EXHIBIT 1.1
1,100,000 Shares of Common Stock
and 1,100,000 Series 1 Redeemable Warrants
and 1,100,00 Series 2 Redeemable Warrants
THERMOENERGY CORPORATION
UNDERWRITING AGREEMENT
Little Rock, Arkansas
August ___, 1997
National Securities Corporation
As Representative of the Several Underwriters
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Thermoenergy Corporation, an Arkansas corporation (the
"Company"), hereby agrees with National Securities Corporation
("National") and each of the underwriters named in Schedule A
hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in
Section 11), for whom National is acting as representative (in
such capacity, National shall hereinafter be referred to as "you"
or the "Representative") with respect to the sale by the Company
and the purchase by the Underwriters, acting severally and not
jointly, of the respective amount of shares (the "Shares") set
forth in said Schedule A of the Company's Series A common stock,
par value $.001 per share (the "Common Stock"), Series 1
redeemable common stock purchase warrants (the "Series 1
Warrants"), each to purchase one share of Common Stock and Series
2 Redeemable Common Stock Purchase Warrants (the "Series 2
Warrants"), each to purchase 1 share of common stock, set forth
in Schedule A hereto. The Series 1 Warrants and the Series 2
Warrants are sometimes referred to herein collectively as (the
"Warrants"). The aggregate 1,100,000 Shares and 2,200,000
Warrants shall be separately tradeable upon issuance and are
hereinafter referred to as the "Firm Securities." Each Warrant
is exercisable commencing on _________, 1998 until _________,
2002, unless previously redeemed by the Company, at an initial
exercise price of $_______ per share of Common Stock. The
Warrants may be redeemed by the Company at a redemption price of
$.05 per Warrant at any time after _________, 1998 on thirty (30)
days' prior written notice, provided that the closing sale price
of the Common Stock equals or exceeds $_________ per share
(subject to adjustment under certain circumstances), for any
twenty (20) trading days within a period of thirty (30)
consecutive trading days ending on the fifth trading day prior to
the notice of redemption, all in accordance with the terms and
conditions of the Warrant Agreement (herein defined).
Upon your request, as provided in Section 2(b) of this
Agreement, the Company shall also issue and sell to the
Underwriters, acting severally and not jointly, up to an
additional 165,000 shares of Common Stock and/or 165,000 Series 1
Warrants and/or 165,000 Series 2 Warrants for the purpose of
covering overallotments, if any. Such 165,000 shares of Common
Stock and/or 165,000 Warrants are hereinafter collectively to as
the "Option Securities." The Company also proposes to issue and
sell to you warrants (the "Representative's Warrants") pursuant
to the Representative's Warrant Agreement (the "Representative's
Warrant Agreement") for the purchase of an additional 110,000
shares of Common Stock and/or 110,000 Warrants and/or 110,000
Series 2 Warrants. The shares of Common Stock and Warrants
issuable upon exercise of the Representative's Warrants are
hereinafter referred to as the "Representative's Securities."
The Firm Securities, the Option Securities, the Representative's
Warrants and the Representative's Securities (collectively,
hereinafter referred to as the "Securities") are more fully
described in the Registration Statement and the Prospectus
referred to below.
1. Representations and Warranties of the Company.
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The Company represents and warrants to, and agrees with,
each of the Underwriters as of the date hereof, and as of the
Closing Date and the Option Closing Date, if any, as follows:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a
registration statement, and an amendment or amendments thereto,
on Form SB-2 (No.333-21613), including any related preliminary
prospectus (the "Preliminary Prospectus"), for the registration
of the Firm Securities, the Option Securities and the
Representative's Securities under the Securities Act of 1933, as
amended (the "Act"), which registration statement and amendment
or amendments have been prepared by the Company in conformity
with the requirements of the Act, and the Regulations (as defined
below) of the Commission under the Act. The Company will not
file any other amendment thereto to which the Underwriters shall
have objected in writing after having been furnished with a copy
thereof. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission
at the time the registration statement becomes effective
(including the prospectus, financial statements, schedules,
exhibits and all other documents filed as a part thereof or
incorporated therein and all information deemed to be a part
thereof as of such time pursuant to paragraph (b) of Rule 430(A)
of the Regulations), is hereinafter called the "Registration
Statement," and the form of prospectus in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations,
is hereinafter called the "Prospectus." For purposes hereof,
"Regulations" mean the rules and regulations adopted by the
Commission under either the Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory
authority has issued any order preventing or suspending the use
of any Preliminary Prospectus, the Registration Statement or the
Prospectus and no proceedings for a stop order suspending the
effectiveness of the Registration Statement have been instituted,
or, to the Company's knowledge, are threatened. Each of the
Preliminary Prospectus, the Registration Statement and the
Prospectus at the time of filing thereof conformed in all
material respects with the requirements of the Act and
Regulations, and none of the Preliminary Prospectus, the
Registration Statement or the Prospectus at the time of filing
thereof contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
and necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to
statements made in reliance upon and in conformity with written
information furnished to the Company with respect to the
Underwriters by or on behalf of the Underwriters expressly for
use in such Preliminary Prospectus, Registration Statement or
Prospectus.
(c) When the Registration Statement becomes effective
and at all times subsequent thereto up to the Closing Date (as
defined in Section 2(c) hereof) and each Option Closing Date (as
defined in Section 2(b) hereof), if any, and during such longer
period as the Prospectus may be required to be delivered in
connection with sales by the Underwriters or a dealer, the
Registration Statement and the Prospectus, as amended or
supplemented as required, will contain all statements which are
required to be stated therein in accordance with the Act and the
Regulations, and will conform in all material respects to the
requirements of the Act and the Regulations; neither the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, will contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, provided, however, that this representation and
warranty does not apply to statements made or statements omitted
in reliance upon and in conformity with information furnished to
the Company in writing by or on behalf of any Underwriter
expressly for use in the Registration Statement or the Prospectus
or any amendment thereof or supplement thereto.
(d) The Company and each of its subsidiaries have been
duly organized and are validly existing as corporations in good
standing under the laws of the respective states of their
incorporation. Except as set forth in the Prospectus, the
Company does not own or control, directly or indirectly, any
corporation, partnership, trust, joint venture or other business
entity other than the subsidiaries listed in Exhibit 21 of the
Registration Statement. Each of the Company and its subsidiaries
is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations
require such qualification or licensing, except where the failure
to be so qualified or licensed would not have a material and
adverse effect on the condition, financial or otherwise, or the
business affairs, operations, properties, or results of
operations of the Company and its subsidiaries, taken as a whole
(the "Business"). Each of the Company and its subsidiaries has
all requisite power and authority (corporate and other), and has
obtained any and all necessary authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including,
without limitation, those having jurisdiction over environmental
or similar matters), to own or lease its properties and conduct
its business as described in the Prospectus; the Company and each
of its subsidiaries have been doing business in compliance in all
material respects with all such authorizations, approvals,
orders, licenses, certificates, franchises and permits and all
federal, state, local and foreign laws, rules and regulations
except where the failure to do so would not have a material
adverse effect on the business; and neither the Company nor any
of its subsidiaries have received any notice of proceedings
relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise,
or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and
adversely affect the Business. The disclosures in the
Registration Statement concerning the effects of federal, state,
local, and foreign laws, rules and regulations on the Company's
business as currently conducted and as contemplated are correct
in all material respects and do not omit to state a material fact
necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made.
(e) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus under
the headings "Capitalization" and "Description of Securities" and
will have the adjusted capitalization set forth therein on the
Closing Date and the Option Closing Date, if any, based upon the
assumptions set forth therein, and the Company is not a party to
or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants,
options or other securities, except for this Agreement and as
described in the Prospectus. The Securities and all other
securities issued or issuable by the Company conform or, when
issued and paid for, will conform, in all material respects to
all statements with respect thereto contained in the Registration
Statement and the Prospectus. All issued and outstanding shares
of capital stock of each subsidiary of the Company have been duly
authorized and validly issued and are fully paid and
nonassessable. Except as disclosed in or contemplated by the
Prospectus and the financial statements of the Company and the
related notes thereto included in the Prospectus, neither the
Company nor any subsidiary has outstanding any options to
purchase, or any preemptive rights or other rights to subscribe
for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible
securities or obligations. The description of the Company's
stock option, stock bonus and other stock plans or arrangements
and the options or other rights granted and exercised thereunder
as set forth in the Prospectus conforms in all material respects
with the requirements of the Act. All issued and outstanding
securities of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, and the holders
thereof have no rights of rescission with respect thereto and are
not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of
the preemptive rights of any holders of any security of the
Company or similar contractual rights granted by the Company.
(f) The Securities are not and will not be subject to
any preemptive or other similar rights of any stockholder, have
been duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof, will be validly issued, fully
paid and nonassessable and will conform in all material respects
to the description thereof contained in the Prospectus; the
holders thereof will not be subject to any liability solely as
such holders; all corporate action required to be taken for the
authorization, issue and sale of the Securities has been duly and
validly taken; and the certificates representing the Securities
will be in due and proper form. Upon the issuance and delivery
pursuant to the terms hereof of the Securities to be sold by the
Company hereunder, the Underwriters or the Representative, as the
case may be, will acquire good and marketable title to such
Securities free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect, or other
restriction or equity of any kind whatsoever. No stockholder of
the Company has any right which has not been waived in writing to
require the Company to register the sale of any shares owned by
such stockholder under the Act in the public offering
contemplated by this Agreement. No further approval or authority
of the stockholders or the Board of Directors of the Company will
be required for the issuance and sale of the Shares, the Option
Shares and the Representative's Warrants to be sold by the
Company as contemplated herein.
(g) The financial statements of the Company, together
with the related notes and schedules thereto, included in the
Registration Statement, each Preliminary Prospectus and the
Prospectus fairly present the financial position, changes in
stockholders' equity and the results of operations of the Company
at the respective dates and for the respective periods to which
they apply and such financial statements have been prepared in
conformity with generally accepted accounting principles and the
Regulations, consistently applied throughout the periods
involved. There has been no material adverse change or material
adverse development involving a material adverse prospective
change in the Business, whether or not arising in the ordinary
course of business since the date of the financial statements
included in the Registration Statement and the Prospectus and the
outstanding debt, the property, both tangible and intangible, and
the description of the business of the Company thereof contained
in the Registration Statement and the Prospectus. Financial
information set forth in the Prospectus under the headings
"Prospectus Summary - Selected Financial Data," "Capitalization,"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations," fairly present, on the basis stated
in the Prospectus, the information set forth therein and have
been derived from or compiled on a basis consistent with that of
the audited financial statements included in the Prospectus.
(h) The Company (i) has paid all federal, state,
local, franchise, and foreign taxes for which it is liable,
including, but not limited to, withholding taxes and amounts
payable under Chapters 21 through 24 of the Internal Revenue Code
of 1986, as amended (the "Code"), and has furnished all
information returns it is required to furnish pursuant to the
Code, (ii) has established adequate reserves for such taxes which
are not due and payable, and (iii) does not have any tax
deficiency or claims outstanding, proposed or assessed against
it.
(i) No transfer tax, stamp duty or other similar tax
is payable by or on behalf of the Underwriters in connection with
(i) the issuance by the Company of the Securities, (ii) the
purchase by the Underwriters of the Firm Securities and the
Option Securities from the Company and the purchase by the
Representative of the Representative's Warrants from the Company,
(iii) the consummation by the Company of any of its obligations
under this Agreement, or (iv) resales of the Firm Securities and
the Option Securities in connection with the distribution
contemplated hereby.
(j) There is no action, suit, proceeding, inquiry,
arbitration, mediation, investigation, litigation or governmental
proceeding (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or
foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or businesses
of, the Company which (i) questions the validity of the capital
stock of the Company, this Agreement or the Representative's
Warrant Agreement, or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement or the
Representative's Warrant Agreement, (ii) is required to be
disclosed in the Registration Statement which is not so disclosed
(and such proceedings as are summarized in the Registration
Statement are accurately summarized in all material respects), or
(iii) might materially and adversely affect the condition,
financial or otherwise, or the business, affairs, position,
stockholders' equity, operation, properties, or results of
operations of the Company and its subsidiaries taken as a whole.
(k) The Company has the corporate power and authority
to authorize, issue, deliver, and sell the Securities and to
enter into this Agreement, the Warrant Agreement, and the
Representative's Warrant Agreement, and to consummate the
transactions provided for in such agreements; and this Agreement,
the Warrant Agreement and the Representative's Warrant Agreement
have each been duly and properly authorized, executed, and
delivered by the Company. Each of this Agreement, the Warrant
Agreement and the Representative's Warrant Agreement constitutes
a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its respective terms
(except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting
enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as
rights to indemnity or contribution may be limited by applicable
law), and none of the issue and sale of the Securities, execution
by the Company, delivery or performance of this Agreement, the
Warrant Agreement, and the Representative's Warrant Agreement,
the consummation by the Company of the transactions contemplated
herein and therein, or the conduct of the Company's businesses as
described in the Registration Statement, the Prospectus, and any
amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or
violation of any of the terms or provisions of, or constitutes or
will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any
kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of (i) the
articles of incorporation or by-laws of the Company, as amended
and restated, (ii) any license, contract, indenture, mortgage,
deed of trust, voting trust agreement, stockholders agreement,
note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or
may be bound or to which its properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, or (iii)
any statute, judgment, decree, order, rule or regulation
applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or
body (including, without limitation, those having jurisdiction
over environmental or similar matters), domestic or foreign,
having jurisdiction over the Company of any of their activities
or properties.
(l) No consent, approval, authorization or order of,
and no filing with, any court, regulatory body, government agency
or other body, domestic or foreign, is required for the issuance
of the Securities pursuant to the Prospectus and the Registration
Statement, the performance of this Agreement, the Warrant
Agreement, the Representative's Warrant Agreement, and the
transactions contemplated hereby and thereby, including without
limitation, any waiver of any preemptive, first refusal or other
rights that any entity or person may have for the issue and/or
sale of any of the Securities, except such as have been or may be
obtained under the Act or may be required under state securities
or Blue Sky laws in connection with the Underwriters' purchase
and distribution of the Firm Securities, the Option Securities,
and the Representative's Warrants to be sold by the Company
hereunder.
(m) All executed agreements, contracts or other
documents or copies of executed agreements, contracts or other
documents filed as exhibits to the Registration Statement to
which the Company is a party or by which it may be bound or to
which its assets, properties or businesses may be subject have
been duly and validly authorized, executed and delivered by the
Company and constitute the legal, valid and binding agreements of
the Company enforceable against the Company in accordance with
their respective terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and
except as rights to indemnity or contribution may be limited by
applicable law). The descriptions in the Registration Statement
of such agreements, contracts and other documents are accurate in
all material respects and fairly present the information required
to be shown with respect thereto by Form SB-2, and there are no
contracts or other documents which are required by the Act to be
described in the Registration Statement or filed as exhibits to
the Registration Statement which are not described or filed as
required, and the exhibits which have been filed are complete and
correct copies of the documents of which they purport to be
copies.
(n) Since the respective dates as of which information
is given in the Registration Statement and Prospectus, and except
as described in or specifically contemplated by the Prospectus
(i) the Company has not incurred any material liabilities or
obligations, indirect, direct or contingent, or entered into any
material verbal or written agreement or other transaction which
is not in the ordinary course of business or which could result
in a material reduction in the future earnings of the Company;
(ii) the Company has not sustained any material loss or
interference with its business or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any
dividends or other distributions with respect to its capital
stock, and the Company is not in default in the payment of
principal or interest on any outstanding debt obligations; (iv)
there has not been any change in the capital stock (other than
upon the sale of the Firm Securities, the Option Securities and
the Representative's Warrants hereunder and upon the exercise of
options and warrants described in the Registration Statement) of,
or indebtedness material to, the Company (other than in the
ordinary course of business); (v) the Company has not issued any
securities or incurred any liability or obligation, primary or
contingent, for borrowed money; and (vi) there has not been any
material adverse change in the condition (financial or
otherwise), business, properties, results of operations, or
prospects of the Company and its subsidiaries.
(o) No default exists in the due performance and
observance of any term, covenant or condition of any material
license, contract, indenture, mortgage, installment sale
agreement, lease, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement, or any
other material agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument
to which the Company is a party or by which the Company may be
bound or to which the property or assets (tangible or intangible)
of the Company is subject or affected, except for such defaults,
if any, which individually and in the aggregate would not have a
material adverse effect on the Business.
(p) To the Company's knowledge, there are no pending
investigations involving the Company by the U.S. Department of
Labor, or any other governmental agency responsible for the
enforcement of such federal, state, local, or foreign laws and
regulations. There is no unfair labor practice charge or
complaint against the Company pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute,
slowdown or stoppage pending or to its knowledge threatened
against or involving the Company. No representation question
exists respecting the employees of the Company. No collective
bargaining agreement, or modification thereof is currently being
negotiated by the Company. No grievance or arbitration
proceeding is pending under any expired or existing collective
bargaining agreements of the Company. No labor dispute with the
employees of the Company exists or to its knowledge is imminent.
(q) Except as described in the Prospectus, the Company
does not maintain, sponsor or contribute to any program or
arrangement that is an "employee pension benefit plan," an
"employee welfare benefit plan," or a "multiemployer plan" as
such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") ("ERISA Plans"). The Company does not
maintain or contribute to a defined benefit plan, as defined in
Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code,
which could subject the Company to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each
ERISA Plan is in compliance with all material reporting,
disclosure and other requirements of the Code and ERISA as they
relate to any such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each
ERISA Plan which is intended to comply with Code Section 401(a),
stating that such ERISA Plan and the attendant trust are
qualified thereunder. The Company has never completely or
partially withdrawn from a "multiemployer plan."
(r) None of the Company, nor any of its employees,
directors, stockholders, or affiliates (within the meaning of the
Regulations) of any of the foregoing has taken or will take
directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in
unlawful stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(s) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and
personal property stated in the Prospectus to be owned or leased
by it, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, or other restrictions
or equities of any kind whatsoever, other than those referred to
in the Prospectus and liens for taxes not yet due and payable.
(t) ▇▇▇▇ & Company ("▇▇▇▇"), whose report is filed
with the Commission as a part of the Registration Statement, are
independent certified public accountants as required by the Act
and the Regulations.
(u) [The Company has caused to be duly executed
legally binding and enforceable agreements pursuant to which all
persons or entities that directly or beneficially own Common
Stock, as of the effective date of the Registration Statement,
have agreed not to, directly or indirectly, offer, offer to sell,
sell, grant any option for the sale of, transfer, assign, pledge,
hypothecate or otherwise encumber or dispose of any shares of
Common Stock or securities convertible into Common Stock,
exercisable or exchangeable for or evidencing any right to
purchase or subscribe for any shares of Common Stock (either
pursuant to Rule 144 of the Regulations or otherwise) or dispose
of any interest therein for a period from the date of the
Prospectus until twelve (12) months following the date that the
Registration Statement becomes effective, without the prior
written consent of National (the "Lock-up Agreements"). The
Company will cause the Transfer Agent (as defined herein) to
place "stop transfer" orders on the Company's stock ledgers in
order to effect the Lock-up Agreements.]
(v) There are no claims, payments, arrangements or
understandings, whether oral or written, for services in the
nature of a finder's or origination fee with respect to the sale
of the Securities hereunder or any other arrangements,
agreements, understandings, payments or issuance with respect to
the Company or any of its officers, directors, stockholders,
employees or affiliates that may affect the Underwriters'
compensation as determined by the Commission and the National
Association of Securities Dealers, Inc. (the "NASD").
(w) The Securities have been approved for listing on
the NASDAQ SmallCap Market.
(x) Neither the Company nor any of its officers,
employees, agents or any other person acting on behalf of the
Company has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency
(domestic or foreign) or instrumentality of any government
(domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is, or may
be in a position to help or hinder the business of the Company
(or assist the Company in connection with any actual or proposed
transaction) which might subject the Company or any other such
person to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign). The
Company's internal accounting controls are sufficient to cause
the Company to comply with the Foreign Corrupt Practices Act of
1977, as amended.
(y) Except as set forth in the Prospectus, no officer,
director or stockholder of the Company, or any "affiliate" or
"associate" (as these terms are defined in Rule 405 promulgated
under the Regulations) of any of the foregoing persons or
entities has or has had, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed
to be furnished or sold by the Company, or (B) purchases from or
sells or furnishes to the Company any goods or services, or (ii)
a beneficiary interest in any contract or agreement to which the
Company is a party or by which it may be bound or affected.
Except as set forth in the Prospectus there are no existing
agreements, arrangements, understandings or transactions, or
proposed agreements, arrangements, understandings or
transactions, between or among the Company, and any officer,
director, principal shareholder (as such term is used in the
Prospectus) of the Company, or any affiliate or associate of any
of the foregoing persons or entities which are required to be
disclosed in the Prospectus.
(z) The Company is not, and does not intend to conduct
its business in a manner in which it would become an "investment
company" within the meaning of the Investment Company Act of
1940, as amended.
(aa) Any certificate signed by any officer of the
Company and delivered to the Underwriters or to the Underwriters'
Counsel (as defined in Section 4(d) herein) shall be deemed a
representation and warranty by the Company to the Underwriters as
to the matters covered thereby.
(ab) The minute books of the Company have been made
available to the Underwriters and contain a complete summary of
all meetings and actions of the directors and stockholders of the
Company, since the time of its incorporation, and reflect all
transactions referred to in such minutes accurately in all
material respects.
(ac) The Company has not distributed and will not
distribute prior to the Closing Date any offering material in
connection with the offering and sale of the Shares in this
offering other than the Prospectus, the Registration Statement
and the other materials permitted by the Act. Except as
described in the Prospectus, no holders of any securities of the
Company or of any options, warrants or other convertible or
exchangeable securities of the Company have the right to include
any securities issued by the Company as part of the Registration
Statement or to require the Company to file a registration
statement under the Act and no person or entity holds any
antidilution rights with respect to any securities of the
Company.
(ad) Each of the Company and its subsidiaries
maintains insurance by insurers of recognized financial
responsibility of the types and in the amounts as the Company
believes are prudent and adequate for the business in which it is
engaged, including, but not limited to, insurance covering real
and personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of
which insurance is in full force and effect. The Company has
delivered to the Underwriter's Counsel full summaries of these
insurance policies. The Company has no reason to believe that it
will not be able to renew existing insurance coverage with
respect to the Company as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary
to continue its business, in either case, at a cost that would
not have a material adverse effect on the financial condition,
operations, business, assets or properties of the Company. The
Company has not failed to file any material claims, has no
material disputes with its insurance company regarding any claims
submitted under its insurance policies, and has complied in
material respects with all material provisions contained in its
insurance policies.
2. Purchase, Sale and Delivery of the Securities.
----------------------------------------------
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell
to each Underwriter, and each Underwriter, severally and not
jointly agrees to purchase from the Company, at a price equal to
$ per Share and $ per Warrant, that
number of Firm Securities set forth in Schedule A opposite the
name of such Underwriter, subject to such adjustment as the
Representative in its discretion shall make to eliminate any
sales or purchases of fractional shares, plus any additional
numbers of Shares which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 11 hereof.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements, herein contained, but
subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters, severally and not
jointly, to purchase all or any part of an additional 165,000
shares of Common Stock at a price of $ per share of
Common Stock and/or an additional 165,000 Series 1 Warrants
and/or 165,000 Series 2 Warrants at a price of $ per
Warrant. The option granted hereby will expire 45 days after (i)
the date the Registration Statement becomes effective, if the
Company has elected not to rely on Rule 430A under the
Regulations, or (ii) the date of this Agreement if the Company
has elected to rely upon Rule 430A under the Regulations, and may
be exercised in whole or in part from time to time (but not on
more than two (2) occasions) only for the purpose of covering
over-allotments which may be made in connection with the offering
and distribution of the Firm Securities upon notice by the
Representative to the Company setting forth the number of Option
Securities as to which the several Underwriters are then
exercising the option and the time and date of payment and
delivery for any such Option Securities. Any such time and date
of delivery (an "Option Closing Date") shall be determined by the
Representative, but shall not be later than three full business
days after the exercise of said option, nor in any event prior to
the Closing Date, as hereinafter defined, unless otherwise agreed
upon by the Representative and the Company. Nothing herein
contained shall obligate the Underwriters to exercise the
over-allotment option described above. No Option Securities
shall be delivered unless the Firm Securities shall be
simultaneously delivered or shall theretofore have been delivered
as herein provided.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Securities shall be made at the
offices of National, at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, or at such other place as shall be agreed upon by the
Representative and the Company. Such delivery and payment shall
be made at 10:00 a.m. (New York time) on ______________, 1997, or
at such other time and date as shall be agreed upon by the
Representative and the Company, but no more than four (4)
business days after the date hereof (such time and date of
payment and delivery being herein called the "Closing Date"). In
addition, in the event that any or all of the Option Securities
are purchased by the Underwriters, payment of the purchase price
for, and delivery of certificates for, such Option Securities
shall be made at the above mentioned office of National or at
such other place as shall be agreed upon by the Representative
and the Company on each Option Closing Date as specified in the
notice from the Representative to the Company. Delivery of the
certificates for the Firm Securities and the Option Securities,
if any, shall be made to the Underwriters against payment by the
Underwriters, of the purchase price for the Firm Securities and
the Option Securities, if any, to the order of the Company. In
the event such option is exercised, each of the Underwriters,
acting severally and not jointly, shall purchase that proportion
of the total number of Option Securities then being purchased
which the number of Firm Securities set forth in Schedule A
hereto opposite the name of such Underwriter bears to the total
number of Firm Securities, subject in each case to such
adjustments as the Representative in their discretion shall make
to eliminate any sales or purchases of fractional shares.
Certificates for the Firm Securities and the Option Securities,
if any, shall be in definitive, fully registered form, shall bear
no restrictive legends and shall be in such denominations and
registered in such names as the Underwriters may request in
writing at least three (3) business days prior to Closing Date or
the relevant Option Closing Date, as the case may be. The
certificates for the Firm Securities and the Option Securities,
if any, shall be made available to the Representative at such
office or such other place as the Representative may designate
for inspection, checking and packaging no later than 9:30 a.m. on
the last business day prior to Closing Date or the relevant
Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and
sell to the Representative Representative's Warrants at a
purchase price of $0.0001 per warrant, which warrants shall
entitle the holders thereof to purchase an aggregate of 110,000
shares of Common Stock and/or 110,000 Series 1 Warrants and/or
110,000 Series 2 Warrants. The Representative's Warrants shall
expire five (5) years after the effective date of the
Registration Statement and shall be exercisable for a period of
four (4) years commencing one (1) year from the effective date
of the Registration Statement at a price equaling one hundred
twenty percent (120%) of the initial public offering price of the
Shares. The Representative's Warrant Agreement and form of
Warrant Certificate shall be substantially in the form filed as
Exhibit 4.2 to the Registration Statement. Payment for the
Representative's Warrants shall be made on the Closing Date.
3. Public Offering of the Shares and the Warrants.
-----------------------------------------------
As soon after the Registration Statement becomes effective
as the Representative deems advisable, the Underwriters shall
make a public offering of the Shares and the Warrants (other than
to residents of or in any jurisdiction in which qualification of
the Shares and the Warrants is required and has not become
effective) at the price and upon the other terms set forth in the
Prospectus. The Representative may from time to time increase or
decrease the public offering price after distribution of the
Shares and the Warrants has been completed to such extent as the
Representative, in its sole discretion, deems advisable. The
Underwriters may enter into one or more agreements as the
Underwriters, in each of their sole discretion, deem advisable
with one or more broker-dealers who shall act as dealers in
connection with such public offering.
4. Covenants of the Company.
-------------------------
The Company covenants and agrees with each of the
Underwriters as follows:
(a) The Company shall use its best efforts to cause
the Registration Statement and any amendments thereto to become
effective as promptly as practicable and will not at any time,
whether before or after the effective date of the Registration
Statement, file any amendment to the Registration Statement or
supplement to the Prospectus or file any document under the Act
or Exchange Act before termination of the offering of the Shares
by the Underwriters of which the Representative shall not
previously have been advised and furnished with a copy, or to
which the Representative shall have objected or which is not in
compliance with the Act, the Exchange Act or the Regulations.
(b) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Representative and
confirm the notice in writing, (i) when the Registration
Statement, as amended, becomes effective, if the provisions of
Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A and
when any post-effective amendment to the Registration Statement
becomes effective, (ii) of the issuance by the Commission of any
stop order or of the initiation, or the threatening, of any
proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the
Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto, or the institution of proceedings for that
purpose, (iii) of the issuance by the Commission or by any state
securities commission of any proceedings for the suspension of
the qualification of any of the Securities for offering or sale
in any jurisdiction or of the initiation, or the threatening, of
any proceeding for that purpose, (iv) of the receipt of any
comments from the Commission; and (v) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional
information. If the Commission or any state securities
commission authority shall enter a stop order or suspend such
qualification at any time, the Company will use its best efforts
to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and
substance satisfactory to the Representative) in accordance with
the requirements of the Act.
(d) The Company will give the Representative notice of
its intention to file or prepare any amendment to the
Registration Statement (including any post-effective amendment)
or any amendment or supplement to the Prospectus (including any
revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities
which differs from the corresponding prospectus on file at the
Commission at the time the Registration Statement becomes
effective, whether or not such revised prospectus is required to
be filed pursuant to Rule 424(b) of the Regulations), and will
furnish the Representative with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such
amendment or supplement to which the Representative or Camhy
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP ("Underwriters' Counsel") shall reasonably
object.
(e) The Company shall endeavor in good faith, in
cooperation with the Representative, at or prior to the time the
Registration Statement becomes effective, to qualify the
Securities for offering and sale under the securities laws of
such jurisdictions as the Representative may reasonably designate
to permit the continuance of sales and dealings therein for as
long as may be necessary to complete the distribution, and shall
make such applications, file such documents and furnish such
information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a
foreign corporation or become subject to service of process in
any such jurisdiction. In each jurisdiction where such
qualification shall be effected, the Company will, unless the
Representative agree that such action is not at the time
necessary or advisable, use all reasonable efforts to file and
make such statements or reports at such times as are or may
reasonably be required by the laws of such jurisdiction to
continue such qualification.
(f) During the time when a prospectus is required to
be delivered under the Act, the Company shall use all reasonable
efforts to comply with all requirements imposed upon it by the
Act, as now and hereafter amended, and by the Regulations, as
from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and the Prospectus, or any
amendments or supplements thereto. If at any time when a
prospectus relating to the Securities is required to be delivered
under the Act, any event shall have occurred as a result of
which, in the opinion of counsel for the Company or Underwriters'
Counsel, the Prospectus, as then amended or supplemented,
includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary
at any time to amend or supplement the Prospectus to comply with
the Act, the Company will notify the Representative promptly and
prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act, each such
amendment or supplement to be satisfactory to Underwriters'
Counsel, and the Company will furnish to the Underwriters copies
of such amendment or supplement as soon as available and in such
quantities as the Underwriters may request.
(g) As soon as practicable, but in any event not later
than 45 days after the end of the 12-month period beginning on
the day after the end of the fiscal quarter of the Company during
which the effective date of the Registration Statement occurs (90
days in the event that the end of such fiscal quarter is the end
of the Company's fiscal year), the Company shall make generally
available to its security holders, in the manner specified in
Rule 158(b) of the Regulations, and to the Representative, an
earnings statement which will be in the detail required by, and
will otherwise comply with, the provisions of Section 11(a) of
the Act and Rule 158(a) of the Regulations, which statement need
not be audited unless required by the Act, covering a period of
at least 12 consecutive months after the effective date of the
Registration Statement.
(h) During a period of five (5) years after the date
hereof, the Company will furnish to its stockholders, as soon as
practicable, annual reports (including financial statements
audited by independent public accountants) and will make
available to its stockholders unaudited quarterly reports of
earnings, and will deliver to the Representative:
(i) concurrently with furnishing such quarterly
reports to its stockholders, statements of income of the Company
for each quarter in the form furnished to the Company's
stockholders;
(ii) concurrently with furnishing such annual
reports to its stockholders, a balance sheet of the Company as at
the end of the preceding fiscal year, together with statements of
operations, stockholders' equity, and cash flows of the Company
for such fiscal year, accompanied by a copy of the report thereon
of independent certified public accountants;
(iii) as soon as they are available, copies of all
reports (financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the
Commission, the Nasdaq SmallCap Market or any securities
exchange;
(v) every press release and every material news
item or article of interest to the financial community in respect
of the Company or its affairs which was released or prepared by
or on behalf of the Company; and
(vi) any additional information of a public nature
concerning the Company (and any future subsidiaries) or its
businesses which the Representative may reasonably request.
During such five-year period, if the Company has active
subsidiaries, the foregoing financial statements will be on a
consolidated basis to the extent that the accounts of the Company
and its subsidiaries are consolidated, and will be accompanied by
similar financial statements for any significant subsidiary which
is not so consolidated.
(i) The Company will maintain a transfer agent (the
"Transfer Agent") and, if necessary under the jurisdiction of
incorporation of the Company, a registrar (which may be the same
entity as the transfer agent) for the Common Stock and the
Representative's Warrants.
(j) The Company will furnish to the Representative or
on the Representative's order, without charge, at such place as
the Representative may designate, copies of each Preliminary
Prospectus, the Registration Statement and any pre-effective or
post-effective amendments thereto (two of which copies will be
signed and will include all financial statements and exhibits),
each Preliminary Prospectus, the Prospectus, and all amendments
and supplements thereto, including any prospectus prepared after
the effective date of the Registration Statement, in each case as
soon as available and in such quantities as the Representative
may reasonably request.
(k) [On or before the effective date of the
Registration Statement, the Company shall provide the
Representative with true copies of duly executed Lock-up
Agreements. On or before the Closing Date, the Company shall
deliver instructions to the Transfer Agent authorizing it to
place appropriate stop transfer orders on the Company's ledgers.]
(l) The Company shall use its best efforts to cause
its officers, directors, stockholders or affiliates (within the
meaning of the Regulations) not to take, directly or indirectly,
any action designed to, or which might in the future reasonably
be expected to cause or result in, unlawful stabilization or
manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the
sale of the Securities substantially in the manner, and subject
to the conditions, set forth under "Use of Proceeds" in the
Prospectus.
(n) The Company shall timely file all such reports,
forms or other documents as may be required (including, but not
limited to, a Form SR as may be required pursuant to Rule 463
under the Act) from time to time, under the Act, the Exchange
Act, and the Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the
applicable requirements under the Act, the Exchange Act, and the
Regulations.
(o) The Company shall cause the Securities to be
listed on the NASDAQ SmallCap Market, and for a period of two (2)
years from the date hereof shall use its best efforts to maintain
the listing of the Securities to the extent outstanding.
(p) For a period of two (2) years from the Closing
Date, the Company shall furnish to the Representative, at the
Company's sole expense, monthly consolidated transfer sheets
relating to the, Common Stock and Warrants.
(q) For a period of five (5) years after the effective
date of the Registration Statement the Company shall, at the
Company's sole expense, take all necessary and appropriate
actions to further qualify the Company's securities in all
jurisdictions of the United States in order to permit secondary
sales of such securities pursuant to the Blue Sky laws of those
jurisdictions which do not require the Company to qualify as a
foreign corporation or to file a general consent to service of
process.
(r) The Company (i) prior to the effective date of the
Registration Statement, has filed a Form 8-A with the Commission
providing for the registration of the Common Stock and Warrants
under the Exchange Act and (ii) as soon as practicable, will use
its best efforts to take all necessary and appropriate actions to
be included in Standard and Poor's Corporation Descriptions and
▇▇▇▇▇'▇ OTC Manual and to continue such inclusion for a period of
not less than five (5) years.
(s) [The Company agrees that for a period of nine (9)
months following the effective date of the Registration Statement
it will not, without the prior written consent of National,
offer, issue, sell, contract to sell, grant any option for the
sale of or otherwise dispose of any Common Stock, or securities
convertible into Common Stock, except for the issuance of the
Option Securities, the Representative's Warrants, and shares of
Common Stock issued upon the exercise of currently outstanding
warrants or options, or options and warrants granted in the
ordinary course of business consistent with prior practice.]
(t) Until the completion of the distribution of the
Securities, the Company shall not without the prior written
consent of National or Underwriters' Counsel, issue, directly or
indirectly any press release or other communication or hold any
press conference with respect to the Company or its activities or
the offering contemplated hereby, other than trade releases
issued in the ordinary course of the Company's business
consistent with past practices with respect to the Company's
operations.
(u) For a period equal to the lesser of (i) five (5)
years from the date hereof, and (ii) the sale to the public of
the Representative's Securities, the Company will not
take any action or actions which may prevent or disqualify the
Company's use of an appropriate form for the registration under
the Act of the Representative's Securities.
(v) The Company agrees that it shall use its best
efforts, which shall include, but shall not be limited to, the
solicitation of proxies, to elect one (1) designee of National to
the Company's Board of Directors for a period of five (5) years
following the Closing, provided that such designee is reasonably
acceptable to the Company and that such director may be excluded
from consideration of certain confidential matters which, in the
good faith judgment of a majority of the other directors, such
director's presence would not be appropriate.
(w) The Company agrees that within forty-five (45)
days after the Closing it shall retain a public relations firm
which is reasonably acceptable to National. The Company shall
keep such public relations firm, or any replacement, for a period
of two (2) years from the Closing. Any replacement public
relations firm shall be retained only with the consent of
National, which shall not be unreasonably withheld.
(x) The Company agrees that any and all future
transactions between the Company and its officers, directors,
principal stockholders and the affiliates of the foregoing
persons will be on terms no less favorable to the Company than
could reasonably be obtained in arm's length transactions with
independent third parties, and that any such transactions also be
approved by a majority of the Company's outside independent
directors disinterested in the transaction.
(y) The Company shall prepare and deliver, at the
Company's sole expense, to National within the one hundred and
twenty (120) day period after the later of the effective date of
the Registration Statement or the latest Option Closing Date, as
the case may be, one bound volume containing all correspondence
with regulatory officials, agreements, documents and all other
materials in connection with the offering as requested by the
Underwriters' Counsel.
5. Payment of Expenses.
--------------------
(a) The Company hereby agrees to pay on each of the
Closing Date and each Option Closing Date (to the extent not
previously paid) all expenses and fees (other than fees of
Underwriters' Counsel, except as provided in (iv) below) incident
to the performance of the obligations of the Company under this
Agreement, the Warrant Agreement, and the Representative's
Warrant Agreement, including, without limitation, (i) the fees
and expenses of accountants and counsel for the Company, (ii) all
costs and expenses incurred in connection with the preparation,
duplication, printing, filing, delivery and mailing (including
the payment of postage with respect thereto) of the Registration
Statement and the Prospectus and any amendments and supplements
thereto and the duplication, mailing (including the payment of
postage with respect thereto) and delivery of this Agreement, the
Warrant Agreement, the Agreement Among Underwriters, the Selected
Dealers Agreements, the Powers of Attorney, and related
documents, including the cost of all copies thereof and of the
Preliminary Prospectuses and of the Prospectus and any amendments
thereof or supplements thereto supplied to the Underwriters and
such dealers as the Underwriters may request, in quantities as
hereinabove stated, (iii) the printing, engraving, issuance and
delivery of the certificates representing the Securities, (iv)
the qualification of the Securities under state or foreign
securities or "Blue Sky" laws and determination of the status of
such securities under legal investment laws, including the costs
of word processing and mailing the "Preliminary Blue Sky
Memorandum," the "Supplemental Blue Sky Memorandum" and "Legal
Investments Survey," if any, and reasonable disbursements and
fees of counsel in connection therewith, (v) advertising costs
and expenses, including but not limited to the costs and expenses
incurred by the Company and the Representative in connection with
the "road show," information meetings and presentations, bound
volumes and prospectus memorabilia and "tombstone" advertisement
expenses, (vi) experts, (vii) fees and expenses of the transfer
agent and registrar, (viii) the fees payable to the Commission
and the NASD, (ix) issue and transfer taxes, if any and (x) the
fees and expenses incurred in connection with the listing of the
Common Stock on the Nasdaq National Market and any other market
or exchange.
(b) If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 6,
Section 10(a) or Section 11, the Company shall reimburse and
indemnify the Representative for all of its actual out-of-pocket
expenses on an accountable basis, including the fees and
disbursements of Underwriters' Counsel, less any amounts already
paid pursuant to Section 5(c) hereof.
(c) The Company further agrees that, in addition to
the expenses payable pursuant to subsection (a) of this Section
5, it will pay to the Representative on the Closing Date by
certified or bank cashier's check or, at the election of the
Representative, by deduction from the proceeds of the offering
contemplated herein a non-accountable expense allowance equal to
three percent (3%) of the gross proceeds received by the Company
from the sale of the Firm Securities, $50,000,000 of which has
been paid to date. In the event the Representative elects to
exercise the over-allotment option described in Section 2(b)
hereof, the Company further agrees to pay to the Representative
on the Option Closing Date (by certified or bank cashier's check
or, at the Representative's election, by deduction from the
proceeds of the offering) a non-accountable expense allowance
equal to three percent (3%) of the gross proceeds received by the
Company from the sale of the Option Securities.
6. Conditions of the Underwriters' Obligations.
--------------------------------------------
The obligations of the Underwriters hereunder shall be
subject to the continuing accuracy of the representations and
warranties of the Company herein as of the date hereof and as of
the Closing Date and each Option Closing Date, if any, as if they
had been made on and as of the Closing Date or each Option
Closing Date, as the case may be; the accuracy on and as of the
Closing Date or Option Closing Date, if any, of the statements of
officers of the Company made pursuant to the provisions hereof;
and the performance by the Company on and as of the Closing Date
and each Option Closing Date, if any, of its covenants and
obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 p.m., New York City time, on the
date prior to the date of this Agreement or such later date and
time as shall be consented to in writing by the Representative,
and, at Closing Date and each Option Closing Date, if any, no
stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the
Commission for additional information shall have been complied
with to the reasonable satisfaction of Underwriters' Counsel. If
the Company has elected to rely upon Rule 430A of the
Regulations, the price of the Shares and any price-related
information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted
to the Commission for filing pursuant to Rule 424(b) of the
Regulations within the prescribed time period, and prior to
Closing Date the Company shall have provided evidence
satisfactory to the Representative of such timely filing, or a
post-effective amendment providing such information shall have
been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the Regulations.
(b) The Representative shall not have advised the
Company that the Registration Statement, or any amendment
thereto, contains an untrue statement of fact which, in the
Representative's opinion, is material, or omits to state a fact
which, in the Representative's opinion, is material and is
required to be stated therein or is necessary to make the
statements therein not misleading, or that the Prospectus, or any
supplement thereto, contains an untrue statement of fact which,
in the Representative's reasonable opinion, is material, or omits
to state a fact which, in the Representative's reasonable
opinion, is material and is required to be stated therein or is
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Underwriters
shall have received from Underwriters' Counsel such opinion or
opinions with respect to the organization of the Company, the
validity of the Securities, the Registration Statement, the
Prospectus and other related matters as the Representative may
request and Underwriters' Counsel shall have received from the
Company such papers and information as they request to enable
them to pass upon such matters.
(d) At Closing Date, the Underwriters shall have
received the favorable opinion of Waring ▇▇▇, PLC ("Waring ▇▇▇"),
counsel to the Company, dated the Closing Date, addressed to the
Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) the Company (A) has been duly organized and is
validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation, (B) is duly qualified and
licensed and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any properties
or the character of its operations requires such qualification or
licensing, and (C) to the best of such counsel's knowledge, has
all requisite corporate power and authority and has obtained any
and all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental
or regulatory officials and bodies (including, without
limitation, those having jurisdiction over environmental or
similar matters), to own or lease its properties and conduct its
business as described in the Prospectus.
(ii) except as described in the Prospectus, and to
the best of such counsel's knowledge after reasonable
investigation, the Company does not own an interest in any
corporation, limited liability company, partnership, joint
venture, trust or other business entity;
(iii) the Company has a duly authorized, issued
and outstanding capitalization as set forth in the Prospectus,
and any amendment or supplement thereto, under "Capitalization"
and "Description of Securities," and to the knowledge of such
counsel, the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Warrant Agreement, the
Representative's Warrant Agreement, and as described in the
Prospectus. The Securities and all other securities issued or
issuable by the Company conform in all material respects to the
statements with respect thereto contained in the Registration
Statement and the Prospectus. All issued and outstanding
securities of the Company have been duly authorized and validly
issued and are fully paid and nonassessable; the holders thereof
are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of
the preemptive rights of any holders of any security of the
Company. The Securities to be sold by the Company hereunder,
under the Warrant Agreement, and under the Representative's
Warrant Agreement are not and will not be subject to any
preemptive or other similar rights of any stockholder, have been
duly authorized and, when issued, paid for and delivered in
accordance with their terms, will be validly issued, fully paid
and nonassessable and will conform in all material respects to
the description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely as such
holders; all corporate action required to be taken for the
authorization, issue and sale of the Securities has been duly and
validly taken; and the certificates representing the Securities
are in due and proper form. The Representative's Warrants and
the Warrants constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment
therefor, the number and type of securities of the Company called
for thereby (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting
enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as
rights to indemnity or contribution may be limited by applicable
law). Upon the issuance and delivery pursuant to this Agreement
of the Securities to be sold by the Company, the Company will
convey, against payment therefor as provided herein, to the
Underwriters and the Representative, respectively, good and
marketable title to the Securities free and clear of all liens
and other encumbrances;
(iv) the Registration Statement is effective under
the Act, and, if applicable, filing of all pricing information
has been timely made in the appropriate form under Rule 430A, and
no stop order suspending the use of the Preliminary Prospectus,
the Registration Statement or Prospectus or any part of any
thereof or suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are pending or, to the best of such
counsel's knowledge, threatened or contemplated under the Act;
(v) each of the Preliminary Prospectus, the
Registration Statement, and the Prospectus and any amendments or
supplements thereto (other than the financial statements and
other financial and statistical data included therein as to which
no opinion need be rendered) comply as to form in all material
respects with the requirements of the Act and the Regulations.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the
Company and the Representative and representatives of the
independent public accountants for the Company, at which
conferences the contents of the Preliminary Prospectus, the
Registration Statement, the Prospectus, and any amendments or
supplements thereto were discussed, and, although such counsel is
not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in
the Preliminary Prospectus, the Registration Statement and
Prospectus, and any amendments or supplements thereto, on the
basis of the foregoing, no facts have come to the attention of
such counsel which lead them to believe that either the
Registration Statement or any amendment thereto, at the time such
Registration Statement or amendment became effective or the
Preliminary Prospectus or Prospectus or amendment or supplement
thereto as of the date of such opinion contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading (it being understood that such counsel
need express no opinion with respect to the financial statements
and schedules and other financial and statistical data included
in the Preliminary Prospectus, the Registration Statement or
Prospectus, and any amendments or supplements thereto);
(vi) to the best of such counsel's knowledge
after reasonable investigation, (A) there are no agreements,
contracts or other documents required by the Act to be described
in the Registration Statement and the Prospectus and filed as
exhibits to the Registration Statement other than those described
in the Registration Statement and the Prospectus and filed as
exhibits thereto; (B) the descriptions in the Registration
Statement and the Prospectus and any supplement or amendment
thereto of contracts and other documents to which the Company is
a party or by which it is bound are accurate in all material
respects and fairly represent the information required to be
shown by Form SB-2; (C) there is not pending or threatened
against the Company any action, arbitration, suit, proceeding,
litigation, governmental or other proceeding (including, without
limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, pending or threatened
against the Company which (x) is required to be disclosed in the
Registration Statement which is not so disclosed (and such
proceedings as are summarized in the Registration Statement are
accurately summarized in all material respects), (y) questions
the validity of the capital stock of the Company or this
Agreement, the Warrant Agreement, or the Representative's Warrant
Agreement, or of any action taken or to be taken by the Company
pursuant to or in connection with any of the foregoing; and (D)
there is no action, suit or proceeding pending or threatened
against the Company before any court or arbitrator or
governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which may result in
a material adverse change in the financial condition, business,
affairs, stockholders' equity, operations, properties, business
or results of operations of the Company, which could adversely
affect the present or prospective ability of the Company to
perform its obligations under this Agreement, the Warrant
Agreement, or the Representative's Warrant Agreement, or which in
any manner draws into question the validity or enforceability of
this Agreement, the Warrant Agreement or the Representative's
Warrant Agreement;
(vii) the Company has the corporate power and
authority to enter into each of this Agreement, the Warrant
Agreement, and the Representative's Warrant Agreement and to
consummate the transactions provided for therein; and each of
this Agreement, the Warrant Agreement, and the Representative's
Warrant Agreement has been duly authorized, executed and
delivered by the Company. Each of this Agreement, the Warrant
Agreement, and the Representative's Warrant Agreement, assuming
due authorization, execution and delivery by each other party
thereto, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms (except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting
enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as
rights to indemnity or contribution may be limited by applicable
law), and none of the Company's execution, delivery or
performance of this Agreement, the Warrant Agreement, and the
Representative's Warrant Agreement, the consummation by the
Company of the transactions contemplated herein or therein, or
the conduct of the Company's business as described in the
Registration Statement, the Prospectus, and any amendments or
supplements thereto conflicts with or results in any breach or
violation of any of the terms or provisions of, or constitutes a
default under, or result in the creation or imposition of any
lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever
upon, any property or assets (tangible or intangible) of the
Company pursuant to the terms of (A) the articles of
incorporation or by-laws of the Company, as amended, (B) any
license, contract, indenture, mortgage, deed of trust, voting
trust agreement, stockholders' agreement, note, loan or credit
agreement or any other agreement or instrument known to such
counsel to which the Company is a party or by which it is bound,
or (C) any federal, state or local statute, rule or regulation
applicable to the Company or any judgment, decree or order known
to such counsel of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or
properties;
(viii) no consent, approval, authorization or
order, and no filing with, any court, regulatory body, government
agency or other body (other than such as may be required under
Blue Sky laws, as to which no opinion need be rendered or under
federal securities laws, as to which no opinion need be rendered
pursuant to this subsection (viii), the Rules of the NASD and the
NASDAQ SmallCap Market) is required in connection with the
issuance of the Securities pursuant to the Prospectus, and the
Registration Statement, the performance of this Agreement, the
Warrant Agreement, and the Representative's Warrant Agreement,
and the transactions contemplated hereby and thereby;
(ix) to the best of such counsel's knowledge
after reasonable investigation, the properties and business of
the Company conform in all material respects to the description
thereof contained in the Registration Statement and the
Prospectus;
(x) to the best knowledge of such counsel, and
except as disclosed in Registration Statement and the Prospectus,
the Company is not in breach of, or in default under, any term or
provision of any license, contract, indenture, mortgage,
installment sale agreement, deed of trust, lease, voting trust
agreement, stockholders' agreement, note, loan or credit
agreement or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or
instrument to which the Company is a party or by which the
Company is bound or to which the property or assets (tangible or
intangible) of the Company is subject; and the Company is not in
violation of any term or provision of its articles of
incorporation or by-laws, as amended, and to the best of such
counsel's knowledge after reasonable investigation, not in
violation of any franchise, license, permit, judgment, decree,
order, statute, rule or regulation;
(xi) the statements in the Prospectus under
"Dividend Policy," "Description of Securities," and "Shares
Eligible for Future Sale" have been reviewed by such counsel, and
insofar as they refer to statements of law, descriptions of
statutes, licenses, rules or regulations or legal conclusions,
are correct in all material respects;
(xii) the Common Stock has been accepted for
listing on the NASDAQ SmallCap Market;
(xiii) to the best of such counsel's knowledge and
based upon a review of the outstanding securities and the
contracts furnished to such counsel by the Company, no person,
corporation, trust, partnership, association or other entity has
the right to include and/or register any securities of the
Company in the Registration Statement, require the Company to
file any registration statement or, if filed, to include any
security in such registration statement;
(xiv) assuming due execution by the parties
thereto other than the Company, each Lock-up Agreement is a
legal, valid and binding obligation of the party thereto,
enforceable against the party and any subsequent holder of the
securities subject thereto in accordance with its terms (except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or
contribution may be limited by applicable law);
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws,
rules and regulations of the United States and the laws, rules
and regulations of the State of Arkansas, to the extent such
counsel deems proper and to the extent specified in such opinion,
if at all, upon an opinion or opinions (in form and substance
satisfactory to Underwriters' Counsel) of other counsel
acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper,
on certificates and written statements of responsible officers of
the Company and certificates or other written statements of
officers of departments of various jurisdictions having custody
of documents respecting the corporate existence or good standing
of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel if
requested. The opinion of such counsel shall state that
knowledge shall not include the knowledge of a director or
officer of the Company who is affiliated with such firm in his or
her capacity as an officer or director of the Company. The
opinion of such counsel for the Company shall state that the
opinion of any such other counsel is in form satisfactory to such
counsel.
At each Option Closing Date, if any, the Underwriters
shall have received the favorable opinion of Waring ▇▇▇, counsel
to the Company, dated the Option Closing Date, addressed to the
Underwriters and in form and substance satisfactory to
Underwriters' Counsel confirming as of such Option Closing Date
the statements made by Waring ▇▇▇ in its opinion delivered on the
Closing Date.
(e) On or prior to each of the Closing Date and the
Option Closing Date, if any, Underwriters' Counsel shall have
been furnished such documents, certificates and opinions as they
may reasonably require for the purpose of enabling them to review
or pass upon the matters referred to in subsection (c) of this
Section 6, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or
conditions of the Company or herein contained.
(f) Prior to each of the Closing Date and each Option
Closing Date, if any, (i) there shall have been no material
adverse change nor development involving a prospective change in
the condition, financial or otherwise, prospects, stockholders'
equity or the business activities of the Company, whether or not
in the ordinary course of business, from the latest dates as of
which such condition is set forth in the Registration Statement
and Prospectus; (ii) there shall have been no transaction, not in
the ordinary course of business, entered into by the Company,
from the latest date as of which the financial condition of the
Company is set forth in the Registration Statement and Prospectus
which is adverse to the Company; (iii) the Company shall not be
in default under any provision of any instrument relating to any
outstanding indebtedness which default has not been waived; (iv)
the Company shall not have issued any securities (other than the
Securities) or declared or paid any dividend or made any
distribution in respect of its capital stock of any class and
there has not been any change in the capital stock, or any
material increase in the debt (long or short term) or liabilities
or obligations of the Company (contingent or otherwise); (v) no
material amount of the assets of the Company shall have been
pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus; (vi) no action, suit or proceeding, at
law or in equity, shall have been pending or threatened (or
circumstances giving rise to same) against the Company, or
affecting any of its respective properties or businesses before
or by any court or federal, state or foreign commission, board or
other administrative agency wherein an unfavorable decision,
ruling or finding may materially adversely affect the business,
operations, prospects or financial condition or income of the
Company, except as set forth in the Registration Statement and
Prospectus; and (vii) no stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated,
threatened or contemplated by the Commission.
(g) At each of the Closing Date and each Option
Closing Date, if any, the Underwriters shall have received a
certificate of the Company signed on behalf of the Company by the
principal executive officer of the Company, dated the Closing
Date or Option Closing Date, as the case may be, to the effect
that such executive has carefully examined the Registration
Statement, the Prospectus and this Agreement, and that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, as if made on and
as of the Closing Date or the Option Closing Date, as the case
may be, and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to
such Closing Date or Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued,
and no proceedings for that purpose have been instituted or are
pending or, to the best of each of such person's knowledge after
due inquiry, are contemplated or threatened under the Act;
(iii) The Registration Statement and the
Prospectus and, if any, each amendment and each supplement
thereto, contain all statements and information required by the
Act to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading and
neither the Preliminary Prospectus or any supplement, as of their
respective dates, thereto included any untrue statement of a
material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, (a) the Company has not incurred up to and including
the Closing Date or the Option Closing Date, as the case may be,
other than in the ordinary course of its business, any material
liabilities or obligations, direct or contingent; (b) the Company
has not paid or declared any dividends or other distributions on
its capital stock; (c) the Company has not entered into any
transactions not in the ordinary course of business; (d) there
has not been any change in the capital stock or material increase
in long-term debt or any increase in the short-term borrowings
(other than any increase in the short-term borrowings in the
ordinary course of business) of the Company, (e) the Company has
not sustained any loss or damage to its property or assets,
whether or not insured, (f) there is no litigation which is
pending or threatened (or circumstances giving rise to same)
against the Company or any affiliated party of any of the
foregoing which is required to be set forth in an amended or
supplemented Prospectus which has not been set forth, and (g)
there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in
this subsection (g) are to such documents as amended and
supplemented at the date of such certificate.
(h) By the Closing Date, the Underwriters will have
received clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriters.
(i) At the time this Agreement is executed, the
Underwriters shall have received a letter, dated such date,
addressed to the Underwriters in form and substance satisfactory
in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to the
Underwriters and Underwriters' Counsel, from ▇▇▇▇:
(i) confirming that they are independent certified
public accountants with respect to the Company within the meaning
of the Act and the applicable Rules and Regulations;
(ii) stating that it is their opinion that the
financial statements and supporting schedules of the Company
included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of
the Act and the Regulations thereunder and that the
Representative may rely upon the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ with
respect to the financial statements and supporting schedules
included in the Registration Statement;
(iii) stating that, on the basis of a limited
review which included a reading of the latest available unaudited
interim financial statements of the Company (with an indication
of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the
stockholders and board of directors and the various committees of
the board of directors of the Company, consultations with
officers and other employees of the Company responsible for
financial and accounting matters and other specified procedures
and inquiries, nothing has come to their attention which would
lead them to believe that (A) the unaudited financial statements
and supporting schedules of the Company included in the
Registration Statement, if any, do not comply as to form in all
material respects with the applicable accounting requirements of
the Act and the Regulations or are not fairly presented in
conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited
financial statements of the Company included in the Registration
Statement, or (B) at a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there
has been any change in the capital stock or material increase in
long-term debt of the Company, or any material decrease in the
stockholders' equity or net current assets or net assets of the
Company as compared with amounts shown in the _____________, 1997
balance sheet included in the Registration Statement, other than
as set forth in or contemplated by the Registration Statement,
or, if there was any change or decrease, setting forth the amount
of such change or decrease.
(iv) stating that they have compared specific
dollar amounts, numbers of shares, percentages of revenues and
earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the
extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records,
including work sheets, of the Company and excluding any questions
requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries
and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted
auditing standards) set forth in the letter and found them to be
in agreement; and
(v) statements as to such other material matters
incident to the transaction contemplated hereby as the
Representative may reasonably request.
(j) At the Closing Date and each Option Closing Date,
if any, the Underwriters shall have received from ▇▇▇▇ a letter,
dated as of the Closing Date or the Option Closing Date, as the
case may be, to the effect that they reaffirm that statements
made in the letter furnished pursuant to Subsection (i) of this
Section 6, except that the specified date referred to shall be a
date not more than five (5) days prior to Closing Date or the
Option Closing Date, as the case may be, and, if the Company has
elected to rely on Rule 430A of the Rules and Regulations, to the
further effect that they have carried out procedures as specified
in clause (iv) of Subsection (i) of this Section 6 with respect
to certain amounts, percentages and financial information as
specified by the Representative and deemed to be a part of the
Registration Statement pursuant to Rule 430A(b) and have found
such amounts, percentages and financial information to be in
agreement with the records specified in such clause (iv).
(k) On each of Closing Date and Option Closing Date,
if any, there shall have been duly tendered to the Representative
for the several Underwriters' accounts the appropriate number of
Securities.
(l) No order suspending the sale of the Securities in
any jurisdiction designated by the Representative pursuant to
subsection (e) of Section 4 hereof shall have been issued on
either the Closing Date or the Option Closing Date, if any, and
no proceedings for that purpose shall have been instituted or
shall be contemplated.
(m) On or before the Closing Date, the Company shall
have executed and delivered to the Representative, (i) the
Representative's Warrant Agreement, substantially in the form
filed as Exhibit 4(b), to the Registration Statement, in final
form and substance satisfactory to the Representative, and (ii)
the Representative's Warrants in such denominations and to such
designees as shall have been provided to the Company.
(n) On or before Closing Date, the Common Stock shall
have been duly approved for listing on the NASDAQ SmallCap
Market.
(o) [On or before Closing Date, there shall have been
delivered to the Representative all of the Lock-up Agreements in
final form and substance satisfactory to Underwriters' Counsel.]
If any condition to the Underwriters' obligations
hereunder to be fulfilled prior to or at the Closing Date or the
relevant Option Closing Date, as the case may be, is not so
fulfilled, the Representative may terminate this Agreement or, if
the Representative so elect, they may waive any such conditions
which have not been fulfilled or extend the time for their
fulfillment.
7. Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless
each of the Underwriters (for purposes of this Section 7
"Underwriters" shall include the officers, directors, partners,
employees, agents and counsel of the Underwriters, including
specifically each person who may be substituted for an
Underwriter as provided in Section 11 hereof), and each person,
if any, who controls the Underwriter ("controlling person")
within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, from and against any and all loss, liability,
claim, damage, and expense whatsoever (including, but not limited
to, reasonable attorneys' fees and any and all reasonable expense
whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any
claim or litigation provided that the indemnified persons may not
agree to any such settlement without the prior written consent of
the Company), as and when incurred, arising out of, based upon or
in connection with (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus (as from
time to time amended and supplemented); or (B) in any application
or other document or communication (in this Section 7
collectively called "application") executed by or on behalf of
the Company or based upon written information furnished by or on
behalf of the Company in any jurisdiction in order to qualify the
Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, the NASDAQ
SmallCap Market; or any omission or alleged omission to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the
Prospectus, in the light of the circumstances under which they
were made), unless such statement or omission was made in
reliance upon and in conformity with written information
furnished to the Company with respect to any Underwriter by or on
behalf of such Underwriter expressly for use in any Preliminary
Prospectus, the Registration Statement or Prospectus, or any
amendment thereof or supplement thereto, or in any application,
as the case may be; or (ii) any breach of any representation,
warranty, covenant or agreement of the Company contained in this
Agreement. The indemnity agreement in this subsection (a) shall
be in addition to any liability which the Company may have at
common law or otherwise.
(b) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the Registration
Statement, and each other person, if any, who controls the
Company, within the meaning of the Act, to the same extent as the
foregoing indemnity from the Company to the Underwriters but only
with respect to statements or omissions, if any, made in any
Preliminary Prospectus, the Registration Statement or Prospectus
or any amendment thereof or supplement thereto or in any
application made in reliance upon, and in strict conformity with,
written information furnished to the Company with respect to any
Underwriter by such Underwriter or the Representative expressly
for use in such Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement
thereto or in any such application, provided that such written
information or omissions only pertain to disclosures in the
Preliminary Prospectus, the Registration Statement or Prospectus
directly relating to the transactions effected by the
Underwriters in connection with this Offering. The Company
acknowledges that the statements with respect to the public
offering of the Securities set forth under the heading
"Underwriting" and the stabilization legend in the Prospectus
have been furnished by the Underwriters expressly for use therein
and constitute the only information furnished in writing by or on
behalf of the Underwriters or the Representative for inclusion in
the Prospectus.
(c) Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action,
suit or proceeding, such indemnified party shall, if a claim in
respect thereof is to be made against one or more indemnifying
parties under this Section 7, notify each party against whom
indemnification is to be sought in writing of the commencement
thereof (but the failure to so notify an indemnifying party shall
not relieve it from any liability which it may have otherwise or
which it may have under this Section 7, except to the extent that
it has been prejudiced in any material respect by such failure).
In case any such action is brought against any indemnified party,
and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties will be
entitled to participate therein, and to the extent it may elect
by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right
to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such
counsel shall have been authorized in writing by the indemnifying
parties in connection with the defense of such action at the
expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such
indemnified party to have charge of the defense of such action
within a reasonable time after notice of commencement of the
action, or (iii) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it
or them which are different from or additional to those available
to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses
of one additional counsel shall be borne by the indemnifying
parties. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate
but similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances. Anything
in this Section 7 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any
claim or action effected without its written consent; provided,
however, that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes
claim for indemnification pursuant to this Section 7, but it is
judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time
to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding
the fact that the express provisions of this Section 7 provide
for indemnification in such case, or (ii) contribution under the
Act may be required on the part of any indemnified party, then
each indemnifying party shall contribute to the amount paid as a
result of such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) (A) in such proportion as is
appropriate to reflect the relative benefits received by each of
the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the
Securities or (B) if the allocation provided by clause (A) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be
indemnified on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages,
expenses or liabilities, as well as any other relevant equitable
considerations. In any case where the Company is a contributing
party and the Underwriters are the indemnified party, the
relative benefits received by the Company on the one hand, and
the Underwriters, on the other, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the
Securities (before deducting expenses other than underwriting
discounts and commissions) bear to the total underwriting
discounts received by the Underwriters hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus.
Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or
by the Underwriters, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
expenses or liabilities (or actions in respect thereof) referred
to above in this subdivision (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this
subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount
applicable to the Securities purchased by the Underwriters
hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 12(f) of the Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section
7, each person, if any, who controls the Company within the
meaning of the Act, each officer of the Company who has signed
the Registration Statement, and each director of the Company
shall have the same rights to contribution as the Company,
subject in each case to this subparagraph (d). Any party
entitled to contribution will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such
party in respect to which a claim for contribution may be made
against another party or parties under this subparagraph (d),
notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall
not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have hereunder or
otherwise than under this subparagraph (d), or to the extent that
such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in
addition to any liabilities which any indemnifying party may have
at common law or otherwise.
8. Representations and Agreements to Survive Delivery.
---------------------------------------------------
All representations, warranties and agreements
contained in this Agreement or contained in certificates of
officers of the Company submitted pursuant hereto, shall be
deemed to be representations, warranties and agreements of the
Company at the Closing Date and the Option Closing Date, as the
case may be, and such representations, warranties and agreements
of the Company and the respective indemnity and contribution
agreements contained in Section 7 hereof shall remain operative
and in full force and effect regardless of any investigation made
by or on behalf of any Underwriter, the Company, any controlling
person of either the Underwriter or the Company, and shall
survive termination of this Agreement or the issuance and
delivery of the Securities to the Underwriters and the
Representative, as the case may be.
9. Effective Date.
---------------
(a) This Agreement shall become effective at 5:00
p.m., New York City time, on the date hereof. For purposes of
this Section 9, the Securities to be purchased hereunder shall be
deemed to have been so released upon the earlier of dispatch by
the Representative of telegrams to securities dealers releasing
such shares for offering or the release by the Representative for
publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
10. Termination.
------------
(a) Subject to subsection (b) of this Section 10, the
Representative shall have the right to terminate this Agreement,
if between the date of this Agreement and the Closing Date or the
Option Closing Date, as the case may be, (i) if any domestic or
international event or act or occurrence has materially
disrupted, or in the Representative's reasonable opinion will in
the immediate future materially disrupt the financial markets; or
(ii) any material adverse change in the financial markets shall
have occurred; or (iii) if trading on the New York Stock
Exchange, the NASDAQ SmallCap Market, or in the over-the-counter
market shall have been suspended, or minimum or maximum prices
for trading shall have been fixed, or maximum ranges for prices
for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other
government authority having jurisdiction; or (iv) if the United
States shall have become involved in a war or major hostilities,
or if there shall have been an escalation in an existing war or
major hostilities or a national emergency shall have been
declared in the United States; or (v) if a banking moratorium has
been declared by a state or federal authority; or (vi) if the
Company shall have sustained a loss material or substantial to
the Company by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether
or not such loss shall have been insured, will, in the
Representative's opinion, make it inadvisable to proceed with the
delivery of the Securities; or (viii) if there shall have been
such a material adverse change in the prospects or conditions of
the Company, or such material adverse change in the general
market, political or economic conditions, in the United States or
elsewhere as in the Representative's judgment would make it
inadvisable to proceed with the offering, sale and/or delivery of
the Securities.
(b) If this Agreement is terminated by the
Representative in accordance with any of the provisions of
Section 6, Section 10(a) or Section 11, the Company shall
promptly reimburse and indemnify the Underwriters pursuant to
Section 5(b) hereof. Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any
termination of this Agreement (including, without limitation,
pursuant to Sections 6, 10, 11 and 12 hereof), and whether or not
this Agreement is otherwise carried out, the provisions of
Section 5 and Section 7 shall not be in any way affected by such
election or termination or failure to carry out the terms of this
Agreement or any part hereof.
11. Substitution of the Underwriters.
---------------------------------
If one or more of the Underwriters shall fail
(otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 6,
Section 10 or Section 12 hereof) to purchase the Securities which
it or they are obligated to purchase on such date under this
Agreement (the "Defaulted Securities"), the Representative shall
have the right, within 24 hours thereafter, to make arrangement
for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the
Defaulted Securities in such amounts as may be agreed upon and
upon the terms herein set forth. If, however, the Representative
shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not
exceed 10% of the total number of Firm Securities to be purchased
on such date, the non-defaulting Underwriters shall be obligated
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10%
of the total number of Firm Securities to be purchased on such
date, this Agreement shall terminate without liability on the
part of any nondefaulting Underwriters.
No action taken pursuant to this Section shall relieve
any defaulting Underwriter from liability in respect of any
default by such Underwriter under this Agreement.
In the event of any such default which does not result
in a termination of this Agreement, the Representative shall have
the right to postpone the Closing Date for a period not exceeding
seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or
arrangements.
12. Default by the Company.
-----------------------
If the Company shall fail at the Closing Date or any
Option Closing Date, as applicable, to sell and deliver the
number of Securities which it is obligated to sell hereunder on
such date, then this Agreement shall terminate (or, if such
default shall occur with respect to any Option Securities to be
purchased on an Option Closing Date, the Underwriters may at the
Representative's option, by notice from the Representative to the
Company, terminate the Underwriters' obligation to purchase
Option Securities from the Company on such date) without any
liability on the part of any non-defaulting party other than
pursuant to Section 5, Section 7 and Section 10 hereof. No
action taken pursuant to this Section shall relieve the Company
from liability, if any, in respect of such default.
13. Notices.
--------
All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and
shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative, c/o
National Securities Corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, with a
copy, which shall not constitute notice, to Camhy ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇. Annex, Esq. Notices to the Company shall be
directed to the Company at Thermoenergy Corporation, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy,
which shall not constitute notice, to Waring ▇▇▇, PLC, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇ ▇▇▇▇▇.
14. Parties.
--------
This Agreement shall inure solely to the benefit of and
shall be binding upon the Underwriters, the Company and the
controlling persons, directors and officers referred to in
Section 7 hereof and their respective successors, legal
representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any
provisions herein contained. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of
such purchase.
15. Construction.
-------------
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York
without giving effect to the choice of law or conflict of laws
principles.
16. Counterparts.
-------------
This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
and all of which taken together shall be deemed to be one and the
same instrument.
17. Entire Agreement; Amendments.
-----------------------------
This Agreement, the Warrant Agreement, and the
Representative's Warrant Agreement constitute the entire
agreement of the parties hereto and supersede all prior written
or oral agreements, understandings and negotiations with respect
to the subject matter hereof. This Agreement may not be amended
except in a writing, signed by the Representative and the
Company.
If the foregoing correctly sets forth the understanding
between the Underwriters and the Company, please so indicate in
the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
THERMOENERGY CORPORATION
By:
-------------------------
Name:
Title:
CONFIRMED AND ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN:
NATIONAL SECURITIES CORPORATION
By:
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman
For itself and as Representative of the Underwriters named in
Schedule A hereto.
SCHEDULE A
Number of Shares of Number of Series 1 Number of Series 2
Common Stock to be Warrants to be Warrants to be
Name of Underwriter Purchased Purchased Purchased
------------------- ------------------- ------------------ -------------------
National Securities
Corporation
TOTAL ..... 1,100,000 1,100,000 1,100,000
