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Exhibit 1.1
2,000,000 Shares of Common Stock
INFINITE TECHNOLOGY GROUP LTD.
UNDERWRITING AGREEMENT
______ _____, 2000
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Auerbach, Pollak & Richardson, Inc. _____ ___, 2000
450 Park Avenue
New York, New York 10022
Ladies and Gentlemen:
Infinite Technology Group Ltd., a New York corporation (the "Company"),
hereby agrees with Auerbach, Pollak & Richardson, Inc. ("APR") and [insert]
("[insert]") and each of the other underwriters named in Schedule A to this
Agreement (the "Underwriters") for whom APR and [insert] are acting as
representatives (hereinafter "you" or the "Representatives") with respect to the
sale by the Company and the purchase by the Underwriters of an aggregate of
2,000,000 shares (the "Shares") of the Company's common stock, par value $.01
per share (the "Common Stock"). Such 2,00,000 Shares are referred to hereinafter
as the "Firm Shares." Upon the request of the Underwriters (or, at your option,
the representatives), as provided in Section 2(b) of this Agreement, the Company
shall also issue and sell up to an additional aggregate of 300,000 shares of
Common Stock for the purpose of covering over-allotments, if any. Such shares of
Common Stock are hereinafter referred to as the "Option Shares." The Company
also proposes to issue and sell to the Representatives for their own account,
and not as representatives of the several Underwriters, warrants (the
"Representatives' Warrants") pursuant to the Representatives' Warrant Agreement
(the "Representatives' Warrant Agreement") for the purchase of an additional
140,000 shares of Common Stock. The shares of Common Stock issuable upon
exercise of the Representatives' Warrants are hereinafter referred to as the
"Representatives' Shares." The Firm Shares, Option Shares, the Representatives'
Warrants and the Representatives' Shares are more fully described in the
Registration Statement and the Prospectus referred to below.
You have advised the Company that you and the other Underwriters desire to
purchase, severally, the Firm Shares and the Option Shares, and that you have
been authorized by the Underwriters to execute this Agreement on their behalf.
The Company confirms the agreements made by it with respect to the purchase of
the Firm Shares and the Option Shares by the several Underwriters on whose
behalf you are signing this Agreement, as follows:
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Underwriter as of the date hereof, and as
of the Closing Date and the Option Closing Date, if any, as follows:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an amendment or
amendments thereto, on Form S-1 (No. 333-88737), including any related
preliminary prospectus ("Preliminary Prospectus"), for the registration of the
Firm Shares, the Option Shares, the Representatives' Warrants and the
Representatives' Shares (collectively, hereinafter referred to as the
"Registered Securities") under the Securities Act of 1933, as amended (the
"Act"), which
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registration statement and amendment or amendments have been prepared by
the Company in conformity with the requirements of the Act, and the Regulations
(as defined below) of the Commission under the Act. The Company will not file
any other amendment thereto to which the Representatives, acting on behalf of
the several Underwriters, shall have objected in writing after having been
furnished with a copy thereof. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof
or incorporated therein and all information deemed to be a part thereof as of
such time pursuant to paragraph (b) of Rule 430(A) of the Regulations), is
hereinafter called the "Registration Statement," and the form of prospectus in
the form first filed with the Commission pursuant to Rule 424(b) of the
Regulations, is hereinafter called the "Prospectus." For purposes hereof,
"Regulations" mean the rules and regulations adopted by the Commission under
either the Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority has issued
any order preventing or suspending the use of any Preliminary Prospectus, the
Registration Statement or the Prospectus and no proceedings for a stop order
suspending the effectiveness of the Registration Statement have been instituted,
or, to the Company's knowledge, are threatened. Each of the Preliminary
Prospectus, the Registration Statement and the Prospectus at the time of filing
thereof conformed in all material respects with the requirements of the Act and
Regulations, and none of the Preliminary Prospectus, the Registration Statement
or the Prospectus at the time of filing thereof contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein and necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that this
representation and warranty does not apply to statements made in reliance upon
and in conformity with written information furnished to the Company with respect
to the Underwriters by or on behalf of the Underwriters expressly for use in
such Preliminary Prospectus, Registration Statement or Prospectus. It is
understood that the statements set forth in the Prospectus under the heading
"Underwriting", the stabilization legend in the Prospectus and the identity of
counsel to the Underwriters under the heading "Legal Matters" constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in the Registration Statement and Prospectus, as the
case may be.
(c) When the Registration Statement becomes effective and at all times
subsequent thereto up to the Closing Date (as defined in Section 2(c) hereof)
and each Option Closing Date (as defined in Section 2(b) hereof), if any, and
during such longer period as the Prospectus may be required to be delivered in
connection with sales by the Underwriters or a dealer, the Registration
Statement and the Prospectus, as amended or supplemented as required, will
contain all statements which are required to be stated therein in accordance
with the Act and the Regulations, and will conform in all material respects to
the requirements of the Act and the Regulations; neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, will
contain any untrue statement of a material fact or omit to state any
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material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, provided, however, that this representation and warranty does
not apply to statements made or statements omitted in reliance upon and in
conformity with information furnished to the Company in writing by or on behalf
of the Underwriters expressly for use in the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto. At or prior to the
Closing Date, (i) the Company shall have taken all steps necessary to terminate
its status as a "subchapter S" corporation under the Internal Revenue Code of
1986, as amended (the "Code") and (ii) Mark Dresner ("Dresner") and James
McGowan ("McGowan" and, collectively with Dresner, the "Existing Stockholders")
shall have entered into a tax agreement (the "Tax Agreement") with the Company
in a form reasonably acceptable to the Underwriter.
(d) The Company and each of its subsidiaries, if any, have been duly
organized and are validly existing as corporations in good standing under the
laws of the respective states of their incorporation. The Company does not own
or control, directly or indirectly, any corporation, partnership, trust, joint
venture or other business entity other than the subsidiaries listed in Exhibit
21 of the Registration Statement, if any. Each of the Company and its
subsidiaries is duly qualified and licensed and in good standing as a foreign
corporation (or other form of entity) in each jurisdiction in which its
ownership or leasing of any properties or the character of its operations
require such qualification or licensing. Each of the Company and its
subsidiaries has all requisite power and authority (corporate and other), and
has obtained any and all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or regulatory
officials and bodies (including, without limitation, those having jurisdiction
over environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the Company and each of its
subsidiaries have been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all federal, state, local and foreign laws, rules and regulations,
except where a failure to comply would not, singly or in the aggregate,
materially and adversely affect the condition, financial or otherwise, or the
business affairs, properties or results of operations of the Company and its
subsidiaries, taken as a whole; and neither the Company nor any of its
subsidiaries have received any notice of proceedings relating to the revocation
or modification of any such authorization, approval, order, license,
certificate, franchise, or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the business affairs,
operations, properties, or results of operations of the Company and its
subsidiaries, taken as a whole. The disclosures in the Registration Statement
concerning the effects of federal, state, local, and foreign laws, rules and
regulations on the Company's business as currently conducted and as contemplated
are correct in all material respects and do not omit to state a material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which they were made.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under the headings
"Capitalization" and "Description of Capital
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Stock" and will have the adjusted capitalization set forth therein on the
Closing Date and the Option Closing Date, if any, based upon the assumptions set
forth therein, and the Company is not a party to or bound by any instrument,
agreement or other arrangement providing for it to issue any capital stock,
rights, warrants, options or other securities, except for this Agreement and as
described in the Prospectus. The Registered Securities and all other securities
issued or issuable by the Company conform or, when issued and paid for, will
conform, in all material respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus. All issued and
outstanding shares of capital stock of each subsidiary of the Company have been
duly authorized and validly issued and are fully paid and nonassessable. Except
as disclosed in or contemplated by the Prospectus and the financial statements
of the Company and the related notes thereto included in the Prospectus, neither
the Company nor any subsidiary has outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for 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 the Company's stock
option, stock bonus and other stock plans or arrangements and the options or
other rights granted and exercised thereunder as set forth in the Prospectus
conforms in all material respects with the requirements of the Act. All issued
and outstanding securities of the Company have been duly authorized and validly
issued and are fully paid and non-assessable, and the holders thereof have no
rights of rescission with respect thereto and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of any security of
the Company or similar contractual rights granted by the Company.
(f) The Registered Securities are not and will not be subject to any
preemptive or other similar rights of any stockholder, have been duly authorized
and, when issued, paid for and delivered in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable and will conform in all
material respects to the description thereof contained in the Prospectus; the
holders thereof will not be subject to any liability solely as such holders; all
corporate action required to be taken for the authorization, issue and sale of
the Registered Securities has been duly and validly taken; and the certificates
representing the Registered Securities will be in due and proper form. Upon the
issuance and delivery pursuant to the terms hereof of the Registered Securities
to be sold by the Company hereunder, the Underwriters will acquire good and
marketable title to such Registered Securities as are purchased by them free and
clear of any lien, charge, claim, encumbrance, pledge, security interest,
defect, or other restriction or equity of any kind whatsoever. No stockholder of
the Company has any right which has not been waived in writing to require the
Company to register the sale of any shares owned by such stockholder under the
Act in the public offering contemplated by this Agreement. No further approval
or authority of the stockholders or the Board of Directors of the Company will
be required for the issuance and sale of the Shares, the Option Shares, the
Representatives' Warrants and the Representatives' Shares to be sold by the
Company as contemplated herein.
(g) The financial statements of the Company, together with the related
notes and schedules thereto, included in the Registration Statement, each
Preliminary Prospectus and the
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Prospectus fairly present the financial position, changes in stockholders'
equity and the results of operations of the Company at the respective dates and
for the respective periods to which they apply and such financial statements
have been prepared in conformity with generally accepted accounting principles
and the Regulations, consistently applied throughout the periods involved. There
has been no material adverse change or development involving a material
prospective change in the condition, financial or otherwise, or in the business,
affairs, operations, properties, or results of operation of the Company and its
subsidiaries taken as a whole whether or not arising in the ordinary course of
business since the date of the financial statements included in the Registration
Statement and the Prospectus and the outstanding debt, the property, both
tangible and intangible, and the business of the Company and its subsidiaries
taken as a whole conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. Financial
information set forth in the Prospectus under the headings "Prospectus Summary -
Summary Consolidated Financial Data," "Capitalization," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
fairly present, on the basis stated in the Prospectus, the information set forth
therein and have been derived from or compiled on a basis consistent with that
of the audited financial statements included in the Prospectus.
(h) Each of the Company and the Existing Stockholders (i) has paid all
federal, state, local, franchise, and foreign taxes for which it is liable,
including, but not limited to, withholding taxes and amounts payable under
Chapters 21 through 24 of the Code, and has furnished all information returns it
is required to furnish pursuant to the Code, (ii) has established adequate
reserves for such taxes which are not due and payable, and (iii) does not have
any tax deficiency or claims outstanding, proposed or assessed against it.
(i) No transfer tax, stamp duty or other similar tax is payable by or on
behalf of the Underwriter in connection with (i) the issuance by the Company of
the Registered Securities, (ii) the purchase by the Underwriters of the Firm
Shares and the Option Shares from the Company and the purchase by the
Representatives of the Representatives' Warrants from the Company, (iii) the
consummation by the Company of any of its obligations under this Agreement, or
(iv) resales of the Firm Shares and the Option Shares by the Underwriters in
connection with the distribution contemplated hereby.
(j) There is no action, suit, proceeding, inquiry, arbitration, mediation,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or businesses of, the
Company which (i) questions the validity of the capital stock of the Company,
this Agreement or the Representatives' Warrant Agreement, or of any action taken
or to be taken by the Company pursuant to or in connection with this Agreement
or the Representatives' Warrant Agreement, (ii) is required to be disclosed in
the Registration Statement which is not so disclosed (and such proceedings as
are summarized in the Registration Statement are accurately summarized in all
material respects), or (iii) might materially and adversely affect the
condition,
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financial or otherwise, or the business, affairs, position, stockholders'
equity, operation, properties, or results of operations of the Company and its
subsidiaries taken as a whole.
(k) The Company has the corporate power and authority to authorize, issue,
deliver, and sell the Registered Securities and to enter into this Agreement,
the Tax Agreement and the Representatives' Warrant Agreement, and to consummate
the transactions provided for in such agreements; and this Agreement, the Tax
Agreement and the Representatives' Warrant Agreement have each been duly and
properly authorized, executed, and delivered by the Company. Each of this
Agreement, the Tax Agreement and the Representatives' Warrant Agreement
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law), and none of the Company's
issue and sale of the Registered Securities, execution, delivery or performance
of this Agreement and the Representatives' Warrant Agreement, its consummation
of the transactions contemplated herein and therein, or the conduct of its
businesses as described in the Registration Statement, the Prospectus, and any
amendments or supplements thereto, conflicts with or will conflict with or
results or will result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under, or result in
the creation or imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any kind whatsoever
upon, any property or assets (tangible or intangible) of the Company pursuant to
the terms of (i) the articles of incorporation or by-laws of the Company, as
amended and restated, (ii) any license, contract, indenture, mortgage, deed of
trust, voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the Company is a party
or by which it is or may be bound or to which its properties or assets (tangible
or intangible) is or may be subject, or any indebtedness, or (iii) any statute,
judgment, decree, order, rule or regulation applicable to the Company of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign, having
jurisdiction over the Company of any of their activities or properties.
(l) No consent, approval, authorization or order of, and no filing with,
any court, regulatory body, government agency or other body, domestic or
foreign, is required for the issuance of the Registered Securities pursuant to
the Prospectus and the Registration Statement, the performance of this
Agreement, the Tax Agreement, the Representatives' Warrant Agreement, and the
transactions contemplated hereby and thereby, including without limitation, any
waiver of any preemptive, first refusal or other rights that any entity or
person may have for the issue and/or sale of any of the Registered Securities,
except such as have been or may be obtained under the Act or may be required
under state securities or Blue Sky laws in connection with the Underwriters'
purchase and distribution of the Registered Securities to be sold by the Company
hereunder.
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(m) All executed agreements, contracts or other documents or copies of
executed agreements, contracts or other documents filed as exhibits to the
Registration Statement to which the Company is a party or by which it may be
bound or to which its assets, properties or businesses may be subject have been
duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding agreements of the Company enforceable
against the Company in accordance with their respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law). The descriptions in the
Registration Statement of such agreements, contracts and other documents are
accurate in all material respects and fairly present the information required to
be shown with respect thereto by Form S-1, and there are no contracts or other
documents which are required by the Act to be described in the Registration
Statement or filed as exhibits to the Registration Statement which are not
described or filed as required, and the exhibits which have been filed are
complete and correct copies of the documents of which they purport to be copies.
(n) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus (i) the Company has not incurred any
material liabilities or obligations, indirect, direct or contingent, or entered
into any material verbal or written agreement or other transaction which is not
in the ordinary course of business or which could result in a material reduction
in the future earnings of the Company; (ii) the Company has not sustained any
material loss or interference with its business or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance;
(iii) the Company has not paid or declared any dividends or other distributions
with respect to its capital stock, and the Company is not in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock (other than upon the sale of the
Firm Shares, the Option Shares, the Representatives' Warrants and the
Representatives' Shares hereunder and upon the exercise of options and warrants
described in the Registration Statement) of, or indebtedness material to, the
Company (other than in the ordinary course of business); (v) the Company has not
issued any securities or incurred any liability or obligation, primary or
contingent, for borrowed money; and (vi) there has not been any material adverse
change in the condition (financial or otherwise), business, properties, results
of operations, or prospects of the Company.
(o) Except as disclosed in or specifically contemplated by the Prospectus,
(i) the Company has sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals and governmental authorizations to conduct its
business as now conducted; (ii) the expiration of any trademarks, trade names,
patent rights, copyrights, licenses, approvals or governmental authorizations
would not have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company; (iii)
the Company has no knowledge of any infringement by it or its subsidiaries of
trademark, trade name rights, patent rights, copyrights, licenses, trade secret
or other similar rights of others; and (iv) there is no claim being
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made against the Company regarding trademark, trade name, patent, copyright,
license, trade secret or other infringement which could have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company.
(p) No default exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement, or any other material
agreement or instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which the Company is a party or by
which the Company may be bound or to which the property or assets (tangible or
intangible) of the Company is subject or affected.
(q) To the Company's knowledge, there are no pending investigations
involving the Company by the U.S. Department of Labor, or any other governmental
agency responsible for the enforcement of such federal, state, local, or foreign
laws and regulations. There is no unfair labor practice charge or complaint
against the Company pending before the National Labor Relations Board or any
strike, picketing, boycott, dispute, slowdown or stoppage pending or to its
knowledge threatened against or involving the Company. No representation
question exists respecting the employees of the Company. No collective
bargaining agreement, or modification thereof is currently being negotiated by
the Company. No grievance or arbitration proceeding is pending under any expired
or existing collective bargaining agreements of the Company. No labor dispute
with the employees of the Company exists or to its knowledge is imminent.
(r) Except as described in the Prospectus, the Company does not maintain,
sponsor or contribute to any program or arrangement that is an "employee pension
benefit plan," an "employee welfare benefit plan," or a "multiemployer plan" as
such terms are defined in Sections 3(2), 3(1) and 3(37), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") ("ERISA
Plan"). The Company does not maintain or contribute to a defined benefit plan,
as defined in Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code, which could subject the
Company to any tax penalty on prohibited transactions and which has not
adequately been corrected.
(s) None of the Company, nor any of its employees, directors, stockholders,
or affiliates (within the meaning of the Regulations) of any of the foregoing
has taken or will take directly or indirectly, any action designed to or which
has constituted or which might be expected to cause or result in stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Registered Securities.
(t) The Company has good and marketable title to, or valid and enforceable
leasehold estates in, all items of real and personal property stated in the
Prospectus to be owned or leased by it, free and clear of all liens, charges,
claims, encumbrances, pledges, security
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interests, or other restrictions or equities of any kind whatsoever other
than those referred to in the Prospectus and liens for taxes not yet due and
payable.
(u) Ernst & Young LLP ("Ernst & Young"), whose report is filed with the
Commission as a part of the Registration Statement, are independent certified
public accountants as required by the Act and the Regulations.
(v) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which all officers and directors of the
Company and owners of five (5%) percent or more of the Common Stock as of the
date of this Agreement have agreed not to, directly or indirectly, offer, offer
to sell, sell, grant any option for the sale of, transfer, assign, pledge,
hypothecate or otherwise encumber or dispose of any shares of Common Stock or
securities convertible into Common Stock, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
(either pursuant to Rule 144 of the Regulations or otherwise) or dispose of any
interest therein for a period from the date of the Prospectus until six (6)
months following the date that the Registration Statement becomes effective,
without the prior written consent of the Representatives (the "Lock-up
Agreements"). The Company will cause the Transfer Agent (as defined herein) to
place "stop transfer" orders on the Company's stock ledgers in order to effect
the Lock-up Agreements.
(w) There are no claims, payments, arrangements or understandings, whether
oral or written, for services in the nature of a finder's or origination fee
with respect to the sale of the Registered Securities hereunder or any other
arrangements, agreements, understandings, payments or issuance with respect to
the Company or any of its officers, directors, stockholders, employees,
affiliates or, to the Company's knowledge, stockholders or their affiliates that
may affect the Underwriters' compensation as determined by the Commission and
the National Association of Securities Dealers, Inc. (the "NASD").
(x) The Registered Securities have been approved for quotation on the
Nasdaq National Market System ("Nasdaq"), subject to official notice of
issuance.
(y) Neither the Company nor any of its officers, employees, agents or any
other person acting on behalf of the Company has, directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the business) to any customer, supplier, employee or
agent of a customer or supplier, or official or employee of any governmental
agency (domestic or foreign) or instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or foreign) or
other person who was, is, or may be in a position to help or hinder the business
of the Company (or assist the Company in connection with any actual or proposed
transaction) which might subject the Company or any other such person to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign). The Company's internal accounting controls are
sufficient to cause the Company to comply with the Foreign Corrupt Practices Act
of 1977, as amended.
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(z) Except as set forth in the Prospectus, no officer, director or
stockholder of the Company, or any "affiliate" or "associate" (as these terms
are defined in Rule 405 promulgated under the Regulations) of any of the
foregoing persons or entities has or has had, either directly or indirectly, (i)
an interest in any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by
the Company, or (B) purchases from or sells or furnishes to the Company any
goods or services, or (ii) a beneficiary interest in any contract or agreement
to which the Company is a party or by which it may be bound or affected. Except
as set forth in the Prospectus there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company, and any officer,
director, principal shareholder (as such term is used in the Prospectus) of the
Company, or any affiliate or associate of any of the foregoing persons or
entities.
(aa) The Company is not, and does not intend to conduct its business in a
manner in which it would become, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(ab) Any certificate signed by any officer of the Company and delivered to
the Representatives or to the Underwriters' Counsel (as defined in Section 4(d)
herein) shall be deemed a representation and warranty by the Company to the
Underwriter as to the matters covered thereby.
(ac) The minute books of the Company have been made available to the
Representatives and contain a complete summary of all meetings and actions of
the directors and stockholders of the Company, since the time of its
incorporation, and reflect all transactions referred to in such minutes
accurately in all material respects.
(ad) The Company has not distributed and will not distribute prior to the
Closing Date any offering material in connection with the offering and sale of
the Shares in this offering other than the Prospectus, the Registration
Statement and the other materials permitted by the Act. Except as described in
the Prospectus, no holders of any securities of the Company or of any options,
warrants or other convertible or exchangeable securities of the Company have the
right to include any securities issued by the Company as part of the
Registration Statement or to require the Company to file a registration
statement under the Act and no person or entity holds any anti-dilution rights
with respect to any securities of the Company.
(ae) Each of the Company and its subsidiaries maintains insurance by
insurers of recognized financial responsibility of the types and in the amounts
as are prudent, customary and adequate for the business in which it is engaged,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect. The Company has no reason to
believe that it will not be able to renew existing insurance coverage with
respect to the Company as and when such
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coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business, in either case, at a cost that would not
have a material adverse effect on the financial condition, operations, business,
assets or properties of the Company. The Company has not failed to file any
claims, has no material disputes with its insurance company regarding any claims
submitted under its insurance policies, and has complied with all material
provisions contained in its insurance policies.
(af) The Company has applied for, and will obtain, key man life insurance
in the amount of at least $1,000,000 for each of Mark Dresner and James McGowan,
which insurance will be (i) payable to the Company and (ii) in force for a
period equal to the longer of (x) three (3) years from the date of this
Agreement or (y) the term of any employment agreement between each of Messrs.
Dresner and McGowan and the Company.
(ag) In addition to the foregoing, the Existing Stockholders severally and
not jointly represent and warrant to, and agree with, the Underwriters that:
(i) Each of the Existing Stockholders has full right, power and
authority to enter into this Agreement and the Tax Agreements. The execution,
delivery and performance of this Agreement and the Tax Agreement by each of the
Existing Stockholders will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default or cause an acceleration of any
obligation under, any license, indenture, lease, mortgage, deed of trust, bank
loan, credit agreement, or other material agreement or instrument to which an
Existing Stockholder is a party or by which an Existing Stockholder is bound, or
to which any of the property or assets of an Existing Stockholder is subject, or
any order of any court or governmental agency or authority entered into in any
proceeding to which an Existing Stockholder was or is a party or by which an
Existing Stockholder is bound, or violate or conflict with any applicable
foreign, federal, state or local law, rule, administrative regulation or
ordinance or administrative or court decree applicable to an Existing
Stockholder or an Existing Stockholder's property;
(ii) None of the Existing Stockholders nor any trustee or beneficiary
of the Existing Stockholders is affiliated as a director, officer, partner,
stockholder, or otherwise with any securities broker or dealer which is a member
of the NASD or any other organization that owns or controls any member of the
NASD; and
(iii) No statement, representation, warranty or covenant made by the
Existing Stockholders in this Agreement or made in any certificate or document
required by this Agreement to be delivered to the Representatives was or will
be, when made, inaccurate, untrue or incorrect.
For purposes of this Agreement, references to "knowledge" of the Company,
or phrases of similar import, shall be deemed to mean the actual knowledge of
the Company's Chief Executive Officer, Chief Operating Officer or Chief
Financial Officer.
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2. Purchase, Sale and Delivery of the Registered Securities.
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(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters,and each such Underwriter
agrees, severally and not jointly, to buy from the Company at $_______ per
Share, at the place and time hereinafter specified, the number of Firm Shares
set forth opposite the names of the Underwriters in Schedule A attached hereto,
plus any additional Shares which such Underwriters may become obligated to
purchase pursuant to the provisions of Section 8A hereof, up to an aggregate of
2,000,000 Shares.
(b) In addition, on the basis of the representations, warranties, covenants
and agreements, herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants an option to the several Underwriters (or,
at your option, to the Representatives) to purchase all or any part of the
Option Shares at a price equal to $________ per share. The number of Option
Shares to be purchased by each Underwriter, if any, shall bear the same
percentage to the total number of Option Shares being purchased by the several
Underwriters pursuant to this subsection (b) as the number of Shares such
Underwriter is purchasing bears to the total number of the Firm Shares being
purchased pursuant to subsection (a) of this Section 2, as adjusted, in each
case by the Representatives in such manner as the Representatives may deem
appropriate. The option granted hereby will expire 30 days after (i) the date
the Registration Statement becomes effective, if the Company has elected not to
rely on Rule 430A under the Regulations, or (ii) the date of this Agreement if
the Company has elected to rely upon Rule 430A under the Regulations, and may be
exercised in whole or in part from time to time (but not on more than two (2)
occasions) only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Shares upon notice by you
to the Company setting forth the number of Option Shares as to which the option
is being exercised and the time and date of payment and delivery for any such
Option Shares. Any such time and date of delivery (an "Option Closing Date")
shall be determined by you, but shall not be later than three full business days
after the exercise of said option, nor in any event prior to the Closing Date,
as hereinafter defined, unless otherwise agreed upon by the Representatives and
the Company. Nothing herein contained shall obligate the Underwriters to
exercise the over-allotment option described above. No Option Shares shall be
delivered unless the Shares shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates for,
the Shares shall be made at the offices of APR, at 450 Park Avenue, New York,
New York 10022, or at such other place as shall be agreed upon by the
Representatives and the Company. Such delivery and payment shall be made at 9:00
a.m. (New York time) on ____ ___, 2000, or at such other time and date as shall
be agreed upon by the Representatives and the Company, but no more than six (6)
business days after the date hereof (such time and date of payment and delivery
being herein called the "Closing Date"). In addition, in the event that any or
all of the Option Shares are purchased by the Underwriters, payment of the
purchase price for, and delivery of certificates
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for, such Option Shares shall be made at the above mentioned office of APR
or at such other place as shall be agreed upon by the Representatives and the
Company on each Option Closing Date as specified in the notice from the
Representatives to the Company. Delivery of the certificates for the Shares and
the Option Shares, if any, shall be made against payment by the Underwrites, of
the purchase price for the Shares and the Option Shares, if any, to the order of
the Company. Certificates for the Shares and the Option Shares, if any, shall be
in definitive, fully registered form, shall bear no restrictive legends and
shall be in such denominations and registered in such names as you may request
in writing at least three (3) business days prior to Closing Date or the
relevant Option Closing Date, as the case may be. The certificates for the
Shares and the Option Shares, if any, shall be made available to you at such
office or such other place as you may designate for inspection, checking and
packaging no later than 9:30 a.m. on the last business day prior to Closing Date
or the relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representatives' Warrants at a purchase price of $0.001 per warrant, which
warrants shall entitle the holders thereof to purchase an aggregate of 140,000
shares of Common Stock. The Representatives' Warrants shall expire five (5)
years after the effective date of the Registration Statement and shall be
exercisable for a period of four (4) years commencing one (1) year from the
effective date of the Registration Statement at a price equaling 160% of the
initial public offering price of the Shares. The Representatives' Warrant
Agreement and form of Warrant Certificate shall be substantially in the form
filed as Exhibit 1.2 to the Registration Statement. Payment for the
Representatives' Warrants shall be made on the Closing Date.
(e) It is understood that the Representatives, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make any and all payments required pursuant to this Section 2 on behalf of any
Underwriters whose check or checks shall not have been received by the
Representatives at the time of delivery of the Shares to be purchased by such
Underwriter or Underwriters. Any such payment by you shall not relieve any such
Underwriter or underwriters of any of its or their obligations hereunder. It is
also understood that the Representatives individually rather than all of the
Underwriters may (but shall not be obligated to) purchase the Option Shares
referred to in subsection (b) of this Section 2, but only to cover
overallotments.
It is understood that the several Underwriters propose to offer the Shares
to be purchased hereunder to the public upon the terms and conditions set forth
in the Registration Statement, after the Registration Statement becomes
effective.
3. Public Offering of the Shares. As soon after the Registration Statement
becomes effective as the Representatives deem advisable, the Underwriters shall
make a public offering of the Shares (other than to residents of or in any
jurisdiction in which qualification of the Shares is required and has not become
effective) at the price and upon the other terms set forth in the Prospectus.
You may from time to time increase or decrease the public offering price after
distribution of the Shares has been completed to such extent as you, in your
sole discretion, deem
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advisable. The Representatives may enter into one or more agreements as you, in
your sole discretion, deem advisable with one or more broker-dealers who shall
act as dealers in connection with such public offering.
4. Covenants of the Company. The Company covenants and agrees with the
several Underwriters as follows:
(a) The Company shall use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
practicable and will not at any time, whether before or after the effective date
of the Registration Statement, file any amendment to the Registration Statement
or supplement to the Prospectus or file any document under the Act or Exchange
Act before termination of the offering of the Shares by the Underwriters of
which you shall not previously have been advised and furnished with a copy, or
to which you shall have objected or which is not in compliance with the Act, the
Exchange Act or the Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof,
the Company will advise you and confirm the notice in writing, (i) when the
Registration Statement, as amended, becomes effective, if the provisions of Rule
430A promulgated under the Act will be relied upon, when the Prospectus has been
filed in accordance with said Rule 430A and when any post-effective amendment to
the Registration Statement becomes effective, (ii) of the issuance by the
Commission of any stop order or of the initiation, or the threatening, of any
proceeding, suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of the Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, or the institution of
proceedings for that purpose, (iii) of the issuance by the Commission or by any
state securities commission of any proceedings for the suspension of the
qualification of any of the Registered Securities for offering or sale in any
jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the receipt of any comments from the Commission, and (v)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional information.
If the Commission or any state securities commission authority shall enter a
stop order or suspend such qualification at any time, the Company will use its
best efforts to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to you) in accordance with the requirements of the Act.
(d) The Company will give you notice of its intention to file or
prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Registered Securities which
differs from thecorresponding prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Regulations),
and will furnish the Underwriters with
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<PAGE>
copies of any such amendment or supplement a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file any such
amendment or supplement to which the Underwriter or Coleman, Rhine & Goodwin LLP
("Underwriters' Counsel") shall reasonably object.
(e) The Company shall endeavor in good faith, in cooperation with the
Underwriters, at or prior to the time the Registration Statement becomes
effective, to qualify the Registered Securities for offering and sale under the
securities laws of such jurisdictions as you may reasonably designate to permit
the continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such documents
and furnish such information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a foreign corporation
or become subject to service of process in any such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless you agree that such action is not at the time necessary or advisable, use
all reasonable efforts to file and make such statements or reports at such times
as are or may reasonably be required by the laws of such jurisdiction to
continue such qualification.
(f) During the time when a prospectus is required to be delivered
under the Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act, as now and hereafter amended, and by
the Regulations, as from time to time in force, so far as necessary to permit
the continuance of sales of or dealings in the Registered Securities in
accordance with the provisions hereof and the Prospectus, or any amendments or
supplements thereto. If at any time when a prospectus relating to the Registered
Securities is required to be delivered under the Act, any event shall have
occurred as a result of which, in the opinion of counsel for the Company or
Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to amend or supplement the Prospectus to comply with
the Act, the Company will notify you promptly and prepare and file with the
Commission an appropriate amendment or supplement in accordance with Section 10
of the Act, each such amendment or supplement to be satisfactory to
Underwriters' Counsel, and the Company will furnish to the Underwriters copies
of such amendment or supplement as soon as available and in such quantities as
the Underwriter may request.
(g) As soon as practicable, but in any event not later than 45 days
after the end of the 12-month period beginning on the day after the end of the
fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its security holders, in the manner specified in Rule
158(b) of the Regulations, and to you, an earnings statement which will be in
the detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the
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Regulations, which statement need not be audited unless required by the Act,
covering a period of at least 12 consecutive months after the effective
date of the Registration Statement.
(h) During a period of five (5) years after the date hereof if
required by law or the applicable rules of the Commission, any securities
exchange or the NASD, the Company will furnish to its stockholders, as soon as
practicable after the end of each respective period, annual reports (including
financial statements audited by independent public accountants) and unaudited
quarterly reports of operations for each of the first three quarters of the
fiscal year, and will furnish to the Representatives:
(i) concurrently, if required (when available if not), with
furnishing such reports to its stockholders, statements of operations of the
Company for each of the first three quarters in the form furnished to the
Company's stockholders;
(ii) concurrently with furnishing to its stockholders, an annual
report;
(iii) as soon as they are available, copies of all other reports
(financial or other) mailed to the Company's stockholders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, any securities
exchange or the NASD;
(v) every material press release in respect of the Company or its
affairs which was released or prepared by the Company; and
(vi) any additional information of a public nature concerning the
Company or its business that you may reasonably request. During such five-year
period, if the Company shall have active subsidiaries, the foregoing financial
statements shall be on a consolidated basis to the extent that the accounts of
the Company and its subsidiaries are consolidated, and shall be accompanied by
similar financial statements for any significant subsidiary that is not so
consolidated.
(i) The Company will maintain a transfer agent (the "Transfer Agent")
and, if necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for the Common
Stock and the Representatives' Warrants.
(j) The Company will furnish to you or on your order, without charge,
at such place as you may designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or post-effective amendments
thereto (two of which copies will be signed and will include all financial
statements and exhibits), each Preliminary Prospectus, the Prospectus, and all
amendments and supplements thereto, including any prospectus prepared after the
effective date of the Registration Statement, in each case as soon as available
and in such quantities as you may reasonably request.
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(k) On or before the effective date of the Registration Statement, the
Company shall provide you with true copies of duly executed, legally binding and
enforceable Lock-up Agreements. On or before the Closing Date, the Company shall
deliver instructions to the Transfer Agent authorizing it to place appropriate
stop transfer orders on the Company's ledgers.
(l) The Company shall use its best efforts to cause its officers,
directors, stockholders or affiliates (within the meaning of the Regulations)
not to take, directly or indirectly, any action designed to, or which might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Registered Securities substantially in the manner, and subject to the
conditions, set forth under "Use of Proceeds" in the Prospectus.
(n) The Company shall timely file all such reports, forms or other
documents as may be required from time to time, under the Act, the Exchange Act,
and the Regulations, and all such reports, forms and documents filed will comply
as to form and substance with the applicable requirements under the Act, the
Exchange Act, and the Regulations.
(o) The Company shall cause the Registered Securities to be quoted on
Nasdaq, and for a period of five (5) years from the date hereof shall use its
best efforts to maintain the quotation of the Registered Securities to the
extent outstanding.
(p) For a period of two (2) year from the Closing Date, the Company
shall furnish to you, at the Company's sole expense, upon your written, daily
consolidated transfer sheets relating to the Common Stock, up to four (4) times
during such year.
(q) For a period of five (5) years after the effective date of the
Registration Statement the Company shall, at the Company's sole expense, take
all necessary and appropriate actions to further qualify the Company's
securities in all jurisdictions of the United States in order to permit
secondary sales of such securities pursuant to the Blue-Sky laws of those
jurisdictions which do not require the Company to qualify as a foreign
corporation or to file a general consent to service of process.
(r) The Company (i) prior to the effective date of the Registration
Statement, has filed a Form 8-A with the Commission providing for the
registration of the Common Stock under the Exchange Act and (ii) as soon as
practicable, will use its best efforts to take all necessary and appropriate
actions to be included in Standard and Poor's Corporation Descriptions and to
continue such inclusion for a period of not less than five (5) years.
(s) The Company agrees that for a period of six (6) months following
the effective date of the Registration Statement it will not, without your prior
written consent, offer, issue, sell, contract to sell, grant any option for the
sale of or otherwise dispose of any Common
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Stock, or securities convertible into Common Stock, except for the issuance of
the Option Shares, the Representatives' Warrants and shares of Common Stock
issued upon the exercise of currently outstanding warrants or options issued
under any stock option plan in effect on the Closing Date, shares of Common
Stock automatically granted pursuant to any stock option plan in effect on the
Closing Date, or shares of Common Stock issued pursuant to any employee stock
purchase plan in effect on the Closing Date.
(t) Until the completion of the distribution of the Registered
Securities, the Company shall not without the prior written consent of the
Representatives or Underwriters' Counsel, issue, directly or indirectly any
press release or other communication or hold any press conference with respect
to the Company or its activities or the offering contemplated hereby, other than
trade releases issued in the Company's business consistent with past practices
with respect to the Company's operations.
(u) For a period equal to the lesser of (i) five (5) years from the
date hereof, and (ii) the sale to the public of the Representatives' Shares, the
Company will not take any action or actions which may prevent or disqualify the
Company's use of Form S-1 (or other appropriate form) for the registration under
the Act of the Representatives' Shares.
(v) The Company agrees that it shall use its best efforts, which shall
include, but shall not be limited to, the solicitation of proxies, to elect two
(2) additional persons reasonably acceptable to the Representatives to the
Company's Board of Directors. Each of these individuals shall be an "independent
director" within the meaning of the rules of The Nasdaq Stock Market (and, in
particular, Rule 4200(a)(14)). In addition, during such three (3) year period
the Company shall allow an individual selected by APR, individually and not as a
representative, to attend all meetings of the Company's Board of Directors. The
Company will use its best efforts to obtain Directors and Officers insurance in
an amount of not less than $5,000,000, which insurance, once obtained, it shall
use its best efforts to keep in full force and effect for a period of at least
five (5) years from the Closing.
(w) The Company agrees that within forty-five (45) days after the
Closing it shall retain a public relations firm which is acceptable to the
Representatives. The Company shall keep such public relations firm, or any
replacement, for a period of three (3) years from the Closing. Any replacement
public relations firm shall be retained only with the consent of the
Representatives.
(x) The Company shall prepare and deliver, at the Company's sole
expense, to the Representatives within the one hundred and twenty (120) day
period after the later of the effective date of the Registration Statement or
the latest Option Closing Date, as the case may be, four bound volumes
containing all correspondence with regulatory officials, agreements, documents
and all other materials in connection with the offering as requested by the
Underwriters' Counsel.
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(y) For a period of two (2) years following the effective date of the
Registration Statement, the Company shall not effect a change in its independent
outside accountants without the prior written consent of the Representatives.
(z) Until expiration of the Representatives' Warrants, the Company
will keep reserved sufficient shares of Common Stock for issuance upon exercise
of the Representatives' Warrants.
(aa) If, at the request of the Company, APR individually, and not as a
representative of the several Underwriters, introduces a potential merger or
acquisition candidates to the Company, it shall be entitled to a "Lehman
Formula" fee (any consideration other than cash to be valued at fair market
value) of the aggregate consideration involved in any transaction (including
mergers, acquisitions, joint ventures and any other business combination for the
Company introduced by APR) consummated by the Company with such candidate within
eighteen (18) months following the date of this Agreement, such finder's fee to
be paid in cash to APR at the closing of such transaction. APR shall provide the
Company with written notice of the introduction of any merger and acquisition
candidate for which it may be entitled to a fee hereunder. For purposes of this
Agreement, a Lehman Formula fee shall be equal to five (5%) percent of the first
million dollars of such consideration, or portion thereof, four (4%) percent of
the second million dollars of such consideration, or portion thereof, three (3%)
percent of the third million dollars of such consideration, or portion thereof,
two (2%) percent of the fourth million dollars of such consideration, or portion
thereof, and one (1) percent of all consideration in excess of four million
($4,000,000) dollars.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date and
each Option Closing Date (to the extent not previously paid) all expenses and
fees (other than fees of Underwriters' Counsel, except as provided in (iv)
below) incident to the performance of the obligations of the Company under this
Agreement, any Agreement Among Underwriters and the Representatives' Warrant
Agreement, including, without limitation, (i) the fees and expenses of
accountants and counsel for the Company, (ii) all costs and expenses incurred in
connection with the preparation, duplication, printing, filing, delivery and
mailing (including the payment of postage with respect thereto) of the
Registration Statement and the Prospectus and any amendments and supplements
thereto and the duplication, mailing (including the payment of postage with
respect thereto) and delivery of this Agreement, any Agreement Among
Underwriters, the Selected Dealers Agreements, the Powers of Attorney, and
related documents, including the cost of all copies thereof and of the
Preliminary Prospectuses and of the Prospectus and any amendments thereof or
supplements thereto supplied to the Underwriters and such dealers as you may
request, in quantities as hereinabove stated, (iii) the printing, engraving,
issuance and delivery of the certificates representing the Registered
Securities, (iv) the qualification of the Registered Securities under state or
foreign securities or "Blue Sky" laws and determination of the status of such
securities under legal investment laws, including the costs of
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printing and mailing the "Preliminary Blue Sky Memorandum," the "Supplemental
Blue Sky Memorandum," the "Final Blue Sky Memorandum" and "Legal Investments
Survey," if any, and reasonable disbursements and fees of counsel in connection
therewith (such legal fees not to exceed $20,000), (v) expense of tombstone
advertisements (not to exceed $15,000) and other advertising costs and expenses,
(vi) costs and expenses in connection with the "road show", (vii) fees and
expenses of the transfer agent and registrar, (viii) the fees payable to the
Commission and the NASD and (ix) the fees and expenses incurred in connection
with the listing of the Registered Securities on Nasdaq and any other market or
exchange.
(b) If the transactions contemplated hereby are not consummated by
reason of any refusal or inability on the part of the Company to perform any
agreement on its part to be performed hereunder or to fulfill any condition of
the Underwriters' obligations hereunder, or if the Company shall terminate the
Agreement for any reason other than a breach by you of your obligations
hereunder, the Company will reimburse the Representatives for all reasonable
out-of-pocket expenses (including any and all reasonable fees and disbursements
of Underwriters' Counsel) in an amount not to exceed $100,000, including the
fees and disbursements of Underwriters' Counsel, inclusive of any amounts
already paid pursuant to Section 5(c) hereof.
(c) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 5, it will pay to the
Representatives, in their individual capacities rather than in their
representative capacities, on the Closing Date by certified or bank cashier's
check or wire transfer or, at the election of the Representatives, by deduction
from the proceeds of the offering contemplated herein, a non-accountable expense
allowance equal to two percent (2%) of the gross proceeds received by the
Company from the sale of the Shares, $50,000 of which has been paid to date. In
the event the Representatives elect to exercise the over-allotment option
described in Section 2(b) hereof, the Company further agrees to pay to the
Representatives, in their individual capacities rather than in their
representative capacities, on the Option Closing Date (by certified or bank
cashier's check or, at the Representatives' election, by deduction from the
proceeds of the offering) a non-accountable expense allowance equal to two
percent (2%) of the gross proceeds received by the Company from the sale of the
Option Shares.
6. Conditions of the Underwriter's Obligations. The obligations of the
several Underwriters hereunder shall be subject to the continuing accuracy of
the representations and warranties of the Company herein as of the date hereof
and as of the Closing Date and each Option Closing Date, if any, as if they had
been made on and as of the Closing Date or each Option Closing Date, as the case
may be; the accuracy on and as of the Closing Date or Option Closing Date, if
any, of the statements of officers of the Company made pursuant to the
provisions hereof; and the performance by the Company on and as of the Closing
Date and each Option Closing Date, if any, of its covenants and obligations
hereunder and to the following further conditions:
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(a) The Registration Statement shall have become effective not later
than 5:00 p.m., New York City time, on the date prior to the date of this
Agreement or such later date and time as shall be consented to in writing by the
Representatives, and, at the Closing Date and each Option Closing Date, if any,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or shall be pending or contemplated by the Commission and any request on the
part of the Commission for additional information shall have been complied with
to the reasonable satisfaction of Underwriters' Counsel. If the Company has
elected to rely upon Rule 430A of the Regulations, the price of the Shares and
any price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Regulations within the
prescribed time period, and prior to Closing Date the Company shall have
provided evidence satisfactory to the Representatives of such timely filing, or
a post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A of
the Regulations.
(b) The Representatives shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representatives' opinion, is material, or omits to state a
fact which, in the Representatives' opinion, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, or
that the Prospectus, or any supplement thereto, contains an untrue statement of
fact which, in the Representatives' reasonable opinion, is material, or omits to
state a fact which, in the Representatives' reasonable opinion, is material and
is required to be stated therein or is necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Representatives shall have
received from Underwriters' Counsel such opinion or opinions with respect to the
organization of the Company, the validity of the Registered Securities, the
Registration Statement, the Prospectus and other related matters as the
Representatives may request and Underwriters' Counsel shall have received from
the Company such papers and information as they request to enable them to pass
upon such matters.
(d) At the Closing Date, you shall have received the favorable
opinion, together with copies of such opinion for each of the other
Underwriters, of Parker Duryee Rosoff & Haft, P.C. ("PDR&H"), counsel to the
Company, dated the Closing Date, in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) the Company (A) has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, (B) is duly qualified and licensed and in good standing as a
foreign corporation in each jurisdiction in which its ownership or leasing of
any properties or the character of its operations requires such qualification or
licensing, and (C) to the best of such counsel's knowledge, has all requisite
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corporate power and authority and has obtained any and all necessary
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over environmental or
similar matters), to own or lease its properties and conduct its business as
described in the Prospectus.
(ii) except as described in the Prospectus, and to the best of such
counsel's knowledge after reasonable investigation, the Company does not own an
interest in any corporation, limited liability company, partnership, joint
venture, trust or other business entity;
(iii) the Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and any amendment or supplement
thereto, under "Capitalization" and "Description of Capital Stock," and to the
knowledge of such counsel, the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this Agreement,
the Representatives' Warrant Agreement, and as described in the Prospectus. The
Registered Securities and all other securities issued or issuable by the Company
conform in all material respects to the statements with respect thereto
contained in the Registration Statement and the Prospectus. All issued and
outstanding securities of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; the holders thereof are not
subject to personal liability by reason of being such holders; and to such
counsel's knowledge after reasonable inquiry, none of such securities were
issued in violation of the preemptive rights of any holders of any security of
the Company. The Registered Securities to be sold by the Company hereunder and
under the Representatives' Warrant Agreement are not and will not be subject to
any preemptive or other similar rights of any stockholder, have been duly
authorized and, when issued, paid for and delivered in accordance with their
terms, will be validly issued, fully paid and non-assessable and conform in all
material respects to the description thereof contained in the Prospectus; the
holders thereof will not be subject to any liability solely as such holders; all
corporate action required to be taken for the authorization, issue and sale of
the Registered Securities has been duly and validly taken; and the certificates
representing the Registered Securities are in due and proper form. The
Representatives' Warrants constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment therefor, the
number and type of securities of the Company called for thereby (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law). Upon the issuance and
delivery pursuant to this Agreement of the Registered Securities to be sold by
the Company, the Company will convey, against payment therefor as provided
herein, to the several Underwriters good and marketable title to the Registered
Securities free and clear of all liens and other encumbrances;
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(iv) the Registration Statement is effective under the Act, and, if
applicable, filing of all pricing information has been timely made in the
appropriate form under Rule 430A, and no stop order suspending the use of the
Preliminary Prospectus, the Registration Statement or Prospectus or any part of
any thereof or suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or, to the best of such counsel's knowledge, threatened or contemplated
under the Act;
(v) each of the Preliminary Prospectus, the Registration Statement,
and the Prospectus and any amendments or supplements thereto (other than the
financial statements and other financial and statistical data included therein
as to which no opinion need be rendered) comply as to form in all material
respects with the requirements of the Act and the Regulations. Such counsel
shall state that such counsel has participated in conferences with officers and
other representatives of the Company and the Representatives and representatives
of the independent public accountants for the Company, at which conferences the
contents of the Preliminary Prospectus, the Registration Statement, the
Prospectus, and any amendments or supplements thereto were discussed, and,
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, and any
amendments or supplements thereto, on the basis of the foregoing, no facts have
come to the attention of such counsel which lead them to believe that either the
Registration Statement or any amendment thereto, at the time such Registration
Statement or amendment became effective or the Preliminary Prospectus or
Prospectus or amendment or supplement thereto as of the date of such opinion
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements and schedules and other financial and
statistical data included in the Preliminary Prospectus, the Registration
Statement or Prospectus, and any amendments or supplements thereto);
(vi) to the best of such counsel's knowledge after reasonable
investigation, (A) there are no agreements, contracts or other documents
required by the Act to be described in the Registration Statement and the
Prospectus and filed as exhibits to the Registration Statement other than those
described in the Registration Statement and the Prospectus and filed as exhibits
thereto; (B) the descriptions in the Registration Statement and the Prospectus
and any supplement or amendment thereto of contracts and other documents to
which the Company is a party or by which it is bound are accurate in all
material respects and fairly represent the information required to be shown by
Form S-1; (C) there is not pending or threatened against the Company any action,
arbitration, suit, proceeding, litigation, governmental or other proceeding
(including, without limitation, those having jurisdiction over environmental or
similar matters),domestic or foreign, pending or threatened against the company
which (x) is required to be disclosed in the Registration Statement which is not
so disclosed (and such proceedings as are summarized in the Registration
Statement are accurately summarized in all material respects), (y) questions the
validity of the capital stock of the Company or this
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Agreement, or the Representatives' Warrant Agreement, or of any action taken or
to be taken by the Company pursuant to or in connection with any of the
foregoing; and (D) there is no action, suit or proceeding pending or threatened
against the Company before any court or arbitrator or governmental body, agency
or official in which there is a reasonable possibility of an adverse decision
which may result in a material adverse change in the financial condition,
business, affairs, stockholders' equity, operations, properties, business or
results of operations of the Company, which could adversely affect the present
or prospective ability of the Company to perform its obligations under this
Agreement or the Representatives' Warrant Agreement or which in any manner draws
into question the validity or enforceability of this Agreement or the
Representatives' Warrant Agreement;
(vii) the Company has the corporate power and authority to enter into
each of this Agreement and the Representatives' Warrant Agreement and to
consummate the transactions provided for therein; and each of this Agreement,
the Tax Agreement and the Representatives' Warrant Agreement has been duly
authorized, executed and delivered by the Company. Each of this Agreement and
the Representatives' Warrant Agreement, assuming due authorization, execution
and delivery by each other party thereto, constitutes a legal, valid and binding
agreement of the Company enforceable against the company in accordance with its
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as rights to
indemnity or contribution maybe limited by applicable law), and none of the
company's execution, delivery or performance of this Agreement and the
Representatives' Warrant Agreement, its consummation of the transactions
contemplated herein or therein, or the conduct of its business as described in
the Registration Statement, the Prospectus, and any amendments or supplements
thereto conflicts with or results in any breach or violation of any of the terms
or provisions of, or constitutes a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of the Company pursuant to the terms of (A)
the articles of incorporation or by-laws of the Company, as amended, (B) any
license, contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement or any other agreement
or instrument known to such counsel to which the Company is a party or by which
it is bound, or (C) any federal, state or local statute, rule or regulation
applicable to the Company or any judgment, decree or order known to such counsel
of any arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or properties;
(viii) no consent, approval, authorization or order, and no filing
with, any court, regulatory body, government agency or other body (other than
such as may be required under federal securities or Blue Sky laws, as to which
no opinion need be rendered) is required in connection with the issuance of the
Registered Securities pursuant to the Prospectus, and the
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Registration Statement, the performance of this Agreement and the
Representatives' Warrant Agreement, and the transactions contemplated hereby and
thereby;
(ix) to the best of such counsel's knowledge after reasonable
investigation, the properties and business of the Company conform in all
material respects to the description thereof contained in the Registration
Statement and the Prospectus;
(x) to the best knowledge of such counsel, and except as disclosed in
Registration Statement and the Prospectus, the Company is not in breach of, or
in default under, any term or provision of any license, contract, indenture,
mortgage, installment sale agreement, deed of trust, lease, voting trust
agreement, stockholders' agreement, note, loan or credit agreement or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is a party or by which the
Company is bound or to which the property or assets (tangible or intangible) of
the Company is subject; and the Company is not in violation of any term or
provision of its articles of incorporation or by-laws, as amended, and to the
best of such counsel's knowledge after reasonable investigation, not in
violation of any franchise, license, permit, judgment, decree, order, statute,
rule or regulation;
(xi) the statements in the Prospectus under "Dividend Policy,"
"Description of Capital Stock," and "Shares Eligible for Future Sale" have been
reviewed by such counsel, and insofar as they refer to statements of law,
descriptions of statutes, licenses, rules or regulations or legal conclusions,
are correct in all material respects;
(xii) the Common Stock has been accepted for quotation on Nasdaq;
(xiii) to the best of such counsel's knowledge and based upon a review
of the outstanding securities and the contracts furnished to such counsel by the
Company and except as described in the Prospectus, no person, corporation,
trust, partnership, association or other entity, has the right to include and/or
register any securities of the Company in the Registration Statement, require
the Company to file any registration statement or, if filed, to include any
security in such registration statement;
(xiv) assuming due execution by the parties thereto other than the
Company, each Lock-up Agreement to be entered into by an officer, director or
stockholder of the Company is a legal, valid and binding obligation of the party
thereto, enforceable against the party and any subsequent holder of the
securities subject thereto in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law); and
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(xv) the Company is not an "investment company" or "promoter" or
"principal underwriter" for or an "affiliated person" of, an "investment
company" as such terms are defined in the 1940 Act.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws, rules and regulations of
the United States and the laws, rules and regulations of the State of New York,
to the extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance
satisfactory to Underwriters' Counsel) of other counsel acceptable to
Underwriters' Counsel, familiar with the applicable laws; (B) as to matters of
fact, to the extent they deem proper, on certificates and written statements of
responsible officers of the Company and certificates or other written statements
of officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to
Underwriters' Counsel if requested. The opinion of such counsel shall state that
knowledge shall not include the knowledge of a director or officer of the
Company who is affiliated with such firm in his or her capacity as an officer or
director of the Company. The opinion of such counsel for the Company shall
further state that the opinion of any such other counsel is in form satisfactory
to such counsel. At each Option Closing Date, if any, you shall have received
the favorable opinion, together with copies of such opinion for each of the
other Underwriters, of PDR&H, counsel to the Company, dated the Option Closing
Date, in form and substance satisfactory to Underwriters' Counsel confirming as
of such Option Closing Date the statements made by PDR&H in their opinion
delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing
Date, if any, Underwriters' Counsel shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (c)
of this Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions of the
Company or herein contained.
(f) Prior to each of the Closing Date and each Option Closing Date, if
any, (i) there shall have been no material adverse change nor development
involving a prospective change in the condition, financial or otherwise,
prospects, stockholders' equity or the business activities of the Company,
whether or not in the business, from the latest dates as of which such condition
is set forth in the Registration Statement and Prospectus; (ii) there shall have
been no transaction, not in the business, entered into by the Company, from the
latest date as of which the financial condition of the Company is set forth in
the Registration Statement and Prospectus which is adverse to the Company; (iii)
the Company shall not be in default under any provision of any instrument
relating to any outstanding indebtedness which default has not been waived; (iv)
the Company shall not have issued any securities (other than the Registered
Securities and the Selling Stockholder Securities) or declared or paid any
dividend or made any distribution in respect of its capital stock of any class
and there has not been any change in the capital stock, or
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<PAGE>
any material increase in the debt (long or short term) or liabilities or
obligations of the Company (contingent or otherwise); (v) no material amount of
the assets of the Company shall have been pledged or mortgaged, except as set
forth in the Registration Statement and Prospectus; (vi) no action, suit or
proceeding, at law or in equity, shall have been pending or threatened (or
circumstances giving rise to same) against the Company, or affecting any of its
respective properties or businesses before or by any court or federal, state or
foreign commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may materially adversely affect the business,
operations, prospects or financial condition or income of the Company, except as
set forth in the Registration Statement and Prospectus; and (vii) no stop order
shall have been issued under the Act and no proceedings therefor shall have been
initiated, threatened or contemplated by the Commission.
(g) At each of the Closing Date and each Option Closing Date, if any,
you shall have received a certificate of the Company signed on behalf of the
Company by the principal executive officer of the Company, dated the Closing
Date or Option Closing Date, as the case may be, to the effect that such
executive has carefully examined the Registration Statement, the Prospectus and
this Agreement, and that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date or the
Option Closing Date, as the case may be, and the Company has complied with all
agreements and covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to such Closing
Date or Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no proceedings
for that purpose have been instituted or are pending or, to the best of each of
such person's knowledge after due inquiry, are contemplated or threatened under
the Act;
(iii) The Registration Statement and the Prospectus and, if any,
each amendment and each supplement thereto, contain all statements and
information required by the Act to be included therein, and none of the
Registration Statement, the Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading and neither the Preliminary Prospectus or any supplement, as of
their respective dates, thereto included any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; and
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus: (a) the Company has
not incurred up to and including the Closing Date or the Option Closing Date, as
the case may be, other than in the its business, any material liabilities or
obligations, direct or contingent; (b) the Company has not
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paid or declared any dividends or other distributions on its capital stock; (c)
the Company has not entered into any transactions not in the ordinary course of
business; (d) there has not been any change in the capital stock or material
increase in long-term debt or any increase in the short-term borrowings (other
than any increase in the short-term borrowings in the ordinary course of
business) of the Company; (e) the Company has not sustained any loss or damage
to its property or assets, whether or not insured; (f) there is no litigation
which is pending or threatened (or circumstances giving rise to same) against
the Company or any affiliated party of any of the foregoing which is required to
be set forth in an amended or supplemented Prospectus which has not been set
forth; and (g) there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been set forth. References to
the Registration Statement and the Prospectus in this subsection (g) are to such
documents as amended and supplemented at the date of such certificate.
(h) By the Closing Date, the Representatives will have received
clearance from the NASD as to the amount of compensation allowable or payable to
the Underwriters.
(i) At the time this Agreement is executed, you shall have received a
letter, dated such date, addressed to you in form and substance satisfactory in
all respects (including the non-material nature of the changes or decreases, if
any, referred to in clause (iii) below) to you and Underwriters' Counsel, from
Ernst & Young:
(i) confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable Rules and Regulations;
(ii) stating that it is their opinion that the financial
statements and supporting schedules of the Company included in the Registration
Statement comply as to form in all material respects with the applicable
accounting requirements of the Act and the Regulations thereunder and that the
Underwriter may rely upon the opinion of Ernst & Young with respect to the
financial statements and supporting schedules included in the Registration
Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and board of directors and the various
committees of the board of directors of the Company, consultations with officers
and other employees of the Company responsible for financial and accounting
matters and other specified procedures and inquiries, nothing has come to their
attention which would lead them to believe that (x) the unaudited financial
statements and supporting schedules of the Company included in the Registration
Statement, if any, do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Regulations or are not
fairly presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited financial
statements of the Company included in the
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Registration Statement, or (y) at a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there has been any
change in the capital stock or material increase in long-term debt of the
Company, or any material decrease in the stockholders' equity or net current
assets or net assets of the Company as compared with amounts shown in the [June
30], 1999, balance sheet included in the Registration Statement, other than as
set forth in or contemplated by the Registration Statement, or, if there was any
change or decrease, setting forth the amount of such change or decrease;
(iv) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Prospectus in
each case to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including work
sheets, of the Company and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in agreement; and
(v) statements as to such other material matters incident to the
transaction contemplated hereby as you may reasonably request.
(j) At the Closing Date and each Option Closing Date, if any, you
shall have received from Ernst & Young a letter, dated as of the Closing Date or
the Option Closing Date, as the case may be, to the effect that they reaffirm
that statements made in the letter furnished pursuant to Subsection (i) of this
Section 6, except that the specified date referred to shall be a date not more
than five (5) days prior to Closing Date or the Option Closing Date, as the case
may be, and, if the Company has elected to rely on Rule 430A of the Rules and
Regulations, to the further effect that they have carried out procedures as
specified in clause (iv) of Subsection (i) of this Section 6 with respect to
certain amounts, percentages and financial information as specified by you and
deemed to be a part of the Registration Statement pursuant to Rule 430A(b) and
have found such amounts, percentages and financial information to be in
agreement with the records specified in such clause (iv).
(k) On each of Closing Date and Option Closing Date, if any, there
shall have been duly tendered to the several Underwriters the appropriate number
of Registered Securities.
(l) No order suspending the sale of the Registered Securities in any
jurisdiction designated by the Representatives pursuant to subsection (e) of
Section 4 hereof shall have been issued on either the Closing Date or the Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(m) On or before the Closing Date, the Company shall have executed and
delivered to the Representatives, (i) the Representatives' Warrant Agreement,
substantially in the
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form filed as Exhibit 4.2, to the Registration Statement, in final form and
substance satisfactory to the Underwriter, and (ii) the Representatives'
Warrants in such denominations and to such designees as shall have been provided
to the Company. (n) On or before Closing Date, the Common Stock shall have been
duly approved for quotation on Nasdaq.
(o) On or before Closing Date, there shall have been delivered to the
Representatives all of the Lock-up Agreements in final form and substance
satisfactory to Underwriters' Counsel.
If any condition to the Underwriters' obligations hereunder to be fulfilled
prior to or at the Closing Date or the relevant Option Closing Date, as the case
may be, is not so fulfilled, the Representatives may terminate this Agreement
or, if the Representatives so elect, they may waive any such conditions which
have not been fulfilled or extend the time for their fulfillment. Any such
cancellation shall be without liability of the Underwriters to the Company.
7. Indemnification. (a) The Company agrees to indemnify and hold harmless
each Underwriter (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees and agents of each Underwriter and
Underwriters' Counsel), and each person, if any, who controls the Underwriter
("controlling person") within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, from and against any and all loss, liability, claim,
damage, and expense whatsoever (including, but not limited to, reasonable
attorneys' fees and any and all reasonable expense whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation provided that the indemnified persons may not agree
to any such settlement without the prior written consent of the Company), as and
when incurred, arising out of, based upon or in connection with (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Preliminary Prospectus, the Registration Statement or the Prospectus (as from
time to time amended and supplemented); or (B) in any application or other
document or communication (in this Section 7 collectively called "application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company in any jurisdiction in order to qualify
the Registered Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq or any securities
exchange; or any omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(in the case of the Prospectus, in the light of the circumstances under which
they were made), unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company with respect to
the Underwriters by or on behalf of the Underwriters expressly for use in any
Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment thereof or supplement thereto, or in any application, as the case may
be; or (ii) any breach of any representation, warranty, covenant or agreement of
the Company contained in this Agreement. The indemnity agreement in this
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subsection (a) shall be in addition to any liability which the Company may have
at common law or otherwise.
(b) Each Underwriter severally, but not jointly, agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the Registration Statement, and each other person, if any, who
controls the Company, within the meaning of the Act, to the same extent as the
foregoing indemnity from the Company to the Underwriters but only with respect
to statements or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in strict conformity
with, written information furnished to the Company with respect to the
Underwriters by the Underwriters expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any such application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriters in connection with this Offering. The
Company acknowledges that the statements with respect to the public offering of
the Registered Securities set forth under the heading "Underwriting", the
identification of the Underwriters' Counsel and the stabilization legend in the
Prospectus have been furnished by the Underwriters expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure to so notify an indemnifying party shall not relieve it from any
liability which it may have otherwise or which it may have under this Section 7,
except to the extent that it has been prejudiced in any material respect by such
failure). In case any such action is brought against any indemnified party, and
it notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action
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on behalf of the indemnified party or parties), in any of which events the
reasonable fees and expenses of one additional counsel shall be borne by the
indemnifying parties; provided that if the indemnified party is an Underwriter
or a person who controls such Underwriter within the meaning of the Act, the
fees and expenses of such counsel shall be at the expense of the indemnifying
party if (i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both such Underwriter or such
controlling person and the indemnifying party and in the judgment of the
Representatives, it is advisable for the Representatives or such Underwriters or
controlling persons to be represented by separate counsel (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such Underwriter or such controlling person). In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, which counsel shall be designated in writing by
the Representatives when the indemnified party is any Underwriter or the
controlling person of any Underwriter. Anything in this Section 7 to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent;
provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution under the
Act in any case in which (i) any Underwriter makes claim for indemnification
pursuant to this Section 7 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
Underwriter, then the Company and each person who controls the Company, in the
aggregate, and any such Underwriter shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees) in either
such case (after contribution from others) in such proportions that all such
Underwriters are responsible in the aggregate for that portion of such losses,
claims, damages or liabilities represented by the percentage that the
underwriting discount per Share appearing on the cover page of the Prospectus
bears to the public offering price appearing thereon, and the Company shall be
responsible for the remaining portion, provided, however, that (a) if such
allocation is not permitted by applicable law then the relative fault of the
Company and the Underwriters and controlling persons, in the aggregate, in
connection with the statements or omissions which resulted in such damages and
other relevant equitable considerations shall also be considered. The relative
fault shall be determined by reference to, among other things, whether in the
case of an untrue statement of a material fact or the omission to state a
material fact, such statement or omission relates to information supplied by the
Company, or the Underwriters' and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The
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Company and the Underwriters agree that it would not be just and equitable if
the respective obligations of the Company and the Underwriters to contribute
pursuant to this Section 7 were to be determined by pro rata or per capita
allocation of the aggregate damages (even if the Underwriters in the aggregate
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the first sentence of this Section 7(d) that the contribution of each
contributing Underwriter shall not be in excess of its proportionate share
(based on the ratio of the number of Shares purchased by such Underwriter to the
number of Shares purchased by all contributing Underwriters) of the portion of
such losses, claims, damages or liabilities for which the Underwriters are
responsible. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. As used in this
paragraph, the word "Company" includes any officer, director, or person who
controls the Company within the meaning of Section 15 of the Act. If the full
amount of the contribution specified in this paragraph is not permitted by law,
then any Underwriter and each person who controls any Underwriter shall be
entitled to contribution from the Company, its officers, directors and
controlling persons to the full extent permitted by law. The foregoing
contribution agreement shall in no way affect the contribution liabilities of
any persons having liability under Section 11 of the Act other than the Company
and the Underwriters. No contribution shall be requested with regard to the
settlement of any matter from any party who did not consent to the settlement;
provided, however, that such consent shall not be unreasonably withheld in light
of all factors of importance to such party.
8. Representations and Agreements to Survive Delivery. All representations,
warranties and agreements contained in this Agreement or contained in
certificates of officers of the Company submitted pursuant hereto, shall be
deemed to be representations, warranties and agreements of the Company at the
Closing Date and the Option Closing Date, as the case may be, and such
representations, warranties and agreements of the Company and the respective
indemnity and contribution agreements contained in Section 7 hereof shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Underwriters, the Company, any controlling person of either
the Underwriters or the Company, and shall survive termination of this Agreement
or the issuance and delivery of the Registered Securities to the Underwriters,
as the case may be.
8A. Substitution of Underwriters. If any Underwriters shall for any reason
not permitted hereunder cancel their obligations to purchase the Firm Shares
hereunder, or shall fail to take up and pay for the number of Firm Shares set
forth opposite their respective names in Schedule A hereto upon tender of such
Firm Shares in accordance with the terms hereof, then:
(a) If the aggregate number of Firm Shares which such Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
number of Firm Shares, the other Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase.
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(b) If any Underwriter or Underwriters so default and the agreed
number of Firm Shares with respect to which such default or defaults occurs is
more than 10% of the total number of Firm Shares, the remaining Underwriters
shall have the right to take up and pay for (in such proportion as may be agreed
upon among them) the Firm Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase. If such remaining Underwriters do
not, at the Closing Date, take up and pay for the Firm Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase, the time
for delivery of the Firm Shares shall be extended to the next business day to
allow the several Underwriters the privilege of substituting within twenty-four
hours (including nonbusiness hours) another underwriter or underwriters
satisfactory to the Company. If no such underwriter or underwriters shall have
been substituted as aforesaid, within such twenty-four hour period, the time of
delivery of the Firm Shares may, at the option of the Company, be again extended
to the next following business day, if necessary, to allow the Company the
privilege of finding within twenty-four hours (including nonbusiness hours)
another underwriter or underwriters to purchase the Firm Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted Underwriters to
take up the Firm Shares of the defaulting Underwriter or Underwriters as
provided in this Section, (i) the Company or the Representatives shall have the
right to postpone the time of delivery for a period of not more than seven
business days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and (ii) the respective numbers of Firm Shares to be purchased
by the remaining Underwriters or substituted Underwriters shall be taken at the
basis of the underwriting obligation for all purposes of this Agreement.
If in the event of a default by one or more Underwriters and the remaining
Underwriters shall not take up and pay for all the Firm Shares agreed to be
purchased by the defaulting Underwriters or substitute another underwriter or
underwriters as aforesaid, the Company shall not find or shall not elect to seek
another underwriter or underwriters for such Firm Shares as aforesaid, then this
Agreement shall terminate.
If, following exercise of the option provided in Section 2(b) hereof, any
Underwriter or Underwriters shall for any reason not permitted hereunder cancel
their obligations to purchase Option Shares at the Option Closing Date, or shall
fail to take up and pay for the number of Option Shares, which they become
obligated to purchase at the Option Closing Date upon tender of such Option
Shares in accordance with the terms hereof, then the remaining Underwriters or
substituted Underwriters may take up and pay for the Option Shares of the
defaulting Underwriters in the manner provided in Section 8A(b) hereof. If the
remaining Underwriters or substituted Underwriters shall not take up and pay for
all such Option Shares, the Underwriters shall be entitled to purchase the
number of Option Shares for which there is no default or, at their election, the
option shall terminate, the exercise thereof shall be of no effect.
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As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. In the event of termination,
there shall be no liability on the part of any nondefaulting Underwriter to the
Company, provided that the provisions of this Section 8A shall not in any event
affect the liability of any defaulting Underwriter to the Company arising out of
such default.
9. Effective Date. This Agreement shall become effective at 10:00 a.m., New
York City time, on the date hereof. For purposes of this Section 9, the
Registered Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by you of telegrams to securities dealers
releasing such shares for offering or the release by you for publication of the
first newspaper advertisement which is subsequently published relating to the
Registered Securities.
10. Termination. (a) Subject to subsection (b) of this Section 10, you
shall have the right to terminate this Agreement, (i) if any domestic or
international event or act or occurrence has disrupted, or inyour reasonable
opinion will in the immediate future disrupt the financial markets; or (ii) any
material adverse change in the financial markets shall have occurred; or (iii)
if trading on the New York Stock Exchange, the American Stock Exchange, or in
the over-the-counter market shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required on the over-the-counter market by the NASD
or by order of the Commission or any other government authority having
jurisdiction; or (iv) if the United States shall have become involved in a war
or major hostilities, or if there shall have been an escalation in an existing
war or major hostilities or a national emergency shall have been declared in the
United States; or (v) if a banking moratorium has been declared by a state or
federal authority; or (vi) if the Company shall have sustained a loss material
or substantial to the Company by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in your opinion, make it inadvisable to
proceed with the delivery of the Registered Securities; or (vii) if there shall
have been such a material adverse change in the prospects or conditions of the
Company, or such material adverse change in the general market, political or
economic conditions, in the United States or elsewhere as would make it
inadvisable to proceed with the offering, sale and/or delivery of the Registered
Securities.
(b) If this Agreement is terminated by you in accordance with any of
the provisions of Section 6, Section 10(a) or Section 11, the Company shall
promptly reimburse and indemnify the Representatives pursuant to Section 5(b)
hereof. Notwithstanding any contrary provision contained in this Agreement, any
election hereunder or any termination of this Agreement (including, without
limitation, pursuant to Sections 6, 10 and 11 hereof), and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 and Section 7
shall not be in any way affected by such election or termination or failure to
carry out the terms of this Agreement or any part hereof.
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11. Default by the Company. If the Company shall fail at the Closing Date
or any Option Closing Date, as applicable, to sell and deliver the number of
Registered Securities which it is obligated to sell hereunder on such date, then
this Agreement shall terminate (or, if such default shall occur with respect to
any Option Shares to be purchased on an Option Closing Date, you may, by notice
the Company, terminate the Underwriters' obligation to purchase Option Shares
from the Company on such date) without any liability on the part of any
non-defaulting party other than pursuant to Section 5, Section 7 and Section 10
hereof. No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect of such default.
12. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to Auerbach,
Pollak & Richardson, Inc., 450 Park Avenue, New York, New York 10022, Attention:
Michael P. Considine, with a copy, which shall not constitute notice, to
Coleman, Rhine & Goodwin LLP, 750 Lexington Avenue, New York, New York 10022,
Attention: Kenneth S. Goodwin, Esq. Notices to the Company shall be directed to
the Company at 77 Jericho Turnpike, Mineola, New York 115012, Attention: Mark
Dresner, with a copy, which shall not constitute notice, to Parker Duryee Rosoff
& Haft, P.C., 529 Fifth Avenue, New York, New York 10017, Attention: Craig L.
Libson, Esq.
13. Parties. This Agreement shall inure solely to the benefit of and shall
be binding upon the several Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained. No purchaser of Registered Securities from any of the several
Underwriters shall be deemed to be a successor by reason merely of such
purchase.
14. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
16. Entire Agreement; Amendments. This Agreement and the Representatives'
Warrant Agreement constitute the entire agreement of the parties hereto and
supersede all prior written or oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may not be amended
except in a writing, signed by the Representatives on behalf of the several
Underwriters and the Company.
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If the foregoing correctly sets forth your understanding of our agreement,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among us.
Very truly yours,
Infinite Technology Group Ltd.
By:_______________________
Name:
Title:
CONFIRMED AND ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN:
Auerbach, Pollak & Richardson, Inc. [insert]
By: ________________________________ By: ___________________________
For itself and as Representative For itself and as Representative
of the several Underwriters of the several Underwriters
CONFIRMED AND ACCEPTED AS TO SECTIONS 1(h) and 1(ag) ONLY:
Mark Dresner
_____________________________________
James McGowan
_____________________________________
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SCHEDULE A
Underwriter Number of Shares to be Purchased
----------- --------------------------------
[UNDERWRITER]
Total:__________
___________Shares
38
