<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1999
REGISTRATION NO. 333-80059
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1 TO FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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perfumania.com, inc.
(Exact Name of Registrant as Specified in Its Charter)
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<TABLE>
<S> <C> <C>
FLORIDA 5912 65-0884688
(State or Other Jurisdiction of (Primary Standard Industrial (IRS Employer Identification
Incorporation or Organization) Classification Code Number) Number)
</TABLE>
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11701 NW 101ST ROAD
MIAMI, FLORIDA 33178
(305) 889-1600
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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RACHMIL LEKACH, CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
perfumania.com, inc.
11701 NW 101ST ROAD
MIAMI, FLORIDA 33178
(305) 889-1600
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code of
Agent For Service)
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COPIES TO:
<TABLE>
<S> <C>
JEFFREY R. HOULE, ESQ. DALE S. BERGMAN, P.A.
GREENBERG TRAURIG MICHAEL D. KARSCH, ESQ.
1750 TYSONS BOULEVARD, SUITE 1200 BROAD AND CASSEL
MCLEAN, VIRGINIA 22102 201 S. BISCAYNE BOULEVARD, SUITE 3000
(703) 749-1300 MIAMI, FLORIDA 33131
(703) 749-1301 (FAX) (305) 373-9400
(305) 373-9493 (FAX)
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [X] 333-80059
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
The purpose of this Post-Effective Amendment No. 1 is to file certain
exhibits to the Registration Statement as set forth below in Item 16(a) of Part
II.
<PAGE> 3
Filed pursuant to Rule 424(B)(1)
Registration No. 333-80059
3,500,000 SHARES OF COMMON STOCK
(perfumania.com LOGO)
-------------------------
perfumania.com, inc. operates an online store that specializes in the sale
of fragrances, fragrance related products and bath and body products on a retail
and wholesale basis.
We are offering 2,500,000 shares of our common stock and Perfumania, Inc.,
the selling shareholder, is offering 1,000,000 shares of our common stock.
No public market currently exists for our common stock. We have applied to
list our common stock on the American Stock Exchange under the symbol "PF".
SEE "RISK FACTORS" BEGINNING ON PAGE 4 TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----------
<S> <C> <C>
Public offering price....................................... $7.00 $24,500,000
Underwriting discounts and commissions...................... $ .49 $ 1,715,000
Proceeds to perfumania.com, inc............................. $6.51 $16,275,000
Proceeds to Perfumania, Inc. ............................... $6.51 $ 6,510,000
</TABLE>
We have granted the underwriters an option for 45 days to purchase up to
525,000 additional shares at the same price indicated above to cover over
allotments.
Cruttenden Roth Incorporated
Pennsylvania Merchant Group
H.C. Wainwright & Co., Inc.
The date of this prospectus is September 29, 1999
<PAGE> 4
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses, other than
underwriting discounts and commissions, in connection with the issuance and
distribution of the shares of common stock being registered, all of which we
will pay:
<TABLE>
<S> <C>
SEC Registration fee........................................ $ 11,121
NASD filing fee............................................. 4,501
American Stock Exchange listing fee......................... 32,500
Printing and engraving...................................... 130,000
Legal fees.................................................. 300,000
Blue Sky fees and expenses.................................. 20,000
Accounting fees............................................. 200,000
Transfer Agent and Registrar fees and expenses.............. 10,000
Miscellaneous............................................... 16,878
--------
Total.................................................. $725,000
========
</TABLE>
All amounts except SEC registration fee and the NASD filing fee are
estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The articles of incorporation and bylaws provide that perfumania.com
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed proceeding by reason of the fact that he
is or was a director or officer of perfumania.com or any other person designated
by the board of directors which may include any person serving at the request of
perfumania.com as a director, officer, employee, agent, fiduciary or trustee of
another corporation, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise, in each case, against certain liabilities including
damages, judgments, amounts paid in settlement, fines, penalties and expenses
including attorneys' fees and disbursements, except where such indemnification
is expressly prohibited by applicable law, where such person has engaged in
willful misconduct or recklessness or where such indemnification has been
determined to be unlawful. Such indemnification as to expenses is mandatory to
the extent the individual is successful on the merits of the matter. Florida law
permits perfumania.com to provide similar indemnification to employees and
agents who are not directors or officers. The determination of whether an
individual meets the applicable standard of conduct may be made by the
disinterested directors, independent legal counsel or the shareholders. Florida
law also permits indemnification in connection with a proceeding brought by or
in the right of perfumania.com to procure a judgment in its favor. Insofar as
indemnification for liabilities arising under the SEC may be permitted to
directors, officers, or persons controlling perfumania.com pursuant to the
foregoing provisions, perfumania.com has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.
II-1
<PAGE> 5
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
perfumania.com issued an aggregate of 1,000 shares of its common stock to
Perfumania, Inc. in January 1999. The foregoing securities were all issued
without registration under the Securities Act of 1933, as amended, by reason of
the exemption from registration afforded by the provisions of Section 4(2)
thereof, as transactions by an issuer not involving public offering, Perfumania,
Inc. having consented to the imposition of restrictive legends upon the
certificates evidencing such securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
The following is a list of exhibits filed as part of this Registration
Statement.
<TABLE>
<CAPTION>
EXHIBIT
- -------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation**
3.2 Bylaws**
5.1 Opinion of Greenberg Traurig regarding legality of the
shares of Common Stock being registered
10.1 1999 Incentive Stock Option Plan(1)
10.2 Intercompany Services Agreement dated as of May 1, 1999 by
and between perfumania.com, inc. and Perfumania, Inc.**
10.3 Technology Transfer and License Agreement dated as of May 1,
1999 by and between the perfumania.com, inc. and Perfumania,
Inc.**
10.4 Employment Agreement of Rachmil Lekach(1)**
10.5 Employment Agreement of Richard Veliz(1)**
10.6 Employment Agreement of Michael Amideo(1)**
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Greenberg Traurig (included in its opinion filed
as Exhibit 5.1 hereto).
23.3 Consent of director nominee Daniel Sawicki**
23.4 Consent of director nominee Daniel Manella**
24.1 Power of Attorney (included on signature page to this
Registration Statement).
27.1 Financial Data Schedule, January 30, 1999 (for SEC only).**
27.2 Financial Data Schedule, May 1, 1999 (for SEC only).**
27.3 Financial Data Schedule, Three-Month Period Ended July 31,
1999 (for SEC only).
27.4 Financial Data Schedule, Six-Month Period Ended July 31,
1999 (for SEC only).
</TABLE>
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** Previously filed.
(1) Management compensation plan or arrangement
II-2
<PAGE> 6
(b) FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable accounting
regulations of the SEC are not required under the related instructions or are
not applicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS
(i) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.
(ii) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(iii) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Miami, Florida, on
September 29, 1999.
perfumania.com, inc.
By: /s/ RACHMIL LEKACH
-----------------------------------
Rachmil Lekach
Chairman of the Board of Directors,
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
Each person in so signing also makes, constitutes and appoints Rachmil
Lekach, and each of them acting alone, his true and lawful attorney-in-fact,
with full power of substitution, to execute and cause to be filed with the
Securities and Exchange Commission pursuant to the requirements of the
Securities Act of 1933, as amended, any and all amendments and post-effective
amendments to this Registration Statement, and including any Registration
Statement for the same offering that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act, with exhibits thereto and other documents
in connection therewith, and hereby ratifies and confirms all that said
attorney-in-fact or his substitute or substitutes may do or cause to be done by
virtue hereof.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<C> <S> <C>
/s/ RACHMIL LEKACH Chairman of the Board September 29, 1999
- ------------------------------------------------ of Directors,
Rachmil Lekach President and Chief
Executive Officer
(Principal
Executive Officer)
/s/ MICHAEL AMIDEO Chief Financial September 29, 1999
- ------------------------------------------------ Officer and Chief
Michael Amideo Operating Officer
(Principal
Financial and
Accounting Officer)
</TABLE>
II-4
<PAGE> 1
EXHIBIT 1.1
PERFUMANIA.COM, INC.
3,500,000 SHARES
COMMON STOCK
UNDERWRITING AGREEMENT
September 28, 1999
CRUTTENDEN ROTH INCORPORATED
PENNSYLVANIA MERCHANT GROUP
H.C. WAINWRIGHT & CO., INC.
as Representatives of the several Underwriters
The undersigned, PERFUMANIA.COM, INC., a Florida corporation (the
"Company") hereby addresses you as the representatives (the "Representatives")
of each of the persons, firms and corporations listed on Schedule I hereto
(collectively, the "Underwriters") and hereby confirm its Underwriting Agreement
(the "Agreement") with the several Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell to the
Underwriters an aggregate of 3,500,000 shares, consisting of 2,500,000 shares of
the Company's Common Stock, $.01 par value (the "Company Shares") and
Perfumania, Inc., a shareholder of the Company (the "Selling Shareholder"),
proposes to sell to the Underwriters an aggregate of 1,000,000 shares (the
"Selling Shareholder Shares" and with the Company Shares are hereinafter
referred to as the "Firm Shares"). Solely for the purpose of covering
over-allotments in the sale of the Firm Shares, the Company further proposes to
grant the right to the Underwriters to purchase up to an additional 525,000
shares of its Common Stock (the "Option Shares"), as provided in Section 3 of
this Agreement. The Firm Shares and the Option Shares are herein sometimes
referred to as the Shares and are more fully described in the Prospectus
hereinafter defined.
2. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and the Selling Shareholder
agree to sell to the Underwriters the Firm Shares, and each such Underwriter
agrees, severally and not jointly, (i) to purchase from the Company and the
Selling Shareholder, at a purchase price of $6.51 per share, the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto and
(ii) to purchase from the Company any additional number of Option Shares which
such Underwriter may become obligated to purchase pursuant to Section 3 hereof.
<PAGE> 2
The Shares to be purchased by each Underwriter hereunder, in definitive
form, and in such authorized denominations and registered in such names as you
may request upon at least forty-eight hours' prior notice to the Company shall
be delivered by or on behalf of the Company to you, through the facilities of
the Depository Trust Company ("DTC"), for the account of such Underwriter,
against payment by or on behalf of such Underwriter of the purchase price
therefor by wire transfer of Clearinghouse (next-day) funds to the account
specified by the Company to you at least forty-eight hours in advance. The
Company will cause the certificates representing the Shares to be made available
for checking and packaging at least twenty-four hours prior to the Time of
Delivery (as defined below) with respect thereto at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m.,
Miami, Florida time, on October 4, 1999 or such other time and date as you and
the Company may agree upon in writing, and, with respect to the Option Shares,
9:30 a.m., Miami, Florida time, on the date specified by you in the written
notice given by you of the Underwriters' election to purchase such Option
shares, or such other time and date as you and the Company may agree upon in
writing. Such time and date for delivery of the Firm Shares is herein called the
"First Time of Delivery," such time and date for delivery of the Option Shares,
if not the First Time of Delivery, is herein called the "Second Time of
Delivery," and each such time and date for delivery is herein called a "Time of
Delivery."
The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 6 hereof, including the cross receipt
for the Shares will be delivered at the offices of Broad and Cassel, Suite 3000,
Miami Center, 201 South Biscayne Blvd., Miami, Florida 33131 (the "Closing
Location"), and the Shares will be delivered at the Designated Office, all at
such Time of Delivery. A meeting will be held at the Closing Location at 3:00
p.m., Miami, Florida time, on the Business Day next preceding such Time of
Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 2, "Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
3. PURCHASE, SALE AND DELIVERY OF THE OPTION SHARES. The Company hereby
grants an option to the Underwriters to purchase from it up to 15% of the shares
sold to the public by the Company and the Selling Shareholder as Option Shares
on the same terms and conditions as the Firm Shares; provided, however, that
such option may be exercised only for the purpose of covering any
over-allotments which may be made by the Underwriters in the sale of the Firm
Shares. No Option Shares shall be sold or delivered unless all of the Firm
Shares previously have been, or simultaneously are, sold and delivered.
The option is exercisable on behalf of the several Underwriters by you,
as Representatives, at any time, and from time to time, before the expiration of
45 days from the date of this Agreement, for the purchase of all or part of the
Option Shares covered thereby, by notice given by you to the Company and the
Selling Shareholder in the manner provided in Section 13 hereof (the "Option
Notice"), setting forth the number of Option Shares as to which the Underwriters
are exercising the option, and the date of delivery of said Option Shares, which
2
<PAGE> 3
date shall not be less than two business days after such Option Notice unless
otherwise agreed to by the parties. You may terminate the option at any time, as
to any unexercised portion thereof, by giving written notice to the Company and
the Selling Shareholder to such effect.
You, as Representatives, shall make such allocation of the Option
Shares among the Underwriters as may be required to eliminate purchases of
fractional Shares.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
(a) The Company represents and warrants to and agrees with each
Underwriter that:
(i) The Company meets the requirements for use of Form S-1
under the Securities Act of 1933, as amended (the "Act"). A registration
statement on Form S-1 (Registration No. 333-80059) in respect to the Shares,
including a preliminary prospectus, and such amendments to such registration
statement as may have been required to the date of this Agreement, has been
prepared by the Company pursuant to and in conformity with the requirements of
the Act, and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") promulgated thereunder and
has been filed with the Commission under the Act. Copies of such registration
statement, including any amendments thereto, each related preliminary prospectus
(meeting the requirements of Rule 430 or 430A of the Rules and Regulations)
contained therein, the exhibits, financial statements and schedules have
heretofore been delivered by the Company to you. If such registration statement
has not become effective under the Act, a further amendment to such registration
statement, including a form of final prospectus, necessary to permit such
registration statement to become effective will be filed promptly by the Company
with the Commission. If such registration statement has become effective under
the Act, a final prospectus containing information permitted to be omitted at
the time of effectiveness by Rule 430A of the Rules and Regulations will be
filed promptly by the Company with the Commission in accordance with Rule 424(b)
of the Rules and Regulations. The term "Registration Statement" as used herein
means the registration statement as amended at the time it becomes or became
effective under the Act (the "Effective Date") and, in the event any
post-effective amendment thereto becomes effective prior to the First Time of
Delivery, the registration statement as so amended, including financial
statements and all exhibits and all documents incorporated by reference therein
and, if applicable, the information deemed to be included by Rule 430A of the
Rules and Regulations. The term Prospectus as used herein means the prospectus
as first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no such filing is required, the form of final prospectus
included in the Registration Statement at the Effective Date, except that if the
prospectus provided to the Underwriters by the Company for use in connection
with the offering of Shares differs from the Prospectus on file with the
Commission at the time the Registration Statement becomes effective (whether or
not the Company is required to file with the Commission such revised Prospectus
pursuant to Rule 424(b) of the Rules and Regulations), the term Prospectus shall
refer to such revised Prospectus from and after the time it is first provided to
the Underwriters for such use. The term Preliminary Prospectus as used herein
shall mean a preliminary prospectus as contemplated by Rule 430 or 430A of the
Rules and Regulations
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<PAGE> 4
included at any time in the Registration Statement. All references in this
Agreement to financial statements and schedules and other information which is
contained, included, stated or described in the Registration Statement,
Preliminary Prospectus or the Prospectus shall be deemed to mean and include all
such financial statements and schedules and other information which is
incorporated by reference in, or deemed to be a part of, the Registration
Statement, Preliminary Prospectus or Prospectus, as the case may be.
(ii) The Commission has not issued, and is not to the best
knowledge of the Company threatening to issue, an order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus nor instituted
proceedings for that purpose. Each Preliminary Prospectus at its date of issue,
the Registration Statement and the Prospectus and any amendments or supplements
thereto contain or will contain, as the case may be, all statements which are
required to be stated therein by, and in all material respects conform or will
conform, as the case may be, to the requirements of, the Act and the Rules and
Regulations. Neither the Registration Statement nor any amendment thereto, as of
the applicable effective date, contains or will contain, as the case may be, any
untrue statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and neither the Prospectus nor any supplement thereto contains
or will contain, as the case may be, any untrue statement of a material fact or
omits or will omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company makes
no representation, warranty or agreement as to information contained in or
omitted from the Registration Statement, the Preliminary Prospectus or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
the Underwriters specifically for use in the preparation of: (i) the statements
therein regarding over-allotment, stabilization or passive market making by the
Underwriters, or (ii) the section thereof under the caption Underwriting.
(iii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Florida, with full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration Statement;
the Company is duly qualified to transact business as a foreign corporation in
good standing in each state or other jurisdiction in which its ownership or
leasing of property or conduct of business requires such qualification, except
where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the business, properties, financial
condition or results of operations of the Company (a "Material Adverse Effect").
The Company does not own or control, directly or indirectly, any corporation,
association or other entity. The Company has no subsidiaries (as defined in Rule
405 of the Rules and Regulations).
(iv) The Company has full right and corporate power and
authority to enter into this Agreement and to perform the transactions
contemplated hereby. The filing of the Registration Statement and the execution
and delivery of this Agreement have been duly authorized by the Board of
Directors of the Company. This Agreement constitutes a valid and legally binding
obligation of the Company enforceable in accordance with its terms (except to
the extent the enforceability of the indemnification, exculpation and
contribution provisions of
4
<PAGE> 5
Section 7 hereof may be limited by applicable law, and except as enforceability
of this Agreement may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other laws affecting creditors' rights
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law). The issuance
and sale of the Shares by the Company and the performance of this Agreement by
the Company and the consummation of the transactions herein contemplated will
not result in a violation of the Company's articles of incorporation or bylaws
or result in a breach or violation of any of the terms and provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company under, any
statute which is applicable to it, or under any indenture, mortgage, deed of
trust, note, loan agreement, sale and leaseback arrangement or other agreement
or instrument to which the Company is a party or by which they are bound or to
which any of the properties or assets of the Company is subject, or any order,
rule or regulation applicable to the Company of any court or public, regulatory
or governmental agency or body having jurisdiction over the Company or its
properties, other than any such breach, violation, default, lien, charge or
encumbrance, as the case may be, which does not individually or in the aggregate
would have a Material Adverse Effect. No consent, approval, authorization,
order, registration or qualification of or with any court or public, regulatory
or governmental agency or body is required for the consummation of the
transactions herein contemplated, except such as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or under the Act or the
Rules and Regulations or any state securities laws.
(v) Except as described in the Prospectus, the Company has not
sustained since the date of the latest audited financial statements included in
the Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree. Except as
contemplated in the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company has not incurred any material liabilities or material obligations,
direct or contingent, other than in the ordinary course of business, or entered
into any material transactions not in the ordinary course of business, and there
has not been any material change in the capital stock or long-term debt of the
Company or any Material Adverse Effect. The Company has filed all necessary
federal, state and foreign income and franchise tax returns and paid all taxes
shown as due thereon, except as are being contested by the Company in good
faith. All tax liabilities, including those being contested by the Company, are
adequately provided for on the books of the Company. The Company has made all
necessary payroll tax payments and is current and up-to-date as of the date of
this Agreement to the extent necessary to avoid a Material Adverse Effect. The
Company has no knowledge of any tax proceeding or action pending or threatened
against the Company.
(vi) Except as described in the Prospectus, there is no
action, suit, arbitration, investigation or governmental proceeding, domestic or
foreign, pending or, to the best of the Company's knowledge, threatened or
involving the properties or business of the Company which challenges the
validity of this Agreement or any action taken or required to be taken by the
Company pursuant to or in connection with this Agreement or which could
reasonably be expected to have a Material Adverse Effect. The Company is not a
party and is
5
<PAGE> 6
not subject to the provisions of any injunction, judgment, decree or order of
any court or any public, regulatory or governmental agency or body. There are no
contracts or documents to which the Company is a party which would be required
to be filed as exhibits to the Registration Statement by the Act or by the Rules
and Regulations which have not been filed as exhibits to the Registration
Statement; the contracts and documents to which the Company is a party which are
so described in the Registration Statement are in full force and effect on the
date hereof; and the Company does not have notice that any other party is in
breach of or default under any of such contracts to a material extent.
(vii) The Company has duly and validly authorized capital
stock as described in the Prospectus. Except as disclosed in or contemplated by
the Prospectus, the Company does not have outstanding any options to purchase or
any preemptive rights or other rights to subscribe or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. The description of outstanding warrants
to purchase Common Stock and the Company's stock option plans and the options or
other rights granted and exercised thereunder set forth in the Prospectus
accurately presents in all material respects the information required to be
shown with respect to such warrants, plans, options and rights. All outstanding
shares of Common Stock of the Company conform, and the Shares when issued will
conform, in all material respects to the description thereof in the Registration
Statement and the Prospectus and have been, or, when issued and paid for will
be, duly authorized, validly issued, fully paid and nonassessable, issued in
material compliance with all applicable Federal and state securities laws and
not issued in violation of or subject to any preemptive rights or other rights
to purchase or subscribe for securities of the Company. No shareholder of the
Company has any right to require the Company to register the sales of any shares
or other securities owned by such shareholder under the Act in the public
offering contemplated by this Agreement. Upon delivery of the Company Shares and
full payment therefor pursuant to this Agreement, good and valid title to such
Shares, free and clear of all liens, encumbrances, security interests,
restrictions on transfer, equities or claims whatsoever, will pass to the
Underwriters.
(viii) The Company owns no real property and the Company has
good and marketable title to personal property owned by it, subject to no lien,
charge, defect or encumbrances of any kind except as are described in the
Prospectus, and which do not materially interfere with the use made and proposed
to be made of such property by the Company. Except as disclosed in the
Prospectus, the Company owns or leases all such assets as are materially
necessary to its operations as now conducted.
(ix) PriceWaterhouseCoopers, LLP, the accounting firm which
has certified the financial statements filed with the Commission as a part of
the Registration Statement, is an independent public accounting firm within the
meaning of the Act and the Rules and Regulations.
(x) The financial statements and schedules of the Company,
including the notes thereto, filed with and as a part of the Registration
Statement, are accurate in all material respects and present fairly the
financial position of the Company as of the respective dates thereof and the
results of operations and statements of cash flow for the respective periods
covered thereby, all in conformity with generally accepted accounting principles
applied on a
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consistent basis throughout the periods involved except as otherwise disclosed
in the Prospectus. The selected financial data included in the Registration
Statement and Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement and Prospectus.
(xi) The Company is not in default with respect to any
contract or agreement to which it is a party; provided that this representation
shall not apply to defaults which in the aggregate could reasonably be expected
not to have a Material Adverse Effect.
(xii) The Company is not in breach or violation of any
provision of its articles of incorporation or bylaws or any laws, ordinances or
governmental rules or regulations to which it is subject, and the Company has
not failed to obtain, maintain or comply with the terms of any of the licenses,
certificates, permits, franchises, easements, consents, or other governmental
authorizations necessary to the ownership, leasing and operation of its
properties or to the conduct of its business, which breach, violation or failure
could reasonably be expected to have a Material Adverse Effect.
(xiii) Except as described in the Prospectus, the Company has
sufficient interests in all patents, trademarks, service marks, trade names,
domain names, copyrights, trade secrets, information, proprietary rights and
processes ("Intellectual Property") necessary for the conduct of the business
now conducted by it as described in the Prospectus, and, to the Company's
knowledge necessary in connection with the products and services under
development, without, to the Company's knowledge, any infringement of or the
interests of others, and has taken all steps necessary to secure interests in
such Intellectual Property from its contractors; except as set forth in the
Prospectus, the Company is not aware of outstanding options, licenses or
agreements of any kind relating to the Intellectual Property of the Company
which are required to be set forth in the Prospectus, and, except as set forth
in the Prospectus, the Company is not a party to or bound by any options,
licenses or agreements with respect to the Intellectual Property of any other
person or entity which are required to be set forth in the Prospectus; none of
the technology employed by the Company has been obtained or is being used by the
Company in violation of any contractual or fiduciary obligation binding on the
Company or to the knowledge of the Company any of its directors, officers or
employees or otherwise in violation of the rights of any persons; except as
disclosed in the Prospectus, the Company has not received any written or, to the
Company's knowledge, oral communications alleging that the Company has violated,
infringed or conflicted with, or by conducting its business as set forth in the
Prospectus, would violate, infringe or conflict with any of the Intellectual
Property of any other person or entity; and the Company has taken and will
maintain reasonable measures to prevent the unauthorized dissemination or
publication of its confidential information and, to the extent contractually
required to do so, the confidential information of third parties in its
possession.
(xiv) The Company maintains insurance of the types and in the
amounts generally deemed adequate for its business, including, but not limited
to, general liability insurance, business interruption insurance and insurance
covering personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect.
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<PAGE> 8
(xv) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Company's
Common Stock, and the Company is not aware of any such action taken or to be
taken by any director, officer, employee, consultant, or shareholder of the
Company.
(xvi) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(xvii) The Common Stock of the Company is registered pursuant
to Section 12(b) of the Securities Exchange Act of 1934, as amended, and is
approved for trading on the American Stock Exchange ("ASE") under the symbol
"PF." The Company has taken no action that was designed to terminate, or that is
likely to have the affect of terminating, trading of its Common Stock on ASE,
nor has the Company received any notification that the Commission or the ASE is
contemplating terminating such trading.
(xviii) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate located in
Cuba, within the meaning of Section 517.075 of the Florida Statutes.
(xix) Except as disclosed in the Registration Statement and
the Prospectus, no officer, director or beneficial owner of the Company's
capital stock is, directly or indirectly, associated with a NASD member
broker-dealer and the Company has no management or financial consulting
agreement with any third party.
(xx) No person is entitled, directly or indirectly, to
compensation from the Company for services as a finder in connection with the
transactions contemplated by this Agreement.
(xxi) The Company has reviewed its operations and that of any
third parties with which the Company has a material relationship to evaluate the
extent to which the business or operations of the Company or any of its
subsidiaries will be affected by Year 2000 issues. As a result of such review,
the Company represents and warrants that the disclosure in the Registration
Statement relating to Year 2000 issues is accurate and complies in all material
respects with the rules and regulations of the Act. "Year 2000 issues" as used
herein means Year 2000 issues described in or contemplated by the Commission's
Interpretation: Disclosure of Year 2000 Issues and Consequences by Public
Companies, Investment Advisers, Investment Companies, and Municipal Securities
Issuers (Release No. 33-7558).
(b) The Selling Shareholder represents and warrants to, and agrees with
the Underwriters that:
(i) The Selling Shareholder is authorized to execute and
deliver this Agreement and to consummate the transactions described in this
Agreement.
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<PAGE> 9
(ii) All authorizations and consents (other than under the Act
or state securities laws) necessary for the execution and delivery by the
Selling Shareholder of this Agreement and the sale and delivery pursuant to this
Agreement of the stock to be sold by the Selling Shareholder have been given and
are in full force and effect.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement will not result
in a breach by the Selling Shareholder of, or constitute a default by the
Selling Shareholder under, any agreement, instrument, decree, judgement or order
to which the Selling Shareholder is a party or by which the Selling Shareholder
is a party or by which the Selling Shareholder may be bound or the properties of
the Selling Shareholder may be subject.
(iv) On the First Closing Date, the Selling Shareholder will
have good title to the stock to be sold by the Selling Shareholder pursuant to
this Agreement free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind; on the First Closing Date the Selling
Shareholder will have full right, power and authority to sell, transfer and
deliver such stock pursuant to this Agreement, and upon delivery of such stock
and payment of the purchase price therefor as contemplated in this Agreement,
the Underwriters will receive good title to the stock purchased by it from the
Selling Shareholder, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind.
(c) Any certificate signed by any officer of the Company and the
Selling Shareholder and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company and the Selling
Shareholder to each Underwriter as to the matters covered thereby.
5. ADDITIONAL COVENANTS. The Company covenants and agrees with the
several Underwriters that:
(a) If the Registration Statement is not effective under the Act,
the Company will use its best efforts to cause the Registration Statement to
become effective as promptly as possible, and it will notify you, promptly after
it shall receive notice thereof, of the time when the Registration Statement has
become effective. The Company (i) will prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations, if required, a
Prospectus containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations or otherwise; (ii) will not file any amendment to the
Registration Statement or supplement to the Prospectus of which the Underwriters
shall not previously have been advised and furnished with a copy or to which the
Underwriters shall have reasonably objected in writing or which is not in
compliance in all material respects with the Rules and Regulations; and (iii)
will promptly notify you after it shall have received notice thereof of the time
when any amendment to the Registration Statement becomes effective or when any
supplement to the Prospectus has been filed.
(b) The Company will advise the Underwriters promptly, after it has
received notice or obtained knowledge thereof, of any comments of the Commission
with respect to the Registration Statement, of any request of the Commission for
amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information, or of the
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<PAGE> 10
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution or
threat of any proceedings for that purpose, and the Company will use its best
efforts to prevent the issuance of any such stop order preventing or suspending
the use of the Prospectus and to obtain as soon as possible the lifting thereof,
if issued.
(c) The Company will cooperate with the Underwriters and their
counsel in endeavoring to qualify the Shares for sale under (or obtain
exemptions from the application of) the securities laws of such jurisdictions as
they may have designated and will make such applications, file such documents,
and furnish such information as may be reasonably necessary so as to permit the
continuance of sales and dealings therein for so long as may be necessary to
complete the distribution of the Shares, provided the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified. The
Company will advise you promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Shares for offering,
sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the withdrawal thereof.
(d) The Company will deliver to, or upon the order of, the
Underwriters, without charge from time to time, as many copies of any
Preliminary Prospectus (including all documents incorporated by reference
therein) as they may reasonably request. The Company will deliver to, or upon
the order of, the Underwriters without charge as many copies of the Prospectus
(including all documents incorporated by reference therein), or as it thereafter
may be amended or supplemented, as they may from time to time reasonably
request. The Company consents to the use of such Prospectus by the Underwriters
and by all dealers to whom the Shares may be sold, in connection with the
offering or sale of the Shares and for such period of time thereafter as the
Prospectus is required by law to be delivered in connection therewith. The
Company will deliver to you at or before the First Time of Delivery two signed
copies of the Registration Statement and all amendments thereto, including all
exhibits filed therewith or incorporated by reference therein, and all documents
incorporated by reference in the Prospectus, and will deliver to the
Underwriters such number of copies of the Registration Statement, without
exhibits, and of all amendments thereto, as they may reasonably request.
(e) If, during the period in which a prospectus is required by law
to be delivered by an Underwriter or dealer, any event shall occur as a result
of which, in the reasonable judgment of the Company or in your reasonable
judgment or in the written opinion of counsel for the Underwriters, it becomes
necessary to amend or supplement the Prospectus in order to make the statements
therein, in light of the circumstances existing at the time the Prospectus is
delivered to a purchaser, not misleading, or, if it is necessary at any time to
amend or supplement the Prospectus to comply with any law, the Company promptly
will prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus as
so amended or supplemented will not, in the light of the circumstances when it
is so delivered, be misleading, or so that the Prospectus will comply with
applicable law.
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<PAGE> 11
(f) The Company will make generally available to its shareholders,
as soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earnings statement in
reasonable detail, covering a period of at least 12 consecutive months beginning
after the effective date of the Registration Statement, which earnings statement
shall satisfy the requirements of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations and will advise the Underwriters in writing when such
statement has been so made available.
(g) The Company will, for a period of five years from the Effective
Date, deliver to the Underwriters at their principal executive offices a
reasonable number of copies of annual reports, quarterly reports, current
reports and copies of all other documents, reports and information furnished by
the Company to its shareholders or filed with any securities exchange or
national securities market pursuant to the requirements of such exchange or
market or with the Commission pursuant to the Act or the Securities Exchange Act
of 1934 (the "1934 Act"). Any report, document or other information required to
be furnished under this subsection (g) shall be furnished as soon as practicable
after such report, document or information becomes available.
(h) The Company will apply the proceeds from the sale of the Shares
as set forth in the description under the caption "Use of Proceeds" in the
Prospectus.
(i) The Company will supply you with copies of all correspondence
to and from, and all documents issued to and by, the Commission in connection
with the registration of the Shares under the Act.
(j) Prior to each Time of Delivery, the Company will furnish to
you, as soon as they have been prepared, copies of any unaudited interim
consolidated financial statements of the Company for any periods subsequent to
the periods covered by the financial statements appearing in the Registration
Statement and the Prospectus.
(k) Prior to the 30th day after the last Time of Delivery, the
Company will not issue any press releases or other communications directly or
indirectly and will hold no press conferences with respect to the Company, the
financial condition, results of operations, business, properties, assets or
liabilities of the Company, or the offering of the Shares, without your prior
written consent except as otherwise required by law.
(l) The Company will use its best efforts to obtain approval for,
and maintain the listing of the Shares on, the ASE.
(m) For a period of 270 days from the Effective Date, the Company
will not, and will cause its directors, officers and pre-Effective Date
securityholders (including, without limitation, holders of options, warrants or
other rights to acquire securities of the Company) to not (in each case without
the Representatives' prior written consent), (i) offer, pledge, sell,
hypothecate, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase,
lend or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or (ii) enter into any hedge, swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in
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<PAGE> 12
clause (i) or (ii) above is be settled by delivery of Common Stock or such other
securities, in cash or otherwise, without your prior written consent, except for
the Shares sold hereunder and except for sales by the Company of shares of
Common Stock to the Company's employees pursuant to the exercise of options
under the Company's stock option plan as described in the Prospectus. The
foregoing sentence shall not apply to the sale of any Shares to the Underwriters
pursuant to this Agreement.
(n) The Company will file with the Commission such information on
Form 10-Q or Form 10-K as may be required by Rule 463 under the Act.
(o) The Company will maintain and keep accurate books and records
reflecting its assets and will maintain internal accounting controls which
provide reasonable assurance that (i) transactions are executed in accordance
with management's authorization, (ii) transactions are recorded as necessary to
permit the preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company, (iii) access to the
assets of the Company is permitted only in accordance with management's
authorization, and (iv) the recorded accounts of the assets of the Company are
compared with existing assets at reasonable intervals.
(p) Prior to the Closing Date, the Company shall have issued to the
transfer agent for the Common Stock (the "Transfer Agent") a "stop transfer"
instruction with respect to all the shares of Common Stock issued and
outstanding immediately prior to the Effective Date other than the Selling
Shareholder Shares (the "Pre-offering Shares"), instructing the Transfer Agent
to not honor any requests to transfer any Pre-offering Shares prior to the
expiration of the 270-day period described in Section 5(m) of this Agreement
without the Representatives' prior written consent, and such stop transfer
instruction shall be in full force and effect at each Time of Delivery.
(q) The Company will make available its stock transfer records to
the Representatives upon either Representative's request during the 12-month
period following the Effective Date.
(r) The Company will not, without the prior written consent of the
Representatives, directly or indirectly grant any options, warrants or rights to
purchase or acquire Common Stock for a period of 270 days commencing on the
Effective Date or permit to be outstanding during such period any such options,
warrants or rights, other than (i) options to employees, directors and
consultants under the Company's stock option plan; (ii) warrants or other rights
which are outstanding on the Effective Date and described in the Prospectus; and
(iii) the Representatives' Warrants. The Company will not, without the prior
written consent of the Representatives, grant any options, warrants or rights to
purchase or acquire Common Stock for a price below the market price for the
Common Stock on the date of grant, for a period of 270 days commencing on the
Effective Date. The Company will not, without the prior written consent of the
Representatives, file a Registration Statement on Form S-8 during the 270 day
period following the Effective Date.
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(s) The Company shall have become listed at or prior to the
Effective Time, and shall use its best efforts to maintain such listing, for at
least five years after the Effective Time in Standard and Poor's Corporation
Records Service and/or Moody's OTC Guide.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase and pay for the Shares being sold hereunder by the
Company and the Selling Shareholder to the Underwriters shall be subject to the
accuracy in all material respects, as of the date hereof and as of each Time of
Delivery of the representations and warranties of the Company and the Selling
Shareholder contained herein, to the performance in all material respects by the
Company and the Selling Shareholder of its covenants and obligations hereunder,
and to the additional conditions set forth in this Section 6.
(a) If the Company and the Underwriters have determined not to
proceed pursuant to Rule 430A, the Registration Statement shall have become
effective not later than 10:00 a.m., Miami, Florida, on the day following the
date of this Agreement or such later date as may be consented to in writing by
you. If the Company and the Underwriters have determined to proceed pursuant to
Rule 430A, all filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been made. No stop order suspending the effectiveness of
the Registration Statement, as amended from time to time, shall have been issued
and no proceeding for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened or contemplated by the
Commission, and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the reasonable satisfaction of the Underwriters.
(b) No person or entity shall have disclosed in writing to the
Company, the Selling Shareholder or the Underwriters on or prior to the relevant
Time of Delivery, that the Registration Statement or Prospectus or any amendment
or supplement thereto contains an untrue statement of fact which, in the opinion
of counsel to the Underwriters, is material, or omits to state a fact which, in
the opinion of such counsel, is material and is required to be stated therein or
is necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(c) You shall have received an opinion of Greenberg Traurig, P.A.,
counsel for the Company and the Selling Shareholder, addressed to you and dated
such Time of Delivery to the effect that:
(i) The Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Florida
with corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement.
(ii) The Company's authorized capital stock is as set forth
under the caption "Capitalization" in the Prospectus. The Common Stock of the
Company conforms in all material respects to the description thereof in the
Prospectus under the caption "Description of Capital Stock," and the statements
in the Prospectus under such caption fairly summarize in all material respects
the provisions referred to in the Company's articles of incorporation, bylaws
and the law of the State of Florida. The form of certificate used to evidence
the Common Stock
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<PAGE> 14
filed as an exhibit to the Registration Statement has been approved by the
Company's Board of Directors, and complies as to form with the requirements of
such law. The outstanding shares of Common Stock have been duly authorized and
are validly issued, fully paid and non-assessable, were issued in compliance
with all applicable Federal and state securities laws and the laws of the State
of Florida, and were not issued in violation of or subject to any preemptive
rights or other rights to purchase or subscribe for securities of the Company.
The Shares have been duly authorized and, when delivered and fully paid for in
accordance with this Agreement, will be validly issued, fully paid and
non-assessable, and the shareholders of the Company have no preemptive rights
with respect to the Shares. The Representatives' Warrants to be sold by the
Company under the Agreement, and the shares of Common Stock to be sold by the
Company upon the exercise of the Representatives' Warrants have been duly
authorized and, when delivered and fully paid for in accordance with this
Agreement, will be validly issued, fully paid and non-assessable. To our
knowledge, except as disclosed or contemplated in the Prospectus, there are no
outstanding options, warrants, or other rights calling for the issuance of, and
no present commitments, plans or arrangements of the Company to issue any shares
of capital stock of the Company or any security convertible into or exchangeable
for capital stock of the Company. Upon delivery of the Shares being sold by the
Company and the Selling Shareholder and full payment therefor pursuant to this
Agreement and registration of the ownership of such Shares by the transfer agent
for such Shares, good and valid title to such Shares free and clear of all
liens, encumbrances, security interests, restrictions on transfer, equities or
claims whatsoever other than those created or granted by this Agreement or by
the Underwriters, will pass to the Underwriters.
(iii) Such counsel has been advised by the staff of the
Commission that the Registration Statement has become effective under the Act
and, to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Act; any required filing of the Prospectus and any supplement thereto pursuant
to Rule 424(b) of the Rules and Regulations has been made in the manner and
within the time period required by such Rule 424(b).
(iv) The Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or issue
dates, comply as to form in all material respects with the requirements of Form
S-1 under the Act and the applicable Rules and Regulations (except that such
counsel need express no opinion or belief as to numerical, financial and
statistical data, financial statements and notes and related schedules thereto).
(v) The descriptions in the Registration Statement and
Prospectus of contracts and other documents filed as exhibits to the
Registration Statement are accurate in all material respects.
(vi) No authorization, approval, consent, order, registration
or qualification of or with any court or public, regulatory or governmental
body, authority or agency is required with respect to the Company in connection
with the transactions contemplated by this Agreement, except such as may be
required under the Act, the Rules and Regulations or
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<PAGE> 15
the 1934 Act or by the NASD or under state securities laws in connection with
the purchase and distribution of the Shares by the Underwriters.
(vii) The Company has the corporate power and authority to
enter into this Agreement and to sell and deliver the Shares to be sold by it to
the several Underwriters. The filing of the Registration Statement with the
Commission has been duly authorized by the Board of Directors of the Company.
This Agreement has been duly authorized, executed and delivered by the Company,
and is a valid and legally binding obligation of the Company enforceable in
accordance with its terms (except to the extent the enforceability of the
indemnification, exculpation and contribution provisions of Section 7 hereof may
be limited by applicable law and except as enforceability of this Agreement may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws affecting creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law). The making and performance of this Agreement
by the Company and the consummation of the transactions herein contemplated will
not result in a violation of the Company's articles of incorporation or bylaws
or to the best knowledge of such counsel result in a breach or violation of any
of the terms and provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any properties or
assets of the Company under, any applicable Federal or state statute, or under
any indenture, mortgage, deed of trust, note, loan agreement, lease, franchise,
license, permit or any other agreement or instrument to which the Company is a
party or by which it is bound or to which any of the properties or assets of the
Company is subject, or any order, rule or regulation known to such counsel of
any court or public, regulatory or governmental agency, authority or body having
jurisdiction over the Company or its properties, except, in the case of any such
violation, breach, default, creation or imposition, to such extent as does not,
individually or in the aggregate, have a Material Adverse Effect.
(viii) To the best knowledge of such counsel, (i) there are no
legal, governmental or regulatory proceedings pending or threatened to which the
Company is a party or of which the business or properties of the Company is the
subject which (individually or in the aggregate) could reasonably be expected to
have a Material Adverse Effect or on the ability of the Company to consummate
the transactions contemplated herein, and which are not disclosed in the
Registration Statement and Prospectus; (ii) there are no contracts or documents
of a character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement which are
not described therein or filed as required; (iii) the Company is not a party or
subject to the provisions of any injunction, judgment, decree or order of any
court or any public, regulatory or governmental agency, authority or body which
could reasonably be expected to have a Material Adverse Effect or on the ability
of the Company to consummate the transactions contemplated herein; and (iv)
there are no applicable Federal or state statutes, orders, rules or regulations
required to be described in the Registration Statement or Prospectus under the
Act, the 1934 Act or applicable state securities laws which are not described
therein as required.
(ix) The Company holds all licenses, certificates, permits,
franchises, consents, authorizations and approvals from all state and federal
regulatory authorities, that are required for the Company to conduct its
business as described in the Prospectus, except in the
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<PAGE> 16
case of any such license, certificate, permit, franchise, consent, authorization
or approval the loss of which or failure to maintain could reasonably be
expected not to have a Material Adverse Effect.
(x) The Company is not in violation of its articles of
incorporation and bylaws. To the best of counsel's knowledge, the Company is not
in breach of, or in default with respect to, any provisions of any agreement,
mortgage, deed of trust, lease, note, agreement, franchise, license, indenture,
permit or other instrument known to such counsel to which the Company is a party
or by which the Company or any of the properties thereof may be bound or
affected, which breach or default could reasonably be expected to have a
Material Adverse Effect or on the Company's ability to consummate the
transactions contemplated herein, and the Company is in compliance with all
judgments, decrees and orders of any court to which the Company is subject,
except where noncompliance could reasonably be expected not to have a Material
Adverse Effect.
(xi) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(xii) No holders of securities of the Company have preemptive
rights or other rights to purchase or subscribe for shares of Common Stock or
other securities of the Company, nor any rights to require the Company to
register any securities under the Act in connection with the transactions
contemplated hereby.
(xiii) This Agreement has been duly executed and delivered by
or on behalf of the Selling Shareholder; and the sale of the Shares to be sold
by such Selling Shareholder hereunder and the performance of this Agreement and
the consummation of the transactions herein and therein contemplated will not
result in a breach or violation of any terms or provisions of, or constitute a
default under, any statute, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which such
Selling Shareholder is a party or by which such Selling Shareholder is bound, or
any order, rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over such Selling Shareholder or the property
of such Shareholder;
(xiv) No consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the Shares to be
sold by the Selling Shareholder hereunder, except such as have been obtained
under the Act and such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of such Shares by the
Underwriters;
(xv) Immediately prior to such Delivery Date the Selling
Shareholder had full right, power and authority to sell, assign, transfer and
deliver the Shares to be sold by the Selling Shareholder hereunder;
(xvi) Upon delivery to the Underwriters, the Underwriters will
receive good and valid title to the Selling Shareholder Shares, free and clear
of all liens, encumbrances, equities or claims.
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Such counsel shall confirm that during the preparation of the
Registration Statement and Prospectus, such counsel participated in conferences
with officers and other representatives of the Company and the Selling
Shareholder, representatives of the independent certified public accountants for
the Company and representatives of the Underwriters and their counsel, at which
time the contents of the Registration Statement and Prospectus and related
matters were discussed and although such counsel is not opining with respect to
and does not assume any responsibility for the accuracy, truthfulness,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus, such counsel confirms that no facts have come to their
attention which have caused them to believe that either (i) the Prospectus or
any supplement thereto as of its date (other than numerical, financial or
statistical data, the financial statements and notes or any related schedules
thereto, as to which such counsel need express no opinion or belief) contains
any untrue statement of a material fact or omits 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 or
(ii) the Registration Statement or any amendment thereto at the time it became
effective (other than numerical, financial or statistical data, the financial
statements and notes or any related schedules thereto, as to which such counsel
need express no opinion or belief) contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(d) You shall have received on such Time of Delivery, from Broad
and Cassel, counsel to the Underwriters, such opinion or opinions, dated such
Time of Delivery with respect to corporate existence and good standing of the
Company, the validity of the Shares, the Registration Statement, the Prospectus
and other related matters as you may reasonably require; the Company shall have
furnished to such counsel such documents as they reasonably request for the
purpose of enabling them to opine with respect to such matters.
(e) On the date of the Prospectus and on each Time of Delivery, you
shall have received from PriceWaterhouseCoopers, LLP, a letter or letters, dated
the date of the Prospectus and Time of Delivery, respectively, in form and
substance reasonably satisfactory to you, providing confirmation that they are
independent public accountants with respect to the Company within the meaning of
the Act and the published Rules and Regulations, and the answer to Item 509 of
Regulation S-K set forth in the Registration Statement is correct insofar as it
relates to them, and providing a statement similar in substance to the one set
forth in Schedule II hereto.
(f) Except as contemplated in the Prospectus, (i) the Company shall
not have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree; and (ii)
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company shall not have incurred
any liability or obligation, direct or contingent, or entered into transactions,
and there shall not have been any change in the capital stock or long-term debt
of the Company or any change in the financial condition, net worth, business,
management, or results of operations of the Company, the effect of which, in any
such case described in clause (i) or (ii), is in your reasonable judgment so
material or
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materially adverse as to make it impracticable to proceed with the public
offering or the delivery of the Shares being delivered on such Time of Delivery
on the terms and in the manner contemplated in the Prospectus.
(g) There shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange or the American Stock Exchange or Nasdaq or establishing on
such exchanges or Nasdaq by the Commission or by such exchanges or Nasdaq of
minimum or maximum prices which are not in force and effect on the date hereof;
(ii) a general moratorium on commercial banking activities declared by either
federal or state authorities; or (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, any calamity or crisis, material change in national,
international or world affairs, natural disaster, material change in the
international or domestic markets, or material change in the existing financial,
political or economic conditions in the United States or elsewhere, or the
enactment, publication, decree, or other promulgation of any federal or state
statute, regulation, rule, or order of any court or other governmental
authority, or the taking of any action by any federal, state or local government
or agency in respect of fiscal or monetary affairs, if the effect of any such
event specified in this clause (iii) is in your reasonable judgment so material
or materially adverse as to make it impracticable to proceed with the public
offering or the delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
(h) As a condition precedent to the several obligations of the
Underwriters to purchase and pay for the Shares being sold hereunder, you shall
have received a certificate or certificates, dated the Time of Delivery and
signed on behalf of the Company by the President and Chief Executive Officer and
the Chief Financial Officer of the Company and the Selling Shareholder stating
that: (A) such party has carefully examined the Registration Statement and the
Prospectus as amended or supplemented and all documents incorporated by
reference therein and nothing has come to such party's attention that would lead
him to believe that either the Registration Statement or the Prospectus, or any
amendment or supplement thereto or any documents incorporated by reference
therein as of their respective effective, issue or filing dates, contained, and
the Prospectus as amended or supplemented and all documents incorporated by
reference therein and when read together with the documents incorporated by
reference therein, at such Time of Delivery, contains any untrue statement of a
material fact, or omits 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; provided, however,
that such party makes no representation, warranty or agreement as to information
contained in or omitted from the Registration Statement, the Preliminary
Prospectus or the Prospectus, or any such amendment or supplement thereto, in
reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of the Underwriters specifically for use in the
preparation of (i) the statements therein regarding over-allotment,
stabilization or passive market making by the Underwriters, or (ii) the section
thereof under the caption "Underwriting"; (B) all representations and warranties
made herein by the Company are true and correct in all material respects at such
Time of Delivery, with the same effect as if made on and as of such Time of
Delivery, and all agreements herein required to be performed by the Company on
or prior to such Time of Delivery have been duly performed in all material
respects; and (C) such other matters as you may reasonably request.
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<PAGE> 19
(i) As a condition precedent to the several obligations of the
Underwriters to purchase and pay for the Shares being sold hereunder, the
Company and the Selling Shareholder shall not have failed, refused, or been
unable, on or by such Time of Delivery to have performed in all material
respects any agreement on its part required to be performed by it or any of the
conditions herein contained and required to be performed or satisfied by it on
or by such Time of Delivery.
(j) The Shares shall have been approved for trading or quotation
upon official notice of issuance on ASE under the symbol "PF," and on the Time
of Delivery the Shares shall be trading or quoted under such symbol.
(k) As a condition precedent to the several obligations of the
Underwriters to purchase and pay for the shares being sold hereunder, you shall
have received, at or prior to the first Time of Delivery:
(i) from each officer and each director of the Company, the
Selling Shareholder and each record holder of shares of Common Stock outstanding
immediately prior to the first Time of Delivery, an executed "lock-up" agreement
in the form of Exhibit A hereto; and
(ii) from the Transfer Agent an acknowledgment of the
Company's instruction's described in Section 5(p) of this Agreement.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Broad and Cassel, counsel for the several Underwriters. The
Company will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you may reasonably request.
(l) On the Closing Date, the Company will sell to the
Representatives or their designees, and the Representatives or their designees
shall purchase, the Representatives' Warrants to purchase 350,000 shares of
Common Stock. The Representatives' Warrants will be in the form of, and in
accordance with, the provisions of the Representatives' Warrants described in
the Registration Statement. Payment for the Representatives' Warrants will be
made to the Company by check or checks payable to its order on the Closing Date
against delivery of the certificates representing the Representatives' Warrants.
The certificates representing the Representatives' Warrants will be in such
denominations and in such names as the Representative may request at least two
business days prior to the Closing Date.
If any of the conditions specified above in this Section 6 shall not
have been satisfied at or prior to the Time of Delivery or waived by you in
writing, this Agreement may be terminated by you on written notice to the
Company.
7. INDEMNIFICATION.
(a) The Company and the Selling Shareholder will indemnify and hold
harmless each Underwriter and its officers and directors and each person, if
any, who controls any Underwriter within the meaning of the Act or the 34 Act,
against any losses, claims,
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<PAGE> 20
damages or liabilities, joint or several, to which such Underwriter, officer,
director or controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, in any
Preliminary Prospectus, in the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky application or other document executed by the
Company or the Selling Shareholder or based on any information furnished in
writing by the Company and filed in any jurisdiction in order to qualify any or
all of the Shares under (or obtain exemption from) the securities laws thereof
(Blue Sky Application), 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, in light of the circumstances under
which they were made, not misleading; and will reimburse each Underwriter and
each such officer, director and controlling person for any legal or other
expenses reasonably incurred by such Underwriter, officer, director or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company shall
not be liable in any such case to the extent, but only to the extent, that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission that is:
(i) contained in the Registration Statement, such Preliminary Prospectus, the
Prospectus, or any such amendment or supplement thereto, or in such Blue Sky
Application or such other document and (ii) both relates to and was made in
reliance upon and in conformity with written information furnished to the
Company by you or by any Underwriter through you, specifically for use in the
preparation of: (a) the last paragraph of the cover page of the form of
prospectus included in the Registration Statement, such Preliminary Prospectus
or the Prospectus, or any such amendment or supplement thereto or (b) the
statements therein regarding over-allotment, stabilization or passive market
making by the Underwriters or (c) the section thereof under the caption
Underwriting; and provided, further, that if any Preliminary Prospectus or the
Prospectus contained any alleged untrue statement or allegedly omitted to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and such statement or omission shall have been corrected in a
revised Preliminary Prospectus or in the Prospectus or in an amended or
supplemented Prospectus, the Company shall not be liable to any Underwriter,
officer, director or controlling person under this subsection (a) with respect
to such alleged untrue statement or alleged omission to the extent that any such
loss, claim, damage or liability of such Underwriter, officer, director or
controlling person results from the fact that such Underwriter sold Shares to a
person or entity to whom there was not sent or given, at or prior to the written
confirmation of such sale, such revised Preliminary Prospectus or Prospectus or
amended or supplemented Prospectus.
(b) Each Underwriter will indemnify and hold harmless the Company,
the Selling Shareholder, each of its directors, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer, controlling person and the Selling Shareholder may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the
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<PAGE> 21
Prospectus, any amendment or supplement thereto, or any Blue Sky Application or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, in each case to the extent, but only to the extent, that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission that is:
(i) contained in the Registration Statement, such Preliminary Prospectus, the
Prospectus, or any such amendment or supplement thereto, or in such Blue Sky
Application or such other document and (ii) both relates to and was made in
reliance upon and in conformity with written information furnished to the
Company by you or by any Underwriter through you, specifically for use in the
preparation of: (a) the last paragraph of the cover page of the form of
prospectus included in the Registration Statement, such Preliminary Prospectus
or the Prospectus, or any such amendment or supplement thereto or (b) the
statements therein regarding over-allotment, stabilization or passive market
making by the Underwriters or (c) the section thereof under the caption
Underwriting; and each Underwriter will reimburse the Company and each such
director, officer and controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action.
(c) Any party which proposes to assert the right to be indemnified
under this Section 7 shall, within ten days after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party under this Section 7
notify each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
such indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Section 7. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party, similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its own counsel in any such action, but the fees and
expenses of such counsel shall be solely at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party at the
expense of the indemnifying party has been authorized in writing by the
indemnifying party, (ii) the indemnified party shall have been advised by such
counsel in a written opinion that there may be a conflict of interest between
the indemnifying party and the indemnified party in the conduct of the defense,
or certain aspects of the defense, of such action (in which case the
indemnifying party shall not have the right to direct the defense of such action
with respect to those matters or aspects of the defense on which a conflict
exists or may exist on behalf of the indemnified party) or (iii) the
indemnifying party shall not in fact have employed counsel to assume the defense
of such action, in any of which events the reasonable fees and expenses of such
party to the extent applicable shall be borne by the indemnifying party. An
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indemnifying party shall not be liable for any settlement of any action or claim
effected without its prior written consent. Each indemnified party, as a
condition of such indemnity, shall furnish such information concerning itself or
the claim in question as an indemnifying party may reasonably request in
connection with the defense of such claim and shall cooperate in good faith with
the indemnifying party in the defense of any such action or claim.
If the indemnification provided for in this Section 7 is for any
reason, other than pursuant to the terms hereof, judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and
upon the expiration of time to appeal or the denial of the last right to appeal)
to be unavailable to an indemnified party under paragraphs (a), (b) or (c) above
in respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company, the Selling
Shareholder and the Underwriters from the offering of the Shares. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault, as
applicable, of the Company, the Selling Shareholder and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as other
relevant equitable considerations. The relative benefits received by, as
applicable, the Company and the Selling Shareholder and the Underwriters shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Shareholder bear to the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Selling Shareholder 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 contributions pursuant to this paragraph 4 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
Subsection.
(d) The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this Subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Subsection (d), no Underwriter shall be required to
contribute any amount in excess of the aggregate underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter. 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. The
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Underwriters' obligations in this Subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company and the Selling
Shareholder contained in Sections 4, 5, 7, and 11, herein or in certificates
delivered pursuant hereto, and the agreements of the Underwriters contained in
Sections 7 and 11 hereof, and the liability of a defaulting Underwriter, if any,
pursuant to Section 9 hereof, shall remain operative and in full force and
effect regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any Underwriter or any controlling person
thereof, the Company or any of its officers, directors or any controlling person
thereof, and shall survive delivery of the Shares to the Underwriters hereunder.
9. SUBSTITUTION OF UNDERWRITERS.
(a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties reasonably satisfactory to the
Company and the Selling Shareholder to purchase such Shares on the terms
contained herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Shares, then the Company
and the Selling Shareholder shall be entitled to a further period of thirty-six
hours within which to procure another party or parties reasonably satisfactory
to you to purchase such Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company and the Selling
Shareholder that you have so arranged for the purchase of such Shares, or the
Company notify you that they have so arranged for the purchase of such Shares,
you or the Company shall have the right to postpone the Time of Delivery for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company and the Selling Shareholder
agree to file promptly any amendments to the Registration Statement or the
Prospectus which in the written opinion of your counsel may thereby be made
necessary. The term Underwriter as used in this Agreement shall include any
persons substituted under this Section 9 with like effect as if such person had
originally been a party to this Agreement with respect to such Shares and any
such substituted person shall be entitled to all of the benefits conferred
hereby and shall be subject to all of the obligations of an Underwriter
hereunder as if such person had originally been a party to this Agreement.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters made by you or the
Company as provided in subsection (a) above, the aggregate number of Shares
which remains unpurchased does not exceed one tenth of the total Shares to be
sold on the Time of Delivery, then the Company and the Selling Shareholder shall
have the right to require each non-defaulting Underwriter to purchase the Shares
which such Underwriter agreed to purchase hereunder and, in addition, to require
each non-defaulting Underwriter to purchase its pro rata share (based on the
number of Shares which such Underwriter agreed to purchase hereunder) of the
Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
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(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters made by you or the
Company as provided in subsection (a) above, the number of Shares which remains
unpurchased exceeds one tenth of the total Shares to be sold on the Time of
Delivery, or if the Company and the Selling Shareholder shall not exercise the
right described in subsection (b) above to require the non-defaulting
Underwriters to purchase the unpurchased Shares of the defaulting Underwriter or
Underwriters, then this Agreement shall thereupon terminate, without liability
on the part of any non-defaulting Underwriter or the Company, except for the
expenses to be borne by the Company, the Selling Shareholder and the
Underwriters as provided in Section 11 hereof and the indemnity and contribution
agreements in Section 7 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement shall become effective at 9 a.m., Miami, Florida
time, on the first business day following the effective date of the Registration
Statement, or at such earlier time after the effective date of the Registration
Statement as you in your discretion shall first release the Shares for offering
to the public; provided, however, that the provisions of Section 7 and Section
11 shall at all times be effective. For the purposes of this Section 10(a), the
Shares shall be deemed to have been released to the public upon release by you
of the publication of a newspaper advertisement relating to the Shares or upon
release of telegrams, facsimile transmissions or letters offering the Shares for
sale to securities dealers, whichever shall first occur.
(b) This Agreement may be terminated by you at any time before it
becomes effective in accordance with Section 10(a) by notice to the Company and
the Selling Shareholder; provided, however, that the provisions of this Section
10(a) and of Section 7 and Section 11 hereof shall at all times be effective. In
the event of any termination of this Agreement pursuant to Section 10(a) or this
Section 10(b) hereof, the Company and the Selling Shareholder shall not then be
under any liability to any Underwriter except as provided in Section 7 or
Section 11 hereof.
(c) This Agreement may be terminated by you at any time at or prior
to the First Time of Delivery by notice to the Company and the Selling
Shareholder if any condition specified in Section 6 hereof required to be
satisfied by the Company and the Selling Shareholder shall not have been
satisfied by the Company and the Selling Shareholder in all material respects on
or prior to the First Time of Delivery. Any such termination shall be without
liability of any party to any other party except as provided in Sections 7 and
Section 11 hereof.
(d) This Agreement also may be terminated by you, by notice to the
Company and the Selling Shareholder, as to any obligation of the Underwriters to
purchase the Option Shares, if any condition specified in Section 6 hereof shall
not have been satisfied by the Company and the Selling Shareholder in all
material respects at or prior to the Second Time of Delivery or as provided in
Section 9 of this Agreement.
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If you terminate this Agreement as provided in Sections 10(b), 10(c) or
10(d), you shall notify the Company and the Selling Shareholder in writing or by
telephone or telegram, confirmed by letter.
11. COSTS AND EXPENSES. The Company will bear and pay the costs,
fees and expenses incident to the registration of the Shares and public offering
thereof, including, without limitation, (a) the fees and expenses of the
Company's accountants and the fees and expenses of counsel for the Company, (b)
the preparation, printing, filing, delivery and shipping of the Registration
Statement, each Preliminary Prospectus, the Prospectus and any amendments or
supplements thereto and the printing, delivery and shipping of this Agreement,
the Agreement Among Underwriters, the Selected Dealer Agreement, Underwriters'
Questionnaires and Powers of Attorney and any Blue Sky Memoranda, to the
Underwriters, (c) the furnishing of copies of such documents, (d) the
registration or qualification (or obtaining exemption therefrom) of the Shares
for offering and sale under the securities laws of the various states, including
the reasonable fees and disbursements of Underwriters' counsel relating thereto,
(e) the fees payable to the NASD and the Commission in connection with their
review of the proposed offering of the Shares, (f) all printing and engraving
costs related to preparation of the certificates for the Shares, including
transfer agent and registrar fees, (g) all initial transfer taxes, if any, (h)
all fees and expenses relating to the authorization of the Shares for trading on
ASE, (i) all travel expenses, including air fare and accommodation expenses, of
representatives of the Company in connection with the offering of the Shares,
(j) the cost of "tombstone" advertisements, (k) the cost of bound volumes for
the Representatives and their counsel and (l) all of the other costs and
expenses incident to the performance by the Company of the registration and
offering of the Shares; provided, however, that the Underwriters will bear and
pay all of the fees and expenses of the Underwriters' counsel (other than fees
and disbursements relating to the registration or qualification of the Shares
for offering and sale under the securities laws of the various states), the
Underwriters' out-of-pocket expenses, and any advertising costs and expenses
incurred by the Underwriters incident to the public offering of the Shares.
In addition to the Company's payment of the foregoing expenses, upon
the consummation of the Public Offering herein contemplated, the Company and the
Selling Shareholder shall pay to the Representatives a non-accountable expense
allowance equal to 1% of the gross proceeds of the offering, including in the
computation of such amount the proceeds from any sale of Option Shares, of which
$50,000 was paid by the Company to the Representatives. The balance of the
non-accountable expense allowance due shall be paid on the First Time of
Delivery and on the Second Time of Delivery, as applicable.
If this Agreement is terminated by you in accordance with the
provisions of Section 10(c), the Company shall reimburse the Underwriters only
for all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel to the Underwriters.
12. NOTICES. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to the
Underwriters shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o:
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Cruttenden Roth Incorporated
24 Corporate Plaza
Newport Beach, California 92660
Attention: Syndicate Department
Pennsylvania Merchant Group
Four Falls Corporate Center
West Conshohocken, Pennsylvania 19428
Attention: Syndicate Department
H.C. Wainwright & Co., Inc.
1 Boston Place # 3100
Boston, Massachusetts 02108
Attention: Syndicate Department
or if sent to the Company shall be mailed, delivered, sent by facsimile
transmission, or telegraphed and confirmed to the Company at:
perfumania.com, inc.
11701 N.W. 101st Road
Miami, Florida 33178
Attention: Rachmil Lekach
Facsimile: (305) 888-0628
Selling Shareholder:
Perfumania, Inc.
11701 N.W. 101st Road
Miami, Florida 33178
Attention: Ilia Lekach
Facsimile: (305) 888-0628
With a copy to:
Jeffrey R. Houle, Esq.
Greenberg Traurig
1750 Tysons Boulevard, Suite 1200
McLean, Virginia 22102
Facsmile: (703) 749-1301
Notice to any Underwriter pursuant to Section 7 shall be mailed,
delivered, sent by facsimile transmission, or telegraphed and confirmed to such
Underwriter's address as it appears in the Underwriters' Questionnaire furnished
in connection with the offering of the Shares or as otherwise furnished to the
Company. Any party hereto may change such address or facsimile number for
notices by sending to the other parties to this Agreement written notice of a
new address or facsimile number for such purpose.
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13. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Company, the Underwriters and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any person, corporation, partnership or other entity, other
than the parties hereto and their respective successors and assigns and the
controlling persons, officers and directors referred to in Section 7, any legal
or equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of the
parties hereto and their respective successors and assigns and said controlling
persons and said officers and directors, and for the benefit of no other person,
corporation, partnership or other entity. No purchaser of any of the Shares from
any Underwriter shall be construed a successor or assign hereunder by reason
merely of such purchase.
In all dealings with the Company under this Agreement you shall act on
behalf of each of the several Underwriters, and the Company shall be entitled to
act and rely upon any statement, instruction, demand, request, notice or
agreement on behalf of the Underwriters, made or given by you on behalf of the
Underwriters, as if the same shall have been made or given in writing by all of
the Underwriters.
14. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
15. PRONOUNS. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender and
number.
16. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other section, paragraph or provision hereof.
17. GENERAL. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written and oral agreements
and all contemporaneous oral agreements, undertakings and negotiations with
respect to the subject matter hereof. The section headings in this Agreement are
for the convenience of the parties only and will not affect the construction or
interpretation of this Agreement. This Agreement may be amended or modified, and
the observance of any term of this Agreement may be waived, only by a writing
signed by the Company, and by you or, in the case of a waiver, by the party
waiving compliance.
18. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Florida without giving effect to
the provisions thereof regarding the choice of law.
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<PAGE> 28
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for such purpose, whereupon this letter
shall constitute a binding agreement among the Company, the Selling Shareholder
and the Underwriters.
perfumania.com, inc.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Perfumania, Inc.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Accepted in Newport Beach, California, as of the date first above written, on
behalf of ourselves and each of the several Underwriters named in Schedule I
hereto.
CRUTTENDEN ROTH INCORPORATED
As Representative for the Several Underwriters
By:
-----------------------------
Name:
--------------------------
Title:
-------------------------
28
<PAGE> 29
SCHEDULE I
NAME NUMBER OF SHARES
---- ----------------
Cruttenden Roth Incorporated
Pennsylvania Merchant Group
H.C. Wainwright & Co., Inc.
--------------------------
Total 3,500,000
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SCHEDULE II
Pursuant to Section 6(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
1. They are independent certified public accountants with respect to
the Company within the meaning of the Act and the applicable Rules and
Regulations thereunder.
2. In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, prospective financial
statements and/or pro forma financial information) examined by them and included
in the Prospectus or the Registration Statement comply as to form with the
applicable accounting requirements of the Act and the Rules and Regulations with
respect to registration statements on Form S-1; and, if applicable, they have
made a review in accordance with standards established by the American Institute
of Certified Public Accountants of the interim financial statements, selected
financial data, pro forma financial information, prospective financial
statements and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as indicated
in their reports thereon, copies of which have been furnished to the
Representatives of the Underwriters (the "Representatives").
3. The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
fiscal years included in the Prospectus agrees with the corresponding amounts
(after restatements where applicable) in the audited consolidated financial
statements for such years which were included in the Prospectus.
4. They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the basis of
limited procedures specified in such letter nothing came to their attention as a
result of the foregoing procedures that cause them to believe that this
information does not conform in all material respects with the disclosure
requirements of Items 301, 302, 402 and 503(d), respectively, of Regulation S-K
5. On the basis of a reading of the unaudited financial statements, pro
forma financial statements, if any, and other information contained in the
Prospectus, a reading of the latest available interim financial statements of
the Company, inspection of the minute books of the Company since the date of the
latest audited financial statements included in the Prospectus, inquiries of
officials of the Company responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(a) any of the above unaudited financial statements or other
information contained in the Prospectus do not comply as to form with the
accounting requirements of the Rules and Regulations or that such unaudited
financial statements are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
the audited financial statements;
(b) as of a specified date not more than two days prior to the date
of such letter, there have been any changes in the capital stock or any increase
in the indebtedness of the
30
<PAGE> 31
Company, or any increases or decreases in net current assets or net assets or
any changes in any other items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described in such
letter; or
(c) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in clause (B) above
there were any decreases in revenues or the total or per share amounts of net
income, or any other changes in any items specified by the Representatives, in
each case as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the Representatives,
except in each case for changes or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
In addition to the audit referred to in their report(s) included in the
Prospectus and the limited procedures, inspection of minute books, inquiries and
other procedures referred to in paragraph 5 above, they have carried out certain
specified procedures, not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives, which are derived from
the general accounting records of the Company for the periods covered by their
reports and any interim or other periods since the latest period covered by
their reports, which appear in the Prospectus, or in Part II of, or in exhibits
and schedules to, the Registration Statement specified by the Representatives,
and have compared certain of such amounts, percentages and financial information
with the accounting records of the Company and have found them to be in
agreement.
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EXHIBIT A
Form of Lock-up Agreement
_____________________, 1999
Cruttenden Roth Incorporated
Pennsylvania Merchant Group
H.C. Wainwright & Co. Inc.
As Representatives of the Several Underwriters
Re: Lock-up Agreement Affecting Stock of Perfumania.com, Inc.
Ladies and Gentlemen:
The undersigned shareholder (the "Shareholder") of Perfumania.com,
Inc., a Florida corporation (the "Company"), wishes to facilitate the initial
public offering (the "Offering") of shares of common stock of the Company. The
Shareholder recognizes that the Offering will be of benefit to the Company and
the Shareholder.
To induce you, as the representatives (the "Representatives") of the
underwriters (the "Underwriters") of the Offering to enter into an underwriting
agreement with the Company (the "Underwriting Agreement") relating to the
Offering and to you and the Underwriters to complete the purchase of the shares
of common stock pursuant to such Underwriting Agreement, the Shareholder hereby
agrees with the Underwriters as follows:
1. During the term of this Agreement, as specified in paragraph 3
hereof, the Shareholder will not, directly or indirectly, offer, sell, contract
to sell, pledge, hypothecate or otherwise dispose of any shares of the Company's
common stock or any securities convertible into or exercisable or exchangeable
for, or any rights to purchase or acquire, shares of the Company's common stock
or the beneficial ownership thereof, whether now owned or hereinafter acquired
(collectively the "Subject Securities"), without your prior written consent as
Representatives of the Underwriters.
2. Any purported transfer of any Subject Securities in violation of
paragraph 1 hereof (an "Unauthorized Transfer") will be null and void. The
Company will not be required to register, recognize or give effect to any
Unauthorized Transfer and the purported transferee of any Subject Securities or
any interest therein pursuant to an Unauthorized Transfer will not acquire any
rights in such Subject Securities during the term of this Agreement as specified
in paragraph 3 hereof. The Company may issue stop transfer or similar
instructions to the transfer agent for its common stock covering all Subject
Shares, but shall not be required to do so.
3. This Agreement shall become effective upon the execution hereof by
the Shareholder. This Agreement shall terminate without any prior notice upon
the earlier of (i) the date which is two hundred and seventy (270) days after
the effective date of the Registration Statement filed by the Company with the
Securities and Exchange Commission (SEC Registration No. 333-80059) in
connection with the Offering, or (ii) the termination or
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<PAGE> 33
cancellation of the Underwriting Agreement for any reason prior to the sale of
the common stock to the Underwriters. Notwithstanding the foregoing, this
Agreement shall terminate immediately upon the abandonment of the Registration
Statement.
4. This Agreement shall be construed and enforced in accordance with
the laws of the State of Florida. The Underwriters shall be entitled to all
legal and equitable remedies in enforcing this Agreement, including without
limitation an injunction against any sale of shares of the common stock in
contravention of this Agreement. If at any time subsequent to the date of this
Agreement any provision hereof shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
force and effect, but the illegality or unenforceability of such provision shall
have no effect upon, and shall not impair the legality or enforceability of, any
other provision of this Agreement.
5. This Agreement may be executed in one or more counterparts, each of
which shall be an original, but all of which taken together shall constitute one
and the same instrument.
6. All of the terms and provisions of this Agreement shall inure to the
benefit of and be binding upon the respective heirs, successors, personal
representatives and permitted assigns of the parties hereto.
If the foregoing correctly sets forth the agreement between the
undersigned and the Underwriters, please indicate your acceptance in the space
provided below for that purpose.
Very truly yours,
------------------------------------
(Signature)
Print Name:
-------------------------
Date:
-------------------------------
Agreed to and accepted as of the date above written:
Cruttenden Roth Incorporated,
For itself and as Representative of the several Underwriters
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Pennsylvania Merchant Group,
For itself and as Representative of the several Underwriters
By:
---------------------------
Name:
-------------------------
Title:
------------------------
33
<PAGE> 1
EXHIBIT 5.1
September 29, 1999
perfumania.com, inc.
11701 NW 101st Road
Miami, FL 33178
Re: perfumania.com, inc.'s Registration Statement on Form S-1
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-1, Amendment
No. 1 to the Registration Statement on Form S-1, Amendment No. 2 to the
Registration Statement on Form S-1, and Post-Effective Amendment No. 1 to the
Registration Statement on Form S-1 (collectively, the "Registration Statement"),
filed by perfumania.com, inc., a Florida corporation (the "Company"), with the
Securities and Exchange Commission on June 4, 1999, July 28, 1999, September 3,
1999, and September 29, 1999 respectively, pursuant to the Securities Act of
1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder (the "Rules"), you have requested us to furnish you our opinion as to
the legality of the 3,500,000 shares of Common Stock, par value $0.01 per share,
of the Company (the "Shares") being registered thereunder.
For the purpose of rendering our opinion, we have reviewed: (a) the
Registration Statement and the exhibits thereto; (b) the Articles of
Incorporation, as amended to date, and the Bylaws of the Company, as amended to
date; and (c) certain records of the Company's corporate proceedings as
reflected in its minute books. In our examination, we have assumed the
genuineness of signatures, the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents submitted to us
as copies thereof. In addition, we have made such other examinations of law and
fact as we considered necessary in order to form a basis for the opinion
hereinafter expressed.
Based on the foregoing, we are of the opinion that the Shares have been
duly and validly authorized and are validly issued, fully paid and
non-assessable. We hereby consent to the use of this opinion as an exhibit to
the Registration Statement, and further consent to the use of our name wherever
appearing in the Registration Statement, including any Prospectus constituting a
part thereof, and any amendments thereto. In giving this consent we do not
thereby admit that we come within the category of persons whose consent is
required by the Act or the Rules.
Very truly yours,
/s/ GREENBERG TRAURIG
GREENBERG TRAURIG
