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1,000,000 Shares of Common Stock
UTEK CORPORATION
UNDERWRITING AGREEMENT
October __, 2000
Schneider Securities, Inc.
1120 Lincoln Street
Suite 900
Denver, Colorado 80203
Dear Sirs:
UTEK Corporation, a Delaware corporation (the "Company"), hereby
confirms its agreement with you (who are sometimes hereinafter referred to as
the "Representative") and with the other members of the underwriting group (the
"Underwriters") named on Schedule 1 hereto as follows:
1. Introductory. Subject to the terms and conditions herein contained,
the Company proposes to sell to the several Underwriters an aggregate of
1,000,000 shares (the "Firm Shares") of the Company's Common Stock, par value
$.01 per share (the "Common Stock"). The Company also proposes to sell to the
several Underwriters not more than 150,000 additional shares of Common Stock
(15% of the number of shares constituting the Firm Shares) if requested by the
Representative as provided in Section 3 of this Agreement. Any and all shares of
Common Stock to be purchased by the Underwriters pursuant to such option are
referred to herein as the "Additional Shares." The Firm Shares and any
Additional Shares are collectively referred to herein as the "Shares."
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
a. The Company has filed with the United States Securities and
Exchange Commission (the "Commission") a registration statement, and
may have filed one or more amendments thereto, on Form N-2
(Registration No. 333-93913), including in such registration statement
and each such amendment a facing sheet, the information called for by
Part A and B, audited consolidated financial statements for the past
three fiscal years or such other period as may be appropriate, the
information called for by Part C, the undertakings to deliver
certificates, file reports and file post-effective amendments, the
required signatures, consents of experts, exhibits, a related
preliminary prospectus (a "Preliminary Prospectus") and any other
information or documents which are required for the registration of the
Shares, and the warrants referred to in Section 5(p) (the
"Representative's Warrants") and the shares referred to in Section 5(p)
purchasable upon exercise of the Representative's Warrants (the
"Representative's Warrant Shares"), under the Securities Act of 1933,
as amended (the "Act"). As used in this Agreement, the term
"Registration Statement" means such registration statement, including
incorporated documents, all exhibits and consolidated financial
statements and schedules thereto, as amended, when it becomes
effective, and shall include the
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information with respect to the Shares, the Representative's Warrants,
and the Representative's Warrant Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the General Rules and Regulations
promulgated under the Act (the "Regulations"), which information is
deemed to be included therein when it becomes effective as provided by
Rule 430A; the term "Preliminary Prospectus" means each prospectus
included in the Registration Statement, or any amendments thereto,
before it becomes effective under the Act and any prospectus filed by
the Company with the consent of the Representative pursuant to Rule
424(a) of the Regulations; and the term "Prospectus" means the final
prospectus included as part of the Registration Statement, except that
if the prospectus relating to the securities covered by the
Registration Statement in the form first filed on behalf of the Company
with the Commission pursuant to Rule 424(b) of the Regulations shall
differ from such final prospectus, the term "Prospectus" shall mean the
prospectus as filed pursuant to Rule 424(b) from and after the date on
which it shall have first been used.
b. When the Registration Statement becomes effective, and at
all times subsequent thereto, to and including the Closing Date (as
defined in Section 3) and each Additional Closing Date (as defined in
Section 3), and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Representative
or any dealer, and during such longer period until any post-effective
amendment thereto shall become effective, the Registration Statement
(and any post-effective amendment thereto) and the Prospectus (as
amended or as supplemented if the Company shall have filed with the
Commission any amendment or supplement to the Registration Statement or
the Prospectus) will contain all statements which are required to be
stated therein in accordance with the Act and the Regulations, will
comply with the Act and the Regulations, and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and no event will have occurred which should
have been set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not then been set forth in such
an amendment or supplement; and no Preliminary Prospectus, as of the
date filed with the Commission, 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 not
misleading; except that no representation or warranty is made in this
Section 2(b) with respect to statements or omissions made in reliance
upon and in conformity with written information furnished to the
Company as stated in Section 8(b) with respect to the Underwriters by
or on behalf of the Underwriters expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto.
c. Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction has issued an order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement, or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement, or
suspending the registration or qualification of the Shares, the
Representative's Warrants, and the Representative's Warrant Shares, nor
has any of such authorities instituted or threatened to institute any
proceedings with respect to a Stop Order.
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d. Any contract, agreement, instrument, lease, or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract,
agreement, instrument, lease, or license required to be filed as an
exhibit to the Registration Statement has been filed with the
Commission as an exhibit to or has been incorporated as an exhibit by
reference into the Registration Statement.
e. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
with full power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other
tribunals, to own, lease, license, and use its properties and assets
and to carry on the business in the manner described in the Prospectus.
Each of the Subsidiaries of the Company (the "Subsidiaries") is a
corporation duly organized and validly existing in good standing under
the laws of the jurisdiction of its organization, with full corporate
power and authority to own, lease, and operate its properties and to
conduct its business as described in the Prospectus. The Company and
each Subsidiary is duly qualified to do business and is in good
standing in every jurisdiction in which its ownership, leasing,
licensing, or use of property and assets or the conduct of its business
makes such qualifications necessary. The Company has no Subsidiaries
except as disclosed in the Prospectus.
f. The authorized capital stock of the Company consists of
19,000,000 shares of Common Stock, of which 2,782,226 shares of Common
Stock are issued and outstanding, 378,000 shares of Common Stock are
reserved for issuance upon the exercise of currently outstanding
options, 372,000 shares of Common Stock are reserved for issuance upon
the exercise of the remaining options authorized under the Company's
option plan; and 1,000,000 shares of Preferred Stock, none of which are
issued or outstanding. Each outstanding share of Common Stock is
validly authorized, validly issued, fully paid, and nonassessable,
without any personal liability attaching to the ownership thereof, and
has not been issued and is not owned or held in violation of any
preemptive rights of stockholders. There is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other
right calling for the issuance of, any share of capital stock of the
Company or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for capital stock of
the Company, except as set forth above, and as may be properly
described in the Prospectus.
g. The consolidated financial statements of the Company
included in the Registration Statement and the Prospectus fairly
present with respect to the Company its consolidated financial
position, the results of operations, and the other information
purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles, except to the extent that certain footnote
disclosures regarding any interim period may have been omitted in
accordance with the applicable rules of the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
consistently applied throughout the periods involved, are correct and
complete, and are in accordance with the books and records of the
Company. The accountants whose reports on the audited consolidated
financial statements are filed with the Commission as a part of the
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Registration Statement are, and during the periods covered by their
reports included in the Registration Statement and the Prospectus were,
independent certified public accountants with respect to the Company
within the meaning of the Act and the Regulations. No other financial
statements are required by Form N-2 or otherwise to be included in the
Registration Statement or the Prospectus. There has at no time been a
material adverse change in the consolidated financial condition,
results of operations, business, properties, assets, liabilities, or
future prospects of the Company or its Subsidiaries from the latest
information set forth in the Registration Statement or the Prospectus,
except as may be properly described in the Prospectus.
h. There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending, or, to
the knowledge of the Company, threatened, or proposed with respect to
the Company or any of its Subsidiaries, operations, businesses,
properties, or assets, except as may be properly described in the
Prospectus or such as individually or in the aggregate do not now have
and will not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company. The Company
and each Subsidiary is not in violation of, or in default with respect
to, any law, rule, regulation, order, judgment, or decree except as may
be properly described in the Prospectus or such as in the aggregate do
not now have and will not in the future have a material adverse effect
upon the operations, business, properties, or assets of the Company,
nor is the Company required to take any action in order to avoid any
such violation or default.
i. The Company has good and marketable title in fee simple
absolute to all real properties and good title to all other properties
and assets which the Prospectus indicates are owned by it, free and
clear of all liens, security interests, pledges, charges, encumbrances,
and mortgages except as may be properly described in the Prospectus or
such as in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business,
properties, or assets of the Company. No real property owned, leased,
licensed, or used by the Company lies in an area which is, or to the
knowledge of the Company will be, subject to zoning, use, or building
code restrictions which would prohibit, and no state of facts relating
to the actions or inaction of another person or entity or his or its
ownership, leasing, licensing, or use of any real or personal property
exists or will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the
business of the Company as presently conducted or as the Prospectus
indicates it contemplates conducting, except as may be properly
described in the Prospectus or such as in the aggregate do not now have
and will not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company.
j. Neither the Company nor any other party is now or is
expected by the Company to be in violation or breach of, or in default
with respect to complying with, any material provision of any contract,
agreement, instrument, lease, license, arrangement, or understanding
which is material to the Company, and each such contract, agreement,
instrument, lease, license, arrangement, and understanding is in full
force and is the legal, valid, and binding obligation of the parties
thereto and is enforceable as to them in accordance with its terms. The
Company and its Subsidiaries enjoy peaceful and undisturbed possession
under all leases and licenses under which they are operating. The
Company and its Subsidiaries are not a party to
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or bound by any contract, agreement, instrument, lease, license,
arrangement, or understanding, or subject to any charter or other
restriction, which has had or may in the future have a material adverse
effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company.
The Company and each of the Subsidiaries is not in violation or breach
of, or in default with respect to, any term of its Certificate of
Incorporation (or other charter document) or by-laws.
k. All patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises,
technology, know-how and other intangible properties and assets (all of
the foregoing being herein called "Intangibles") that the Company owns
or has pending, or under which it is licensed, are in good standing and
uncontested. Except as otherwise disclosed in the Registration
Statement, the Intangibles are owned by the Company, free and clear of
all liens, security interests, pledges, and encumbrances. The Company
has filed an application with, and has been granted services mark
registration by, the United States Patent and Trademark Office for "U
to B." There is no right under any Intangible necessary to the business
of the Company as presently conducted or as the Prospectus indicates it
contemplates conducting (except as may be so designated in the
Prospectus). To the knowledge of the Company, the Company has not
infringed, is not infringing, and has not received notice of
infringement with respect to asserted Intangibles of others. To the
knowledge of the Company, there is no infringement by others of
Intangibles of the Company. To the knowledge of the Company, there is
no Intangible of others which has had or may in the future have a
materially adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or future
prospects of the Company.
l. Neither the Company nor any of the Subsidiaries, nor any
director, officer, agent, employee, or other person associated with or
acting on behalf of the Company has, directly or indirectly: used any
corporate funds for unlawful contributions, gifts, entertainment, or
other unlawful expenses relating to political activity; made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended by the International Anti-Bribery Act
of 1998; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment. Each of the Company and the
Subsidiaries has not accepted any material advertising allowances or
marketing allowances from suppliers to the Company and, to the extent
any advertising allowance has been accepted, the Company has provided
proper documentation to the supplier with respect to advertising as to
which the advertising allowance has been granted.
m. The Company has all requisite power and authority to
execute and deliver, and to perform thereunder each of this Agreement
and the Representative's Warrants. All necessary corporate proceedings
of the Company have been duly taken to authorize the execution and
delivery, and performance thereunder by the Company of this Agreement
and the Representative's Warrants. This Agreement has been duly
authorized, executed, and delivered by the Company, is a legal, valid,
and binding obligation of the Company, and is enforceable as to the
Company in accordance with its terms. The Representative's Warrants
have been duly authorized by the Company and, when executed and
delivered by the Company, will each be a legal, valid, and
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binding obligation of the Company, and will be enforceable against the
Company in accordance with its terms. No consent, authorization,
approval, order, license, certificate, or permit of or from, or
declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by
the Company for the execution and delivery, or performance thereunder
by the Company of this Agreement or the Representative's Warrants
except filings under the Act which have been or will be made before the
Closing Date and such consents consisting only of consents under "blue
sky" or securities laws which are required in connection with the
transactions contemplated by this Agreement and which have been
obtained at or prior to the date of this Agreement. No consent of any
party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party, or to
which any of its properties or assets are subject, is required for the
execution or delivery, or performance thereunder of this Agreement or
the Representative's Warrants; and the execution and delivery, and
performance thereunder of this Agreement and the Representative's
Warrants will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under any such
contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the
Certificate of Incorporation or by-laws of the Company, or violate,
result in a breach of, or conflict with any law, rule, regulation,
order, judgment, or decree binding on the Company or to which any of
its operations, businesses, properties, or assets are subject.
n. The Shares, the Representative's Warrants and the
Representative's Warrant Shares are validly authorized and reserved for
issuance. The Shares, when issued and delivered in accordance with this
Agreement and the Representative's Warrant Shares, when issued and
delivered upon exercise of the Representative's Warrants, and upon
payment of the exercise price therefor, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to
the ownership thereof, and will not be issued in violation of any
preemptive rights of stockholders, and the Underwriters will receive
good title to the Shares purchased, the Representative will receive
good title to the Representative's Warrants purchased and any purchaser
of the Representative 's Warrant Shares will receive good title thereto
upon payment of the applicable exercise price, all such title free and
clear of all liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts.
o. The Shares, the Representative's Warrants and the
Representative's Warrant Shares conform to all statements relating
thereto contained in the Registration Statement and the Prospectus.
p. Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as may otherwise be properly described in the Prospectus, the Company
has not (i) issued any securities or incurred any liability or
obligation, primary or contingent, for borrowed money, (ii) entered
into any transaction not in the ordinary course of business, or (iii)
declared or paid any dividend on its capital stock.
q. The Company has not incurred any liability for a fee,
commission, or other compensation on account of the employment of a
broker or finder in connection with the transactions contemplated by
this Agreement.
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r. The Company has obtained from each officer, director and
person or entity that beneficially own in the aggregate at least 97% of
the Company's Common Stock outstanding prior to the date hereof, and
has validly assigned such agreements to the Representative, his, her or
its enforceable written agreement that for a period of 24 months from
the Effective Date, he, she or it will not, without the
Representative's prior written consent, sell, pledge, hypothecate or
transfer any of the Company's Common Stock owned by such person or
entity. Sales of Common Stock by such persons shall not include gifts,
intra-family transfers or transfers for estate planning purposes, which
shall be exempt from the foregoing provisions. The Company agrees not
to sell its Common Stock for a period of 12 months from the Effective
Date except (i) with the Representative's prior written consent, (ii)
in an underwritten public offering, (iii) in connection with an
acquisition, (iv) upon the exercise of currently outstanding options,
(v) upon the exercise of options granted pursuant to the Company's
stock option plan, or (vi) upon exercise of the Representative's
Warrants.
s. The Company and its Subsidiaries have not, directly or
indirectly (except for the sale of Securities under this Agreement),
(i) taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities, or (ii)
since the filing of the Registration Statement, and except for the
transactions contemplated herein, (A) sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of the Securities, or
(B) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
t. Except to the extent otherwise described in the Prospectus,
the Company is not an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"), and this transaction will not
cause the Company to become an investment company subject to
registration as such under the 1940 Act except as a business
development company.
u. The Company and the Subsidiaries have not distributed and,
prior to the later of (A) the Closing Date or any Additional Closing
Date and (B) the completion of the distribution of the Securities, will
not distribute any written offering material in connection with the
offering and sale of the Securities other than the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or other materials,
if any, permitted by the Act.
v. The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which
they are engaged; and neither the Company nor its Subsidiaries has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect,
except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus).
w. Neither the Company nor its Subsidiaries is presently doing
business with the government of Cuba or with any person or affiliate
located in Cuba.
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x. In the event the Company presents a "road show" over the
Internet, the Company and any contractor engaged by it to prepare and
transmit such "road show" presentation by means of the Internet shall
comply with that certain no-action request from Net Roadshow, Inc. to
the Securities and Exchange Commission on July 23, 1997, as responded
to by the Securities and Exchange Commission on July 30, 1997.
y. Except as otherwise provided in the Registration Statement,
no person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement.
z. The Company is eligible to use Form N-2 for registration of
the Shares, the Representative's Warrants and the Representative's
Warrant Shares.
aa. No unregistered securities of the Company, of an affiliate
of the Company or of a predecessor of the Company have been sold within
three years prior to the date hereof, except as described in the
Registration Statement.
bb. Except as set forth in the Registration Statement, there
is and at the Closing Date there will be no action, suit or proceeding
before any court, arbitration tribunal or governmental agency,
authority or body pending or, to the knowledge of the Company,
threatened which might result in judgments against the Company or its
Subsidiaries not adequately covered by insurance or which collectively
might result in any material adverse change in the condition (financial
or otherwise), the business or the prospects of the Company or its
Subsidiaries or would materially affect the properties or assets of the
Company or its Subsidiaries.
cc. The Company has filed all federal and state tax returns
which are required to be filed by it and has paid all taxes shown on
such returns and all assessments received by it to the extent such
taxes have become due. All taxes with respect to which the Company is
obligated have been paid or adequate accruals have been set up to cover
any such unpaid taxes.
dd. Except as set forth in the Registration Statement:
i. The Company has obtained all permits, licenses and
other authorizations which are required under the
Environmental Laws for the ownership, use and operation of
each location operated or leased by the Company (the
"Property"), all such permits, licenses and authorizations, if
any, obtained are in effect, no appeal nor any other action is
pending to revoke any such permit, license or authorization,
and the Company is in full compliance with all terms and
conditions of all such permits, licenses and authorizations,
if any, obtained by the Company.
ii. To the best knowledge of the Company's executive
officers, the Company and the Property are in compliance with
all Environmental Laws including, without limitation, all
restrictions, conditions, standards, limitations,
prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or contained in
any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
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iii. The Company has not, and to the best knowledge
of the Company's executive officers, no other person has,
released, placed, stored, buried or dumped any Hazardous
Substances, Oils, Pollutants or Contaminants or any other
wastes produced by, or resulting from, any business,
commercial, or industrial activities, operations, or
processes, on, beneath, or adjacent to the Property or any
property formerly owned, operated or leased by the Company
except for inventories of such substances to be used, and
wastes generated therefrom, in the ordinary course of business
of the Company (which inventories and wastes, if any, were and
are stored or disposed of in accordance with applicable laws
and regulations and in a manner such that there has been no
release of any such substances into the environment).
iv. Except as provided to the Representative, there
exists no written or tangible report, synopsis or summary of
any asbestos, toxic waste or Hazardous Substances, Oils,
Pollutants or Contaminants investigation made with respect to
all or any portion of the assets of the Company (whether or
not prepared by experts and whether or not in the possession
of the executive officers of the Company).
v. Definitions: As used herein:
(1) Environmental Laws means all federal,
state and local laws, regulations, rules and
ordinances relating to pollution or protection of the
environment, including, without limitation, laws
relating to Releases or threatened Releases of
Hazardous Substances, Oils, Pollutants or
Contaminants into the indoor or outdoor environment
(including, without limitation, ambient air, surface
water, groundwater, land, surface and subsurface
strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous
Substances, Oils, Pollutants or Contaminants.
(2) Hazardous Substances, Oils, Pollutants
or Contaminants means all substances defined as such
in the National Oil and Hazardous Substances
Pollutant Contingency Plan, 40 C.F.R. ss.300.6, or
defined as such under any Environmental Law.
(3) Release means any release, spill,
emission, discharge, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environmental
(including, without limitation, ambient air, surface
water, groundwater, and surface or subsurface strata)
or into or out of any property, including the
movement of Hazardous Substances, Oils, Pollutants or
Contaminants through or in the air, soil, surface
water, groundwater or any property.
ee. The Company has filed a Notification of Election to be
subject to Sections 55-65 of the 1940 Act on Form N-54A and is both
eligible to elect, and has elected, to be regulated as a business
development company under the 1940 Act. Since electing to be regulated
as a business development company, the Company has acquired only
qualifying assets or assets
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necessary for its operations, subject to applicable limitations in the
value of qualifying assets as described in the 1940 Act. The Company
has issued no senior securities, as such senior securities are defined
in the 1940 Act.
ff. All sales of securities by the Company have been made at a
price at or above the Company's net asset value per share or, if sold
at a price less than the net asset value per share, a majority of the
disinterested directors of the Company have determined that such a sale
was in the Company's best interests and those of the stockholders of
the Company, and a majority of the outstanding voting securities,
including a majority of the voting securities held by non-affiliates of
the Company, have approved such sale.
gg. The Company has set forth in the Prospectus all
transactions by and between the Company, on the one hand, and
affiliates of the Company, on the other hand, and all such transactions
received the prior approval of a majority of the Company's
disinterested directors and a majority of the directors having no
financial interest in any such transactions. The Company and its
affiliates, including its directors, officers and employees, have not
engaged in any transaction among them that requires the prior approval
of the Commission.
hh. The Company has engaged in no transaction which, if
disclosed or subject to disclosure, would cause the Company to lose its
status as a business development company.
3. Purchase, Sale, and Delivery of the Shares. On the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters, severally and not jointly, and the
Underwriters, severally and not jointly, agree to purchase from the Company the
number of Firm Shares set forth opposite the Underwriters' names in Schedule 1
hereto.
The purchase price per Firm Share to be paid by the Underwriters shall
be $5.40. The initial public offering price of the Shares shall be $6.00.
Payment for the Firm Shares by the Underwriters shall be made by wire
transfer or by certified or official bank check in clearing house funds, payable
to the order of the Company at the offices of Schneider Securities, Inc., 1120
Lincoln Street, Suite 900, Denver, Colorado 80203, or at such other place in
Denver, Colorado as the Representative shall determine and advise the Company by
at least two full days' notice in writing, upon delivery of the Shares to the
Representative. Such delivery and payment shall be made at 10:00 a.m., Mountain
Time, on the third business day following the time of the initial public
offering, as defined in Section 10(a) hereof, unless the Commission declares the
Registration Statement effective after 4:30 p.m. Eastern time, in which event
delivery and payment shall be made on the fourth (4th) business day following
the time of the initial public offering. The time and date of such delivery and
payment are herein called the "Closing Date."
In addition, the Company hereby grants to the Representative the option
to purchase all or a portion of the Additional Shares as may be necessary to
cover over-allotments, at the same purchase price per Additional Share as the
price per Firm Share provided for in this Section 3. The Representative may
purchase Additional Shares when exercising such option, in its sole discretion.
This option may be exercised by the Representative on the basis of the
representations, warranties, covenants, and agreements of the Company herein
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contained, but subject to the terms and conditions herein set forth, at any time
and from time to time on or before the 45th day following the Effective Date of
the Registration Statement, by written notice by the Representative to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the time and date, as determined
by the Representative, when such Additional Shares are to be delivered (such
time and date are herein called an "Additional Closing Date"); provided,
however, that no Additional Closing Date shall be earlier than the Closing Date
nor earlier than the third business day after the date on which the notice of
the exercise of the option shall have been given nor later than the eighth
business day after the date on which such notice shall have been given; and
further provided, that not more than two Additional Closings shall be noticed
and held following purchase of Additional Shares by the Representative.
Payment for the Additional Shares shall be made by wire transfer or by
certified or official bank check in clearing house funds payable to the order of
the Company at the offices of Schneider Securities, Inc., 1120 Lincoln Street,
Suite 900, Denver, Colorado 80203, or at such other place in Denver, Colorado as
you shall determine and advise the Company by at least two full days' notice in
writing, upon delivery of certificates representing the Additional Shares to
you.
Certificates for the Shares purchased shall be registered in such name
or names and in such authorized denominations as you may request in writing at
least two full business days prior to the Closing Date or Additional Closing
Date, as applicable. The Company shall permit you to examine and package such
certificates for delivery at least one full business day prior to any such
closing with respect thereto.
If for any reason one or more Underwriters shall fail or refuse
(otherwise than for a reason sufficient to justify the termination of this
Agreement under the provisions of Section 10 hereof) to purchase and pay for the
number of Firm Shares agreed to be purchased by such Underwriter, the Company
shall immediately give notice thereof to the Representative, and the
non-defaulting Underwriters shall have the right within 24 hours after the
receipt by the Representative of such notice, to purchase or procure one or more
other Underwriters to purchase, in such proportions as may be agreed upon among
the Representative and such purchasing Underwriter or Underwriters and upon the
terms herein set forth, the Firm Shares which such defaulting Underwriter or
Underwriters agreed to purchase. If the non-defaulting Underwriters fail to
make such arrangements with respect to all such Firm Shares, the number of Firm
Shares which each non-defaulting Underwriter is otherwise obligated to purchase
under the Agreement shall be automatically increased pro rata to absorb the
remaining Firm Shares which the defaulting Underwriter or Underwriters agreed to
purchase; provided, however, that the non-defaulting Underwriters shall not be
obligated to purchase the Firm Shares which the defaulting Underwriter or
Underwriters agreed to purchase in excess of 10% of the total number of Shares
which such non-defaulting Underwriter agreed to purchase hereunder, and provided
further that the non-defaulting Underwriters shall not be obligated to purchase
any Firm Shares which the defaulting Underwriter or Underwriters agreed to
purchase if such additional purchase would cause the Underwriter to be in
violation of the net capital rule of the Commission or other applicable law. If
the total number of Firm Shares which the defaulting Underwriter or Underwriters
agreed to purchase shall not be purchased or absorbed in accordance with the two
preceding sentences, the Company shall have the right, within 24 hours next
succeeding the 24-hour period above referred to, to make arrangements with other
underwriters or purchasers satisfactory to the
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Representative for the purchase of such Firm Shares on the terms herein set
forth. In any such case, either the Representative or the Company shall have the
right to postpone the Closing for not more than seven business days after the
date originally fixed as the Closing in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made. If neither the non-defaulting Underwriters nor the Company shall
make arrangements within the 24-hour periods stated above for the purchase of
all the Firm Shares which the defaulting Underwriter or Underwriters agreed to
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company to any non-defaulting
Underwriter, except the Company shall be liable for actual expenses incurred by
the Representative as provided in Section 10 hereof, and without any liability
on the part of any non-defaulting Underwriter to the Company.
Nothing contained herein shall relieve any defaulting Underwriter of
its liability, if any, to the Company or to the remaining Underwriters for
damages occasioned by its default hereunder.
4. Offering. The Underwriters are to make a public offering of the
Shares as soon, on or after the effective date of the Registration Statement, as
the Representative deems it advisable so to do. The Shares are to be initially
offered to the public at the initial public offering price as provided for in
Section 3 (such price being herein called the "public offering price"). After
the initial public offering, you may from time to time increase or decrease the
price of the Shares in your sole discretion, by reason of changes in general
market conditions or otherwise.
5. Covenants of the Company. The Company covenants that it will:
a. Use its best efforts to cause the Registration Statement to
become effective as promptly as possible. If the Registration Statement
has become or becomes effective with a form of Prospectus omitting
certain information pursuant to Rule 430A of the Regulations, or filing
of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus, properly completed, pursuant to Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to you of such timely filing.
b. Notify you immediately, and confirm such notice in writing,
(i) when the Registration Statement and any post-effective amendment
thereto become effective, (ii) of the receipt of any comments from the
Commission or the "blue sky" or securities authority of any
jurisdiction regarding the Registration Statement, any post-effective
amendment thereto, the Prospectus, or any amendment or supplement
thereto, and (iii) of the receipt of any notification with respect to a
Stop Order or the initiation or threatening of any proceeding with
respect to a Stop Order. The Company will use its best efforts to
prevent the issuance of any Stop Order and, if any Stop Order is
issued, to obtain the lifting thereof as promptly as possible.
c. During the time when a prospectus relating to the Shares is
required to be delivered hereunder or under the Act or the Regulations,
comply so far as it is able with all requirements imposed upon it by
the Act, as now existing and as hereafter amended, and by the
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Shares and
Representative's Warrant Shares in accordance with the provisions
hereof and the Prospectus. If, at any time when a prospectus relating
to the Shares or Representative's Warrant Shares is required to be
delivered hereunder
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or under the Act or the Regulations, any event shall have occurred as a
result of which, in the reasonable opinion of counsel for the Company
or counsel for the Representative, the Registration Statement or the
Prospectus, as then amended or supplemented, contains any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or if, in the opinion of either of such
counsel, it is necessary at any time to amend or supplement the
Registration Statement or the Prospectus to comply with the Act or the
Regulations, the Company will immediately notify you and promptly
prepare and file with the Commission an appropriate amendment or
supplement (in form and substance satisfactory to you) which will
correct such statement or omission or which will effect such compliance
and will use its best efforts to have any such amendment declared
effective as soon as possible.
d. Deliver without charge to you such number of copies of each
Preliminary Prospectus as you may reasonably request and, as soon as
the Registration Statement or any amendment thereto becomes effective
or a supplement is filed, deliver without charge to you two signed
copies of the Registration Statement or such amendment thereto, as the
case may be, including exhibits, and two copies of any supplement
thereto, and deliver without charge to you such number of copies of the
Prospectus, the Registration Statement, and amendments and supplements
thereto, if any, without exhibits, as you may reasonably request for
the purposes contemplated by the Act.
e. Endeavor in good faith, in cooperation with you, at or
prior to the time the Registration Statement becomes effective, to
qualify the Shares and Representative's Warrant Shares for offering and
sale under the "blue sky" or securities laws of such jurisdictions as
you may designate; provided, however, that no such qualification shall
be required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a
foreign corporation doing business in such jurisdiction to which it is
not then subject. In each jurisdiction where such qualification shall
be effected, the Company will, unless you agree in writing that such
action is not at the time necessary or advisable, file and make such
statements or reports at such times as are or may be required by the
laws of such jurisdiction.
f. Make generally available (within the meaning of Section
11(a) of the Act and the Regulations) to its security holders as soon
as practicable, but not later than fifteen (15) months after the date
of the Prospectus, an earnings statement (which need not be certified
by independent certified public accountants unless required by the Act
or the Regulations, but which shall satisfy the provisions of Section
11(a) of the Act and the Regulations) covering a period of at least 12
months beginning after the effective date of the Registration
Statement.
g. For a period of 12 months after the date of the Prospectus,
not, without your prior written consent, offer, issue, sell, contract
to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock (or any security or
other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock) except as provided in
Section 3 and except (i) with the Representative's prior written
consent, (ii) in an underwritten public offering, (iii) in connection
with an acquisition, (iv) upon the exercise of currently outstanding
options, (v)
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upon the exercise of options granted pursuant to the Company's stock
option plan, or (vi) upon exercise of the Representative's Warrants.
h. For a period of five years after the Effective Date of the
registration statement, furnish you, without charge, the following:
i. Within 105 days after the end of each fiscal year,
three copies of consolidated financial statements certified
by independent certified public accountants, including a
balance sheet, statement of operations, and statement of cash
flows of the Company and its then existing Subsidiaries, with
supporting schedules, prepared in accordance with generally
accepted accounting principles, at the end of such fiscal year
and for the 12 months then ended;
ii. As soon as practicable after they have been sent
to stockholders of the Company or filed with the Commission,
three copies of each annual and interim financial and other
report or communication sent by the Company to its
stockholders or filed with the Commission;
iii. As soon as practicable, two copies of every
press release and every material news item and article in
respect of the Company or its affairs which was released by
the Company;
iv. Notice of any regular or special meeting of the
Company's Board of Directors concurrently with the sending of
such notice to the Company's directors; and
v. Such additional documents and information with
respect to the Company and its affairs and the affairs of any
of its Subsidiaries as you may from time to time reasonably
request.
i. Designate an Audit Committee and a Compensation Committee,
the members of which shall be subject to your reasonable approval,
which will generally supervise the financial affairs of the Company and
review executive compensation, respectively.
j. Furnish to you as early as practicable prior to the Closing
Date and any Additional Closing Date, as the case may be, but not less
than two full business days prior thereto, a copy of the latest
available unaudited interim consolidated financial statements of the
Company which have been read by the Company's independent certified
public accountants, as stated in their letters to be furnished pursuant
to Section 7(f).
k. File no amendment or supplement to the Registration
Statement or Prospectus at any time, whether before or after the
Effective Date of the Registration Statement, unless such filing shall
comply with the Act and the Regulations and unless you shall previously
have been advised of such filing and furnished with a copy thereof, and
you and counsel for the Representative shall have approved such filing
in writing within a reasonable time of receipt thereof.
l. Comply with all periodic reporting and proxy solicitation
requirements which may from time to time be applicable to the Company
as a result of the Company's registration under the Exchange Act on a
registration statement on Form 8-A.
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m. Comply with all provisions of all undertakings contained in
the Registration Statement.
n. Prior to the Closing Date or any Additional Closing Date,
as the case may be, issue no press release or other communication,
directly or indirectly, and hold no press conference and grant no
interviews with respect to the Company, the financial condition,
results of operations, business, properties, assets, or liabilities of
the Company, or this offering, without your prior written consent.
o. Appoint ComputerShare Investor Service, formerly American
Securities Transfer & Trust, Inc., as its transfer agent.
p. On or prior to the Closing Date, sell to the Representative
for a total purchase price of $30, Representative's Warrants entitling
the Representative or its assigns to purchase one share of Common Stock
for each ten (10) Firm Shares sold to the public at a price equal to
165% of the public offering price of the Shares, with the terms of the
Representative's Warrants, including exercise period, anti-dilution
provisions, exercise price, exercise provisions, transferability, and
registration rights, to be in the form filed as an exhibit to the
Registration Statement.
q. Until expiration of the Representative's Warrants, keep
reserved sufficient shares of Common Stock for issuance as
Representative's Warrant Shares upon full exercise of the
Representative's Warrants.
r. Adopt procedures for the application of the net proceeds it
receives from the sale of the Shares and apply the net proceeds from
the sale of the Shares substantially in the manner set forth in the
Registration Statement, which does not contemplate repayment of debt to
officers, directors, stockholders or affiliates of the Company, unless
any deviation from such application is in accordance with the
Registration Statement and occurs only after approval by the Board of
Directors of the Company and then only after the Board of Directors has
obtained the written opinion of recognized legal counsel experienced in
federal and state securities laws as to the propriety of any such
deviation.
s. Within the time period which the Prospectus is required to
be delivered under the Act, comply, at its own expense, with all
requirements imposed upon it by the Act, as now or hereafter amended,
by the Rules and Regulations, as from time to time may be enforced, and
by any order of the Commission, so far as necessary to permit the
continuance of sales or dealing in the Shares.
t. At the Closing, deliver to the Representative true and
correct copies of the Certificate of Incorporation of the Company and
all amendments thereto, all such copies to be certified by the
Secretary of the Company; true and correct copies of the by-laws of the
Company and of the minutes of all meetings of the directors and
stockholders of the Company held prior to the Closing which in any way
relate to the subject matter of this Agreement or the Registration
Statement.
u. Use all reasonable efforts to comply or cause to be
complied with the conditions precedent to the several obligations of
the Underwriters in Section 7 hereof.
v. File with the Commission all required information
concerning use of proceeds of the Public Offering in Forms 10-Q and
10-K in accordance with the provisions of the Exchange Act and to
provide a copy of such reports to the Representative and its counsel.
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w. Supply to the Representative and the Representative's
counsel at the Company's cost, two bound volumes each containing
material documents relating to the offering of the Shares within a
reasonable time after the Closing, not to exceed 90 days.
x. As soon as possible prior to the Effective Date, and as a
condition of the Underwriter's obligations hereunder, (i) if requested
by the Representative, have the Company listed on an accelerated basis,
and to maintain such listing for not less than ten years from the
Closing Date, in Standard & Poor's Standard Corporation Records; and
(ii) have the Common Stock quoted on The Nasdaq SmallCap Market as of
the Effective Date, on the Closing Date, on the Additional Closing Date
and thereafter for at least ten years provided the Company is in
compliance with The Nasdaq SmallCap Market maintenance requirements.
y. Continue, for a period of at least five years following the
Effective Date of the Registration Statement, to appoint such auditors
as are reasonably acceptable to the Representative, which auditors
shall (i) prepare consolidated financial statements in accordance with
Regulation S-X under the General Rules and Regulations of the Act and
(ii) examine (but not audit) the Company's consolidated financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of the
Company's 10-Q quarterly report and the mailing of quarterly financial
information to security holders.
z. Within 90 days of the Effective Date of the Registration
Statement, obtain "key man" life insurance policies in the amount of
$500,000 each on the lives of Clifford M. Gross and Uwe Reischl, with
the Company designated as the beneficiary of such policy, and pay the
annual premiums thereon for a period of not less than five years from
the Effective Date of the Registration Statement.
aa. Cause its transfer agent to furnish the Representative a
duplicate copy of the daily transfer sheets prepared by the transfer
agent during the six-month period commencing on the Effective Date of
the Registration Statement and instruct the transfer agent to timely
provide, upon the request of the Representative, duplicate copies of
such transfer sheets and/or a duplicate copy of a list of stockholders,
all at the Company's expense, for a period of 4 1/2 years after such
six-month period.
bb. Refrain from filing a Form S-8 registration statement for
a period of 24 months from the Effective Date of the Registration
Statement without the Representative's prior written consent. The
Company will also obtain from each holder of options to acquire Common
Stock of the Company such person's written enforceable agreement not to
sell shares of Common Stock pursuant to the exemption afforded by Rule
701 under the 1933 Act for a minimum period of 24 months from the
Effective Date without the prior written consent of the Representative.
cc. Afford the Representative the right, but not the
obligation, commencing on the Effective Date and surviving for a period
of five years, to designate an observer to attend meetings of the Board
of Directors. The designee, if any, and the Representative will receive
notice of each meeting of the Board of Directors in accordance with
Delaware law. Any such designee will receive reimbursement for all
reasonable costs and expenses incurred in attending meetings of the
Board of Directors, including but not limited to, food, lodging and
transportation, together with a fee equal to the highest cash fee or
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compensation paid by the Company to independent members of the Board of
Directors (but excluding options or securities). Moreover, to the
extent permitted by law, the Representative and its designee shall be
indemnified for the actions of such designee as an observer to the
Board of Directors and in the event the Company maintains a liability
insurance policy affording coverage for the acts of its officers and/or
directors, to the extent permitted under such policy, each of the
Representative and its designee shall be an insured under such policy.
dd. The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities, or (ii) for a period of 12 months
after the date hereof (A) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Securities, or (B) pay or
agree to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
ee. The Company will use its best efforts to maintain
insurance of the types and in the amounts which it deems adequate for
its business consistent with insurance coverage maintained by companies
of similar size and engaged in similar businesses including, but not
limited to, general liability insurance covering products and services
sold or distributed by the Company, all real and personal property
owned or leased by the Company and its Subsidiaries, and providing
coverage for theft, damage, destruction, acts of vandalism and all
other risks customarily insured against.
ff. Inform the Florida Department of Banking and Finance at
any time prior to the consummation of the distribution of the Firm
Securities and the Additional Securities by the Representatives if it
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba. Such information will be provided
within 90 days after the commencement thereof or after a change occurs
with respect to previously reported information.
gg. After the Effective Date, the Company will continue to
adopt annual business plans and monthly financial projections
(including balance sheet, profit/loss statement, statement of cash
flows, revenue and earnings) and an annual budget which are agreeable
to the Board of Directors.
hh. At the Effective Date, the Company shall enter into a
Consulting Agreement with the Representative under which the
Representative shall agree to consult with the Company in connection
with its management, business operations, financing opportunities
(including prospective mergers, acquisitions, joint ventures and other
business transactions), in consideration for the payment at the Closing
in one lump sum of a consulting fee in the aggregate amount of
$120,000.
ii. During the 12 month period following the Closing, the
Company shall not, without the prior written consent of the
Representative (i) invest in any single portfolio company in an amount
exceeding the lesser of (a) $500,000, or (b) 10% of the Company's net
assets, (ii) permit a portfolio company to invest, advance or otherwise
commit a material amount of the funds invested by the Company in such
portfolio company to payment of consideration to third parties for the
acquisition of rights to a technology or further development of a
technology, unless and until the Company has an agreement to resell
such technology or to merge the portfolio company with an acquiring
company or has secured an executed letter of intent with respect to
such merger or resale and the Company reasonably believes that such
merger or resale shall occur, and (iii) limit the number
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of new portfolio companies that the Company will merge with private,
non-public companies such the Company's total investment in its
portfolio companies that have merged with private, non-public companies
does not exceed 10% of the Company's total net assets valued at the
time of the Closing Date.
6. Payment of Expenses. The Company hereby agrees to pay all expenses
(subject to the last sentence of this Section 6) in connection with the
offering, including but not limited to (a) the preparation, printing, filing,
distribution, and mailing of the Registration Statement and the Prospectus,
including NASD, SEC, Nasdaq filing and/or application fees, and the printing,
filing, distribution, and mailing of this Agreement, any Agreement Among
Underwriters, Selected Dealers Agreement, preliminary and final Blue Sky
Memorandums, material to be circulated to the Underwriters by you and other
incidental or related documents, including the cost of all copies thereof and of
the Preliminary Prospectuses and of the Prospectus, and any amendments or
supplements thereto, supplied to the Representative in quantities as herein
above stated, (b) the issuance, sale, transfer, and delivery of the Firm Shares,
Additional Shares, the Representative's Warrants and the Representative's
Warrant Shares, including, without limitation, any original issue, transfer or
other taxes payable thereon and the costs of preparation, printing and delivery
of certificates representing such securities, as applicable, (c) the
qualification of the Firm Shares, Additional Shares, the Representative's
Warrants and the Representative's Warrant Shares under state or foreign "blue
sky" or securities laws, which qualification shall be undertaken by counsel to
the Representative at the Company's expense, (d) the fees and disbursements of
counsel for the Company and the accountants for the Company, (e) the listing of
the Shares on The Nasdaq SmallCap Market, (f) the Representative's
non-accountable expense allowance equal to three percent (3%) of the aggregate
gross proceeds from the sale of the Shares, and (g) the consulting fee of
$120,000 payable to the Representative. Prior to or immediately following the
Closing Date, the Company shall bear the costs of tombstone announcements if
requested to do so by the Representative.
The Company has previously remitted to the Representative the sum of
$25,000, which sum has been credited as a partial payment in advance of the
non-accountable expense allowance provided for in Section 6(f) above.
7. Conditions of Underwriters' Obligations. The Underwriters'
obligation to purchase and pay for the Firm Shares and Additional Shares, as
provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
you, as of the date hereof and as of the Closing Date (or the Additional Closing
Date, as the case may be), to the performance by the Company of its obligations
hereunder, and to the following conditions:
a. The Registration Statement shall have become effective not
later than 5:00 p.m., Mountain time, on the date of this Agreement or
such later date and time as shall be consented to in writing by you.
b. At the Closing Date and any Additional Closing Date, you
shall have received the favorable opinion of Gersten, Savage &
Kaplowitz, LLP, counsel for the Company, dated the date of delivery,
addressed to you, and in form and scope satisfactory to your counsel,
to the effect that:
i. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Delaware, with full power and authority, and, after
reasonable investigation, counsel has no knowledge that the
Company does not have all necessary consents, authorizations,
approvals, orders, certificates, and
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permits of and from, and declarations and filings with, all
federal, state, local, and other governmental authorities and
all courts and other tribunals, to own, lease, license, and
use its properties and assets and to conduct its business in
the manner described in the Prospectus. The Company is duly
qualified to do business and is in good standing in every
jurisdiction in which its ownership, leasing, licensing, or
use of property and assets or the conduct of its business
makes such qualification necessary;
ii. Each Subsidiary is a corporation duly organized
and validly existing in good standing under the laws of the
jurisdiction of its organization, with full corporate power
and authority to own, lease, and operate its properties and to
conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement
thereto); and all the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned by the
Company directly, free and clear of any security interest,
lien, adverse claim, equity or other encumbrance;
iii. The authorized capital stock of the Company as
of the date of this Agreement consisted of 19,000,000 shares
of Common Stock, of which 2,782,226 shares of Common Stock are
issued and outstanding,378,000 shares of Common Stock are
reserved for issuance upon the exercise of outstanding
options, and 372,000 shares of Common Stock are reserved for
issuance upon the exercise of the remaining options authorized
under the Company's option plans; and 1,000,000 shares of
Preferred Stock, none of which are issued and outstanding; and
there have been no changes in the authorized and outstanding
capital stock of the Company since the date of this Agreement,
except as contemplated by the Registration Statement and the
Prospectus. Each outstanding share of capital stock is validly
authorized, validly issued, fully paid, and nonassessable,
with no personal liability attaching to the ownership thereof,
has not been issued and is not owned or held in violation of
any preemptive right of stockholders. There is no commitment,
plan, or arrangement to issue, and no outstanding option,
warrant, or other right calling for the issuance of, any share
of capital stock of the Company or any security or other
instrument which by its terms is convertible into, exercisable
for, or exchangeable for capital stock of the Company, except
as set forth above, and except as is properly described in the
Prospectus. There is outstanding no security or other
instrument which by its terms is convertible into or
exchangeable for capital stock of the Company, except as
described in the Prospectus;
iv. To the knowledge of counsel, after reasonable
investigation, there is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or
investigation pending, threatened, or proposed (or any basis
therefor) with respect to the Company or any of its respective
operations, businesses, properties, or assets, except as is
properly described in the Prospectus or such as individually
or in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business,
properties, or assets of the Company. To the knowledge of
counsel, the Company is not in violation of, or in default
with respect to, any law, rule, regulation, order, judgment,
or decree, except as may be properly described in the
Prospectus or such as in the
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aggregate have been disclosed to the Representative and do not
now have and will not in the future have a material adverse
effect upon the operations, business, properties, or assets of
the Company; nor is the Company required to take any action in
order to avoid any such violation or default;
v. Neither the Company nor any other party is now or
is expected by the Company to be in violation or breach of, or
in default with respect to, complying with any material
provision of any contract, agreement, instrument, lease,
license, arrangement, or understanding which is material to
the Company;
vi. Neither the Company nor any Subsidiary is in
violation or breach of, or in default with respect to, any
term of its Certificate of Incorporation or by-laws;
vii. The Company has all requisite power and
authority to execute and deliver and to perform thereunder
this Agreement, the Consulting Agreement and the
Representative's Warrants. All necessary corporate proceedings
of the Company have been taken to authorize the execution and
delivery and performance thereunder by the Company of this
Agreement, the Consulting Agreement and the Representative's
Warrants. Each of this Agreement, the Consulting Agreement and
the Representative's Warrants have been duly authorized,
executed and delivered by the Company, and is a legal, valid,
and binding obligation of the Company, and (subject to
applicable bankruptcy, insolvency, and other laws affecting
the enforceability of creditors' rights generally) enforceable
as to the Company in accordance with its respective terms. No
consent, authorization, approval, order, license, certificate,
or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any
court or other tribunal is required by the Company for the
execution or delivery, or performance thereunder by the
Company of this Agreement or the Representative's Warrants
(except filings under the Act and the 1940 Act that have been
made prior to the Closing Date, and consents consisting only
of consents under "blue sky" or securities laws which are
required in connection with the transactions contemplated by
this Agreement, and which counsel has been advised by counsel
to the underwriters have been obtained on or prior to the date
the Registration Statement becomes effective under the Act).
No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to
which the Company is a party, or to which any of its
properties or assets are subject, is required for the
execution or delivery, or performance thereunder of this
Agreement, the Consulting Agreement or the Representative's
Warrants; and the execution and delivery and performance
thereunder of this Agreement, the Consulting Agreement and the
Representative's Warrants will not violate, result in a breach
of, conflict with, or (with or without the giving of notice or
the passage of time or both) entitle any party to terminate or
call a default under any such contract, agreement, instrument,
lease, license, arrangement, or understanding, or violate or
result in a breach of any term of the Certificate of
Incorporation or by-laws of the Company, or violate, result in
a breach of, or conflict with any law, rule, regulation,
order, judgment, or decree binding on the Company or to which
any of its operations, businesses, properties, or assets are
subject;
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<PAGE>
viii. The Shares are, and the Representative's
Warrant Shares will be upon exercise of the Representative's
Warrants, validly authorized, validly issued, fully paid, and
nonassessable and are not issued in violation of any
preemptive rights of shareholders, and the Underwriters will
have received good title to the Shares purchased by them from
the Company upon payment therefor, free and clear of all
liens, security interests, pledges, charges, encumbrances,
shareholders' agreements, and voting trusts. The
Representative's Warrant Shares have been duly and validly
reserved for issuance pursuant to the terms of the
Representative's Warrants. The Shares, the Representative's
Warrants and the Representative's Warrant Shares conform to
all statements relating thereto contained in the Registration
Statement or the Prospectus;
ix. To the knowledge of counsel, after reasonable
investigation, all contracts, agreements, instruments, leases,
and licenses that are required to be described in the
Registration Statement or the Prospectus relating to the
Company or its Subsidiaries have been properly described
therein. All contracts, agreements, instruments, leases, or
licenses required to be filed as an exhibit to the
Registration Statement have been filed with the Commission as
an exhibit to the Registration Statement;
x. Insofar as statements in the Prospectus purport to
summarize the status of litigation or the provisions of laws,
rules, regulations, orders, judgments, decrees, contracts,
agreements, instruments, leases, or licenses such statements
have been prepared or reviewed by such counsel and accurately
reflect the status of such litigation and provisions purported
to be summarized and are correct in all material respects;
xi. Except as provided in the Registration Statement,
no person or entity has the right to require registration of
shares of Common Stock or other securities of the Company
because of the filing or effectiveness of the Registration
Statement;
xii. The Registration Statement has become effective
under the Act. No Stop Order has been issued and no
proceedings for that purpose have been instituted or
threatened;
xiii. The Registration Statement and the Prospectus,
and any amendment or supplement thereto, comply as to form in
all material respects with the requirements of the Act and the
Regulations;
xiv. Such counsel has no knowledge that either the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, contains any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (except that no opinion need be expressed as to the
consolidated financial statements and other financial data and
schedules which are or should be contained therein);
xv. After reasonable investigation, such counsel has
no knowledge of any event which has occurred since the
Effective Date which should have been set forth in an
amendment or supplement to the Registration Statement or the
Prospectus that has not been set forth in such an amendment or
supplement;
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<PAGE>
xvi. The Company is not currently offering any
securities for sale except as described in the Registration
Statement;
xvii. Such counsel has no knowledge of any promoters,
affiliates, parents or Subsidiaries of the Company except as
are described in the Registration Statement;
xviii. The Company and its Subsidiaries own or
possess, free and clear of all liens or encumbrances and
rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, copyrights,
service marks, service names, trade names and licenses
necessary to conduct business (including without limitation,
any such licenses or rights described in the Registration
Statement as being owned or possessed by the Company or any
Subsidiary) (all of which are collectively referred to herein
as the "Intellectual Property"); there is no actual or, to the
knowledge of counsel, pending or threatened claim, proceeding
or action by any person pertaining to or which challenges the
exclusive rights of the Company with respect to any of the
Company's Intellectual Property; based on a review of all the
Company's Intellectual Property, to the knowledge of counsel,
such Intellectual Property does not and will not infringe on
any trademarks, copyrights, service marks, service names,
trade names or valid patents or patents pending held by third
parties known to the Company and such counsel;
xix. The Company is not a party to any agreement
giving rise to any obligation by the Company or any Subsidiary
to pay any third-party royalties or fees of any kind
whatsoever with respect to any technology developed, employed,
used or licensed by the Company or any Subsidiary, other than
is disclosed in the Prospectus;
xx. The Shares are eligible for quotation on The
Nasdaq SmallCap Market; and
xxi. The issued and outstanding shares of Common
Stock and all other securities issued and sold or exchanged by
the Company were not required to be registered under any
applicable state or federal securities laws and regulations
when issued and sold or exchanged and were issued and sold or
exchanged in compliance with applicable exemptions from
registration under federal and state securities laws.
Such opinion shall be governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991) and shall be subject to the qualifications, exceptions,
definitions, limitations on coverage and other limitations set forth therein and
in such opinion. Qualifications in such opinion as to knowledge or the absence
of knowledge shall be based upon and limited to the "Actual Knowledge" (as
defined in the Accord) of the "Primary Lawyer Group" (as identified in such
opinion). In rendering such opinion, such legal counsel shall be entitled to
rely upon Public Authority Documents and upon information provided by client
officials in written Certificates provided that copies of such Public Authority
Documents and Certificates are attached as exhibits to the written opinion of
legal counsel. The term "Public Authority Documents" shall have the meaning
ascribed to it in the Legal Opinion Accord of the ABA Section of Business Law
(1991).
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<PAGE>
c. At the Closing Date and any Additional Closing Date, you shall have
received the signed opinion of Reed Smith Shaw & McClay LLP, dated the date of
delivery, addressed to you, and in form and scope satisfactory to your counsel,
to the effect that:
i. the issuance and sale of the Shares and the transactions
contemplated hereby will not conflict with or result in a breach or violation
of, the provisions of 1940 Act applicable to the Company that would reasonably
be expected to have, singly or in the aggregate, a material adverse effect on
the Company;
ii. no authorization, approval, consent or order of any
regulatory authority is necessary under the 1940 Act in connection with the
issuance of the Shares and the due and valid execution, delivery and performance
by the Company of this Agreement and any of the transactions contemplated hereby
to be entered into prior to or contemporaneously with such Agreement, except
such authorizations, approvals or consents that have been obtained prior to the
date of such opinion. Such counsel has received no notice that any such
authorizations, approvals or consents have been revoked, modified or rescinded
as of the date of such opinion;
iii. to the best knowledge of such counsel, the Company and
each of its Subsidiaries has made all declarations and filings with regulatory
authorities necessary to use its properties and assets and to conduct its
business pursuant to the 1940 Act and as of the date of such opinion, no facts
have come to the attention of such counsel that would lead such counsel to
believe that any regulatory authorizations under the 1940 Act are not valid and
in full force and effect as of the date of such opinion;
iv. such counsel has reviewed the Registration Statement and,
based solely upon such review and interviews with management of the Company, no
facts have come to the attention of such counsel that would lead such counsel to
believe that the Company and each of its Subsidiaries is not in compliance in
all material respects with the 1940 Act applicable to the Company;
v. No facts have come to the attention of such counsel that
would lead such counsel to believe that any of the regulatory authorities is
considering modifying, limiting, conditioning, suspending, revoking or not
renewing any consents, orders, approvals or other authorizations granted in
connection with the Company's election and operation as a business development
company under the 1940 Act;
vi. Such counsel has no knowledge of any notice given to the
Company or any of its Subsidiaries that any regulatory authorities are
investigating the Company or any of its Subsidiaries in connection with the
provisions of the 1940 Act to which the Company is subject, other than normal
oversight incident to the operations of the Company and its Subsidiaries;
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<PAGE>
vii. Each of the directors described under the caption
"Management" in the Prospectus as being "disinterested," as such term is defined
under the 1940 Act, is eligible to serve as, and is in compliance with the
definition of, a disinterested director, as defined;
viii. The statements in the Prospectus under the captions
"Regulation," "investment Advisory Services" and "Brokerage Allocation and Other
Practices" fairly present the information with respect to the regulation of the
Company as a business development company under applicable provisions of the
1940 Act and no facts have come to the attention of such counsel that would lead
such counsel to believe that any such disclosure contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make such statements, in light of the circumstances
under which they were made, not misleading, at the time of filing thereof, or
the date of such counsel's opinion;
ix. To the best of such counsel's knowledge and information,
after due inquiry of the officers of the Company, such counsel has no reason to
believe that the Company has conducted operations or business prior to its
election to be regulated as a business development company such that the Company
would have been required by the 1940 Act to have earlier elected to be so
governed; and
x. To the best of such counsel's knowledge and information,
after due investigation, the Company is in compliance in all material respects
with the provisions of the 1940 Act that are applicable to the conduct of
business development companies.
d. On or prior to the Closing Date and any Additional Closing
Date, as the case may be, you shall have been furnished such
information, documents, certificates, and opinions as you may
reasonably require for the purpose of enabling you to review the
matters referred to in this Section 7, and in order to evidence the
accuracy, completeness, or satisfaction of any of the representations,
warranties, covenants, agreements, or conditions herein contained, or
as you may reasonably request.
e. At the Closing Date and any Additional Closing Date, as the
case may be, you shall have received a certificate of the chief
executive officer and of the chief financial officer of the Company,
dated the Closing Date or such Additional Closing Date, as the case may
be, to the effect that the conditions set forth in Section 7(a) have
been satisfied, that as of the date of this Agreement and as of the
Closing Date or such Additional Closing Date, as the case may be, the
representations and warranties of the Company contained herein were
and are accurate, and that as of the Closing Date or such Additional
Closing Date, as the case may be, the obligations to be performed by
the Company hereunder on or prior thereto have been fully performed.
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<PAGE>
f. At the time this Agreement is executed and at the Closing
Date and any Additional Closing Date, as the case may be, you shall
have received letters from Ernst & Young LLP, addressed to you and
dated the date of delivery but covering a period within three business
days of such date, in form and substance satisfactory to you.
g. All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Firm Shares and the Additional
Shares shall be satisfactory in form and substance to you and to
counsel for the Representative, and you shall have received a favorable
opinion from counsel to the Company, dated as of the Closing Date or
the Additional Closing Date, as the case may be, with respect to such
of the matters set forth under Sections 7(b) and 7(c) and with respect
to such other related matters as you may reasonably request including
the payment of all amounts due to the Representative and its counsel
under Section 6 hereof.
h. The NASD, upon review of the terms of the public offering
of the Firm Shares and the Additional Shares shall not have objected to
your participation in such offering.
i. The Company shall have received notice that the Common
Stock will be quoted on The Nasdaq SmallCap Market as of the Effective
Date.
Any certificate or other document signed by any officer of the Company
and delivered to you or to counsel for the Representative shall be deemed a
representation and warranty by such officer individually and by the Company
hereunder to the Representative as to the statements made therein. If any
condition to your obligations hereunder to be fulfilled prior to or at the
Closing Date or any Additional Closing Date, as the case may be, is not so
fulfilled, you may terminate this Agreement or, if you so elect, in writing
waive any such conditions which have not been fulfilled or extend the time for
their fulfillment.
8. Indemnification and Contribution.
a. Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Underwriters, the
Representative, and each of their officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls
the Representative or any one of the Underwriters within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any
and all loss, liability, claim, damage, and expense whatsoever (which
shall include, for all purposes of this Section 8, but not be limited
to, attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any
untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Prospectus, the Registration
Statement, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or (B) in any
application or other document or communication (in this Section 8
collectively called an "application") in any jurisdiction in order to
qualify the Common Stock under the "blue sky" or securities laws
thereof or filed with the Commission or any securities exchange; or any
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or (ii) any breach of any representation, warranty,
covenant, or agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any liability
the Company may
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<PAGE>
otherwise have, including liabilities arising under this Agreement;
however, the Company shall have no liability under this Section 8 if
such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company as stated in Section
8(b) with respect to the Underwriters by or on behalf of the
Underwriters expressly for inclusion in any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or in any application, as the case may be.
If any action is brought against the Underwriters, the
Representative or any of their officers, directors, partners,
employees, agents, or counsel, or any controlling persons of an
Underwriter or the Representative (an "indemnified party") in respect
of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but
the failure so to notify shall not relieve the Company from any
liability it may have other than pursuant to this Section 8(a)) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties
shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in
connection with the defense of such action or the Company shall not
have promptly employed counsel satisfactory to such indemnified party
or parties to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses
shall be borne by the Company. Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written
consent. The Company agrees promptly to notify the Underwriters and the
Representative of the commencement of any litigation or proceedings
against the Company or against any of its officers or directors in
connection with the sale of the Shares, any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or any application.
b. The Underwriters agree to indemnify and hold harmless the
Company, the Company's counsel, each director of the Company, each
officer of the Company who shall have signed the Registration
Statement, each other person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, to the same extent as the foregoing indemnity from the Company to
the Underwriters in Section 8(a), but only with respect to statements
or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement, or the Prospectus (as from time to time amended
and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written
information furnished to the Company as stated in this Section 8(b)
with respect to the Underwriters by or on behalf of the Underwriters
expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto,
or in any application, as the case may be; provided, however, that the
obligation of the Underwriters to provide indemnity under the
provisions of this Section 8(b) shall be limited to the amount which
represents the
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<PAGE>
product of the number of Firm Shares and Additional Shares sold
hereunder and the initial public offering price per Share set forth on
the cover page of the Prospectus. For all purposes of this Agreement,
the amounts of the selling concession and reallowance set forth in the
Prospectus, the information under "Underwriting" and the identification
of counsel to the Representative under "Legal Matters" constitute the
only information furnished in writing by or on behalf of the
Underwriters expressly for inclusion in any Preliminary Prospectus, the
Registration Statement, or the Prospectus (as from time to time amended
or supplemented), or any amendment or supplement thereto, or in any
application, as the case may be. If any action shall be brought against
the Company or any other person so indemnified based on any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or any application, and in respect of
which indemnity may be sought against the Underwriters pursuant to this
Section 8(b), the Underwriters shall have the rights and duties given
to the Company, and the Company and each other person so indemnified
shall have the rights and duties given to the indemnified parties, by
the provisions of Section 8(a).
c. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 8 is for any reason held to be unavailable to the Underwriters
or the Company, then the Company shall contribute to the damages paid
by the several Underwriters, and the several Underwriters shall
contribute to the damages paid by the Company; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties
are entitled, there shall be considered the relative benefits received
by each party from the sale of the Firm Shares and Additional Shares
(taking into account the portion of the proceeds of the offering
realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated as
one entity for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in
the aggregate exceeds the total public offering price of the Firm
Shares and Additional Shares purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages which such
Underwriter and its controlling persons have otherwise been required to
pay in respect of the same or any substantially similar claim. The
Underwriters' obligations to contribute hereunder are several in
proportion to their respective underwriting obligations and not joint.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act shall have the
same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, shall have the same rights to
contribution as the Company. Anything in this Section 8(c) to the
contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without
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<PAGE>
its written consent. This Section 8(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
9. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and any Additional Closing Date, and such
representations, warranties, covenants, and agreements of the Underwriters and
the Company, including the indemnity and contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Representative, the Underwriters or
any indemnified person, or by or on behalf of the Company or any person or
entity which is entitled to be indemnified under Section 8(b), and shall survive
termination of this Agreement or the delivery of the Firm Shares and Additional
Shares to the Underwriters for a period equal to the statute of limitations for
claims related hereto, but not to exceed an aggregate of five years from the
date hereof. In addition, the provisions of Sections 5(a), 6, 8, 9, 10, and 12
shall survive termination of this Agreement, whether such termination occurs
before or after the Closing Date or any Additional Closing Date.
10. Effective Date of This Agreement and Termination Thereof.
a. This Agreement shall be executed within 24 hours of the
Effective Date of the Registration Statement and shall become effective
on the Effective Date or at the time of the initial public offering of
the Shares, whichever is earlier. The time of the initial public
offering shall mean the time, after the Registration Statement becomes
effective, of the release by the Representative for publication of the
first newspaper advertisement which is subsequently published relating
to the Shares or the time, after the Registration Statement becomes
effective, when the Shares are first released by the Representative for
offering by dealers by letter or telegram, whichever shall first occur.
The Representative or the Company may prevent this Agreement from
becoming effective without liability of any party to any other party,
except as noted below in this Section 10, by giving the notice
indicated in Section 10(c) before the time this Agreement becomes
effective.
b. The Representative shall have the right to terminate this
Agreement at any time prior to the Closing Date or any Additional
Closing Date, as the case may be, by giving notice to the Company if
there shall have been a general suspension of, or a general limitation
on prices for, trading in securities on the New York Stock Exchange or
the American Stock Exchange or in the over-the-counter market; or if
there shall have been an outbreak of major hostilities or other
national or international calamity; or if a banking moratorium has been
declared by a state or federal authority; or if a moratorium in foreign
exchange trading by major international banks or persons has been
declared; or if there shall have been a material interruption in the
mail service or other means of communication within the United States;
or if the Company shall have sustained a material or substantial loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage, or
other calamity or malicious act which, whether or not such loss shall
have been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the offering, sale, or delivery of the Firm
Shares and Additional Shares, as the case may be; or if there shall
have been such material and adverse change in the market for securities
in general so as to make it inadvisable to proceed with the offering,
sale, and
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<PAGE>
delivery of the Shares, as the case may be, on the terms contemplated
by the Prospectus due to the impaired investment quality of the Shares;
or if the Dow Jones Industrial Average shall have fallen by 15% or more
from its closing price on the day immediately preceding the date that
the Registration Statement is declared effective by the Commission.
c. If the Representative elects to prevent this Agreement from
becoming effective as provided in this Section 10, or to terminate this
Agreement, it shall notify the Company promptly by telephone, telex, or
telegram, confirmed by letter. If, as so provided, the Company elects
to prevent this Agreement from becoming effective, the Company shall
notify the Representative promptly by telephone, telex, or telegram,
confirmed by letter.
d. Anything in this Agreement to the contrary notwithstanding
other than Section 10(e), if this Agreement shall not become effective
by reason of an election pursuant to this Section 10 or if this
Agreement shall terminate or shall otherwise not be carried out prior
to December 31, 2000 because (i) of any reason solely within the
control of the Company or its stockholders and not due to the breach of
any representation, warranty or covenant or bad faith of the
Representative, (ii) the Company unilaterally withdraws the proposed
Public Offering from the Representative in favor of another
underwriter, (iii) the Company does not permit the Registration
Statement to become effective, (iv) of any material discrepancy in any
representation by the Company and/or its officers, directors,
stockholders, agents, advisers or representatives, made in writing,
including but not limited to the Registration Statement, to the
Representative, (v) the Company is, directly and/or indirectly,
negotiating with other persons or entities of whatsoever nature
relating to a possible Public Offering of its securities, or (vi) of
any failure on the part of the Company to perform any covenant or
agreement or satisfy any condition of this Agreement by it to be
performed or satisfied, then, in any of such events, the Company shall
be obligated to reimburse the Representative for its out-of-pocket
expenses on an accountable basis. Should the Representative be required
to account for "out-of-pocket" expenses, any expense incurred by the
Representative shall be deemed to be reasonable and unobjectionable
upon a reasonable showing by the Representative that such expenses were
incurred, directly or indirectly, in connection with the proposed
transaction and/or relationship of the parties hereto, as described
herein. In no event will the Representative be entitled to
reimbursement of accountable expenses exceeding $40,000, inclusive of
the $25,000 advanced against the non-accountable expense allowance. The
Representative will return to the Company any portion of the $25,000
payment previously received that is not used in the payment of
accountable expenses if the Public Offering is not completed.
e. Notwithstanding any election hereunder or any termination
of this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 5(a), 6, 8, 9, and 10 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.
11. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the
Representative, shall be mailed, delivered, or sent by facsimile transmission
and confirmed by original letter, to Schneider Securities, Inc., 1120 Lincoln
Street, Suite 900, Denver, Colorado 80203, Attention: Thomas J. O'Rourke and
Keith Koch, with a copy to Robert W. Walter, Esq., Berliner Zisser Walter &
Gallegos, P.C., 1700 Lincoln Street, Suite 4700, Denver, Colorado 80203; or if
sent to the Company shall be mailed, delivered, or telexed or telegraphed and
confirmed by letter, to UTEK Corporation, 202 South Wheeler
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<PAGE>
Street, Plant City, Florida, Attention: Clifford M. Gross, with a copy to Jay M.
Kaplowitz, Esq., Gersten, Savage, & Kaplowitz, LLP, 101 East 52nd Street, 9th
Floor, New York, New York 10022. All notices hereunder shall be effective upon
receipt by the party to which it is addressed.
12. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company, and the persons and
entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any buyer, as such, of the Firm Shares and
Additional Shares) and no other person shall have or be construed to have any
legal or equitable right, remedy, or claim under or in respect of or by virtue
of this Agreement or any provision herein contained.
13. Construction. This Agreement shall be construed in accordance with
the laws of the State of Colorado, without giving effect to conflict of laws.
Time is of the essence in this Agreement. The parties acknowledge that this
Agreement was initially prepared by the Representative, and that all parties
have read and negotiated the language used in this Agreement. The parties agree
that, because all parties participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which construes
ambiguous language in favor of or against any party by reason of that party's
role in drafting this Agreement.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
UTEK CORPORATION
By:__________________________________________
Clifford M. Gross, Chief Executive Officer
Accepted as of the date first above written.
Denver, Colorado
SCHNEIDER SECURITIES, INC.
for itself and any other Underwriters:
By:_________________________________________
Thomas Schneider, Chief Executive Officer
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<PAGE>
UTEK CORPORATION
(a Delaware corporation)
SCHEDULE 1
This Schedule sets forth the name of each Underwriter referred to in
the Underwriting Agreement and the number of Shares to be sold by the Company.
Number of
Name Shares
-------------------------- ---------
Schneider Securities, Inc.
----------
Total 1,000,000
==========
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