EXHIBIT 1.1
DRAFT 3/26/97
UNDERWRITING AGREEMENT
BETWEEN
TRIDENT ROWAN GROUP, INC.
AND
GKN SECURITIES CORP.
DATED: __________ __, 1997
TABLE OF CONTENTS
PAGE
INDEX OF DEFINITIONS...........................................................v
1. Purchase and Sale of Securities...........................................2
1.1 Firm Securities......................................................2
1.1.1 Purchase of Firm Securities................................2
1.1.2 Payment and Delivery.......................................2
1.2 Over-Allotment Option................................................3
1.2.1 Option Securities..........................................3
1.2.2 Exercise of Option.........................................3
1.2.3 Payment and Delivery.......................................3
1.3 Representative's Purchase Option.....................................4
1.3.1 Purchase Option............................................4
1.3.2 Payment and Delivery.......................................4
2. Representations and Warranties of the Company.............................4
2.1 Filing of Registration Statement.....................................4
2.1.1 Pursuant to the Act........................................4
2.1.2 Pursuant to the Exchange Act...............................5
2.2 No Stop Orders, Etc..................................................5
2.3 Disclosures in Registration Statement................................5
2.3.1 Securities Act and Exchange Act Representation.............5
2.3.2 Disclosure of Contracts....................................5
2.3.3 Prior Securities Transactions..............................6
2.4 Changes After Dates in Registration Statement........................6
2.4.1 No Material Adverse Change.................................6
2.4.2 Recent Securities Transactions, Etc........................6
2.5 Independent Accountants..............................................6
2.6 Financial Statements.................................................6
2.7 Authorized Capital; Options; Etc.....................................6
2.8 Valid Issuance of Securities; Etc....................................7
2.8.1 Outstanding Securities.....................................7
2.8.2 Securities Sold Pursuant to this Agreement.................7
2.9 Registration or Repurchase Rights of Third Parties...................7
2.10 Validity and Binding Effect of Agreements............................7
2.11 No Conflicts, Etc....................................................8
2.12 No Defaults; Violations..............................................8
2.13 Corporate Power; Licenses; Consents..................................8
2.13.1 Conduct of Business........................................8
2.13.2 Transactions Contemplated Herein...........................9
2.14 Title to Property; Insurance.........................................9
2.15 Litigation; Governmental Proceedings.................................9
2.16 Good Standing........................................................9
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PAGE
2.17 Taxes................................................................9
2.18 Employees' Options..................................................10
2.19 Transactions Affecting Disclosure to NASD...........................10
2.19.1 Finder's Fees.............................................10
2.19.2 Payments Within Twelve Months.............................10
2.19.3 Use of Proceeds...........................................10
2.19.4 Insiders' NASD Affiliation................................10
2.20 Foreign Corrupt Practices Act.......................................10
2.21 Nasdaq Eligibility..................................................11
2.22 Intangibles.........................................................11
2.23 Relations With Employees............................................11
2.23.1 Employee Matters..........................................11
2.23.2 Employee Benefit Plans....................................11
2.24 Officers' Certificate...............................................12
2.25 Warrant Agreement...................................................12
2.26 Agreements With Insiders............................................12
2.27 Subsidiaries........................................................12
2.28 Unaudited Financials................................................12
2.29 Exchange Act Reports................................................12
2.30 Repurchase..........................................................12
2.31 No Obligations. ....................................................13
3. Covenants of the Company. ..............................................13
3.1 Amendments to Registration Statement................................13
3.2 Federal Securities Laws.............................................13
3.2.1 Compliance................................................13
3.2.2 Filing of Final Prospectus................................13
3.2.3 Exchange Act Registration.................................13
3.3 Blue Sky Filing.....................................................13
3.4 Delivery to the Underwriters of Prospectuses........................14
3.5 Events Requiring Notice to the Representative.......................14
3.6 Review of Financial Statements......................................14
3.7 Reserved............................................................14
3.8 Standard & Poor's...................................................14
3.9 Nasdaq Maintenance. ...............................................14
3.10 Warrant Solicitation and Representative Warrant Solicitation Fees...14
3.11 Registration of Common Stock........................................15
3.12 Reports to the Representative and Others............................15
3.12.1 Periodic Reports, Etc.....................................15
3.12.2 Transfer Sheets and Weekly Position Listings..............15
3.13 Agreements between the Representative and the Company...............16
3.13.1 Representative's Purchase Option..........................16
3.14 Disqualification of Form S-1........................................16
3.15 Payment of Expenses.................................................16
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PAGE
3.15.1 General Expenses..........................................16
3.15.2 Non-Accountable Expenses..................................17
3.16 Application of Net Proceeds.........................................17
3.17 Delivery of Earnings Statements to Security Holders.................17
3.18 Key Person Life Insurance...........................................17
3.19 Stabilization.......................................................17
3.20 Internal Controls...................................................17
3.21 Accountants and Lawyers.............................................18
3.22 Transfer Agent......................................................18
3.23 Sale of Securities; Exercise Price of Options.......................18
3.24 ....................................................................18
4. Conditions of the Underwriters' Obligations..............................18
4.1 Regulatory Matters..................................................18
4.1.1 Effectiveness of Registration Statement...................18
4.1.2 NASD Clearance............................................19
4.1.3 No Blue Sky Stop Orders...................................19
4.2 Company Counsel Matters.............................................19
4.2.1 Effective Date Opinion of Counsel.........................19
4.2.2 Closing Date and Option Closing Date Opinion of Counsel...23
[4.2.3 RELIANCE..................................................23
4.3 Cold Comfort Letter.................................................23
4.4 Officers' Certificates..............................................24
4.4.1 Officers' Certificate.....................................24
4.4.2 Secretary's Certificate...................................25
4.5 No Material Changes.................................................25
4.6 Delivery of Agreements..............................................25
4.7 Opinion of Counsel for the Representative...........................25
5. Indemnification..........................................................26
5.1 Indemnification of the Underwriter..................................26
5.1.1 General...................................................26
5.1.2 Procedure.................................................26
5.2 Indemnification of the Company......................................27
5.3 Contribution........................................................27
5.3.1 Contribution Rights.......................................27
5.3.2 Contribution Procedure....................................28
6. Default by an Underwriter................................................28
6.1 Default Not Exceeding 10% of Firm Securities........................28
6.2 Default Exceeding 10% of Firm Securities............................28
6.3 Postponement of Closing Date........................................29
7. Additional Covenants.....................................................29
iii
PAGE
7.1 Board Designee......................................................29
7.2 Press Releases......................................................29
7.3 Form S-8 or any Similar Form........................................29
7.4 Compensation and Other Arrangements.................................29
8. Representations and Agreements to Survive Delivery.......................29
9. Effective Date of This Agreement and Termination Thereof.................30
9.1 Effective Date......................................................30
9.2 Termination.........................................................30
9.3 Notice..............................................................30
9.4 Expenses............................................................30
9.5 Indemnification.....................................................30
10. Miscellaneous............................................................31
10.1 Notices.............................................................31
10.2 Headings............................................................31
10.3 Amendment...........................................................31
10.4 Entire Agreement....................................................31
10.5 Binding Effect......................................................32
10.6 Governing Law; Jurisdiction.........................................32
10.7 Execution in Counterparts...........................................32
10.8 Waiver, Etc.........................................................32
iv
INDEX OF DEFINITIONS
Term Section
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . 1.1.2
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.23.2
Commission. . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . 1.1.1
Company . . . . . . . . . . . . . . . . . . . . . . . . . . Introductory
Paragraph
Effective Date. . . . . . . . . . . . . . . . . . . . . . . 1.2.2
ERISA Plans . . . . . . . . . . . . . . . . . . . . . . . . 2.23.2
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . 2.1.2
Filing Date . . . . . . . . . . . . . . . . . . . . . . . . 2.19.2
Firm Securities . . . . . . . . . . . . . . . . . . . . . . 1.1.1
Insiders. . . . . . . . . . . . . . . . . . . . . . . . . . 2.26
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . 2.22
NASD. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.19.1
Nasdaq. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.21
Option Closing Date . . . . . . . . . . . . . . . . . . . . 1.2.2
Option Securities . . . . . . . . . . . . . . . . . . . . . 1.2.1
Over-allotment Option . . . . . . . . . . . . . . . . . . . 1.2.1
Preliminary Prospectus. . . . . . . . . . . . . . . . . . . 2.1.1
Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1
Public Securities . . . . . . . . . . . . . . . . . . . . . 1.2.1
Registration Statement. . . . . . . . . . . . . . . . . . . 2.1.1
Regulations . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1
Representative. . . . . . . . . . . . . . . . . . . . . . . Introductory
Paragraph
Representative's Securities . . . . . . . . . . . . . . . . 1.3.1
Representative's Shares . . . . . . . . . . . . . . . . . . 1.3.1
Representative's Warrants . . . . . . . . . . . . . . . . . 1.3.1
Securities. . . . . . . . . . . . . . . . . . . . . . . . . 1.3.1
Subsidiary(ies) . . . . . . . . . . . . . . . . . . . . . . 2.27
Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . 3.22
Unaudited Financials. . . . . . . . . . . . . . . . . . . . 2.28
Underwriters. . . . . . . . . . . . . . . . . . . . . . . . Introductory
Paragraph
Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1
Warrant Agreement . . . . . . . . . . . . . . . . . . . . . 2.25
TRIDENT ROWAN GROUP, INC.
1,250,000 Shares of Common Stock
and
1,250,000 Redeemable Common Stock Purchase Warrants
UNDERWRITING AGREEMENT
New York, New York
__________ ___, 1997
GKN Securities Corp.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned, Trident Rowan Group, Inc., a Maryland corporation
("Company"), hereby confirms its agreement with GKN Securities Corp. ("GKN"
being referred to herein variously as the "Representative" or "you") and the
other underwriters named on Schedule I hereto (the Representative and the other
underwriters being collectively called the "Underwriters" or individually, an
"Underwriter") as follows:
1. PURCHASE AND SALE OF SECURITIES.
1.1 FIRM SECURITIES.
1.1.1 PURCHASE OF FIRM SECURITIES. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell, severally and
not jointly, to the several Underwriters 1,250,000 shares of the Company's
Common Stock, par value $.01 per share ("Common Stock") at a purchase price (net
of commissions) of $_____ per share ("Common Stock") and 1,250,000 Redeemable
Common Stock Purchase Warrants ("Warrant(s)") at a purchase price (net of
commissions) of $_____ per Warrant. Each Warrant shall entitle the holder
thereof to purchase one share of Common Stock commencing one year after the
effective date ("Effective Date") of the Registration Statement (as hereinafter
defined) and expiring at the close of business on the last day of the five-year
period following the Effective Date. The exercise price of the Warrants shall
be 120% of the per-share public offering price of the Common Stock (these shares
of Common Stock and Warrants being referred to herein as "Firm Securities").
The Underwriters, severally and not jointly, agree to purchase from the Company
the number of Firm Securities set forth opposite their respective names on
Schedule I attached hereto and made a part hereof at a purchase price of $_____
per share of Common Stock and $_____ per Warrant.
1.1.2 PAYMENT AND DELIVERY. Delivery and payment for the Firm
Securities shall be made at 10:00 A.M., New York time, on or before the third
business day following the date that the Firm Securities commence trading or at
such earlier time as the Representative shall determine, or at such other time
as shall be agreed upon by the Representative and the Company at the New York
2
City office of GKN or at such other place as shall be agreed upon by the
Representative and the Company. The hour and date of delivery and payment for
the Firm Securities are called the "Closing Date." Payment for the Firm
Securities shall be made on the Closing Date at the Representative's election by
certified or bank cashier's check(s) in New York Clearing House funds, payable
to the order of the Company upon delivery to you of certificates (in form and
substance satisfactory to the Representative) representing the Firm Securities
for the respective accounts of the Underwriters. The Firm Securities shall be
registered in such name or names and in such authorized denominations as the
Representative may request in writing at least two full business days prior to
the Closing Date. The Company will permit the Representative to examine and
package the Firm Securities for delivery, at least one full business day prior
to the Closing Date. The Company shall not be obligated to sell or deliver the
Firm Securities except upon tender of payment by the Underwriters for all the
Firm Securities.
1.2 OVER-ALLOTMENT OPTION.
1.2.1 OPTION SECURITIES. For the purposes of covering any over-
allotments in connection with the distribution and sale of the Firm Securities,
the Underwriters are hereby granted an option to purchase up to an additional
187,500 shares of Common Stock and/or 187,500 Warrants from the Company
("Over-allotment Option"). Such additional 187,500 shares of Common Stock and
187,500 Warrants are hereinafter referred to as the "Option Securities." The
Firm Securities and the Option Securities are, together with the shares of
Common Stock issuable upon exercise of the Warrants, hereinafter referred to
collectively as the "Public Securities." The purchase price to be paid for the
Option Securities will be the same price per Option Security as the price per
Firm Security set forth in Section 1.1.1 hereof.
1.2.2 EXERCISE OF OPTION. The Over-allotment Option granted
pursuant to Section 1.2.1 hereof may be exercised by the Representative on
behalf of the Underwriters as to all or any part of the Option Securities at any
time, from time to time, within forty-five days after the Effective Date of the
Registration Statement. The Underwriters will not be under any obligation to
purchase any Option Securities prior to the exercise of the Over-allotment
Option. The Over-allotment Option granted hereby may be exercised by the giving
of oral notice to the Company from GKN, which must be confirmed within 24 hours
thereof by a letter or telecopy setting forth the number of Option Securities to
be purchased, the date and time for delivery of and payment for the Option
Securities and stating that the Option Securities referred to therein are to be
used for the purpose of covering over-allotments in connection with the
distribution and sale of the Firm Securities. If such notice is given at least
two full business days prior to the Closing Date, the date set forth therein for
such delivery and payment will be the Closing Date. If such notice is given
thereafter, the date set forth therein for such delivery and payment will not be
earlier than five full business days after the date of the notice, unless we
mutually agree to an earlier date. If such delivery and payment for the Option
Securities does not occur on the Closing Date, the date and time of the closing
for such Option Securities will be as set forth in the notice (hereinafter the
"Option Closing Date"). Upon exercise of the Over-allotment Option, the Company
will become obligated to convey to the Underwriters, and, subject to the terms
and conditions set forth herein, the Underwriters will become obligated to
purchase, the number of Option Securities specified in such notice.
1.2.3 PAYMENT AND DELIVERY. Payment for the Option Securities
will be at the Representative's election by certified or bank cashier's check(s)
in New York Clearing House funds, payable to the order of the Company at the
offices of GKN or at such other place as shall be agreed upon by the
Representative and the Company upon delivery to the Representative of
certificates
3
representing such securities for the respective accounts of the Underwriters.
The certificates representing the Option Securities to be delivered will be in
such denominations and registered in such names as the request not less than two
full business days prior to the Closing Date or the Option Closing Date, as the
case may be, and will be made available to the Representative for inspection,
checking and packaging at the aforesaid office of the Company's transfer agent
or correspondent not less than one full business day prior to such Closing Date.
1.3 REPRESENTATIVE'S PURCHASE OPTION.
1.3.1 PURCHASE OPTION. The Company hereby agrees to issue and
sell to the Representative (and/or its designees) on the Closing Date, for an
aggregate purchase price of $100, an option ("Representative's Purchase
Option"), exercisable at any time, in whole or in part, between the first and
fifth anniversary dates of the Effective Date, for the purchase of an aggregate
of 125,000 shares of Common Stock ("Representative's Shares") at an initial
exercise price of ______ of the initial offering price of a share of Common
Stock (i.e., $_____ per share of Common Stock) and/or 125,000 Warrants
("Representative's Warrants") at an initial exercise price ________ of the
initial offering price of a Warrant (i.e. $____ per Warrant). Each of the
Representative's Shares and the Representative's Warrants is identical to the
Firm Securities. The Representative's Purchase Option, the Representative's
Shares, the Representative's Warrants and the shares of Common Stock issuable
upon exercise of the Representative's Warrants are hereinafter referred to
collectively as the "Representative's Securities." The Public Securities and
the Representative's Securities are hereinafter referred to collectively as the
"Securities."
1.3.2 PAYMENT AND DELIVERY. Delivery and payment for the Purchase
Option shall be made on the Closing Date. The Company shall deliver to the
Representative, upon payment therefor, certificates for the Purchase Option in
the name or names and in such authorized denominations as the Representative may
request.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Representative as follows:
2.1 FILING OF REGISTRATION STATEMENT.
2.1.1 PURSUANT TO THE ACT. The Company has filed with the
Securities and Exchange Commission ("Commission") a registration statement and
an amendment or amendments thereto, on Form S-1 (No. 333-21595) including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Public Securities under the Securities Act of 1933, as amended ("Act"),
which registration statement and amendment or amendments have been prepared by
the Company in conformity with the requirements of the Act, and the rules and
regulations ("Regulations") of the Commission under the Act. 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 430A of the Regulations), is hereinafter called the "Registration
Statement," and the form of the final prospectus dated the Effective Date (or,
if applicable, the form of final prospectus filed with the Commission pursuant
to Rule 424 of the Regulations), is hereinafter called the "Prospectus." The
Registration Statement has been declared effective by the Commission on the date
hereof.
4
2.1.2 PURSUANT TO THE EXCHANGE ACT. The Company has filed with
the commission a registration statement on Form 8-A providing for the
registration under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), of the Public Securities. Such registration of the Public Securities has
been declared effective by the Commission on the date hereof.
2.2 NO STOP ORDERS, ETC. Neither the Commission nor, to the best of the
Company's knowledge, any state regulatory authority has issued any order
preventing or suspending the use of any Preliminary Prospectus or has instituted
or, to the best of the Company's knowledge, threatened to institute any
proceedings with respect to such an order.
2.3 DISCLOSURES IN REGISTRATION STATEMENT.
2.3.1 SECURITIES ACT AND EXCHANGE ACT REPRESENTATION. At the time
the Registration Statement became effective and at all times subsequent thereto
up to and including the Closing Date and the Option Closing Date, if any, the
Registration Statement and the Prospectus and any amendment or supplement
thereto contained and will contain all material statements which are required to
be stated therein in accordance with the Act and the Regulations, and conformed
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, during such time period and on such dates,
contained or will contain any untrue statement of a material fact or omitted or
will omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, nor did they or will they contain
any untrue statement of a material fact or did they or will they 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. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) of the Regulations) and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto at the time such filing was made
complied in all material respects with the applicable provisions of the Act and
the Regulations. The representation and warranty made in this Section 2.3.1
does not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to the
Underwriters by the Representative expressly for use in the Registration
Statement or Prospectus or any amendment thereof or supplement thereto.
2.3.2 DISCLOSURE OF CONTRACTS. The description in the
Registration Statement and the Prospectus of contracts and other documents is
accurate and presents fairly the information required to be disclosed and there
are no contracts or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits to
the Registration Statement, which have not been so described or filed. Each
contract or other instrument (however characterized or described) to which the
Company is a party or by which its property or business is or may be bound or
affected and (i) which is referred to in the Prospectus, or (ii) is material to
the Company's business, has been duly and validly executed, is in full force and
effect in all material respects and is enforceable against the parties thereto
in accordance with its terms, and none of such contracts or instruments has been
assigned by the Company, and neither the Company nor, to the best of the
Company's knowledge, any other party is in default thereunder and, to the best
of the Company's knowledge, no event has occurred which, with the lapse of time
or the giving of notice, or both, would constitute a default thereunder. None
of the material provisions of such contracts or instruments violates or will
result in a violation of any existing
5
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court having jurisdiction over the Company or any of its respective
assets or businesses, including, without limitation, those relating to
environmental laws and regulations.
2.3.3 PRIOR SECURITIES TRANSACTIONS. No securities of the Company
have been sold by the Company or to the best of the Company's knowledge, by or
on behalf of, or for the benefit of, any person or persons controlling,
controlled by, or under common control with the Company within the three years
prior to the date hereof, except as disclosed in the Registration Statement.
2.4 CHANGES AFTER DATES IN REGISTRATION STATEMENT.
2.4.1 NO MATERIAL ADVERSE CHANGE. Since the respective dates as
of which information is given in the Registration Statement and the Prospectus,
except as otherwise specifically stated therein, (i) there has been no material
adverse change in the condition, financial or otherwise, or in the results of
operations, business or business prospects of the Company, including, but not
limited to, a material loss or interference with its business from fire, storm,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, whether or
not arising in the ordinary course of business, and (ii) there have been no
transactions entered into by the Company, other than those in the ordinary
course of business, which are material with respect to the condition, financial
or otherwise, or to the results of operations, business or business prospects of
the Company.
2.4.2 RECENT SECURITIES TRANSACTIONS, ETC. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, and except as may otherwise be indicated or contemplated
herein or therein, the Company has not (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money; or
(ii) declared or paid any dividend or made any other distribution on or in
respect to its capital stock.
2.5 INDEPENDENT ACCOUNTANTS. Reconta Ernst & Young and Xxxxxx Xxxxxxxx
LLP whose reports are filed with the Commission as part of the Registration
Statement, are independent accountants as required by the Act and the
Regulations as of the dates of their respective reports.
2.6 FINANCIAL STATEMENTS. The financial statements, including the notes
thereto and supporting schedules included in the Registration Statement and
Prospectus, fairly present the financial position and the results of operations
of the Company at the dates and for the periods to which they apply; and such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved; and
the supporting schedules included in the Registration Statement present fairly
the information required to be stated therein. The pro forma consolidated
financial information set forth in the Registration Statement reflects all
significant assumptions and adjustments relating to the business, operations and
recent transactions of the Company, including [THE RECENT PURCHASES BY THE
COMPANY OF ITS STOCK, THE COMPANY'S ACQUISITION OF L.I.T.A. S.P.A. AND CERTAIN
ASSETS OF FINPROGETTI AND THE RECENT SALE OF STOCK BY MOTO GUZZI CORP., THE
COMPANY'S SUBSIDIARY].
2.7 AUTHORIZED CAPITAL; OPTIONS; ETC. The Company had at the date or
dates indicated in the Prospectus duly authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
Based on the assumptions stated in the Registration Statement and the
Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein. Except as set forth in the Registration
Statement and the Prospectus,
6
on the Effective Date and on the Closing Date there will be no options,
warrants, or other rights to purchase or otherwise acquire any authorized but
unissued shares of Common Stock of the Company, including any issuances pursuant
to anti-dilution provisions, or any security convertible into shares of Common
Stock of the Company, or any contracts or commitments to issue or sell shares of
Common Stock or any such options, warrants, rights or convertible securities.
2.8 VALID ISSUANCE OF SECURITIES; ETC.
2.8.1 OUTSTANDING SECURITIES. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof 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. The outstanding options and warrants
to purchase shares of Common Stock constitute the valid and binding obligations
of the Company, enforceable in accordance with their terms. The authorized
Common Stock and outstanding options and warrants to purchase shares of Common
Stock conform in all material respects to all statements relating thereto
contained in the Registration Statement and the Prospectus. The offers and
sales of the outstanding Common Stock, options and warrants to purchase shares
of Common Stock were at all relevant times either registered or qualified under
the Act and the applicable state securities or Blue Sky Laws or exempt from such
registration requirements.
2.8.2 SECURITIES SOLD PURSUANT TO THIS AGREEMENT. The Securities
have been duly authorized and, when issued and paid for, will be validly issued,
fully paid and non-assessable; the holders thereof are not and will not be
subject to personal liability by reason of being such holders; the Securities
are not and will not be subject to the preemptive rights of any holders of any
security of the Company or similar contractual rights granted by the Company;
and all corporate action required to be taken for the authorization, issuance
and sale of the Securities has been duly and validly taken. When issued, the
Representative's Purchase Option, the Representative's Warrants and the Warrants
will 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 and the Representative's Purchase Option, the
Representative's Warrants and the Warrants will be enforceable against the
Company in accordance with their respective terms, except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability of
any indemnification provision may be limited under the federal and state
securities laws, and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.9 REGISTRATION OR REPURCHASE RIGHTS OF THIRD PARTIES. Except as set
forth in the Prospectus, no holders of any securities of the Company or of any
options or warrants of the Company exercisable for or convertible or
exchangeable into securities of the Company have the right to require the
Company to repurchase or register any such securities of the Company under the
Act, or to include any such securities in a registration statement to be filed
by the Company.
2.10 VALIDITY AND BINDING EFFECT OF AGREEMENTS. This Agreement, the
Warrant Agreement (as hereinafter defined) and the Representative's Purchase
Option have been duly and validly authorized by the Company, and this Agreement,
the Warrant Agreement and the Representative's Purchase Option when executed and
delivered pursuant to this Agreement, will constitute, the valid
7
and binding agreements of the Company, enforceable against the Company in
accordance with their respective terms, except (i) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification
provision may be limited under the federal and state securities laws, and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
2.11 NO CONFLICTS, ETC. The execution, delivery, and performance by the
Company of this Agreement, the Warrant Agreement and the Representative's
Purchase Option, and the consummation by the Company of the transactions herein
and therein contemplated and the compliance by the Company with the terms hereof
and thereof have been duly authorized by all necessary corporate action and do
not and will not, with or without the giving of notice or the lapse of time or
both, (i) result in a breach of, or conflict with any of the terms and
provisions of, or constitute a default under, or result in the creation,
modification, termination or imposition of any lien, charge or encumbrance upon
any property or assets of the Company pursuant to the terms of any indenture,
mortgage, deed of trust, 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
may be bound or to which any of the property or assets of the Company is
subject; (ii) result in any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company; (iii) violate any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its properties or business; or (iv) have a material adverse effect on any
permit, license, certificate, registration, approval, consent, license or
franchise concerning the Company.
2.12 NO DEFAULTS; VIOLATIONS. Except as described in the Prospectus, no
default exists in the due performance and observance of any term, covenant or
condition of any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other 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
any of the properties or assets of the Company is subject, the result of which
would have, singly or in the aggregate, a material adverse effect on the
Company, its assets or its operations. The Company is not in violation of any
term or provision of its Certificate of Incorporation or By-Laws or in violation
of any franchise, license, permit, applicable law, rule, regulation, judgment or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its properties or business, except as
described in the Prospectus.
2.13 CORPORATE POWER; LICENSES; CONSENTS.
2.13.1 CONDUCT OF BUSINESS. The Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies to own or lease its properties and conduct its
business as described in the Prospectus, and the Company is and has been doing
business in compliance with all such material authorizations, approvals, orders,
licenses, certificates and permits and all federal, state and local laws, rules
and regulations. The disclosures in the Registration Statement concerning the
effects of federal, state and local regulation of the Company's business as
currently contemplated are correct in all material respects and do not omit to
state a material fact.
8
2.13.2 TRANSACTIONS CONTEMPLATED HEREIN. The Company has all
corporate power and authority to enter into this Agreement and to carry out the
provisions and conditions hereof, and all consents, authorizations, approvals
and orders required in connection therewith have been obtained. No consent,
authorization or order of, and no filing with, any court, government agency or
other body is required for the valid issuance, sale and delivery, of the
Securities pursuant to this Agreement, the Warrant Agreement and the
Representative's Purchase Option, and as contemplated by the Prospectus, except
with respect to applicable federal and state securities laws.
2.14 TITLE TO PROPERTY; INSURANCE. The Company has good and marketable
title to, or valid and enforceable leasehold estates in, all items of real and
personal property (tangible and intangible) owned or leased by it, free and
clear of all liens, encumbrances, claims, security interests, defects and
restrictions of any material nature whatsoever, other than those referred to in
the Prospectus and liens for taxes not yet due and payable. The Company has
adequately insured its properties against loss or damage by fire or other
casualty and maintains, in adequate amounts, such other insurance as is usually
maintained by companies engaged in the same or similar business.
2.15 LITIGATION; GOVERNMENTAL PROCEEDINGS. Except as set forth in the
Prospectus, there is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding pending or threatened
against, or involving the properties or business of, the Company which might
materially and adversely affect the financial position, prospects, value or the
operation or the properties or the business of the Company, or which question
the validity of the capital stock of the Company or this Agreement or of any
action taken or to be taken by the Company pursuant to, or in connection with,
this Agreement. There are no outstanding orders, judgments or decrees of any
court, governmental agency or other tribunal naming the Company and enjoining
the Company from taking, or requiring the Company to take, any action, or to
which the Company, its properties or business is bound or subject.
2.16 GOOD STANDING. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of the state of
its incorporation. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which ownership or
leasing of any properties or the character of its operations requires such
qualification or licensing, except where the failure to qualify would not have a
material adverse effect on the Company.
2.17 TAXES. The Company has filed all returns (as hereinafter defined)
required to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. The Company has paid
all taxes (as hereinafter defined) shown as due on such returns that were filed
and has paid all taxes imposed on or assessed against the Company. The
provisions for taxes payable, if any, shown on the financial statements filed
with or as part of the Registration Statement are sufficient for all accrued and
unpaid taxes, whether or not disputed, and for all periods to and including the
dates of such consolidated financial statements. Except as disclosed in writing
to the Representative, (i) no issues have been raised (and are currently
pending) by any taxing authority in connection with any of the returns or taxes
asserted as due from the Company except as set forth on Schedule 2.17 hereto,
and (ii) no waivers of statutes of limitation with respect to the returns or
collection of taxes have been given by or requested from the Company. The term
"taxes" mean all federal, state, local, foreign, and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments, or charges of any kind whatever,
together with any interest
9
and any penalties, additions to tax, or additional amounts with respect thereto.
The term "returns" means all returns, declarations, reports, statements, and
other documents required to be filed in respect to taxes.
2.18 EMPLOYEES' OPTIONS. No shares of Common Stock are eligible for sale
pursuant to Rule 701 promulgated under the Act other than those subject to the
provisions of the lock-up agreements required by Section 2.26 hereof.
2.19 TRANSACTIONS AFFECTING DISCLOSURE TO NASD.
2.19.1 FINDER'S FEES. There are no claims, payments, issuances,
arrangements or understandings for services in the nature of a finder's or
origination fee to which any of the Company or any of its officers, directors or
their respective affiliates is a party, with respect to the sale of the
Securities hereunder or any other arrangements, agreements, understandings,
payments or issuance with respect to the Company that may affect the
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
2.19.2 PAYMENTS WITHIN TWELVE MONTHS. The Company has not made any
direct or indirect payments (in cash, securities or otherwise) to (i) any
person, as a finder's fee, investing fee or otherwise, in consideration of such
person raising capital for the Company or introducing to the Company persons who
provided capital to the Company, (ii) to any NASD member, or (iii) to any person
or entity that has any direct or indirect affiliation or association with any
NASD member within the twelve month period prior to the date on which the
Registration Statement was filed with the Commission ("Filing Date") or
thereafter, other than payments to the Representative.
2.19.3 USE OF PROCEEDS. None of the net proceeds of the offering
will be paid by the Company to any participating NASD member or any affiliate or
associate of any NASD member, except as specifically authorized herein.
2.19.4 INSIDERS' NASD AFFILIATION. No officer or director of the
Company or owner of any of the Company's unregistered securities has any direct
or indirect affiliation or association with any NASD member. The Company will
advise the Representative and the NASD if any stockholder of the Company is or
becomes an affiliate or associated person of an NASD member participating in the
offering or distribution.
2.20 FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any of its
officers, directors, 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 or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (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 it in
connection with any actual or proposed transaction) which (i) might subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the Company
as reflected in any of the financial statements contained in the Prospectus or
(iii) if continued in the future, might adversely affect the assets, business,
operations or prospects of the Company. The Company's
10
internal accounting controls and procedures are sufficient to cause the Company
to comply with the Foreign Corrupt Practices Act of 1977, as amended.
2.21 NASDAQ ELIGIBILITY. As of the Effective Date, the Public Securities
have been approved for quotation on the Nasdaq National Market ("Nasdaq").
2.22 INTANGIBLES. The Company owns or possesses the requisite licenses or
rights to use all trademarks, service marks, service names, trade names, patents
and patent applications, copyrights and other rights (collectively,
"Intangibles") described as being licensed to or owned by it in the Registration
Statement. The Company's Intangibles which have been registered in the United
States Patent and Trademark Office or the United States Copyright Office, as the
case may be, have been fully maintained and are in full force and effect. There
is no claim or action by any person pertaining to, or proceeding pending or
threatened and the Company has not received any notice of conflict with the
asserted rights of others which challenges the exclusive right of the Company
with respect to any Intangibles used in the conduct of the Company's business
except as described in the Prospectus. The Intangibles and the Company's
current products, services and processes do not infringe on any intangibles held
by any third party. To the best of the Company's knowledge, no others have
infringed upon the Intangibles of the Company.
2.23 RELATIONS WITH EMPLOYEES.
2.23.1 EMPLOYEE MATTERS. The Company has generally enjoyed a
satisfactory employer-employee relationship with its employees and is in
compliance in all material respects with all United States federal, state and
local laws, regulations and all applicable Italian laws and regulations
respecting the employment of its employees and employment practices, terms and
conditions of employment and wages and hours relating thereto. There are no
pending investigations involving the Company by the U.S. Department of Labor, or
any other United States or Italian governmental agency responsible for the
enforcement of labor, federal, state or local laws and regulations. There is no
unfair labor practice charge or complaint against the Company pending before the
National Labor Relations Board or similar Italian regulatory agency, or any
strike, picketing, boycott, dispute, slowdown or stoppage pending or threatened
against or involving the Company or any predecessor entity, and none has ever
occurred except as described in the Registration Statement. No question
concerning representation exists respecting the employees of the Company and no
collective bargaining agreement or modification thereof is currently being
negotiated by the Company except as described in the Registration Statement. No
grievance or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company, if any.
2.23.2 EMPLOYEE BENEFIT PLANS. Other than as set forth in the
Registration Statement, the Company neither maintains, sponsors nor contributes
to, nor is it required to contribute to, any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a,
"multi-employer 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") or similar employment benefit plan as provided for under
Italian law ("ERISA Plans"). The Company does not, and has at no time,
maintained or contributed to a defined benefit plan, as defined in Section 3(35)
of ERISA. If the Company does maintain or contribute to a defined benefit plan,
any termination of the plan on the date hereof would not give rise to liability
under Title IV 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 Internal Revenue Code of 1986,
11
as amended ("Code"), which could subject the Company to any tax penalty for
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 "multi-employer
plan".
2.24 OFFICERS' CERTIFICATE. Any certificate signed by any duly authorized
officer of the Company and delivered to the Representative or to its counsel
shall be deemed a representation and warranty by the Company to the
Representative as to the matters covered thereby.
2.25 WARRANT AGREEMENT. The Company has entered into a warrant agreement
with respect to the Warrants substantially in the form filed as an exhibit to
the Registration Statement ("Warrant Agreement") with Continental Stock Transfer
& Trust Company, in form and substance satisfactory to the Representative,
providing for among other things, (i) no redemption of the Warrants without the
consent of GKN and (ii) for the payment of a warrant solicitation fee as
contemplated by Section 3.10 hereof.
2.26 AGREEMENTS WITH INSIDERS. The Company has caused to be duly executed
a legally binding and enforceable agreements pursuant to which (i) all of the
officers and directors of the Company and all of the shareholders owning 1% or
more of the outstanding Common Stock of the Company (collectively "Insiders")
have agreed not to sell any shares of Common Stock owned by them (either
pursuant to Rule 144 of the Regulations or otherwise) for a period of 18 months
following the Effective Date except with the prior written consent of GKN; and
all shareholders owning less than 1% of the outstanding Common Stock have agreed
not to sell any shares of Common Stock owned by them (either pursuant to Rule
144 of the Regulations or otherwise) for a period of 6 months following the
Effective Date except with the prior written consent of GKN. Attached as
Exhibit 2.26 is a list of such persons subject to lock-up restrictions.
2.27 SUBSIDIARIES. The representations and warranties made by the Company
in this Agreement shall also apply and be true with respect to each subsidiary
of the Company (a "subsidiary(ies)"), individually and taken as a whole with the
Company and all other subsidiaries, as if each representation and warranty
contained herein made specific reference to the subsidiary each time the term
"Company" was used.
2.28 UNAUDITED FINANCIALS. The Company has furnished to the Representative
as early as practicable prior to the date hereof a copy of the latest available
unaudited interim financial statements ("Unaudited Financials") of the Company
(which in no event shall be as of a date more than thirty days prior to the
Effective Date) which have been read by the Company's independent accountants,
as stated in their letter to be furnished pursuant to Section 4.3 hereof.
2.29 EXCHANGE ACT REPORTS. The Company is subject to the Exchange Act
reporting requirements and has filed all reports required by such Act in a
complete and timely manner. The information set forth in each such report was
true and correct as of the date of the filing of each such report with the
Commission.
2.30 REPURCHASE. The recent repurchases by the Company of its Common Stock
on October 23, 1996, November 7, 1996 and December 31, 1996, were effected in
accordance with
12
all applicable laws and regulations and no persons have any outstanding rights
or obligations with respect to any of such repurchases.
2.31 NO OBLIGATIONS. The Company does not have any obligations or
liability pursuant to a recently aborted acquisition transaction with respect to
a real estate services company.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees as follows:
3.1 AMENDMENTS TO REGISTRATION STATEMENT. The Company will deliver to the
Representative, prior to filing, any amendment or supplement to the Registration
Statement or Prospectus proposed to be filed after the Effective Date and not
file any such amendment or supplement to which the Representative shall
reasonably object.
3.2 FEDERAL SECURITIES LAWS.
3.2.1 COMPLIANCE. During the time when a Prospectus is required
to be delivered under the Act the Company will use all reasonable efforts to
comply with all requirements imposed upon it by the Act, the Regulations and the
Exchange Act and by the regulations under the Exchange Act, as from time to time
in force, so far as necessary to permit the continuance of sales of or dealings
in the Public Securities in accordance with the provisions hereof and the
Prospectus. If at any time when a Prospectus relating to the Public 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 counsel for the
Representative, 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 light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representative promptly and prepare and file with the
Commission, subject to Section 3.1 hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Act.
3.2.2 FILING OF FINAL PROSPECTUS. The Company will file the
Prospectus (in form and substance satisfactory to the Underwriter) with the
Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3 EXCHANGE ACT REGISTRATION. For a period of five years from
the Effective Date, the Company will use its best efforts to maintain the
registration of the Common Stock and Warrants under the provisions of the
Exchange Act.
3.3 BLUE SKY FILING. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Public Securities for offering and
sale under the securities laws of such jurisdictions as the Representative may
reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. 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 be required
by the laws of such jurisdiction.
13
3.4 DELIVERY TO THE UNDERWRITERS OF PROSPECTUSES. The Company will
deliver to each of the several Underwriters, without charge, from time to time
during the period when the Prospectus is required to be delivered under the Act
or the Exchange Act such number of copies of each Preliminary Prospectus and the
Prospectus as such Underwriter may reasonably request and, as soon as the
Registration Statement or any amendment or supplement thereto becomes effective,
deliver to the Representative two original executed Registration Statements,
including exhibits, and all post-effective amendments thereto and copies of all
exhibits filed therewith or incorporated therein by reference and all original
executed consents of certified experts.
3.5 EVENTS REQUIRING NOTICE TO THE REPRESENTATIVE. The Company will
notify the Representative immediately upon its becoming aware, and confirm the
notice in writing, (i) of the effectiveness of the Registration Statement and
any amendment thereto, (ii) of the issuance by the Commission of any stop order
or of the initiation, or the threatening, of any proceeding for that purpose,
(iii) of the issuance by any state securities commission of any proceedings for
the suspension of the qualification of the Public Securities for offering or
sale in any jurisdiction or of the initiation, or the threatening, of any
proceeding for that purpose, (iv) of the mailing and delivery to the Commission
for filing of any amendment or supplement to the Registration Statement or
Prospectus, (v) of the receipt of any comments or request for any additional
information from the Commission, and (vi) of the happening of any event during
the period described in Section 3.4 hereof which, in the judgment of the
Company, makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires the making of any changes
in the Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If the Commission or any state securities commission shall enter a
stop order or suspend such qualification at any time, the Company will make
every reasonable effort to obtain promptly the lifting of such order.
3.6 REVIEW OF FINANCIAL STATEMENTS. For a period of five years from the
Effective Date, the Company, at its expense, shall cause its regularly engaged
independent certified public accountants to participate in the preparation and
presentation (but not audit) of the Company's financial statements for each of
the first three fiscal quarters prior to the announcement of quarterly financial
information, the filing of the Company's Form 10-Q quarterly report and the
mailing of any quarterly financial information to stockholders.
3.7 RESERVED.
3.8 STANDARD & POOR'S. The Company will take all necessary and
appropriate actions to achieve accelerated publication in Standard and Poor's
Corporation Records Corporate Descriptions (within 30 days after the Effective
Date) and to maintain such publication with updated quarterly information for a
period of five years from the Effective Date, including the payment of any
necessary fees and expenses.
3.9 NASDAQ MAINTENANCE. For a period of five years from the date hereof,
the Company will use its best efforts to maintain the quotation by Nasdaq of the
Common Stock, and, if outstanding, the Warrants and, if the Company no longer
satisfies the inclusion standards of the Nasdaq, to apply for and maintain
quotations by the Nasdaq SmallCap of such securities during such period.
3.10 WARRANT SOLICITATION AND REPRESENTATIVE WARRANT SOLICITATION FEES The
Company hereby engages the Representative, on a non-exclusive basis, as its
agent for the solicitation of the
14
exercise of the Warrants. The Company, at its cost, will (i) assist the
Representative with respect to such solicitation, if requested by the
Representative and will (ii) provide the Representative, and direct the
Company's transfer and warrant agent to provide to the Representative, lists of
the record and, to the extent known, beneficial owners of the Company's
Warrants. During the period commencing one year after the Effective Date, the
Company will pay to GKN (on behalf of the Representative) a commission of five
percent of the Warrant exercise price for each Warrant exercised, payable on the
date of such exercise, on the terms provided for in the Warrant Agreement, if
allowed under the rules and regulations of the NASD and only if the
Representative has provided bona fide securities to the Company in connection
with the exercise of Warrants. In addition to soliciting either orally or in
writing, the exercise of Warrants, such services may also include disseminating
information, either orally or in writing to Warrant holders about the Company or
the market for the Company's securities, and the assisting in the processing of
Warrants. The Representative may engage sub-agents in its solicitation efforts.
The Company will disclose the arrangement to pay such solicitation fees to the
Representative in any prospectus used by the Company in connection with the
registration of the shares of Common Stock underlying the Warrants.
3.11 REGISTRATION OF COMMON STOCK The Company agrees that prior to the
date that the Warrants become exercisable, it shall file all necessary
amendments to the Registration Statement, if possible, or a new registration
statement to register, under the Act, the Common Stock issuable upon exercise of
the Warrants. In either case, the Company shall cause the same to be effective
prior to the date that the Warrants become exercisable and shall maintain the
effectiveness of such registration statement and keep current a prospectus
thereunder and maintain such qualification until the expiration of the Warrants
and the Representative's Warrants in accordance with the provisions of the
Agreement. The provisions of this Section 3.11 may not be modified, amended or
deleted without the prior written consent of the Representative.
3.12 REPORTS TO THE REPRESENTATIVE AND OTHERS.
3.12.1 PERIODIC REPORTS, ETC. For a period of five years from the
Effective Date, the Company will promptly furnish to the Representative, and to
each other Underwriter who may so request, copies of such financial statements
and other periodic and special reports as the Company from time to time files
with any governmental authority or furnishes generally to holders of any class
of its securities, and promptly furnish to the Representative (i) a copy of each
periodic report the Company shall be required to file with the Commission, (ii)
a copy of every press release and every news item and article with respect to
the Company or its affairs which was released by the Company, (iii) copies of
each Form SR, (iv) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4
received or prepared by the Company, and (v) such additional documents and
information with respect to the Company and the affairs of any future
subsidiaries of the Company as the Representative may from time to time
reasonably request.
3.12.2 TRANSFER SHEETS AND WEEKLY POSITION LISTINGS. For a period
of five years from the Closing Date, the Company will furnish to the
Representative at the Company's sole expense such transfer sheets and position
listings of the Company's securities as the Representative may reasonably
request, including the daily, weekly and monthly consolidated transfer sheets of
the transfer agent of the Company and the weekly position listings of the
Depository Trust Company.
15
3.13 AGREEMENTS BETWEEN THE REPRESENTATIVE AND THE COMPANY.
3.13.1 REPRESENTATIVE'S PURCHASE OPTION. On the Closing Date, the
Company will execute and deliver the Representative's Purchase Option to the
Representative substantially in the form filed as an exhibit to the Registration
Statement.
3.14 DISQUALIFICATION OF FORM S-1. For a period equal to five years from
the date hereof, the Company will not take any action or actions which may
prevent or disqualify the Company's use of Form S-1 (or other appropriate form)
for the registration of the Warrants and the Representative's Purchase Option
and the securities issuable upon exercise of those securities under the Act.
3.15 PAYMENT OF EXPENSES.
3.15.1 GENERAL EXPENSES. The Company hereby agrees to pay on each
of the Closing Date and the Option Closing Date, if any, to the extent not paid
at Closing Date, all expenses incident to the performance of the obligations of
the Company under this Agreement, including but not limited to (i) the
preparation, printing, filing, delivery and mailing (including the payment of
postage with respect to such mailing) of the Registration Statement, the
Prospectus and the Preliminary Prospectuses and the printing and mailing of this
Agreement and related documents, including the cost of all copies thereof and
any amendments thereof or supplements thereto supplied to the Underwriters in
quantities as may be required by the Underwriters, (ii) the printing, engraving,
issuance and delivery of the shares of Common Stock, the Warrants and the
Representative's Purchase Option, including any transfer or other taxes payable
thereon, (iii) the qualification of the Public Securities under state or foreign
securities or Blue Sky laws, including the filing fees under such Blue Sky laws,
the costs of printing and mailing the "Preliminary Blue Sky Memorandum," and all
amendments and supplements thereto, fees up to an aggregate of $35,000 and
disbursements of the Representative's counsel, and fees and disbursements of
local counsel, if any, retained for such purpose, (iv) costs associated with
applications for assignments of a rating of the Public Securities by qualified
rating agencies, (v) filing fees, costs and expenses (including fees and
disbursements for the Representative's counsel) incurred in registering the
offering with the NASD, (vi) costs of placing "tombstone" advertisements in THE
WALL STREET JOURNAL, THE NEW YORK TIMES and a third publication to be selected
by the Representative, (vii) fees and disbursements of the transfer and warrant
agent, (viii) the Company's expenses associated with "due diligence" meetings
arranged by the Representative, (ix) the preparation, binding and delivery of
transaction "bibles," in number, form and style reasonably satisfactory to the
Representative and transaction lucite cubes or similar commemorative items in a
style and quantity as reasonably requested by the Representative, (x) any
listing of the Public Securities on Nasdaq, and any securities exchange or any
listing in Standard & Poor's and (xi) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 3.15.1. Since an important part of
the public offering process is for the Company to appropriately and accurately
describe both the background of the principals of the Company and the Company's
competitive position in its industry, the Company has engaged and will pay for
an investigative search firm of the Representative's choice to conduct an
investigation of principals of the Company mutually selected by the
Representative and the Company. The Representative may deduct from the net
proceeds of the offering payable to the Company on the Closing Date, or the
Option Closing Date, if any, the expenses set forth herein to be paid by the
Company to the Representative and/or to third parties.
16
3.15.2 NON-ACCOUNTABLE EXPENSES. The Company further agrees that,
in addition to the expenses payable pursuant to Section 3.15.1 it will pay to
the Representative a non-accountable expense allowance equal to three percent
(3%) of the gross proceeds received by the Company from the sale of the Public
Securities, of which $60,000 has been paid to date, and the Company will pay the
balance on the Closing Date and any additional monies owed attributable to the
Option Securities or otherwise on the Option 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. If the offering contemplated by
this Agreement is not consummated for any reason whatsoever then the following
provisions shall apply: The Company's liability for payment to the
Representative of the non-accountable expense allowance shall be equal to the
sum of the Representative's actual out-of-pocket expenses (including, but not
limited to, counsel fees, "road-show" and due diligence expenses). The
Representative shall retain such part of the non-accountable expense allowance
previously paid as shall equal such actual out-of-pocket expenses. If the
amount previously paid is insufficient to cover such actual out-of-pocket
expenses, the Company shall remain liable for and promptly pay any other actual
out-of-pocket expenses. If the amount previously paid exceeds the amount of
actual out-of-pocket expenses, the Representative shall promptly remit to the
Company any such excess.
3.16 APPLICATION OF NET PROCEEDS. The Company will apply the net proceeds
from the offering received by it in a manner consistent with the application
described under the caption "USE OF PROCEEDS" in the Prospectus. The Company
hereby agrees that, other than described under "USE OF PROCEEDS" in the
Prospectus, the Company will not apply any net proceeds from the offering to pay
(i) any debt for borrowed funds, other than periodic payments, in the ordinary
course, under bank or other institutional credit lines, or (ii) any debt or
obligation owed to any shareholder owning one percent or more of the outstanding
shares of Common Stock on the Closing Date, or by any family member or affiliate
of any of the foregoing persons, or by any option holder who would have the
ability to sell the shares underlying his option under Rule 701 under the Act.
3.17 DELIVERY OF EARNINGS STATEMENTS TO SECURITY HOLDERS. The Company will
make generally available to its security holders as soon as practicable, but not
later than the first day of the fifteenth full calendar month following the
Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.
3.18 KEY PERSON LIFE INSURANCE. The Company has key person life insurance
in an amount no less than $1,000,000 on the lives of Xxxxxx Xxxxxxx and Xxxxx
Xxxxx-Condivi and pay the annual premium therefor naming the Company as the sole
beneficiary thereof for at least three years following the Effective Date.
3.19 STABILIZATION. Neither the Company, nor, to its knowledge, any of its
employees, directors or stockholders has taken or will take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Public Securities.
3.20 INTERNAL CONTROLS. The Company maintains and will continue to
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are
17
recorded as necessary in order to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.21 ACCOUNTANTS AND LAWYERS. For a period of five years from the
Effective Date, the Company shall retain independent public accountants and
securities lawyers reasonably acceptable to the Representative. Accountants
Xxxxxx Xxxxxxxx, LLP and lawyers Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, L.L.P. are
acceptable to the Company.
3.22 TRANSFER AGENT. For a period of five years from the Effective Date,
the Company shall retain a transfer agent for the Common Stock and Warrants
acceptable to the Representative. American Stock Transfer & Trust Company
("Transfer Agent") is acceptable to the Company.
3.23 SALE OF SECURITIES; EXERCISE PRICE OF OPTIONS. To the extent it has
the ability, the Company agrees not to permit or cause a private or public sale
or private or public offering of any of its securities (in any manner, including
pursuant to Rule 144 under the Act) owned nominally or beneficially by the
Insiders for a period of 18 months following the Effective Date without
obtaining the prior written approval of GKN. The Company will not issue any
shares of Common Stock, options, warrants or other convertible securities during
a three year period from the date of the Agreement for an issuance or exercise
price, as the case may be, of less than the fair market value on the date of
issuance or grant without the prior written consent of GKN.
3.24 RIGHT OF FIRST REFUSAL. During the three-year period following the
Effective Date, GKN shall have the right to purchase for GKN's account or to
sell for the account of the Insiders, any securities sold by the Insiders or by
any family member or affiliate of any of the Insiders on the open market,
including pursuant to Rule 144 under the Act. Each Insider will agree to
consult with GKN with regard to any such sales and will offer GKN the exclusive
opportunity to purchase or sell such securities on terms at least as favorable
to the Insider as they can secure elsewhere. If GKN fails to accept in writing
any such proposal for sale by the Insider within 24 hours after receipt of a
notice containing such proposal, then GKN shall have no claim or right with
respect to any such sales contained in any such notice. If, thereafter, such
proposal is modified in any material respect, the Insider shall adopt the same
procedure as with respect to the original proposal.
4. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Securities, as provided herein,
shall be subject to the continuing accuracy of the representations and
warranties of the Company as of the date hereof and as of each of the Closing
Date and the Option Closing Date, if any, to the accuracy of the statements of
officers of the Company made pursuant to the provisions hereof and to the
performance by the Company of its obligations hereunder and to the following
conditions:
4.1 REGULATORY MATTERS.
4.1.1 EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement has been declared effective on the date of this Agreement and, at each
of the Closing Date and the Option Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for the 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
18
information shall have been complied with to the reasonable satisfaction of
Xxxxxxxx Xxxxxx & Xxxxxx, counsel to the Representative.
4.1.2 NASD CLEARANCE. By the Effective Date, the Representative
shall have received clearance from the NASD as to the amount of compensation
allowable or payable to the Representative as described in the Registration
Statement.
4.1.3 NO BLUE SKY STOP ORDERS. No order suspending the sale of
the Securities in any jurisdiction designated by you pursuant to Section 3.3
hereof shall have been issued on either on the Closing Date or the Option
Closing Date, and no proceedings for that purpose shall have been instituted or
shall be contemplated.
4.2 COMPANY COUNSEL MATTERS.
4.2.1 EFFECTIVE DATE OPINION OF COUNSEL. On the Effective Date,
the Representative shall have received the favorable opinion of Xxxxxxxx Xxxxx
Singer & Xxxxxxxxx, L.L.P., counsel to the Company, dated the Effective Date,
addressed to the Representative and in form and substance satisfactory to
Xxxxxxxx Xxxxxx & Xxxxxx, counsel to the Representative, to the effect that:
(i) The Company has been duly organized and is validly existing
as a corporation and is in good standing under the laws of its state of
incorporation. The Company is duly qualified and licensed and in good standing
as a foreign corporation in each jurisdiction in which it owns or leases any
real property or to the best of our knowledge the character of its operations as
described in the Prospectus requires such qualification or licensing, except
where the failure would have a material adverse effect on the business of the
Company.
(ii) The Company has all requisite corporate power and
authority, and has all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental or regulatory officials
and bodies to own or lease its properties and conduct its business as described
in the Prospectus, except where failure to have same would not have, either
singly or in the aggregate, a material adverse effect on the Company or its
operations. The Company has all corporate power and authority to enter into
this Agreement and to carry out the provisions and conditions hereof, and all
consents, authorizations, approvals and orders required by it in connection
therewith have been obtained. No consents, approvals, authorizations or orders
of, and no filing with any court or governmental agency or body (other than such
as may be required under the Act and applicable Blue Sky laws), is required by
it for the valid authorization, issuance, sale and delivery of the Securities,
and the consummation of the transactions and agreements contemplated by this
Agreement, the Warrant Agreement and the Representative's Purchase Option or if
so required, all such authorizations, approvals, consents, orders,
registrations, licenses and permits have been duly obtained by it and are in
full force and effect and have been disclosed to the Representative.
(iii) All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof 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 and known to us. The outstanding options and warrants issued by the
Company to purchase shares of Common Stock known to us constitute the valid and
binding obligations of the Company,
19
enforceable in accordance with their terms. The offers and sales of the
outstanding Common Stock and options and warrants to purchase shares of Common
Stock were at all relevant times either registered under the Act or exempt from
such registration requirements. The authorized capital stock of the Company is
as set forth under the caption "Capitalization" in the Prospectus.
(iv) The Securities have been duly authorized and, when issued
and paid for, will be validly issued, fully paid and non-assessable; the holders
thereof are not and will not be subject to personal liability by reason of being
such holders. The Securities are not and will not be subject to the preemptive
rights of any holders of any security of the Company or, to the best of such
counsel's knowledge, similar contractual rights granted by the Company. All
corporate action required to be taken for the authorization, issuance, and sale
of the Securities has been duly and validly taken. When issued, the
Representative's Purchase Option, the Representative's Warrants and the Warrants
will 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.
(v) To the best of such counsel's knowledge, except as set forth
in the Prospectus, no holders of any securities of the Company or of any
options, warrants or securities of the Company exercisable for or convertible or
exchangeable into securities of the Company and issued by the Company have the
right to require the Company to repurchase, or register any such securities of
the Company under the Act or to include any such securities in a registration
statement to be filed by the Company under the Act.
(vi) To the best of such counsel's knowledge, the shares of
Common Stock and the Warrants are eligible for quotation on Nasdaq.
(vii) This Agreement, the Representative's Purchase Option and
the Warrant Agreement have each been duly and validly authorized by the Company
and, when executed and delivered by the Company, will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except (a) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (b) as enforceability of any indemnification
provisions may be limited under the federal and state securities laws, and (c)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(viii) The execution, delivery and performance by the Company of
this Agreement, the Representative's Purchase Option and the Warrant Agreement,
the issuance and sale of the Securities, the consummation of the transactions
contemplated hereby and thereby and the compliance by the Company with the terms
and provisions hereof and thereof, do not and will not, with or without the
giving of notice or the lapse of time, or both, (a) conflict with, or result in
a breach of, any of the terms or provisions of, or constitute a default under,
or result in the creation or modification of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company pursuant to
the terms of, any material mortgage, deed of trust, note, indenture, loan,
contract, commitment or other material agreement or instrument, to which the
Company is a party or by which the Company or any of its properties or assets
may be bound and of which such counsel has knowledge, (b) result in any
violation of the provisions of the Certificate of Incorporation or the By-Laws
of the Company, (c) violate any statute or any judgment, order or decree, rule
or regulation applicable to the Company of any court, domestic or foreign, or of
any
20
federal, state or other regulatory authority or other governmental body having
jurisdiction over the Company, its properties or assets and of which such
counsel has knowledge, or (d) have a material effect on any permit,
certification, registration, approval, consent, license or franchise of the
Company that is known to such counsel.
(ix) The Registration Statement, each Preliminary Prospectus and
the Prospectus and any post-effective amendments or supplements thereto (other
than the financial statements 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 Regulations. The Securities and all other securities issued or
issuable by the Company and described in the Registration Statement and the
Prospectus conform in all respects to the description thereof contained in the
Registration Statement and the Prospectus. The statements in the Prospectus
regarding the Company 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. No
statute or regulation or legal or governmental proceeding required to be
described in the Prospectus is not described as required, nor are any contracts
or documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement and known to counsel not so described or filed as required.
(x) Counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants for the Company and representatives of the Underwriters at which the
contents of the Registration Statement, the Prospectus and related matters 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 Registration Statement and Prospectus (except as otherwise set
forth in this opinion), no facts have come to the attention of such counsel
which lead them to believe that either the Registration Statement or the
Prospectus nor any 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, in light of the circumstances under which they were made, 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 Registration Statement or Prospectus).
(xi) The Securities and Exchange Commission has informed counsel
that the Registration Statement is effective under the Act, and, to the best of
such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act or applicable state
securities laws.
(xii) To such counsel's knowledge, except as described in the
Prospectus, no default exists in the due performance and observance of any term,
covenant or condition of any license, contract, indenture, mortgage, deed of
trust, 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 may be bound
or to which any of the properties or assets of the Company is subject, except
where such defaults, either singly or in the aggregate, would not have a
material adverse effect on the Company or its operations. To such counsel's
knowledge, the Company is not in violation of any term or provision of its
Certificate of Incorporation or By-Laws. The Company is not in violation of any
franchise, license, permit, applicable law, rule, regulation, judgment or decree
of any governmental agency or court, domestic
21
or foreign, having jurisdiction over the Company or any of its properties or
business, except where such violations, either singly or in the aggregate, would
not have a material adverse effect on the Company or its operations.
(xiii) To the best of counsel's knowledge, (a) the Company owns
or possesses, free and clear of all liens and encumbrances, and rights thereto,
other than as disclosed in the Prospectus, the rights to all patents, patent
applications, patent rights, trademark applications or copyrights used by the
Company in its businesses (collectively, "Intellectual Property"); (b) the
Company has not received any notice of infringement or of conflict with rights
on claims of other with respect to any Intellectual Property owned or used by it
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, could result in any material adverse effect upon the Company,
except as described in the Prospectus, and (c) counsel and the Company have no
knowledge without any independent investigation of patent rights of others which
are or would be infringed by specific products or processes referred to in the
Prospectus in such a manner as to materially and adversely affect the Company,
except as described in the Prospectus.
(xiv) To the best of such counsel's knowledge, except as
described in the Prospectus, the Company does not own an interest in any
corporation, partnership, joint venture, trust or other business entity.
(xv) To the best of such counsel's knowledge, except as set
forth in the Prospectus, there is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or
threatened against the Company, which might result in any material and adverse
change in the condition (financial or otherwise), business or prospects of the
Company, or might materially and adversely affect the properties or assets
thereof.
(xvi) To the best of such counsel's knowledge, except as
described in the Prospectus, there are no claims, payments, issuances,
arrangements or understandings with the Company for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or financial consulting arrangements or any other arrangements, agreements,
understandings, payments or issuances that may affect the Representative's
compensation, as determined by the NASD.
(xvii) To the best of such counsel's knowledge, the Company has
filed all Exchange Act reports in a complete and timely manner and the
information set forth in such reports is true and correct as of the respective
filing dates of each such report with the Commission.
(xviii) The recent repurchases by the Company of its Common
Stock on October 23, 1996, November 7, 1996 and December 31, 1996, were effected
in accordance with all applicable laws and regulations and to the best of such
counsel's knowledge, no persons have any outstanding rights or obligations with
respect to such repurchases.
(xix) The Company does not have any obligation or liability
pursuant to a recently aborted transaction with respect to a real estate
services company.
Unless the context clearly indicates otherwise, the term "Company" as
used in this Section 4.2.1 shall include each subsidiary of the Company. The
opinion of counsel for the Company and any opinion relied upon by such counsel
for the Company shall include a statement
22
to the effect that it may be relied upon by counsel for the Representative in
its opinion delivered to the Representative.
4.2.2 CLOSING DATE AND OPTION CLOSING DATE OPINION OF COUNSEL. On
each of the Closing Date and the Option Closing Date, if any, the Representative
shall have received the favorable opinion of Xxxxxxxx Xxxxx Singer & Xxxxxxxxx,
L.L.P., counsel to the Company, dated the Closing Date or the Option Closing
Date, as the case may be, addressed to the Representative and in form and
substance satisfactory to Xxxxxxxx Xxxxxx & Xxxxxx, counsel to the
Representative, confirming as of the Closing Date and, if applicable, the Option
Closing Date, the statements made by Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, L.L.P.
in its opinion delivered on the Effective Date.
[4.2.3 RELIANCE. IN RENDERING SUCH OPINION, SUCH COUNSEL MAY RELY
(I) AS TO MATTERS INVOLVING THE APPLICATION OF LAWS OTHER THAN THE LAWS OF THE
UNITED STATES AND JURISDICTIONS IN WHICH THEY ARE ADMITTED, 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 REASONABLY SATISFACTORY TO
COUNSEL) OF OTHER COUNSEL REASONABLY ACCEPTABLE TO COUNSEL, FAMILIAR WITH THE
APPLICABLE LAWS, AND (II) AS TO MATTERS OF FACT, TO THE EXTENT THEY DEEM PROPER,
ON CERTIFICATES OR OTHER WRITTEN STATEMENTS OF OFFICERS OF DEPARTMENTS OF
VARIOUS JURISDICTION 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 COUNSEL IF REQUESTED. THE
OPINION OF COUNSEL FOR THE COMPANY SHALL INCLUDE A STATEMENT TO THE EFFECT THAT
IT MAY BE RELIED UPON BY COUNSEL FOR THE REPRESENTATIVE IN ITS OPINION DELIVERED
TO THE REPRESENTATIVE.]
4.3 COLD COMFORT LETTER. At the time this Agreement is executed, and at
each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representative and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to Xxxxxxxx
Xxxxxx & Xxxxxx, counsel for the Representative, from each of Reconta Ernst &
Young, and Xxxxxx Xxxxxxxx LLP dated, respectively, as of the date of this
Agreement and as of the Closing Date and the Option Closing Date, if any:
(i) Confirming that they are independent accountants with respect
to the Company within the meaning of the Act and the applicable Regulations;
(ii) Stating that in their opinion the financial statements of the
Company prepared by them and included in the Registration Statement and
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act and the published Regulations thereunder;
(iii) (WITH RESPECT ONLY TO XXXXXX XXXXXXXX) Stating that, based on
the performance of procedures specified by the American Institute of Certified
Public Accountants for a review of the latest available unaudited interim
financial statements of the Company (as described in SAS No. 71 Interim
Financial Information), 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, 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 of the Company and
the pro forma financial information
23
included in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Regulations or any material modification should be made to the unaudited interim
financial statements and/or pro forma financial information included in the
Registration Statement for them to be 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, (b) at a date not later than five days prior to the Effective Date,
Closing Date or Option Closing Date, as the case may be, there was any change in
the capital stock or long-term debt of the Company, or any decrease in the
stockholders' equity of the Company as compared with amounts shown in the
December 31, 1996 balance sheet included in the Registration Statement, other
than as set forth in or contemplated by the Registration Statement, or, if there
was any decrease, setting forth the amount of such decrease, and (c) during the
period from January 1, 1997 to a specified date not later than five days prior
to the Effective Date, Closing Date or Option Closing Date, as the case may be,
there was any decrease in revenues, net earnings or net earnings per share of
Common Stock or increase in net loss or net loss per share of Common Stock, in
each case as compared with the corresponding period in the preceding year and as
compared with the corresponding period in the preceding quarter, other than as
set forth in or contemplated by the Registration Statement, or, if there was any
such decrease, setting forth the amount of such decrease;
(iv) (WITH RESPECT ONLY TO XXXXXX XXXXXXXX) Setting forth, at a
date not later than five days prior to the Effective Date, the amount of
liabilities of the Company (including a break-down of commercial papers and
notes payable to banks);
(v) 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, and work sheets,
of the Company 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;
(vi) Stating that they have not during the immediately preceding
five year period brought to the attention of the Company's management any
reportable condition related to internal structure, design or operation as
defined in the Statement on Auditing Standards No. 60 -- "Communication of
Internal Control Structure Related Matters Noted in an Audit," in the Company's
internal controls; and
(vii) Statements as to such other matters incident to the
transaction contemplated hereby as you may reasonably request.
4.4 OFFICERS' CERTIFICATES.
4.4.1 OFFICERS' CERTIFICATE. At each of the Closing Date and the
Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Chairman of the Board or the President
and the Secretary of the Company, dated the Closing Date or the Option Closing
Date, as the case may be, respectively, to the effect that the Company has
performed all covenants and complied with all conditions required by this
Agreement to be performed or complied with by the Company prior to and as of the
Closing Date, or the Option
24
Closing Date, as the case may be, and that the conditions set forth in Section
4.5 hereof have been satisfied as of such date and that, as of Closing Date and
the Option Closing Date, as the case may be, the representations and warranties
of the Company set forth in Section 2 hereof are true and correct. In addition,
the Representative will have received such other and further certificates of
officers of the Company as the Representative may reasonably request.
4.4.2 SECRETARY'S CERTIFICATE. At each of the Closing Date and the
Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company, dated the
Closing Date or the Option Date, as the case may be, respectively, certifying
(i) that the By-Laws and Certificate of Incorporation, as amended, of the
Company are true and complete, have not been modified and are in full force and
effect, (ii) that the resolutions relating to the public offering contemplated
by this Agreement are in full force and effect and have not been modified, (iii)
all correspondence between the Company or its counsel and the Commission, (iv)
all correspondence between the Company or its counsel and the NASD concerning
inclusion on Nasdaq, and (vi) as to the incumbency of the officers of the
Company. The documents referred to in such certificate shall be attached to
such certificate.
4.5 NO MATERIAL CHANGES. Prior to and on each of the Closing Date and the
Option Closing Date, if any, (i) there shall have been no material adverse
change or development involving a prospective material change in the condition
or prospects or the business activities, financial or otherwise, of the Company
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 materially adverse
to the Company, taken as a whole, (iii) the Company shall not be in default
under any provision of any instrument relating to any outstanding indebtedness
which default would have a material adverse effect on the Company, (iv) 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, (v)
no action suit or proceeding, at law or in equity, shall have been pending or
threatened against the Company or affecting any of its property or business
before or by any court or federal or state 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, (vi) no stop order shall have been issued under the
Act and no proceedings therefor shall have been initiated or threatened by the
Commission, and (vii) the Registration Statement and the Prospectus and any
amendments or supplements thereto contain all material statements which are
required to be stated therein in accordance with the Act and the Regulations and
conform in all material respects to the requirements of the Act and the
Regulations, and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto contains any untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.6 DELIVERY OF AGREEMENTS. The Company has delivered to the
Representative an executed copy of the Representative's Purchase Option.
4.7 OPINION OF COUNSEL FOR THE REPRESENTATIVE. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to Xxxxxxxx Mollen & Xxxxxx, counsel to the
25
Representative, and you shall have received from such counsel a favorable
opinion, dated the Closing Date and the Option Closing Date, if any, with
respect to such of these proceedings as you may reasonably require. On or prior
to the Effective Date, the Closing Date and the Option Closing Date, as the case
may be, counsel for the Representative 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 this Section
4.7, or in order to evidence the accuracy, completeness or satisfaction of any
of the representations, warranties or conditions herein contained.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION OF THE UNDERWRITERS.
5.1.1 GENERAL. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each of the Underwriters, their
respective directors, officers, agents and employees and each person, if any,
who controls any such Underwriter ("controlling person") within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any and all
loss, liability, claim, damage and expense whatsoever (including but not limited
to any and all legal or other expenses reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened, whether
arising out of any action between any of the Underwriters and the Company or
between any of the Underwriters and any third-party or otherwise) to which they
or any of them may become subject under the Act, the Exchange Act or any other
statute or at common law or otherwise or under the laws of foreign countries,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in (i) the Registration Statement or the Prospectus
(as from time to time each may be amended and supplemented); (ii) in any
post-effective amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Purchase Option; or (iii) any application or other document
or written communication (in this Section 5 collectively called "application")
executed by the Company or based upon written information furnished by 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, Nasdaq or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, unless such statement or omission
was made in reliance upon, and in strict 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 or supplement thereof, or in any
application, as the case may be.
5.1.2 PROCEDURE. If any action is brought against an Underwriter or
controlling person in respect of which indemnity may be sought against the
Company pursuant to Section 5.1.1, such Underwriter shall promptly notify the
Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the approval of such Underwriter) and payment of actual expenses.
Such Underwriter or controlling person 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 Underwriter or such controlling person unless
(i) the employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action, or (ii) the Company shall
not have employed counsel to have charge of the defense of such action, or (iii)
such indemnified party
26
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 the
Company (in which case the Company 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 fees and expenses of not more than one additional firm of
attorneys selected by the Underwriter and/or controlling person shall be borne
by the Company. Notwithstanding anything to the contrary contained herein, if
an Underwriter or controlling person shall assume the defense of such action as
provided above, the Company shall have the right to approve the terms of any
settlement of such action which approval shall not be unreasonably withheld.
5.2 INDEMNIFICATION OF THE COMPANY. Each Underwriter, severally and not
jointly, agrees to indemnify and hold harmless the Company against any and all
loss, liability, claim, damage and expense described in the foregoing indemnity
from the Company to the several Underwriters, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions
directly relating to the transactions effected by the Underwriters in connection
with this offering made in any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment or supplement thereto or in any
application in reliance upon, and in strict conformity with, written information
furnished to the Company with respect to such Underwriter by or on behalf of
such Underwriter expressly for use in such Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or supplement thereto or
in any such application. In case any action shall be brought against the
Company or any other person so indemnified based on any Preliminary Prospectus,
the Registration Statement or Prospectus or any amendment or supplement thereto
or any application, and in respect of which indemnity may be sought against any
Underwriter, such Underwriter shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the several Underwriters by the provisions of Section
5.1.2. The Company agrees promptly to notify the Representative of the
commencement of any litigation or proceedings against the Company or any of its
officers, directors or controlling persons in connection with the issue and sale
of the Securities or in connection with the Registration Statement or
Prospectus.
5.3 CONTRIBUTION.
5.3.1 CONTRIBUTION RIGHTS. In order to provide for just and
equitable contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for indemnification
pursuant hereto 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
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Act, the Exchange Act or otherwise may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 5, then, and in each such case, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
the Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance;
provided, that, no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Notwithstanding
the provisions of this Section 5.3, no Underwriter shall not be required to
contribute any amount in
27
excess of the amount by which the total price at which the Public Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section, each director, officer and employee of
an Underwriter, and each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act shall have the same rights to contribution as
such Underwriter.
5.3.2 CONTRIBUTION PROCEDURE. Within fifteen days after receipt by
any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution on account of any settlement of any claim, action or
proceeding which was effected by such party without the written consent of such
contributing party. The contribution provisions contained in this Section are
intended to supersede, to the extent permitted by law, any right to contribution
under the Act, the Exchange Act or otherwise available.
6. DEFAULT BY AN UNDERWRITER.
6.1 DEFAULT NOT EXCEEDING 10% OF FIRM SECURITIES. If any Underwriter or
Underwriters shall default in its or their obligations to purchase the Firm
Securities or the Option Securities if exercised, hereunder, and if the number
of the Firm Securities with respect to which such default relates does not
exceed in the aggregate 10% of the number of Firm Securities or Option
Securities which all Underwriters have agreed to purchase hereunder, then such
Firm Securities or Option Securities to which the default relates shall be
purchased by the non-defaulting Underwriters in proportion to their respective
commitments hereunder.
6.2 DEFAULT EXCEEDING 10% OF FIRM SECURITIES. In the event that such
default relates to more than 10% of the Firm Securities or Option Securities,
you may in your discretion arrange for yourself or for another party or parties
to purchase such Firm Securities or Option Securities to which such default
relates on the terms contained herein. If within one business day after such
default relating to more than 10% of the Firm Securities or Option Securities
you do not arrange for the purchase of such Firm Securities or Option
Securities, then the Company shall be entitled to a further period of one
business day within which to procure another party or parties satisfactory to
you to purchase said Firm Securities or Option Securities on such terms. In the
event that neither you nor the Company arrange for the purchase of the Firm
Securities or Option Securities to which a default relates as provided in this
Section 6, this Agreement may be terminated by you or the Company without
liability on the part of the Company (except as provided in Section 3.15 and
Section 5.1 hereof) or the several Underwriters but nothing herein shall relieve
a defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for damages occasioned by its default hereunder.
28
6.3 POSTPONEMENT OF CLOSING DATE. In the event that the Firm Securities
or Option Securities to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, you or the Company shall have the right to postpone the Closing
Date or Option Closing Date for a reasonable period, but not in any event
exceeding five business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment to the Registration Statement or the Prospectus which in the opinion
of counsel for the Underwriters may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 6 with like effect as if it had originally been a party to
this Agreement with respect to such Securities.
7. ADDITIONAL COVENANTS.
7.1 BOARD DESIGNEE. For a period of five years from the Effective Date,
the Company will recommend and use its best efforts to elect two designees of
GKN as members of the Company's Board of Directors. Such designees shall
receive no more or less compensation than is paid to other non-management
directors of the Company. If GKN does not exercise its option to designate at
least one member of the Company's Board of Directors, GKN shall nevertheless
have the right to send a representative (who need not be the same individual
from meeting to meeting) to observe each meeting of the Board of Directors,
subject to such individual(s) executing a suitable confidentiality agreement.
Such person(s), whether a member of the Board or a representative, shall be
entitled to receive reimbursement for all reasonable costs incurred in attending
such meetings, including, but not limited to, food, lodging and transportation.
The Company agrees to give GKN written notice of each such meeting and to
provide GKN with an agenda and minutes of the meeting no later than it gives
such notice and provides such items to the other directors.
7.2 PRESS RELEASES. The Company will not issue a press release or engage
in any other publicity until 25 days after the Effective Date without GKN's
prior written consent.
7.3 FORM S-8 OR ANY SIMILAR FORM. The Company shall not file a
Registration Statement on Form S-8 (or any similar or successor form) for the
registration of shares of Common Stock underlying stock options for a period of
one year from the Effective Date without GKN's written consent.
7.4 COMPENSATION AND OTHER ARRANGEMENTS. The Company hereby agrees that
for a period of three years from the Effective Date, all compensation and other
arrangements between the Company and its officers, directors and affiliates
shall be approved by the Compensation Committee of the Company's Board of
Directors, a majority of the members of which shall have no affiliation or other
relationship with the Company other than as directors.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Closing Dates and such representations, warranties and agreements of the
Underwriters and Company, including the indemnity agreements contained in
Section 5 hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter, the Company or any
controlling person, and shall survive termination of this Agreement or the
issuance and delivery of the Securities to the several Underwriters until the
earlier of the expiration of any applicable statute
29
of limitations and the seventh anniversary of the later of the Closing Date or
the Option Closing Date, if any, at which time the representations, warranties
and agreements shall terminate and be of no further force and effect.
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
9.1 EFFECTIVE DATE. This Agreement shall become effective on the
Effective Date at the time that the Registration Statement is declared
effective.
9.2 TERMINATION. You shall have the right to terminate this Agreement at
any time prior to any Closing Date, (i) if any domestic or international event
or act or occurrence has materially disrupted, or in your opinion will in the
immediate future materially disrupt, general securities markets in the United
States; or (ii) if trading on the New York Stock Exchange, the American Stock
Exchange, The Boston Stock Exchange, Nasdaq, or otherwise 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 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 (iii) if
the United States or Italy shall have become involved in a war or major
hostilities, or (iv) if a banking moratorium has been declared by a New York
State or federal authority, or (v) if a moratorium on foreign exchange trading
has been declared which materially adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Securities, or (vii) if Albino Condivi or Xxxxx Xxxxx-Condivi shall no
longer serve the Company in their respective present capacities, or (viii) if
the Company has breached any of its representations, warranties or obligations
hereunder, or (ix) if the Underwriter shall have become aware after the date
hereof of such a material adverse change in the condition (financial or
otherwise), business, or prospects of the Company, or such adverse material
change in general market conditions as in the Representative's judgment would
make it impracticable to proceed with the offering, sale and/or delivery of the
Securities or to enforce contracts made by the Representative's for the sale of
the Securities.
9.3 NOTICE. If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 9, the
Company shall be notified on the same day as such election is made by you by
telephone or telecopy, confirmed by letter.
9.4 EXPENSES. In the event that this Agreement shall not be carried out
for any reason whatsoever, within the time specified herein or any extensions
thereof pursuant to the terms herein, the obligations of the Company to pay the
expenses related to the transactions contemplated herein shall be governed by
Section 3.14 hereof.
9.5 INDEMNIFICATION. Notwithstanding any contrary provision contained in
this Agreement, any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the provisions of
Section 5 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.
30
10. MISCELLANEOUS.
10.1 NOTICES. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telecopied and confirmed
If to the Representative:
GKN Securities Corp.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Chairman
Copy to:
Xxxxxxxx Mollen & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx Xxxxxx, Esq.
If to the Company:
Trident Rowan Group, Inc.
0 Xxxxxx Xxxx Xxxxx
Xxxxxxxx Xxxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx,
President, Chief Executive Officer
Copy to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: Xxxxx Xxxxxx, Esq.
10.2 HEADINGS. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
10.3 AMENDMENT. This Agreement may only be amended by a written instrument
executed by each of the parties hereto.
10.4 ENTIRE AGREEMENT. This Agreement (together with the other agreements
and documents being delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
31
10.5 BINDING EFFECT. This Agreement shall inure solely to the benefit of
and shall be binding upon, the Representative, the Underwriters, the Company and
the controlling persons, directors and officers referred to in Section 5 hereof,
and their respective successors, legal Representative and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provisions
herein contained.
10.6 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed and enforced in accordance with the law of the State of New York,
without giving effect to conflicts of law. The Company hereby agrees that any
action, proceeding or claim against it arising out of, relating in any way to
this Agreement shall be brought and enforced in the courts of the State of New
York or the United States District Court for the Southern District of New York,
and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum. Any such
process or summons to be served upon the Company may be served by transmitting a
copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 10.1 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys' fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
10.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto.
10.8 WAIVER, ETC. The failure of any of the parties hereto to at any time
enforce any of the provisions of this Agreement shall not be deemed or construed
to be a waiver of any such provision, nor to in any way effect the validity of
this Agreement or any provision hereof or the right of any of the parties hereto
to thereafter enforce each and every provision of this Agreement. No waiver of
any breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
32
If the foregoing correctly sets forth the understanding between the
Representative and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
Trident Rowan Group, Inc.
By:
------------------------------------
Name: Xxxxxx Xxxxx
Title: President, Chief Executive Officer
Accepted as of the date first
above written.
New York, New York
GKN Securities Corp.
By:
-----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
33
SCHEDULE I
TRIDENT ROWAN GROUP, INC.
1,250,000 SHARES OF COMMON STOCK
1,250,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
UNDERWRITER NUMBER OF FIRM SECURITIES
TO BE PURCHASED
COMMON STOCK WARRANTS
------------ --------
GKN Securities Corp.
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34
