Underwriting Agreement
1,200,000 Common Shares
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
UNDERWRITING AGREEMENT
Between
FIRST MADISON SECURITIES, INC.
AND
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
1. Introductory.
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC., a Delaware corporation (the "Company"), proposes to
sell 1,200,000 Common Shares to the public through FIRST MADISON SECURITIES,
INC. (the "Underwriter") as exclusive agent of the Company, at a price of $8 -
$10 per Common Share. The Company also proposes to issue and sell at the
public offering to the Underwriter and/or its assigns, warrants to purchase
from the Company one (1) share for every ten (10) Common Shares sold (the
"Underwriter's Warrants") in the offering at a price of $.001 per warrant. The
Underwriter's Warrants will be exercisable at 120% of the initial public
offering price of the Common Shares. The Underwriter's Warrants are
exercisable for a period of five (5) years, commencing one year from the date
of the prospectus. The shares of common stock issuable upon exercise of the
Underwriter's Warrants are called the "Underwriter's Stock". The purpose of
this agreement is to confirm the arrangements with respect to the offering of
the Common Shares and the purchase of the Underwriter's Warrants.
2. Representations and Warranties of the Company.
The Company represents, warrants and agrees with the Underwriter
that:
2.1 The Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Delaware,
with full power and authority to own and operate its properties and to conduct
its business, and the Company is lawfully qualified to do business as a
foreign corporation in good standing in all jurisdictions in which the
ownership of its properties or the conduct of its business requires such
qualification. The issued shares of common stock of the Company have been, the
Stock, and the Underwriter's Warrants to be issued by the Company when paid
for and delivered in accordance herewith will be, and the Underwriter's Stock,
when paid for and delivered upon exercise of the Underwriter's Warrants will
be, duly authorized and validly issued, fully paid and non-assessable; and the
holders of Stock, Underwriter's Warrants and Underwriter's Stock (collectively
the "Securities") will not be subject to personal liability by reason of being
such holders. No preemptive rights of stockholders of the Company with
respect to the issue and sale of the Securities pursuant hereto will exist
with respect to the Stock and Underwriter's Stock upon the exercise of the
Underwriter's Warrants. The Underwriter's Stock has been validly reserved for
issuance upon exercise of the Warrants.
2.2 The Company has no subsidiaries.
2.3 The Company has a duly authorized and outstanding
capitalization as set forth in the Prospectus referred to below and the
Securities conform to the description contained therein and such description
conforms with the rights set forth in the instruments defining the same.
2.4 The Company has prepared and filed with the Securities and
Exchange Commissions (the "Commission") a Registration Statement (Registration
No. ) and one or more amendments thereto covering the registration of the
Securities under the Securities Act of 1933, as amended (the "Securities
Act"), including the related Preliminary Prospectus and Amended Preliminary
Prospectus or Prospectuses. Each such Preliminary Prospectus and Amended
Preliminary Prospectus bore the legends required by the rules and regulations
of the Commission under the Securities Act (the "Rules and Regulations"). Such
Registration Statement as amended at the time it becomes effective and the
final Prospectus included therein or, if changed subsequent thereto, in the
form which is furnished to the Underwriter to enable it to offer the Shares to
the public and filed with the Commission pursuant to Rule 424 under the
Securities Act, are herein respectively called the "Registration Statement"
and the "Prospectus."
2.5 At the time the Registration Statement becomes effective and
at all times subsequent thereto up to the closing date of the offering (the
"Closing Date"), the Registration Statement and Prospectus, and any amendments
or supplements thereto, will contain all statements which are required to be
stated therein in accordance with the Securities Act and the Rules and
Regulations and will in all material respects conform to the requirements of
the Securities Act and the Rules and Regulations, and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, except that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Underwriter.
2.6 The consolidated financial statements and schedules filed with
and as part of the Registration Statement present fairly the financial
position of the Company as of the respective dates thereof for the respective
periods covered thereby, all in conformity with generally accepted principles
of accounting, prevailing in the United States, applied on a consistent basis
throughout the entire period involved.
2.7 Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and prior to the Closing
Date, except as contemplated or set forth in the Prospectus, (i) there has not
been and will not have been any material adverse change in the condition,
financial or otherwise, or in the earnings, affairs or business prospects of
the Company whether or not arising in the ordinary course of business; (ii)
the Company has not incurred any material liability or obligation, direct or
contingent, nor has it entered into any material transaction; (iii) the
Company has not and will not have paid or declared any dividend or other
distribution on its common stock; and (iv) there has not been and will not
have been any change in the certificate of incorporation of the Company.
2.8 The execution and delivery of this Agreement, the consummation
of the transactions herein contemplated and the compliance with the terms and
conditions of this Agreement have been duly authorized by all necessary
corporate proceedings and will not conflict with or result in a breach of any
of the terms or conditions of, or constitute a default under, or with the
giving of notice or the passage of time (or both) constitute a default under,
the certificate of incorporation, as amended, or by-laws of the Company, or
any indenture, mortgage, or other agreement or instrument to which the Company
is a party or by which it or its property is bound, or any applicable law,
rule, regulation, judgment, order or decree of any government, governmental
instrumentality, court or other governmental body, domestic or foreign, having
jurisdiction over the Company or its properties.
2.9 Simon, Krowitz, ▇▇▇▇▇ & Associates P.A., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇, who is certifying the financial statements
filed with the Commission as part of the Registration Statement, is an
independent public accountant as required by the Securities Act and the Rules
and Regulations.
Any certificate relating to matters not specifically covered by
subsections 2.1 to 2.9 above signed by any officer of the Company and
delivered to the Underwriter or its counsel, the Securities and Exchange
Commission or the National Association of Securities Dealers, Inc. ("NASD") at
or prior to the Closing Date shall be deemed a representation by the Company
to the Underwriter as to the matters covered thereby.
3. Employment of Underwriter.
On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth:
3.1 The Company hereby employs the Underwriter as its
exclusive agent to sell for its account 1,200,000 Common Shares, on a "best
efforts" basis at a price of $ $8 - $10 per Share. The Underwriter agrees to
use its best efforts as agent, promptly after receipt of written notice on the
Effective Date of the Registration Statement (the "Effective Date"), to sell
the 1,200,000 Common Shares subject to the terms, provisions and conditions
hereinafter mentioned, for a period of not less than ninety (90) calendar days
which may be extended up to an additional ninety (90) calendar days with the
consent of the Company and the Underwriter.
3.1.1 All funds received from subscribers shall be made payable to the
Company
3.1.2 Deliberately Left Blank.
3.1.3 Per share of Common Stock sold, the Underwriter shall be entitled
to receive as compensation (i) a Commission of $ per Common Share (10%)
with respect to all Common Shares sold, which compensation the Underwriter
shall be entitled to deduct and retain from the proceeds of the sale of the
Common Shares prior to transmittal of payment to the Company; (ii) a
nonaccountable expense allowance of $ which is calculated at
approximately 3% of the offering proceeds, and (iii) Stock purchase warrants
(the "Underwriter's Warrants") to be sold to the Underwriter, at the closing,
at a price of $.001 per Underwriter's Warrant, at a rate of one Underwriter's
Warrant for every 10 Shares sold in the public offering herein. Each
Underwriter's Warrant will entitle the holder thereof to purchase one share of
common stock for a five year period commencing one year from the Effective
Date of the Prospectus at a price of 120% of the initial public offering
price. The Underwriter's Warrants shall contain provisions protecting the
holders thereof against dilution and are non-transferable for one year
subsequent to the Effective Date, except to Officers of the Underwriter or to
members of a selling group of registered broker-dealers or their respective
officers or partners, if any. In no event shall the Underwriter sell more
then 20% of the Shares to officers, directors or shareholders of the Company.
The Company will include the Underwriter's Warrants and the underlying
Underwriter's Stock in the registration statement to be filed under the
Securities Act regarding the Company's public offering of 1,200,000 shares of
common stock. In addition, for a period of five (5) years commencing one (1)
year from the effective date, upon the written demand of at least 50% of the
beneficial holders of the Underwriter's Warrants and/or securities underlying
the same, the Company agrees, on one occasion at the expense of the Company
(excluding underwriting discounts, commissions, fees and expenses of the
holder's counsel) and on a second occasion at the expense of such holders, to
promptly register the underlying securities for purposes of a public offering.
The Underwriter's Warrants shall be in the form annexed hereto and filed as an
exhibit to the Registration Statement. The Company has agreed that in the
event it shall cause a future Registration Statement or Offering Statement
other than a post effective amendment to be filed with the Securities and
Exchange Commission, the Underwriter shall have the right during the life of
the Warrants, to register or qualify said Warrants and/or the shares of common
stock underlying same (as the case may be) in such Registration Statement or
Offering Statement at no expense to the Underwriter.
3.2 The Underwriter may, at its discretion, form a "Selling Group" and
offer Shares for sale through certain dealers who are members of the National
Association of Securities Dealers, Inc. (the "NASD").
4. Offering of Common Shares.
The Company understands that the Underwriter intends to make a
public offering of the Common Shares on the terms set forth in the
Registration Statement.
5. Payment and Delivery.
Upon receipt by the Underwriter or any participating selected dealer,
investors' funds will immediately be deposited in a bank account maintained
by the Underwriter. All investors' checks, bank drafts or money orders must
be made payable to the Company. The name, address, social security or
employer identification number and number of Common Shares purchased by each
subscriber shall be included with investors' funds.
The Underwriter's Warrants shall be registered in the name of the Underwriter.
6. Certain Covenants of the Company.
The Company covenants and agrees to the extent set forth herein,
with the Underwriter as follows:
6.1 The Company shall not at any time, whether before or after the
Registration Statement has become effective, file or make an amendment or
supplement to the Registration Statement or Prospectus of which the
Underwriter or its counsel shall not have previously been advised and
furnished a copy at least (ten) 10 days prior to filing, or to which the
Underwriter or ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ , its counsel, shall object in
writing.
6.2 The Company shall use its best efforts to cause the
Registration Statement to become effective and shall advise the Underwriter
immediately, and confirm the advice in writing (i) when the Registration
Statement or any post-effective amendment to the Registration Statement shall
have become effective or any supplement to the Prospectus or any amended
Prospectus shall have been filed; (ii) of any request of the Commission for
amendment or supplementation of the Registration Statement or Prospectus or
for additional information; (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary or amended
preliminary Prospectus; and (iv) of the suspension of the qualification of the
common shares for offering or sale in any jurisdiction, or of the institution
of any proceedings for any of such purposes. The Company will use its best
efforts to prevent the issuance of any such stop order or of any order
preventing or suspending such use and to obtain as soon as possible the
lifting thereof if issued.
6.3 The Company shall deliver to the Underwriter, without
charge, from time to time until the Effective Date of the Registration
Statement, as many copies of each preliminary and amended preliminary
Prospectus as the Underwriter may reasonably request, and the Company hereby
consents to the use of such copies for purposes permitted by the Securities
Act. The Company shall deliver to the Underwriter, without charge, as soon
as the
Registration Statement shall have become effective and thereafter from time to
time as requested, such number of copies of the Prospectus (as supplemented or
amended, if the Company shall have made any supplements or amendments to the
Prospectus) as the Underwriter may reasonably request. The Company has
furnished or shall furnish to the Underwriter two (2) signed copies of the
Registration Statement as originally filed and of all amendments thereto,
whether filed before or after the Registration Statement becomes effective
including in each case copies of all exhibits filed therewith and signed
copies of all consents and certificates of experts, and has furnished or will
furnish to the Underwriter, conformed copies of the Registration Statements as
originally filed and each of said amendments (exclusive of exhibits) in such
quantities as may be reasonably requested.
6.4 The Company shall comply with the Securities Act and the Rules and
Regulations thereunder so as to permit the continuance of sales of and
dealings in the common shares under the Securities Act. If at any time when a
prospectus is required to be delivered under the Securities Act in connection
with such sales and dealings, and an event shall have occurred as a result of
which it is necessary in the opinion of counsel to the Company and the
Underwriter's counsel to amend or supplement the Prospectus in order to make
the statements therein not untrue or misleading or to make the Prospectus
comply with the Securities Act, the Company shall furnish the Underwriter
without charge such number of copies as the Underwriter may reasonably request
of the Prospectus (in form and substance satisfactory to the Underwriter's
counsel), appropriately amended or supplemented to comply with the
requirements of Section 10 of the Securities Act.
6.5 The Company shall use its best efforts to qualify, and to cooperate
with the Underwriter in an endeavor to qualify the Common Shares for sale
under the laws of such jurisdictions as the Underwriter may reasonably request
and will comply to the best of its ability with such laws so as to permit the
continuance of sales of and dealings in the Common Shares thereunder. The
Company, however, shall not be obligated to qualify as a foreign corporation
or subject itself to taxation as doing business in any such jurisdiction that
it did not "blue sky" in. In each jurisdiction where the Common Shares shall
have been qualified as above provided, the Company will make and file such
statements and reports in each year as are or may be required by the laws of
such jurisdiction.
6.6 The Company, within three (3) months following the close of it first
fiscal year subsequent to the Effective Date and at least annually thereafter,
shall issue consolidated financial statements to its stockholders reported
upon by an independent public accountant.
6.7 The Company agrees neither to sell nor to transfer any shares of
common stock of the Company or any options to purchase such common stock other
than that sold or contemplated to be sold hereunder, for a period of one
hundred and eighty (180) days after the Effective Date without the prior
written consent of the Underwriter, and prior to discussion.
6.8 For a period of five (5) years after the Closing Date, the Company
will furnish to the Underwriter quarterly consolidated statements of income of
the Company for, and within sixty (60) days after the expiration of, each of
the first three (3) quarters of each fiscal year (which need not be audited)
deliver to the Underwriter within one hundred twenty (120) days after the
expiration of each fiscal year, annual consolidated balance sheets and
consolidated statements of income and surplus of the Company (which shall be
audited) promptly deliver to the Underwriter copies of all such documents,
reports and information as shall be of general interest, furnished by the
Company to its stockholders generally; and shall promptly deliver to you
copies of all documents, reports and information required to be filed by the
Company with the Commission, if, and so long as the Company has a consolidated
basis to the extent the accounts of the Company are required to be
consolidated under the Rules and Regulations, and if such financial statements
were required to be prepared in accordance with the Rules and Regulations.
6.9 In addition to the registration of the Underwriter's Warrants and
the underlying Underwriter's Stock pursuant to the Company's proposed public
offering of 1,200,000 Common Shares, the Company agrees to register the
Underwriter's Warrants and/or Underwriter's Stock under the following
circumstances:
6.9.1 The Company shall once, at the Company's sole expense, commencing
on the Effective Date, register the Underwriter's Warrants and/or
Underwriter's Stock upon the written request of the Underwriter, during the
exercise period of the Underwriter's Warrants exercise term, and shall keep
effective for 150 days such Registration Statements relating thereto as may be
filed under the Securities Act of 1933. The Company shall use its best
efforts to file with the Commission as promptly as practicable, a
post-effective amendment or other Registration Statement declared effective
and remaining effective until the securities registered thereby have been sold
and a Prospectus is no longer required to be delivered, and to qualify the
Underwriter's Warrants and/or Underwriter's Stock under the "blue sky" laws of
such jurisdictions as the Underwriter shall reasonably request.
6.9.2 If, at any time, or from time to time, for a period of six (6)
years from the Effective Date, the Company proposes to file a Registration
Statement with the Commission with respect to any securities of the Company,
the Company shall, at least thirty (30) days prior to such filing, give
written notice thereof to the holders of the Underwriter's Warrants and/or
Underwriter's Stock and if, within twenty (20) days after receipt of such
notice, the holders request inclusion of any Underwriter's Warrants and/or
Underwriter's Stock in such Registration Statement, the Company will include
such Underwriter's Warrants and/or Underwriter's Stock in such Registration
Statement. During this seven (7) year period, the Company will pay and bear
all costs and expenses for a single registration in connection with
registering the Underwriter's Warrants and/or Underwriter's Stock, except for
the fees of the Underwriter's counsel in connection therewith and except for a
post-effective amendment that might be filed.
6.9.3 The Company shall supply the Underwriter with copies of the
Registration Statement and of the Prospectus included therein in such
quantities as may reasonably be necessary for purposes of any promised
offering pursuant to clauses 6.9.1 or 6.9.2 above and the Company shall bear
all expenses necessary and incidental to the performance of its obligations
under such clauses.
6.9.4 With respect to any registration statement filed pursuant to
clauses 6.9.1 or 6.9.2 above, the Company and the Underwriter agree to
indemnify each other to the same extent as provided in Section 8 hereof.
6.10 The Company shall pay all costs and expenses in connection with (i)
the preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), preliminary prospectuses and the
Prospectus and any amendments or supplements thereto; (ii) the printing of
this Agreement and all related documents; (iii) the printing and delivery of
certificates for the Securities; (iv) the cost of furnishing to the
Underwriter copies of the Registration Statement, preliminary and amended
preliminary prospectuses and the Prospectus and any amendments or supplements
thereto as herein provided; (v) Blue Sky and NASD filing; and (vi) a
non-accountable expense allowance of $. (3%) per Common Share payable to
the Underwriter for reimbursement of out-of-pocket expenses.
7. Conditions Precedent to the Underwriter's Obligation.
The obligations of the Underwriter hereunder are subject to the
accuracy (as of the date hereof and the Closing Date) of the compliance with
the representations and warranties of the Company, to the accuracy of the
written statements of the officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
7.1 The Registration Statement shall have become effective not later
than 5:30 p.m., New York City time, on [ ], or at such later time or on
such later date as the Underwriter may agree to in writing, and prior to the
Closing Date no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or shall be pending or, to the Underwriter's knowledge
shall be contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Underwriter.
7.2 At the Closing Date, there shall have been delivered to the
Underwriter a signed opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the
Company, dated as of the Closing Date, satisfactory in form and substance to
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, to the effect:
7.2.1 The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware and has full
corporate power to own its properties and to conduct its business as such
business as described in the Prospectus, and the Company is qualified to do
business as a foreign corporation in good standing in every jurisdiction in
which the ownership of its properties and the conduct of its business requires
such qualification.
7.2.2 The Company has no subsidiaries.
7.2.3 The Stock has been duly authorized and validly issued and is fully
paid and non-assessable, and no holder thereof will be subject to personal
liability by reason of being a stockholder, and all corporate action required
to be taken by the Company for the authorization, issue and sale of the Stock
has been validly and sufficiently taken, and the certificates representing the
Stock are in proper legal form.
7.2.4 The Warrants and the Underwriter's Warrants have been duly
authorized, executed and delivered by the Company and are validly issued and
legally binding obligations of the Company, enforceable in accordance with
their terms.
7.2.5 The Underlying Underwriter's Stock has been duly and validly
authorized and reserved for issuance upon exercise of the Underwriter's
Warrants and when issued in accordance with the terms of the Underwriter's
Warrants shall be validly issued, fully paid and non-assessable, and no holder
thereof shall be subject to personal liability by reason of being a
stockholder.
7.2.6 The Securities are not subject to the preemptive rights of any
stockholder of the Company.
7.2.7 The Company has a duly authorized capitalization as set forth in
the Prospectus and the Securities conform to the description thereof contained
therein and such description conforms to the rights set forth in the
instruments defining the same.
7.2.8 The Registration Statement has become effective under the
Securities Act and, to the best of the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted, are pending,
or are contemplated under the Securities Act.
7.2.9 The Registration Statement, the Prospectus and any amendment or
supplement thereto (except for the financial statements and other financial
date included therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations; such counsel has participated in
the preparation of the Registration Statement and Prospectus and such counsel
has no reason to believe that either the Registration Statement or the
Prospectus or any such amendment or supplement (except for such financial
statements and other financial data included therein, as to which such counsel
need express no opinion) contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
7.2.10 The descriptions in the Registration Statement and Prospectus of
the contracts and documents therein described are accurate and fairly present
the information required to be stated.
7.2.11 Such counsel does not know of any statutes or regulations or
legal or governmental proceedings required to be described in the Registration
Statement and Prospectus which are not described as required, nor of any
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as required.
7.2.12 This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company enforceable
in accordance with its terms, except to the extent limited by applicable
bankruptcy and similar laws, and except as enforceability of the
indemnification provisions may be limited under federal securities laws.
7.2.13 The execution and delivery of the Agreement, the consummation of
transactions herein contemplated and the fulfillment of the terms hereof by
the Company will not result in the breach of any law or legal requirements
(subject to the provisions of clause 8.2.), and will not conflict with, or
result in the breach of, any term or provision of, or constitute a default
under, or with the giving of notice or the passage of time (or both)
constitute a default under, the certificate of incorporation, or by-laws of
the Company or any indenture, mortgage, deed of trust, lease, note, court
order or other agreement or instrument known to such counsel to which the
Company is a party by succession or otherwise, or by which it is bound.
7.2.14 So far as counsel is aware, the Company is not in default under
any material agreement or instrument to which it is a party.
7.2.15 Except for state "blue sky" or securities laws (as to which such
counsel need express no opinion) and except for any necessary registration
under the Securities Act of the Underlying Stock and Underwriter's Stock, no
authority is required for the valid authorization, issuance, sale and/or
delivery of the Securities or, if so required, all such authorizations,
approvals, consents and licenses, specifying the same, have been obtained and
are in full force and effect.
Such opinion may be based, insofar as it relates to factual matters
and/or information with respect to which is in the possession of a
corporation, upon the certificate of or representations by an officer or
officers of such corporation, unless such counsel knows that such certificate
or representations are erroneous. To the extent that any such opinion relates
to matters involving the laws of a jurisdiction in which counsel rendering
such opinion is not licensed to practice, such opinion may also be based upon
an opinion of counsel, licensed to practice in such other jurisdiction,
satisfactory to ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇.
7.3 At the Closing Date, there shall have been delivered to the
Underwriter a signed opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, Esq., counsel for the
Company, in form and substance reasonable satisfactory to the Underwriter,
dated as of the Closing Date, with respect to the incorporation and legal
existence of the Company, the authorized capital stock of the Company, the
validity of the Securities, the due authorization and execution by the Company
of this Agreement and Registration Statement, and such other related matters
as the Underwriter may require.
7.4 At the Closing Date, (i) 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
Securities Act and the Rules and Regulations and in all material respects
shall conform to the requirements of the Securities Act and the Rules and
Regulations, and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto shall contain any untrue statement of a
material fact or shall omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii) the
Company shall not have declared, paid or made any dividend or distribution of
any kind on its common stock; (iii) since the respective dates as of which
information is given there shall have been no material adverse change in the
business, properties or condition, financial or otherwise, of the Company from
that set forth in the Registration Statement and the Prospectus, except
changes which the Registration Statement indicates might occur after the
Effective Date, and there shall have been no material transaction, contract or
agreement entered into by the Company other than in the ordinary course of
business which is not referred to in the Registration Statement; (iv) no
action, suit or proceeding at law or in equity shall be pending or, to the
knowledge of the Company, threatened against or affecting the Company which
would be required to be set forth in the Registration Statement other than as
set forth therein, and no proceedings shall be pending or to the knowledge of
the Company, threatened against the Company before or by any Federal, State or
other governmental commission, board or administrative agency wherein an
unfavorable decision, ruling or finding would materially adversely affect the
business, property, financial condition or income of the Company other than as
set forth in the Registration Statement; and (v) to the best knowledge of the
Company, no labor disturbance by the employees of the Company shall exist or
be imminent which might materially adversely affect the business, operations,
financial condition or income of the Company, except as set forth in the
Registration Statement or the Prospectus. The Underwriter shall have received
at the Closing Date, a certificate of the President of the Company, dated as
of the Closing Date, evidencing compliance with the provisions of this
subsection 7.4.
7.5 At the time that this Agreement is executed by the Company and at
the Closing Date, the Underwriter shall have received a letter from ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, P.A., Certified Public Accountants, dated as of
the date this Agreement is executed by the Company and as of the Closing Date,
confirming that they are an independent public accounting firm within the
meaning of the Securities Act and the Rules and Regulations and stating in
effect (i) that in their opinion the financial statements and schedules
examined by him and included or incorporated by reference in the Registration
Statement and Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the Rules and
Regulations to the extent required for registration statements on Form SB-2
and (ii) that on the basis of a reading of the unaudited financial statements
and schedules (if any) included in the Registration Statement, and of the
latest available unaudited interim financial statements prepared by the
Company (if any) consultations with and inquiries of officers of the Company
responsible for financial and account matters, a reading of the minute books
of the Company, and such other procedures and inquiries (if any) specified in
such letter, nothing has come to their attention which gives them reason to
believe that (a) the unaudited financial statements and schedules (if any)
included in the Registration Statement and Prospectus do not comply as to form
in all material respects with the applicable account requirements of the
Securities Act and the Rules and Regulations or were not prepared in
accordance with generally accepted accounting principles and practices
prevailing in the United States, applied on a basis consistent with those
followed in the preparation of such audited financial statements or would
require any material adjustments for a fair and reasonable presentation of the
information purported to be shown or that (b) during the period to be
specified dated not more than five (5) days prior to date of such letter there
was no change in the capital stock or long-term debt of the Company, except as
set forth in or contemplated by the Registration Statement and Prospectus.
7.6 All proceedings taken at or prior to the Closing Date in connection
with the issue and sale of the Securities shall be satisfactory in form and
substance to counsel for the Underwriter, and such counsel shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the
purpose of enabling them to pass upon matters referred to in subsection 7.3 of
this Section 7 and upon compliance with any of the conditions herein
contained.
Should any of the conditions specified above in this Section 7 not
have been fulfilled, this Agreement may be terminated by the Underwriter on
notice to the Company.
8. Indemnification.
8.1 The Company agrees to indemnify and hold harmless the Underwriter ,
its counsel and each person, firm or corporation, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act, from and
against any and all losses, claims, damages, expenses or liabilities, joint or
several, to which they or any of them may become subject under the Securities
Act or under any other statute or at common law or otherwise, and except as
hereinafter provided, will reimburse the Underwriter and each such controlling
person, firm or corporation, if any, for any legal or other expenses
reasonably incurred by them or any of them in connection with investigating or
defending any and all actions which such expenses, whether or not resulting in
any expenses, liabilities or actions, which such expenses arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, in any preliminary or amended
prospectus or in the Prospectus (or the Registration Statement or Prospectus
as from time to time amended or supplemented by the Company) or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless such untrue statement or omission
was made in such Registration Statement, preliminary or amended preliminary
prospectus or Prospectus (or the Registration Statement or Prospectus as from
time to time amended or supplemented by the Company) in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith by the Underwriter, expressly for use therein. Promptly after
receipt by the Underwriter, the Underwriter's counsel or any person, firm or
corporation controlling such Underwriter of notice of the commencement of any
action in respect of which indemnity may be sought against the Company under
this Section 8, the Underwriter shall notify the Company in writing of the
commencement thereof and, subject to the provisions hereinafter stated, the
Company shall have the right to assume the defense of such action (including
the employment of counsel and the payment of expenses) insofar as such action
shall relate to any alleged liability in respect of which indemnity may be
sought against the Company. The Underwriter, its counsel or any such
controlling person, firm or corporation 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 Company unless (i)
the Company does not assume such defense or (ii) the employment of such
counsel has been specifically authorized by the Company or (iii) counsel
employed by the Company to conduct
such defense is in the sole opinion of the Underwriter not effective. The
Company shall not be liable to indemnify any person for any settlement of any
such action effected without the Company's consent.
8.2 The Underwriter agrees to indemnify and hold harmless the Company,
each of its directors and each of its officers who have signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act from and against any
and all losses, claims, damages, expenses or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act or under
any other statute or at common law or otherwise and, except as hereinafter
provided, will reimburse the Company and each such director or officer and
each such controlling person, if any, for any legal or other expenses
reasonably incurred by them or any of them in connection with investigating or
defending any and all actions, whether or not resulting in any liability,
insofar as such losses, claims, damages, expenses, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectus (or the Registration Statement or Prospectus as from time to time
amended or supplemented) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein not misleading,
but only insofar as any such statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company in
connection therewith by the Underwriter expressly for use therein; provided,
however, that the Underwriter shall only be responsible for its own
misstatements or omissions. Promptly after receipt of notice of the
commencement of any action in respect of which indemnity may be sought against
an Underwriter under this Section 8, the indemnified party will notify the
Underwriter in writing of the commencement thereof, and the Underwriter shall,
subject to provisions hereinafter stated, have the right to assume the defense
of such action (including the employment of counsel and the payment of
expenses) insofar as such action shall relate to any alleged liability in
respect of which indemnity may be sought against the Underwriter. The Company
and each such director, officer or controlling person 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 Underwriter whose purported omissions or misstatements were responsible
for the initiation of the claim unless the employment of such counsel has been
specifically
authorized by the Underwriter. The Underwriter whose purported omissions or
misstatements were responsible for the initiation of the claim shall not be
liable to indemnify any person for any settlement of any such action effected
without the Underwriter's consent.
9. Representations, Warranties and Agreements to Survive Delivery.
The representations, warranties, indemnities, agreements and other
statements of officers of the Company set forth in or made pursuant to this
Agreement and the indemnity agreement of the Underwriter contained in Section
8 hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company of the Underwriter or any
controlling person thereof and will survive delivery of any payment for the
Securities.
10. Effectiveness of Obligation and Underwriter's Termination.
10.1 The Underwriter agrees to make a public offering of the Common
Shares covered by this Agreement as soon after the Effective Date as is
advisable, in accordance with and as set forth in such Registration Statement.
Notwithstanding any of the terms and provisions hereof, this Agreement may be
terminated at any time prior to the Closing Date by the Underwriter if the
Underwriter shall determine, in its sole uncontrolled discretion, that the
market conditions not warrant the offering at this time or since the
respective dates as of which information was given in the Registration
Statement or Prospectus, the Company shall have sustained a loss, whether or
not insured, by reason of fire, flood, accident or other calamity otherwise,
which substantially affects the value of the property of the Company as a
whole, or materially interferes with the operation of the business of the
Company as a whole, and which in the sole judgment of the Underwriter shall
render it impracticable to offer for sale or to enforce contracts made by the
Underwriter for the sale of the Common Shares or, if as a result of action by
the New York Stock Exchange, Inc., the American Stock Exchange, the NASD, the
Commission, or any Federal or State agency, or by action of the Congress or by
Executive Order, trading in securities generally on either of such Exchanges
or in the over-the-counter market shall have been suspended or limited or
minimum prices shall have been established on either of such Exchanges or in
the over-the-counter market or any new restrictions on transactions in
securities materially limiting the free market for securities shall generally
have been established, or if a banking moratorium shall have been declared by
either Federal or New York State authorities, or if some other catastrophe,
natural calamity, act of God, act of a public enemy, labor dispute or other
event occurs, the effect of which is materially to disrupt the financial
markets in the United States or transactions materially in the aggregate,
related to the offering, or the financial condition, business practices,
officers or directors of the Company have not fulfilled the Underwriter's
expectations. If this Agreement shall be terminated pursuant to this Section
10, the Underwriter shall not be responsible for any expenses of the Company
or others for any charges or claims and neither the Company nor the
Underwriter shall be under any obligation under this Agreement, except that
(i) the Company shall remain liable for the payment of expenses referred to in
Section 6 hereof and (ii) the Company and the Underwriter shall retain their
respective liabilities pursuant to Section 8.1 and 8.2 hereof.
10.2 If this Agreement shall be terminated pursuant to Section 7 or this
Section 10 or of the offering provided for herein is not consummated, and/or
any condition to the Underwriter's obligation hereunder is not satisfied, or
because of any refusal, inability or failure on the part of the Company to
comply with any of the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company Shall be unable to perform its
obligations under this Agreement, the Company shall not be liable to the
Underwriter for damages on account of loss of anticipated profits arising out
of the transactions covered by this Agreement, but the Company shall pay all
out-of-pocket expenses incurred by the Underwriter in contemplation of the
performance by them of their obligations hereunder, including the fees and
disbursements of its counsel and accountants and its printing and traveling
expenses and postage, telephone and telegraph charges, up to a maximum of
$5,000, and the company shall remain liable to the extent provided in Section
6.10 and Section 8.1 hereof and the Underwriter shall remain liable to the
extent provided in Section 8.2.
11. Brokerage.
The Company shall indemnify and hold harmless the Underwriter from
and against any claim by any person with whom the Company has dealt, and the
Underwriter shall indemnify and hold harmless the Company from and against any
claim by any person with whom the Underwriter has dealt, for a brokerage
commission with the sale of the Common Shares hereunder, as well as all
liabilities, costs, charges and expenses (including without limitation,
reasonable fees and expenses of counsel) which the Underwriter or the Company,
as the case may be, may incur or pay as the result of investigating, defending
or settling any such claim or responding to any judgment based thereon, or in
connection therewith.
12. Notices.
All communications hereunder shall be in writing and, except as
otherwise provided, shall be delivered at, or mailed or telegraphed to, the
following addresses: if to the Underwriter, to First Madison Securities, Inc.,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ with copies to ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ for
underwriter. If to the Company, to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc., Attention: ▇▇▇ ▇.
▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
13. Parties in Interest.
The Agreement herein set forth is made solely for the benefit of
the Underwriter and, to the extent expressed, any person, firm or corporation
controlling the Underwriter, the Company, the directors of the Company, its
officers who have signed the Registration Statement, and their respective
executors, administrators, successors and assigns and no other person shall
acquire or have any right under or by virtue of the Agreement. The terms
"successor" or "successors and assigns" shall not include any purchases, as
such purchaser, from the Underwriter, of the Stock, Warrants or Underlying
Stock. All of the obligations of the Underwriter and the Company hereunder
are several.
14. Governing Law.
This Agreement shall be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
,1999.
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
BY:
▇▇▇ ▇ ▇▇▇▇, Chief Executive Officer
Confirmed and accepted
as of the date first above written:
FIRST MADISON SECURITES, INC.
By:
▇▇▇ ▇▇▇▇▇, Chairman
