ORION ACQUISITION CORP. I
800,000 Units
Each Unit Consisting of One Share of Common Stock
and
One Class A Common Stock Purchase Warrant
and
320,000 Class B Unit Purchase Warrants
____________
UNDERWRITING AGREEMENT
____________
[EFFECTIVE DATE]
H.J. Meyers & Co., Inc.
1895 Mount Hope Avenue
Rochester, NY 14620
Attn: Michael S. Smith, Esquire
As representative of the several Underwriters
Ladies and Gentlemen:
ORION ACQUISITION CORP. I, a Delaware corporation (the "Company"), proposes
to issue and sell to the one or more underwriters named in Schedule I hereto
(the "Underwriters"), including H.J. Meyers & Co., Inc. (H.J. Meyers) (the
"Representative" or "you"), the representative of the several Underwriters,
pursuant to this Underwriting Agreement (this "Agreement"):
(1) an aggregate of 800,000 Units (the "Units"), each consisting of
one share of the Common Stock, $.01 par value, of the Company (the "Common
Stock"), and one Class A Common Stock Purchase Warrant (the "Class A
Warrants"), each exercisable to purchase one share of Common Stock at any
time commencing on the date of the business combination (the "Business
Combination"), and ending on the fifth anniversary of the effective date of
the Registration Statement (the "Effective Date"); and
(2) an aggregate of 320,000 Class B Unit Purchase Warrants (the
"Class B Warrants"), exercisable to purchase one Unit at any time
commencing on the date of the Business Combination and ending on the fifth
anniversary of the Effective Date.
The Class A Warrant exercise price, subject to adjustment as described in the
agreement providing for the Warrants (the "Warrant Agreement"), shall be $9.00
per share. The Class B Warrant exercise price, subject to adjustment as
described in the Warrant Agreement, shall be $0.125 per Unit. In addition, the
Company proposes to grant to the Underwriters the Over-Allotment Option,
referred to and defined in Section 2(c), to purchase all or any part of an
aggregate of 120,000 additional Units and 48,000 additional Class B Warrants,
and to issue to you the Representative's Warrant, referred to and defined in
Section 12, to purchase certain further additional Units and Class B Warrants.
The 800,000 shares of Common Stock comprising the Units, together with the
120,000 additional shares of Common Stock comprising the Units that are the
subject of the Over-Allotment Option, are herein collectively called the
"Shares." The Units, the Shares, the Warrants (including the Warrants
comprising the Units, the additional Warrants comprising the Units that are the
subject of the Over-Allotment Option and the Warrants issuable upon exercise of
the Representative's Warrant), the shares of Common Stock issuable upon exercise
of the Warrants and the shares of Common Stock issuable upon exercise of the
Representative's Warrant, are herein collectively called the "Securities." The
term "Representative's Counsel" shall mean the firm of Harter, Secrest & Emery,
counsel to the Representative, and the term "Company Counsel" shall mean the
firm of Greenbaum, Rowe, Smith, Ravin & Davis, counsel to the Company. Unless
the context otherwise requires, all references herein to a "Section" shall mean
the appropriate Section of this Agreement.
You have advised the Company that the Underwriters desire to purchase the
Units and Class B Warrants as herein provided, and that you have been authorized
to execute this Agreement as representative of the Underwriters. The Company
confirms the agreements made by it with respect to the purchase of the Units and
Class B Warrants by the Underwriters, as follows:
1. REPRESENTATIONS AND WARRANTIES.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to, and agrees with, each Underwriter that:
(a) REGISTRATION STATEMENT; PROSPECTUS. A registration statement
(File No. 33-80647) on Form SB-2 relating to the public offering of the
Securities (the "Offering"),
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including a preliminary form of prospectus, 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 of the Securities and Exchange Commission (the
"Commission") promulgated thereunder (the "Rules and Regulations"), and has been
filed with the Commission under the Act. As used herein, the term "Preliminary
Prospectus" shall mean each prospectus filed pursuant to Rule 430 or Rule 424(a)
of the Rules and Regulations. The Preliminary Prospectus bore the legend
required by Item 501 of Regulation S-K under the Act and the Rules and
Regulations. Such registration statement (including all financial statements,
schedules and exhibits) as amended at the time it becomes effective and the
final prospectus included therein are herein respectively called the
"Registration Statement" and the "Prospectus," except that (i) if the prospectus
first filed by the Company pursuant to Rule 424(b) or Rule 430A of the Rules and
Regulations shall differ from such final prospectus as then amended, then the
term "Prospectus" shall instead mean the prospectus first filed pursuant to said
Rule 424(b) or Rule 430A, and (ii) if such registration statement is amended or
such prospectus is amended or supplemented after the effective date of such
registration statement and prior to the Option Closing Date (as defined in
Section 2(c)), then (unless the context necessarily requires otherwise) the term
"Registration Statement" shall include such registration statement as so
amended, and the term "Prospectus" shall include such prospectus as so amended
or supplemented, as the case may be.
(b) CONTENTS OF REGISTRATION STATEMENT. On the Effective Date, and
at all times subsequent thereto for so long as the delivery of a prospectus is
required in connection with the offering or sale of any of the Securities,
(i) the Registration Statement and the Prospectus shall in all respects conform
to the requirements of the Act and the Rules and Regulations, and (ii) neither
the Registration Statement nor the Prospectus shall 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 with respect to stabilization, the material set forth under
the caption "UNDERWRITING," and the identity of counsel to the Representative
under the caption "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) ORGANIZATION, STANDING, ETC. The Company and each subsidiary of
the Company (a "Subsidiary") has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware with
full power and corporate authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each other
jurisdiction in which the nature of its business or the character or location of
its
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properties requires such qualification, except where failure so to qualify will
not materially affect the business, properties or financial condition of the
Company or such Subsidiary, as the case may be.
(d) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company as of the date of the Prospectus is as set forth in the
Prospectus under the caption "CAPITALIZATION". The shares of Common Stock
issued and outstanding on the Effective Date have been duly authorized, validly
issued and are fully paid and non-assessable. 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 or any Subsidiary have been granted or entered into by the Company or
such Subsidiary, except as expressly described in the Prospectus. The
Securities conform to all statements relating thereto contained in the
Registration Statement or the Prospectus.
(e) SECURITIES. The Securities and the Representative's Warrant have
been duly authorized and, when issued and delivered against payment therefor
pursuant to this Agreement, will be duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights of any security holder of the
Company. Neither the filing of the Registration Statement nor the offering or
sale of any of the Securities or the Representative's Warrant as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any securities of the
Company, except as described in the Registration Statement.
(f) AUTHORITY, ETC. This Agreement, the Warrant Agreement, the
Representative's Warrant, and the Stock Escrow Agreement, the Financial
Consulting Agreement and the M/A Agreement (each as hereinafter defined), have
been duly and validly authorized, executed and delivered by the Company and,
assuming due execution of this Agreement and such other agreements by the other
party or parties hereto and thereto, constitute valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms. The Company has full right, power and lawful authority to authorize,
issue and sell the Securities and the Representative's Warrant on the terms and
conditions set forth herein. All consents, approvals, authorizations and orders
of any court or governmental authority which are required in connection with the
authorization, execution and delivery of such agreements, the authorization,
issue and sale of the Securities and the Representative's Warrant, and the
consummation of the transactions contemplated hereby have been obtained.
(g) NO CONFLICT. Except as described in the Prospectus, neither the
Company nor any Subsidiary is in violation, breach or default of or under, and
consummation of the transactions hereby contemplated and fulfillment of the
terms of this Agreement will not conflict with or result in a breach of, any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance pursuant to the terms
of, any contract, indenture, mortgage, deed of trust, loan agreement or other
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material agreement or instrument to which the Company or such Subsidiary is a
party or by which the Company or such Subsidiary may be bound or to which any of
the property or assets of the Company or such Subsidiary are subject, nor will
such action result in any violation of the provisions of the Certificate of
Incorporation or the By-laws of the Company or any Subsidiary, or any statute,
order, rule or regulation applicable to the Company or any Subsidiary of any
court or governmental authority.
(h) ASSETS. Subject to the qualifications stated in the Prospectus:
(i) the Company and each Subsidiary, as the case may be, has good and marketable
title to all properties and assets described in the Prospectus as owned by it,
including without limitation intellectual property, free and clear of all liens,
charges, encumbrances or restrictions, except such as are not materially
significant or important in relation to its business; (ii) all of the material
leases and subleases under which the Company or any Subsidiary is the lessor or
sublessor of properties or assets or under which the Company or any Subsidiary
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, neither the Company nor any Subsidiary is 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 any party adverse to the rights of
the Company or such Subsidiary as lessor, sublessor, lessee or sublessee under
any such lease or sublease, or affecting or questioning the right of the Company
or such Subsidiary 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 (iii) the Company and each Subsidiary, as the case may
be, 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) INDEPENDENT ACCOUNTANTS. BDO Seidman, LLP, who have given their
report on certain financial statements filed or to be filed with the Commission
as a part of the Registration Statement, and which are included in the
Prospectus, are with respect to the Company, independent public accountants as
required by the Act and the Rules and Regulations.
(j) FINANCIAL STATEMENTS. The financial statements and schedules,
together with related notes, set forth in the Registration Statement and the
Prospectus present fairly the financial position, results of operations and cash
flows of the Company and the Predecessor on the basis stated in the Registration
Statement, at the respective dates and for the respective periods to which they
apply. Such financial statements, schedules and related notes have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the entire period involved, except to the extent
disclosed therein. The financial information for each of the periods presented
in the Registration Statement and the Prospectus present a true and complete
statement of the financial position of the Company and the Predecessor at the
dates indicated and the results of their operations for the periods then
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ended. The Summary Financial Information and Selected Financial Data included
in the Registration Statement and the Prospectus present fairly the information
shown therein and have been prepared on a basis consistent with that of the
audited financial statements included in the Registration Statement and the
Prospectus.
(k) NO MATERIAL CHANGE. Except as otherwise set forth in the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has: (i) incurred any liability or obligation, direct or contingent,
or entered into any transaction, which is material to its business;
(ii) effected or experienced any change in its capital stock; (iii) issued any
options, warrants or other rights to acquire its capital stock; (iv) declared,
paid or made any dividend or distribution of any kind on its capital stock; or
(v) effected or experienced any material adverse change, or development
involving a prospective material adverse change, in its business, property,
operations, condition (financial or otherwise) or earnings.
(l) LITIGATION. Except as set forth in the Prospectus, there is not
now pending nor, to the best knowledge of the Company, threatened, any action,
suit or proceeding (including any related to environmental matters or
discrimination on the basis of age, sex, religion or race), whether or not in
the ordinary course of business, to which the Company or any Subsidiary is a
party or its business or property is subject, before or by any court or
governmental authority, which might result in any material adverse change in the
business, property, operations, condition (financial or otherwise) or earnings
of the Company or such Subsidiary; and no labor disputes involving the employees
of the Company or any Subsidiary exist which might be expected to affect
materially adversely the business, property, operations, condition (financial or
otherwise) or earnings of the Company or such Subsidiary.
(m) NO UNLAWFUL PROSPECTUSES. The Company has not distributed any
prospectus or other offering material in connection with the Offering
contemplated herein, other than any Preliminary Prospectus, the Prospectus or
other material permitted by the Act and the Rules and Regulations.
(n) TAXES. Except as disclosed in the Prospectus, the Company and
each Subsidiary has filed all necessary federal, state, local 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 best knowledge of the Company,
might be asserted against the Company or any Subsidiary.
(o) LICENSES, ETC. The Company and each Subsidiary has in effect all
necessary licenses, permits and other governmental authorizations currently
required for the conduct of its business or the ownership of its property, as
described in the Prospectus, and is in all material respects in compliance
therewith. The Company owns or possesses adequate rights to use all material
patents, patent applications, trademarks, mark registrations, copy-
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rights and licenses disclosed in the Prospectus and/or which are necessary for
the conduct of such business, and except as disclosed in the Prospectus has 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 or any Subsidiary is in violation of, or would cause the
Company or such Subsidiary to violate, any law, rule, regulation or order of the
United States, any state, county or locality, the violation of which would have
a material adverse effect upon the business, property, operations, condition
(financial or otherwise) or earnings of the Company or such Subsidiary.
(p) NO PROHIBITED PAYMENTS. Neither the Company nor any Subsidiary
nor the Predecessor have, directly or indirectly at any time: (i) made any
contribution 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
federal, state, local 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.
(q) TRANSFER TAXES. On the Closing Dates (as defined in
Section 2(d)), all transfer and other taxes (including franchise, capital stock
and 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 shall have been fully paid or provided for
by the Company, and all laws imposing such taxes shall have been fully complied
with.
(r) EXHIBITS. All contracts and other documents of the Company or
any Subsidiary which are, under the Rules and Regulations, required to be filed
as exhibits to the Registration Statement have been so filed.
(s) SUBSIDIARIES. Except as described in the Prospectus, the Company
has no Subsidiaries. All of the capital stock of each Subsidiary is owned by
the Company.
(t) SHAREHOLDER AGREEMENTS, REGISTRATION RIGHTS. Except as described
in the Prospectus, no security holder of the Company has any rights with respect
to the purchase, sale or registration of any Securities, and all registration
rights with respect to the Offering have been effectively waived.
(u) INVESTMENT COMPANY STATUS. The Company is in compliance or has
secured a suitable exemption from the Investment Company Act of 1940.
(v) SECURITIES ACT RULE 419. The Company is exempt from the
provisions of Rule 419 of the Securities Act.
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2. PURCHASE, DELIVERY AND SALE OF UNITS.
(a) PURCHASE PRICE FOR UNITS. The Units and Class B Warrants shall
be sold to and purchased by the Underwriters hereunder at the purchase price of
$9.40 per Unit (that being the public offering price of $10.00 per Unit less an
underwriting discount of 6 percent) and $5.175 per Class B Warrant (that being
the public offering price of $5.75 per Class B Warrant less an underwriting
discount of 10 percent) (respectively the "Purchase Price").
(b) FIRM UNITS.
(i) Subject to the terms and conditions of this Agreement, and
on the basis of the representations, warranties and agreements herein contained
the Company agrees to issue and sell to the Underwriters, severally and not
jointly, and each of the Underwriters agrees, severally and not jointly, to buy
from the Company at the Purchase Price, the number of Units and Class B Warrants
set forth opposite such Underwriter's name in Schedule I hereto (collectively
the "Firm Units").
(ii) Delivery of the Firm Units against payment therefor shall
take place at the offices of H.J. Meyers, 1895 Mt. Hope Avenue, Rochester, New
York 14620 (the "Representative's Offices") (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 [CLOSING DATE], or at such later time and date, not later than ten
banking days after the Effective Date, as you may designate (such time and date
of payment and delivery for the Firm Units being herein called the "First
Closing Date"). Time shall be of the essence and delivery of the Firm Units at
the time and place specified in this Section 2(b)(ii) is a further condition to
the obligations of the Underwriters hereunder.
(c) OPTION UNITS.
(i) In addition, subject to the terms and conditions of this
Agreement, and on the basis of the representations, warranties and agreements
herein contained, the Company hereby grants to the Underwriters an option (the
"Over-Allotment Option") to purchase from the Company all or any part of an
aggregate of an additional 120,000 Units and 48,000 Class B Warrants at the
Purchase Price (collectively the "Option Units"). In the event that the Over-
Allotment Option is exercised by the Underwriters in whole or in part, each
Underwriter shall purchase Option Units in the same proportion as the number of
Firm Units purchased by it bore to the total number of Firm Units, unless you
and the other Underwriters shall otherwise agree.
(ii) The Over-Allotment Option may be exercised by the
Underwriters, in whole or in part, within 30 days after the Effective Date, upon
notice by you to the
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Company advising it of the number of Option Units as to which the Over-Allotment
Option is being exercised, the names and denominations in which the certificates
for the Shares and the Warrants comprising 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 you but shall not be less than four
nor more than ten banking days after exercise of the Over-Allotment Option, nor
in any event prior to the First Closing Date (such time and date being herein
called the "Option Closing Date"). Delivery of the Option Units against payment
therefor shall take place at the Representative's Offices. Time shall be of the
essence and delivery at the time and place specified in this Section 2(c)(ii) is
a further condition to the obligations of the Underwriters hereunder.
(iii) The Over-Allotment Option may be exercised only to cover
over-allotments in the sale by the Underwriters of Firm Units.
(d) DELIVERY OF CERTIFICATES; PAYMENT.
(i) The Company shall make the certificates for the Shares and
the Warrants comprising the Units to be purchased hereunder available to you for
checking at least one banking day prior to the First Closing Date or the Option
Closing Date (each, a "Closing Date"), as the case may be. The certificates
shall be in such names and denominations as you may request at least two banking
days prior to the relevant Closing Date. Time shall be of the essence and the
availability of the certificates at the time and place specified in this
Section 2(d)(i) is a further condition to the obligations of the Underwriters
hereunder.
(ii) On the First Closing Date, the Company shall deliver to you
for the several accounts of the Underwriters definitive engraved certificates in
negotiable form representing all of the Shares and the Warrants comprising the
Firm Units to be sold by the Company, against payment of the Purchase Price
therefor by you for the several accounts of the Underwriters, by certified or
bank cashier's checks payable in next day funds to the order of the Company.
(iii) In addition, if and to the extent that the Underwriters
exercise the Over-Allotment Option, then on the Option Closing Date, the Company
shall deliver to you for the several accounts of the Underwriters definitive
engraved certificates in negotiable form representing the Units, Shares and the
Warrants comprising the Option Units to be sold by the Company, against payment
of the Purchase Price therefor by you for the several accounts of the
Underwriters, by certified or bank cashier's checks payable in next day funds to
the order of the Company.
(iv) It is understood that the Underwriters propose to offer the
Units and Class B Warrants to be purchased hereunder to the public, upon the
terms and conditions set forth in the Registration Statement, after the
Registration Statement becomes effective.
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3. COVENANTS.
COVENANTS OF THE COMPANY. The Company covenants and agrees with each
Underwriter that:
(a) REGISTRATION.
(i) The Company shall use its best efforts to cause the
Registration Statement to become effective and, upon notification from the
Commission that the Registration Statement has become effective, shall so advise
you and shall not at any time, whether before or after the Effective Date, file
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus of which you shall not previously have been advised and furnished
with a copy, or to which you or Representative's 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 the
Underwriters of the distribution of the Units and Class B Warrants contemplated
hereby (but in no event more than nine months after the Effective Date), and
(B) 25 days after the Effective Date, the Company shall prepare and file with
the Commission, promptly upon your request, any amendments to the Registration
Statement or any amendments or supplements to the Prospectus which, in your
reasonable opinion, may be necessary or advisable in connection with the
distribution of the Units and Class B Warrants.
(ii) Promptly after you or the Company shall have been advised
thereof, you shall advise the Company or the Company shall advise you, as the
case may be, and confirm such advice in writing, of (A) the receipt of any
comments of the Commission, (B) the effectiveness of any post-effective
amendment to the Registration Statement, (C) the filing of any supplement to the
Prospectus or any amended Prospectus, (D) any request made by the Commission for
amendment of the Registration Statement or amendment or supplementing of the
Prospectus, or for additional information with respect thereto, or (E) the
issuance by the Commission or any state or regulatory body of any stop order or
other order denying or suspending the effectiveness of the Registration
Statement, or preventing or suspending the use of any Preliminary Prospectus, or
suspending the qualification of the Securities for offering in any jurisdiction,
or otherwise preventing or impairing the Offering, or the institution or threat
of any proceeding for any of such purposes. The Company and you shall not
acquiesce in such order or proceeding, and shall instead actively defend such
order or proceeding, unless the Company and you agree in writing to such
acquiescence.
(iii) 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 selected dealers to use the Prospectus in
connection with the sale of the Units and Class B
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Warrants for such period as in the opinion of Representative's Counsel 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, or which
in the opinion of Company Counsel or of Representative's Counsel should be set
forth in an amendment to the Registration Statement or an amendment or
supplement to the Prospectus in order to make the statements made 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 Class B
Warrants, or in case it shall be necessary to amend or supplement the Prospectus
to comply with the Act or the Rules and Regulations, the Company shall notify
you promptly and forthwith prepare and furnish to the Underwriters 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, shall not contain any untrue statement of a
material fact or omit to state any material fact 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 each such amendment
to the Registration Statement, amended Prospectus or supplement to be attached
to the Prospectus shall be without expense to the Underwriters, except that in
the case that the Underwriters are required, in connection with the sale of the
Units or Class B Warrants, to deliver a prospectus nine months or more after the
Effective Date, the Company shall upon your request and at the expense of the
Underwriters, amend the Registration Statement and amend or supplement the
Prospectus, or file a new registration statement on Form SB-2 (if applicable) or
Form S-1, if necessary, and furnish the Underwriters with reasonable quantities
of prospectuses complying with section 10(a)(3) of the Act.
(iv) The Company shall comply with the Act, the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder in connection with
the offering and issuance of the Securities.
(b) BLUE SKY. The Company shall, at its own expense, use its best
efforts to qualify or register the Securities for sale under the securities or
"blue sky" laws of such jurisdictions as you may designate, and shall make such
applications and furnish such information to Representative's Counsel as may be
required for that purpose, and shall comply with such laws; provided, however,
that the Company shall not be required to qualify as a foreign corporation or a
dealer in securities or to execute a general consent to service of process in
any jurisdiction in any action other than one arising out of the offering or
sale of the Units. The Company shall bear all of the expense of such
qualifications and registrations, including without limitation the legal fees
and disbursements of Representative's Counsel, which fees, exclusive of
disbursements, shall not exceed $35,000 (unless otherwise agreed). After each
Closing Date the Company shall, at its own expense, from time to time prepare
and file such
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statements and reports as may be required to continue each such qualification in
effect for so long a period as you may reasonably request.
(c) EXCHANGE ACT REGISTRATION. The Company shall, at its own
expense, prepare and file with the Commission a registration statement (on
Form 8-A or Form 10) under section 12(g) of the Exchange Act concurrently with
the completion of the Offering or promptly thereafter, but in no event later
than 45 days from the Effective Date, and shall use its best efforts to cause
such registration statement to be declared effective and maintained in effect
for at least five years from the Effective Date.
(d) PROSPECTUS COPIES. The Company shall deliver to you on or before
the First Closing Date two signed copies of the Registration Statement including
all financial statements, schedules and exhibits filed therewith, and of all
amendments thereto. The Company shall deliver to or on the order of the
Underwriters, from time to time until the Effective Date, as many copies of any
Preliminary Prospectus filed with the Commission prior to the Effective Date as
the Underwriters may reasonably request. The Company shall deliver to the
Underwriters on the Effective Date, 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.
(e) AMENDMENTS AND SUPPLEMENTS. The Company shall, promptly upon
your request, prepare and file with the Commission any amendments to the
Registration Statement, and any amendments or supplements to the Preliminary
Prospectus or the Prospectus, and take any other action which in the reasonable
opinion of Representative's Counsel may be reasonably necessary or advisable in
connection with the distribution of the Units and Class B Warrants, and shall
use its best efforts to cause the same to become effective as promptly as
possible.
(f) CERTAIN MARKET PRACTICES. The Company has not taken, and shall
not take, directly or indirectly, any action designed, or which might reasonably
be expected, to cause or result in, or which has constituted, the stabilization
or manipulation of the price of the Securities to facilitate the sale or resale
thereof.
(g) CERTAIN REPRESENTATIONS. Neither the Company nor any
representative of the Company has made or shall make any written or oral
representation in connection with the Offering and sale of the Securities or the
Representative's Warrant which is not contained in the Prospectus, which is
otherwise inconsistent with or in contravention of any thing contained in the
Prospectus, or which shall constitute a violation of the Act, the Rules and
Regulations, the Exchange Act or the rules and regulations promulgated under the
Exchange Act.
-12-
(h) CONTINUING REGISTRATION OF WARRANTS AND UNDERLYING COMMON STOCK.
For so long as any Warrant is outstanding, the Company shall, at its own
expense: (i) use its best efforts to cause post-effective amendments to the
Registration Statement, or new registration statements (which may be on
Forms SB-2, S-2 or S-3, as the case may be) relating to the Warrants and the
Common Stock and Units underlying the Warrants to become effective in compliance
with the Act and without any lapse of time between the effectiveness of the
Registration Statement and of any such post-effective amendment or new
registration statement; (ii) cause a copy of each Prospectus, as then amended,
to be delivered to each holder of record of a Warrant; (iii) furnish to the
Underwriters and dealers as many copies of each such Prospectus as the
Underwriters or dealers may reasonably request; and (iv) maintain the "blue sky"
qualification or registration of the Warrants and the Common Stock and Units
underlying the Warrants, or have a currently available exemption therefrom, in
each jurisdiction in which the Securities were so qualified or registered for
purposes of the Offering. In addition, for so long as any Warrant is
outstanding, the Company shall promptly notify you of any material change in the
business, financial condition or prospects of the Company.
(i) USE OF PROCEEDS. The Company shall apply the net proceeds from
the sale of the Units substantially for the purposes set forth in the Prospectus
under the caption "USE OF PROCEEDS," and shall 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 of the Rules and
Regulations.
(j) TWELVE MONTHS' EARNINGS STATEMENT. The Company shall make
generally available to its security holders and deliver to you as soon as it is
practicable so to do, but in no event later than 90 days after the end of twelve
months after the close of its current fiscal quarter, an earnings statement
(which need not be audited) covering a period of at least twelve consecutive
months beginning after the Effective Date, which shall satisfy the requirements
of section 11(a) of the Act.
(k) NASDAQ, EXCHANGE LISTINGS, ETC. Within 10 days after the
Effective Date, the Company shall also use its best efforts to list itself in
Moody's OTC Industrial Manual or Standard & Poor's Corporation Records and to
cause such listing to be maintained for two years. After the Business
Combination, the Company shall immediately make all filings required to seek
approval for the quotation of the Securities on The Nasdaq Stock Market
("NASDAQ"), the NASDAQ-NNM or the New York Stock Exchange ("NYSE"), and shall
use its best efforts to effect and maintain such approval for at least two
years.
(l) BOARD OF DIRECTORS. The Company shall maintain a Board of
Directors comprised of a size and structure as the Company and Underwriters
jointly agree until completion of the Business Combination.
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(m) PERIODIC REPORTS. For so long as the Company is a reporting
company under section 12(g) or section 15(d) of the Exchange Act, the Company
shall, at its own expense, furnish to its shareholders an annual report
(including financial statements audited by certified public accountants) in
reasonable detail. In addition, during the period ending five years from the
date hereof, the Company shall, at its own expense, furnish to you: (i) within
90 days of the end of each fiscal year, a balance sheet of the Company and its
Subsidiaries as at the end of such fiscal year, together with statements of
income, stockholders' equity and cash flows of the Company and its Subsidiaries
as at the end of such fiscal year, all in reasonable detail and accompanied by a
copy of the certificate or report thereon of certified public accountants;
(ii) as soon as they are available, a copy of all reports (financial or
otherwise) distributed to security holders; (iii) as soon as they are available,
a copy of all non-confidential reports and financial statements furnished to or
filed with the Commission; and (iv) such other information as you may from time
to time reasonably request. The financial statements referred to herein shall
be on a consolidated basis to the extent the accounts of the Company and its
Subsidiaries are consolidated in reports furnished to its shareholders
generally. In addition, during the period ending one year from the date hereof,
the company shall, at its own expense, furnish you monthly with Depository Trust
Company stock transfer sheets.
(n) CERTAIN OPTIONS. For a period of 90 days following the First
Closing Date, the Company shall not, without your prior written consent, grant
any options, warrants or other rights to purchase shares of Common Stock at a
price less than the initial public Offering price of the Shares comprising the
Units and Class B Warrants.
(o) WARRANT SOLICITATION. Upon the exercise of any Warrants on or
after the first anniversary of the Effective Date, the Company shall pay you a
commission of 10 percent of the aggregate exercise price of such Warrants, 8
percent of which may be reallowed by you to the dealer who solicited the
exercise (which may also be you), if: (i) the market price of the Common Stock
is greater than the exercise price of the Warrant on the date of exercise;
(ii) the exercise of the Warrant was solicited by a member of the National
Association of Securities Dealers, Inc. ("NASD"); (iii) the Warrant is not held
in a discretionary account; (iv) the disclosure of the compensation arrangements
has been made in documents provided to customers, both as part of the Offering
and at the time of exercise; and (v) the solicitation of the Warrant was not in
violation of Rule 10b-6 promulgated under the Exchange Act. The Company agrees
not to solicit the exercise of any Warrant other than through you, and shall not
authorize any other dealer to engage in such solicitation without your prior
written consent. No commission shall be paid to you on any Warrant exercised
prior to the first anniversary of the Effective Date, or on any Warrant
exercised at any time without solicitation by you.
(p) AVAILABLE SHARES. The Company shall reserve and at all times
keep available that maximum number of its authorized but unissued Securities
which are issuable
-14-
upon exercise of the Warrants, the Representative's Warrant, and the Warrants
issuable upon exercise of the Representative's Warrant, in each case taking into
account the anti-dilution provisions thereof.
(q) INVESTMENT BANKING ADVISOR. The Company shall engage an
investment banking firm to advise the Company concerning potential business
combinations.
(r) STOCK ESCROW AGREEMENT. On or before the Effective Date, the
Company shall, and shall cause all of its current shareholders to, execute and
deliver to you an agreement with American Stock Transfer & Trust Company (or
other escrow agent mutually acceptable to the Company and you), in the form
previously delivered to the Company by you, regarding the escrow of all shares
of Common Stock and Series A Preferred Stock owned by such shareholders (the
"Stock Escrow Agreement").
(s) M/A AGREEMENT. On the First Closing Date and simultaneously with
the delivery of the Firm Units, the Company shall execute and deliver to you an
agreement with you, in the form previously delivered to the Company by you,
regarding mergers, acquisitions, joint ventures and certain other forms of
transactions (the "M/A Agreement").
(t) PUBLIC RELATIONS. Prior to the Effective Date the Company shall
have retained a public relations firm acceptable to you, and shall continue to
retain such firm, or an alternate firm acceptable to you, for a period of two
years.
(u) BOUND VOLUMES. Within 90 days from the First Closing Date, the
Company shall deliver to you, at the Company's expense, three bound volumes in
form and content acceptable to you, containing the Registration Statement and
all exhibits filed therewith and all amendments thereto, and all other
agreements, correspondence, filings, certificates and other documents filed
and/or delivered in connection with the Offering.
4. CONDITIONS TO UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Units which they have agreed to
purchase hereunder are subject to the accuracy (as of the date hereof and as of
each Closing Date) of and compliance with the representations and warranties of
the Company contained herein, the performance by the Company of all of their
obligations hereunder, the execution, delivery and performance by each of the
parties thereto of all of their obligations under the Stock Escrow Agreement,
and the following further conditions:
(a) EFFECTIVE REGISTRATION STATEMENT; NO STOP ORDER. The
Registration Statement shall have become effective and you shall have received
notice thereof not later than 6:00 p.m., New York time, on the date of this
Agreement, or at such later time or on such later date as to which you may agree
in writing. In addition, on each Closing Date (i) no stop order denying or
suspending the effectiveness of the Registration Statement shall be in effect,
-15-
and no proceedings for that or any 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, and (ii) all requests on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Representative's Counsel.
(b) OPINION OF COMPANY COUNSEL. On the First Closing Date, you shall
have received the opinion, dated as of the First Closing Date, of Company
Counsel, in form and substance satisfactory to Representative's Counsel, to the
effect that:
(i) the Company and each Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with full power and corporate
authority to own its properties and conduct its business as described
in the Prospectus, and is duly qualified or licensed to do business as
a foreign corporation and is in good standing in each other
jurisdiction in which the nature of its business or the character or
location of its properties requires such qualification, except where
failure so to qualify will not materially affect the business,
properties or financial condition of the Company or such Subsidiary;
(ii) to the best knowledge of such counsel, (A) the Company
and each Subsidiary has obtained, or is in the process of obtaining,
all necessary licenses, permits and other governmental authorizations
currently required for the conduct of its business or the ownership of
its property, as described in the Prospectus, (B) such obtained
licenses, permits and other governmental authorizations are in full
force and effect, and (C) the Company and each Subsidiary is, in all
material respects, in compliance therewith;
(iii) (A) the authorized capitalization of the Company as of
the date of the Prospectus was as is set forth in the Prospectus under
the caption "CAPITALIZATION;" (B) all of the shares of Common Stock
now outstanding have been duly authorized and validly issued, are
fully paid and non-assessable, conform to the description thereof
contained in the Prospectus, have not been issued in violation of the
preemptive rights of any shareholder and, except as described in the
Prospectus, are not subject to any restrictions upon the voting or
transfer thereof; (C) all of the Shares and all of the Warrants
comprising the Units have been duly authorized and, when paid for as
provided herein, shall be validly issued, fully paid and non-
assessable, shall not have been issued in violation of the preemptive
rights of any shareholder, and no personal liability shall attach to
the ownership thereof; (D) the shareholders of the Company do not have
any preemptive rights or other rights to subscribe for or purchase,
and there are no restrictions upon the voting or transfer of, any of
the Securities; (E) the Shares and the Warrants comprising the Units,
the Warrant Agreement
-16-
and the Representative's Warrant conform to the respective descriptions
thereof contained in the Prospectus; (F) all prior sales of the Company's
securities have been made in compliance with, or under an exemption from,
the Act and applicable state securities laws; (G) a sufficient number of
shares of Common Stock has been reserved, for all times when any of the
Warrants (including the Warrants issuable upon exercise of the
Representative's Warrant) are outstanding, for issuance upon exercise of
all of the Warrants; and (H) to the best knowledge of such counsel, 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 effectively waived
or satisfied, for or relating to the registration of any securities of the
Company;
(iv) the certificates evidencing the Units, the Shares and
the Warrants comprising the Units and Warrants are each in valid and
proper legal form; and the Warrants are exercisable for shares of
Common Stock or Units in accordance with the terms of the Warrants and
at the prices therein provided for;
(v) this Agreement, the Warrant Agreement, the
Representative's Warrant, the Stock Escrow Agreement and the M/A
Agreement have been duly and validly authorized, executed and
delivered by the Company and (assuming due execution and delivery
thereof by the Representative and/or American Stock Transfer & Trust
Company, as the case may be) all of such agreements are, or when duly
executed shall be, the valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms (except
as enforceability may be limited by bankruptcy, insolvency or other
laws affecting the rights of creditors generally); provided, however,
that no opinion need be expressed as to the enforceability of the
indemnity provisions contained in Section 6 or the contribution
provisions contained in Section 7;
(vi) to the best knowledge of such counsel, (A) there is no
pending, threatened or contemplated legal or governmental proceeding
affecting the Company or any Subsidiary which could materially and
adversely affect the business, property, operations, condition
(financial or otherwise) or earnings of the Company or such
Subsidiary, or which questions the validity of the Offering, the
Securities, this Agreement, the Warrant Agreement, the
Representative's Warrant, the Stock Escrow Agreement or the M/A
Agreement, or of any action taken or to be taken by the Company
pursuant thereto; and (B) there is no legal or governmental proceeding
or regulation required to be described or
-17-
referred to in the Registration Statement which is not so described or
referred to;
(vii) to the best knowledge of such counsel, (A) the
Company is not in violation of or default under this Agreement, the
Warrant Agreement, the Representative's Warrant, the Stock Escrow
Agreement, the Financial Consulting Agreement or the M/A Agreement;
and (B) the execution and delivery hereof and thereof and the
incurrence of the obligations herein and therein set forth and the
consummation of the transactions herein or therein contemplated shall
not result in a violation of, or constitute a default under, the
Certificate of Incorporation or By-laws of the Company, or any
material obligation, 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 its assets are bound, or any material order, rule,
regulation, writ, injunction or decree of any government, governmental
instrumentality or court;
(viii) the Registration Statement has become effective under the
Act, and to the best knowledge of such counsel, no stop order denying or
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for that or any similar purpose have been instituted or
are pending before or threatened by the Commission;
(ix) the Registration Statement and the Prospectus (except for
the financial statements, notes thereto and other financial information and
statistical data contained therein, as to which no opinion need be
rendered), comply as to form in all material respects with the Act and the
Rules and Regulations;
(x) all descriptions contained in the Registration
Statement or the Prospectus of contracts and other documents are
accurate and fairly present the information required to be described,
and such counsel is familiar with all contracts and other documents
referred to in the Registration Statement and the Prospectus or filed
as exhibits to the Registration Statement and, to the best knowledge
of such counsel, no contract or document of a character required to be
summarized or described therein or to be filed as an exhibit thereto
is not so summarized, described or filed;
(xi) the descriptions contained in the Registration
Statement and the Prospectus which purport to summarize the provisions
of statutes, rules and regulations are accurate summaries in all
respects, and such descriptions fairly present in all respects the
information shown, and the descriptions
-18-
contained in the Registration Statement and the Prospectus that concern
matters of law or legal conclusions have been reviewed by such counsel and
are correct;
(xii) the Stock Escrow Agreement has been duly and validly
executed and delivered by each party thereto (other than American
Stock Transfer & Trust Company); and
(xiii) except for registration under the Act and
registration or qualification of the Securities under applicable state
or foreign securities or blue sky laws, no authorization, approval,
consent or license of any governmental or regulatory authority or
agency is necessary in connection with: (A) the authorization,
issuance, sale, transfer or delivery of the Securities by the Company;
(B) the execution, delivery and performance of this Agreement by the
Company or the taking of any action contemplated herein; (C) the
issuance of the Representative's Warrant or the Securities issuable
upon exercise thereof; or (D) the execution, delivery and performance
of this Agreement by the Company or the taking of any action
contemplated herein.
Such opinion shall also state that such counsel has participated in the
preparation of the Registration Statement and the Prospectus, and nothing has
come to the attention of such counsel to cause such counsel to have reason to
believe that the Registration Statement at the time it became effective
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except, in the case of both the Registration Statement and the
Prospectus, for the financial statements, notes thereto and other financial
information and statistical data contained therein, as to which no need be. Such
opinion shall also cover such matters incident to the transactions contemplated
hereby as you or Representative's Counsel shall reasonably request. In
rendering such opinion, Company Counsel may rely as to matters of fact upon
certificates of officers of the Company-, and of public officials, and may rely
as to all matters of law other than the law of the United States or the State of
Delaware 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 so to rely.
(c) CORPORATE PROCEEDINGS. All corporate proceedings and other legal
matters relating to this Agreement, the Registration Statement, the Prospectus
and other related matters shall be reasonably satisfactory to or approved by
Representative's Counsel, and you shall have received from such counsel a signed
opinion, dated as of the First Closing Date, with respect to the validity of the
issuance of the Units, the form of the Registration Statement and Prospectus
(other than the financial statements and other financial or statistical data
contained therein), the execution of this Agreement and other related matters as
you may
-19-
reasonably require. The Company shall have furnished to Representative's
Counsel such documents as they may reasonably request for the purpose of
enabling them to render such opinion.
(d) COMFORT LETTER. Prior to the Effective Date, and again on and as
of the First Closing Date, you shall have received a letter from BDO Seidman,
LLP, certified public accountants for the Company, substantially in the form
approved by you.
(e) BRING DOWN. At each of 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 such Closing
Date, and the Company shall have performed all of their obligations hereunder
and satisfied all the conditions on their parts to be satisfied at or prior to
such Closing Date; (ii) the Registration Statement and the Prospectus 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 of the Act and the Rules and Regulations, and
neither the Registration Statement nor the Prospectus shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order 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 in the business, property,
operations, condition (financial or otherwise), earnings, 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, and the Company shall not have incurred any material liabilities nor
entered into any material agreement 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 shall be pending or threatened against
the Company which would be required to be disclosed 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 adversely affect the business, property, operations, condition
(financial or otherwise), earnings or general affairs of the Company. In
addition, you shall have received, at the First Closing Date, a certificate
signed by the principal executive officer and by the principal financial officer
of the Company, dated as of the First Closing Date, evidencing compliance with
the provisions of this Section 4(e).
(f) TRANSFER AND WARRANT AGENT. On or before the Effective Date, the
Company shall have appointed American Stock Transfer & Trust Company (or other
agent mutually acceptable to the Company and you), as its transfer agent and
warrant agent to transfer all of the Shares and Warrants issued in the Offering,
as well as to transfer other shares of the Common Stock outstanding from time to
time.
-20-
(g) CERTAIN FURTHER MATTERS. On each Closing Date, Representative's
Counsel shall have been furnished with all such other documents and certificates
as they may reasonably request for the purpose of enabling them to render their
legal opinion to the Underwriter and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements, the
performance of any of the covenants, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company on or
prior to each of the Closing Dates in connection with the authorization,
issuance and sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to you and to Representative's Counsel.
(h) ADDITIONAL CONDITIONS. Upon exercise of the Over-Allotment
Option, the Underwriters' obligations to purchase and pay for the Option Units
shall 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, no stop order denying or suspending the effectiveness
thereof shall have been issued, and no proceedings for that or any similar
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 all
reasonable requests on the part of the Commission for additional information
shall have been complied with to the satisfaction of Representative's Counsel.
(ii) On the Option Closing Date there shall have been delivered
to you the signed opinion of Company Counsel, dated as of the Option Closing
Date, in form and substance satisfactory to Representative's Counsel, which
opinion shall be substantially the same in scope and substance as the opinion
furnished to you on the First Closing Date pursuant to Section 4(b), except that
such opinion, where appropriate, shall cover the Option Units rather than the
Firm Units. If the First Closing Date is the same as the Option Closing Date,
such opinions may be combined.
(iii) 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 you and Representative's Counsel
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.
(iv) On the Option Closing Date there shall have been delivered
to you a letter in form and substance satisfactory to you from BDO Seidman, LLP,
dated the Option Closing Date and addressed to you, confirming the information
in their letter referred to in Section 4(d) as of the date thereof and stating
that, without any additional investigation required, nothing has come to their
attention during the period from the ending date of their
-21-
review referred to in such letter to a date not more than five banking days
prior to the Option Closing Date which would require any change in such letter
if it were required to be dated the Option Closing Date.
(v) On the Option Closing Date there shall have been delivered
to you a certificate signed by the principal executive officer and by the
principal financial or accounting officer of the Company, dated the Option
Closing Date, in form and substance satisfactory to Representative's Counsel,
substantially the same in scope and substance as the certificate furnished to
you on the First Closing Date pursuant to Section 4(e).
(i) CANCELLATION. If any of the conditions provided by this
Section 4 shall not have been completely fulfilled as of the date indicated,
then this Agreement and all obligations of the Underwriters hereunder may be
cancelled at, or at any time prior to, either Closing Date by your notifying the
Company of such cancellation in writing or by telegram at or prior to the
applicable Closing Date. Any such cancellation shall be without liability of
the Underwriters to the Company, except as otherwise provided herein.
5. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell and deliver the Units and Class B Warrants are subject to the
following conditions:
(a) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
shall have become effective not later than 6:00 p.m. New York time, on the date
of this Agreement, or at such later time or on such later date as the Company
and you may agree in writing.
(b) NO STOP ORDER. On the applicable Closing Date, no stop order
denying or suspending the effectiveness of the Registration Statement shall have
been issued under the Act or any proceedings therefor initiated or threatened by
the Commission.
(c) PAYMENT FOR UNITS. On the applicable Closing Date, you shall
have made payment, for the several accounts of the Underwriters, of the
aggregate Purchase Price for the Units then being purchased, by certified or
bank cashier's checks payable in next day funds to the order of the Company.
If the conditions to the obligations of the Company provided by 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 Option Units upon exercise of
the Over-Allotment Option shall be affected.
6. INDEMNIFICATION.
-22-
(a) INDEMNIFICATION BY THE COMPANY. As used in this Agreement, the
term "Liabilities" shall mean any and all losses, claims, damages and
liabilities, and actions and proceedings in respect thereof (including without
limitation all reasonable costs of defense and investigation and all attorneys'
fees) including without limitation those asserted by any party to this Agreement
against any other party to this Agreement. The Company hereby indemnifies and
holds harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act, from and against all Liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such Liabilities arise
out of or are based upon: (i) any untrue statement or alleged untrue statement
of any material fact contained in (A) the Registration Statement or any
amendment thereto, or the Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto, or (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 Securities under the
securities laws thereof (any such application, document or information being
herein called a "Blue Sky Application"); or (ii) the omission or alleged
omission to state in the Registration Statement or any amendment thereto, or the
Prospectus or any Preliminary 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 shall not be liable in any such case to the extent,
but only to the extent, that any such Liabilities arise out of or are 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 through you by or on behalf of any Underwriter specifically for use
in the preparation of the Registration Statement or any such amendment thereto,
or the Prospectus or any such Preliminary Prospectus, or any such amendment or
supplement thereto, or any such Blue Sky Application. The foregoing indemnity
shall be in addition to any other liability which the Company may otherwise
have.
(b) INDEMNIFICATION BY UNDERWRITERS. Each Underwriter, severally
and not jointly, hereby indemnifies and holds 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, from
and against all Liabilities to which the Company or any such director,
nominee, officer or controlling person may become subject under the Act or
otherwise, insofar as such Liabilities arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, or the Prospectus or
any Preliminary Prospectus, or any amendment or supplement thereto, or (ii)
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 any such
Liabilities arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement or any amendment thereto, or the Prospectus or any Preli-
-23-
minary Prospectus, or any amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company through
you, by or on behalf of such Underwriter, specifically for use in the
preparation thereof. In no event shall any Underwriter be liable or
responsible for any amount in excess of the compensation received by such
Underwriter, in the form of underwriting discounts or otherwise, pursuant to
this Agreement or any other agreement contemplated hereby. The foregoing
indemnity shall be in addition to any other liability which any Underwriter
may otherwise have.
(c) PROCEDURE. Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action, such indemnified
party shall, 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 shall 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 shall 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 hereof, 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 shall 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,
however, that if the indemnified party is any Underwriter or a person who
controls any 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 such Underwriter or such controlling person and
the indemnifying party and, in your judgment, it is advisable for such
Underwriter or controlling person 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 such 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). No settlement of any action against an indemnified
party shall be made without the consent of the indemnified party, which shall
not be unreasonably withheld in light of all factors of importance to such
indemnified party.
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7. CONTRIBUTION. In order to provide for just and equitable contribution
under the Act in any case in which (a) any indemnified party makes claims for
indemnification pursuant to Section 6 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 (b) contribution under the Act may be required on the part of any
indemnified party, then such indemnified party and each indemnifying party (if
more than one) shall contribute to the aggregate Liabilities to which it may be
subject, in either such case (after contribution from others) in such
proportions that the Underwriters are responsible in the aggregate for that
portion of such 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 per Unit appearing thereon, and the Company shall be
responsible for the remaining portion; provided, however, that if such
allocation is not permitted by applicable law, then the relative fault of the
Company and the Underwriters in connection with the statements or omissions
which resulted in such Liabilities 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 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 Liabilities (even if the Underwriters were to be treated as one entity
for such purpose) 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. In addition, the contribution of any Underwriter shall not be
in excess of its proportionate share of the portion of such Liabilities for
which such Underwriter is 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 term "Company" shall include
any officer, director or person who controls the Company within the meaning of
section 15 of the Act. The Underwriters' obligations under this Section 7 to
contribute are several in proportion to their respective underwriting
obligations and not joint. If the full amount of the contribution specified in
this Section 7 is not permitted by law, then each indemnified party and each
person who controls an indemnified party shall be entitled to contribution from
each indemnifying party 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.
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8. COSTS AND EXPENSES.
(a) CERTAIN COSTS AND EXPENSES. Whether or not this Agreement
becomes effective or the sale of the Units to the Underwriters is consummated,
the Company shall pay all costs and expenses incident to the issuance, offering,
sale and delivery of the Units and the performance of its obligations under this
Agreement, including without limitation: (i) all fees and expenses of the
Company's legal counsel and accountants; (ii) all costs and expenses incident to
the preparation, printing, filing and distribution of the Registration Statement
(including the financial statements contained therein and all exhibits and
amendments thereto), each Preliminary Prospectus and the Prospectus, each as
amended or supplemented, this Agreement and the other agreements and documents
referred to herein, each in such quantities as you shall deem necessary;
(iii) all fees of NASD required in connection with the filing required by NASD
to be made by the Representative with respect to the Offering; (iv) all
expenses, including fees (but not in excess of the amount set forth in
Section 3(b)) and disbursements of Representative's Counsel in connection with
the qualification of the Securities under the "blue sky" laws which you shall
designate; (v) all costs and expenses of printing the respective certificates
representing the Shares and the Warrants; (vi) the expense of placing one or
more "tombstone" advertisements or promotional materials as directed by you
(provided, however, that the aggregate amount thereof shall not exceed $10,000);
(vii) all costs and expenses of the Company and its employees (but not of the
Representative or its employees) associated with due diligence meetings and
presentations; (viii) all costs and expenses associated with the preparation of
a seven to ten minute professional video presentation concerning the Company,
its products and its management for broker due diligence purposes; (ix) any and
all taxes (including without limitation any transfer, franchise, capital stock
or other tax imposed by any jurisdiction) on sales of the Units to the
Underwriters hereunder; and (x) all costs and expenses incident to the
furnishing of any amended Prospectus or any supplement to be attached to the
Prospectus as required by Sections 3(a) and 3(d), except as otherwise provided
by said Sections.
(b) REPRESENTATIVE'S EXPENSE ALLOWANCE. In addition to the expenses
described in Section 8(a), the Company shall on the First Closing Date pay to
you the balance of a non-accountable expense allowance (which shall include fees
of Representative's Counsel exclusive of the fees referred to in Section 3(b))
of $290,400 (that being an amount equal to 3 percent of the gross proceeds
received upon sale of the Firm Units), of which $20,000 has been paid to you
prior to the date hereof. In the event that the Over-Allotment Option is
exercised, then the Company shall on the Option Closing Date pay to you an
additional amount equal to 3 percent of the gross proceeds received upon sale of
any of the Option Units. In the event that the transactions contemplated hereby
fail to be consummated for any reason, then you shall return to the Company that
portion of the $20,000 heretofore paid by the Company to the extent that it has
not been utilized by you in connection with the Offering for accountable out-of-
pocket expenses; provided, however, that if such failure is due to a breach by
the Company of any covenant, representation or warranty contained herein or
because any
-26-
other condition to the Underwriters' obligations hereunder required to be
fulfilled by the Company is not fulfilled, then the Company shall be liable for
your accountable out-of-pocket expenses to the full extent thereof (with credit
given to the $20,000 paid).
(c) NO FINDERS. No person is entitled either directly or indirectly
to compensation from the Company, the Underwriters or any other person for
services as a finder in connection with the Offering, and the Company hereby
indemnify and hold harmless the Underwriters, and the Underwriters hereby
indemnify and hold harmless the Company from and against all Liabilities, joint
or several, to which the indemnified party may become subject insofar as such
Liabilities 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 Offering by reason of such person's or
entity's influence or prior contact with the indemnifying party.
9. SUBSTITUTION OF UNDERWRITERS.
(a) SUBSTITUTION. If any Underwriter defaults in its obligation to
purchase the numbers of Units which it has agreed to purchase under this
Agreement, you shall be obligated to purchase all of the Units not purchased by
the defaulting Underwriter unless such purchase shall cause you to be in
violation of the net capital requirements of Rule 15c3-1 of the Exchange Act, in
which case you, and any other Underwriters satisfactory to you who so agree,
shall have the right, but shall not be obligated, to purchase (in such
proportions as may be agreed upon among them) all of the Units. If you or the
other Underwriters satisfactory to you do not elect to purchase the Units which
the defaulting Underwriter or Underwriters agreed but failed to purchase, then
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter or the Company, except for (i) the payment by the Company
of expenses as provided by Section 8(a), (ii) the payment by the Company of
accountable expenses as provided by Section 8(b), and (iii) the indemnity and
contribution agreements of the Company and the Underwriters provided by
Sections 6 and 7.
(b) FURTHER MATTERS. Nothing contained herein shall relieve a
defaulting Underwriter of any liability it may have for damages caused by its
default. If the other Underwriters satisfactory to you are obligated or agree
to purchase the Units of a defaulting Underwriter, either you or the Company may
postpone the First Closing Date for up to seven banking days in order to effect
any changes that may be necessary in the Registration Statement, any Preliminary
Prospectus or the Prospectus or in any other document or agreement, and to file
promptly any amendments to the Registration Statement, or any amendments or
supplements to any Preliminary Prospectus or the Prospectus, which in your
opinion may thereby be made necessary.
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10. EFFECTIVE DATE. The Agreement shall become effective upon its
execution, except that you may, at your option, delay its effectiveness until
10:00 a.m., New York time, on the first full business day following the
Effective Date, or at such earlier time after the Effective Date 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 the provisions of Sections 6, 7, 8, 13, 14, 15 and 16 shall remain
in effect notwithstanding such termination.
11. TERMINATION.
(a) GROUNDS FOR TERMINATION. This Agreement, except for Sections 6,
7, 8, 13, 14, 15 and 16, may be terminated at any time prior to the First
Closing Date, and the Over-Allotment Option, if exercised, may be cancelled at
any time prior to the Option Closing Date, by you if in your sole 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 or the American Stock Exchange having
been suspended or limited; (iii) material governmental restrictions having been
imposed on trading in securities generally which are 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 or significant escalation of major
international hostilities or other national or international calamity having
occurred; (vi) the passage by the Congress of the United States or by any state
legislature, of any act or measure, or the adoption of any order, rule or
regulation by any governmental body or any authoritative accounting institute or
board, or any governmental executive, which is reasonably believed by you likely
to have a material adverse effect on the business, property, operations,
condition (financial or otherwise) or earnings of the Company; (vii) any
material adverse change in the financial or securities markets beyond normal
fluctuations in the United States having occurred since the date of this
Agreement; or (viii) any material adverse change having occurred since the
respective dates for which information is given in the Registration Statement
and Prospectus, in the business, property, operations, condition (financial or
otherwise), earnings or business prospects of the Company, whether or not
arising in the ordinary course of business.
(b) NOTIFICATION. If you elect to prevent this Agreement from
becoming effective or to terminate this Agreement as provided by this Section 11
or by Section 10, the Company shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
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12. REPRESENTATIVE'S WARRANT. On the First Closing Date, the Company
shall issue and sell to you, for a total purchase price of $5.00, and upon the
terms and conditions set forth in the form of Representative's Warrant filed as
an exhibit to the Registration Statement, a warrant entitling you to purchase
80,000 Units and 32,000 Class B Warrants (the "Representative's Warrant"). In
the event of conflict in the terms of this Agreement and the Representative's
Warrant, the terms and conditions of the Representative's Warrant shall control.
13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company and the Underwriters set forth in or made
pursuant to this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any other party, and shall survive
delivery of and payment for the Units and the termination of this Agreement. The
Company hereby indemnifies and holds harmless the Underwriters from and against
all Liabilities, joint or several, to which the Underwriters may become subject
insofar as such Liabilities arise out of or are based upon the breach or failure
of any representation, warranty or covenant of the Company contained in this
Agreement.
14. NOTICES. All communications hereunder shall be in writing and, except
as otherwise expressly provided herein, if sent to you, shall be mailed,
delivered or telegraphed and confirmed to you at H.J. Meyers & Co., Inc.,
1895 Mt. Hope Avenue, Rochester, New York 14620, With a copy sent to James M.
Jenkins, Esq., Harter, Secrest & Emery, 700 Midtown Tower, Rochester, New York
14604; or if sent to the Company, shall be mailed, delivered, or telegraphed and
confirmed to it at Orion Acquisition Corp. I, 150 52nd Street, New York, New
York 10022, with a copy sent to W. Raymond Felton, Esq., Greenbaum, Rowe, Smith,
Ravin & Davis, P.O. Box 5600, Woodbridge, New Jersey 07095-0988.
15. PARTIES IN INTEREST. This Agreement is made solely for the benefit of
the Underwriters, the Company and, to the extent expressed, any person
controlling the Company or an Underwriter, as the case may be, and the 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 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, from an Underwriter of the Units.
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16. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely within such State.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterpart copies, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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.
Yours very truly,
ORION ACQUISITION CORP. I
------------------------------------
Arthur H. Goldberg
Chairman of the Board and
Chief Executive Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
H.J. MEYERS & CO., INC.
AS REPRESENTATIVE OF THE
SEVERAL UNDERWRITERS NAMED
IN SCHEDULE I HERETO
By:
---------------------------------
Its
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SCHEDULE I
UNDERWRITING AGREEMENT DATED [EFFECTIVE DATE]
NUMBER OF CLASS B
NUMBER OF UNITS WARRANTS TO BE
UNDERWRITER TO BE PURCHASED PURCHASED
H.J. Meyers & Co., Inc. 800,000 320,000
TOTAL ---------- ----------
800,000 320,000
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