issue of preferred stock of the Company, (other than upon exercise of the
Underwriter's Warrants).
On or before the Closing Date, the Company shall deliver instructions to the
Transfer Agent
16
authorizing it to place appropriate legends on the certificates representing
the securities subject to
the Lock-up Agreement and to place appropriate stop transfer orders on the
Company's ledgers.
(l) Neither the Company, nor any of its officers, directors,
stockholders or affiliates (within
the meaning of the Rules and Regulations) will take, directly or indirectly,
any action designed to,
or which might in the future reasonably be expected to cause or result in,
stabilization or
manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner,
and subject to the conditions, set forth under "Use of Proceeds" in the
Prospectus. No portion of the
net proceeds will be used, directly or indirectly, to acquire any securities
issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be
required (including, but not limited to, a Form SR as may be required pursuant
to Rule 463 under
the Act) from time to time, under the Act, the Exchange Act and the Rules and
Regulations, and all
such reports, forms and documents filed shall comply as to form and substance
with the applicable
requirements under the Act, the Exchange Act and the Rules and Regulations.
(o) The Company shall furnish to the Underwriter as early as
practicable prior to each of the
date hereof, the Closing Date and each Option Closing Date, if any, but no
later than two (2) full
business days prior thereto, a copy of the latest available unaudited interim
financial statements of
the Company (which in no event shall be as of a date more than thirty (30) days
prior to the date of
the Registration Statement) which have been read by the Company's independent
public accountants,
as stated in their letters to be furnished pursuant to Section 6(j) hereof.
(p) The Company shall cause the Shares, the Common Stock and the
Public Warrants to be
listed on the Nasdaq SmallCap Market and upon the request of the Underwriter to
be listed on the
BSE, and for a period of seven (7) years from the date hereof, use its best
efforts to maintain such
listings of the Shares, the Common Stock and the Public Warrants to the extent
outstanding.
(q) For a period of five (5) years from the Closing Date, the Company
shall furnish to the
Underwriter at the Underwriter's request and at the Company's sole expense, the
list of holders of
all of the Company's securities.The Company shall also instruct Depository
Trust Company ("DTC")
to send to the Underwriter a copy of the securities positions of all of the
security holders of the
Company on DTC's records on a weekly basis for a period of three (3) calendar
months following
the effective date, on a monthly basis for a period of three (3) years
following the effective date and,
in addition thereto, as frequently as may be reasonably requested by the
Underwriter,
(r) The Company shall as soon as practicable, (i) but in no event
more than five business days
before the effective date of the Registration Statement, file a Form 8-A with
the Commission
providing for the registration under the Exchange Act of the Securities and
(ii) but in no event more
than 30 days from the effective date of the Registration Statement, take all
necessary and appropriate
actions to be included in Standard and Poor's Corporation Descriptions and
Xxxxx'x Manual in order
17
to satisfy the requirements for "manual exemption" in those states where
available and to maintain
such inclusion for as long as the Securities are outstanding.
(s) Until the completion of the distribution of the Securities,
the Company shall not without
the prior written consent of the Underwriter and Underwriter's Counsel, issue,
directly or indirectly
any press release or other communication or hold any press conference with
respect to the Company
or its activities or the offering contemplated hereby, other than trade
releases issued in the ordinary
course of the Company's business consistent with past practices with respect
to the Company's
operations.
(t) For a period of three (3) years after the effective date of the
Registration Statement, the
Underwriter shall have the right to designate, one (1) individual for election
to the Company's Board
of Directors ("Board") and the Company shall cause such individual to be
elected to the Board
(provided such person is reasonable qualified and is not an officer, director,
employee or principal
of the Underwriter). In the event the Underwriter shall not have designated
such individual at the
time of any meeting of the Board or such person is unavailable to serve, or at
the end of the period
of three (3) years, the Company shall notify the Underwriter of each meeting of
the Board and an
individual designated by the Underwriter shall be permitted to attend all
meetings of the Board and
to receive all notices and other correspondence and communications sent by the
Company to
members of the Board for a period of five (5) years after the effective date.
Such individual shall
be reimbursed for all out-of-pocket expenses incurred in connection with his
or her service on, or
attendance at meetings of, the Board. The Company shall provide its outside
directors with
compensation in the form of cash and/or options on its Common Stock as deemed
appropriate and
customary for similar companies.
(u) The Company hereby grants to the Underwriter a right of first
refusal on the terms and
subject to the conditions set forth in this paragraph, for a period of three
years from the effective date
of the Registration Statement, to purchase for its account or to sell for the
account of the Company
or its present or future subsidiaries, any securities of the company or any of
its present or future
subsidiaries, with respect to which the Company or any of its present or future
subsidiaries may seek
a public or private sale. The Company, for a period of three years from the
effective date of the
Registration Statement, will consult, and will cause such present or future
subsidiaries to consult
with the Underwriter with regard to any such offering or placement and will
offer, or cause any of
its present or future subsidiaries to offer, to the Underwriter the
opportunity, on terms not more
favorable to the Company or such present or future subsidiary than they can
secure elsewhere, to
purchase or sell any such securities. If the Underwriter fails to accept
in writing such proposal made
by the Company or any of its present or future subsidiaries within fifteen
business days after receipt
of a notice containing such notice, then the Underwriter shall have no further
claim or right with
respect to the proposal contained in such notice. If, thereafter, such
proposal is materially modified,
the Company shall again consult, and cause each present or future subsidiary
to consult, with the
Underwriter in connection with such modification and shall in all respects
have the same obligations
and adopt the same procedures with respect to such proposal as are provided
hereinabove with
respect to the original proposal.
18
(v) For a period equal to the lesser of (i) seven (7) years from
the date hereof, and (ii) the date
of the sale to the public of the securities issuable upon exercise of the
Underwriter's Securities, the
Company will not take any action or actions which may prevent or disqualify
the Company's use of
any form otherwise available for the registration under the Act of the
securities issuable upon
exercise of the Underwriter's Securities.
(w) Commencing one year from the date hereof, the Company shall pa
the Underwriter a
commission equal to four percent (4%) of the exercise price of the Public
Warrants, payable on the
date of the exercise thereof on terms provided for in the Warrant Agreement.
The Company will not
solicit the exercise of the Public Warrants other than through the Underwriter
and will not authorize
any other dealer or engage in such solicitation without the Underwriter's prior
written consent.
(x) On or before the effective date of the Registration Statement, the
Company shall have
retained a financial public relations firm reasonably satisfactory to the
Underwriter, which shall be
continuously engaged from such engagement date to a date twelve (12) months
from the Closing
Date.
(y) The Company agrees that, for a period of seven (7) years from the
date of the closing of
the public offering of the shares of the Public Offering Securities (the
"Closing"), if the Company
intends to file a Registration Statement or Statements for the public sale
of securities for cash (other
than a Form S-8, Form S-4 or comparable Registration Statement), it will notify
all of the holders
of the Representative's Securities and if so requested it will include therein
material to permit a
public offering of the Representative's Securities at the expense of the
Company (excluding fees and
expenses of the holder's counsel and any underwriting or selling commissions),
In addition, for a
period of five (5) years from the Closing, upon the written demand of holder(s)
representing a
majority of the Representative's Securities, the Company agrees, on one
occasion, to promptly
register the Representative's Securities at the expense of the Company
(excluding fees and expenses
of the holder's counsel and any underwriting or selling commissions).
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date
and the Option Closing
Date (to the extent not paid at the Closing Date) all expenses and fees (other
than fees of
Underwriter' Counsel, except as provided in (iv) below) incident to the
performance of the
obligations of the Company under this Agreement, the Underwriter's Warrant
Agreement and the
Warrant Agreement including, without limitation, (i) the fees and expenses of
accountants and
counsel for the Company, (ii) all costs and expenses incurred in connection
with the preparation,
duplication, printing, (including mailing and handling charges) filing,
delivery and mailing
(including the payment of postage with respect thereto) of the Registration
Statement and the
Prospectus and any amendments and supplements thereto and the printing,
mailing (including the
payment of postage with respect thereto) and delivery of this Agreement, the
Underwriter's Warrant
Agreement, the Warrant Agreement, and related documents, including the cost of
all copies thereof
and of the Preliminary Prospectuses and of the Prospectus and any amendments
thereof or
19
supplements thereto supplied to the Underwriter and such dealers as the
Underwriter may request,
in quantities as hereinabove stated, (iii) the printing, engraving, issuance
and delivery of the
Securities, including, but not limited to, (x) the purchase by the Underwriter
of the Securities and
the purchase by the Underwriter of the Underwriter's Warrants from the Company,
(y) the
consummation by the Company of any of its obligations under this Agreement, the
Underwriter's
Warrant Agreement, and the Warrant Agreement, and (z) resale of the Securities
by the Underwriter
in connection with the distribution contemplated hereby, (iv) the qualification
of the Securities under
state or foreign securities or "Blue Sky" laws and determination of the status
of such securities under legal investment laws, including the costs of printing
and mailing the "Preliminary Blue Sky Memorandum", the "Supplemental Blue Sky
Memorandum" and "Legal Investments Survey," if any, and disbursements and fees
of counsel in connection therewith, provided, however, that the Company's
obligation with respect to such "Blue Sky" fees and disbursement of counsel
shall not exceed $30,000 (v) advertising costs and expenses, including but not
limited to costs and expenses in connection with the "road show", information
meetings and presentations, bound volumes and prospectus memorabilia, tombstones
in the Wall Street Journal and other appropriate publications, (vi) costs, fees
and expenses in connection with due diligence investigations, including but not
limited to the costs of background checks on key management and/or personnel of
the Company and the fees of any independent counsel or consultant retained,
(vii) fees and expenses of the transfer agent, warrant agent, escrow agent, if
any, and registrar, (viii) applications for assignments of a rating of the
Securities by qualified rating agencies, (ix) the fees payable to the
Commission, Nasdaq and the NASD, and (x) the fees and expenses incurred in
connection with the listing of the Securities on the Nasdaq SmallCap Market, the
BSE and any other exchange. (b) If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 6, Section 10(a) or
Section 12, the Company shall reimburse and indemnify the Underwriter for all of
its actual out-of-pocket expenses, including the fees and disbursements of
Underwriter' Counsel (and in addition to fees and expenses of Underwriter's
Counsel incurred pursuant to Section 5(a)(iv) above for which the Company shall
remain liable), provided, however, that in the event of a termination pursuant
to Section 10(a) hereof such obligation of the Company shall not exceed $50,000.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 5, it will pay to the Underwriter on
the Closing Date by certified or bank cashier's check or, at the election of the
Underwriter, by deduction from the proceeds of the offering contemplated herein
a non-accountable expense allowance equal to three percent (3%) of the gross
proceeds received by the Company from the sale of the Firm Securities. In the
event the Underwriter elects to exercise the over-allotment option described in
Section 2(b) hereof, the Company further agrees to pay to the Underwriter on
each Option Closing Date (by certified or bank cashier's check or, at the
Underwriter's election, by deduction from the proceeds of the offering) a
non-accountable expense allowance equal to three percent (3%) of the gross
proceeds received by the Company from the sale of the relevant Option
Securities. (d) The Underwriter shall not be responsible for any expense of the
Company or others or for
20
any charge or claim related to the offering contemplated by hereunder in the
event that the sale of
the Securities as contemplated hereunder is not consummated.
6. Conditions of the Underwriter' Obligations. The obligations of
the Underwriter
hereunder shall be subject to the continuing accuracy of the representations
and warranties of the
Company herein as of the date hereof and as of the Closing Date and each Option
Closing Date, if
any, as if they had been made on and as of the Closing Date or each Option
Closing Date, as the case
may be; the accuracy on and as of the Closing Date or Option Closing Date,
if any, of the statements
of the officers of the Company made pursuant to the provisions hereof; and the
performance by the
Company on and as of the Closing Date and each Option Closing Date, if any, of
its covenants and
obligations hereunder and to the following further conditions:
(a) The Registration Statement, which shall be in form and substance
satisfactory to the
Underwriter and Underwriter's Counsel, shall have become effective no later
than 12:00 p.m., New
York time, on the date of this Agreement or such later date and time as shall
be consented to in
writing by the Underwriter, and, at the Closing Date and each Option Closing
Date, if any, no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the
Commission and any request on the part of the Commission for additional
information shall have
been complied with to the reasonable satisfaction of Underwriter's Counsel. If
the Company has
elected to rely upon Rule 430A of the Rules and Regulations, the price of the
Public Offering
Securities and any price-related information previously omitted from the
effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing
pursuant to Rule 424(b) of the Rules and Regulations within the prescribed
time period, and prior
to the Closing Date the Company shall have provided evidence satisfactory to
the Underwriter of
such timely filing, or a post-effective amendment providing such information
shall have been
promptly filed and declared effective in accordance with the requirements of
(b) The Underwriter shall not have advised the Company that the
Registration Statement, or
any amendment thereto, contains an untrue statement of fact which, in the
Underwriter's opinion,
is material, or omits to state a fact which, in the Underwriter's opinion, is
material and is required
to be stated therein or is necessary to make the statements therein not
misleading, or that the
Prospectus, or any supplement thereto, contains an untrue statement of fact
which, in the
Underwriter's opinion, is material and is required to be stated therein or is
necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) On or prior to the Closing Date, the Underwriter shall have
received from Underwriter's
Counsel, such opinion or opinions with respect to the organization of the
Company, the validity of
the Securities, the Underwriter's Warrants, the Registration Statement, the
Prospectus and other
related matters as the Underwriter may request and Underwriter's Counsel shall
have received such
papers and information as they request to enable them to pass upon such matters.
21
(d) On the Closing Date, the Underwriter shall have received the
favorable opinion of
XxXxxxxxxx & Xxxxx, LLP, counsel to the Company, dated the Closing Date,
addressed to the Underwriter and in form and substance satisfactory to
Underwriter's Counsel, to the effect that: (i) the Company (A) has been duly
organized and is validly existing as a corporation in good standing under the
laws of its jurisdiction, and (B) has all requisite corporate power and
authority, and has obtained any and all authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all governmental or
regulatory officials and bodies (including, without limitation, those having
jurisdiction over environmental or similar matters), to own or lease its
properties and conduct its business as described in the Prospectus; the Company
is duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing; to such
counsel's knowledge, the Company has not received any notice of proceedings
relating to the revocation or modification of any such authorization, approval,
order, license, certificate, franchise, or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
materially adversely affect the business, operations, condition, financial or
otherwise, or the earnings, business affairs or prospects, properties, business,
assets or results of operations of the Company. The disclosures in the
Registration Statement concerning the effects of federal, state and local laws,
rules and regulations on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
fact necessary to make the statements contained therein not misleading in light
of the circumstances in which they were made. (ii) to such counsel's knowledge,
the Company does not own an equity interest in any other corporation,
partnership, joint venture, trust or other business entity; (iii) the Company
has a duly authorized, issued and outstanding capitalization as set forth in the
Prospectus, and any amendment or supplement thereto, under "Capitalization",
and, to such counsel's knowledge, after due inquiry, the Company is not a party
to or bound by any instrument, agreement or other arrangement providing for it
to issue any capital stock, rights, warrants, options or other securities,
except for this Agreement, the Underwriter's Warrant Agreement, the Warrant
Agreement and as described in the Prospectus. The Securities, and all other
securities issued or
issuable by the Company, conform in all material respects to all statements
with respect thereto
contained in the Registration Statement and the Prospectus. All issued and
outstanding securities
of the Company have been duly authorized and validly issued and are fully
paid and non-assessable;
the holders thereof have no rights of rescission with respect thereto, and are
not subject to personal
liability under the laws of the State of New Jersey as currently in effect by
reason of being such
holders; and none of such securities were issued in violation of the preemptive
rights of any holders
of any security of the Company. The Securities to be sold by the Company
hereunder and under the
Underwriter's Warrant Agreement are not and will not be subject to any
preemptive or other similar
rights of any stockholder, have been duly authorized and, when issued, paid
for and delivered in
accordance with the terms hereof, will be validly issued, fully paid and
non-assessable and conform
to the description thereof contained in the Prospectus; the holders thereof
will not be subject to any
22
liability solely as such holders; all corporate action required to be taken
for the authorization, issue
and sale of the Securities has been duly and validly taken; and the
certificates representing the
Securities are in due and proper form. The Public Warrants and the
Underwriter's Warrants
constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and
payment therefore the number and type of securities of the Company called
for thereby. Upon the
issuance and delivery pursuant to this Agreement of the Securities to be sold
by the Company, the
Underwriter and the Underwriter will acquire good and marketable title to the
Securities free and clear of any pledge, lien, charge, claim, encumbrance,
pledge, security interest, or other restriction or equity of any kind
whatsoever. No transfer tax is payable by or on behalf of the Underwriter in
connection with (A) the issuance by the Company of the Securities, (B) the
purchase by the Underwriter and the Underwriter of the Securities from the
Company, (C) consummation by the Company of any of its obligations under this
Agreement, or (D) resales of the Securities in connection with the distribution
contemplated hereby. (iv) the Registration Statement is effective under the Act,
and, if applicable, filing of all pricing information has been timely made in
the appropriate form under Rule 430A, and, to such counsel's knowledge, after
due inquiry no stop order suspending the use of the Preliminary Prospectus, the
Registration Statement or Prospectus or any part of any thereof or suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending, threatened or
contemplated under the Act; (v) each of the Preliminary Prospectus, the
Registration Statement, and the Prospectus and any amendments or supplement
thereto (other than the financial statements and other financial and statistical
data included therein, as to which no opinion need be rendered) comply as to
form in all material respects with the requirements of the Act and the Rules and
Regulations. (vi) to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be described in
the Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement other than those described in the Registration Statement
(or required to be filed under the Exchange Act if upon such filing they would
be incorporated, in whole or in part, by reference therein) and the Prospectus
and filed as exhibits thereto, and the exhibits which have been filed are
correct copies of the documents of which they purport to be copies; (B) the
descriptions in the Registration Statement and the Prospectus and any supplement
or amendment thereto of contracts and other documents to which the Company is a
party or by which it is bound, including any document to which the Company is a
party or by which it is bound, incorporated by reference into the Prospectus and
any supplement or amendment thereto, are accurate in all material respects and
fairly represent the information required to be shown under the Act and the
Rules and Regulations of the Commission thereunder; (C) there is not pending or
threatened against the Company any action, arbitration, suit, proceeding,
inquiry, investigation, litigation, governmental or other proceeding (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or circumstances
that may give rise to the same), or involving the properties or business of the
Company which (1) is required to be disclosed in the Registration Statement
which is not so 23
disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all respects), (2) questions
the validity of the capital stock of the Company or this Agreement or of any
action taken or to be taken by the Company pursuant to or in connection with any
of the foregoing; (D) no statute or regulation or legal or governmental
proceeding required to be described in the Prospectus is not described as
required; and (E) except as disclosed in the Prospectus, there is no action,
suit or proceeding pending, or threatened, against or affecting the Company
before any court or arbitrator or governmental body, agency or official (or any
basis thereof known to such counsel) in which an adverse decision which may
result in a material adverse change in the condition, financial or otherwise, or
the earnings, position, prospects, stockholders' equity, value, operation,
properties, business or results of operations of the Company, could adversely
affect the present or prospective ability of the Company to perform its
obligations under this Agreement, the Underwriter's Warrant Agreement or the
Warrant Agreement or which in any manner draws into question the validity or
enforceability of this Agreement, the Underwriter's Warrant Agreement or the
Warrant Agreement; (vii) the Company has full legal right, power and authority
to enter into this Agreement, the Underwriter's Warrant Agreement and the
Warrant Agreement and to consummate the transactions provided for therein; and
this Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement
has been duly authorized, executed and delivered by the Company. This Agreement,
the Underwriter's Warrant Agreement and the Warrant Agreement assuming due
authorization, execution and delivery by each other party hereto and thereto
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or contribution may be
limited by applicable law), and neither the Company's execution or delivery of
this Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement,
its performance hereunder or thereunder, its consummation of the transactions
contemplated herein or therein, or the conduct of its business as described in
the Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or will
constitute a default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company pursuant to the terms of, (A) the
certificate of incorporation or by-laws of the Company, (B) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (C) any statute, judgment, decree, order, rule
or regulation applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or body (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or any of
its activities or properties, except for conflicts, breaches, violations,
defaults, creations or 24
24
impositions which do not and would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs, position,
shareholder's equity, value, operations, properties, business or results of
operations of the Company. (viii) except as described in the Prospectus, no
consent, approval, authorization or order, and no filing with, any court,
regulatory body, government agency or other body (other than such as may be
required under Blue Sky laws, as to which no opinion need be rendered) is
required in connection with the issuance of the Securities pursuant to the
Prospectus and the Registration Statement, the issuance of the Underwriter's
Warrants, the performance of this Agreement, the Underwriter's Warrant Agreement
and the Warrant Agreement and the transactions contemplated hereby and thereby;
(ix) the properties and business of the Company conform to the description
thereof contained in the Registration Statement and the Prospectus; (x) , the
Company is not in breach of, or in default under, any term or provision of any
license, contract, indenture, mortgage, installment sale agreement, deed of
trust, lease, voting trust agreement, stockholders' agreement, partnership
agreement, note, loan or credit agreement or any other agreement or instrument
evidencing an obligation for borrowed money, or any other agreement or
instrument to which the Company is a party or by which the Company may be bound
or to which the property or assets (tangible or intangible) of the Company is
subject or affected, which could materially adversely affect the Company; and
the Company is not in violation of any term or provision of its Certificate of
Incorporation or By-Laws, or in violation of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation the result of which would
materially and adversely affect the condition, financial or otherwise, or the
earnings, business affairs, position, shareholders' equity, value operation,
properties, business or results of operations of the Company. (xi) the Company
owns or possesses, free and clear of all liens or encumbrances and rights
thereto or therein by third parties, the requisite licenses or other rights to
use all trademarks, service marks, copyrights, service names, trade names,
patents, patent applications and licenses necessary to conduct its business
(including, without limitation any such licenses or rights described in the
Prospectus as being owned or possessed by the Company), and to the best of such
counsel's knowledge after reasonable investigation, there is no claim or action
by any person pertaining to, or proceeding, pending, or threatened, which
challenges the exclusive rights of the Company with respect to any trademarks,
service marks, copyrights, service names, trade names, patents, patent
applications and licenses used in the conduct of the Company's business
(including, without limitations, any such licenses or rights described in the
Prospectus as being owned or possessed by the Company). (xii) except as
described in the Prospectus, the Company does not (A) maintain, sponsor, or
contribute to any ERISA Plans, (B) maintain or contribute now or at any time
previously, to a defined benefit plan, as defined in Section 3(35) of ERISA, and
(C) has never completely or partially withdrawn from a "multiemployer plan"; and
25
(xiii) the Securities have been approved for listing on the Nasdaq SmallCap
Market and the BSE, and the Company's Registration Statement on Form 8-A under
the Exchange Act has become effective. (xiv) to such counsel's knowledge, the
persons listed under the caption "Principal Stockholders" in the Prospectus are
the respective "beneficial owners" (as such phrase is defined in regulation
13d-3 under the Exchange Act) of the securities set forth opposite their
respective names thereunder as and to the extent set forth therein; (xv) to such
counsel's knowledge, except as described in the Prospectus, no person,
corporation, trust, partnership, association or other entity has the right to
include and/or register any securities of the Company in the Registration
Statement, require the Company to file any registration statement or, if filed,
to include any security in such registration statement; (xvi) to such counsel's
knowledge, except as described in the Prospectus, there are no claims, payments,
issuances, arrangements or understandings for services in the nature of a
finder's or origination fee with respect to the sale of the Public Offering
Securities hereunder or the financial consulting arrangement between the
Underwriter and the Company, if any, or any other arrangements, agreements,
understandings, payments or issuances that may affect the Underwriter'
compensation, as determined by the NASD; (xvii) the Lock-up Agreements are
legal, valid and binding obligations of the parties thereto, enforceable against
each such party and any subsequent holder of the securities subject thereto in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or equitable);
and (xviii) all action under the Act necessary to make the public offering and
consummate the sale of the Securities as provided in this Agreement has been
taken by the Company. The consummate
the sale of the Securities as provided in this Agreement has been taken by the
Company. The provisions of the Certificate of Incorporation and By-laws of the
Company comply as to form in all material respects with the Act and the Rules
and Regulations. 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 were discussed and,
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which
leads counsel to believe that either the Registration Statement or any amendment
thereto, at the time such Registration Statement or amendment became effective
or the Preliminary Prospectus or Prospectus or amendment or 26
supplement
thereto as of the date of such opinion contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and schedules and other financial and statistical data included in
the Preliminary Prospectus, the Registration Statement or Prospectus). In
rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance satisfactory to Underwriter's Counsel) of other counsel
acceptable to Underwriter's Counsel, familiar with the applicable laws; (B) as
to matters of fact, to the extent they deem proper, on certificates and written
statements of responsible officers of the Company and certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to Underwriter's Counsel if requested. The opinion of such counsel for
the Company shall state that the opinion of any such other counsel is in form
satisfactory to such counsel and that the Underwriter and they are justified in
relying thereon. At each Option Closing Date, if any, the Underwriter shall have
received the favorable opinion of XxXxxxxxxx & Xxxxx, LLP, counsel to the
Company, dated the Option Closing Date, addressed to the Underwriter and in form
and substance satisfactory to Underwriter's Counsel confirming as of such Option
Closing Date the statements made in its opinion delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing Date, if any,
Underwriter's Counsel shall have been furnished such documents, certificates and
opinions as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in subsection (c) of this Section 6,
or in order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or covenants of the Company herein contained. (f)
Prior to each of Closing Date and each Option Closing Date, if any, (i) there
shall have been no adverse change nor development involving a prospective change
in the condition, financial or otherwise, prospects, stockholders' equity or the
business activities of the Company, whether or not in the ordinary course of
business, from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, (iii) the Company shall not be in default under any provision of any
instrument relating to any outstanding indebtedness; (iv) the Company shall not
have issued any securities (other than the Securities) or declared or paid any
dividend or made any distribution in respect of its capital stock of any class
and there shall not have been any change in the capital or any change in the
debt (long or short term) or liabilities or obligations of the Company
(contingent or otherwise); (v) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus (vi) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened (or 27
circumstances giving rise
to same) against the Company, or affecting any of its properties or business
before or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
adversely affect the business, operations, management prospects or financial
condition or assets of the Company, except as set forth in the Registration
Statement and Prospectus: and (vii) no stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission. (g) At each of the Closing Date and each Option
Closing Date, if any, the Underwriter shall have received a certificate of the
principal executive officer and the chief financial or chief accounting officer
of the Company, dated the Closing Date or Option Closing Date, as the case may
be, to the effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that: (i) The
representations and warranties in this Agreement of the Company are true and
correct, as if made on and as of the Closing Date or the Option Closing Date, as
the case may be, and the Company has complied with all agreements and covenants
and satisfied all conditions contained in this Agreement on its part to be
performed or satisfied at or prior to such Closing Date or Option Closing Date,
as the case may be; (ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no proceedings
for that purpose have been instituted or are pending or, are contemplated or
threatened under the Act; (iii) The Registration Statement and the Prospectus
and, if any, each amendment and each supplement thereto, contain all statements
and information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and neither the Preliminary Prospectus or any supplement thereto included any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and (iv)
Since the dates as of which information is given in the Registration Statement
and the Prospectus, (A) there has not been any material change in the shares of
Common Stock or liabilities of the Company except as set forth in or
contemplated by the Prospectus; (B) there has not been any material adverse
change in the general affairs, management, business, financial condition or
results of operations of the Company, whether or not arising from transactions
in the ordinary course of business, as set forth in or contemplated by the
Prospectus; (C) the Company has not sustained any material loss or interference
with its business from any court or from legislative or other governmental
action, order or decree, whether foreign or domestic, or from any other
occurrence, not described in the Registration Statement and Prospectus; (D)
there has not occurred any event that makes untrue or incorrect in any material
respect any statement or information contained in the 28
Registration
Statement or Prospectus or that is not reflected in the Registration Statement
or Prospectus but should be reflected therein in order to make the statements or
information therein,hat Registration Statement or Prospectus or that is not
reflected in the Registration Statement or Prospectus but should be reflected
therein in order to make the statements or information therein, in light of the
circumstances in which they were made, not misleading in any material respect;
(E) the Company has not incurred up to and including the Closing Date or the
Option Closing Date, as the case may be, other than in the ordinary course of
its business, any material liabilities or obligations, direct or contingent; (F)
the Company has not paid or declared any dividends or other distributions on its
capital stock; (G) the Company has not entered into any transactions not in the
ordinary course of business; (H) there has not been any change in the capital
stock or long-term debt or any increase in the short-term borrowings (other than
any increase in the short-terms borrowings in the ordinary course of business)
of the Company; (I) the Company has not sustained any material loss or damage to
its property or assets, whether or not insured; and (J) there has occurred no
event required to be set forth in an amended or supplemented Prospectus which
has not been set forth. References to the Registration Statement and the
Prospectus in this subsection (g) are to such documents as amended and
supplemented at the date of such certificate. (h) By the Closing Date, the
Underwriter will have received clearance from the NASD as to the amount of
compensation allowable or payable to the Underwriter, as described in the
Registration Statement. (i) At the time this Agreement is executed, the
Underwriter shall have received a letter, dated such date, addressed to the
Underwriter in form and substance satisfactory (including the non- material
nature of the changes or decreases, if any, referred to in clause (iii) below)
in all respects to the Underwriter and Underwriter's Counsel, from Wiss &
Company, LLP,: (i) confirming that they are independent accountants with respect
to the Company within the meaning of the Act and the applicable Rules and
Regulations; (ii) stating that it is their opinion that the financial statements
of the Company included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act and the
Rules and Regulations thereunder and that the Underwriter may rely upon the
opinion of Wiss & Company, LLP, with respect to the financial statements and
supporting schedules included in the Registration Statement; (iii) stating that,
on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders and
board of directors and the various committees of the boards of directors of the
Company, consultations with officers and other employees of the Company
responsible for financial and accounting matters and other specified procedures
and inquiries, nothing has come to their attention which would lead them to
believe that (A) the unaudited financial statements, if any, of the Company
included in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the Rules
and Regulations or 29
are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements of the Company included in the
Registration Statement, or (B) at a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there has been any
change in the capital stock or long- term debt of the Company, or any decrease
in the stockholders' equity or net current assets or net assets of the Company
as compared with amounts shown in the [ ] 199 balance sheet included in the
Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any change or decrease, setting forth
the amount of such change or decrease; (iv) setting forth, at a date not later
than five (5) days prior to the date of the Registration Statement, the amount
of liabilities of the Company (including a breakdown of commercial paper and
notes payable to banks) ; (v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company set forth in the
Prospectus in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting records,
including work sheets, of the Company and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter and found them to be in
agreement;generally accepted auditing standards) set forth in the letter and
found them to be in agreement; (vi) stating that they have in addition carried
out certain specified procedures, not constituting an audit, with respect to
certain pro forma financial information which is included in the Registration
Statement and the Prospectus and that nothing has come to their attention as a
result of such procedures that caused them to believe such unaudited pro forma
financial information does not comply in form in all respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or that the
pro forma adjustments have not been properly applied to the historical amounts
in the compilation of that information; (vii) stating that they have not during
the immediately preceding five (5) year period brought to the attention of any
of the Company's management any "weakness," as defined in Statement of Auditing
Standard No. 60 "Communication of Internal Control Structure Related Matters
Noted in an Audit," in any of the Company's internal controls; and (viii)
statements as to such other matters incident to the transaction contemplated
hereby as the Underwriter may request. (j) On or prior to the Closing Date and
each Option Closing Date, if any, the Underwriter shall have received from Wiss
& Company, LLP, a letter, dated as of the Closing Date or the Option Closing
Date, as the case may be, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (i) of this Section, except that
the specified date in the referred to 30
shall be a date not more than five
days prior to the Closing Date or the Option Closing Date, as the case may be,
and, if the Company has elected to rely on Rule 430A of the Rules and
Regulations, to the further effect that they have carried out procedures as
specified in clause (v) of subsection (i) of this Section with respect to
certain amounts, percentages and financial information as specified by the
Underwriter and deemed to be a part of the Registration Statement pursuant to
Rule 430A(b) and have found such amounts, percentages and financial information
to be in agreement with the records specified in such clause (v). (k) On each of
Closing Date and Option Closing Date, if any, there shall have been duly
tendered to the Underwriter for the several Underwriter's accounts the
appropriate number of Securities. (l) No order suspending the sale of the
Securities in any jurisdiction designated by the Underwriter pursuant to
subsection (e) of Section 4 hereof shall have been issued on either the Closing
Date or the Option Closing Date, if any, and no proceedings for that purpose
shall have been instituted or shall be contemplated. (m) On or before Closing
Date, the Shares, the Common Stock and the Public Warrants shall have been
approved for quotation on the Nasdaq SmallCap Market and shall have been
authorized upon official notice of issuance for trading on the BSE. (n) On or
before Closing Date, there shall have been delivered to the Underwriter the
Lock- up Agreements, in form and substance satisfactory to the Underwriter. (o)
On or before the Closing Date, the Company shall have executed the Underwriter's
Warrant Agreement and the Warrant Agreement together with the applicable Warrant
Certificates, each in form and substance satisfactory to the Underwriter. (p) On
or before the Closing Date the Underwriter shall have received executed copies
of the employment agreements and insurance policies referred to in Section 1 (a)
(xxxi) hereof, each to the satisfaction of the Underwriter. If any condition to
the Underwriter's obligations hereunder to be fulfilled prior to or at the
Closing Date or the relevant Option Closing Date, as the case may be, is not so
fulfilled, the Underwriter may terminate this Agreement or, if the Underwriter
so elects, it may waive any such conditions which have not been fulfilled or
extend the time for their fulfillment. 7. Indemnification. (a) The Company
agrees to indemnify and hold harmless each of the Underwriter (for purposes of
this Section 7 "Underwriter" shall include the officers, directors, partners,
employees, agents and counsel of the Underwriter, including specifically each
person who may be substituted for an Underwriter as provided in Section 11
hereof), and each person, if any, who controls the 31
Underwriter
("controlling person") within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several (and actions in respect thereof),
whatsoever (including but not limited to any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever), as such are
incurred, to which the Underwriter or such controlling person may become subject
under the Act, the Exchange Act, or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
(i) in any Preliminary Prospectus, the Registration Statement or the Prospectus
(as from time to time amended and supplemented); (ii) in any post-effective
amendment or amendments or any time new registration statement and prospectus in
which is included securities of the Company issued or issuable upon exercise of
the Securities; or (iii) in any application or other document or written
communication (in this Section 7 collectively called "Application") executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any securities commission or agency,
Nasdaq, the BSE or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to any Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment thereof or supplement thereto, or in
any Application, as the case may be. The indemnity agreement in this subsection
(a) shall be in addition to any liability which the Company may have at common
law or otherwise. (b) the Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement, and each other person, if any, who controls the Company
within the meaning of the Act, to the same extent as the foregoing indemnityors,
each of its officers who has signed the Registration Statement, and each other
person, if any, who controls the Company within the meaning of the Act, to the
same extent as the foregoing indemnity from the Company to the Underwriter but
only with respect to statements or omissions, if any, made in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any Application made in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
the Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any such Application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriter in connection with this offering. The
Company acknowledges that the statements with respect to the public offering of
the Securities set forth under the heading "Underwriting" and the stabilization
legend in the Prospectus have been furnished by the Underwriter expressly for
use therein and constitute the only information furnished in writing by or on
behalf of the Underwriter for inclusion in the Prospectus. 32
(c) Promptly
after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, suit or proceeding, such indemnified party shall, if
a claim in respect thereof is to be made against one or more indemnifying
parties under this Section 7, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may have
otherwise). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party or parties of the commencement thereof,
the indemnifying party or parties will be entitled to participate therein, and
to the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such case
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 7 to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was not
unreasonably withheld. (d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 7, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Section 7 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Securities or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) 33
above but also the
relative fault of each of the contributing parties, on the one hand, and the
party to be indemnified on the other hand in connection with the statements or
omissions that resulted inty to be indemnified on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages,
expenses or liabilities, as well as any other relevant equitable considerations.
In any case where the Company is a contributing party and the Underwriter are
the indemnified party, the relative benefits received by the Company, on the one
hand, and the Underwriter, on the other, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Public Offering
Securities (before deducting expenses) bear to the total underwriting discounts
received by the Underwriter hereunder, in each case as set forth in the table in
the cover page of the Prospectus. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, or by the Underwriter, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, expenses or
liabilities (or actions in respect thereof) referred to above in this
subdivision (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subdivision (d) the Underwriter shall not be required to contribute any amount
in excess of the underwriting discount applicable to the Securities purchased by
the Underwriter hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls the Company within the meaning of the Act, each officer of the Company
who has signed the Registration Statement, and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to this subparagraph (d), Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect to which a claim for contribution may be made
against another party or parties under this subparagraph (d), notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this subparagraph (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution agreement
set forth above shall be in addition to any liabilities which any indemnifying
party may have at common law or otherwise. 8. Representations and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or contained in certificates of officers of the Company submitted
pursuant hereto, shall be deemed to be representations, warranties and
agreements at the Closing Date and any Option Closing Date, as the case may be,
and such representations, warranties and agreements of the Company and the
respective indemnity agreements contained in Section 7 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company, any controlling person of any
Underwriter or the Company, and shall survive termination of this Agreement or
the issuance and deliver of the Securities to the Underwriter and the
Underwriter, as the case may be. 34
9. Effective Date. This Agreement shall
become effective at 10:00 a.m., New York City time, on the next full business
day following the date hereof, or at such earlier time after the Registration
Statement becomes effective as the Underwriter, in it's discretion, shall
release the Securities for the sale to the public; provided, however, that the
provisions of Sections 5, 7 and 10 of this Agreement shall at all times be
effective. For purposes of this Section 9, the Securities to be purchased
hereunder shall be deemed to have been so released upon the earlier of dispatch
by the Underwriter of telegrams to securities dealers releasing such shares for
offering or the release by the Underwriter for publication of the first
newspaper advertisement which is subsequently published relating to the
Securities. 10. Termination. (a) Subject to subsection (b) of this Section 10,
the Underwriter shall have the right to terminate this Agreement, (i) if any
domestic or international event or act or occurrence has disrupted, or in the
Underwriter's opinion will in the immediate future disrupt the financial
markets; or (ii) any material adverse change in the financial markets shall have
occurred; or (iii) if trading on the New York Stock Exchange, the American Stock
Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction; or (iv) if the United States shall have become
involved in a war or major hostilities, or if there shall have been an
escalation in an existing war or major hostilities or a national emergency shall
have been declared in the United States; or (v) if a banking moratorium has been
declared by a state or federal authority; or (vi) if a moratorium in foreign
exchange trading has been declared; or (vii) if the Company, shall have
sustained a loss material or substantial to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in the
Underwriter's opinion, make it inadvisable to proceed with the delivery of the
Securities; or (vii) if there shall have been such a material adverse change in
the condition (financial or otherwise), business affairs or prospects of the
Company, whether or not arising in the ordinary course of business, which would
render, in the Underwriter's judgment, either of such parties unable to perform
satisfactorily its respective obligations as contemplated by this Agreement or
the Registration Statement, or such material adverse change in the general
market, political or economic conditions, in the United States or elsewhere as
in the Underwriter's judgment would make it inadvisable to proceed with the
offering, sale and/or delivery of the Securities. (b) If this Agreement is
terminated by the Underwriter in accordance with the provisions of Section
10(a), the Company shall promptly reimburse and indemnify the Underwriter for
all of its actual out-of-pocket expenses, including the fees and disbursements
of counsel for the Underwriter in an amount not to exceed $50,000 (less amounts
previously paid pursuant to Section 5(c) above). Notwithstanding any contrary
provision contained in this Agreement, if this Agreement shall not be carried
out within the time specified herein, or any extension thereof granted to the
Underwriter, by reason of any failure on the part of the Company to perform an
undertaking or satisfy any condition 35
of this Agreement to be performed or
satisfied by the Company (including, without limitation, pursuant to Section 6
or Section 12) then, the Company shall promptly reimburse and indemnify the
Underwriter for all of its actual out-of-pocket expenses, including the fees and
disbursements of counsel for the Underwriter (less amounts previously paid
pursuant to Section 5 (c) above). In addition, the Company shall remain liable
for all Blue Sky counsel fees and expenses and Blue Sky filing fees.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement (including, without limitation,
pursuant to Sections 6, 10, 11 and 12 hereof), and whether or not this Agreement
is otherwise carried out, the provisions of Section 5 and Section 7 shall not be
in any way affected by such election or termination or failureshall terminate
(or, if such default shall occur with respect to any Option Securities to be
purchased on any Option Closing Date, the Underwriter may at the Underwriter's
option, by notice from the Underwriter to the Company, terminate the
Underwriter's obligation to purchase Option Securities from the Company on such
date) without any liability on the part of any non-defaulting party other than
pursuant to Section 5, Section 7 and Section 10 hereof. No action taken pursuant
to this Section shall relieve the Company from liability, if any, in respect of
such default. 13. Notices. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be deemed
to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed to the
Underwriter at 000 Xxxxx Xxxxxx - 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xx. Xxxx Xxxxxxx, President, with a copy to Scheichet & Xxxxx, P.C.,
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X. Xxxxx, Esq. Notices
to the Company shall be directed to the Company at 0000 Xxxxxx Xxxxxx, 0xx
Xxxxx, Xxxxx, Xxx Xxxxxx 00000, Attn: Xxxxxx Xxxxxxx, President, with a copy to
XxXxxxxxxx & Xxxxx, LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention:
Xxxxx Xxxx, Esq. 14. Parties. This Agreement shall inure solely to the benefit
of and shall be binding upon, the Underwriter, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal Underwriter and assigns and no other person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provisions herein
contained. No purchaser of Securities from any Underwriter shall be deemed to be
a successor by reason merely of such purchase. 15. Construction. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of New York without giving effect to the choice of law or conflict of
laws principles. 36
16. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which taken together shall be deemed to be one and the same instrument. 17.
Entire Agreement; Amendments. This Agreement, the Underwriter's Warrant
Agreement and the Warrant Agreement constitute the entire agreement of the
parties hereto and supersede alle
and the Warrant Agreement constitute the entire agreement of the parties hereto
and supersede all prior written or oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may not
be amended except in a writing, signed by the Underwriter and the Company. If
the foregoing correctly sets forth the understanding between the Underwriter and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us. Very truly
yours, GENISYS RESERVATION SYSTEMS, INC. By: Xxxxxx Xxxxxxx, President Confirmed
and accepted as of the date first above written X.X. Xxxxx & Co., Inc. By: Xxxxx
Xxxxxx, Chairman
