Exhibit 1.1
1,400,000 SHARES OF COMMON STOCK
COFFEE HOLDING CO., INC.
UNDERWRITING AGREEMENT
_______________ ____, 2005
Xxxxxx Xxxxxxx & Company, Inc.
00 Xxxxxx Xxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representative of the several Underwriters
named on Schedule A hereto
Ladies and Gentlemen:
Coffee Holding Co., Inc., a corporation organized and existing under
the laws of the State of Nevada (the "COMPANY"), confirms its agreement, subject
to the terms and conditions set forth herein, with each of the underwriters
listed on Schedule A hereto (collectively, the "UNDERWRITERS"), for whom Xxxxxx
Xxxxxxx & Company, Inc. is acting as Representative (in such capacity, the
"REPRESENTATIVE"), to sell and issue to the Underwriters an aggregate of
1,400,000 shares (the "FIRM SHARES") of its common stock, par value $0.001 per
share (the "COMMON STOCK"). In addition, for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, the Company
proposes to sell and issue to the Underwriters, at the Underwriters' option, up
to an additional 210,000 shares of Common Stock as set forth herein (the
"ADDITIONAL SHARES"). The Firm Shares and any Additional Shares purchased by the
Underwriters are referred to herein as the "SHARES." The Shares are more fully
described in the Registration Statement and Prospectus (as each such term is
hereinafter respectively defined). The offering and sale of the Shares
contemplated by this underwriting agreement (this "AGREEMENT") is referred to
herein as the "OFFERING."
1. Representations and Warranties of the Company. The Company
represents, warrants and covenants to, and agrees with, each of the Underwriters
that, as of the date hereof and as of the First Closing Date and each Additional
Closing Date (as each such term is hereinafter respectively defined)(the First
Closing Date and each Additional Closing Date, if any, are referred to herein as
the "CLOSING DATE"):
(a) The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form SB-2
(Registration No. 333-116838), and amendments thereto, and related
preliminary prospectuses for the registration under the Securities Act
of 1933, as amended (the "SECURITIES ACT"), of the Shares which
registration statement, as so amended (including post-effective
amendments, if any), has been declared effective by the Commission and
copies of which have heretofore been delivered to the Underwriters. The
registration statement, as amended at the time it became effective,
including
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the prospectus, financial statements, schedules, exhibits and other
information (if any) deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A under the Securities
Act, is hereinafter referred to as the "REGISTRATION STATEMENT." If the
Company has filed, or is required pursuant to the terms hereof to file,
a registration statement pursuant to Rule 462(b) under the Securities
Act registering additional shares of Common Stock (a "RULE 462(B)
REGISTRATION STATEMENT"), then, unless otherwise specified, any
reference herein to the term "REGISTRATION STATEMENT" shall be deemed
to include such Rule 462(b) Registration Statement. Other than a Rule
462(b) Registration Statement, which, if filed, becomes effective upon
filing, no other document with respect to the Registration Statement
has heretofore been filed with the Commission. All of the Shares have
been registered under the Securities Act pursuant to the Registration
Statement or, if any Rule 462(b) Registration Statement is filed, will
be duly registered under the Securities Act with the filing of such
Rule 462(b) Registration Statement. Based on communications from the
Commission, no stop order suspending the effectiveness of either the
Registration Statement or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission. The Company, if required by
the Securities Act and the rules and regulations of the Commission (the
"RULES AND REGULATIONS"), shall file the prospectus with the Commission
pursuant to Rule 424(b) under the Securities Act ("RULE 424(B)"). The
prospectus, in the form in which it is to be filed with the Commission
pursuant to Rule 424(b), or, if the prospectus is not to be filed with
the Commission pursuant to Rule 424(b), the prospectus in the form
included as part of the Registration Statement at the time the
Registration Statement became effective, is hereinafter referred to as
the "PROSPECTUS," except that if any revised prospectus or prospectus
supplement shall be provided to the Underwriters by the Company for use
in connection with the Offering which differs from the Prospectus
(whether or not such revised prospectus or prospectus supplement is
required to be filed by the Company pursuant to Rule 424(b)), the term
"PROSPECTUS" shall also refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. Any preliminary prospectus
or prospectus subject to completion included in the Registration
Statement or filed with the Commission pursuant to Rule 424 under the
Securities Act is hereafter called a "PRELIMINARY PROSPECTUS." Any
reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
the exhibits incorporated by reference therein pursuant to the Rules
and Regulations on or before the effective date of the Registration
Statement, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be. Any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include: (i) the filing of any document under the
Securities Exchange Act of 1934, as amended, and together with the
Rules and Regulations promulgated thereunder (the "EXCHANGE ACT"),
after the effective date of the Registration Statement, the date of
such Preliminary Prospectus or the date of the Prospectus, as the case
may be, which is incorporated therein by reference, and (ii) any such
document so filed. All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a Preliminary
Prospectus and the Prospectus, or any amendments or supplements to any
of the foregoing shall be deemed to include any copy thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System ("XXXXX").
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(b) At the time (1) of the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or the
effectiveness of any post-effective amendment to the Registration
Statement, (2) when the Prospectus is first filed with the Commission
pursuant to Rule 424(b), (3) when any supplement to or amendment of the
Prospectus is filed with the Commission and (4) of the First Closing
Date and each Additional Closing Date, if any, in the case of the items
referred to in clauses (1) through (4) above, the Registration
Statement and the Prospectus and any amendments thereof and supplements
or exhibits thereto complied or will comply in all material respects
with the applicable provisions of the Securities Act, the Exchange Act
and the Rules and Regulations, and did not and will not contain an
untrue statement of a material fact and did not and will not omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein: (i) in the case of the
Registration Statement, not misleading, and (ii) in the case of the
Prospectus in light of the circumstances under which they were made,
not misleading. When any Preliminary Prospectus was first filed with
the Commission (whether filed as part of the Registration Statement for
the registration of the Shares or any amendment thereto or pursuant to
Rule 424(a) under the Securities Act) and when any amendment thereof or
supplement thereto was first filed with the Commission, such
Preliminary Prospectus and any amendments thereof and supplements
thereto complied in all material respects with the applicable
provisions of the Securities Act, the Exchange Act and the Rules and
Regulations and did not contain an untrue statement of a material fact
and did not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. No
representation and warranty is made in this subsection (b), however,
with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related Preliminary
Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter specifically for use
therein. The parties acknowledge and agree that such information
provided by or on behalf of any Underwriter consists solely of the
information contained in the ___ paragraph of the cover page and in
paragraphs ___________ under the caption "Underwriting" in the
Prospectus.
(c) Xxxxx Xxxxxx & Xxxxx LLP, whose reports relating to the
Company are included in the Registration Statement and who have
delivered the letters referred to in Section 6(e), are independent
public accountants as required by the Securities Act, the Exchange Act
and the Rules and Regulations.
(d) Subsequent to the respective dates as of which information
is presented in the Registration Statement and the Prospectus, and
except as disclosed in the Registration Statement and the Prospectus:
(i) the Company has not declared, paid or made any dividends or other
distributions of any kind on or in respect of its capital stock, and
(ii) there has been no material adverse change or material adverse
effect (or any development which may result in a material adverse
change or a material adverse effect in the future), whether or not
arising from transactions in the ordinary course of business, in or
affecting: (A) the business, condition (financial or otherwise),
results of operations, shareholders' equity, properties or prospects of
the
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Company; (B) the long-term debt or capital stock of the Company; or (C)
the Offering or consummation of any of the other transactions
contemplated by this Agreement, the Registration Statement or the
Prospectus (a "MATERIAL ADVERSE CHANGE" or a "MATERIAL ADVERSE
EFFECT"). Since the date of the latest balance sheet presented in the
Registration Statement and the Prospectus, the Company has not incurred
or undertaken any liabilities or obligations, whether direct or
indirect, liquidated or contingent, matured or unmatured, or entered
into any transactions, including any acquisition or disposition of any
business or asset, which are material to the Company, except for
liabilities, obligations and transactions which are disclosed in the
Registration Statement and the Prospectus.
(e) As of the dates indicated in the Prospectus, the
authorized, issued and outstanding shares of capital stock of the
Company were as set forth in the Prospectus in the column labeled
"Actual" under the section thereof captioned "Capitalization" and,
after giving effect to the Offering and the application of the proceeds
of the Offering as set forth in the Prospectus, the Registration
Statement and the Prospectus, will be as set forth in the column
labeled "As Adjusted" in such section. All of the issued and
outstanding shares of capital stock of the Company are fully paid and
non-assessable and have been duly and validly authorized and issued, in
compliance with all applicable state, federal and foreign securities
laws and not in violation of or subject to any preemptive or similar
right that does or will entitle any Person (as defined below), upon the
issuance or sale of any security, to acquire from the Company any
Relevant Security. As used herein, the term "RELEVANT SECURITY" means
Common Stock or any other security of the Company that is convertible
into, or exercisable or exchangeable for, Common Stock or other equity
securities of the Company (including any other equity security that is
convertible into, or exercisable or exchangeable for, Common Stock), or
that holds the right to acquire Common Stock or other equity securities
of the Company (including any other equity security that is convertible
into, or exercisable or exchangeable for, Common Stock), except for
such rights as may have been fully satisfied or waived prior to the
effectiveness of the Registration Statement. As used herein, the term
"PERSON" means any individual, corporation, trust, partnership, joint
venture, limited liability company or other entity, in each such case,
whether foreign or domestic. The Company has not issued any Relevant
Security since February 1998. The Company has not granted registration
rights to any holder of its securities.
(f) The Shares have been duly and validly authorized and, when
issued, delivered and paid for in accordance with this Agreement and as
described in the Prospectus on each of the First Closing Date and each
Additional Closing Date, as applicable, will be duly and validly
issued, fully paid and non-assessable, will have been issued in
compliance with all applicable state and federal securities laws and
will not have been issued in violation of or subject to any preemptive
or similar right that does or will entitle any Person to acquire any
Relevant Security from the Company upon issuance or sale of Shares in
the Offering. The Underwriters will receive good title to the Shares
purchased by them, respectively, free and clear of all liens,
encumbrances, equities or claims or other defects of title whatsoever.
No further approval or authority of the shareholders or the Board of
Directors of the Company will be required for the issuance and sale of
the Shares as contemplated herein. The shares of Common Stock
representing the Shares conform to the descriptions thereof contained
in the Registration
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Statement and the Prospectus. Except as disclosed in the Registration
Statement and the Prospectus, the Company does not have any outstanding
warrants, options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase, or any contracts or commitments to
issue or sell, any Relevant Security. The shares of Common Stock
underlying the Stock Purchase Warrant (the "WARRANT SHARES") to be
issued to the Underwriters (the "STOCK PURCHASE WARRANT") have been
reserved for issuance upon the exercise of the Stock Purchase Warrant
and when issued and sold in accordance with the terms of the Stock
Purchase Warrant, will be duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights and no personal
liability will attach to the ownership thereof.
(g) The Company does not have any Subsidiaries (as defined in
Rule 405 of the Rules and Regulations). The Company holds no ownership
or other interest, nominal or beneficial, direct or indirect, in any
corporation, partnership, joint venture or other business entity. No
director or officer (including Xxxxxxxx Xxxxxx) of the Company named in
the Prospectus holds any direct equity, debt or other pecuniary
interest in any Person with whom the Company does business or is in
privity of contract with, other than, in each case, indirectly through
the ownership by such individuals of shares of Common Stock.
(h) The Company has been duly organized and is validly
existing as a corporation under the laws of the State of Nevada. The
Company has all requisite power and authority to carry on its business
as it is currently being conducted and as described in the Prospectus,
and to own, lease and operate its properties. The Company is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the character or location of
its properties (owned, leased or licensed) or the nature or conduct of
its business makes such qualification necessary, except, in each case,
for those failures to be so qualified or in good standing which
(individually and in the aggregate) could not reasonably be expected to
have a Material Adverse Effect.
(i) The Company: (i) is not in violation of its articles of
incorporation or by-laws, and (ii) is not in default under, and no
event has occurred which, with notice or lapse of time or both, would
constitute a default under or result in the creation or imposition of
any Lien (as defined below) upon any of its properties or assets
pursuant to any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject, except,
in the case of clause (ii) above for any Lien disclosed in the
Registration Statement and the Prospectus. For purposes of this
Agreement, "LIEN" means any lien, charge, mortgage, pledge, security
interest, claim, equity, trust or other encumbrance, preferential
arrangement, defect or restriction of any kind whatsoever.
(j) The Company has full right, power and authority to execute
and deliver this Agreement and the Stock Purchase Warrant, to perform
its obligations hereunder and thereunder and to consummate each of the
transactions contemplated by this Agreement and the Stock Purchase
Warrant. The Company has duly and validly authorized this Agreement and
the Stock Purchase Warrant and each of the transactions contemplated by
this Agreement and the
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Stock Purchase Warrant. This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company and is enforceable against the
Company in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Stock Purchase Warrant, when
executed and delivered by the Company, will have been duly and validly
executed and delivered by the Company and will constitute the legal,
valid and binding obligation of the Company and will be enforceable
against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(k) The execution, delivery, and performance of this Agreement
and the Stock Purchase Warrant and the consummation of the transactions
contemplated by this Agreement and the Stock Purchase Warrant do not
and will not: (i) conflict with, require consent under or result in a
breach of any of the terms and provisions of, or constitute a default
(or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of
any Lien upon any of the Company's properties or assets pursuant to any
indenture, mortgage, deed of trust, loan agreement or other agreement,
instrument, franchise, license or permit to which the Company is a
party or by which the Company or its properties, operations or assets
may be bound or (ii) violate or conflict with any provision of the
articles of incorporation or by-laws of the Company, or (iii) violate
or conflict with any law, rule, regulation, ordinance, directive,
judgment, decree or order of any judicial, regulatory or other legal or
governmental agency or body, domestic or foreign.
(l) The Company has all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses,
filings and permits of, with and from all judicial, regulatory and
other legal or governmental agencies and bodies and all third parties,
foreign and domestic (collectively, the "CONSENTS"), to own, lease and
operate its properties and conduct its business as it is now being
conducted and as disclosed in the Registration Statement and the
Prospectus, and each such Consent is valid and in full force and
effect. The Company has not received notice of any investigation or
proceeding which has resulted in or, if decided adversely to the
Company, could reasonably be expected to result in, the revocation of,
or imposition of a materially burdensome restriction on, any Consent.
No Consent contains a materially burdensome restriction not adequately
disclosed in the Registration Statement and the Prospectus.
(m) The Company is in compliance with all applicable laws,
rules, regulations, ordinances, directives, judgments, decrees and
orders, foreign and domestic, except for those the non-compliance with
which would not have a Material Adverse Effect.
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(n) No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign
or domestic, is required for the execution, delivery and performance of
this Agreement or the Stock Purchase Warrant or the consummation of the
transactions contemplated by this Agreement or the Stock Purchase
Warrant, including the issuance, sale and delivery of the Shares and
the Warrant Shares to be issued, sold and delivered hereunder and
thereunder, except the registration under the Securities Act of the
Shares and the Warrant Shares, which has become effective, and such
Consents as may be required under state securities or blue sky laws or
the by-laws and rules of the American Stock Exchange ("AMEX"), the
National Association of Securities Dealers, Inc. (the "NASD") or NASD
Regulation, Inc. in connection with the purchase and distribution of
the Shares by the Underwriters, each of which has been obtained and is
in full force and effect.
(o) Except as disclosed in the Registration Statement and the
Prospectus, there is no judicial, regulatory, arbitral or other legal
or governmental proceeding or other litigation or arbitration, domestic
or foreign, pending to which the Company is a party or of which any
property, operations or assets of the Company is the subject which,
individually or in the aggregate, if determined adversely to the
Company, could reasonably be expected to have a Material Adverse
Effect. To the Company's knowledge, no such proceeding, litigation or
arbitration is threatened or contemplated.
(p) The financial statements of the Company included in the
Registration Statement and the Prospectus, including the notes thereto,
and the supporting schedules included in the Registration Statement and
the Prospectus, present fairly the financial position of the Company as
of the dates indicated and the cash flows and results of operations of
the Company for the periods specified. Except as otherwise stated in
the Registration Statement and the Prospectus, said financial
statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The supporting schedules included in
the Registration Statement and the Prospectus present fairly the
information required to be stated therein. No other financial
statements or supporting schedules are required to be included or
incorporated by reference in the Registration Statement. The other
financial and statistical information included in the Registration
Statement and the Prospectus present fairly the information included
therein and have been prepared on a basis consistent with that of the
financial statements that are included in the Registration Statement
and the Prospectus and the books and records of the Company.
(q) There are no pro forma or as adjusted financial statements
which are required to be included in the Registration Statement and the
Prospectus in accordance with Regulation S-X which have not been
included as so required. The pro forma and pro forma as adjusted
financial information included in the Registration Statement and the
Prospectus has been properly compiled and prepared in accordance with
the applicable requirements of the Securities Act and the Rules and
Regulations and includes all adjustments necessary to present fairly in
accordance with generally accepted accounting principles the pro forma
and as adjusted financial position of the Company at the respective
dates indicated and its cash flows and results of operations for the
respective periods specified. The assumptions used in preparing the pro
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forma and pro forma as adjusted financial information included in the
Registration Statement and the Prospectus provide a reasonable basis
for presenting the significant effects directly attributable to the
transactions or events described therein. The related pro forma and pro
forma as adjusted adjustments give appropriate effect to those
assumptions; and the pro forma and pro forma as adjusted financial
information reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.
(r) The statistical, industry-related and market-related data
included in the Registration Statement and the Prospectus are based on
or derived from sources which the Company reasonably and in good faith
believes are reliable and accurate, and such data agree with the
sources from which they are derived.
(s) The Company maintains a system of internal accounting and
other controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with United
States generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and
(iv) the recorded accounting for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(t) As of the effective date of the Registration Statement,
the Company's Board of Directors shall have validly appointed an audit
committee, nominating committee and compensation committee whose
composition satisfies the requirements of the Rules of AMEX (the "AMEX
RULES") and the Board of Directors and/or audit committee and the
nominating committee has each adopted a charter that satisfies the
requirements the AMEX Rules. Neither the Board of Directors nor the
audit committee has been informed, nor is any director of the Company
aware, of: (i) any significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the Company's ability
to record, process, summarize and report financial information; or (ii)
any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal control
over financial reporting.
(u) The Company has not violated: (i) the Bank Secrecy Act, as
amended, (ii) the Money Laundering Control Act of 1986, as amended,
(iii) the Foreign Corrupt Practices Act, or (iv) the Uniting and
Strengthening of America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and/or
the rules and regulations promulgated under any such law, or any
successor law, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(v) Neither the Company nor any of its Affiliates (within the
meaning of Rule 144 under the Securities Act) (collectively,
"AFFILIATES") has taken, directly or indirectly, any action which
constitutes or is designed to cause or result in, or which could
reasonably be
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expected to constitute, cause or result in, the stabilization or
manipulation of the price of any security to facilitate the sale or
resale of the Shares.
(w) Neither the Company nor any of its Affiliates has, prior
to the date hereof, made any offer or sale of any securities which are
required to be "integrated" pursuant to the Securities Act or the Rules
and Regulations with the offer and sale of the Shares pursuant to the
Registration Statement. Except as disclosed in the Registration
Statement, the Prospectus or in any public filings relating to the
Company filed with the Commission, neither the Company nor any of its
Affiliates has sold or issued any Relevant Security during the
six-month period preceding the date of the Prospectus, including but
not limited to any sales pursuant to Rule 144A or Regulation D or S
under the Securities Act, other than shares of Common Stock issued
pursuant to employee benefit plans, qualified stock option plans or
employee compensation plans or pursuant to outstanding options, rights
or warrants as described in the Registration Statement and the
Prospectus.
(x) Except as disclosed in the Registration Statement and the
Prospectus, no holder of any Relevant Security has any rights to
require registration of any Relevant Security as part or on account of,
or otherwise in connection with, the offer and sale of the Shares
contemplated hereby, and any such rights so disclosed have either been
fully complied with by the Company or effectively waived by the holders
thereof, and any such waivers remain in full force and effect.
(y) The documents, exhibits or other materials incorporated or
deemed to be incorporated by reference in the Prospectus, at the time
they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Securities
Act, the Exchange Act and the Rules and Regulations, and, when read
together with the other information in the Prospectus, do not and, in
the case of any Prospectus filed after the date hereof, will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(z) The conditions for use of Form SB-2 to register the
Offering under the Securities Act, as set forth in the General
Instructions to such Form, have been satisfied.
(aa) The Company is not and, at all times up to and including
consummation of the transactions contemplated by this Agreement, and
after giving effect to application of the net proceeds of the Offering,
will not be, subject to registration as an "investment company" under
the Investment Company Act of 1940, as amended, and is not and will not
be an entity "controlled" by an "investment company" within the meaning
of such act.
(bb) There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be
described in the Registration Statement and the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act, the
Exchange
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Act or the Rules and Regulations and which have not been so described,
filed or incorporated by reference.
(cc) No relationship, direct or indirect, exists between or
among any of the Company or its Affiliates, on the one hand, and any
director, officer, shareholder, customer or supplier of the Company or
any of their respective Affiliates, on the other hand, which is
required by the Securities Act, the Exchange Act or the Rules and
Regulations to be described in the Registration Statement or the
Prospectus which is not so described and described as required. There
are no outstanding loans, advances (except normal advances for business
expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of their respective family
members, except as disclosed in the Registration Statement and the
Prospectus. The Company has not, in violation of the Xxxxxxxx-Xxxxx Act
of 2002 ("SARB-OX"), directly or indirectly, extended or maintained
credit, arranged for the extension of credit, or renewed an extension
of credit, in the form of a personal loan to or for any director or
executive officer of the Company.
(dd) The Company is in material compliance with the provisions
of Sarb-Ox and the Rules and Regulations promulgated thereunder and
related or similar rules and regulations promulgated by AMEX or any
other governmental or self regulatory entity or agency, except for such
violations which, singly or in the aggregate, would not have a Material
Adverse Effect. Without limiting the generality of the foregoing, as of
the effective date of the Registration Statement: (i) all members of
the Company's Board of Directors who are required to be "independent"
(as that term is defined under applicable laws, rules and regulations),
including, without limitation, all members of the audit committee of
the Company's Board of Directors, meet the qualifications of
independence as set forth under applicable laws, rules and regulations
and (ii) the audit committee of the Company's Board of Directors has at
least one member who is an "audit committee financial expert" (as that
term is defined under applicable laws, rules and regulations).
(ee) Except as disclosed in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings
between the Company and any Person that would give rise to a valid
claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated by this Agreement and the Stock Purchase
Warrant or, to the Company's knowledge, any arrangements, agreements,
understandings, payments or issuances with respect to the Company or
any of its officers, directors, shareholders, partners, employees, or
Affiliates that may affect the Underwriters' compensation as determined
by the NASD.
(ff) The Company owns or leases all such properties as are
necessary to the conduct of its business as presently operated and as
proposed to be operated as described in the Registration Statement and
the Prospectus. The Company has good and marketable title in fee simple
to all real property and good and marketable title to all personal
property owned by it, in each case, free and clear of all Liens, except
such Liens as are described in the Registration Statement and the
Prospectus or such Liens as do not (individually or in the aggregate)
Xxxxxx Xxxxxxx & Company, Inc.
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materially affect the business or prospects of the Company. Any real
property and buildings held under lease or sublease by the Company are
held by the Company under valid, subsisting and enforceable leases with
such exceptions as are not material to, and do not interfere with, the
use made and proposed to be made of such property and buildings by the
Company. The Company has not received any notice of any claim adverse
to its ownership of any real or personal property or of any claim
against the continued possession of any real property, whether owned or
held under lease or sublease by the Company.
(gg) The Company: (i) owns or possesses adequate right to use
all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service xxxx registrations, copyrights,
licenses, formulae, customer lists, and know-how and other intellectual
property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures, "INTELLECTUAL PROPERTY") necessary for the conduct of its
business as being conducted and as described in the Registration
Statement and Prospectus and (ii) has no knowledge that the conduct of
its business does or will conflict with, and the Company has not
received any notice of any claim of conflict with, any such right of
others. To the Company's knowledge, all material technical information
developed by and belonging to the Company which has not been patented
has been kept confidential so, among other things, all such information
may be deemed proprietary to the Company. Except as set forth in the
Registration Statement or the Prospectus, the Company has not granted
or assigned to any other Person any right to sell the current products
and services of the Company. To the Company's knowledge, there is no
infringement by third parties of any such Intellectual Property owned
by the Company; there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
Company's rights in or to any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for
any such claim; and there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others, and the Company is
unaware of any other fact which would form a reasonable basis for any
such claim.
(hh) The Company maintains insurance of the types and in the
amounts which are customary for companies engaged in similar
businesses, including, but not limited to: (A) directors' and officers'
insurance (including insurance covering the Company, its directors and
officers for liabilities or losses arising in connection with this
Offering, including, without limitation, liabilities or losses arising
under the Securities Act, the Exchange Act, the Rules and Regulations
and applicable foreign securities laws), (B) insurance covering real
and personal property owned or leased by the Company against theft,
damage, destruction, acts of vandalism and all other risks customarily
insured against and (C) business interruption insurance. There are no
claims by the Company under any policy or instrument described in this
subparagraph as to which any insurance company is denying liability or
defending under a reservation of rights clause. All of the insurance
policies described in this subparagraph are in full force and effect.
The Company has not been refused any insurance coverage sought or
applied for, and the Company has no reason to believe that it will not
be able to renew its existing insurance
Xxxxxx Xxxxxxx & Company, Inc.
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coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially adversely affect the
business, business prospects, properties, condition (financial or
otherwise) or results of operations of the Company.
(ii) The Company has accurately prepared and timely filed all
federal, state, foreign and other tax returns that are required to be
filed by it and has paid or made provision for the payment of all
taxes, assessments, governmental or other similar charges, including
without limitation, all sales and use taxes and all taxes which the
Company is obligated to withhold from amounts owing to employees,
creditors and third parties, with respect to the periods covered by
such tax returns (whether or not such amounts are shown as due on any
tax return). No deficiency assessment with respect to a proposed
adjustment of the Company's federal, state, local or foreign taxes is
pending or, to the Company's knowledge, threatened. The accruals and
reserves on the books and records of the Company in respect of tax
liabilities for any taxable period not finally determined are adequate
to meet any assessments and related liabilities for any such period
and, since the date of the Company's most recent audited financial
statements, the Company has not incurred any liability for taxes other
than in the ordinary course of its business. There is no tax Lien,
whether imposed by any federal, state, foreign or other taxing
authority, outstanding against the assets, properties or business of
the Company.
(jj) No material labor dispute by the employees of the Company
currently exists or, to the Company's knowledge, is imminent.
(kk) The Company has at all times operated its business in
material compliance with all Environmental Laws (as defined below), and
no expenditures are or will be required in order to comply therewith
that are reasonably likely to result in a Material Adverse Effect. The
Company has not received any notice or communication that relates to or
alleges any actual or potential violation or failure to comply with any
Environmental Laws that are reasonably likely to result in a Material
Adverse Effect. As used herein, the term "ENVIRONMENTAL LAWS" means all
applicable laws and regulations, including any licensing, permits or
reporting requirements, and any action by a Federal, state or local
governmental entity pertaining to the protection of the environment,
protection of public health, protection of worker health and safety, or
the handling of hazardous materials, including without limitation, the
Clean Air Act, 42 U.S.C. ss. 7401, et seq., the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. ss. 9601, et seq., the Federal Water Pollution Control Act, 33
U.S.C. ss. 1321, et seq., the Hazardous Materials Transportation Act,
49 U.S.C. ss. 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. ss. 690-1, et seq., and the Toxic Substances Control
Act, 15 U.S.C. ss. 2601, et seq.
(ll) Except as set forth in the Registration Statement or the
Prospectus, the Company is not a party to an "employee benefit plan,"
as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974 ("ERISA") which: (i) is subject to any provision of ERISA
and (ii) is or was at any time maintained, administered or contributed
to by the Company and covers any employee or former employee of the
Company or any ERISA
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Affiliate (as defined hereafter). These plans are referred to
collectively herein as the "EMPLOYEE PLANS." The term "ERISA AFFILIATE"
of any Person means any other Person which, together with that Person,
could be treated as a single employer under Section 414(m) of the
Internal Revenue Code of 1986, as amended (the "CODE"), or is an
"affiliate," whether or not incorporated, as defined in Section
407(d)(7) of ERISA, of such Person.
(mm) The Registration Statement and the Prospectus identify
each employment, severance or other similar arrangement or policy and
each material plan or arrangement providing for insurance coverage
(including any self-insured arrangements), workers' compensation,
disability benefits, severance benefits, supplemental unemployment
benefits, vacation benefits, retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation, or
post-retirement insurance, compensation or benefits which: (i) is not
an Employee Plan, (ii) is entered into, maintained or contributed to,
as the case may be, by the Company or any of its ERISA Affiliates, and
(iii) covers any employee or former employee of the Company or any of
its ERISA Affiliates. These contracts, plans and arrangements are
referred to collectively in this Agreement as the "BENEFIT
ARRANGEMENTS." Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations that
are applicable to that Benefit Arrangement.
(nn) Except as set forth in the Registration Statement or the
Prospectus, there is no liability in respect of post-retirement health
and medical benefits for retired employees of the Company or any of its
ERISA Affiliates other than medical benefits required to be continued
under applicable law. With respect to any of the Company's Employee
Plans which are "group health plans" under Section 4980B of the Code
and Section 607(1) of ERISA, there has been material compliance with
all requirements imposed thereunder such that that the Company or its
ERISA Affiliates have no (and will not incur any) loss, assessment, tax
penalty, or other sanction with respect to any such Company Employee
Plan.
(oo) Except: (i) as set forth in the Registration Statement or
the Prospectus or (ii) for employment agreements between the Company
and each of Xxxxxx Xxxxxx, the Company's Chief Executive Officer and
President, and Xxxxx Xxxxxx, the Company's Executive Vice
President-Operations, the Company is not a party to or subject to any
employment contract or arrangement providing for annual future
compensation, or the opportunity to earn annual future compensation
(whether through fixed salary, bonus, commission, options or otherwise)
of more than $60,000 to any officer, consultant, director or employee.
(pp) The execution of this Agreement and the Stock Purchase
Warrant and consummation of the Offering does not constitute a
triggering event under any Employee Plan or any other employment
contract, whether or not legally enforceable, which (either alone or
upon the occurrence of any additional or subsequent event) will or may
result in any payment (of severance pay or otherwise), acceleration,
increase in vesting, or increase in benefits to any current or former
participant, employee or director of the Company other than an event
that is not material to the financial condition or business of the
Company.
Xxxxxx Xxxxxxx & Company, Inc.
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(qq) No "prohibited transaction" (as defined in either Section
406 of the ERISA or Section 4975 of Code), "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or other event of the
kind described in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of
ERISA has been waived) has occurred with respect to any Employee Plan
for which the Company would have any liability; each Employee Plan of
the Company is in compliance in all material respects with applicable
law, including without limitation ERISA and the Code; the Company has
not incurred and does not expect to incur liability under Title IV of
ERISA with respect to the termination of, or withdrawal from any
"pension plan"; and each Employee Plan of the Company that is intended
to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or by failure to act, which
could cause the loss of such qualification.
(rr) Neither the Company nor, to the Company's knowledge, any
of its employees or agents has at any time: (i) made any unlawful
contribution to any candidate for foreign office, or failed to disclose
fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other Person
charged with similar public or quasi-public duties, other than payments
that are not prohibited by the laws of the United States of any
jurisdiction thereof.
(ss) The Company has not offered, or caused the Underwriters
to offer, the Firm Shares to any Person with the intention of
unlawfully influencing: (i) a customer or supplier of the Company to
alter the customer's or supplier's level or type of business with the
Company or (ii) a journalist or publication to write or publish
favorable information about the Company or its products or services.
(tt) The Shares have been authorized for listing on the AMEX.
(uu) The Company has not distributed, nor will it distribute
prior to the First Closing Date (as defined in Section 2(b) below), any
offering materials in connection with the offering and sale of the
Shares other than the Preliminary Prospectus, the Prospectus, the
Registration Statement or any other materials permitted by the
Securities Act, if any.
(vv) Since October 27, 2000, the Company has timely filed all
reports, schedules, forms, statements and other documents required to
be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act (all of the foregoing, and all other
documents and registration statements heretofore filed by the Company
with the Commission being hereinafter referred to as the "SEC
DOCUMENTS"). None of the SEC Documents, at the time they were filed
with the Commission (except those SEC Documents that were subsequently
amended), contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included (or
incorporated by reference) in the SEC Documents complied as to form in
all material respects with applicable accounting requirements
Xxxxxx Xxxxxxx & Company, Inc.
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and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto (except those SEC
Documents that were subsequently amended).
(ww) As used in this Agreement, references to matters being
"material" with respect to the Company shall mean a material event,
change, condition, status or effect related to the condition (financial
or otherwise), properties, assets (including intangible assets),
liabilities, business, prospects, operations or results of operations
of the Company.
(xx) As used in this Agreement, the term "knowledge of the
Company" (or similar language) shall mean the knowledge of the officers
and directors of the Company who are named in the Prospectus, with the
assumption that such officers and directors shall have made reasonable
and diligent inquiry of the matters presented (with reference to what
is customary and prudent for the applicable individuals in connection
with the discharge by the applicable individuals of their duties as
officers or directors of the Company, as applicable.
Any certificate signed by or on behalf of the Company and delivered to
the Underwriters or to Xxxxxxxxxx Xxxxxxx PC, counsel for the Underwriters
("UNDERWRITERS' COUNSEL"), shall be deemed to be a representation and warranty
by the Company to each Underwriter listed on Schedule A hereto as to the matters
covered thereby.
2. Purchase, Sale and Delivery of the Shares.
(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 purchase
price per share of $__________, the number of Firm Shares set forth opposite
their respective names on Schedule A hereto together with any additional number
of Shares which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
representing, the Firm Shares shall be made at the offices of the Underwriters'
Counsel, 1251 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or
at such other place as shall be agreed upon by the Underwriters and the Company,
at 10:00 A.M., New York City time, on the third (3rd) or, as permitted under
Rule 15c6-1 under the Exchange Act, fourth (4th) business day (unless postponed
in accordance with the provisions of Section 9 hereof) following the date of the
effectiveness of the Registration Statement, or such other time not later than
ten (10) business days after such date as shall be agreed upon by the
Underwriters and the Company as permitted under Rule 15c6-1 under the Exchange
Act (such time and date of payment and delivery being herein called the "FIRST
CLOSING DATE"). The closing of the payment of the purchase price for, and
delivery of certificates representing, the Firm Shares is referred to herein as
the "FIRST CLOSING."
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(c) Payment of the purchase price for the Firm Shares shall be made by
wire transfer in immediately available funds to or as directed by the Company
upon delivery of certificates for the Firm Shares to the Underwriters through
the facilities of The Depository Trust Company for the respective accounts of
the several Underwriters. Certificates for the Firm Shares shall be registered
in such name or names and shall be in such denominations as the Underwriters may
request at least two (2) business days before the First Closing Date. The
Company will permit the Underwriters to examine and package such certificates
for delivery at least one (1) full business day prior to the First Closing Date.
(d) 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 to the Underwriters an
option to purchase up to an aggregate of 210,000 Additional Shares at the same
purchase price per share to be paid by the Underwriters for the Firm Shares as
set forth in Section 2(a) above, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option may
be exercised at any time and from time to time on or before the forty-fifth
(45th) day following the final date of the Prospectus, by written notice from
the Underwriters to the Company. Such notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised and the
date and time, as reasonably determined by the Underwriters, when the Additional
Shares are to be delivered (any such date and time being herein sometimes
referred to as an "ADDITIONAL CLOSING DATE"; the closing of the payment of the
purchase price for, and delivery of certificates representing, any Additional
Shares is referred to herein as an "ADDITIONAL CLOSING"); provided, however,
that no Additional Closing Date shall occur earlier than the First Closing Date
or earlier than the second (2nd) full business day after the date on which the
option shall have been exercised nor later than the eighth (8th) full business
day after the date on which the option shall have been exercised (unless such
time and date are postponed in accordance with the provisions of Section 9
hereof). Upon any exercise of the option as to all or any portion of the
Additional Shares, each Underwriter, acting severally and not jointly, agrees to
purchase from the Company the number of Additional Shares that bears the same
proportion of the total number of Additional Shares then being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto (or such number increased as set forth in Section 9 hereof)
bears to the total number of Firm Shares that the Underwriters have agreed to
purchase hereunder, subject, however, to such adjustments to eliminate
fractional shares as the Underwriters in their sole discretion shall make. In
the event the Company declares or pays a dividend or distribution on its Common
Stock, whether in the form of cash, shares of Common Stock or any other
consideration, following the First Closing Date and prior to any Additional
Closing Date, such dividend or distribution shall also be paid on the Additional
Shares issued on such Additional Closing Date.
(e) Payment of the purchase price for, and delivery of certificates
representing, the Additional Shares shall be made at the office of Underwriters'
Counsel, or at such other place as shall be agreed upon by the Underwriters and
the Company, at 10:00 A.M., New York City time, on the Additional Closing Date
(unless postponed in accordance with the provisions of Section 9 hereof), or
such other time as shall be agreed upon by the Underwriters and the Company.
Xxxxxx Xxxxxxx & Company, Inc.
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(f) Payment of the purchase price for the Additional Shares shall be
made by wire transfer in immediately available funds to or as directed by the
Company upon delivery of certificates for the Additional Shares to the
Underwriters through the facilities of The Depository Trust Company for the
respective accounts of the several Underwriters. Certificates for the Additional
Shares shall be registered in such name or names and shall be in such
denominations as the Underwriters may request at least two (2) business days
before the Additional Closing Date. The Company will permit the Underwriters to
examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date.
3. Offering. Upon authorization of the release of the Firm Shares by
the Representative, the Underwriters propose to offer the Shares for sale to the
public upon the terms and conditions set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.
4. Covenants of the Company. The Company acknowledges, covenants and
agrees with the Underwriters that:
(a) The Registration Statement and any amendments thereto have
been declared effective, and if Rule 430A is used or the filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
file the Prospectus (properly completed if Rule 430A has been used)
pursuant to Rule 424(b) within the prescribed time period and will
provide evidence satisfactory to the Underwriters of such timely
filing.
The Company will notify the Underwriters immediately (and, if
requested by the Underwriters, will confirm such notice in writing):
(i) when any amendments to the Registration Statement become effective,
(ii) of any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for any
additional information, (iii) of the Company's intention to file or
prepare any supplement or amendment to the Registration Statement or
the Prospectus, (iv) of the mailing or the delivery to the Commission
for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, including but not limited to Rule 462(b)
under the Securities Act, (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereto or of the initiation, or the
threatening, of any proceedings therefor, it being understood that the
Company shall make every effort to avoid the issuance of any such stop
order, (vi) of the receipt of any comments from the Commission, and
(vii) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
that purpose. If the Commission shall propose or enter a stop order at
any time, the Company will make every reasonable effort to prevent the
issuance of any such stop order and, if issued, to obtain the lifting
of such order as soon as possible. The Company will not file any
amendment to the Registration Statement or any amendment of or
supplement to the Prospectus (including the prospectus required to be
filed pursuant to Rule 424(b)) that differs from the Prospectus on
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file at the time of the effectiveness of the Registration Statement or
file any document under the Exchange Act if such document would be
deemed to be incorporated by reference into the Prospectus to which the
Underwriters shall object in writing after being timely furnished in
advance a copy thereof. The Company will provide the Underwriters with
copies of all such amendments, filings and other documents a sufficient
time prior to any filing or other publication thereof to permit the
Underwriters a reasonable opportunity to review and comment thereon.
(b) The Company shall comply with the Securities Act, the
Exchange Act and all applicable Rules and Regulations to permit
completion of the distribution as contemplated in this Agreement, the
Registration Statement and the Prospectus. If, at any time when a
Prospectus relating to the Shares is required to be delivered under the
Securities Act, the Exchange Act and all applicable Rules and
Regulations in connection with the sales of Shares, any event shall
have occurred as a result of which the Prospectus as then amended or
supplemented would, in the judgment of the Underwriters or the Company,
include an 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 the light of the circumstances existing at the
time of delivery to the purchaser, not misleading, or if, to comply
with the Securities Act, the Exchange Act or the Rules and Regulations,
it shall be necessary at any time to amend or supplement the Prospectus
or Registration Statement, or to file any document which is an exhibit
to the Registration Statement or the Prospectus or in any amendment
thereof or supplement thereto, the Company will notify the Underwriters
promptly and prepare and file with the Commission, subject to Section
4(a) hereof, an appropriate amendment or supplement (in form and
substance satisfactory to the Underwriters) which will correct such
statement or omission or which will effect such compliance and will use
its best efforts to have any amendment to the Registration Statement
declared effective as soon as possible.
(c) The Company will promptly deliver to the Underwriters and
Underwriters' Counsel a signed copy of the Registration Statement, as
initially filed and all amendments thereto, including all consents and
exhibits filed therewith, and will maintain in the Company's files
manually signed copies of such documents for at least five (5) years
after the date of filing thereof. The Company will promptly deliver to
each of the Underwriters such number of copies of any Preliminary
Prospectus, the Prospectus, the Registration Statement, and all
amendments of and supplements to such documents, if any, and all
documents which are exhibits to the Registration Statement and
Prospectus or any amendment thereof or supplement thereto, as the
Underwriters may reasonably request. Prior to 10:00 A.M., New York
time, on the business day next succeeding the date of this Agreement
and from time to time thereafter, the Company will furnish the
Underwriters with copies of the Prospectus in New York City in such
quantities as the Underwriters may reasonably request.
(d) The Company consents to the use and delivery of the
Preliminary Prospectus by the Underwriters in accordance with Rule 430
and Section 5(b) of the Securities Act.
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(e) If the Company elects to rely on Rule 462(b) under the
Securities Act, the Company shall both file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) and pay
the applicable fees in accordance with Rule 111 of the Act by the
earlier of: (i) 10:00 p.m., New York City time, on the date of this
Agreement, and (ii) the time that confirmations are given or sent, as
specified by Rule 462(b)(2).
(f) The Company will use its best efforts, in cooperation with
the Underwriters, at or prior to the time of effectiveness of the
Registration Statement, to qualify the Shares for offering and sale
under the securities laws relating to the offering or sale of the
Shares of such jurisdictions, domestic or foreign, as the Underwriters
may designate and to maintain such qualification in effect for so long
as required for the distribution thereof, except that in no event shall
the Company be obligated in connection therewith to qualify as a
foreign corporation or to execute a general consent to service of
process.
(g) The Company will make generally available to its security
holders and to the Underwriters as soon as practicable, but in any
event not later than twelve (12) months after the effective date of the
Registration Statement (as defined in Rule 158(c) under the Securities
Act), an earnings statement of the Company (which need not be audited)
complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158).
(h) During the twelve (12) months following the First Closing
Date, without the consent of the Underwriters which shall not be
unreasonably withheld: the Company will not file any registration
statement relating to the offer or sale of any of the Company's
securities, including any Registration Statement on Form S-8.
Notwithstanding the foregoing, the Company shall be permitted to file a
Registration Statement on Form S-4 for an acquisition transaction and a
Registration Statement and Form S-8 with respect to the Company's stock
option plan described in the Registration Statement.
(i) For a period of nine (9) months from the date of the
Prospectus, the Company shall not, directly or indirectly, (1) offer
for sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to,
result in the disposition by any Person at any time in the future of)
any Relevant Securities (other than (x) the Shares, (y) the grant of
options to purchase shares of Common Stock under its existing stock
option plan and the issuance of Common Stock to employees or
prospective employees as incentive compensation in an amount (with
respect to the shares of Common Stock underlying the option grants and
the issuance of Common Stock to employees or prospective employees) not
to exceed 100,000 shares of Common Stock in the aggregate; and (z) the
issuance of shares of Common Stock pursuant to currently outstanding
options, warrants or rights), or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such shares of
Common Stock or other Relevant Securities, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, in each case,
without the prior written consent of the Underwriters; and to cause
each officer, director and each
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shareholder of the Company set forth on Annex III hereto to furnish to
the Company, prior to the First Closing Date, a letter or letters,
substantially in the form of Annex II hereto. During the nine (9) month
period from the date of the final Prospectus, the Company shall obtain
an executed letter in the form of Annex II from each new officer and
director who has not previously executed such a letter.
(j) During the twelve (12) month period following the First
Closing Date, without the consent of the Underwriters, which consent
shall not be unreasonably withheld, the Company shall not grant any
registration rights relating to securities of the Company.
(k) During the twelve (12) month period following the First
Closing Date, the Company will not offer or sell any convertible
securities convertible at a price that may, at the time of conversion,
be less than the Fair Market Value of the Common Stock of the date of
the original sale. For purposes of this Section 4, the term "FAIR
MARKET VALUE" shall mean the last sale price of the Common Stock,
during normal operating hours, as reported on AMEX.
(l) For a period of one year from the effective date of the
Registration Statement, the Company, at its expense, shall provide the
Underwriters on a weekly basis with a copy of the Company's weekly
transfer sheets from the previous week and securities positions
listings.
(m) During the period of three (3) years from the effective
date of the Registration Statement, the Company will furnish to the
Underwriters copies of all reports or other communications (financial
or other) furnished to security holders or from time to time published
or publicly disseminated by the Company, and will deliver to the
Underwriters: (i) as soon as they are available, copies of any reports,
financial statements and proxy or information statements furnished to
or filed with the Commission or any national securities exchange on
which any class of securities of the Company is listed; and (ii) such
additional information concerning the business and financial condition
of the Company as the Underwriters may from time to time reasonably
request.
(n) The Company will not issue press releases or engage in any
other publicity, without the Underwriters's prior written consent, for
a period ending at 5:00 p.m. New York time on the first business day
following the thirtieth (30th) day following the First Closing Date,
other than normal and customary releases issued in the ordinary course
of the Company's business.
(o) On or prior to the First Closing Date, the Company will
have engaged and will continue to engage for no less than one (1) year
from the date of the First Closing Date, a financial public relations
firm mutually acceptable to the Company and the Underwriters. The
Company further agrees to consult with the Underwriters as is customary
within the securities industry prior to distribution to third parties
of any financial information, news releases, and/or other publicity
regarding the Company, its business, or any terms of the Offering, it
being agreed that the Company shall give the Underwriters prior notice
of any such distribution and a
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reasonable opportunity during or prior to such period to review the
contents of the proposed distribution.
(p) The Company has or will retain a transfer agent reasonably
acceptable to the Underwriters for the Shares and shall continue to
retain such transfer agent for a period of three (3) years following
the Closing Date. Notwithstanding the foregoing, the Underwriters agree
that OTR, Inc. is a transfer agent reasonably acceptable to it.
(q) The Company will apply the net proceeds from the sale of
the Shares as set forth under the caption "Use of Proceeds" in the
Prospectus. Without the written consent of the Underwriters, no
proceeds of the Offering will be used to pay outstanding loans from
officers, directors or shareholders or to pay any accrued salaries or
bonuses to any employees or former employees.
(r) The Company will use its commercially reasonable efforts
to maintain the listing of the Shares on AMEX or other national
securities exchange acceptable to the Underwriters for a period of at
least five (5) years from the date of this Agreement.
(s) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act or the Exchange Act,
will file all documents required to be filed with the Commission
pursuant to the Securities Act, the Exchange Act and the Rules and
Regulations within the time periods required thereby.
(t) The Company will use its best efforts to perform all of
its obligations under this Agreement prior to the First Closing Date or
any Additional Closing Date, as the case may be, and to satisfy all
conditions precedent to the delivery of the Firm Shares and the
Additional Shares.
(u) The Company will not take, and will cause its Affiliates
not to take, directly or indirectly, any action which constitutes or is
designed to cause or result in, or which could reasonably be expected
to constitute, cause or result in, the stabilization or manipulation of
the price of any security to facilitate the sale or resale of the
Shares.
(v) The Company shall cause to be prepared and delivered to
the Underwriters, at its expense, within one (1) business day from the
effective date of this Agreement, an Electronic Prospectus to be used
by the Underwriters in connection with the Offering. As used herein,
the term "ELECTRONIC PROSPECTUS" means a form of prospectus, and any
amendment or supplement thereto, that meets each of the following
conditions: (i) it shall be encoded in an electronic format,
satisfactory to the Underwriters, that may be transmitted
electronically by the other Underwriters to offerees and purchasers of
the Shares for at least the period during which a Prospectus relating
to the Shares is required to be delivered under the Securities Act;
(ii) it shall disclose the same information as the paper prospectus and
prospectus filed pursuant to XXXXX, except to the extent that graphic
and image material cannot be disseminated electronically, in which case
such graphic and image material shall be replaced in
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the electronic prospectus with a fair and accurate narrative
description or tabular representation of such material, as appropriate;
and (iii) it shall be in or convertible into a paper format or an
electronic format, satisfactory to the Underwriters, that will allow
recipients thereof to store and have continuously ready access to the
prospectus at any future time, without charge to such recipients (other
than any fee charged for subscription to the Internet as a whole and
for on-line time). The Company hereby confirms that it has included or
will include in the Prospectus filed pursuant to XXXXX or otherwise
with the Commission and in the Registration Statement at the time it
was declared effective an undertaking that, upon receipt of a request
by an investor or his or her representative within the period when a
prospectus relating to the Shares is required to be delivered under the
Securities Act, the Company shall transmit or cause to be transmitted
promptly, without charge, a paper copy of the Prospectus.
(w) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable
upon exercise of the Stock Purchase Warrant outstanding from time to
time.
(x) The Company shall take all actions as shall be necessary
to ensure that it shall not become an "investment company" as defined
in the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
5. Consideration; Payment of Expenses.
(a) In consideration of the services to be provided for hereunder, the
Company shall pay and/or issue to the Underwriters or their respective designees
their pro rata portion (based on the Shares purchased) of the following
compensation:
(i) A cash fee equal to nine percent (9%) of the gross
proceeds of the Offering (including proceeds from the sale of
Additional Shares, if any), which fee is to be paid by means of a
discount from the public offering price in the Offering or, at the
Underwriters' option, as a cash fee at the First Closing (with respect
to the gross proceeds from the sale of the Firm Shares and the
Additional Shares, if any, at the First Closing) and at each Additional
Closing (with respect to the gross proceeds from the sale of the
Additional Shares at such Additional Closing);
(ii) A non-accountable expense allowance, to the Underwriters
equal to three percent (3%) of the gross proceeds of the Offering
(including proceeds from the sale of Additional Shares, if any). The
Company has heretofore paid a $50,000 advance to the Underwriters,
which shall be applied against the non-accountable expense allowance;
and
(iii) The Stock Purchase Warrant to the Underwriters as set
forth in Section 12 of this Agreement.
(b) The Underwriters reserve the right to reduce any item of the
Underwriters' compensation or adjust the terms thereof as specified herein in
the event that a determination
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shall be made by the NASD to the effect that the Underwriters' aggregate
compensation is in excess of NASD rules or that the terms thereof require
adjustment.
(c) Whether or not the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus are consummated or this Agreement is
terminated (regardless of the reason for such termination), the Company hereby
agrees to pay all costs and expenses incident to the performance of its
obligations hereunder, including the following:
(i) all expenses in connection with the preparation, printing,
"edgarization" and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and any and all amendments
and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers;
(ii) the fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration of the
Shares under the Securities Act and the Offering;
(iii) the cost of producing this Agreement and any agreement
among Underwriters, the blue sky survey and memorandum, closing
documents and other instruments, agreements or documents (including any
compilations thereof) in connection with the Offering and the cost of
five (5) bound volumes of such documents for the Underwriters;
(iv) all expenses in connection with the qualification of the
Shares for offering and sale under state or foreign securities or blue
sky laws, including the fees and disbursements of Underwriters' Counsel
in connection with such qualification and in connection with any blue
sky survey undertaken by such counsel;
(v) the filing fees incident to, and the fees and
disbursements of Underwriters' Counsel in connection with, securing any
required review by the NASD of the terms of the Offering;
(vi) all fees and expenses in connection with listing the
Shares on AMEX;
(vii) all travel expenses of the Company's officers and
employees and any other expense of the Company incurred in connection
with attending or hosting meetings with prospective purchasers of the
Shares ("ROAD SHOW EXPENSES");
(viii) any stock transfer taxes incurred in connection with
this Agreement or the Offering;
(ix) the cost of preparing stock certificates representing the
Shares;
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(x) the cost and charges of any transfer agent or registrar
for the Shares;
(xi) the cost of two (2) "tombstone" advertisements to be
placed in appropriate daily or weekly periodicals of the Underwriters's
choice (i.e., The Wall Street Journal and The New York Times); and
(xii) all other costs and expenses incident to the performance
of the Company obligations hereunder which are not otherwise
specifically provided for in this Section 5.
Notwithstanding the foregoing, unless otherwise approved in advance by the
Company, the fees and expenses of Underwriters' Counsel payable by the Company
under subparagraphs (iv) and (v), excluding filing fees in either case, shall be
limited to $15,000 ($10,000 of which was paid upon the initial filing of the
Registration Statement) plus disbursements.
(d) The Company shall also pay, as due, state registration,
qualification and filing fees, and accountable out-of-pocket disbursements in
connection with such registration, qualification or filing.
(e) It is understood, however, that except as provided in this Section
or elsewhere in this Agreement, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel. Notwithstanding anything to
the contrary in this Section 5, in the event that this Agreement is terminated
as a result of the failure of the Company to satisfy the conditions set forth in
Section 6 or pursuant to 11(b) hereof, or subsequent to a Material Adverse
Change, the Company will pay all accountable expenses of the Underwriters
(including but not limited to fees and disbursements of counsel to the
Underwriters) incurred in connection herewith.
(f) No person is entitled either directly or indirectly to compensation
from the Company, from the Underwriters or from any other person for services as
a finder in connection with the proposed offering, and the Company agrees to
indemnify and hold harmless the Underwriters, against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), to which the Underwriters may become
subject insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon the claim of any person (other
than an employee of the party claiming indemnity) or entity that he or it is
entitled to a finder's fee in connection with the proposed offering by reason of
such person's or entity's influence or prior contact with the indemnifying
party.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares
as provided herein shall be subject to: (i) the accuracy of the representations
and warranties of the Company herein contained, as of the date hereof and as of
each Closing Date, (ii) the absence of any misstatement or omission from any
certificates, opinions, written statements or letters furnished to the
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Underwriters' Counsel pursuant to this Section 6, (iii) the performance by the
Company of its obligations hereunder, and (iv) each of the following additional
conditions set forth in Section 6 hereof. For purposes of this Section 6, the
term "Closing" shall refer to the First Closing Date for the Firm Shares and any
Additional Closing Date, if different, for the Additional Shares, and each of
the foregoing and following conditions must be satisfied as of each Closing.
(a) The Registration Statement shall have become effective and all
necessary regulatory or listing approvals shall have been received not later
than 5:30 P.M., New York time, on the date of this Agreement, or at such later
time and date as shall have been consented to in writing by the Underwriters. If
the Company shall have elected to rely upon Rule 430A under the Securities Act,
the Prospectus shall have been filed with the Commission in a timely fashion in
accordance with the terms hereof and a form of the Prospectus containing
information relating to the description of the Shares and the method of
distribution and similar matters shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period; and, at or prior to
the Closing Date or the actual time of the Closing, no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof shall have been issued and no proceedings therefor shall have been
initiated or threatened by the Commission.
(b) The Underwriters shall have received the favorable written opinion
of Xxxxxxx Xxxxxxxx & Wood LLP, legal counsel for the Company, dated as of each
Closing Date addressed to the Underwriters in the form attached hereto as Annex
I.
(c) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory in
form and substance to the Underwriters' Counsel, and the Underwriters shall have
received from such counsel a signed opinion, dated as of each Closing Date, in
form and substance satisfactory to the Underwriters. The Company shall have
furnished to Underwriters' Counsel such documents as it may reasonably request
for the purpose of enabling it to render such opinion.
(d) The Underwriters shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company, dated as of each
Closing Date, to the effect that: (i) the condition set forth in subsection (a)
of this Section 6 has been satisfied, (ii) as of the date hereof and as of each
Closing Date, the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of each Closing Date, all agreements,
conditions and obligations of the Company to be performed or complied with
hereunder on or prior thereto have been duly performed or complied with, (iv)
the Company has not sustained any material loss or interference with their
respective businesses, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding, (v) no stop order suspending
the effectiveness of the Registration Statement or any post-effective amendment
thereof has been issued and no proceedings therefor have been initiated or
threatened by the Commission, (vi) there are no pro forma or as adjusted
financial statements that are required to be included or incorporated by
reference in the Registration Statement and the Prospectus pursuant to the Rules
and Regulations which are not so included or incorporated by reference, and
(vii) subsequent to
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the respective dates as of which information is given in the Registration
Statement and the Prospectus there has not occurred any Material Adverse Change.
(e) On the date of this Agreement and on each Closing Date, the
Underwriters shall have received a "cold comfort" letter from Xxxxx Xxxxxx &
Xxxxx LLP, independent public accountants for the Company, dated, respectively,
as of the date of the date of delivery and addressed to the Underwriters and in
form and substance satisfactory to the Underwriters and Underwriters' Counsel,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Securities Act and the Rules and
Regulations, and stating, as of the date of delivery (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five (5) days prior to the date of such letter), the conclusions and
findings of such firm with respect to the financial information and other
matters relating to the Registration Statement covered by such letter and, with
respect to letters issued in respect of an Additional Closing Date, confirming
the conclusions and findings set forth in such prior letter(s).
(f) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock or long-term debt of the Company or any change or development involving a
change, whether or not arising from transactions in the ordinary course of
business, in the business, condition (financial or otherwise), results of
operations, shareholders' equity, properties or prospects of the Company,
including but not limited to the occurrence of any fire, flood, storm,
explosion, accident, act of war or terrorism or other calamity, the effect of
which, in any such case described above, is, in the sole judgment of the
Underwriters, so material and adverse as to make it impracticable or inadvisable
to proceed with the Offering on the terms and in the manner contemplated in the
Prospectus (exclusive of any supplement).
(g) The Underwriters shall have received a duly executed lock-up
agreement from each officer, director and shareholder of the Company set forth
on Annex III, in each case substantially in the form attached hereto as Annex
II.
(h) The Underwriters shall have received a duly executed management
confirmation letter from the Company's directors and officers relating to
certain information appearing in the Registration Statement, which letter shall
be in the form previously delivered to the Underwriters in connection with the
filing of the Preliminary Prospectus.
(i) The Shares shall have been approved for listing on AMEX.
(j) The NASD shall have confirmed that it it is satisfied with respect
to the fairness and reasonableness of the underwriting terms and arrangements.
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(k) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any federal, state or
foreign governmental or regulatory authority that would, as of each Closing
Date, prevent the issuance or sale of the Shares; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of
each Closing Date, prevent the issuance or sale of the Shares.
(l) The Company shall have furnished the Underwriters and Underwriters'
Counsel with such other certificates, opinions or other documents as they may
have reasonably requested.
(m) On the First Closing Date and simultaneously with the delivery of
the Shares, the Company shall execute and deliver to the Underwriters, the Stock
Purchase Warrant. The Stock Purchase Warrant will be substantially in the form
of the Stock Purchase Warrant filed as an exhibit to the Registration Statement.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Underwriters or to Underwriters' Counsel pursuant to this Section 6 shall not be
satisfactory in form and substance to the Underwriters and to Underwriters'
Counsel, all obligations of the Underwriters hereunder may be cancelled by the
Underwriters at, or at any time prior to, the consummation of the First Closing,
and the obligations of the Underwriters to purchase any Additional Shares may be
cancelled by the Underwriters at, or at any time prior to, the Additional
Closing Date. Notice of such cancellation shall be given to the Company in
writing, or by telephone. Any such telephone notice shall be confirmed promptly
thereafter in writing.
7. Indemnification.
(a) The Company shall indemnify and hold harmless each Underwriter and
each Person, if any, who controls each Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and reimbursement of any and all
expenses 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) to which they or any
of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, as originally filed or any amendment thereof, or any related
Preliminary Prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue
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statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter expressly for use therein. The
parties agree that such information provided by or on behalf of any Underwriter
consists solely of the material referred to in the last sentence of Section 1(b)
hereof. This indemnity agreement will be in addition to any liability, which the
Company may otherwise have, including but not limited to other liability under
this Agreement.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, each of the directors of the Company, each of the
officers 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 Securities Act or Section 20 of the Exchange Act, against any
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
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) to which they or any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, as
originally filed or any amendment thereof, or any related Preliminary Prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such
Underwriter or responsible for any amount in excess of the underwriting discount
applicable to the Shares to be purchased by such Underwriter hereunder. The
parties agree that such information provided by or on behalf of any Underwriter
consists solely of the material referred to in the last sentence of Section 1(b)
hereof.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of any claims or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the claim or the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
the indemnifying party from any liability which it may have under this Section 7
to the extent that it is not materially prejudiced as a result thereof and in
any event shall not relieve it from any liability that such indemnifying party
may have otherwise than on account of the indemnity agreement hereunder). In
case any such claim or action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate, at its own expense, in the defense of
such action, 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
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satisfactory to such indemnified party; provided however, that counsel to the
indemnifying party shall not (except with the written consent of the indemnified
party) also be counsel to the 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 one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action after
assumption of the defense, or (iv) 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 shall be borne by the
indemnifying parties. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 7 or Section 8 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and
(ii) does not include a statement as to or an admission of fault, culpability or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
8. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from Persons, other than the Underwriters, who may also be liable
for contribution, including Persons who control the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, officers
of the Company who signed the Registration Statement and directors of the
Company) as incurred to which the Company and one or more of the Underwriters
may be subject, in such proportions as is appropriate to reflect the relative
benefits received by the Company and such Underwriters from the Offering or, if
such allocation is not permitted by applicable law, in such proportions as are
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant
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equitable considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the Offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company bears to (y) the underwriting
discount or commissions received by the Underwriters, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault of each of
the Company and of the Underwriters 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 the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any judicial, regulatory or
other legal or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 8:
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the discounts and commissions applicable to the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and (ii)
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each Person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act 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 Securities Act
or Section 20 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 clauses
(i) and (ii) of the immediately preceding sentence. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so 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 under this Section 8 or
otherwise. The obligations of the Underwriters to contribute pursuant to this
Section 8 are several in proportion to the respective number of Shares to be
purchased by each of the Underwriters hereunder and not joint.
9. Underwriter Default.
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(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates (the
"DEFAULT SHARES") do not (after giving effect to arrangements, if any, made by
the Underwriters pursuant to subsection (b) below) exceed in the aggregate 10%
of the number of Firm Shares or Additional Shares, each non-defaulting
Underwriter, acting severally and not jointly, agrees to purchase from the
Company that number of Default Shares that bears the same proportion of the
total number of Default Shares then being purchased as the number of Firm Shares
set forth opposite the name of such Underwriter on Schedule A hereto bears to
the aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as the Underwriters in their sole discretion shall make.
(b) In the event that the aggregate number of Default Shares exceeds
10% of the number of Firm Shares or Additional Shares, as the case may be, the
Underwriters may in their discretion arrange for itself or for another party or
parties (including any non-defaulting Underwriter or Underwriters who so agree)
to purchase the Default Shares on the terms contained herein. In the event that
within five calendar days after such a default the Underwriters does not arrange
for the purchase of the Default Shares as provided in this Section 9, this
Agreement or, in the case of a default with respect to the Additional Shares,
the obligations of the Underwriters to purchase and of the Company to sell the
Additional Shares shall thereupon terminate, without liability on the part of
the Company with respect to such Additional Shares (except as otherwise provided
herein) or the Underwriters, but nothing in this Agreement shall relieve a
defaulting Underwriter or Underwriters of its or their liability, if any, to the
other Underwriters and the Company for damages occasioned by its or their
default hereunder.
(c) In the event that any Default Shares are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, the Underwriters or the Company shall have the right to postpone
the First Closing Date or any Additional Closing Date, as the case may be, for a
period, not exceeding five (5) business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company agrees to
file promptly any amendment or supplement to the Registration Statement or the
Prospectus which, in the reasonable opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9 with like
effect as if it had originally been a party to this Agreement with respect to
such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Company and the Underwriters
contained in this Agreement or in certificates of officers of the Company
submitted pursuant hereto, including the covenants contained in Section 4, the
agreements contained in Section 5, the indemnity agreements contained in Section
7 and the contribution agreements contained in Section 8 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling Person thereof or by or on
behalf
Xxxxxx Xxxxxxx & Company, Inc.
_____________ ___, 2005
Page 32 of 36
of the Company, any of its officers and directors or any controlling
Person thereof, and shall survive delivery of and payment for the Shares to and
by the Underwriters. The representations contained in Section 1 hereof and the
covenants and agreements contained in Sections 5, 7, 8, this Section 10 and
Sections 14 and 15 hereof shall survive any termination of this Agreement,
including any termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the later of: (i)
receipt by the Underwriters and the Company of notification of the effectiveness
of the Registration Statement or (ii) the execution of this Agreement.
Notwithstanding any termination of this Agreement, the provisions of this
Section 11 and of Sections 1, 4 through 16, inclusive, shall remain in full
force and effect at all times after the execution hereof.
(b) The Underwriters shall have the right to terminate this Agreement
at any time prior to the First Closing Date or to terminate the obligations of
the Underwriters to purchase the Additional Shares at any time prior to the
consummation of any closing to occur on any Additional Closing Date, as the case
may be, if: (i) any domestic or international event or act or occurrence has
materially disrupted, or in the opinion of the Underwriters will in the
immediate future materially disrupt, the market for the Company's securities or
securities in general; or (ii) trading on the New York Stock Exchange, The
NASDAQ National Market or AMEX shall have been suspended or been made subject to
material limitations, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York Stock Exchange, The NASDAQ National Market or AMEX or by order of
the Commission or any other governmental authority having jurisdiction; or (iii)
a banking moratorium has been declared by any state or federal authority or if
any material disruption in commercial banking or securities settlement or
clearance services shall have occurred; or (iv) (A) there shall have occurred
any outbreak or escalation of hostilities or acts of terrorism involving the
United States or there is a declaration of a national emergency or war by the
United States or (B) there shall have been any other calamity or crisis or any
change in political, financial or economic conditions if the effect of any such
event in (A) or (B), in the judgment of the Underwriters, makes it impracticable
or inadvisable to proceed with the offering, sale and delivery of the Firm
Shares or the Additional Shares, as the case may be, on the terms and in the
manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be in
writing.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 9(b) hereof), or if the sale
of the Shares provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth herein is not satisfied or because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will, subject
to demand by
Xxxxxx Xxxxxxx & Company, Inc.
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Page 33 of 36
the Underwriters, reimburse the Underwriters for all out-of-pocket
expenses (including the fees and expenses of their counsel), incurred by the
Underwriters in connection herewith.
12. Stock Purchase Warrant.
At or before the First Closing Date, the Company will sell to the
Underwriters, or its designees, as permitted by the NASD, for a consideration of
$________, and upon the terms and conditions set forth in the form of Stock
Purchase Warrant annexed as an exhibit to the Registration Statement, a Stock
Purchase Warrant to purchase an aggregate of _______ shares of Common Stock of
the Company. In the event of conflict in the terms of this Agreement and the
Stock Purchase Warrant, the language of the Stock Purchase Warrant shall
control.
13. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing, and:
(a) if sent to the Underwriters or any Underwriter, shall be
mailed, delivered, or faxed and confirmed in writing, to Maxim Group
LLC, 000 Xxxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx X.
Xxxxxx, Managing Director, with a copy to Underwriters' Counsel at
Xxxxxxxxxx Xxxxxxx PC, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx
00000, Attention: Xxxxxx X. Xxxxxxxx, Esq.; and
(b) if sent to the Company, shall be mailed, delivered, or
faxed and confirmed in writing to the Company and its counsel at the
addresses set forth in the Registration Statement,
provided, however, that any notice to an Underwriter pursuant to Section 7 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to the Underwriters, which
address will be supplied to any other party hereto by the Underwriters upon
request. Any such notices and other communications shall take effect at the time
of receipt thereof.
14. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company and the controlling
Persons, directors, officers, employees and agents referred to in Sections 7 and
8 hereof, and their respective successors 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 provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and said
controlling Persons and their respective successors, officers, directors, heirs
and legal representative, and it is not for the benefit of any other Person. The
term "successors and assigns" shall not include a purchaser, in its capacity as
such, of Shares from any of the Underwriters.
15. Governing Law. This Agreement shall be deemed to have been executed
and delivered in New York and both this Agreement and the transactions
contemplated hereby shall
Xxxxxx Xxxxxxx & Company, Inc.
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Page 34 of 36
be governed as to validity, interpretation, construction, effect, and in all
other respects by the laws of the State of New York, without regard to the
conflicts of laws principals thereof (other than Section 5-1401 of The New York
General Obligations Law). Each of the Underwriters and the Company: (a) agrees
that any legal suit, action or proceeding arising out of or relating to this
Agreement and/or the transactions contemplated hereby shall be instituted
exclusively in the Supreme Court of the State of New York, New York County, or
in the United States District Court for the Southern District of New York, (b)
waives any objection which it may have or hereafter to the venue of any such
suit, action or proceeding, and (c) irrevocably consents to the jurisdiction of
Supreme Court of the State of New York, New York County, or in the United States
District Court for the Southern District of New York in any such suit, action or
proceeding. Each of the Underwriters and the Company further agrees to accept
and acknowledge service of any and all process which may be served in any such
suit, action or proceeding in the Supreme Court of the State of New York, New
York County, or in the United States District Court for the Southern District of
New York and agrees that service of process upon the Company mailed by certified
mail to the Company's address or delivered by Federal Express via overnight
delivery shall be deemed in every respect effective service of process upon the
Company, in any such suit, action or proceeding, and service of process upon the
Underwriters mailed by certified mail to the Underwriters' address or delivered
by Federal Express via overnight delivery shall be deemed in every respect
effective service process upon the Underwriter, in any such suit, action or
proceeding. THE COMPANY (ON BEHALF OF ITSELF, AND, TO THE FULLEST EXTENT
PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS)
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE
PROSPECTUS.
16. Entire Agreement. This Agreement, together with the schedules,
annexes and exhibits attached hereto as the same may be amended from time to
time in accordance with the terms hereof and together with the engagement
letter, dated as of March 17, 2004, by and between the Company and the
Underwriters (the "ENGAGEMENT LETTER"), contains the entire agreement among the
parties hereto relating to the subject matter hereof and there are no other or
further agreements outstanding not specifically mentioned herein. The Company
and the Underwriters agree that the terms of the Engagement Letter shall survive
the termination of this Agreement.
17. Severability. If any term or provision of this Agreement or the
performance thereof shall be invalid or unenforceable to any extent, such
invalidity or unenforceability shall not affect or render invalid or
unenforceable any other provision of this Agreement and this Agreement shall be
valid and enforced to the fullest extent permitted by law.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one
Xxxxxx Xxxxxxx & Company, Inc.
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and the same instrument. Delivery of a signed counterpart of this Agreement by
facsimile transmission shall constitute valid and sufficient delivery thereof.
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
20. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
[Signature Pages Follow]
Xxxxxx Xxxxxxx & Company, Inc.
_____________ ___, 2005
Page 36 of 36
If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
COFFEE HOLDING CO., INC.
By: ________________________________
Name:
Title:
Xxxxxx Xxxxxxx & Company, Inc.
_____________ ___, 2005
ACCEPTED BY THE REPRESENTATIVE, ACTING FOR ITESLF AND AS
REPRESENTATIVE OF THE UNDERWRITERS NAMED ON SCHEDULE A ATTACHED HERETO,
AS OF THE DATE FIRST WRITTEN ABOVE:
XXXXXX XXXXXXX & COMPANY, INC.
By: _______________________________________
Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
[End of Signature Pages to Underwriting Agreement]
SCHEDULE A
UNDERWRITERS
--------------------------------------------- ------------------------------ ----------------------------------------
UNDERWRITER TOTAL NUMBER OF FIRM SHARES NUMBER OF ADDITIONAL SHARES TO BE
TO BE PURCHASED PURCHASED IF OPTION IS FULLY EXERCISED
--------------------------------------------- ------------------------------ ----------------------------------------
Xxxxxx Xxxxxxx & Company, Inc.
--------------------------------------------- ------------------------------ ----------------------------------------
Maxim Group LLC
--------------------------------------------- ------------------------------ ----------------------------------------
--------------------------------------------- ------------------------------ ----------------------------------------
TOTAL
--------------------------------------------- ------------------------------ ----------------------------------------
