1,600,000 Shares of Common Stock
XXXXXX TECHNOLOGIES, INC.
UNDERWRITING AGREEMENT
____________, 1998
Barington Capital Group, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Xxxxxx Technologies, Inc., a Delaware
corporation (the "Company"), hereby confirms its agreement with you (the
"Underwriter") and any other selling group members named in Schedule I hereto in
connection with the proposed offering of certain of its securities to the public
(the "Offering") as follows:
1. Introductory. The Company proposes to issue and sell to the
Underwriter 1,600,000 shares of Common Stock, par value $.01 per share, of the
Company (the "Common Stock"). In addition, solely for the purpose of covering
over-allotments, the Company proposes to grant the Underwriter the option to
purchase from it up to an additional 240,000 shares of Common Stock (the
"Additional Stock") identical to the Common Stock. The Common Stock is more
fully described in the Prospectus referred to below.
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriter that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), a registration statement, and may have filed one
or more amendments thereto, on Form SB-2 (Registration No. 333-______),
including in such registration statement and each such amendment and
related preliminary prospectus (a "Preliminary Prospectus") the
registration of (i) the 1,600,000 shares of Common Stock (the "Firm
Stock"), (ii) the Additional Stock and (iii) the shares of Common Stock
(the "Underwriter's Stock") issuable upon exercise of the Common Stock
purchase options referred to in Section 5(t) (the "Underwriter's
Options") (the Firm Stock, the Additional Stock, the
Underwriter's Options and the Underwriter's Stock are collectively
referred to as the "Securities"). As used in this Agreement, the term
"Registration Statement" means such registration statement, as amended,
on file with the Commission at the time such registration statement
becomes effective (including the prospectus, financial statements,
exhibits, and all other documents filed as a part thereof), provided
that such Registration Statement, at the time it becomes effective, may
omit such information as is permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A
of the General Rules and Regulations promulgated under the Act (the
"Regulations"), which information ("Rule 430 Information") shall be
deemed to be included in such Registration Statement when a final
prospectus is filed with the Commission in accordance with Rules 430A
and 424(b)(1) or (4) of the Regulations; the term "Preliminary
Prospectus" means each prospectus included in the Registration
Statement, or any amendments thereto, before it becomes effective under
the Act, the form of prospectus omitting Rule 430A Information included
in the Registration Statement when it becomes effective, if applicable
(the "Rule 430A Prospectus"), and any prospectus filed by the Company
with your consent pursuant to Rule 424(a) of the Regulations; and the
term "Prospectus" means the final prospectus included as part of the
Registration Statement, except that if the prospectus relating to the
securities covered by the Registration Statement in the form first
filed on behalf of the Company with the Commission pursuant to Rule
424(b) of the Regulations shall differ from such final prospectus, the
term "Prospectus" shall mean the prospectus as filed pursuant to Rule
424(b) from and after the date on which it shall have first been used.
(b) When the Registration Statement becomes effective, and at
all times subsequent thereto and including the Closing Date (as defined
in Section 3) and each Additional Closing Date (as defined in Section
3), and during such longer period as the Prospectus may be required to
be delivered in connection with sales by the Underwriter or a dealer,
and during such longer period until any post-effective amendment
thereto shall become effective, the Registration Statement (and any
post-effective amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment or supplement to the Registration Statement or the
Prospectus) will contain all statements which are required to be stated
therein in accordance with the Act and the Regulations, will comply
with the Act and the Regulations, and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and no event will have occurred which should
have been set forth in an amendment or supplement to the
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Registration Statement or the Prospectus which has not then been set
forth in such an amendment or supplement; if a Rule 430A Prospectus is
included in the Registration Statement at the time it becomes
effective, the Prospectus filed pursuant to Rules 430A and 424 (b) (1)
or (4) will contain all Rule 430A Information and all statements which
are required to be stated therein in accordance with the Act or the
Regulations, will comply with the Act and the Regulations, and will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; and each Preliminary Prospectus, as
of the date filed with the Commission, did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; except that no representation or warranty is
made in this Section 2(b) with respect to statements or omissions made
in reliance upon and in conformity with written information furnished
to the Company as stated in Section 8(b) with respect to the
Underwriter by the Underwriter expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto.
(c) Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction has issued an order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement, or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement, or
suspending the registration or qualification of any of the Securities,
nor has any of such authorities instituted or threatened to institute
any proceedings with respect to a Stop Order.
(d) Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract,
agreement, instrument, lease, or license required to be filed as an
exhibit to the Registration Statement has been filed with the
Commission as an exhibit to the Registration Statement.
(e) The Company has no subsidiaries (as defined in the
Regulations). The Company is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, with full
corporate power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other
tribunals, to own, lease, license, and use its properties and assets
and to carry on its business in the manner
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described in the Prospectus. The Company is duly qualified to do
business and is in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets or the
conduct of its business makes such qualification necessary except where
the failure to be so qualified does not now have and cannot be expected
in the future to have a material adverse effect on the operations,
business, properties, or assets of the Company.
(f) As of the Closing of the sale of the Firm Stock, the
authorized capital stock of the Company will consist of 10,000,000
shares of Common Stock, of which ______________ shares will be issued
outstanding and 1,000,000 shares of preferred stock, of which ___
shares have been designated Series __ Convertible Preferred Stock
("Series __ Preferred"), of which ___ shares of Series __ Convertible
Preferred will be issued and outstanding. Each outstanding share of
Common Stock and Series __ Preferred is validly authorized, validly
issued, fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and has not been issued and is not
owned or held in violation of any preemptive rights of stockholders.
There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance
of, any share of capital stock of the Company or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for, capital stock of the Company, except as may be
properly described in the Prospectus. There is outstanding no security
or other instrument which by its terms is convertible into or
exchangeable for capital stock of the Company, except as may have been
properly described in the Prospectus. As of the Closing (as hereinafter
defined), there shall be outstanding no indebtedness of the Company
other than (i) trade payables incurred and unpaid in the ordinary
course of business consistent with past practice, (ii) capital lease
obligations properly described in the Prospectus, and (iii) an
aggregate principal amount of indebtedness for borrowed money
outstanding to a bank or other financial institution of not exceeding
$.5 million.
(g) The financial statements of the Company included in the
Registration Statement and the Prospectus fairly present the financial
position, the results of operations, and the other information
purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such financial statements have
been prepared in accordance with generally accepted accounting
principles (except to the extent that certain footnote disclosures
regarding any period may have been omitted in accordance with the
applicable rules of the Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) consistently applied throughout
the periods involved, are correct and complete, and are in accordance
with the
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books and records of the Company. The accountants whose report on the
audited financial statements is filed with the Commission as a part of
the Registration Statement are, and during the periods covered by their
report(s) included in the Registration Statement and the Prospectus,
were independent certified public accountants within the meaning of the
Act and the Regulations. No other financial statements are required by
Form SB-2 or otherwise to be included in the Registration Statement or
the Prospectus. There has not been a material adverse change in the
financial condition, results of operations, business, properties,
assets, liabilities, or prospects of the Company from the latest
information set forth in the Registration Statement or the Prospectus
except as may be properly described in the Prospectus.
(h) There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or investigation pending,
threatened, or in prospect (or any basis therefor) with respect to the
Company, or any of its operations, businesses, properties, assets, or
liabilities or future prospects, except as may be properly described in
the Prospectus or such as individually or in the aggregate do not now
have and cannot be expected in the future to have a material adverse
effect upon the operations, business, properties, or assets of the
Company. The Company is not in violation of, or in default with respect
to, any law, rule, regulation, order, judgment, or decree except as may
be properly described in the Prospectus or such as in the aggregate do
not now have and cannot be expected in the future to have a material
adverse effect upon the operations, business, properties, assets,
liabilities or prospects, of the Company; nor is the Company required
to take any action in order to avoid any such violation or default.
(i) The Company does not own any real property. The Company
has good title to all properties and assets which the Prospectus
indicates are owned by it, free and clear of all liens, security
interests, pledges, charges, encumbrances, and mortgages (except as may
be properly described in the Prospectus). No real property owned,
leased, licensed, or used by the Company lies in an area which is, or
to the knowledge of the Company will be, subject to zoning, use, or
building code restrictions which would prohibit, and no state of facts
relating to the actions or inaction of another person or entity or his
or its ownership, leasing, licensing, or use of any real or personal
property exists or will exist which would prevent, the continued
effective ownership, leasing, licensing or use of such real property in
the business of the Company as presently conducted or as the Prospectus
indicates it contemplates conducting (except as may be properly
described in the Prospectus).
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(j) The Company is not, nor to the knowledge of the Company is
any other party, now or expected by the Company in the future to be in
violation or breach of, or in default with respect to, complying with
any material provision of any contract, agreement, instrument, lease,
license, arrangement, or understanding which is material to the
Company, and each such contract, agreement, instrument, lease, license,
arrangement, and understanding is in full force and is the legal,
valid, and binding obligation of the parties thereto and is enforceable
as to them in accordance with its terms. The Company enjoys peaceful
and undisturbed possession under all leases and licenses under which it
is operating. The Company is not a party to or bound by any contract,
agreement, instrument, lease, license, arrangement, or understanding,
or subject to any charter or other restriction, which has had or may in
the future be expected to have a material adverse effect on the
financial condition, results of operations, business, properties,
assets, liabilities, or prospects of the Company. The Company is not in
violation or breach of, or in default with respect to, any term of its
articles of incorporation (or other charter document) or by-laws.
(k) The Company owns, possesses or has the right to employ all
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, software, systems or
procedures), trademarks, service marks and trade names, inventions,
computer programs, technical data and information (collectively, the
"Intangibles") presently employed by it in connection with the
businesses now operated by it or that the Company owns or has pending
or has licensed, free and clear of and without violating any right,
claimed right, charge, encumbrance, pledge, security interest,
restriction or lien of any kind of any other person and are in good
standing, and, except as disclosed in the Registration Statement and
the Prospectus, the Company has not received any notice of infringement
of or conflict with asserted rights of others with respect to any of
the foregoing and to the knowledge of the Company, its rights to the
foregoing are uncontested. The use of the Intangibles in connection
with the business and operations of the Company and its Subsidiaries
does not infringe on the rights of any person. The "Xxxxxx
Technologies", "ComforTemp", "Thermasorb" and "Comfort in the Extreme"
names are the only trademarks and service marks used by the Company to
identify its products, and except for "Comfort in the Extreme" as to
which the Company has applied for trademark registration, such
trademarks and service marks are protected by registration in the name
of the Company on the principal register in the United States Patent
and Trademark Office. There is no right under any Intangible necessary
to the business of the Company as presently conducted or as the
Prospectus indicates it
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contemplates conducting except as may be so designated in the
Prospectus. The Company has not infringed, is not infringing, nor has
received notice of infringement with respect to, asserted Intangibles
of others. To the knowledge of the Company, there is no infringement by
others of Intangibles of the Company. To the knowledge of the Company,
there is no Intangible of others which has had or may be expected to
have in the future a material adverse effect on the financial
condition, results of operations, business, properties, assets,
liabilities, or prospects of the Company except for _____, as is
properly described in the Prospectus.
(l) Neither the Company, nor any director, officer, agent,
employee, or other person associated with or acting on behalf of the
Company has, directly or indirectly, used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended;
or made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment.
(m) The Company has all requisite corporate power and
authority to execute, deliver, and perform its obligations under each
of (i) this Agreement, and (ii) the certificate evidencing the
Underwriter's Options (the "Underwriter's Option Agreement" and,
collectively with this Agreement the "Company Documents"). All
necessary corporate proceedings of the Company have been duly taken to
authorize the execution, delivery, and performance of each of the
Company Documents by the Company. This Agreement has been duly
authorized, executed, and delivered by the Company, is the legal,
valid, and binding obligation of the Company, and is enforceable as to
the Company in accordance with its terms. Each of the other Company
Documents has been duly authorized by the Company, and is or, when
executed and delivered by the Company, will be the legal, valid, and
binding obligation of the Company, enforceable against the Company in
accordance with its terms. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing
with, any federal, state, local, or other governmental authority or any
court or other tribunal is required by the Company for the execution,
delivery, or performance by the Company of any of the Company Documents
(except filings under the Act which have been or will be made before
the Closing Date and such consents or approvals consisting only of
consents or approvals under "blue sky" or state securities laws). No
consent of any party to any contract, agreement, instrument, lease,
license, arrangement, or understanding to which the Company is a
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party, or to which any of its properties or assets are subject, is
required for the execution, delivery, or performance of the Company
Documents (except for those consents which have been obtained); and the
execution, delivery, and performance of any of the Company Documents
will not violate, result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under any such contract,
agreement, instrument, lease, license, arrangement, or understanding,
or violate or result in a breach of any term of the certificate of
incorporation (or other charter document) or by-laws of the Company or
violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the Company or to
which any of its operations, businesses, properties, or assets are
subject.
(n) The Firm Stock and the Additional Stock are validly
authorized and, when issued and delivered in accordance with this
Agreement, will be validly issued, fully paid, and nonassessable,
without any personal liability attaching to the ownership thereof, and
will not be issued in violation of any preemptive rights of
stockholders. The Underwriter will receive good title to the Firm Stock
and Additional Stock purchased by it free and clear of all liens,
security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts.
(o) The Underwriter's Stock is validly authorized and reserved
for issuance and, when issued and delivered upon exercise of the
Underwriter's Options in accordance with the Underwriter's Option
Agreement, will be validly issued, fully paid and nonassessable,
without any personal liability attaching to ownership thereof, and will
not be issued in violation of any preemptive rights of stockholders;
and the holders of the Underwriter's Options will receive good title to
the securities purchased by them, respectively, free and clear of all
liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts.
(p) The Securities conform to all statements relating thereto
contained in the Registration Statement or the Prospectus. The
descriptions of any litigation, contract, agreement, instrument lease
or license required to be described in the Registration Statement or
the Prospectus are correct in all material respects. Any litigation
contract, agreement, instrument lease or license required to be filed
as an exhibit to the Registration Statement has been so filed.
(q) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as may otherwise be properly described in the Prospectus, the Company
has not (i) issued
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any securities or incurred any liability or obligation, primary or
contingent, for borrowed money, (ii) entered into any transaction not
in the ordinary course of business, or (iii) declared or paid any
dividend on its capital stock.
(r) Neither the Company nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take,
directly or indirectly, prior to the termination of the underwriting
syndicate contemplated by this Agreement, any action designed to
stabilize or manipulate the price of any security of the Company, or
which has caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate
the sale or resale of any of the Firm Stock or Additional Stock, as the
case may be.
(s) The Company has obtained from each of its directors,
officers and affiliates (as defined in the Regulations), and from each
other person or entity who beneficially owned as of the effective date
of the Registration Statement shares of Common Stock of the Company
(each an "Original Stockholder"), enforceable written agreements, in
form and substance satisfactory to counsel for the Underwriter, that
for a period of 24 months from the Closing Date he will not, without
your prior written consent, offer, pledge, issue, sell, contract to
sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock or any security or
other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock or other securities of
the Company, including, without limitation, any shares of Common Stock
issuable under any outstanding stock options. Such agreements shall
provide that any such Original Stockholder may sell shares of Common
Stock commencing 12 months after the offering is completed in the event
that the last sales price for the Common Stock on its principal
exchange has been at least 200% of the initial public offering price
per share hereunder for a period of 20 consecutive trading days ending
within 5 days of the date of such sale, and such sale is completed at a
price in excess of 200% of such initial public offering price. Such
agreements shall terminate upon the closing of a follow-on public
offering with at least $20 million in gross proceeds underwritten by a
major bracket or large regional underwriting firm.
(t) Except as may have been registered in the Registration
Statement or already been exercised or waived, no person or entity has
the right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of the
Registration Statement.
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(u) Except as may be set forth in the Prospectus, the Company
has not incurred any liability for a fee, commission, or other
compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement.
(v) Neither the Company nor any of its affiliates is presently
doing business with the government of Cuba or with any person or
affiliate located in Cuba. If, at any time after the date that the
Registration Statement is declared effective with the Commission or
with the Florida Department of Banking and Finance (the "Florida
Department"), whichever date is later, and prior to the end of the
period referred to in the first clause of Section 2(b), the Company
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba, the Company will so inform the
Florida Department within ninety days after such commencement of
business in Cuba, and during the period referred to in Section 2(b)
will inform the Florida Department within ninety days after any change
occurs with respect to previously reported information.
(w) The Securities have been approved for quotation on the
NASDAQ SmallCap Market, subject to official notice of issuance.
(x) The Securities have been approved for listing on the
Pacific Stock Exchange (the "PSE"), subject to official notice of
issuance.
(y) Except as contemplated herein or as may have been waived,
no person or entity has any right of first refusal, preemptive right,
right to any compensation, or other similar right or option, in
connection with the Offering, this Agreement, or the Underwriter's
Options, or any of the transactions contemplated hereby or thereby.
3. Purchase, Sale, and Delivery of the Firm Stock and the Additional
Stock. On the basis of the representations, warranties, covenants, and
agreements of the Company herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to the Underwriter, and
the Underwriter agrees to purchase from the Company, all of the shares of Firm
Stock.
The purchase price per share of Firm Stock to be paid by the
Underwriter shall be $_______. The initial public offering price per share of
Firm Stock shall be $_______.
Payment for the Firm Stock by the Underwriter shall be made by wire
transfer in immediately available funds to the account or accounts designated by
the Company at the offices of Barington Capital Group, L.P., 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or at such other place in the Xxx Xxxx Xxxx
Xxxxxxxxxxxx
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Xxxx as you shall determine and advise the Company by at least two full days'
notice in writing, upon delivery of the Firm Stock to you for the account of the
Underwriter. Such delivery and payment shall be made at 10:00 A.M., New York
City Time, on the third business day following the commencement of the initial
public offering, as defined in Section 11(a), or at such other time as shall be
agreed upon between you and the Company. Such delivery and payment are herein
called the "Closing," and the time and date of such delivery and payment are
herein called the "Closing Date."
Certificates for the Firm Stock shall be registered in such name or
names and in such authorized denominations as you may request in writing at
least two full business days prior to the Closing Date. The Company shall permit
you to examine and package such certificates for delivery at least one full
business day prior to the Closing Date.
In addition, the Company hereby grants to the Underwriter the option to
purchase all or a portion of the Additional Stock as may be necessary to cover
over-allotments, at the same purchase price per share to be paid by the
Underwriter to the Company for the Firm Stock as provided for in this Section 3.
This option may be exercised only to cover over-allotments in the sale of shares
of Common Stock by the Underwriter. This option may be exercised by you on the
basis of the representations, warranties, covenants, and agreements of the
Company herein contained, but subject to the terms and conditions herein set
forth, at any time and from time to time on or before the forty-fifth day
following the effective date of the Registration Statement, by written notice by
you to the Company. Such notice shall set forth the aggregate number of
Additional Stock as to which the option is being exercised and the time and
date, as determined by you, when such Additional Stock are to be delivered (such
delivery herein being called an "Additional Closing", and such time and date are
herein called an "Additional Closing Date"); provided, however, that no
Additional Closing Date shall be earlier than the Closing Date nor earlier than
the second business day after the date on which the notice of the exercise of
the option shall have been given nor later than the eighth business day after
the date on which such notice shall have been given.
Payment for the Additional Stock by the Underwriter shall be made by
wire transfer in immediately available funds to the account or accounts
designated by the Company at the offices of Barington Capital Group, L.P., 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place in the New York
City Metropolitan Area as you shall determine and advise the Company by at least
two full days' notice in writing, upon delivery of the Additional Stock to you
for the account of the Underwriter.
Certificates for the Additional Stock shall be registered in
such name or names and in such authorized denominations as you
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may request in writing at least two full business days prior to the Additional
Closing Date with respect thereto. The Company shall permit you to examine and
package such certificates for delivery at least one full business day prior to
the Additional Closing Date with respect thereto.
4. Offering. The Underwriter is to make a public offering of the Firm
Stock as soon, on or after the effective date of the Registration Statement, as
you deem it advisable so to do. The Firm Stock is to be initially offered to the
public at the initial public offering price as provided for in Section 3 (such
price being herein called the "public offering price"). After the initial public
offering, you may from time to time increase or decrease the public offering
price, in your sole discretion, by reason of changes in general market
conditions or otherwise.
5. Covenants of the Company. The Company covenants that it will:
(a) Use its best efforts to cause the Registration Statement
to become effective as promptly as possible. If the Registration
Statement has become or becomes effective with a form of prospectus
omitting Rule 430A Information, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will file the
Prospectus, properly completed, pursuant to Rule 424(b) within the time
period prescribed and will provide evidence satisfactory to you of such
timely filing.
(b) Notify you immediately, and confirm such notice in
writing, (i) when the Registration Statement and any post-effective
amendment thereto become effective, (ii) of the receipt of any comments
from the Commission or the "blue sky" or securities authority of any
jurisdiction regarding the Registration Statement, any post-effective
amendment thereto, the Prospectus, or any amendment or supplement
thereto, and (iii) of the receipt of any notification with respect to a
Stop Order or the initiation or threatening of any proceeding with
respect to a Stop Order. The Company will use its best efforts to
prevent the issuance of any Stop Order and, if any Stop Order is
issued, to obtain the lifting thereof as promptly as possible.
(c) During the time when a prospectus relating to the Firm
Stock and the Additional Stock is required to be delivered hereunder or
under the Act or the Regulations, comply so far as it is able with all
requirements imposed upon it by the Act, as now existing and as
hereafter amended, and by the Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or
dealings in the Firm Stock or the Additional Stock, as the case may be,
in accordance with the provisions hereof and the Prospectus. If, at any
time when a prospectus relating to the Firm Stock and the Additional
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Stock is required to be delivered hereunder or under the Act or the
Regulations, any event shall have occurred as a result of which, in the
reasonable opinion of counsel for the Company or counsel for the
Underwriter, the Registration Statement or the Prospectus as then
amended or supplemented contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or if, in
the opinion of either of such counsel, it is necessary at any time to
amend or supplement the Registration Statement or the Prospectus to
comply with the Act or the Regulations, the Company will immediately
notify you and promptly prepare and file with the Commission an
appropriate amendment or supplement (in form and substance satisfactory
to you) which will correct such statement or omission or which will
effect such compliance and will use its best efforts to have any such
amendment declared effective as soon as possible.
(d) Deliver without charge to the Underwriter such number of
copies of each Preliminary Prospectus as may reasonably be requested by
the Underwriter and, as soon as the Registration Statement, or any
amendment thereto, becomes effective or a supplement is filed, deliver
without charge to you two signed copies of the Registration Statement,
including exhibits, or such amendment thereto, as the case may be, and
two copies of any supplement thereto, and deliver without charge to the
Underwriter such number of copies of the Prospectus, the Registration
Statement, and amendments and supplements thereto, if any, without
exhibits, as you may request for the purposes contemplated by the Act.
(e) Endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes effective, to
qualify the Firm Stock and the Additional Stock for offering and sale
under the "blue sky" or securities laws of such jurisdictions as you
may designate; provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a
foreign corporation doing business in such jurisdiction to which it is
not then subject. In each jurisdiction where such qualification shall
be effected, the Company will, unless you agree in writing that such
action is not at the time necessary or advisable, file and make such
statements or reports at such times as are or may be required by the
laws of such jurisdiction.
(f) Use its best efforts to keep the Prospectus and the
Registration Statement current and effective by filing post-effective
amendments, as necessary.
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(g) Make generally available (within the meaning of Section
11(a) of the Act and the Regulations) to its security holders as soon
as practicable, but not later than _______________, 1999, an earnings
statement (which need not be certified by independent certified public
accountants unless required by the Act or the Regulations, but which
shall satisfy the provisions of Section 11(a) of the Act and the
Regulations) covering a period of at least twelve months beginning
after the effective date of the Registration Statement.
(h) For the shorter of a period of twenty four months after
the date of the Prospectus or until the closing of a sale of Common
Stock in a follow-on public offering underwritten by a major bracket or
large regional underwriting firm which raises at least $20 million in
gross proceeds, not, without your prior written consent, offer, issue,
sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or other
securities of the Company (or any security or other instrument which by
its terms is convertible into, exercisable for, or exchangeable for
shares of Common Stock or other securities of the Company) except as
provided in Section 3 and except for (i) the grant of options to
purchase an aggregate of up to 250,000 shares of Common Stock under the
Company's 1998 ______________ Plan, which plan is properly described in
the Prospectus, (ii) the issuance of Common Stock issuable upon the
exercise of stock options and warrants and conversion of other
convertible securities outstanding on the date hereof or subsequently
issued pursuant to clause (i) hereof, (iii) the issuance of the
Securities, (iv) the issuance of any securities in connection with any
merger or acquisition approved by a majority of the independent
directors of the Company, or (v) the issuance, commencing twelve months
after the closing of the Offering, of shares of Common Stock to
unaffiliated third parties at fair market value pursuant to a private
placement approved by a majority of the independent directors of the
Company.
(i) For a period of five years after the effective date of the
Registration Statement, furnish you, without charge, the following:
(i) within 90 days after the end of each fiscal year,
three copies of financial statements certified by independent
certified public accountants, including a balance sheet,
statement of income, and statement of cash flows of the
Company and its then existing subsidiaries, with supporting
schedules, prepared in accordance with generally accepted
accounting principles, as at the end of such fiscal year and
for the 12 months then ended, which may be on a consolidated
basis;
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(ii) as soon as practicable after they have been sent
to stockholders of the Company or filed with the Commission,
three copies of each annual and interim financial and other
report or communication sent by the Company to its
stockholders or filed with the Commission;
(iii) as soon as practicable, two copies of every
press release and every material news item and article in
respect of the Company or its affairs which was released by
the Company; and
(iv) such additional documents and information with
respect to the Company and its affairs and the affairs of any
of its subsidiaries as you may from time to time reasonably
request.
(j) Apply the net proceeds received by it from the offering in
the manner set forth under "Use of Proceeds" in the Prospectus.
(k) Furnish to you as early as practicable prior to the
Closing Date and any Additional Closing Date, as the case may be, but
no less than two full business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements of the
Company and its consolidated subsidiaries which have been read by the
Company's independent certified public accountants, as stated in their
letters to be furnished pursuant to Section 7(e).
(l) File no amendment or supplement to the Registration
Statement or Prospectus at any time, after the effective date of the
Registration Statement, unless such filing shall comply with the Act
and the Regulations and unless you shall previously have been advised
of such filing and furnished with a copy thereof, and you and counsel
for the Underwriter shall have approved such filing in writing.
(m) Comply with all registration, filing, and reporting
requirements of the Exchange Act which may from time to time be
applicable to the Company.
(n) Comply with all provisions of all undertakings contained
in the Registration Statement.
(o) Prior to the Closing Date or any Additional Closing Date,
as the case may be, issue no press release or other communication,
directly or indirectly, and hold no press conference with respect to
the Company, the financial conditions, results of operations, business,
properties, assets, liabilities of the Company, or this Offering,
without your prior written consent.
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(p) File timely with the Commission an appropriate form to
register the Common Stock pursuant to Section 12(b) under the Exchange
Act.
(q) File timely and accurate reports on Form SR with the
Commission in accordance with Rule 463 of the Regulations or any
successor provision.
(r) Use its best efforts to cause the application for
quotation of the Firm Stock and the Additional Stock on The Nasdaq
SmallCap Market ("NASDAQ") to be approved as soon as possible.
(s) Use its best efforts to complete the listing of the
Securities on the PSE.
(t) On or prior to the Closing Date, sell to the Underwriter
(or its designee) the Underwriter's Options to purchase an aggregate of
160,000 shares of Common Stock, which Underwriter's Options shall be
evidenced by the Underwriter's Option Agreement substantially in the
form set forth as an exhibit to the Registration Statement.
(u) Until expiration of the Underwriter's Options, keep
reserved sufficient shares of Common Stock for issuance upon exercise
of the Underwriter's Options.
(v) Until the expiration of three years from the Closing Date,
if you shall so indicate in writing to the Company, use its best
efforts, including, without limitation, the solicitation of proxies, to
cause one individual selected from time to time by Barington Capital
Group, L.P. to be elected as a director of the Company.
(w) Deliver to you, without charge, within a reasonable period
after the last Additional Closing Date or the expiration of the period
in which the Underwriter may exercise the over-allotment option, four
bound volumes of the Registration Statement and all related materials.
(x) For a period of five years after the Closing Date, supply
to the appropriate parties such information as may be necessary or
desirable, and otherwise use its best efforts, so that the Company will
be listed and will maintain its listing in the Corporation Records
Service published by Standard & Poor's Corporation and that at all
times during such period such listing will, at a minimum, contain the
names of the Company's officers and directors, a balance sheet as of a
date not more than 18 months prior to such time, and a statement of
operations for either the fiscal year preceding such date or the most
recent fiscal year of operations.
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(y) Use its best efforts to maintain the quotation on the
Nasdaq SmallCap Market, and the PSE of the Common Stock issued
hereunder.
(z) From the date the Registration Statement becomes effective
and until three years from the Closing Date, procure and maintain
Director and Officer Liability Insurance in the amount no less than
$3.0 million with a reputable insurance carrier.
(aa) From the Closing Date and until three years from the date
the Registration Statement becomes effective, retain a transfer agent
acceptable to the Underwriter. Upon the Underwriter's request, and
provided such request is solely for the purpose of monitoring the
trading of Common Stock, the Company shall provide the Underwriter with
copies of the Company's daily stock transfer sheets and lists of the
beneficial and record holders of the Company, from such transfer agent
and from the Depository Trust Company, at the Company's sole cost and
expense.
(bb) From the date the Registration Statement becomes
effective and until three years from such date, the Company shall
retain a public relations firm reasonably acceptable to the
Underwriter.
6. Payment of Expenses. The Company hereby agrees to pay all expenses
(other than fees of counsel for the Underwriter, except as provided in Sections
6(c) and 6(e)) in connection with (a) the preparation, printing, filing,
distribution, and mailing of the Registration Statement, the Prospectus and the
certificates and agreements representing the Securities and the printing,
filing, distribution, and mailing of this Agreement, any Agreement Among
Underwriters, any selected dealers agreement, any Blue Sky Surveys, and if
appropriate, any Underwriter's Questionnaire and Power of Attorney, the
certificates representing any of the Securities, and related documents,
including the cost of all copies thereof and of the Preliminary Prospectuses and
of the Prospectus and any amendments or supplements thereto supplied to the
Underwriter in quantities as hereinabove stated, (b) the issuance, sale,
transfer, and delivery of the Firm Stock and the Additional Stock, including any
transfer or other taxes payable thereon, (c) the qualification of the Firm Stock
and the Additional Stock under state or foreign "blue sky" or securities laws,
including the costs of printing and mailing the preliminary and final "Blue Sky
Survey" and the fees of counsel for the Underwriter and the disbursements in
connection therewith, up to a maximum of $30,000 in fees and $5,000 in expenses,
(d) the filing fees payable to the Commission, the NASD, and the jurisdictions
in which such qualification is sought, (e) the reasonable fees and disbursements
of the Underwriter relating to all filings with the NASD, (f) the application
fee and fees for the quotation of the Common Stock on the NASDAQ SmallCap Market
and the PSE, (g) the
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fees and expenses of the Company's transfer agent and registrar, (h) the fees
and expenses of the Company's legal counsel and accountants, (i) the fees of an
investigative search firm designated by the Underwriter to conduct a background
check of the principals of the Company, (j) the costs (up to a maximum of
$7,500) of placing "tombstone" advertisements in the national edition of The
Wall Street Journal or other publication acceptable to Barington, and (k) the
costs of preparing a reasonable number of transaction "bibles" or "mementos." In
addition, the Company hereby agrees to pay to the Underwriter a non-accountable
expense allowance equal to 3% of the aggregate gross proceeds received by the
Company from the sale of the Firm Stock and the Additional Stock which amounts
(less $40,000 previously paid to you in respect of such non-accountable expense
allowance) shall be paid to you on the Closing Date (with respect to Common
Stock sold by the Company on the Closing Date) and, if applicable, on any
Additional Closing Date (with respect to Additional Stock sold by the Company on
such Additional Closing Date).
7. Conditions of Underwriter's Obligations. The obligations of the
Underwriter to purchase and pay for the Firm Stock and the Additional Stock, as
provided herein, shall be subject, in their discretion, to the continuing
accuracy of the representations and warranties of the Company contained herein
and in each certificate and document contemplated under this Agreement to be
delivered to you, as of the date hereof and as of the Closing Date (or the
Additional Closing Date, as the case may be), to the performance by the Company
of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective not
later than 6:00 P.M., New York City Time, on the date of this Agreement
or such later date and time as shall be consented to in writing by you.
(b) At the Closing Date and any Additional Closing Date, as
the case may be, you shall have received the favorable opinion of
Ruskin, Moscou, Xxxxx & Faltischek, P.C., counsel for the Company,
dated the date of delivery, addressed to the Underwriter, and in form
and scope satisfactory to counsel for the Underwriter, with such number
of reproduced copies or signed counterparts thereof for the Underwriter
as shall be satisfactory to the Underwriter, to the effect that:
(i) the Company is a corporation, duly organized and
validly existing, and in good standing under the laws of Delaware with
full corporate power and authority, and all consents, authorizations,
approvals, orders, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals necessary
to own, lease, license, and use its properties and assets and
-18-
to conduct its business in the manner described in the Prospectus. To
the knowledge of such counsel, the Company has no subsidiaries (as
defined in the Regulations). The Company is duly qualified to do
business and is in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets or the
conduct of its business makes such qualification necessary except where
the failure to be so qualified does not now have and cannot be expected
in the future to have a material adverse effect of the operations,
business, properties or assets of the Company. The Company has all
necessary governmental authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental
regulatory authorities to own, lease, license and use its properties
and assets and to conduct its business in the manner described in the
Prospectus, except where the failure to have any such authorizations,
approvals, orders, licenses, certificates, franchises and permits,
individually or in the aggregate, have not and cannot be expected in
the future to have a material adverse effect upon the operations,
business, properties, or assets of the Company.
(ii) the authorized capital stock of the Company
consists of 10,000,000 shares of Common Stock, and 1,000,000 shares of
preferred stock, no par value per share of which __ shares and ____
shares are outstanding, respectively. Each outstanding share of Common
Stock is duly authorized, validly issued, fully paid, and
nonassessable, without any personal liability attaching to the
ownership thereof and has not been issued and is not owned or held in
violation of any preemptive right of stockholders. To the knowledge of
such counsel, except for (A) the 250,000 shares of Common Stock
reserved for issuance upon exercise of awards under the Company's
_________ Plan, (B) the shares of Common Stock issuable upon exercise
of the Underwriter's Options, (C) the Additional Stock, and (D)
_________; each of which has been properly described in the prospectus,
there is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance
of, any share of capital stock of the Company, or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for, capital stock of the Company or any outstanding
security or other instrument which by its terms is convertible into or
exchangeable for capital stock of the Company;
(iii) to the knowledge of such counsel, there is no
litigation, arbitration, claim, governmental or other proceeding
(formal or informal), or investigation pending or threatened with
respect to the Company, or its operations, business, properties, or
assets except as may be properly described in the Prospectus or as
individually or in the aggregate do not now have and cannot be expected
in the
-19-
future to have a material adverse effect upon the operations, business,
properties, or assets of the Company. To the knowledge of such counsel,
the Company is not in violation of, or in default with respect to, any
law, rule, regulation, order, judgment, or decree, except as may be
properly described in the Prospectus or such as in the aggregate do not
now have and cannot be expected in the future to have a material
adverse effect upon the operations, business, properties, or assets of
the Company, nor is the Company required to take any action in order to
avoid any such violation or default;
(iv) to the knowledge of such counsel, neither the
Company nor any other party is now or is expected by the Company to be
in violation or breach of, or in default with respect to, complying
with any material provision of any contract, agreement, instrument,
lease, license, arrangement, or understanding known to such counsel
which is material to the Company, and each such contract, agreement,
instrument, lease, license, arrangement or understanding is in full
force and is the legal, valid and binding obligation of the parties
thereto and is enforceable as to them in accordance with its terms;
(v) the Company is not in violation or breach of, or
in default with respect to, any term of its certificate of
incorporation (or other charter document) or by-laws;
(vi) the Company has all requisite corporate power and
authority to execute, deliver, and perform each of the Company
Documents. All necessary corporate proceedings of the Company have been
taken to authorize the execution, delivery, and performance by the
Company of the Company Documents. Each Company Document has been duly
executed and delivered by the Company. Each Company Document is the
legal, valid, and binding obligation of the Company, and (subject to
applicable bankruptcy, insolvency, and other laws affecting the
enforceability of creditors' rights generally) is or will be
enforceable as to the Company in accordance with its terms. No consent,
authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or
other governmental authority or any court or other tribunal is required
by the Company for the execution, delivery, or performance by the
Company of any of the Company Documents (except filings under the Act
which have been made prior to the Closing Date and consents consisting
only of consents under "blue sky" or state securities laws, as to which
such counsel need not express any opinion). No consent of any party to
any contract, agreement, instrument, lease, license, arrangement, or
understanding known to such counsel and listed as an exhibit to the
Registration Statement, to which the Company is a party, or to which
any of its properties or assets are subject, is required for the
-20-
execution, delivery, or performance of any of the Company Documents;
and the execution, delivery, and performance of the Company Documents
will not violate, result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under any such contract,
agreement, instrument, lease, license, arrangement, or understanding,
or violate or result in a breach of any term of the certificate of
incorporation (or other charter document) or by-laws of the Company, or
violate, result in a breach of, conflict with any law, rule,
regulation, order, judgment, or decree binding on the Company or to
which any of its operations, business, properties, or assets are
subject (assuming compliance with all applicable "blue sky" or state
securities laws);
(vii) the Firm Stock and the Additional Stock are validly
authorized. Such opinion delivered at the Closing Date or any
Additional Closing Date shall state that each share of Firm Stock or
Additional Stock, as the case may be, to be delivered on that date is
validly issued, fully paid, and nonassessable, with no personal
liability attaching to the ownership thereof, and is not issued in
violation of any preemptive rights of stockholders, and the Underwriter
has received good title to the Firm Stock and Additional Stock
purchased by them, respectively, from the Company, free and clear of
all liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts;
(viii) the Underwriter's Stock has been duly and validly
reserved for issuance. Such opinion delivered at the Closing Date shall
state that the Underwriter's Options have been duly and validly issued
and delivered. The Underwriter's Stock, when issued and delivered in
accordance with the Underwriter's Option Agreement, will be validly
authorized, validly issued, fully paid, and nonassessable, with no
personal liability attaching to the ownership thereof, and will not
have been issued in violation of any preemptive rights of stockholders;
and the holders of the Underwriter's Options will receive good title to
the securities purchased by them, respectively, free and clear of all
liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts;
(ix) the Common Stock and the Securities conform to all
statements relating thereto contained in the Registration Statement or
the Prospectus;
(x) to the knowledge of such counsel, the
descriptions of any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus are correct in all material respects. To the knowledge of
such counsel, any contract, agreement, instrument, lease, or license
required to be
-21-
filed as an exhibit to the Registration Statement has been filed with
the Commission as an exhibit to the Registration Statement;
(xi) insofar as statements in the Prospectus purport to
summarize the status of litigation or the provisions of laws, rules,
regulations, orders, judgments, decrees, contracts, agreements,
instruments, leases, or licenses, such statements have been prepared or
reviewed by such counsel and accurately reflect the status of such
litigation and provisions purported to be summarized and are correct in
all material respects;
(xii) the conditions for use of Form SB-2 have been
satisfied with respect to the Registration Statement;
(xiii) the Common Stock has been approved for quotation on
the NASDAQ SmallCap Market, subject to official notice of issuance;
(xiv) the Common Stock has been approved for listing on
the PSE, subject to official notice of issuance;
(xv) to the knowledge of such counsel, no person or
entity has the right to require registration of shares of Common Stock
or other securities of the Company because of the filing or
effectiveness of the Registration Statement, other than persons or
entities which have waived such rights or whose rights have been
satisfied;
(xvi) the Registration Statement has become effective under
the Act. To the knowledge of such counsel, no Stop Order has been
issued and no proceedings for that purpose have been instituted or
threatened;
(xvii) the Registration Statement, any Rule 430A Prospectus,
and the Prospectus, and any amendment or supplement thereto (other than
financial statements and other financial data and schedules contained
therein, as to which such counsel need express no opinion), comply as
to form in all material respects with the requirements of the Act and
the Regulations;
(xviii) to the knowledge of such counsel, since the effective
date of the Registration Statement, no event has occurred which is
required to be described in an amendment or supplement to the
Registration Statement or the Prospectus which has not been set forth
in such an amendment or supplement; and
(xix) nothing has come to the attention of such counsel
that would lead them to believe that the Registration Statement, any
Rule 430A Prospectus, or the Prospectus, or any amendment or supplement
thereto (other
-22-
than financial statements and other financial data and schedules which
are or should be contained therein, as to which such counsel need
express no opinion), at the time it or they become effective or at the
Closing Date or Additional Closing Date, as the case may be, contained
an 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 or that the Prospectus, at the Closing Date or
Additional Closing Date, as the case may be (unless the term
"Prospectus" refers to a Prospectus which has been provided to the
Underwriter by the Company for use in connection with the offering of
the Securities which differs from the Prospectus on file at the
Commission at the Closing Date or Additional Closing Date, as the case
may be, in which case at the time it is first provided to the
Underwriter for such use), or at the Closing Date or Additional Closing
Date, as the case may be, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading (in each case other than the
financial statements and supporting schedules and notes thereto and
other financial or statistical information included therein, as to
which no opinion need be rendered) and such counsel does not know of
any amendment to the Registration Statement required to be filed;
(xx) any right of first refusal, preemptive right,
right to compensation, or other similar right or option, in connection
with the Offering, this Agreement or the Underwriter's Options, or any
of the transactions contemplated hereby or thereby known to such
counsel and not contemplated by the Offering, this Agreement or the
Underwriter's Options has been effectively waived.
In rendering such opinion, counsel for the Company (A) may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company; and (B) may rely to the extent they deem proper, upon written
statements or certificates of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such opinions, statements or
certificates shall be delivered to counsel for the Underwriter.
(c) At the Closing Date and any Additional Closing Date, as
the case may be, you shall have received the favorable opinion of Fish
& Xxxxxxxxxx, intellectual property counsel for the Company, dated the
date of delivery, addressed to the Underwriter, and in form and scope
satisfactory to counsel for the Underwriter, with such number of
reproduced copies or signed counterparts thereof
-23-
for the Underwriter as shall be satisfactory to the Underwriter, to the
effect that:
(i) The statements in the Prospectus and the
Registration Statement under "Risk Factors--Dependence Upon
Intellectual Property," "Business--Strategic Partnerships" and
"Business--Patents/Intellectual Property" insofar as such
statements constitute summaries of legal matters referred to
therein, fairly and adequately present the information called
for with respect to such legal matters and accurately
summarize the matters referred to therein.
(ii) The descriptions of the license agreements of
the Company with its licensors set forth in the Prospectus and
the Registration Statement are complete and accurate in all
material respects.
(iii) such counsel has reviewed the Registration
Statement, any Rule 430A Prospectus or the Prospectus or any
amendment or supplement thereto at the time it or they become
effective or at the Closing Date or Additional Closing Date,
as the case may be, relating to the intellectual property of
the Company and such statements have been and are approved by
such counsel and are accurate in all material respects and
fairly present the information set forth therein;
(iv) nothing has come to the attention of such counsel
that would lead them to believe that the Registration
Statement, any Rule 430A Prospectus, or the Prospectus, or any
amendment or supplement thereto any Rule 430 Prospectus, or
the Prospectus, or any amendment or supplement thereto, at the
time it or they become effective or at the Closing Date or
Additional Closing Date, as the case may be, contained an
untrue statement of a material fact with respect to the patent
or license position of the Company or omitted to state a
material fact relating to the patent or license position of
the Company required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus,
at the Closing Date or Additional Closing Date, as the case
may be (unless the term "Prospectus" refers to a Prospectus
which has been provided to the Underwriter by the Company for
use in connection with the offering of the Securities which
differs from the Prospectus on file at the Commission at the
Closing Date or Additional Closing Date, as the case may be,
in which case at the time it is first provided to the
Underwriter for such use), included or includes an untrue
statement of a material fact with respect to the patent or
license position of the Company or omitted or omits to state a
material fact with respect to the patent or license position
of the
-24-
Company necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading and such counsel does not know of any amendment to
the Registration Statement required to be filed.
In rendering such opinion, counsel for the Company (A) may rely as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company; and (B) may rely to the extent they deem proper, upon written
statements or certificates of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such opinions, statements or
certificates shall be delivered to counsel for the Underwriter.
(d) On or prior to the Closing Date and any Additional Closing
Date, as the case may be, the Underwriter shall have been furnished
such information, documents, certificates, and opinions as it may
reasonably require for the purpose of enabling it to review the matters
referred to in Section 7(b), and in order to evidence the accuracy,
completeness, or satisfaction of any of the representations,
warranties, covenants, agreements, or conditions herein contained, or
as you may reasonably request.
(e) At the Closing Date and any Additional Closing Date, as
the case may be, you shall have received a certificate of the chief
executive officer and of the chief financial officer of the Company,
dated the Closing Date or such Additional Closing Date, as the case may
be, to the effect that the condition set forth in Section 7(a) has been
satisfied, that as of the date of this Agreement and as of the Closing
Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein were and
are accurate, and that as of the Closing Date or such Additional
Closing Date, as the case may be, the obligations to be performed by
the Company hereunder on or prior thereto have been fully performed.
(f) At the time this Agreement is executed and at the Closing
Date and any Additional Closing Date, as the case may be, you shall
have received a letter from Ernst & Young, L.L.P. certified public
accountants, dated the date of delivery, and addre/ssed to the
Underwriter, and in form and substance satisfactory to you, with
reproduced copies or signed counterparts thereof for the Underwriter.
(g) All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Firm Stock and the Additional Stock
shall be satisfactory in form and substance to you and to counsel for
the Underwriter, and the Underwriter shall have received from such
counsel for the Underwriter a favorable opinion, dated as of the
Closing
-25-
Date and the Additional Closing Date, as the case may be, with respect
to such of the matters set forth under Section 7(b), and with respect
to such other related matters, as you may reasonably request.
(h) The NASD, upon review of the terms of the public offering
of the Firm Stock and the Additional Stock, shall not have objected to
the Underwriter's participation in such offering.
(i) Prior to or on the Closing Date, the Company shall have
entered into the Underwriter's Option Agreement with the Underwriter.
(j) Prior to or on the Closing Date, the Company shall have
provided to you copies of the agreements referred to in Section 2(s).
Any certificate or other document signed by any officer of the Company
and delivered to you or to counsel for the Underwriter shall be deemed a
representation and warranty by such officer individually and by the Company
hereunder to the Underwriter as to the statements made therein. If any condition
to the Underwriter's obligations hereunder to be fulfilled prior to or at the
Closing Date or any Additional Closing Date, as the case may be, is not so
fulfilled, you may terminate this Agreement or, if you so elect, in writing
waive any such conditions which have not been fulfilled or extend the time for
their fulfillment.
8. Indemnification and Contribution. (a) Subject to the conditions set forth
below, the Company agrees to indemnify and hold harmless the Underwriter, its
respective officers, directors, partners, employees, agents, and counsel, and
each person, if any, who controls the Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against any and all loss,
liability, claim, damage, and expense whatsoever (which shall include, for all
purposes of this Section 8, but not be limited to, attorneys' fees and any and
all expense whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever and any
and all amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Preliminary Prospectus, any Rule 430A Prospectus, the Registration Statement, or
the Prospectus (as from time to time amended and supplemented), or any amendment
or supplement thereto or (B) in any application or other document or
communication (in this Section 8 collectively called an "application") executed
by or on behalf of the Company or based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to qualify any of
the Securities under the
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"blue sky" or securities laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company as stated in
Section 8(b) with respect to any Underwriter by or on behalf of such Underwriter
through the Underwriter or its counsel expressly for inclusion in any
Preliminary Prospectus, any Rule 430A Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto, or in any application,
as the case may be, or (ii) any breach of any representation, warranty,
covenant, or agreement of the Company contained in this Agreement. The foregoing
agreement to indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Agreement.
If any action is brought against the Underwriter or any of its
respective officers, directors, partners, employees, agents, or counsel, or any
controlling persons of the Underwriter (an "indemnified party") in respect of
which indemnity may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company
in writing of the institution of such action (but the failure so to notify shall
not relieve the Company from any liability it may have other than pursuant to
this Section 8(a), except to the extent it may have been prejudiced in any
material respect by such failure) and the Company shall promptly assume the
defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment of expenses. Such
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in connection with
the defense of such action or the Company shall not have promptly employed
counsel reasonably satisfactory to such indemnified party or parties to have
charge of the defense of such action or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this paragraph to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent, which shall not be unreasonably withheld. The
Company shall not, without the prior written consent of each indemnified party
that is not released as described in this sentence, settle or compromise any
action, or permit a default or consent to the entry of judgment in or otherwise
seek to
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terminate any pending or threatened action, in respect of which indemnity may be
sought hereunder (whether or not any indemnified party is a party thereto),
unless such settlement, compromise, consent, or termination includes an
unconditional release of each indemnified party from all liability in respect of
such action. The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the sale of the Firm Stock or the
Additional Stock, any Preliminary Prospectus, any Rule 430A Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or any application.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who
shall have signed the Registration Statement, and each other person, if
any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Underwriter in Section
8(a), but only with respect to statements or omissions, if any, made in
any Preliminary Prospectus, any Rule 430A Prospectus, the Registration
Statement, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any
application in reliance upon and in conformity with written information
furnished to the Company as stated in this Section 8(b) with respect to
any Underwriter by or on behalf of such Underwriter through the
Underwriter or its counsel expressly for inclusion in any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be; provided, however, that the obligation
of the Underwriter to provide indemnity under the provisions of this
Section 8(b) shall be limited to the amount which represents the
underwriting discounts received by the Underwriter hereunder. For all
purposes of this Agreement, the amounts of the selling concession and
reallowance set forth in the Prospectus constitute the only information
furnished in writing by or on behalf of any Underwriter expressly for
inclusion in any Preliminary Prospectus, any Rule 430A Prospectus, the
Registration Statement, or the Prospectus (as from time to time amended
or supplemented), or any amendment or supplement thereto, or in any
application, as the case may be. If any action shall be brought against
the Company or any other person so indemnified based on any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto, or in any
application, and in respect of which indemnity may be sought against
any Underwriter pursuant to this Section 8(b), such Underwriter shall
have the rights and duties given to the Company, and the Company and
each other person so indemnified shall have the rights
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and duties given to the indemnified parties, by the provisions of
Section 8(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section
8(a) or 8(b) (subject to the limitations thereof) but it is found in a
final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case or (ii)
any indemnified or indemnifying party seeks contribution under the Act,
the Exchange Act, or otherwise, then the Company (including for this
purpose any contribution made by or on behalf of any director of the
Company, any officer of the Company who signed the Registration
Statement, and any controlling person of the Company), as one entity,
and the Underwriter (including for this purpose any contribution by or
on behalf of an indemnified party), as a second entity, shall
contribute to the losses, liabilities, claims, damages, and expenses
whatsoever to which any of them may be subject, so that the Underwriter
is responsible for the proportion thereof equal to the percentage which
the underwriting discount per share of Firm Stock set forth on the
cover page of the Prospectus represents of the initial public offering
price per share set forth on the cover page of the Prospectus and the
Company is responsible for the remaining portion; provided, however,
that if applicable law does not permit such allocation, then other
relevant equitable considerations such as the relative fault of the
Company and the Underwriter, in connection with the facts which
resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission, or alleged omission,
shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission 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 statement, alleged statement, omission, or
alleged omission. The Company and the Underwriter agree that it would
be unjust and inequitable if the respective obligations of the Company
and the Underwriter for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities, claims,
damages, and expenses (even if the Underwriter and the other
indemnified parties were treated as one entity for such purpose) or by
any other method of allocation that does not reflect the equitable
considerations referred to in this Section 8(c). No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this
Section 8(c), each person, if any, who
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controls the Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, partner,
employee, agent, and counsel of the Underwriter shall have the same
rights to contribution as such Underwriter and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company who
shall have 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 the provisions of this Section 8(c). In no case
shall the Underwriter be liable or responsible for any amount in excess
of the Underwriting discount applicable to the Firm Stock purchased by
such Underwriter hereunder. Anything in this Section 8(c) to the
contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without
its written consent. This Section 8(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
9. [Reserved]
10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriter and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any indemnified person,
or by or on behalf of the Company or any person or entity which is entitled to
be indemnified under Section 8(b), and shall survive termination of this
Agreement or the delivery of the Firm Stock and the Additional Stock to the
Underwriter. In addition, the provisions of Sections 6, 8, 10, 11, and 13 shall
survive termination of this Agreement, whether such termination occurs before or
after the Closing Date or any Additional Closing Date.
11. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective at 9:30 A.M., New
York City Time, on the first full business day following the day on
which the Registration Statement becomes effective or at the time of
the initial public offering by the Underwriter of the Firm Stock,
whichever is earlier. The time of the initial public offering shall
mean the time, after the Registration Statement becomes effective, of
the release by you for publication of the first newspaper advertisement
which is subsequently published relating to the shares or the time,
after the
-30-
Registration Statement becomes effective, when the Firm Stock are first
released by you for offering by the Underwriter or dealers by letter or
telegram, whichever shall first occur. You or the Company may prevent
this Agreement from becoming effective without liability of any party
to any other party, except as noted below in this Section 11, by giving
the notice indicated in Section 11(c) before the time this Agreement
becomes effective.
(b) In addition to the right to terminate this Agreement
pursuant to Section 7 hereof, you shall have the right to terminate
this Agreement at any time prior to the Closing Date or any Additional
Closing Date, as the case may be, by giving notice to the Company if
any domestic or international event, act, or occurrence has materially
disrupted, or in your opinion will in the immediate future materially
disrupt, the securities markets; or if there shall have been a general
suspension of, or a general limitation on prices for, trading in
securities on the New York Stock Exchange, the Nasdaq SmallCap Market,
the American Stock Exchange, the _____ PSE or in the over-the-counter
market; or if there shall have been an outbreak of major hostilities or
other national or international calamity; or if a banking moratorium
has been declared by a state or federal authority; or if a moratorium
in foreign exchange trading by major international banks or persons has
been declared; or if there shall have been a material interruption in
the mail service or other means of communication within the United
States; or if the Company shall have sustained a material or
substantial loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage, or other calamity or malicious act which, whether or
not such loss shall have been insured, will, in your opinion, make it
inadvisable to proceed with the offering, sale, or delivery of the Firm
Stock or the Additional Stock, as the case may be; or if there shall
have been such change in the market for securities in general or in
political, financial, or economic conditions as in your judgment makes
it inadvisable to proceed with the offering, sale, and delivery of the
Firm Stock or the Additional Stock, as the case may be, on the terms
contemplated by the Prospectus.
(c) If you elect to prevent this Agreement from becoming
effective, as provided in this Section 11, or to terminate this
Agreement pursuant to Section 7, or this Section 11, you shall notify
the Company promptly by telephone, telex, facsimile or telegram,
confirmed by letter. If the Company elects to prevent this Agreement
from becoming effective, as provided in this Section 11, the Company
shall notify you promptly by telephone, telex, facsimile, or telegram,
confirmed by letter.
(d) Anything in this Agreement to the contrary notwithstanding
other than Section 11(e), if this Agreement
-31-
shall not become effective by reason of an election pursuant to this
Section 11 or if this Agreement shall terminate or shall otherwise not
be carried out within the time specified herein by reason of any
failure on the part of the Company to perform any covenant or agreement
or satisfy any condition of this Agreement by it to be performed or
satisfied, the sole liability of the Company to the Underwriter, in
addition to the obligations the Company assumed pursuant to Section 6,
will be to reimburse the Underwriter for such out-of-pocket expenses
(including the fees and disbursements of their counsel) as shall have
been incurred by them in connection with this Agreement or the proposed
offer, sale, and delivery of the Firm Stock and the Additional Stock,
and the Company agrees to pay promptly upon demand the full amount
thereof to you for the account of the Underwriter less amounts
previously paid to you in reimbursement of such expenses.
(e) Notwithstanding any election hereunder or any termination
of this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 6, 8, 10, and 15 shall not be
in any way affected by such election or termination or failure to carry
out the terms of this Agreement or any part hereof.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
by letter, to such Underwriter, to Barington Capital Group, L.P., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx; or if sent to the
Company, shall be mailed, delivered, or telexed or telegraphed and confirmed by
letter, to the Company, 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, XX 00000, Attention:
Xxxx Xxxxxx. All notices hereunder shall be effective upon receipt by the party
to which it is addressed.
13. Parties. You represent that you are authorized to act on behalf of
the parties named in Schedule I hereto, and the Company shall be entitled to act
and rely on any request, notice, consent, waiver, or agreement purportedly given
on behalf of the Underwriter when the same shall have been given by you on such
behalf. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriter and the Company and the persons and entities
referred to in Section 8 who are entitled to indemnification or contribution,
and their respective successors, legal representatives, and assigns (which shall
not include any buyer, as such, of the Firm Stock or the Additional Stock), and
no other person shall have or be construed to have any legal or equitable right,
remedy, or claim under or in respect of or by virtue of this Agreement or any
provision herein contained.
14. Construction. This Agreement shall be construed in accordance with
the laws of the State of New York, without giving
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effect to conflict of laws. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
15. Consent to Jurisdiction. The Company irrevocably consents to the
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action or proceeding arising out of
or relating to this Agreement, any document or instrument delivered pursuant to,
in connection with or simultaneously with this Agreement, or a breach of this
Agreement or any such document or instrument. In any such action or proceeding,
the Company waives personal service or any summons, complaint or other process
and agrees that service thereof may be made in accordance with Section 12.
Within 30 days after such service, or such other time as may be mutually agreed
upon in writing by the attorneys for the parties to such action or proceeding,
the Company shall appear or answer such summons, complaint or other process.
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If the foregoing correctly sets forth the understanding between you and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
XXXXXX TECHNOLOGIES, INC.
By:____________________________
Name: Xxxx Xxxxxx
Title: President and Chief Executive
Officer
Accepted as of the date first above written.
New York, New York
BARINGTON CAPITAL GROUP, L.P.
By: LNA CAPITAL CORP.,
General Partner
By:_____________________________
Xxxx Xxxxxx, Executive Vice-
President
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