Exhibit 1.1
1,600,000 Units
(each Unit consisting of (i) one share of Common Stock, par value $0.01 per
share and (ii) one redeemable Warrant to purchase one share of Common Stock)
CareFlow | Net, Inc.
Underwriting Agreement
[__], 1997
▇.▇. ▇▇▇▇▇ Investment Banking Corp.
(as representative of the several underwriters
named in SCHEDULE A attached hereto)
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
CareFlow | Net, Inc., a Delaware corporation (the "COMPANY"), proposes
to issue and sell to the several underwriters named in SCHEDULE A attached
hereto (collectively, the "UNDERWRITERS") for whom you are acting as
representative (the "REPRESENTATIVE") pursuant to this Underwriting Agreement
(this "AGREEMENT") an aggregate of One Million Six Hundred Thousand (1,600,000)
Units, each unit being hereinafter referred to as a "UNIT" and consisting of (i)
one share of common stock, par value $0.001 per share ("SHARES"), and (ii) one
redeemable warrant (the "WARRANTS") to purchase one share of common stock at a
price of Six Dollars and Fifty Cents ($6.50) from the Separation Date (as
defined in the Warrant Agreement) through [__], 2002. The Warrants are subject
to redemption, in certain instances commencing one (1) year from the date of
this Agreement. In addition, the Company proposes to grant to the Underwriters
the option referred to in SECTION 2(B) to purchase all or any part of an
aggregate of Two Hundred Forty Thousand (240,000) additional Units, subject to
the right of the Representative to elect, in its sole discretion, to exercise
such option individually, and not as representative of the several Underwriters.
Unless the context otherwise indicates, the term "UNITS" shall include the Two
Hundred Forty Thousand (240,000) additional Units referred to above.
The aggregate of One Million Six Hundred Thousand (1,600,000) Units to
be sold by the Company, together with all or any part of the Two Hundred Forty
Thousand (240,000) Units which the Underwriters or the Representative, on an
individual basis, as the case may be, have the option to purchase, and the
Shares and the Warrants comprising such Units, are herein called the "UNITS".
The common stock of the Company to be outstanding after giving effect to the
sale of the Shares is herein called the "COMMON STOCK". The Shares and Warrants
included in the Units (including the Units which the Underwriters or the
Representative, on an individual basis, as the case
may be, have the option to purchase) are herein collectively called the
"SECURITIES".
You have advised the Company that you desire to purchase the Units.
The Company confirms the agreements made by it with respect to the purchase of
the Units by you as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement (File No. 333-[__]) on Form SB-2
relating to the public offering of the Units, including a form of prospectus
subject to completion, copies of which have heretofore been delivered to you,
has been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "ACT"), and the rules and regulations
(the "RULES AND REGULATIONS") of the Securities and Exchange Commission (the
"COMMISSION") thereunder, and has been filed with the Commission under the Act
and one or more amendments to such registration statement may have been so
filed. After the execution of this Agreement, the Company will file with the
Commission either (i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the Act,
either (A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Units that shall identify the Preliminary
Prospectus (as hereinafter defined) that it supplements containing such
information as is required or permitted by Rules 434, 430A and 424(b) under the
Act or (B) if the Company does not rely on Rule 434 under the Act, a prospectus
in the form most recently included in an amendment to such registration
statement (or, if no such amendment shall have been filed, in such registration
statement), with such changes or insertions as are required by Rule 430A under
the Act or permitted by Rule 424(b) under the Act and in the case of either
CLAUSE (I)(A) OR (I)(B) of this sentence, as have been provided to and approved
by the Representative prior to the execution of this Agreement, or (ii) if such
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Act, an amendment to such registration
statement, including a form of prospectus, a copy of which amendment has been
furnished to and approved by the Representative prior to the execution of this
Agreement. As used in this Agreement, the term "REGISTRATION STATEMENT" means
such registration statement, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and including
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term "PRELIMINARY
PROSPECTUS" means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); the term
"PROSPECTUS" means (A) if the Company relies on Rule 434 under the Act, the Term
Sheet relating to the Units that is first filed pursuant to Rule 424(b)(7) under
the Act, together with the Preliminary Prospectus identified therein that such
Term Sheet supplements; (B) if the Company does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act or (C) if the Company does not rely on Rule 434 under the Act and
if no prospectus is required to be filed pursuant to said Rule 424(b), such term
means the prospectus included in the Registration Statement; except that if such
registration statement or prospectus is amended or such
prospectus is supplemented, after the effective date of such registration
statement and prior to the Option Closing Date (as hereinafter defined), the
terms "REGISTRATION STATEMENT" and "PROSPECTUS" shall include such registration
statement and prospectus as so amended, and the term "PROSPECTUS" shall include
the prospectus as so supplemented, or both, as the case may be; and the term
"TERM SHEET" means any term sheet that satisfies the requirements of Rule 434
under the Act. Any reference to the "DATE" of a Prospectus that includes a Term
Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. At the time the Registration Statement
becomes effective and at all times subsequent thereto up to and on the Closing
Date (as hereinafter defined) or the Option Closing Date, as the case may be,
(i) the Registration Statement and Prospectus will in all respects conform to
the requirements of the Act and the Rules and Regulations; and (ii) neither the
Registration Statement nor the Prospectus will include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make statements therein not misleading; provided, however, that
the Company makes no representations, warranties or agreements as to information
contained in or omitted from the Registration Statement or Prospectus in
reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of the Underwriters specifically for use in the
preparation thereof. It is understood that the statements set forth in the
Prospectus on page 2 with respect to stabilization, under the heading "Risk
Factors -- Possible Adverse Effect on the Liquidity of the Company's Securities
Due to Securities and Exchange Commission Investigation of the Representative
and ▇▇▇▇▇ & Co. and Recent Settlement by ▇▇▇▇▇ & Co. with NASD", the first
sentence under the heading "Risk Factors -- Possible Restrictions on
Market-Making Activities in Company's Securities", under the heading
"Underwriting" and the identity of counsel to the Underwriters under the heading
"Legal Matters" constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Registration Statement and
Prospectus, as the case may be.
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and is duly
qualified to do business as a foreign corporation and is in good standing in all
other jurisdictions in which the nature of its business or the character or
location of its properties requires such qualification, except where failure to
so qualify will not materially affect the Company's business, properties or
financial condition.
(d) The authorized, issued and outstanding capital stock of the
Company as of September 30, 1997 is as set forth in the Prospectus under
"Capitalization"; the shares of issued and outstanding capital stock of the
Company set forth thereunder have been duly authorized, validly issued and are
fully paid and non-assessable; except as set forth in the Prospectus, no
options, warrants, or other rights to purchase, agreements or other obligations
to issue, or agreements or other rights to convert any obligation into, any
shares of capital stock of the Company have been granted or entered into by the
Company; and the capital stock conforms to all statements relating thereto
contained in the Registration Statement and Prospectus.
(e) The Units and the Shares are duly authorized, and when issued and
delivered pursuant to this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights of any security
holder of the Company. The Warrants have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been duly executed, issued
and delivered and will constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency, moratorium or similar laws relating to or affecting
creditors' rights generally and by general principles of equity, and entitled to
the benefits provided by the warrant agreement pursuant to which such Warrants
are to be issued (the "WARRANT AGREEMENT"), which will be substantially in the
form filed as an exhibit to the Registration Statement. The shares of Common
Stock issuable upon exercise of the Warrants have been reserved for issuance
upon the exercise of the Warrants and when issued in accordance with the terms
of the Warrants and Warrant Agreement, will be duly and validly authorized,
validly issued, fully paid and non-assessable and free of preemptive rights and
no personal liability will attach to the ownership thereof. The Warrant
Agreement has been duly authorized and, when executed and delivered pursuant to
this Agreement, will have been duly executed and delivered and will constitute
the valid and legally binding obligation of the Company enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
moratorium or similar laws relating to or affecting creditors' rights generally
and by general principles of equity. The Warrants and the Warrant Agreement
conform to the respective descriptions thereof in the Registration Statement and
Prospectus. The Shares and the Warrants contained in the Unit Purchase Option
(as such term is defined in the Prospectus) have been duly authorized and, when
duly issued and delivered, such Warrants will constitute valid and legally
binding obligations of the Company enforceable in accordance with their terms,
except as may be limited by bankruptcy, insolvency, moratorium or similar laws
relating to or affecting creditors' rights generally and by general principles
of equity, and entitled to the benefits provided by the Unit Purchase Option.
The Shares included in the Unit Purchase Option (and the shares of Common Stock
issuable upon exercise of such Warrants) when issued and sold in accordance with
the terms of the Unit Purchase Option and the Warrant Agreement, as the case may
be, will be duly authorized, validly issued, fully paid and non-assessable and
free of preemptive rights and no personal liability will attach to the ownership
thereof.
(f) This Agreement, the Unit Purchase Option, the M/A Agreement and
the Escrow Agreement have been duly and validly authorized, executed and
delivered by the Company. The Company has full power and lawful authority to
authorize, issue and sell the Units to be sold by it hereunder on the terms and
conditions set forth herein, and no consent, approval, authorization or other
order of any governmental authority is required in connection with such
authorization, execution and delivery or with the authorization, issue and sale
of the Units or the Unit Purchase Option, except such as may be required under
the Act or state securities laws.
(g) Except as described in the Prospectus, the Company is not in
violation, breach or default of or under, and consummation of the transactions
herein contemplated and the fulfillment
of the terms of this Agreement will not conflict with, or result in a material
breach or violation of, any of the terms or provisions of, or constitute a
material default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property or assets of the Company pursuant
to the terms of any indenture, mortgage, deed of trust, loan agreement or 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 property or assets of the Company is
subject, nor will such action result in any violation of the provisions of the
articles of incorporation or the by-laws of the Company, as amended, or any
statute or any order, rule or regulation applicable to the Company of any court
or of any regulatory authority or other governmental body having jurisdiction
over the Company.
(h) Subject to the qualifications stated in the Prospectus, the
Company has good and marketable title to all properties and assets described in
the Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as are not materially significant or
important in relation to its business; all of the material leases and subleases
under which the Company is the lessor or sublessor of properties or assets or
under which the Company holds properties or assets as lessee or sublessee as
described in the Prospectus are in full force and effect, and, except as
described in the Prospectus, the Company is not in default in any material
respect with respect to any of the terms or provisions of any of such leases or
subleases, and no claim has been asserted by anyone adverse to rights of the
Company as lessor, sublessor, lessee or sublessee under any of the leases or
subleases mentioned above, or affecting or questioning the right of the Company
to continued possession of the leased or subleased premises or assets under any
such lease or sublease except as described or referred to in the Prospectus; and
the Company owns or leases all such properties described in the Prospectus as
are necessary to its operations as now conducted and, except as otherwise stated
in the Prospectus, as proposed to be conducted as set forth in the Prospectus.
(i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company, LLP, who have given their reports on
certain financial statements filed and to be filed with the Commission as a part
of the Registration Statement, which are incorporated in the Prospectus, are
with respect to the Company, independent public accountants as required by the
Act and the Rules and Regulations.
(j) The financial statements, together with related notes, set forth
in the Prospectus (or if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or the Registration Statement present fairly the
financial position and results of operations and changes in cash flow position
of the Company on the basis stated in the Registration Statement, at the
respective dates and for the respective periods to which they apply. Said
statements and related notes have been prepared in accordance with generally
accepted accounting principles applied on a basis which is consistent during the
periods involved. The information set forth under the captions "Dilution",
"Capitalization", and "Selected Financial Data" in the Prospectus fairly
present, on the basis stated in the Prospectus in all material respects, the
information included therein.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus (or, if the Prospectus is not
in existence, the most recent
Preliminary Prospectus), the Company has not incurred any liabilities or
obligations, direct or contingent, not in the ordinary course of business, or
entered into any transaction not in the ordinary course of business, which is
material to the business of the Company, and there has not been any change in
the capital stock of, or any incurrence of short-term or long-term debt by, the
Company or any issuance of options, warrants or other rights to purchase the
capital stock of the Company or any adverse change or any development involving,
so far as the Company can now reasonably foresee a prospective adverse change in
the condition (financial or other), net worth, results of operations, business,
key personnel or properties of it which would be material to the business or
financial condition of the Company and the Company has not become a party to,
and neither the business nor the property of the Company has become the subject
of, any material litigation whether or not in the ordinary course of business.
(l) Except as set forth in the Prospectus, there is not now pending
or, to the knowledge of the Company, threatened, any action, suit or proceeding
to which the Company is a party before or by any court or governmental agency or
body, which might result in any material adverse change in the condition
(financial or other), business prospects, net worth, or properties of the
Company, nor are there any actions, suits or proceedings related to
environmental matters or related to discrimination on the basis of age, sex,
religion or race; and no labor disputes involving the employees of the Company
exist or are imminent which might be expected to adversely affect the conduct of
the business, property or operations or the financial condition or results of
operations of the Company.
(m) Except as disclosed in the Prospectus, the Company has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid all taxes shown as due thereon; and there is no tax deficiency which has
been or to the knowledge of the Company might be asserted against the Company.
(n) Except as described in the Prospectus, the Company has all
licenses, permits and other governmental authorizations currently required for
the conduct of its business or the ownership of its properties as described in
the Prospectus and is in all material respects complying therewith and owns or
possesses adequate rights to use all material patents, patent applications,
trademarks, copyrights, service marks, trade-names, trademark registrations,
service ▇▇▇▇ registrations, copyrights and licenses necessary for the conduct of
such business and had not received any notice of conflict with the asserted
rights of others in respect thereof. To the best knowledge of the Company, none
of the activities or business of the Company are in violation of, or cause the
Company to violate, any law, rule, regulation or order of the United States, any
state, county or locality, or of any agency or body of the United States or of
any state, county or locality, the violation of which would have a material
adverse impact upon the condition (financial or otherwise), business, property,
prospective results of operations, or net worth of the Company.
(o) The Company has not, directly or indirectly, at any time (i) made
any contributions to any candidate for political office, or failed to disclose
fully any such contribution in violation of law or (ii) made any payment to any
state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments or contributions required or allowed by applicable law. The
Company's internal accounting controls and procedures are sufficient to cause
the Company to comply in all material respects with the Foreign Corrupt
Practices Act of 1977, as amended.
(p) On the Closing Dates (hereinafter defined) all transfer or other
taxes, (including franchise, capital stock or other tax, other than income
taxes, imposed by any jurisdiction) if any, which are required to be paid in
connection with the sale and transfer of the Units to the Underwriters hereunder
will have been fully paid or provided for by the Company and all laws imposing
such taxes will have been fully complied with.
(q) All contracts and other documents of the Company which are, under
the Rules and Regulations, required to be filed as exhibits to the Registration
Statement have been so filed.
(r) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Units hereby.
(s) The Company has no subsidiaries.
(t) The Company has not entered into any agreement pursuant to which
any person is entitled either directly or indirectly to compensation from the
Company for services as a finder in connection with the proposed public
offering.
(u) Except as previously disclosed in writing by the Company to the
Representative, no officer, director or stockholder of the Company has any
affiliation or association with any member of the National Association of
Securities Dealers Inc. ("NASD").
(v) The Company is not, and upon receipt of the proceeds from the
sale of the Units will not be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
(w) The Company has not distributed and will not distribute prior to
the First Closing Date any offering material in connection with the offering and
sale of the Units other than the Preliminary Prospectus, Prospectus, the
Registration Statement or the other materials permitted by the Act, if any.
(x) The conditions for use of Form SB-2, as set forth in the General
Instructions thereto, have been satisfied.
(y) There are no business relationships or related-party transactions
of the nature described in Item 404 of Regulation S-B involving the Company and
any person described in such
Item that are required to be disclosed in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) and that have not
been so disclosed.
(z) The Company has complied with all provisions of Section 517.075
Florida Statutes relating to doing business with the government of Cuba or with
any person or affiliate located in Cuba.
(aa) The Company owns or possesses adequate and enforceable rights to
use all patents, patent applications, trademarks, service marks, copyrights,
trade secrets, processes, formulations, technology or know-how used or proposed
to be used in the conduct of its business as described in or contemplated by the
Prospectus (the "PROPRIETARY RIGHTS"). The Company has not received any notice
of any claims, nor does it have any knowledge of any threatened claims, and
knows of no facts which would form the basis of any claim, asserted by any
person to the effect that the sale or use of any product or process now used or
offered by the Company or proposed to be used or offered by the Company
infringes on any patents or infringes upon the use of any proprietary rights of
another person and, to the best of the Company's knowledge, no others have
infringed the Company's Proprietary Rights.
2. PURCHASE, DELIVERY AND SALE OF THE UNITS.
(a) Subject to the terms and conditions of this Agreement, and upon
the basis of the representations, warranties, and agreements herein contained,
the Company agrees to issue and sell to the Underwriters, and each Underwriter
agrees, severally and not jointly, to buy from the Company at $[__] per Unit, at
the place and time hereinafter specified, the number of Units set forth opposite
the name of such Underwriter in SCHEDULE A attached hereto (the "FIRST UNITS")
plus any additional Units which such Underwriter may become obligated to
purchase pursuant to the provisions of SECTION 9 hereof. The First Units shall
consist of One Million Six Hundred Thousand (1,600,000) Units to be purchased
from the Company. Delivery of the First Units against payment therefor shall
take place at the offices of ▇.▇. ▇▇▇▇▇ Investment Banking Corp., ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or at such other place as may be
designated by agreement between you and the Company) at 10:00 a.m., New York
time, on [__], 1997, or at such later time and date as you may designate, such
time and date of payment and delivery for the First Units being herein called
the "FIRST CLOSING DATE".
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, the Company hereby grants an option to the Underwriters (or,
at the Representative's option to the Representative, individually) to purchase
all or any part of an aggregate of an additional Two Hundred Forty Thousand
(240,000) Units at the same price per Unit as the Underwriters shall pay for the
First Units being sold pursuant to the provisions of CLAUSE (A) of this SECTION
2 (such additional Units being referred to herein as the "OPTION UNITS"). This
option may be exercised within thirty (30) days after the effective date of the
Registration Statement upon notice by the Representative to the Company advising
as to the amount of Option Units as to which the option is being exercised, the
names and
denominations in which the certificates for such Option Units are to be
registered and the time and date when such certificates are to be delivered.
Such time and date shall be determined by the Representative, but shall not be
earlier than four nor later than ten full business days after the exercise of
said option, nor in any event prior to the First Closing Date, and such time and
date is referred to herein as the "OPTION CLOSING DATE". Delivery of the Option
Units against payment therefor shall take place at the offices of ▇.▇. ▇▇▇▇▇
Investment Banking Corp., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
The number of Option Units to be purchased by each Underwriter, if any, shall
bear the same percentage to the total number of Option Units being purchased by
the several Underwriters pursuant to this CLAUSE (B) as the number of Units such
Underwriter is purchasing bears to the total number of the First Units being
purchased pursuant to CLAUSE (A) of this SECTION 2, as adjusted, in each case by
the Representative in such manner as the Representative may deem appropriate.
The Option granted hereunder may be exercised only to cover over-allotments in
the sale by the Underwriters of First Units referred to in CLAUSE (A) above. In
the event the Company declares or pays a dividend or distribution on its Common
Stock, whether in the form of cash, shares of Common Stock or any other
consideration, prior to the Option Closing Date, such dividend or distribution
shall also be paid on the Option Units on the Option Closing Date.
(c) The Company will make the certificates for the securities
comprising the Units to be purchased by the Underwriters hereunder available to
you for checking at least two full business days prior to the First Closing Date
or the Option Closing Date (which are collectively referred to herein as the
"CLOSING DATES"). The certificates shall be in such names and denominations as
you may request, at least two full business days prior to the Closing Dates.
Time shall be of the essence and delivery at the time and place specified in
this Agreement is a further condition to the obligations of the Underwriters.
Definitive certificates in negotiable form for the Units to be purchased by the
Underwriters hereunder will be delivered by the Company to you for the accounts
of the Underwriters against payment of the respective purchase prices by the
Underwriters, by certified or bank cashier's checks or, at the Representative's
option, by wire transfer in New York Clearing House funds, payable to the order
of the Company. In addition, in the event the Underwriters or the
Representative, on an individual basis, as the case may be, exercise the option
to purchase from the Company all or any portion of the Option Units pursuant to
the provisions of CLAUSE (B) above, payment for such Units shall be made to or
upon the order of the Company by certified or bank cashier's checks or, at the
Representative's option, by wire transfer payable in New York Clearing House
funds at the offices of ▇.▇. ▇▇▇▇▇ Investment Banking Corp., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at the time and date of delivery of such Units
as required by the provisions of CLAUSE (B) above, against receipt of the
certificates for such Units by the Representative for the respective accounts of
the Underwriters registered in such names and in such denominations as the
Representative may request. It is understood that you, individually and not as
Representative of the several Underwriters, may (but shall not be obligated to)
make any and all payments required pursuant to this SECTION 2 on behalf of any
Underwriters whose check or checks shall not have been received by the
Representative at the time of delivery of the Units to be purchased by such
Underwriter or Underwriters. Any such payment by you shall not relieve any such
Underwriter or Underwriters of any of its or their obligations hereunder. It is
also understood that you individually rather than all of the Underwriters may
(but shall not be obligated to) purchase
the Option Units referred to in CLAUSE (B) of this SECTION 2, but only to cover
overallotments. It is understood that the Underwriters propose to offer the
Units to be purchased hereunder to the public upon the terms and conditions set
forth in the Registration Statement, after the Registration Statement becomes
effective.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective as promptly as possible. If required, the Company
will file the Prospectus or any Term Sheet that constitutes a part thereof and
any amendment or supplement thereto with the Commission in the manner and within
the time period required by Rules 434 and 424(b) under the Act. Upon
notification from the Commission that the Registration Statement has become
effective, the Company will so advise you and will not at any time, whether
before or after the effective date, file the Prospectus, Term Sheet or any
amendment to the Registration Statement or supplement to the Prospectus of which
you shall not previously have been advised and furnished with a copy or to which
you or your counsel shall have objected in writing or which is not in compliance
with the Act and the Rules and Regulations. At any time prior to the later of
(A) the completion by all of the Underwriters of the distribution of the Units
contemplated hereby (but in no event more than nine months after the date on
which the Registration Statement shall have become or been declared effective)
and (B) twenty five (25) days after the date on which the Registration Statement
shall have become or been declared effective, the Company will prepare and file
with the Commission, promptly upon your request, any amendments or supplements
to the Registration Statement or Prospectus which, in your opinion, may be
necessary or advisable in connection with the distribution of the Units. As
soon as the Company is advised thereof, the Company will advise you, and confirm
the advice in writing, of the receipt of any comments of the Commission, of the
effectiveness of any post-effective amendment to the Registration Statement, of
the filing of any supplement to the Prospectus or any amended Prospectus, of any
request made by the Commission for amendment of the Registration Statement or
for supplementing of the Prospectus or for additional information with respect
thereto, of the issuance by the Commission or any state or regulatory body of
any stop order or other order or threat thereof suspending the effectiveness of
the Registration Statement or any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the Units
for offering in any jurisdiction, or of the institution of any proceedings for
any of such purposes, and will use its best efforts to prevent the issuance of
any such order, and, if issued, to obtain as soon as possible the lifting
thereof. The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company
authorizes the Underwriters and dealers to use the Prospectus in connection with
the sale of the Units for such period as in the opinion of counsel to the
Underwriters the use thereof is required to comply with the applicable
provisions of the Act and the Rules and Regulations. In case of the happening,
at any time within such period as a Prospectus is required under the Act to be
delivered in connection with sales by an underwriter or dealer of any event of
which the Company has knowledge and which materially affects the Company or the
securities of the Company, or which in the opinion of counsel
for the Company or counsel for the Underwriters should be set forth in an
amendment of the Registration Statement or a supplement to the Prospectus in
order to make the statements therein not then misleading, in light of the
circumstances existing at the time the Prospectus is required to be delivered to
a purchaser of the Units or in case it shall be necessary to amend or supplement
the Prospectus to comply with law or with the Rules and Regulations, the Company
will notify you promptly and forthwith prepare and furnish to you copies of such
amended Prospectus or of such supplement to be attached to the Prospectus, in
such quantities as you may reasonably request, in order that the Prospectus, as
so amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material facts necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which they
are made, not misleading. The preparation and furnishing of any such amendment
or supplement to the Registration Statement or amended Prospectus or supplement
to be attached to the Prospectus shall be without expense to the Underwriters,
except that in case any Underwriter is required, in connection with the sale of
the Units to deliver a Prospectus nine months or more after the effective date
of the Registration Statement, the Company will upon request of and at the
expense of the applicable Underwriter, amend or supplement the Registration
Statement and Prospectus and furnish the applicable Underwriter with reasonable
quantities of prospectuses complying with Section 10(a)(3) of the Act. The
Company will comply with the Act, the Rules and Regulations and the Securities
Exchange Act of 1934 and the rules and regulations thereunder in connection with
the offering and issuance of the Units.
(b) The Company will use its best efforts to qualify to register the
Units for sale under the securities or "blue sky" laws of such jurisdictions as
the Representative may designate and will make such applications and furnish
such information as may be required for that purpose and to comply with such
laws, provided the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general consent of service
of process in any jurisdiction in any action other than one arising out of the
offering or sale of the Units. The Company will, from time to time, prepare and
file such statements and reports as are or may be required to continue such
qualification in effect for so long a period as the Representative may
reasonably request.
(c) If the sale of the Units provided for herein is not consummated
for any reason caused by the Company, the Company shall pay all costs and
expenses incident to the performance of the Company's obligations hereunder,
including but not limited to, all of the expenses itemized in SECTION 8,
including the accountable out-of-pocket expenses of the Representative.
(d) The Company will use its best efforts to (i) cause a registration
statement under the Securities Exchange Act of 1934 to be declared effective
concurrently with the completion of this offering and will notify the
Representative in writing immediately upon the effectiveness of such
registration statement and (ii) if requested by the Representative, obtain a
listing on the Nasdaq Small Cap Market and to obtain and keep current a listing
in the Standard & Poors or ▇▇▇▇▇'▇ Industrial OTC Manual.
(e) For so long as the Company is a reporting company under either
Section 12(g) or 15(d) of the Securities Exchange Act of 1934, the Company, at
its expense, will furnish to its stockholders an annual report (including
financial statements audited by independent public accountants), in reasonable
detail and at its expense, will furnish to you during the period ending five (5)
years from the date hereof, (i) as soon as practicable after the end of each
fiscal year, a balance sheet of the Company and any of its subsidiaries as at
the end of such fiscal year, together with statements of income, surplus and
cash flow of the Company and any subsidiaries for such fiscal year, all in
reasonable detail and accompanied by a copy of the certificate or report thereon
of independent accountants; (ii) as soon as practicable after the end of each of
the first three fiscal quarters of each fiscal year, consolidated summary
financial information of the Company for such quarter in reasonable detail;
(iii) as soon as they are available, a copy of all reports (financial or other)
mailed to security holders; (iv) as soon as they are available, a copy of all
non-confidential reports and financial statements furnished to or filed with the
Commission or any securities exchange or automated quotation system on which any
class of securities of the Company is listed; and (v) such other information as
you may from time to time reasonably request.
(f) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in CLAUSE (E) above will be
on a consolidated basis to the extent the accounts of the Company and its
subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
(g) The Company will deliver to you at or before the First Closing
Date two signed copies of the Registration Statement including all financial
statements and exhibits filed therewith, and of all amendments thereto, and will
deliver to the Underwriters such number of conformed copies of the Registration
Statement, including such financial statements but without exhibits, and of all
amendments thereto, as the Underwriters may reasonably request. The Company
will deliver to or upon the order of the Underwriters, from time to time until
the effective date of the Registration Statement, as many copies of any
Preliminary Prospectus filed with the Commission prior to the effective date of
the Registration Statement as the Underwriters may reasonably request. The
Company will deliver to the Underwriters on the effective date of the
Registration Statement and thereafter for so long as a Prospectus is required to
be delivered under the Act, from time to time, as many copies of the Prospectus,
in final form, or as thereafter amended or supplemented, as the Underwriters may
from time to time reasonably request. The Company, not later than (i) 5:00
p.m., New York City time, on the date of determination of the public offering
price, if such determination occurred at or prior to 12:00 noon, New York City
time, on such date or (ii) 6:00 p.m., New York City time, on the business day
following the date of determination of the public offering price, if such
determination occurred after 12:00 noon, New York City time, on such date, will
deliver to the Underwriters, without charge, as many copies of the Prospectus
and any amendment or supplement thereto as the Underwriters may reasonably
request for purposes of confirming orders that are expected to settle on the
First Closing Date.
(h) The Company will make generally available to its security holders
and to the registered holders of its Warrants and deliver to you as soon as it
is practicable to do so but in no
event later than 90 days after the end of twelve months after its current fiscal
quarter, an earnings statement (which need not be audited) covering a period of
at least twelve (12) consecutive months beginning after the effective date of
the Registration Statement, which shall satisfy the requirements of Section
11(a) of the Act.
(i) The Company will apply the net proceeds from the sale of the
Units for the purposes set forth under "Use of Proceeds" in the Prospectus, and
will file such reports with the Commission with respect to the sale of the Units
and the application of the proceeds therefrom as may be required pursuant to
Rule 463 under the Act.
(j) The Company will, promptly upon your request, prepare and file
with the Commission any amendments or supplements to the Registration Statement,
Preliminary Prospectus or Prospectus and take any other action, which in the
reasonable opinion of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the
Underwriters, may be reasonably necessary or advisable in connection with the
distribution of the Units, and will use its best efforts to cause the same to
become effective as promptly as possible.
(k) The Company will reserve and keep available that maximum number
of its authorized but unissued securities which are issuable upon exercise of
the Unit Purchase Option outstanding from time to time.
(l) For a period of thirteen (13) months from the First Closing Date,
no officer, director or stockholder of the Company will directly or indirectly,
offer, sell (including any short sale), grant any option for the sale of,
acquire any option to dispose of, or otherwise dispose of any shares of Common
Stock without the prior written consent of the Representative.
(m) Prior to completion of this offering, the Company will make all
filings required, including registration under the Securities Exchange Act of
1934, to obtain the listing of the Units, Common Stock, and Warrants on the
Nasdaq Small Cap Market (or a listing on such other market or exchange as the
Representative consents to), and will effect and use its best efforts to
maintain such listing for at least five years from the date of this Agreement.
(n) The Company and each of the stockholders listed on the signature
page hereto (the "PRINCIPAL STOCKHOLDERS") in the Prospectus represents that it
or he has not taken and agree that it or he will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in the stabilization or manipulation
of the price of the Units, Shares or the Warrants or to facilitate the sale or
resale of the Securities.
(o) On the Closing Date and simultaneously with the delivery of the
Units, the Company shall execute and deliver to you the Unit Purchase Option.
The Unit Purchase Option will be substantially in the form of the Unit Purchase
Option filed as an Exhibit to the Registration Statement.
(p) Without the prior written consent of the Representative, (i)
during the eighteen (18) month period commencing on the date of this Agreement,
the Company will not grant options to purchase shares of Common Stock at an
exercise price less than the greater of (x) the initial public offering price of
the Units (without allocating any value to the Warrants) or (y) the fair market
value of the Common Stock on the date of grant; (ii) during the six month period
commencing on the date of this Agreement, grant options to any current officer
of the Company; (iii) during the three year period commencing on the date of
this Agreement, offer or sell any of its securities pursuant to Regulation S
under the Act; (iv) grant registration rights to any person which are
exercisable sooner than thirteen (13) months from the First Closing Date; (v)
issue any additional securities which have per share voting rights greater than
the voting rights of the Shares (or take any corporate action which would have
this effect) or (vi) during the eighteen (18) month period commencing on the
date of this Agreement, enter into any agreement or arrangement with any
investment banking firm other than the Representative relating to investment
banking, corporate finance, merger and acquisition or other similar advisory or
consulting services.
(q) J. ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be Chairman and Chief Executive Officer of
the Company on the Closing Dates. The Company will obtain key person life
insurance on the life of J. ▇▇▇▇▇▇ ▇▇▇▇▇▇ in an amount of not less than Two
Million Dollars ($2,000,000) and will use its best efforts to maintain such
insurance during the five year period commencing with the First Closing Date
unless his employment with the Company is earlier terminated. In such event,
the Company will obtain a comparable policy on the life of his successor for the
balance of the five year period. For a period of thirteen months from the First
Closing Date, the compensation of the executive officers of the Company shall
not be increased from the compensation levels disclosed in the Prospectus.
(r) On the Closing Date and simultaneously with the delivery of the
Units the Company shall execute and deliver to you, individually and not as
representative of the Underwriters, an agreement with you regarding mergers,
acquisitions, joint ventures and certain other forms of transactions, in the
form previously delivered to the Company by you (the "M/A AGREEMENT").
(s) So long as any Warrants are outstanding, the Company shall use
its best efforts to cause post-effective amendments to the Registration
Statement to become effective in compliance with the Act and without any lapse
of time between the effectiveness of any such post-effective amendments and
cause a copy of each Prospectus, as then amended, to be delivered to each holder
of record of a Warrant and to furnish to each Underwriter and dealer as many
copies of each such Prospectus as such Underwriter or dealer may reasonably
request. The Company shall not call for redemption any of the Warrants unless a
registration statement covering the securities underlying the Warrants has been
declared effective by the Commission and remains current at least until the date
fixed for redemption. In addition, for so long as any Warrant is outstanding,
the Company will promptly notify the Representative of any material change in
the business, financial condition or prospects of the Company.
(t) Upon the exercise of any Warrant or Warrants after [__], 1998,
the Company
will pay ▇.▇. ▇▇▇▇▇ Investment Banking Corp. individually and not as
representative of the Underwriters, a fee of [__]% of the aggregate exercise
price of the Warrants, of which a portion may be reallowed to the dealer who
solicited the exercise (which may also be the ▇.▇. ▇▇▇▇▇ Investment Banking
Corp.) if (i) the market price of the Company's Common Stock is greater than the
exercise price of the Warrants on the date of exercise; (ii) the exercise of the
Warrant was solicited by a member of the National Association of Securities
Dealers, Inc., (iii) the Warrant Holder designates in writing that the exercise
of the Warrant was solicited by a member of the NASD and designates in writing
the broker-dealer to receive compensation for such exercise; (iv) the Warrant
is not held in a discretionary account; (v) the disclosure of compensation
arrangements has been made in documents provided to customers, both as part of
the original offering and at the time of exercise, and (vi) the solicitation of
exercise of the Warrant was not in violation of Regulation M promulgated under
the Securities Exchange Act of 1934, as amended. The Company agrees not to
solicit the exercise of any Warrants other than through ▇.▇. ▇▇▇▇▇ Investment
Banking Corp. and will not authorize any other dealer to engage in such
solicitation without the prior written consent of the ▇.▇. ▇▇▇▇▇ Investment
Banking Corp.
(u) For a period of five (5) years from the Effective Date the
Company (i) at its expense, shall cause its regularly engaged independent
certified public accountants to review (but not audit) the Company's financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
10-Q quarterly report and the mailing of quarterly financial information to
stockholders and (ii) shall not change its accounting firm without the prior
written consent of the Chairman or the President of the Representative.
(v) As promptly as practicable after the Closing Date, the Company
will prepare, at its own expense, hard cover "bound volumes" relating to the
offering, and will distribute at least four of such volumes to the individuals
designated by the Representative or counsel to the Representative.
(w) For a period of five years from the First Closing Date (i) the
Representative shall have the right, but not the obligation, to designate one
director of the Board of Directors of the Company and (ii) the Company shall
engage a public relations firm acceptable to the Representative.
(x) The Company shall, for a period of six years after date of this
Agreement, submit which reports to the Secretary of the Treasury and to
stockholders, as the Secretary may require, pursuant to Section 1202 of the
Internal Revenue Code, as amended, or regulations promulgated thereunder, in
order for the Company to qualify as a "small business" so that stockholders may
realize special tax treatment with respect to their investment in the Company.
4. CONDITIONS OF UNDERWRITERS OBLIGATION. The obligations of the
Underwriters to purchase and pay for the Units which it has agreed to purchase
hereunder, are subject to the accuracy (as of the date hereof, and as of the
Closing Dates) of and compliance with the representations and warranties of the
Company herein, to the performance by the Company of its
obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and you
shall have received notice thereof not later than 10:00 A.M., New York time, on
the date on which the amendment to the registration statement originally filed
with respect to the Units or to the Registration Statement, as the case may be,
containing information regarding the initial public offering price of the Units
has been filed with the Commission, or such later time and date as shall have
been agreed to by the Representative; if required, the Prospectus or any Term
Sheet that constitutes a part thereof and any amendment or supplement thereto
shall have been filed with the Commission in the manner and within the time
period required by Rule 434 and 424(b) under the Act; on or prior to the Closing
Dates no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that or a similar purpose shall
have been instituted or shall be pending or, to your knowledge or to the
knowledge of the Company, shall be contemplated by the Commission; any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of Paul, Hastings, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, counsel to the Underwriters ("PHJ&W");
(b) At the First Closing Date, you shall have received the opinion,
together with copies of such opinion for the Underwriters, dated as of the First
Closing Date, of Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the Company,
in form and substance satisfactory to counsel for the Underwriters, to the
effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with full corporate power and authority to own its properties and
conduct its business as described in the Registration Statement and Prospectus
and is duly qualified or licensed to do business as a foreign corporation and is
in good standing in Missouri and in each other jurisdiction in which the
ownership or leasing of its properties or conduct of its business requires such
qualification, except where the failure to so qualify will not have a material
adverse affect on the business of the Company;
(ii) to the best knowledge of such counsel, (a) the Company has
obtained all licenses, permits and other governmental authorizations necessary
to the conduct of its business as described in the Prospectus, (b) such
licenses, permits and other governmental authorizations obtained are in full
force and effect, and (c) the Company is in all material respects complying
therewith;
(iii) the authorized capitalization of the Company as of September
30, 1997 is as set forth under "Capitalization" in the Prospectus; all shares of
the Company's outstanding stock requiring authorization for issuance by the
Company's board of directors have been duly authorized, validly issued, are
fully paid and non-assessable and conform to the description thereof contained
in the Prospectus; to the best of such counsel's knowledge, the outstanding
shares of Common Stock of the Company have not been issued in violation of the
preemptive rights of any shareholder and the shareholders of the Company do not
have any statutory preemptive rights to subscribe for or to
purchase, nor are there any restrictions upon the voting or transfer of any of
the Stock; the Common Stock, the Warrants, the Unit Purchase Option and the
Warrant Agreement conform as to legal matters in all material respects to the
respective descriptions thereof contained in the Prospectus; the Shares have
been, and the shares of Common Stock to be issued upon exercise of the Warrants
and the Unit Purchase Option, upon issuance in accordance with the terms of such
Warrants, the Warrant Agreement and Unit Purchase Option have been duly
authorized and, when issued and delivered, will be duly and validly issued,
fully paid, non-assessable, free of preemptive rights and no personal liability
will attach to the ownership thereof; a sufficient number of shares of Common
Stock has been reserved for issuance upon exercise of the Warrants and Unit
Purchase Option and to the best of such counsel's knowledge, neither the filing
of the Registration Statement nor the offering or sale of the Units as
contemplated by this Agreement gives rise to, any registration rights or other
rights, other than those which have been waived or satisfied, for or relating to
the registration of any shares of Common Stock;
(iv) this Agreement, the Unit Purchase Option, the Warrant
Agreement and the M/A Agreement have been duly and validly authorized, executed
and delivered by the Company and, assuming due execution by each other party
hereto or thereto, each constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its respective terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law;
(v) the certificates evidencing the shares of Common Stock are
in valid and proper legal form; the Warrants will be exercisable for shares of
Common Stock of the Company in accordance with the terms of the Warrants and at
the prices therein provided for;
(vi) delivery of certificates for the Securities underlying the
Units, upon payment therefor by the Underwriters as provided in the Underwriting
Agreement, will transfer valid title to such Securities to the Underwriters;
and, upon payment for such Securities, the Underwriters will acquire such
Securities free and clear of any liens;
(vii) such counsel knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which could materially
adversely affect the business, property, financial condition or operations of
the Company; or which question the validity of the Securities, this Agreement,
the Warrant Agreement, the Unit Purchase Option or the M/A Agreement, or of any
action taken or to be taken by the Company pursuant to this Agreement, the
Warrant Agreement, the Unit Purchase Option or the M/A Agreement; and no such
proceedings are known to such counsel to be contemplated against the Company; to
such counsel's knowledge there are no governmental proceedings or regulations
required to be described or referred to in the Registration Statement which are
not so described or referred to;
(viii) to such counsel's knowledge the Company is not in violation
of or
default under, nor will the execution and delivery of this Agreement, the Unit
Purchase Option, the Warrant Agreement or the M/A Agreement, and the incurrence
of the obligations herein and therein set forth and the consummation of the
transactions herein or therein contemplated, result in a breach or violation of,
or constitute a default under the certificate of incorporation or by-laws, in
the performance or observance of any material obligations, agreement, covenant
or condition contained in any bond, debenture, note or other evidence of
indebtedness or in any material contract, indenture, mortgage, loan agreement,
lease, joint venture or other agreement or instrument to which the Company is a
party or by which it or any of its properties may be bound or in violation of
any material order, rule, regulation, writ, injunction, or decree of any
government, governmental instrumentality or court, domestic or foreign, the
effect of which default, breach or violation would be material to the Company;
(ix) the Registration Statement has become effective under the
Act, and to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement is in effect, and no proceedings for
that purpose have been instituted or are pending before, or threatened by, the
Commission; the Registration Statement and the Prospectus (except for the
financial statements and other financial data contained therein, or omitted
therefrom, as to which such counsel need express no opinion) comply as to form
in all material respects with the applicable requirements of the Act and the
Rules and Regulations;
(x) such counsel has participated in the preparation of the
Registration Statement and the Prospectus and, although such counsel did not
independently verify and 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 the Prospectus, based upon such
participation (relying as to materiality to a large extent upon the certificates
of officers and other representatives of the Company), nothing has come to the
attention of such counsel to cause such counsel to have reason to believe that
the Registration Statement or any amendment thereto at the time it became
effective contained any untrue statement of a material fact required to be
stated therein or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any supplement thereto contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make statements
therein, in light of the circumstances under which they were made, not
misleading (except, in the case of both the Registration Statement and any
amendment thereto and the Prospectus and any supplement thereto, for the (1)
financial statements, notes thereto and other financial information and
schedules contained therein, (2) matters relating to proprietary rights or
intellectual property or (3) matters relating to government regulatory matters
relating to the development and potential marketing and sale of the Company's
products as to all of which such counsel need express no opinion);
(xi) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and other
documents are accurate and fairly summarize in all material respects the
information required to be shown, and such counsel is familiar with all
contracts and other documents referred to in the Registration Statement and the
Prospectus
and any such amendment or supplement or filed as exhibits to the Registration
Statement, and such counsel does not know of any contracts or documents of a
character required to be summarized or described therein or to be filed as
exhibits thereto which are not so summarized, described or filed;
(xii) no authorization, approval, consent, or license of any
governmental or regulatory authority or agency is necessary in connection with
the authorization, issuance, transfer, sale or delivery of the Units by the
Company, in connection with the execution, delivery and performance of this
Agreement by the Company or in connection with the taking of any action
contemplated herein, or the issuance of the Unit Purchase Option or the
Securities underlying the Unit Purchase Option, other than registrations or
qualifications of the Units under applicable state or foreign securities or Blue
Sky laws and registration under the Act;
(xiii) the statements in the Registration Statement under the
captions "Business," "Management," "Shares Eligible for Future Sale," "Certain
Transactions," and "Description of Securities" have been reviewed by such
counsel and insofar as they refer to descriptions of agreements, statements of
law, descriptions of statutes, licenses, rules or regulations or legal
conclusions, are correct in all material respects;
(xiv) based solely upon advice of representatives of Nasdaq, the
Units, the Common Stock and the Warrants have been duly authorized for quotation
on the Nasdaq Small Cap Market; and
(xv) to such counsel's knowledge, there are no business
relationships or related-party transactions of the nature described in Item 404
of Regulation S-B involving the Company and any person described in such Item
that are required to be disclosed in the Prospectus and which have not been so
disclosed.
Such counsel need express no opinion with respect to the financial statements
and other financial data included in or omitted from the Registration Statement
or Prospectus, nor to matters pertaining to patent or intellectual property law,
nor to matters pertaining to government regulatory matters relating to the
development and potential marketing and sale of the Company's products. Such
opinion shall also cover such matters incident to the transactions contemplated
hereby as the Underwriters or counsel for the Underwriters shall reasonably
request. In rendering such opinion, such counsel may rely upon certificates of
any officer of the Company or public officials as to matters of fact; and may
rely as to all matters of law other than the law of the United States or of the
State of New York upon opinions of counsel satisfactory to you, in which case
the opinion shall state that they have no reason to believe that you and they
are not entitled to so rely.
(c) At the First Closing Date you shall receive the opinion of ▇▇▇▇
Price ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, special intellectual property counsel to the Company,
dated as of the First Closing Date, in form and substance satisfactory to
counsel for the Underwriters, to the effect that:
(i) such counsel is unaware of another entity or individual
having any
right or claim in any of the Proprietary Rights of the Company by virtue of any
contract, license or other agreement and (1) such counsel has no reason to
believe, except as discussed in the Prospectus, that the Company lacks or will
be unable to obtain rights to use all Proprietary Rights necessary to conduct
the business now or proposed to be conducted by the Company and (2) such counsel
is unaware of any material facts which form a basis for a finding of
unenforceability or invalidity of any of the Proprietary Rights owned, licensed
or used by the Company;
(ii) the Company has not received notice of any claim of
infringement or violation of or conflict with the rights or claims of others
with respect to any Proprietary Rights owned, licensed or used by the Company
and (1) such counsel is not aware of any agreements or proprietary rights of
others which are literally infringed by the Company's products, processes or
operations and (2) the Company conducts its business without willful
infringement of the Proprietary Rights of others;
(iii) there are no material legal or governmental proceedings
pending, or, to the best knowledge of such counsel, threatened or contemplated
by governmental authorities related to the Proprietary Rights of the Company;
and
(iv) the statements in the Prospectus, under the captions (1)
"Business" and (2) "Risk Factors -- Potential Conflicts of Interest",
"--Dependence on Proprietary Technology" and "--Potential Dependence on License
Agreement and CERC" are, in the case of each of CLAUSES (1) AND (2) true,
complete and correct in all material respects.
(d) All corporate proceedings and other legal matters relating to
this Agreement, the Registration Statement, the Prospectus and other related
matters shall be satisfactory to or approved by PHJ&W, counsel to the
Underwriters.
(e) You shall have received a letter prior to the effective date of
the Registration Statement and again on and as of the First Closing Date from
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company, LLP, independent public accountants for the
Company, substantially in the form approved by you, and including estimates of
the Company's revenues and results of operations for the period ending at the
end of the month immediately preceding the effective date and results of the
comparable period during the prior fiscal year.
(f) At the Closing Dates, (i) the representations and warranties of
the Company contained in this Agreement shall be true and correct with the same
effect as if made on and as of the Closing Dates and the Company shall have
performed all of its obligations hereunder and satisfied all the conditions on
its part to be satisfied at or prior to such Closing Date; (ii) the Registration
Statement and the Prospectus and any amendments or supplements thereto shall
contain all statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations, and shall in all material respects
conform to the requirements thereof, and neither the Registration Statement nor
the Prospectus nor any amendment or supplement thereto shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein
or necessary to make the statements therein not misleading; (iii) there shall
have been, since the respective dates as of which information is given, no
material adverse change, or any development involving a prospective material
adverse change, in the business, properties, condition (financial or otherwise),
results of operations, capital stock, long-term or short-term debt or general
affairs of the Company from that set forth in the Registration Statement and the
Prospectus, except changes which the Registration Statement and Prospectus
indicate might occur after the effective date of the Registration Statement, and
the Company shall not have incurred any material liabilities or entered into any
agreement not in the ordinary course of business other than as referred to in
the Registration Statement and Prospectus; and (iv) except as set forth in the
Prospectus, no action, suit or proceeding at law or in equity shall be pending
or threatened against the Company which would be required to be set forth in the
Registration Statement, and no proceedings shall be pending or threatened
against the Company before or by any commission, board or administrative agency
in the United States or elsewhere, wherein an unfavorable decision, ruling or
finding would materially and adversely affect the business, property, condition
(financial or otherwise), results of operations or general affairs of the
Company, and (v) you shall have received, at the First Closing Date, a
certificate signed by each of the Chairman of the Board or the President and the
principal financial or accounting officer of the Company, dated as of the First
Closing Date, evidencing compliance with the provisions of this CLAUSE (F).
(g) Upon exercise of the option provided for in SECTION 2(B) hereof,
the obligations of the Underwriters (or, at its option, the Representative
individually) to purchase and pay for the Option Units referred to therein will
be subject (as of the date hereof and as of the Option Closing Date) to the
following additional conditions:
(i) The Registration Statement shall remain effective at the
Option Closing Date, and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending, or, to your knowledge or the knowledge of the
Company, shall be contemplated by the Commission, and any reasonable request on
the part of the Commission for additional information shall have been complied
with to the satisfaction of PHJ&W, counsel to the Underwriters.
(ii) At the Option Closing Date there shall have been delivered
to you the signed opinion of Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for
the Company, dated as of the Option Closing Date, in form and substance
satisfactory to PHJ&W, counsel to the Underwriters, together with copies of such
opinion for the Underwriters, which opinion shall be substantially the same in
scope and substance as the opinion furnished to you at the First Closing Date
pursuant to SECTION 4(B) hereof, except that such opinion, where appropriate,
shall cover the Option Units.
(iii) At the Option Closing Date there shall have been delivered
to you the signed opinion of ▇▇▇▇ Price ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, special intellectual
property counsel to the Company, dated as of the Option Closing Date, in form
and substance satisfactory to PHJ&W, counsel to the Underwriters, together with
copies of such opinion for the Underwriters, which opinion shall be
substantially the same in scope and substance as the opinion furnished to you at
the
First Closing Date pursuant to SECTION 4(C) hereof, except that such opinion,
where appropriate, shall cover the Option Units.
(iv) At the Option Closing Date there shall have been delivered
to you a certificate of the Chairman of the Board or the President and the
principal financial or accounting officer of the Company, dated the Option
Closing Date, in form and substance satisfactory to PHJ&W, counsel to the
Underwriters, substantially the same in scope and substance as the certificate
furnished to you at the First Closing Date pursuant to SECTION 4(F) hereof.
(v) At the Option Closing Date there shall have been delivered
to you a letter in form and substance satisfactory to you from ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ & Company, LLP, dated the Option Closing Date and addressed to the
Underwriters confirming the information in their letter referred to in SECTION
4(E) hereof and stating that nothing has come to their attention during the
period from the ending date of their review referred to in said letter to a date
not more than three business days prior to the Option Closing Date, which would
require any change in said letter if it were required to be dated the Option
Closing Date.
(vi) All proceedings taken at or prior to the Option Closing Date
in connection with the sale and issuance of the Option Units shall be
satisfactory in form and substance to you and PHJ&W, counsel to the
Underwriters, shall have been furnished with all such documents, certificates,
and opinions as you may request in connection with this transaction in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements of the Company or its compliance with any of the covenants or
conditions contained herein.
(h) No action shall have been taken by the Commission or the NASD the
effect of which would make it improper, at any time prior to the Closing Date,
for members of the NASD to execute transactions (as principal or agent) in the
Units, Common Stock or the Warrants and no proceedings for the taking of such
action shall have been instituted or shall be pending, or, to the knowledge of
the Underwriters or the Company, shall be contemplated by the Commission or the
NASD. The Company represents that at the date hereof it has no knowledge that
any such action is in fact contemplated by the Commission or the NASD. The
Company shall have advised the Underwriters of any NASD affiliation of any of
its officers, directors, stockholders or their affiliates.
(i) If any of the conditions herein provided for in this SECTION 4
shall not have been fulfilled as of the date indicated, this Agreement and all
obligations of the Underwriters under this Agreement may be canceled at, or at
any time prior to, each Closing Date by the Representative. Any such
cancellation shall be without liability of the Underwriters to the Company.
5. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligation of
the Company to sell and deliver the Units is subject to the condition that at
the Closing Dates, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued under the Act or any proceedings
therefor initiated or threatened by the Commission. If the condition to the
obligations of the Company provided for in this SECTION 5 have been fulfilled on
the First Closing
Date but are not fulfilled after the First Closing Date and prior to the Option
Closing Date, then only the obligation of the Company to sell and deliver the
Units on exercise of the option provided for in SECTION 2(B) hereof shall be
affected.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all attorneys'
fees), to which such Underwriter or such controlling person may become subject,
under the Act or otherwise, and will reimburse, as incurred, such Underwriter
and such controlling persons for any legal or other expenses reasonably incurred
in connection with investigating, defending against or appearing as a third
party witness in connection with any losses, claims, damages or liabilities,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in (A) the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
(B) any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any or all
of the Units under the securities laws thereof (any such application, document
or information being hereinafter called a "BLUE SKY APPLICATION"), or arise out
of or are based upon the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, Prospectus, or any amendment
or supplement thereto, or in any Blue Sky Application, a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent, but only to the extent, that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Underwriters
specifically for use in the preparation of the Registration Statement or any
such amendment or supplement thereof or any such Blue Sky Application or any
such preliminary Prospectus or the Prospectus or any such amendment or
supplement thereto. This indemnity will be in addition to any liability which
the Company may otherwise have.
(b) Each Underwriter, severally, but not jointly, will indemnify and
hold harmless the Company, each of its directors, each nominee (if any) for
director named in the Prospectus, each of its officers who have signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of the Act, against any losses, claims, damages or liabilities
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees) to which the
Company or any such director, nominee, officer or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto
(i) in reliance upon and in conformity with written information furnished to the
Company by you or any Underwriter specifically for use in the preparation
thereof and (ii) relates to the transactions effected by the Underwriters in
connection with the offer and sale of the Units contemplated hereby. This
indemnity agreement will be in addition to any liability which the Underwriters
may otherwise have.
(c) Promptly after receipt by an indemnified party under this SECTION
6 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
SECTION 6, notify in writing the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this SECTION 6. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this SECTION 6 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is an Underwriter
or a person who controls an Underwriter within the meaning of the Act, the fees
and expenses of such counsel shall be at the expense of the indemnifying party
if (i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both the Underwriter or such
controlling person and the indemnifying party and in the judgment of the
applicable Underwriter, it is advisable for the applicable Underwriter or
controlling persons to be represented by separate counsel (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the applicable Underwriter or such controlling person, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for the applicable Underwriter and controlling
persons, which firm shall be designated in writing by the applicable
Underwriter). No settlement of any action against an indemnified party shall be
made without the consent of the indemnifying party, which shall not be
unreasonably withheld in light of all factors of importance to such indemnifying
party.
7. CONTRIBUTION. In order to provide for just and equitable
contribution under the Act in any case in which (i) an Underwriter makes claim
for indemnification pursuant to SECTION 6 hereof but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case, notwithstanding the
fact that the express provisions of SECTION 6 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
Underwriter, then the Company and each person who controls the Company, in the
aggregate, and any such Underwriter shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees) in either
such case (after contribution from others) in such proportions that all such
Underwriters are only responsible for that portion of such losses, claims,
damages or liabilities represented by the percentage that the underwriting
discount per Unit appearing on the cover page of the Prospectus bears to the
public offering price appearing thereon, and the Company shall be responsible
for the remaining portion, provided, however, that (a) if such allocation is not
permitted by applicable law then the relative fault of the Company and the
applicable Underwriter and controlling persons, in the aggregate, in connection
with the statements or omissions which resulted in such damages and other
relevant equitable considerations shall also be considered. The relative fault
shall be determined by reference to, among other things, whether in the case of
an untrue statement of a material fact or the omission to state a material fact,
such statement or omission relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Underwriters agree (a) that it would not be just and equitable
if the respective obligations of the Company and the Underwriters to contribute
pursuant to this SECTION 7 were to be determined by pro rata or per capita
allocation of the aggregate damages or by any other method of allocation that
does not take account of the equitable considerations referred to in the first
sentence of this SECTION 7 and (b) that the contribution of each contributing
Underwriter shall not be in excess of its proportionate share (based on the
ratio of the number of Units purchased by such Underwriter to the number of
Units purchased by all contributing Underwriters) of the portion of such losses,
claims, damages or liabilities for which the Underwriters are responsible. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. As used in this SECTION 7, the
word "COMPANY" includes any officer, director, or person who controls the
Company within the meaning of Section 15 of the Act. If the full amount of the
contribution specified in this SECTION 7 is not permitted by law, then the
applicable Underwriter and each person who controls the applicable Underwriter
shall be entitled to contribution from the Company, its officers, directors and
controlling persons to the full extent permitted by law. The foregoing
contribution agreement shall in no way affect the contribution liabilities of
any persons having liability under Section 11 of the Act other than the Company
and the Underwriters. No contribution shall be requested with regard to the
settlement of any matter from any party who did not consent to the settlement;
provided, however, that such consent shall not be unreasonably withheld in light
of all factors of importance to such party.
8. COSTS AND EXPENSES.
(a) Whether or not this Agreement becomes effective or the sale of
the Units to the Underwriters is consummated, the Company will pay all costs and
expenses incident to the performance of this Agreement by the Company including,
but not limited to, the fees and expenses of counsel to the Company and of the
Company's accountants; the costs and expenses incident to the preparation,
printing, filing and distribution under the Act of the Registration Statement
(including the financial statements therein and all amendments and exhibits
thereto), Preliminary Prospectus and the Prospectus, as amended or supplemented,
or the Term Sheet, the fee of the NASD in connection with the filing required by
the NASD relating to the offering of the Units contemplated hereby; all
expenses, including reasonable fees and disbursements of counsel to the
Underwriters, in connection with the qualification of the Units under the state
securities or blue sky laws which the Representative shall designate; the cost
of printing and furnishing to the Underwriters copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus, this Agreement, the
Agreement Among Underwriters, Selling Agreement, Underwriters' Questionnaire,
and the Blue Sky Memorandum, any fees relating to the listing of the Units,
Common Stock and Warrants on the Nasdaq Small Cap Market or any other securities
exchange, the cost of printing the certificates representing the securities
comprising the Units, the fees of the transfer agent and warrant agent the cost
of publication of at least three "tombstones" of the offering (at least one of
which shall be in national business newspaper and one of which shall be in a
major New York newspaper) and the cost of preparing at least four hard cover
"bound volumes" relating to the offering, in accordance with the
Representative's request. The Company shall pay any and all taxes (including
any transfer, franchise, capital stock or other tax imposed by any jurisdiction)
on sales to the Underwriters hereunder. The Company will also pay all costs and
expenses incident to the furnishing of any amended Prospectus or of any
supplement to be attached to the Prospectus as called for in SECTION 3(A) of
this Agreement except as otherwise set forth in said SECTION 3(A).
(b) In addition to the foregoing expenses the Company shall at the
First Closing Date pay to the Representative, individually and not as
representative of the Underwriters, a non-accountable expense allowance equal to
three percent (3%) of the gross proceeds derived from the sale of Units offered
hereby, of which $[__] has been paid. In the event the over-allotment option is
exercised, the Company shall pay to the Representative at the Option Closing
Date an additional amount equal to three percent (3%) of the gross proceeds
received upon exercise of the over-allotment option. In the event the
transactions contemplated hereby are not consummated by reason of any action by
the Underwriters (except if such prevention is based upon a breach by the
Company of any covenant, representation or warranty contained herein or because
any other condition to the Underwriters' obligations hereunder required to be
fulfilled by the Company is not fulfilled) the Company shall be liable for the
accountable out-of-pocket expenses of the Representative, including "blue sky"
legal fees up to a maximum of $[__]. In the event the transactions contemplated
hereby are not consummated by reason of any action of the Company or because of
a breach by the Company of any covenant, representation or warranty herein, the
Company shall be liable for the accountable out-of-pocket expenses of the
Representative, including legal fees, up to a maximum of $[__].
(c) No person is entitled either directly or indirectly to
compensation from the Company, from the Underwriters or from any other person
for services as a finder in connection with the proposed offering, and the
Company agrees to indemnify and hold harmless the Underwriters and the other
Underwriters, against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys' fees), to
which the Underwriters or person may become subject insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon the claim of any person (other than an employee of the party
claiming indemnity) or entity that he or it is entitled to a finder's fee in
connection with the proposed offering by reason of such person's or entity's
influence or prior contact with the indemnifying party.
9. SUBSTITUTION OF UNDERWRITERS. If any Underwriters shall for any
reason not permitted hereunder cancel their obligations to purchase the First
Units hereunder, or shall fail to take up and pay for the number of First Units
set forth opposite their respective names in SCHEDULE A hereto upon tender of
such First Units in accordance with the terms hereof, then:
(a) If the aggregate number of First Units which such Underwriter or
Underwriters agreed but failed to purchase does not exceed ten percent (10%) of
the total number of First Units, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the First Units which such defaulting Underwriter or Underwriters agreed but
failed to purchase.
(b) If any Underwriter or Underwriters so default and the agreed
number of First Units with respect to which such default or defaults occurs is
more than ten percent (10%) of the total number of First Units, the remaining
Underwriters shall have the right to take up and pay for (in such proportion as
may be agreed upon among them) the First Units which the defaulting Underwriter
or Underwriters agreed but failed to purchase. If such remaining Underwriters
do not, at the First Closing Date, take up and pay for the First Units which the
defaulting Underwriter or Underwriters agreed but failed to purchase, the time
for delivery of the First Units shall be extended to the next business day to
allow the several Underwriters the privilege of substituting within twenty-four
hours (including nonbusiness hours) another underwriter or underwriters
satisfactory to the Company. If no such underwriter or underwriters shall have
been substituted as aforesaid, within such twenty-four hour period, the time of
delivery of the First Units may, at the option of the Company, be again extended
to the next following business day, if necessary, to allow the Company the
privilege of finding within twenty-four hours (including nonbusiness hours)
another underwriter or underwriters to purchase the First Units which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted Underwriters to
take up the First Units of the defaulting Underwriter or Underwriters as
provided in this SECTION 9, (i) the Company or the Representative shall have the
right to postpone the time of delivery for the period of not more than seven
business days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and
(ii) the respective numbers of First Units to be purchased by the remaining
Underwriters or substituted Underwriters shall be taken at the basis of the
underwriting obligation for all purposes of this Agreement.
If in the event of a default by one or more Underwriters and the
remaining Underwriters shall not take up and pay for all the First Units agreed
to be purchased by the defaulting Underwriters or substitute another underwriter
or underwriters as aforesaid, the Company shall not find or shall not elect to
seek another underwriter or underwriters for such First Units as aforesaid, then
this Agreement shall terminate.
If, following exercise of the option provided in SECTION 2(B) hereof,
any Underwriter or Underwriters shall for any reason not permitted hereunder
cancel their obligations to purchase Option Units at the Option Closing Date, or
shall fail to take up and pay for the number of Option Units, which they become
obligated to purchase at the Option Closing Date upon tender of such Option
Units in accordance with the terms hereof, then the remaining Underwriters or
substituted Underwriters may take up and pay for the Option Units of the
defaulting Underwriters in the manner provided in SECTION 9(B) hereof. If the
remaining Underwriters or substituted Underwriters shall not take up and pay for
all such Option Units, the Underwriters shall be entitled to purchase the number
of Option Units for which there is no default or, at their election, the option
shall terminate, the exercise thereof shall be of no effect.
As used in this Agreement, the term "UNDERWRITER" includes any person
substituted for an Underwriter under this SECTION 9. In the event of
termination, there shall be no liability on the part of any nondefaulting
Underwriter to the Company, provided that the provisions of this SECTION 9 shall
to in any event affect the liability of any defaulting Underwriter to the
Company arising out of such default.
10. EFFECTIVE DATE. The Agreement shall become effective upon its
execution except that you may, at your option, delay its effectiveness until
11:00 A.M., New York time on the first full business day following the effective
date of the Registration Statement, or at such earlier time after the effective
date of the Registration Statement as you in your discretion shall first
commence the initial public offering by the Underwriters of any of the Units.
The time of the initial public offering shall mean the time of release by you of
the first newspaper advertisement with respect to the Units, or the time when
the Units are first generally offered by you to dealers by letter or telegram,
whichever shall first occur. This Agreement may be terminated by you at any
time before it becomes effective as provided above, except that SECTIONS 3(C),
6, 7, 8, 14, 15 AND 16 shall remain in effect notwithstanding such termination.
11. TERMINATION.
(a) This Agreement, except for SECTIONS 3(C), 6, 7, 8, 13, 14, 15 AND
16 hereof, may be terminated at any time prior to the First Closing Date, and
the option referred to in SECTION 2(B) hereof, if exercised, may be canceled at
any time prior to the Option Closing Date, by
you if in your judgment it is impracticable to offer for sale or to enforce
contracts made by the Underwriters for the resale of the Units agreed to be
purchased hereunder by reason of (i) the Company having sustained a material
loss, whether or not insured, by reason of fire, earthquake, flood, accident or
other calamity, or from any labor dispute or court or government action, order
or decree; (ii) trading in securities on the New York Stock Exchange, the
American Stock Exchange, the Nasdaq SmallCap Market or the Nasdaq National
Market having been suspended or limited; (iii) material governmental
restrictions having been imposed on trading in securities generally (not in
force and effect on the date hereof); (iv) a banking moratorium having been
declared by federal or New York state authorities; (v) an outbreak of
international hostilities or other national or international calamity or crisis
or change in economic or political conditions having occurred; (vi) a pending or
threatened legal or governmental proceeding or action relating generally to the
Company's business, or a notification having been received by the Company of the
threat of any such proceeding or action, which could materially adversely affect
the Company; (vii) except as contemplated by the Prospectus, the Company is
merged or consolidated into or acquired by another company or group or there
exists a binding legal commitment for the foregoing or any other material change
of ownership or control occurs; (viii) the passage by the Congress of the United
States or by any state legislative body or federal or state agency or other
authority of any act, rule or regulation, measure, or the adoption of any
orders, rules or regulations by any governmental body or any authoritative
accounting institute or board, or any governmental executive, which is
reasonably believed likely by the Representative to have a material impact on
the business, financial condition or financial statements of the Company or the
market for the securities offered pursuant to the Prospectus; (ix) any adverse
change in the financial or securities markets beyond normal market fluctuations
having occurred since the date of this Agreement, or (x) any material adverse
change having occurred, since the respective dates of which information is given
in the Registration Statement and Prospectus, in the earnings, business
prospects or general condition of the Company, financial or otherwise, whether
or not arising in the ordinary course of business.
(b) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this SECTION 11 or in SECTION 10
hereof, the Company shall be promptly notified by you, by telephone or telegram,
confirmed by letter, in accordance with SECTION 14 hereof.
12. UNIT PURCHASE OPTION. At or before the First Closing Date, the
Company will sell to the Representative (for its own account and not as
representative of the Underwriters), or its designees for a consideration of One
Hundred Sixty Dollars ($160), and upon the terms and conditions set forth in the
form of Unit Purchase Option annexed as an exhibit to the Registration
Statement, a Unit Purchase Option to purchase an aggregate of One Hundred Sixty
Thousand (160,000) Units. In the event of conflict between the terms of this
Agreement and the Unit Purchase Option, the language of the Unit Purchase Option
shall control.
13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers, directors, stockholders or Principal
Stockholders, where appropriate, and the undertakings set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Underwriters, the Company or any
of its officers or directors or any controlling person and will survive delivery
of and payment of the Units and the termination of this Agreement.
14. NOTICE. Any communications specifically required hereunder to be
in writing, if sent to the Underwriters, will be mailed, delivered and confirmed
to the Representative at ▇.▇. ▇▇▇▇▇ Investment Banking Corp., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, with a copy sent to Paul, Hastings,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or if sent to
the Company, will be mailed, delivered and confirmed to it at CareFlow | Net,
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy
sent to Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇.
15. PARTIES IN INTEREST. This Agreement is made solely for the
benefit of the Underwriters, the Representative, on an individual basis, the
Company and, to the extent expressed, the Principal Stockholders, any person
controlling the Company or the Underwriters, directors of the Company, nominees
for directors of the Company (if any) named in the Prospectus, officers of the
Company who have signed the Registration Statement and each of their respective
executors, administrators, successors and assigns and no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"SUCCESSORS AND ASSIGNS" shall not include any purchaser, as such purchaser,
from the Underwriters of the Units. All of the obligations of the Underwriters
hereunder are several and not joint.
16. APPLICABLE LAW. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York applicable to
agreements made and to be entirely performed within New York.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this agreement, whereupon it will become a
binding agreement between the Company and the Underwriters in accordance with
its terms.
Very truly yours,
CareFlow | Net, Inc.
By:
-----------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
▇.▇. ▇▇▇▇▇ Investment Banking Corp.
By:
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice Chairman and General
Counsel
We hereby agree to be bound by the provisions of SECTION 3(L) AND (N)
AND 13 hereof.
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SCHEDULE A
UNDERWRITERS
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UNDERWRITERS NUMBER OF FIRST UNITS TO BE PURCHASED
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▇.▇. ▇▇▇▇▇ Investment Banking Corp. [__]
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TOTAL: 1,600,000
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