FORM OF
EMERGING GROWTH ACQUISITION CORPORATION I
166,332 Shares
Common Stock, $.001 par value
"QUALIFIED INDEPENDENT UNDERWRITER" AGREEMENT
New York, New York
October __, 1996
The undersigned, Emerging Growth Acquisition Corporation I (the
"Company"), a Delaware corporation, hereby agrees with Xxxxx Securities Co.,
Inc. ("Xxxxx") as follows:
1. Introduction. The Company proposes to issue and sell to the
public, without the assistance of an underwriter or a placement agent, 166,332
shares of common stock, $.001 par value, of the Company (the "Common Stock")
(the "Offering"). Pursuant to Rule 2720 of the National Association of
Securities Dealers, Inc. (the "NASD") Conduct Rules ("Rule 2720") the Company,
as an affiliate of NASD members, may participate in the Offering only if the
price at which the Shares is to be offered to the public is no higher than the
price recommended by a "Qualified Independent Underwriter" (as such phrase is
defined by Rule 2720) who participates in the preparation of the registration
statement and prospectus relating to the Offering and exercises customary
standards of due diligence with respect thereto.
As hereinafter used, the term "Registration Statement" means
the registration statement on Form SB-2 (No. 333-_______) (including the related
preliminary prospectus, financial statements, exhibits and all other documents
to be filed as a part thereof or incorporated therein) for the registration of
the offer and sale of the Shares under the Securities Act of 1933, as amended,
and the rules and regulations thereunder (collectively, the "Act"), filed with
he Securities and Exchange Commission (the "Commission"), and any amendments
thereto, and the term "Prospectus" means the prospectus including any
preliminary or final prospectus (including the form of final prospectus as filed
with the Commission) pursuant to Rule 424(b) under the Act and any amendments or
supplements thereto, to be used in connection with the Offering.
2. Rule 2720 Requirement. Xxxxx hereby confirms its agreement
as set forth in Rule 2720 and represents that, as appropriate, it satisfies or
will satisfy at the times designated in Rule 2720 the other requirements set
forth herein.
3. Consent. Xxxxx hereby consents to be named in the
Registration Statement and Prospectus as having acted as the "Qualified
Independent Underwriter." Except as permitted by the immediately preceding
sentence or to the extent required by law, all references to Xxxxx in the
Registration Statement or Prospectus or in any other filing, report, document,
release or other communication prepared, issued or transmitted in connection
with the Offering by the Company or any corporation controlling, controlled by
or under common control with the Company, or by any director, officer, employee,
representative or agent of any thereof, shall be subject to Xxxxx'x prior
written consent with respect to form and substance.
4. Fees and Expenses. In consideration for Xxxxx acting as
Qualified Independent Underwriter for the Offering, the Company hereby agrees to
pay Xxxxx a fee of fifteen thousand dollars ($15,000) and issue Xxxxx warrants
to purchase 16,663 shares of Common Stock on the first closing of the sale of
the Shares offered by the Prospectus. Such warrants shall have a five-year
duration and an exercise price equal to 120% of the initial public offering
price per share. If, for whatever reason, it is determined that the Offering
shall not proceed, Xxxxx shall not be entitled to receive the above-mentioned
fee and warrants but shall be paid in full for its expenses and any amount
payable to Xxxxx under Section 7 hereof promptly following any such
determination.
5. Material Facts. The Company represents and warrants to
Xxxxx that at the time the Registration Statement or any amendment or supplement
thereto becomes effective, the Registration Statement and, at the time the
Prospectus is filed with the Commission (including any preliminary prospectus
and the form of prospectus filed with the Commission pursuant to Rule 424(b))
and at all times subsequent thereto, to and including the date on which payment
for and delivery of the Shares (such date being referred to herein as the
"Closing Date"), the Prospectus (as amended or supplemented if it shall have
been so amended or supplemented) will contain all material statements which are
required to be stated therein in accordance with the Act and will conform to all
other requirements of the federal securities laws, and will not, on such dates,
include any 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 not
misleading. The Company further represents and warrants that any further filing,
report, document, release or communication which in any way refers to Xxxxx or
to the services to be performed by it pursuant to this Agreement will not
contain any untrue or misleading statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
6. Availability of Information. The Company hereby agrees to
provide Xxxxx, at the Company's expense, all information and documentation with
respect to the Company's business, financial condition and other matters as
Xxxxx may xxxx relevant, including, without limitation, copies of all
correspondence with the Commission, certificates of its officers, opinions of
its counsel and comfort letters from its auditors. The above mentioned
certificates, opinions of counsel and comfort letters shall be provided to Xxxxx
as it may request on the effective date of the Registration Statement and on the
closing date of the Offering. The Company will make reasonably available to
Xxxxx, its auditors, counsel, and officers and directors to discuss with Xxxxx
any aspect of the Company or its business which Xxxxx may xxxx relevant. In
addition, the Company, at Xxxxx'x request, will cause to be delivered to Xxxxx,
copies of any certificates, opinions, letters and reports and shall cause the
person issuing such certificates, opinions, letters or reports to authorize
Xxxxx to rely thereon to the same extent as if addressed directly to Xxxxx. The
Company represents and warrants to Xxxxx that all such information and
documentation provided pursuant to this paragraph 6 will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading. In addition, the Company will promptly
advise Xxxxx of all telephone conversations with the Commission which relate to
or may affect the Offering.
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7. Indemnification.
(a) Subject to the conditions set forth below, the Company and
International Capital Growth, Ltd., an affiliate of the Company ("ICG") hereby
agree that they will indemnify and hold Xxxxx and each officer, partner,
employee or representative of Xxxxx and each person controlling, controlled by
or under common control with Xxxxx within the meaning of Section 15 of the Act
or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules and regulations thereunder (individually, an "Indemnified
Person") harmless from and against any and all loss, claim, damage, liability,
cost or expense whatsoever (including, but not limited to, any and all legal
fees and other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or proceeding,
including any inquiry or investigation, commenced or threatened, or any claim
whatsoever or in appearing or preparing for appearance as a witness in any
action, suit or proceeding including any inquiry, investigation or pretrial
proceeding such as a deposition) to which such Indemnified Person may become
subject under the Act, the Exchange Act, or other federal or state statutory law
or regulation at common law or otherwise, arising out of, based upon, or in any
way related or attributed to (i) this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or Prospectus or any other filing report, document, release or
communication, whether oral or written referred to in paragraph 5 hereof or 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, (iii)
any application or other document executed by the Company or based upon written
information furnished by the Company filed in any jurisdiction in order to
qualify the Shares under the securities or Blue Sky laws thereof, or 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, (iv)
the breach of any representation or warranty made by the Company in this
Agreement, or (v) the performance by Xxxxx as the "Qualified Independent
Underwriter" pursuant to this Agreement unless as a direct result of Xxxxx'x
gross negligence, bad faith or willful misfeasance. The Company and ICG further
agree that upon demand by an Indemnified Person at any time or from time to
time, they will promptly reimburse such Indemnified Person for, any loss, claim,
damage, liability, cost or expense as to which the Company has indemnified such
person pursuant hereto. Notwithstanding the foregoing provisions of this
paragraph 7, any such payment or reimbursement by the Company and ICG of fees,
expenses or disbursements incurred by an Indemnified Person in any proceeding in
which a final judgment by a court of competent jurisdiction (after all appeals
or the expiration of time to appeal) is entered against such Indemnified Person
as a direct result of such person's gross negligence, bad faith or willful
misfeasance will be promptly repaid to the Company and ICG.
(b) Promptly after receipt by an Indemnified Person under
paragraph (a) above of notice of the commencement of any action, such
Indemnified Person will, if a claim in respect thereof is to be made against the
Company under paragraph (a), notify the Company and ICG in writing of the
commencement thereof; but the omission to so notify the Company and ICG will not
relieve the Company and ICG from any liability which either may have to any
Indemnified Person otherwise than under this paragraph 7. In case any such
action is brought against any Indemnified Person, and such Indemnified Person
notifies the Company and ICG of the commencement thereof, the Company and ICG
will be entitled to participate therein and, to
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the extent that they may elect by written notice delivered to the Indemnified
Person promptly after receiving the aforesaid notice from such Indemnified
Person, to assume the defense thereof with counsel reasonably satisfactory to
such Indemnified Person: provided, however, that if the defendants in any such
action include both the Indemnified Person and the Company and ICG or any
corporation controlling, controlled by or under common control with the Company
or ICG, or any director, officer, employee, representative or agent of any
thereof, and the Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it which are different from or additional to
those available to such other defendant, the Indemnified Person shall have the
right to select separate counsel to represent it. Upon receipt by the
Indemnified Person of notice from the Company and ICG setting forth the
Company's and ICG's irrevocable election to assume the defense of such action
and approval by the Indemnified Person of such counsel, the Company and ICG will
not be liable to such Indemnified Person under this paragraph 7 for any fees of
counsel subsequently incurred by such Indemnified Person in connection with the
defense thereof (other than the reasonable costs of investigation subsequently
incurred by such Indemnified Person) unless (x) the Indemnified Person shall
have employed separate counsel in accordance with the provision of the next
preceding sentences, (y) the Company and ICG, within a reasonable time after
notice of commencement of the action, shall not have employed counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person, or
(z) the Company and ICG shall have authorized in writing the employment of
counsel for the Indemnified Person at the expense of the Company and ICG, and
except that, if clause (x) or (z) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (x) or (z).
(c) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
paragraph 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company and ICG to Xxxxx on grounds of policy
or otherwise, the Company and ICG and Xxxxx shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigation or defending of same) to
which the Company and ICG and Xxxxx may be subject in such proportion so that
Xxxxx is responsible for that portion represented by the percentage that its fee
under this Agreement bears to the aggregate public offering price appearing on
the cover page of the Prospectus and the Company and ICG are responsible for the
balance, except as the Company and ICG may otherwise agree to reallocate a
portion of such liability with respect to such balance with any other person;
provided, however, that (y) in no case shall Xxxxx be responsible for any amount
in excess of the fee set forth in paragraph 4 above and (z) no person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the Act
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (c), any person
controlling, controlled by or under common control with Xxxxx, or any partner,
director, officer, employee, representative or any agent of any thereof, shall
have the same rights to contribution as Xxxxx and each person who controls the
Company within the meaning of Section 15 of the 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 and ICG, subject in each case to clause (y) of this
paragraph (c). 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
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for contribution may be made against the other party under this paragraph (c),
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this paragraph (c). The indemnity and contribution agreements contained in
this paragraph 7 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Indemnified Person or any
termination of this Agreement.
8. Outside Directors. The Company hereby covenants that upon
consummation of a Business Transaction, as such term is defined in the Company's
Registration Statement and Prospectus, the board of directors of the surviving
company will include at least two independent directors that are reasonably
acceptable to Xxxxx.
9. Authorization by Company. The Company represents and
warrants to Xxxxx that this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company.
10. Notice. Whenever notice is required to be given pursuant
to this Agreement, such notice shall be in writing and shall be mailed by first
class mail, postage prepaid, addresses (a) if to Xxxxx, at 00 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. X'Xxxxx, Xx. and (b) if to the
Company or ICG, at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention:
Xxxxxxx Xxxxxx.
11. Governing Law. This Agreement shall be construed (both as
to validity and performance) and enforced in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
wholly within such jurisdiction.
12. Parties. This Agreement shall inure solely to the benefit
of and shall be binding upon, Xxxxx and the Company (and ICG with respect to
paragraph 7 hereof) and the controlling persons, directors and officers referred
to in paragraph 7 hereof, and their respective successors, legal representative
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.
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If the foregoing correctly sets forth the understanding between Xxxxx
and the Company, please so indicate in the space provided below for that purpose
whereupon this letter shall constitute a binding agreement between us.
EMERGING GROWTH ACQUISITION XXXXX SECURITIES CO., INC.
CORPORATION I
By: _______________________________ By: __________________________________
INTERNATIONAL CAPITAL GROWTH, LTD.
(A party solely to Section 7 of this Agreement)
By: _______________________________
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