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EXHIBIT 1.1
UNDERWRITING AGREEMENT
______________________, 1996
Alexander, Wescott & Co., Inc.
63 Wall Street
New York, New York 10005
Dear Sirs:
All American Food Group, Inc., a New Jersey corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to you ("ALWC"), 600,000 shares of the common stock, no par
value (the "Common Stock") of the Company (the "Firm Shares"). In addition,
solely for the purpose of covering over-allotments, the Company proposes to
grant to ALWC the option to purchase up to 90,000 additional shares of Common
Stock (the "Additional Shares"). The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares". The Shares are more
fully described in the Registration Statement and Prospectus referred to below.
The Company confirms as follows its agreement with ALWC:
1. REGISTRATION STATEMENT AND PROSPECTUS: The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission"), in
accordance with the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder (the "Rules and
Regulations", and together with said Act, the "Act"), a registration statement
on Form SB-2 (File No. 333-4490) and may have filed one or more amendments
thereto, including in such registration statement and in certain amendments
thereto a related preliminary prospectus for the registration under the Act of
the Shares. In addition, subject to the provisions of Section 4(e) hereof, the
Company has filed or will promptly file a further amendment to such
registration statement prior to the effectiveness of such registration
statement, unless an amendment is not required pursuant to Rule 430A of the
Rules and Regulations. As used in this Agreement, the term "Registration
Statement" means such registration statement, including the prospectus,
financial statements and schedules thereto, exhibits and other documents filed
as part thereof, as amended when, and in the form in which, it is declared
effective by the Commission, and, in the event any post-effective amendment
thereto is filed thereafter and on or before the Closing Date (as hereinafter
defined), shall also mean (from and after the date such post-effective
amendment is effective under the Act) such registration statement as so
amended, provided that such Registration Statement, at the time it becomes
effective, may omit such information as is permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A of the
Rules and Regulations, which information ("Rule 430 Information") shall be
deemed to be included in such Registration Statement when a final prospectus is
filed with the Commission in accordance with Rules 430A and 424(b)(1) or (4) of
the Rules and Regulations; the term "Preliminary Prospectus" means each
prospectus included in the Registration Statement, or any amendments thereto,
before it becomes effective under the Act, the form of prospectus omitting Rule
430A Information included in the Registration Statement when it becomes
effective, if applicable (the "Rule 430A Prospectus"), and any prospectus filed
by the Company with the consent of ALWC pursuant to Rule 424(a) under the Act;
the term "Prospectus" means the final prospectus included as part of the
Registration Statement, except that (i) if any prospectus (including any
preliminary prospectus) which differs from such prospectus included in the
Registration Statement is provided to ALWC for use in connection with the
offering of the Shares (whether or not
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such differing prospectus is required to be filed by the Company pursuant to
Rule 424(b) under the Act), the term "Prospectus" as used herein shall mean
such differing prospectus from and after the date on which it shall have been
first used, and (ii) in the event any supplement to or amendment of such
prospectus is made after the date on which the Registration Statement is
declared effective and on or prior to the Closing Date, the term "Prospectus"
shall also mean (with respect to any supplement, from and after the date such
supplement is first used or, with respect to any amendment, the date such
amendment is effective under the Act) such prospectus as so supplemented or
amended; and the term "Effective Date" means (i) if the Company and ALWC have
determined not to proceed pursuant to Rule 430A under the Act, the date on
which the Registration Statement becomes effective, or (ii) if the Company and
ALWC have determined to proceed pursuant to Rule 430A under the Act, the date
of this Agreement.
2. AGREEMENTS TO SELL AND PURCHASE: Subject to the terms and
conditions herein set forth, the Company agrees to sell to ALWC and ALWC agrees
to purchase from the Company, the Firm Shares at a purchase price of $_____ per
Firm Share.
Subject to the terms and conditions herein set forth, the Company
further agrees to sell to ALWC, and ALWC shall have the right to purchase from
the Company, up to 90,000 Additional Shares at a purchase price of $_____ per
Additional Share. Additional Shares may be purchased solely for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares. Additional Shares may be purchased at any time and from time to time
on or before the thirtieth day following the date of this Agreement upon
written notice from ALWC to the Company specifying the number of Additional
Shares to be purchased.
ALWC will offer the Shares for sale at the initial public offering
price set forth on the cover of the Prospectus. After the initial public
offering, ALWC may from time to time increase or decrease the public offering
price, in ALWC's sole discretion, by reason of changes in general market
conditions or otherwise.
3. DELIVERY AND PAYMENT: Delivery of and payment for the Firm Shares
shall be made at 10:00 A.M., New York City time, on _ ______________, 1996
(such time and date are referred to herein as the "Closing Date"), at the
offices of ALWC at 63 Wall Street, New York, New York 10005.
Delivery of and payment for Additional Shares shall be made at said
offices of ALWC, or at such other place, and at such time(s) and date(s) (each
an "Optional Closing Date") as may be agreed upon in writing by ALWC and the
Company; provided, however, that in no event may an Optional Closing Date be
(i) earlier than the Closing Date, or (ii) earlier than three or later than ten
business days after the date on which the related notice to purchase Additional
Shares is given, or (iii) earlier than the fifth business day following the
Closing Date or the most recent Optional Closing Date.
The Closing Date, the Optional Closing Date and the time and place of
delivery of and payment for the Shares and Additional Shares may be varied by
agreement between ALWC and the Company. Delivery of certificates for the Shares
(in definitive form, registered in such names and in such denominations as ALWC
shall request at least two business days prior to the Closing Date by written
notice to the Company) shall be made to ALWC against payment of the purchase
price therefor by certified or official bank check or checks payable in New
York Clearing House funds to the order of the Company. For the purpose of
expediting the checking and packaging of certificates for the Shares, the
Company agrees to
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make such certificates available for inspection at the offices of ALWC at least
24 hours prior to the Closing Date and each Optional Closing Date, as the case
may be.
On the Closing Date, at the time of the delivery and payment for the
Firm Shares, the Company shall (i) pay to ALWC as a non-accountable expense
allowance a sum equal to $.________ per Share for each Firm Share purchased by
ALWC hereunder (or an aggregate of $__________________ in respect of the Firm
Shares), less the $35,000 heretofore paid to you in respect thereof, by
certified or official bank check or checks payable in New York Clearing House
funds payable to the order of, and in accordance with instructions from, ALWC,
and (ii) issue, sell and deliver to ALWC, for an aggregate purchase price of
$10, a warrant to purchase up to an aggregate of 60,000 Shares (the
"Underwriter's Warrant") in substantially in the form filed as an exhibit to
the Registration Statement. The shares of Common Stock issuable upon exercise
of the Underwriter's Warrant are hereinafter referred to collectively as the
"Underwriter's Warrant Shares". The Underwriter's Warrant will be exercisable
at an initial exercise price of $____ per Share at any time and from time to
time, in whole or in part, during a five-year period commencing one year
following the Effective Date. The Company has granted ALWC certain
registration rights with respect to the Underwriter's Warrant and the
securities issuable upon exercise thereof, as set forth in said Underwriter's
Warrant.
On each Optional Closing Date, at the time of the delivery and payment
for the Additional Shares, the Company shall pay to ALWC as a non-accountable
expense allowance, a sum equal to $.___ per Additional Share for each
Additional Share purchased by ALWC on such date by certified or official bank
check or checks payable in New York Clearing House funds payable to the order
of, and in accordance with instructions from, ALWC.
4. COVENANTS AND AGREEMENTS OF THE COMPANY: (A) The Company
covenants and agrees with ALWC as follows:
(a) The Company will notify ALWC promptly by telephone and (if
requested by ALWC) will confirm such advice in writing, (1)
when the Registration Statement has become effective and when
any post-effective amendment thereto becomes effective, (2) if
Rule 430A under the Act is used, or the Prospectus is
otherwise required to be filed with the Commission pursuant to
Rule 424(b) under the Act, when the Prospectus is filed with
the Commission pursuant to Rule 424(b) under the Act, (3) of
any request by the Commission for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information, (4) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement, preventing or suspending the use of the Preliminary
Prospectus, the Prospectus, the Registration Statement or any
amendment or supplement thereto, or refusing to permit the
effectiveness of the Registration Statement ("Stop Order"), or
the initiation of any proceedings for any of those purposes,
(5) of the happening of any event during the period mentioned
in paragraph (f) below which in the reasonable judgment of the
Company makes any statement made in the Registration Statement
or the Prospectus untrue or which requires the making of any
changes in the Registration Statement or the Prospectus in
order to make the statements therein not misleading, and (6)
of the receipt of any comments from the Commission or the Blue
Sky or securities authorities of any jurisdiction regarding
the Registration Statement, any post-effective amendment
thereto, the Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto. The Company will
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use its best efforts to prevent the issuance of any Stop Order
by the Commission or any notification from the Blue Sky or
securities authorities of any jurisdiction suspending the
qualification or registration of the Shares for sale in such
jurisdictions, and if at any time the Commission shall issue
any Stop Order, or if the Blue Sky or securities authorities
of any jurisdiction shall issue notification suspending the
qualification or registration of the Shares, the Company will
make every reasonable effort to obtain the withdrawal of such
Stop Order or notification at the earliest possible moment.
The Company will promptly advise ALWC of its receipt of any
notification with respect to the suspension of the
qualification or registration of the Shares for offer or sale
in any jurisdiction or the initiation or threatening of any
action or proceeding for such purpose.
(b) Prior to any public offering of the Shares by ALWC, the
Company will cooperate with ALWC and its counsel in
registering or qualifying the Shares for offer or sale under
the Blue Sky or securities laws, rules or regulations of such
jurisdictions as ALWC may reasonably request; provided that in
no event shall the Company be obligated to register or qualify
to do business as a foreign corporation in any jurisdiction
where it is not now so registered or qualified or to take any
action which would subject it to general service of process,
or to taxation as a foreign corporation doing business, in any
jurisdiction where it is not now so subject. The Company will
pay all fees and expenses relating to the registration or
qualification of the Shares under such Blue Sky or securities
laws of such jurisdictions as ALWC may designate (including
the legal fees, expenses and disbursements of counsel to ALWC
for the registration or qualification of the Shares in such
jurisdictions as ALWC shall determine). After registration,
qualification or exemption of the Shares for offer and sale in
such jurisdictions, and for as long as any offering pursuant
to this Agreement continues, the Company, at ALWC's reasonable
request, will file and make such statements or reports, and
pay the fees applicable thereto, at such times as are or may
be required by the laws, rules or regulations of such
jurisdictions in order to maintain and continue in full force
and effect the registration, qualification or exemption for
offer or sale of the Shares in such jurisdictions. After the
termination of the offering contemplated hereby, and as long
as any of the Shares are outstanding, the Company will use its
best efforts to file and make, and pay all fees applicable
thereto, such statements and reports and renewals of
registration as are or may be required by the laws, rules or
regulations of such jurisdictions to maintain and continue in
full force and effect the registration, qualification or
exemption for secondary market transactions in the Shares, in
the various jurisdictions in which the Shares were originally
registered, qualified or exempted for offer or sale.
(c) The Company will furnish to ALWC, without charge, four
manually-signed copies of the Registration Statement as
originally filed on Form SB-2 and of any amendments (including
post-effective amendments thereto), including financial
statements and schedules, if any, and all consents,
certificates and exhibits (including those incorporated
therein by reference to the extent not previously furnished to
ALWC), heretofore or hereafter made, signed by or on behalf of
its officers whose signatures are required thereon and a
majority of its board of directors.
(d) The Company will use its best efforts to cause the
Registration Statement to become effective under the Act.
Upon such effectiveness, if the Company and ALWC have
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determined not to proceed pursuant to Rule 430A under the Act,
the Company will timely file a Prospectus pursuant to, and in
conformity with, Rule 424(b), if required, and if the Company
and ALWC have determined to proceed pursuant to Rule 430A
under the Act, the Company will timely file a Prospectus
pursuant to, and in conformity with, Rules 424(b) and 430A
under the Act.
(e) The Company will give ALWC and its counsel advance notice of
its intention to file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus,
whether before or after the effective date of the Registration
Statement, and will not file any such amendment or supplement
unless the Company shall have first delivered copies of such
amendment or supplement to ALWC and its counsel and ALWC and
its counsel shall have given ALWC's consent to the filing of
such amendment or supplement, which consent shall not be
unreasonably withheld or delayed. Any such amendment or
supplement shall comply with the Act.
(f) From and after the Effective Date, the Company will deliver to
ALWC, without charge, as many copies of the Prospectus or any
amendment or supplement thereto as ALWC may reasonably
request. The Company consents to the use of the Prospectus or
any amendment or supplement thereto by ALWC and by all dealers
to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for such period of time
thereafter as the Prospectus is required by law to be
delivered in connection therewith. If during such period of
time any event shall occur which in the reasonable judgment of
the Company or counsel to ALWC should be set forth in the
Prospectus in order to make the statements therein, in light
of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the
Prospectus to comply with law, the Company will forthwith
prepare and duly file with the Commission an appropriate
supplement or amendment thereto, and will deliver to ALWC,
without charge, such number of copies thereof as ALWC may
reasonably request.
(g) The Company will promptly pay all expenses in connection with
(1) the preparation, printing, filing, distribution and
mailing (including, without limitation, express delivery
service) of the Registration Statement, each preliminary
prospectus, the Prospectus, and the preliminary and final
forms of Blue Sky memoranda (if any); (2) the issuance and
delivery of the Shares; (3) the fees and expenses of legal
counsel and independent accountants for the Company relating
to, among other things, opinions of counsel, audits, review of
unaudited financial statements and cold comfort review; (4)
the fees and expenses of a registrar or transfer agent for the
Common Stock; (5) the printing, filing, distribution and
mailing (including, without limitation, express delivery
service) of this Agreement and the Selected Dealer Agreement;
(6) furnishing such copies of the Registration Statement, the
Prospectus and any preliminary prospectus, and all amendments
and supplements thereto, as may reasonably be requested for
use in connection with the offering and sale of the Shares by
ALWC or by dealers to whom Shares may be sold; (7) any fees
and communication expenses with respect to filings required to
be made by ALWC with the National Association of Securities
Dealers, Inc. (the "NASD"); and (8) the listing of the Shares
on the Nasdaq SmallCap market.
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(h) On the Closing Date, the Company shall sell to ALWC, the
Underwriter's Warrant to purchase 60,000 Shares for an
aggregate purchase price of $10.
(i) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than by notice given by ALWC
pursuant to Section 8 hereof) or if for any reason the Company
shall be unable to perform its obligations hereunder, unless
such termination or inability to perform is due, in whole or
in material part, to the default, omission, action or failure
of ALWC, the Company will reimburse ALWC for all of its
out-of-pocket expenses (including the fees and expenses of
counsel to ALWC) reasonably incurred by it in connection
herewith through the date of such termination, less the
$35,000 advance paid in respect thereof. In the event such
advance exceeds ALWC's accountable out-of-pocket expenses, the
difference shall be refunded to the Company.
(j) For a period of ninety (90) days after the commencement of the
public offering of the Shares by ALWC, without the prior
written consent of ALWC, the Company will not offer, issue,
sell, contract to sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any securities
of the Company, except as provided for and as contemplated by
this Agreement or as specifically disclosed in the
Registration Statement respecting certain post-offering
issuances to Company employees.
(k) On or prior to the Closing Date, the Company shall obtain from
each of its officers and directors, and the holders of stock
options or other rights to acquire shares of Common Stock,
except the outstanding shares of convertible preferred stock,
his enforceable written agreement, in form and substance
reasonably satisfactory to counsel to ALWC, that for a period
of twenty-four (24) months after the Effective Date (or any
longer period required by any jurisdiction in which the offer
and sale of the Shares is to be registered or qualified), he
will not offer for sale, sell, contract to sell, assign,
pledge, transfer, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any securities
of the Company (including without limitation any shares of
Common Stock), owned by him as of the Closing Date or
subsequently acquired, whether upon exercise of warrants,
stock options or otherwise, without the prior written consent
of ALWC (the "Lock-up Letter").
(l) The Company has reserved and, so long as the Underwriter's
Warrant remains exercisable in accordance with its terms, so
long as the Underwriter's Warrant remains exercisable in
accordance with its terms, shall continue to reserve and keep
available the maximum number of shares of its authorized but
unissued Common Stock and other securities which are issuable
upon exercise of the Underwriter's Warrant.
(m) For a period of five years after the date of this Agreement,
the Company shall:
(1) retain DelSanto and DeFreitas or another firm of
independent public accountants, reasonably acceptable
to ALWC, as its auditors, and at its own expense,
shall cause such independent certified public
accountants to review (but not audit) the Company's
financial statements and those of its subsidiaries
for each of the first three fiscal quarters of each
fiscal year prior to the announcement of quarterly
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financial information, the filing of the Company's
10-Q quarterly reports and the mailing of quarterly
financial information to its stockholders;
(2) cause the Company's Board of Directors to meet not
less frequently than twice in each calendar year,
upon proper notice for each such meeting to be
distributed to directors prior to such meeting (or
upon proper waiver of such notice), together with
minutes of the preceding meeting, provided that if
not practicable, such minutes shall be distributed as
soon thereafter as is reasonably possible;
(3) distribute to its security holders, within 120 days
after the end of each fiscal year, or such longer
period as may be permitted by applicable law, an
annual report (containing certified financial
statements of the Company and its subsidiaries)
prepared in accordance with those required under Rule
14a-3(b) of Regulation 14A promulgated by the
Commission under the Securities Exchange Act of 1934,
as amended; and
(4) appoint a transfer agent for the Common Stock and
warrant agent for the Warrants, in each case
reasonably acceptable to ALWC.
(n) For a period of five years after the date of this Agreement,
the Company shall furnish ALWC, free of charge, with the
following:
(1) within 90 days after the end of each fiscal year,
financial statements for the Company and its
subsidiaries certified by the independent certified
public accountants referred to in Section 4(m)(1)
above, including a balance sheet, statement of
operations, statement of stockholders' equity and
statement of cash flows, in each case for the Company
and its subsidiaries, with supporting schedules,
prepared in accordance with generally accepted
accounting principles, as at the end of such fiscal
year and for the twelve months then ended,
accompanied by a copy of the certificate or report
thereon of such independent certified public
accountants;
(2) (x) for so long as the Company is a reporting company
under any of Sections 12(b), 12(g) or 15(d) of the
Securities Exchange Act, as amended, and the rules
and regulations of the Commission promulgated
thereunder (collectively, the "Exchange Act"),
promptly after filing with the Commission, copies of
all reports and proxy soliciting material which the
Company is required to file under the Exchange Act,
or (y) at such times as the Company is not a
reporting company under the aforesaid provisions of
the Exchange Act, as soon as practicable after the
end of each of the first three fiscal quarters of
each fiscal year, financial statements of the Company
and its subsidiaries, including a balance sheet,
statement of operations, statement of stockholders'
equity and statement of cash flows as at the end of,
or for each such fiscal quarter and the comparable
period of the preceding year, which statements need
not be audited;
(3) as soon as practicable after they have first been
distributed to stockholders of the Company, copies of
each annual and interim financial or other report or
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communication sent by the Company to its stockholders
(except to the extent duplicative of information
furnished pursuant to any other clause of this
Section 4(n));
(4) as soon as practicable following release or other
dissemination, copies of every press release and
every material news item and article in respect of
the Company or its affairs released or otherwise
disseminated by the Company;
(5) promptly upon request therefor, copies of the
Company's daily transfer sheets prepared by the
Company's transfer agent and warrant agent and a list
of stockholders; and
(6) such additional documents and information with
respect to the Company and its affairs and the
affairs of its subsidiaries, if any, as ALWC may from
time to time reasonably request.
(o) The Company agrees, for a period of five years after the date
of this Agreement, to use its best efforts to cause the
Company's Board of Directors to nominate a designee of ALWC
for election to the Company's Board of Directors, and to
solicit proxies for the election of such designee as a
director of the Company, so long as, during such time, ALWC
elects to select such a designee and such designee otherwise
meets the qualification for election as director of the
Company. At least 60 days prior to the earlier of any
election of the Board of Directors or the commencement of any
solicitation of proxies for such election, the Company shall
notify ALWC of the date of such election or of the
commencement of such solicitation. ALWC shall have the right
to furnish written notice to the Company of the name of the
person designated by ALWC to serve as director no more than 30
days following receipt of such notice. In the absence of such
notice from ALWC, the director then serving and previously
designated by ALWC, if any, shall be nominated and shall stand
for reelection. In the event ALWC shall choose not to
designate a representative for election to the Company's Board
of Directors, a representative designated by ALWC shall be
duly authorized to attend all meetings of the Company's Board
of Directors in a nonvoting observer capacity and, in such
event, the Company shall give such representative copies of
all notices, minutes, consents, and other materials that it
provides its directors; provided, however, that such
representative shall agree to hold in confidence and trust and
to act in a fiduciary manner with respect to all information
so provided. If the Company maintains a liability insurance
policy offering coverage for acts or omissions of its officers
and directors, it agrees to include ALWC's designee as an
insured under such policy.
(p) On or prior to the Effective Date, the Company will have
obtained the listing of the Shares on the Nasdaq SmallCap
Market, subject only to notice of issuance and the
registration of such securities under the Exchange Act. For a
period of five years from the date of this Agreement, the
Company agrees, at its sole cost and expense, to use its best
efforts to ensure that its securities continue to be listed on
the Nasdaq SmallCap Market (or such other market or exchange
to which ALWC reasonably consents), provided that the Company
otherwise complies with the prevailing requirements for such
listing.
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(q) For a period of two years after the date of this Agreement,
the Company will not seek to amend its certificate of
incorporation to authorize the issuance of any other class of
its capital stock, including, without limitation, any
preferred stock, without the prior written consent of ALWC,
which consent shall not be unreasonably withheld, conditioned
or delayed.
(r) Within thirty days after the date of this Agreement, the
Company shall apply for listing in Standard and Poor's
Corporation Reports, and use its best efforts to ensure the
Company's continued listing for a period of not less than five
years, provided that the Company's otherwise complies with
prevailing requirements for such listing.
(s) The Company agrees, at its own cost and expense, to deliver to
ALWC and its counsel, within a reasonable period after the
last Optional Closing Date, or the expiration of the period in
which ALWC may exercise the over-allotment option, two bound
volumes containing copies of all documents and correspondence
filed with, or received from, the Commission and the NASD
relating to the offering of the Shares and the closing
thereof, including related matters.
(t) The Company will make generally available to its security
holders and deliver to ALWC as soon as it is practicable to do
so (but in no event later than the 45th day after the end of
the twelve-month period beginning at end of fiscal quarter of
the Company during which the Registration Statement becomes
effective, or, if the Registration Statement becomes effective
during the Company's last fiscal quarter, the 90th day after
the end of such twelve-month period), an earnings statement of
the Company and its subsidiaries (which need not be audited)
covering a period of at least twelve consecutive months
commencing after the effective date of the Registration
Statement, which shall satisfy the requirements of Section
11(a) of the Act.
(u) The Company will, promptly upon ALWC's reasonable request,
prepare and file with the Commission any amendments or
supplements to the Registration Statement, any Preliminary
Prospectus or the Prospectus and take any other action, which
in the reasonable opinion of Lehman & Eilen, counsel to ALWC,
may be reasonably necessary or advisable in connection with
the distribution of the Shares, and will use its best efforts
cause the same to become effective as promptly as reasonably
possible.
(v) The Company will furnish to ALWC as early as practicable prior
to the Closing Date and any Optional Closing Date, as the case
may be, but no less than two full business days prior thereto,
a copy of the latest available unaudited interim financial
statements of the Company and its subsidiaries which have been
reviewed by the Company's independent certified public
accountants, as stated in their letters to be furnished
pursuant to Section 7(e) hereof; provided, however, that if
that latest available unaudited interim financial statements
theretofore have been included in the Registration Statement,
a Preliminary Prospectus, a Rule 430A Prospectus or a
Prospectus previously filed with the Commission, no additional
financial statements need be furnished pursuant hereto. Any
such financial statements will be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries
are generally consolidated in reports furnished to the
Company's stockholders.
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(w) The Company will apply the net proceeds from the issuance and
sale of the Shares for the purposes and in the manner set
forth under the caption "Use of Proceeds" in the Prospectus,
and will file on a timely basis such reports with the
Commission with respect to the sale of the Shares and the
application of the proceeds therefrom as may be required
pursuant to Rule 463 under the Act. The Company will operate
its business in such a manner and, pending application of the
net proceeds of the offering for the purposes and in the
manner set forth under the caption "Use of Proceeds" in the
Prospectus, will invest such net proceeds in certain types of
securities so as not to become an "investment company" as such
term is defined under the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(x) The Company has filed a registration statement on Form 8-A
covering the Shares pursuant to Section 12(b) of the Exchange
Act and will use its best efforts to cause said registration
statement to become effective on the Effective Date. The
Company will comply with all registration, filing and
reporting requirements of the Exchange Act, which may from
time to time be applicable to the Company. The Company shall
comply with the provisions of all undertakings contained in
the Registration Statement.
(y) Prior to the Closing Date or any Optional Closing Date, as the
case may be, the Company shall neither issue any press release
or other communication, directly or indirectly, nor hold any
press conference with respect to the offering of the Shares,
the Company, its subsidiaries or its business, results of
operations, condition (financial or otherwise), property,
assets, liabilities or prospects of the Company or any of its
subsidiaries, without the prior written consent of ALWC, which
consent shall not unreasonably be denied or delayed; provided,
however, that if counsel to the Company is of the opinion that
the issuance of a press release or other communication or a
press conference is required to comply with or avoid a
violation of applicable law, and having been so informed ALWC
declines to consent thereto, the Company shall be permitted to
issue such press release or other communication or hold such
press conference in the manner advised by its counsel.
(z) For a period of ninety (90) days after the date hereof, the
Company will not, directly or indirectly, take any action
designed, or which will constitute or which might reasonably
be expected to cause or result in, stabilization or
manipulation of the market price of the Shares, or the
facilitation of the sale or resale of the Shares.
(aa) Neither the Company nor any of its subsidiaries will grant any
person or entity registration rights with respect to any of
its securities, except such rights as are subordinate to the
registration rights contained in the Underwriter's Warrant
Agreement and are exercisable no earlier than six months after
the securities to be registered upon exercise of such
registration rights have been offered for sale pursuant to an
effective registration statement under the Act and registered
or qualified for sale under the Blue Sky or state securities
law, rules or regulations of the jurisdictions in which such
securities are to be offered for sale.
(bb) The Company hereby agrees to retain ALWC in an exclusive
investment banking advisory capacity for a period of twenty
four (24) months following the Closing Date at
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a fee of $3,000 per month, such fee to be due and payable upon
the first of the month immediately following the Closing Date
and the first of each month thereafter.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY: (A) The Company
represents and warrants to ALWC that:
(a) When the Registration Statement becomes effective, and at all
times subsequent thereto to and including the Closing Date and
each Optional Closing Date, and during such longer period as
the Prospectus may be required to be delivered in connection
with sales by ALWC or any dealer, and during such longer
period until any post-effective amendment thereto shall become
effective, the Registration Statement (and any post-effective
amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the
Commission any amendment or supplement to the Registration
Statement or the Prospectus) will contain all material
statements which are required to be stated therein in
accordance with the Act, will comply in all material respects
with the Act, and will not 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, and no event will have occurred which should
have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not then
been set forth in such an amendment or supplement; if a Rule
430A Prospectus is included in the Registration Statement at
the time it becomes effective, the Prospectus filed pursuant
to Rules 430A and 424(b) (1) or (4) will contain all Rule 430A
Information and all statements which are required to be stated
therein in accordance with the Act, will comply in all
material respects with the Act, and will not 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; and each
Preliminary Prospectus, as of the date filed with the
Commission, did not include any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading; except that no representation or warranty is made
in this Section 5(A)(a) with respect to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 6(b)
with respect to ALWC expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto.
(b) Neither the Commission nor the Blue Sky or securities
authorities of any jurisdiction has issued an order suspending
the effectiveness of the Registration Statement, preventing or
suspending the use of any Preliminary Prospectus, the
Prospectus, the Registration Statement, or any amendment or
supplement thereto, refusing to permit the effectiveness of
the Registration Statement, or suspending the registration or
qualification of the Shares, nor has the Commission or any of
such authorities instituted or, to the knowledge of the
Company, threatened to institute any proceedings with respect
to such an order.
(c) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of New Jersey, its
jurisdiction of incorporation. The Company and each of its
subsidiaries have full corporate power and authority and has
obtained all necessary consents, authorizations, approvals,
orders, licenses, certificates, declarations and permits
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of and from, and have made all required filings with, all
federal, state, local and other governmental authorities and
all courts and other tribunals, to own, lease, license and use
their properties and assets and to carry on their respective
businesses in the manner described in the Prospectus, except
where the failure to do so will not have a material adverse
effect on the business, properties or financial condition of
the Company and its subsidiaries, taken as a whole. All such
consents, authorizations, approvals, orders, licenses,
certificates, declarations, permits and filings are in full
force and effect and the Company and/or its subsidiaries, are
in all material respects complying therewith. The Company and
its subsidiaries are duly registered or qualified to do
business as foreign corporations and are in good standing in
each other jurisdiction in which their ownership, leasing,
licensing, or use of property and assets or the conduct of
their respective businesses require such registration or
qualification, except where the failure to be so qualified
does not have a material adverse effect on the business,
properties or financial condition of the Company and its
subsidiaries, taken as a whole.
(d) The authorized capital stock of the Company consists of
____________ shares of Common Stock, of which _____________
shares are outstanding and ____________ shares of Preferred
Stock, of which _____________ shares are outstanding. Each
outstanding share of capital stock of the Company and each
subsidiary of the Company, is duly authorized, validly issued,
fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and has not been issued
and is not owned or held in violation of any preemptive rights
of stockholders. There is no commitment, plan or arrangement
to issue, and no outstanding option, warrant or other right
calling for the issuance of, any share of capital stock of the
Company, or that of any of its subsidiaries or any security or
other instrument which by its terms is convertible into,
exercisable for, or exchangeable for capital stock of the
Company or that of any of its subsidiaries, except as
disclosed in the Prospectus. There is outstanding no security
or other instrument which by its terms is convertible into or
exchangeable for capital stock of the Company or that of any
of its subsidiaries, except as disclosed in the Prospectus.
(e) The financial statements of the Company and its subsidiaries,
together with the related notes and schedules, included in the
Registration Statement and the Prospectus fairly present the
financial position, the results of operations and the other
information purported to be shown therein at the respective
dates and for the respective periods to which they apply.
Such financial statements have been prepared in accordance
with generally accepted accounting principles and are prepared
in accordance with the books and records of the Company and
its subsidiaries. The accountants whose reports on the
audited financial statements are filed with the Commission as
a part of the Registration Statement are, and during the
periods covered by their report(s) included in the
Registration Statement and the Prospectus were, independent
certified public accountants with respect to the Company and
its subsidiaries within the meaning of the Act. No other
financial statements are required by Form SB-2 or otherwise to
be included in the Registration Statement or the Prospectus.
Except as disclosed in the Prospectus, there has at no time
been a material adverse change in the condition (financial or
otherwise), results of operations, business, property, assets,
liabilities or prospects of the Company or any of its
subsidiaries from the latest information set forth in the
Registration Statement or the Prospectus.
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(f) There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation
pending or threatened (or any basis therefor known to the
Company or any of its subsidiaries) with respect to or
affecting the Company or any of its subsidiaries, their
operation, businesses, property or assets, or related to the
offer for sale or the offer of franchises for the operation of
a Goldberg's Original Old World Bagels or Sammy's New York
Bagels facility, except as disclosed in the Prospectus or such
as individually or in the aggregate do not now have and are
not expected to have a material adverse effect upon the
operations, businesses, property, assets, condition (financial
or otherwise) or prospects of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries
are in violation of, or in default with respect to, any law,
rule, regulation, order, judgment, or decree, except as
disclosed in the Prospectus or such as individually or in the
aggregate do not now have and are not expected to have a
material adverse effect upon the operations, businesses,
property, assets, condition (financial or otherwise) or
prospects of the Company or any of its subsidiaries; nor is
the Company or any of its subsidiaries required to take any
action in order to avoid any such violation or default. At
all times since the Company and its subsidiaries began
offering for sale franchises for the operation of Goldberg's
Original Old World Bagels or Sammy's New York Bagels
facilities, the Company and its subsidiaries have been, and
currently are, in compliance with all material requirements of
all laws, rules and regulations applicable to the offer for
sale or sale of franchises in all jurisdictions in which the
Company and its subsidiaries have offered for sale or sold, or
are offering for sale or proposes to offer or to sell
franchises for the operation of a Goldberg's Original Old
World Bagels or Sammy's New York Bagels facility.
(g) The Company and its subsidiaries have good and marketable
title in fee simple absolute to all real properties and good
title to all other properties and assets which the Prospectus
indicates are owned by them, free and clear of all liens,
security interests, pledges, charges, mortgages and other
encumbrances (except as disclosed in the Prospectus or which
are not material in amount). The properties held under lease
by the Company and its subsidiaries are held by it under valid
and enforceable leases and the interests of the Company and
its subsidiaries in such leases are free and clear of all
liens, encumbrances and defects, except as disclosed in the
Prospectus or which are not material in amount, and the
Company and its subsidiaries are in full compliance with all
material terms and conditions thereunder and such leases are
in full force and effect. No real property owned, leased,
licensed or used by the Company or its subsidiaries is
situated in an area which is, or to the knowledge of the
Company or its subsidiaries will be, subject to zoning, use,
or building code restrictions which would prohibit (and no
state of facts relating to the actions or inaction of another
person or entity or his or its ownership, leasing, licensing,
or use of any real or personal property exists or will exist
which would prevent) the continued effective ownership,
leasing, licensing, or use of such real property in the
business of the Company or its subsidiaries as presently
conducted or as the Prospectus indicates any of them
contemplate conducting (except as disclosed in the
Prospectus).
(h) Neither the Company nor any of its subsidiaries nor any other
party is now or, to the knowledge of the Company, is expected
by the Company or any of its subsidiaries to be in violation
or breach of, or in default with respect to complying with,
any material
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provision of any indenture, mortgage, deed of trust,
debenture, note or other evidence of indebtedness, contract,
agreement, instrument, lease or license, or arrangement or
understanding which is material to the Company and its
subsidiaries, taken as a whole, and each such indenture,
mortgage, deed of trust, debenture, note or other evidence of
indebtedness, contract, agreement, instrument, lease or
license is in full force and is the legal, valid and binding
obligation of the Company and/or its subsidiaries, and to the
knowledge of the Company and its subsidiaries, of the other
contracting party and is enforceable as to them in accordance
with its terms. The Company and its subsidiaries enjoy
peaceful and undisturbed possession under all leases and
licenses under which they are operating. Neither the Company
nor any of its subsidiaries is a party to or bound by any
contract, agreement, instrument, lease, license, arrangement
or understanding, or subject to any charter or other
restriction, which has had or is expected in the future to
have a material adverse effect on the condition (financial or
otherwise), results of operations, businesses, property,
assets or liabilities of the Company and its subsidiaries,
taken as a whole. Neither the Company nor any of its
subsidiaries is in violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation or
By-laws.
(i) Goldberg's Original Old World Bagels and Sammy's New York
Bagels are trademarks of the Company. Except for said
trademarks, neither the Company nor any of its subsidiaries
owns or has any licensed rights to, in or under any patents,
patent applications, trademarks, trademark applications, trade
names, service marks, copyrights, technology, know-how or
other intangible properties or assets (all of the foregoing
being herein called "Intangibles") that are material to the
business of the Company and its subsidiaries, taken as a
whole. There is no right under any Intangibles of the Company
or its subsidiaries necessary to the business of the Company
and its subsidiaries as presently conducted or as proposed to
be conducted as indicated in the Prospectus, except as
disclosed in the Prospectus. Neither the Company nor any of
its subsidiaries has received notice of infringement with
respect to asserted Intangibles of others. To the knowledge
of the Company and its subsidiaries, there is no infringement
by others of Intangibles of the Company or its subsidiaries.
To the knowledge of the Company and its subsidiaries, there is
no Intangible of others which has had or may in the future
have a materially adverse effect on the condition (financial
or otherwise), results of operations, businesses, property,
assets, liabilities or prospects of the Company and its
subsidiaries, taken as a whole.
(j) Neither the Company, its subsidiaries, any director or officer
of the Company or its subsidiaries, or to the knowledge of the
Company and its subsidiaries, any agent, employee, or other
person authorized to act on behalf of the Company or its
subsidiaries has, directly or indirectly: used any corporate
funds of the Company or its subsidiaries for unlawful
contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful
payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or
campaigns from corporate funds of the Company or its
subsidiaries; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, as relates to the business
of the Company and its subsidiaries; or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful
payment in connection with the business of the Company or its
subsidiaries.
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(k) The material terms of any contract, agreement, instrument,
lease or license required to be described in the Registration
Statement or the Prospectus have been properly described
therein. Any contract, agreement, instrument, lease or
license required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to
or has been incorporated as an exhibit by reference into the
Registration Statement.
(l) The Company has all requisite corporate power and authority to
execute, deliver and perform under the terms and conditions of
this Agreement and the Underwriter's Warrant. All necessary
corporate proceedings of the Company have been duly taken to
authorize the execution, delivery and performance by the
Company of this Agreement and the Underwriter's Warrant. This
Agreement has been duly authorized, executed and delivered by
the Company, is a legal, valid, and binding agreement of the
Company, and is enforceable as to the Company in accordance
with its terms. The Underwriter's Warrant has been duly
authorized by the Company and, when executed and delivered by
the Company, assuming the due execution and delivery thereof
by the other parties thereto, will be a legal, valid and
binding agreement of the Company, enforceable against the
Company in accordance with its terms. No consent,
authorization, approval, order, license, certificate,
declaration or permit of or from, or filing with, any
governmental or regulatory authority, agent, board or other
body is required for the issue and sale of the Shares by the
Company and the execution, delivery or performance by the
Company of this Agreement or the Underwriter's Warrant (except
filings with and orders of the Commission pursuant to the Act
which have been or will be made or obtained prior to the
Closing Date, and such filings, consents or permits as are
required under Blue Sky or securities laws in connection with
the transactions contemplated by this Agreement). No consent
of any party to any contract, agreement, instrument, lease,
license, arrangement or understanding to which the Company or
any of its subsidiaries are a party, or to which any of their
properties or assets are subject, is required for the
execution, delivery or performance of this Agreement or the
Underwriter's Warrant; and the execution, delivery and
performance of this Agreement and the Underwriter's Warrant
will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default
under any such contract, agreement, instrument, lease,
license, arrangement or understanding, result in the creation
or imposition of, any lien, security interest, pledge, charge,
or other encumbrance upon any of the property or assets of the
Company or its subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan or credit agreement,
lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries
are subject or violate or result in a breach of any term of
the Certificate of Incorporation or By-laws of the Company or
any of its subsidiaries, or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment or
decree binding on the Company or any of its subsidiaries or to
which any of their operations, businesses, properties or
assets are subject.
(m) The Shares are duly authorized, and when issued, paid for and
delivered in accordance with this Agreement, will be validly
issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be
issued in violation
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of any preemptive rights of stockholders. ALWC will receive
good title to the Shares and the Underwriter's Warrant
purchased by it, upon payment of the purchase price therefor
in accordance with the provisions thereof and of this
Agreement, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements and
voting trusts (collectively, "Encumbrances").
(n) The Underwriter's Warrant Shares are duly authorized and
validly reserved for issuance and, when issued, paid for and
delivered upon exercise of the Underwriter's Warrant, in
accordance with the provisions thereof and of this Agreement
will be validly issued, fully paid and nonassessable and will
not be issued in violation of any preemptive rights of
stockholders; and the holders of the Underwriter's Warrant
Shares will receive good title to them, free and clear of all
Encumbrances.
(o) The Shares and the Underwriter's Warrant conform to all
statements relating thereto contained in the Registration
Statement and the Prospectus.
(p) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as
otherwise may be stated therein, (i) neither the Company, nor
its subsidiaries have entered into any transaction or incurred
any liability or obligation, contingent or otherwise, which is
material to the Company and its subsidiaries, taken as a
whole, except in the ordinary course of business, (ii) there
has not been any change in the outstanding capital stock of
the Company or its subsidiaries, or any issuance of options,
warrants or rights to purchase the capital stock of the
Company or its subsidiaries, or any material increase in the
long-term debt of the Company or its subsidiaries, or any
material adverse change in the business, condition (financial
or otherwise) or results of operations of the Company or its
subsidiaries, (iii) no loss or damage (whether or not insured)
to the properties of the Company or its subsidiaries has been
sustained which is material to the Company and its
subsidiaries, taken as a whole, (iv) neither the Company nor
its subsidiaries have paid or declared any dividend or other
distribution with respect to their stock, and (v) there has
not been any change, contingent or otherwise, in the direct or
indirect control of the Company or its subsidiaries nor, to
the best knowledge of the Company and its subsidiaries, do
there exist any circumstances which would likely result in
such a change.
(q) Neither the Company, its subsidiaries, nor any officers or
directors of the Company or its subsidiaries or Affiliates (as
defined in Rule 405 of the Rules and Regulations), has taken
or will take, directly or indirectly, prior to the termination
of the offering contemplated by this Agreement, any action
designed to stabilize or manipulate the price of any security
of the Company, or which has caused or resulted in, or which
might in the future reasonably be expected to cause or result
in, stabilization or manipulation of the price of any security
of the Company, to facilitate the sale or resale of any of the
Shares.
(r) Neither the Company nor its subsidiaries, have incurred,
directly or indirectly, any liability for a fee, commission or
other compensation on account of the employment of a broker or
finder in connection with the offering of the Shares
contemplated by this Agreement.
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(s) The Company is not conducting, and does not intend to conduct,
its business in a manner in which it would become an
"investment company" as defined in Section 3(a) of the
Investment Company Act.
(t) The Company has obtained, or prior to the Closing Date will
obtain a Lock-up Letter, from each of its officers and
directors and holders of stock options or other rights to
acquire shares of Common Stock as contemplated by Section 4(k)
hereof.
(u) Except as disclosed in the Prospectus, no person or entity has
the right to require registration of shares of Common Stock or
other securities of the Company because of the filing or
effectiveness of the Registration Statement who has not waived
such right.
(v) The Company and its subsidiaries have adequately insured their
properties against loss or damage by fire, maintain adequate
insurance against liability for negligence and maintain such
other insurance as is usually maintained by companies engaged
in the same or similar businesses, including product liability
insurance.
(w) The Company and its subsidiaries have filed all federal, state
and local tax returns required to be filed (or have obtained
extensions therefor) and have paid all taxes shown on such
returns and all assessments received by it to the extent that
payment has become due, except federal payroll taxes in the
approximate amount of $________________ . The Company and its
subsidiaries have made adequate accruals for all taxes which
may be owed by them but have not been paid.
(y) DelSanto & DeFreitas, who have certified certain financial
statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder.
(z) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability;
(iii) access to cash and cash equivalents is permitted only in
accordance with management's general or specific
authorization; and (iv) the recorded accountability for cash
and cash equivalents is compared with the existing cash and
cash equivalents at reasonable intervals and appropriate
action is taken with respect to any differences.
(aa) There are no business relationships or related party
transactions of the nature described in Item 404 of Regulation
S-B of the Rules and Regulations involving the Company, any of
its subsidiaries and any person referred to in Items 401 or
404, except as required to be described in the Prospectus and
as so described.
6. INDEMNIFICATION AND CONTRIBUTION:
(a) The Company agrees to indemnify and hold harmless ALWC, its
officers, directors, partners, employees, agents and counsel,
and each person, if any, who controls ALWC
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within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act, against any and all loss, liability,
claim, damage, and expense whatsoever (which shall include,
for all purposes of this Section 6, but not be limited to,
attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation) as
and when incurred arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a
material fact contained (1) in any Preliminary Prospectus, the
Rule 430A Prospectus, the Registration Statement, or the
Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto, or (2) in any application
or other document or communication (in this Section 6
collectively called an "application") executed by or on behalf
of the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order
to qualify the Shares under the Blue Sky or securities laws
thereof (or the rules and regulations promulgated thereunder)
or filed with the Commission or any securities exchange or
automated quotation system; or any omission or alleged
omission to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon and in conformity with written information
furnished to the Company as stated in Section 6(b) by ALWC for
inclusion in any Preliminary Prospectus, the Rule 430A
Prospectus, the Registration Statement, of the Prospectus, or
any amendment or supplement thereto, or in any application, as
the case may be, provided that the Company will not be liable
pursuant hereto with respect to any such statement or omission
made in any Preliminary Prospectus that is corrected in the
Prospectus (or and amendment or supplement thereto) if the
person asserting such loss, liability, damage, claim or
expense purchased shares from ALWC but was not sent or given a
copy of the Prospectus (as amended or supplemented) at or
prior to the written confirmation of the sale of the Shares to
such person in any case where such delivery is required by the
Act, unless such failure to deliver was the result of
noncompliance, by the Company, with Section 4(f) hereof, or
(ii) any breach of any representation, warranty, covenant or
agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including
liabilities arising under this Agreement.
If any action is brought against ALWC or any of its officers,
directors, partners, employees, agents or counsel, or any controlling persons
of ALWC (each, an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of
the institution of such action (but the failure so to notify shall not relieve
the Company from any liability it may have pursuant to this Section 6(a)) and
the Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the sole expense of such indemnified party
or parties, unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or the
Company shall not have promptly employed counsel reasonably satisfactory to
such indemnified party or parties to have charge of the defense of such action
or such indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are
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different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its prior written consent. The Company agrees
promptly to notify ALWC of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
sale of the Shares, any Preliminary Prospectus, the Rule 430A Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or any application.
(b) ALWC agrees to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall
have signed the Registration Statement, and each other person,
if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, and each
Selling Shareholder, to the same extent as the foregoing
indemnity from the Company to ALWC in Section 6(a), but only
with respect to statements or omissions, if any, made in any
Preliminary Prospectus, the Rule 430A Prospectus, the
Registration Statement, or the Prospectus (as from time to
time amended and supplemented), or any amendment or supplement
thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company
by ALWC expressly for inclusion in any Preliminary Prospectus,
the Rule 430A Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be. For all purposes of this
Agreement, the public offering price, the amounts of the
selling concession and re-allowance set forth in the
Prospectus and the information as to the stabilization set
forth on the inside front cover, under the heading "Risk
Factors - Inexperience of Underwriter" and in the ___________
paragraph under "Underwriting" constitute the only information
furnished in writing by or on behalf of ALWC expressly for
inclusion in any Preliminary Prospectus, the Rule 430A
Prospectus, the Registration Statement or the Prospectus (as
from time to time amended or supplemented), or any amendment
or supplement thereto, or in any application, as the case may
be. If any action shall be brought against the Company or any
other person so indemnified based upon any Preliminary
Prospectus, the Rule 430A Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement
thereto, or any application, and in respect of which indemnity
may be sought against ALWC pursuant to this Section 6(b), ALWC
shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the
provisions of Section 6(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant
to Section 6(a) or 6(b) (subject to the limitations thereof)
but it is found in a final judicial determination, not subject
to further appeal, that such indemnification may not be
enforced in such case, even though this Agreement expressly
provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the
Act, the Exchange Act, or otherwise, then the Company
(including for this purpose any contribution made by or on
behalf of any director of the Company, any officer of the
Company who signed the Registration Statement, and any
controlling person of the Company), as one entity, and ALWC
(including for this purpose any contribution made by or on
behalf of any directors, officers, partners, employees,
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agents or controlling persons of ALWC), as a second entity,
shall contribute to the losses, liabilities, claims, damages
and expenses whatsoever to which any of them may be subject,
so that ALWC is responsible for the proportion thereof equal
to the percentage which the aggregate underwriting discount
set forth on the cover page of the Prospectus represents of
the initial public offering price of the Shares set forth on
the cover page of the Prospectus and the Company is
responsible for the remaining portion, in proportion to the
net proceeds from the offering received by them; provided,
however, that if applicable law does not permit such
allocation, then other relevant equitable considerations such
as the relative fault of the Company and ALWC in the aggregate
in connection with the facts which resulted in such losses,
liabilities, claims, damages and expenses shall also be
considered. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether
such statement, alleged statement, omission, or alleged
omission relates to information supplied by the Company or by
ALWC, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission.
The Company and ALWC agree that it would be unjust and
inequitable if the respective obligations of the Company and
ALWC for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities,
claims, damages and expenses or by any other method of
allocation that does not reflect the equitable considerations
referred to in this Section 6(c). 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.
For purposes of this Section 6(c), each person, if any, who
controls ALWC within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each
director of the Company, shall have the same rights to
contribution as the Company, subject in each case to the
provisions of this Section 6(c). Anything in this Section
6(c) to the contrary notwithstanding, no party shall be liable
for contribution with respect to the settlement of any claim
or action effected without its written consent. This Section
6(c) is intended to supersede any right to contribution under
the Act, the Exchange Act, or otherwise.
7. CONDITIONS OF ALWC'S OBLIGATIONS: The obligations of ALWC
hereunder are subject to the continuing accuracy of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to ALWC, as of the date
hereof, as of the Closing Date, and each Optional Closing Date, as the case may
be, to the performance by the Company of its obligations hereunder, and to the
following additional conditions:
(a) Notification that the Registration Statement has become
effective shall be received by ALWC not later than 6:30 p.m.,
New York City time, on the date of this Agreement or at such
later date and time as shall be consented to in writing by
ALWC. If the Company has elected to rely upon Rule 430A of
the Rules and Regulations, the price of the Shares and any
price-related information previously omitted from the
effective Registration Statement pursuant to such Rule 430A
shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) of the Rules and Regulations within
the prescribed time period, and prior to the Closing Date the
Company shall have provided evidence reasonably satisfactory
to ALWC of such timely filing, or a post-effective
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amendment providing such information shall have been promptly
filed and declared effective in accordance with the
requirements of Rule 430A of the Rules and Regulations.
(b) The Commission shall not have issued a Stop Order and no Blue
Sky or securities authority of any jurisdiction shall have
issued an order suspending the registration or qualification
of the Securities, and no proceedings for such purpose shall
have been instituted or shall be pending, or to the knowledge
of the Company, be threatened or contemplated by the
Commission or the Blue Sky or securities authorities of any
such jurisdiction.
(c) ALWC shall have received an opinion, dated the Closing Date
and satisfactory in form and substance to counsel for ALWC
from Venable, Baetjer, Howard & Civiletti, LLP, counsel to the
Company and its subsidiaries, to the effect that:
(1) The Company is a corporation validly existing in good
standing under the laws of New Jersey, its
jurisdiction of incorporation, with full corporate
power and authority to own its property and conduct
its business in the manner described in the
Prospectus. Each subsidiary of the Company is
validly existing and in good standing in its
jurisdiction of incorporation, with full corporate
power and authority to own its property and conduct
its business. To the knowledge of such counsel,
after reasonable investigation, the Company and its
subsidiaries have obtained all necessary consents,
authorizations, approvals, orders, licenses,
certificates, declarations and permits of and from,
and have made all required filings with, all federal,
state, local and other governmental authorities and
all courts and other tribunals, to own, lease,
license and use their respective properties and
assets and to carry on their respective businesses in
the manner described in the Prospectus, except where
the failure to do so will not have a material adverse
effect on the business, properties or financial
condition of the Company and its subsidiaries,
considered as a single enterprise. The Company and
its subsidiaries are duly registered or qualified to
do business as foreign corporations and are in good
standing in the States of
_________________________________________ , which, to
the knowledge of such counsel, after reasonable
investigation, are the only jurisdictions in which
their ownership, leasing, licensing, or use of
property and assets or the conduct of their
respective businesses require such registration or
qualification.
(2) The authorized capital stock of the Company consists
of ___________ shares of Common Stock, of which
_______ shares are outstanding and ___________
shares of Preferred Stock, of which ___________
shares are outstanding. Each outstanding share of
such capital stock is duly authorized, validly
issued, fully paid, and nonassessable, with no
personal liability attaching to the ownership
thereof, has not been issued and is not owned or held
in violation of any preemptive right of stockholders.
Each outstanding share of the capital stock of the
Company's subsidiaries is duly authorized, validly
issued, fully paid, and nonassessable, with no
personal liability attaching to the ownership thereof
has not been issued and is not owned or held in
violation of any preemptive rights of stockholders.
To the knowledge of such counsel, after reasonable
investigation, there is no
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commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling
for the issuance of, any share of capital stock of
the Company, or its subsidiaries, or any security or
other instrument which by its terms is convertible
into, exercisable for, or exchangeable for capital
stock of the Company or its subsidiaries, except as
disclosed in the Prospectus. To the knowledge of
such counsel, after reasonable investigation, there
is outstanding no security or other instrument which
by its terms is convertible into or exchangeable for
capital stock of the Company or its subsidiaries,
except as disclosed in the Prospectus.
(3) To the knowledge of such counsel, after reasonable
investigation, there is no litigation, arbitration,
claim, governmental or other proceeding (formal or
informal), or investigation pending or threatened,
with respect to the Company, its subsidiaries, or any
of their operations, businesses, property or assets,
or related to the offer for sale or the sale of
franchises for the operation of a Goldberg's
Original Old World Bagels and Sammy's New York Bagels
facility, except as disclosed in the Prospectus or
such as individually or in the aggregate do not now
have and are not expected to have a material adverse
effect on the operations, business, property, assets
or condition (financial or otherwise) of the Company
and subsidiaries, considered as a single enterprise.
To the knowledge of such counsel, after reasonable
investigation, neither the Company nor its
subsidiaries are in violation of, or in default with
respect to, any law, rule, regulation, order,
judgment or decree, except as disclosed in the
Prospectus or such as individually or in the
aggregate do not now have and are not expected to
have a material adverse effect on the operations,
businesses, property, assets or condition (financial
or otherwise) of the Company and its subsidiaries,
considered as a single enterprise; nor is the
Company, or its subsidiaries, required to take any
action in order to avoid any such violation or
default.
(4) To the knowledge of such counsel, after reasonable
investigation, except as disclosed in the Prospectus,
neither the Company, its subsidiaries, nor any other
party is now in violation or breach of, or in default
with respect to complying with, any material
provision of any indenture, mortgage, deed of trust,
debenture, note or other evidence of indebtedness,
contract, agreement, instrument, lease or license, or
arrangement or understanding which is material to the
Company and its subsidiaries, considered as a single
enterprise and each such indenture, mortgage, deed of
trust, debenture, note or other evidence of
indebtedness, contract, agreement, instrument, lease
or license is in full and force and is the legal,
valid and binding obligation of the Company or its
subsidiaries.
(5) Neither the Company nor its subsidiaries are in
violation or breach of, or in default with respect
to, any term of their respective Certificates of
Incorporation or By-laws.
(6) The Company has all requisite corporate power and
authority to execute, deliver and perform this
Agreement and the Underwriter's Warrant. All
necessary corporate proceedings of the Company have
been taken to authorize the
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execution, delivery, and performance by the Company
of this Agreement and the Underwriter's Warrant.
This Agreement and the Underwriter's Warrant have
been duly authorized, executed and delivered by the
Company, constitute legal, valid, and binding
agreements of the Company, and (subject to applicable
bankruptcy, insolvency, reorganization and other laws
affecting the enforceability of creditors' rights
generally, and the application of equitable
principles affecting the enforceability of remedies
in the nature of specific enforcement, and except as
the enforceability of the indemnification and
contribution provisions of this Agreement and the
Underwriter's Warrant may be limited under applicable
securities laws) is enforceable as to the Company in
accordance with its terms. The Underwriter's Warrant
has been duly authorized by the Company and, when
executed, issued and delivered by the Company and
paid for by ALWC in accordance with the provisions of
this Agreement, will be a legal, valid and binding
obligation of the Company, enforceable against the
Company in accordance with the terms hereof and
thereof, except as may be limited by applicable
bankruptcy, insolvency, registration and other laws
affecting the enforceability of creditors' rights
generally and the application of equitable principles
affecting the availability of remedies in the nature
of specific enforcement.
(7) All legally required proceedings in connection with
the authorization, issue and sale of the Shares by
the Company in accordance with the provisions of this
Agreement have been taken, and, to the knowledge of
such counsel, after reasonable investigation, no
consent, authorization, approval, order, license,
certificate, declaration or permit of or from, or
filing with, any governmental or regulatory
authority, agency, board, bureau or other body or is
required for the execution, delivery or performance
by the Company of this Agreement and the
Underwriter's Warrant (except filings with and orders
of the Commission pursuant to the Act which have been
made or received and matters under Blue Sky or state
securities laws, rules or regulations, as to which
such counsel need not express an opinion).
(8) No consent of any party to any material contract,
agreement, instrument, lease or license, or
arrangement or understanding known to such counsel,
to which the Company or its subsidiaries are a party,
or to which any of the property or assets of the
Company or its subsidiaries are subject, is required
for the execution, delivery or performance of this
Agreement or the Underwriter's Warrant; and the
execution, delivery and performance of this Agreement
and the Underwriter's Warrant will not violate,
result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time
or both) entitle any party to terminate or call a
default under any such contract, agreement,
instrument, lease, license, arrangement or
understanding, result in the creation or imposition
of any lien, security interest, pledge, charge or
other encumbrance upon any of the property or assets
of the Company or its subsidiaries pursuant to the
terms of any indenture, mortgage, deed of trust, loan
or credit agreement, lease or other agreement or
instrument to which the Company or its subsidiaries
are a party or by which the Company or its
subsidiaries are bound or to which any of the
property or assets of the Company or its subsidiaries
are subject, known to such
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counsel, or violate or result in a breach of any term
of the Certificate of Incorporation or By-laws of the
Company or its subsidiaries, or violate, result in a
breach of, or conflict with any law, rule,
regulation, order, judgment or decree binding on the
Company or its subsidiaries or to which any of the
operations, businesses, property or assets of the
Company or its subsidiaries are subject.
(9) The Shares are duly authorized. Upon payment of the
purchase price therefor in accordance with the
provisions thereof and of this Agreement, the
Underwriter's Warrant will be duly delivered. The
Shares, when issued, paid for and delivered in
accordance with the provisions of this Agreement,
will be duly issued, fully paid and nonassessable,
without any personal liability attaching to the
ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders.
Upon payment of the purchase price therefor in
accordance with the provisions thereof and of this
Agreement, ALWC will receive good title to the Shares
and the Underwriter's Warrant purchased by it from
the Company, free and clear of all Liens.
(10) The Underwriter's Warrant Shares are duly authorized
and have been validly reserved for issuance, and when
issued, paid for and delivered upon exercise of the
Underwriter's Warrant in accordance with the
provisions of the Underwriter's Warrant will be duly
authorized, duly issued, fully paid, and
nonassessable, with no personal liability attaching
to the ownership thereof, and will not have been
issued in violation of any preemptive rights of
stockholders, and the holders of the Underwriter's
Warrant Shares will receive good title to them, free
and clear of all Encumbrances.
(11) The Shares and the Underwriter's Warrant Shares
conform to all statements relating thereto contained
in the Registration Statement and the Prospectus.
(12) To the knowledge of such counsel, any contract,
agreement, instrument, lease or license required to
be described in the Registration Statement or the
Prospectus has been properly described therein. To
the knowledge of such counsel, any contract,
agreement, instrument, lease, or license required to
be filed as an exhibit to the Registration Statement
has been filed with the Commission as an exhibit to
or has been incorporated as an exhibit by reference
into the Registration Statement.
(13) The Shares are duly authorized for listing on the
Nasdaq SmallCap market, subject to notice of
issuance.
(14) To the knowledge of such counsel, except as disclosed
in the Prospectus, no person or entity has the right
to require registration of shares of Common Stock or
other securities of the Company or its subsidiaries
because of the filing or effectiveness of the
Registration Statement who has not waived such right.
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(15) Neither the Company nor its subsidiaries are an
"investment company" by reason of its assets and
operations as defined in Section 3(a) of the
Investment Company Act.
(16) None of the shares of Common Stock issued by the
Company prior to the date hereof have been offered
and sold by the Company in violation of the Act or
applicable Blue Sky or state securities laws or rules
or regulations. All shares of Common Stock
outstanding as of the date hereof have been duly
authorized and validly issued, and are fully paid and
non-assessable, with no personal liability attaching
to the ownership thereof, and have not been issued in
violation of any preemptive rights of stockholders.
(17) The statements in the Prospectus under captions
"Business", "Risk Factors", "Use of Proceeds",
"Management" and "Description of Capital Stock" have
been reviewed by such counsel and insofar as such
statements refer to descriptions of agreements,
instruments, leases or franchises, summarize the
status of litigation or other proceedings, or the
provisions of orders, judgments or decrees, or
constitute statements of law, descriptions of
statutes, rules or regulations, or conclusions of
law, such statements fairly present the information
called for and are accurate and complete in all
material respects.
(18) At all times during which the Company or its
subsidiaries offered for sale franchises for the
operation of a Goldberg's Original Old World Bagels
and Sammy's New York Bagels facility, the Company and
its subsidiaries were in compliance with all material
requirements of all laws, rules and regulations
applicable to the offer for sale or sale of
franchises in all jurisdictions in which the Company
or its subsidiaries have offered for sale or sold,
franchises for the operation of a Goldberg's Original
Old World Bagels and Sammy's New York Bagels
facility;
(19) (i) except for liabilities and obligations incurred
in the ordinary course of business, to the knowledge
of such counsel, after due inquiry, there are no
claims (absolute, accrued, contingent or otherwise),
against the Company or its subsidiaries related to
the offer for sale or the sale of franchises for the
operation of Goldberg's Original Old World Bagels and
Sammy's New York Bagels, except as disclosed in the
Prospectus or such as individually or in the
aggregate do not have and are not expected to have a
material adverse effect upon the operations,
businesses, property, assets or condition (financial
or otherwise) of the Company or its subsidiaries;
(ii) no franchisee has a cause of action against the
Company or its subsidiaries under applicable federal
or state laws, rules and regulations governing the
offer and sale of franchises arising out of the offer
and sale by the Company or its subsidiaries of the
franchise(s) purchased by such franchisee; and (iii)
neither the Company nor its subsidiaries have been
charged with any violation of any state or other
applicable law or administrative regulation in
respect of the offer for sale or sale of such
franchises; and
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(20) The Registration Statement has become effective under
the Act, and to the knowledge of such counsel, no
Stop Order has been issued and no proceedings for
that purpose have been instituted or threatened.
(21) The Registration Statement, any Rule 430A Prospectus,
and the Prospectus, and any amendment or supplement
thereto (except for the financial statements and the
notes and schedules related thereto, and other
financial information and statistical data contained
therein or omitted therefrom, as to which such
counsel need express no opinion), comply as to form
in all material respects with the applicable
requirements of the Act.
(22) Such counsel has participated in conferences with
officers and other representatives of the Company,
its subsidiaries, representatives of the independent
certified public accountants for the Company and its
subsidiaries and representatives of ALWC at which the
contents of the Registration Statement and Prospectus
and related matters were discussed and, although such
counsel has not verified and is not passing upon and
does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained
in the Registration Statement and Prospectus, or any
amendment or supplement thereto, on the basis of the
foregoing, no facts have come to the attention of
such counsel which lead them to believe that either
the Registration Statement or any amendment thereto
at the time such Registration Statement or such
amendment became effective or the Prospectus as of
its date or any amendment or supplement thereto as of
its date contained an untrue statement of a material
fact or omitted to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading (it being understood that such
counsel need express no comment with respect to the
financial statements, and the notes and schedules
related thereto, and other financial information and
statistical data included in the Registration
Statement or Prospectus).
(23) To the knowledge of such counsel, since the effective
date of the Registration Statement, no event has
occurred which should have been set forth in an
amendment or supplement to the Registration Statement
or the Prospectus which has not been set forth in
such an amendment or supplement.
In rendering such opinion, counsel for the Company may rely (i) as to
matters involving the application of laws other than the laws of the United
States, and the laws of the State of New Jersey, to the extent counsel for the
Company deems proper and to the extent specified in such opinion, upon an
opinion or opinions of local counsel (in form and substance reasonably
satisfactory to counsel for ALWC) acceptable to counsel for ALWC, familiar with
the applicable laws, in which case the opinion of counsel for the Company shall
state that the opinion or opinions of such other counsel are satisfactory in
scope, form and substance to counsel for the Company and that reliance thereon
by counsel for the Company is reasonable; (ii) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the
Company; and (iii) to the extent they deem proper, upon written statements or
certificates of officers of departments of various jurisdictions having custody
of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to counsel for ALWC.
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(d) ALWC shall have received letters addressed to you and dated
the date hereof and the Closing Date from DelSanto &
DeFreitas, independent certified public accountants for the
Company and its subsidiaries, addressed to ALWC, and in form
and substance satisfactory to ALWC, to the effect that:
(1) Such accountants are independent public accountants
as required by the Act and the rules and regulations
of the Commission thereunder and no information need
be supplied with respect to them in answer to Item 13
of Form SB-2.
(2) In their opinion, the financial statements and
related notes and schedules of the Company and its
subsidiaries examined by them, at all dates and for
all periods referred to in their report therein, and
included in the Registration Statement and the
Prospectus on their authority as experts comply as to
form in all material respects with the applicable
accounting requirements of the Act and the Rules and
Regulations of the Commission promulgated thereunder.
(3) On the basis of limited procedures not constituting
an audit, including a reading of the latest available
unaudited interim financial statements of the Company
and its subsidiaries and the financial data and
accounting records of the Company and its
subsidiaries, inquiries of officials of the Company
and its subsidiaries and others responsible for
financial and accounting matters, a reading of the
minute books of the Company and its subsidiaries,
including without limitation the minutes (if any) of
meetings or consents in lieu of meetings of the
stockholders and of the Board of Directors (and any
executive committee, audit committee or other
committees thereof) of the Company and its
subsidiaries, and other specified procedures and
inquiries requested by you, if any, nothing has come
to their attention which causes them to believe that:
(i) the unaudited financial statements of the
Company and its subsidiaries contained in the
Registration Statement and the Prospectus (if
any) do not comply as to form in all material
respects with the applicable accounting
requirements of the Act and the Rules and
Regulations of the Commission promulgated
thereunder or were not prepared in conformity
with generally accepted accounting principles
applied on a basis consistent, in all
material respects, with those followed in the
preparation of the audited financial
statements therein;
(ii) except as disclosed in, or as contemplated by
the Registration Statement or the Prospectus,
during the period from the date of the last
audited balance sheet of the Company and its
subsidiaries included in the Registration
Statement and the Prospectus to a specified
date not more than five (5) days prior to the
date of such letter there were any decreases,
as compared with the corresponding period of
the preceding year, in net sales and
revenues, cost of sales, selling general and
administrative expenses, income (loss) from
operations, the total or per share amounts of
net income, or weighted number of shares
outstanding;
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(iii) except as disclosed in or contemplated by the
Registration Statement and the Prospectus,
during the period from the date of the last
audited balance sheet of the Company and its
subsidiaries included in the Registration
Statement and Prospectus to a specified date
not more than five (5) days prior to the date
of such letter, there has been any change in
the capital stock or other securities of the
Company and its subsidiaries or any payment
or declaration of any dividend or other
distribution in respect thereof or in
exchange therefor, or any increase in the
long-term debt of the Company and its
subsidiaries or any decrease in the net
current assets or net assets of the Company
and its subsidiaries as compared with the
amounts shown on the last audited balance
sheet of the Company and its subsidiaries,
included in the Registration Statement and
the Prospectus (other than in the ordinary
course of business); and
(iv) On the basis of their examinations referred
to in their report and consent included in
the Registration Statement and Prospectus and
the indicated procedures and inquiries
referred to above, nothing has come to their
attention which, in their judgment, would
cause them to believe or indicate that the
financial statements and related notes and
schedules of the Company and its subsidiaries
included in the Registration Statement and
Prospectus do not present fairly the
financial position and results of operations
of the Company and its subsidiaries, as at
the dates and for the periods indicated, in
conformity with generally accepted accounting
principles applied on a consistent basis, and
are not in all material respects a fair
presentation of the information purported to
be shown.
(4) In addition to their examination referred to in their
report included in the Registration Statement and the
Prospectus and the inquiries and limited procedures
referred to in clause (iii) of this Section 7(d),
they have performed other procedures, not
constituting an audit, with respect to the numerical
data, percentages, dollar amounts and other financial
information appearing in the Registration Statement
and the Prospectus, which are derived from the
general accounting records of the Company and its
subsidiaries, and have compared certain of such data
and information with the accounting records of the
Company and its subsidiaries and found them to be in
agreement.
(5) Such other matters as you may have reasonably
requested.
(e) The representations and warranties of the Company in this
Agreement shall be true and correct with the same effect as if
made on and as of the Closing Date and the Company shall have
complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the
Closing Date.
(f) The Registration Statement and the Prospectus and any
amendments or supplements thereto shall contain all statements
which are required to be stated therein in accordance with the
Act and the Rules and Regulations, and shall in all material
respects conform to the requirements thereof, and neither the
Registration Statement nor the Prospectus nor
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any amendment or supplement thereto shall contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(g) There shall have been, since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, no material adverse change in the business,
property, condition (financial or otherwise), results of
operations, capital stock, long-term or short-term debt or
general affairs of the Company and its subsidiaries, taken as
a whole, except changes which the Registration Statement and
the Prospectus indicate might occur after the effective date
of the Registration Statement, and neither the Company nor its
subsidiaries shall have incurred any material liabilities or
entered into any agreements not in the ordinary course of
business, except as disclosed in the Registration Statement
and the Prospectus.
(h) No action, suit or proceeding, at law or in equity, shall be
pending or threatened against the Company or its subsidiaries
which would be required to be set forth in the Registration
Statement, and no proceedings shall be pending or threatened
against the Company or its subsidiaries before or by any
commission, board or administrative agency in the United
States or elsewhere, wherein an unfavorable decision, ruling
or finding would have a materially adverse affect on the
business, property, condition (financial or otherwise),
results of operations or general affairs of the Company or its
subsidiaries.
(i) The Company shall have furnished to ALWC or caused to
be furnished to ALWC at the Closing Date,
certificates of the President and chief financial
officer of the Company in form and substance
reasonably satisfactory to ALWC, as to the accuracy
of the representations and warranties of the Company
herein at and as of the Closing Date and as to the
performance by the Company of all of its obligations
hereunder to be performed at or prior to the Closing
Date and the Company shall have furnished to ALWC a
certificate of the President and chief financial
officer of the Company reasonably satisfactory to
ALWC as to the matters set forth in Sections 7(a) and
(b) above.
(j) The NASD, upon review of the terms of the public offering of
the Shares, shall have indicated that it has no objections to
the underwriting arrangements pertaining to the sale of the
Shares and the participation by ALWC in the sale of the
Shares.
(l) Prior to or on the Closing Date, the Company shall have
executed and delivered the Underwriter's Warrant to ALWC.
(m) Prior to or on the Closing Date, the Company shall have
delivered to ALWC executed copies of the Lock-up Agreements.
(n) Subsequent to the date hereof, there shall not have occurred
any change, or any development involving a prospective change,
in or affecting particularly the business or financial affairs
of the Company which, in ALWC's reasonable opinion, would
materially and adversely affect the market for the Shares.
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(o) Subsequent to the date hereof, no executive officer of the
Company listed as such in the Prospectus shall have died,
become physically or mentally disabled, resigned or have been
removed or discharged.
(p) The Company shall furnish ALWC with such further certificates
and documents as ALWC or its counsel shall have reasonably
requested.
All opinions, certificates, letters and other documents required by
this Section 7 to be delivered to ALWC by the Company will be in compliance
with the provisions hereof only if they are satisfactory in form and substance
to ALWC and its counsel. The Company will furnish ALWC with such conformed
copies of such opinions, certificates, letters and other documents as ALWC
shall reasonably request.
(q) Upon the exercise, in whole or in part, by ALWC of the option
to purchase the Additional Shares, referred to in Section 2
hereof, the obligations of ALWC to purchase and pay for the
Additional Shares will be subject to the continuing accuracy
of the representations and warranties of the Company contained
herein and in each certificate and document contemplated under
this Agreement to be delivered to ALWC, as of the date hereof
and as of each Optional Closing Date, to the performance by
the Company of its obligations hereunder, and the following
additional conditions:
(1) The Registration Statement shall remain effective at
the Optional Closing Date, and no Stop Order shall
have been issued by the Commission and no proceedings
for that purpose shall have been instituted or shall
be pending, or to ALWC's knowledge or the knowledge
of the Company, shall be contemplated by the
Commission, and any reasonable request on the part of
the Commission for additional information shall have
been complied with to the satisfaction of Lehman &
Eilen, counsel to ALWC.
(2) ALWC shall have received an opinion, dated the
Optional Closing Date and satisfactory in form and
substance to counsel to ALWC, from Venable, Baetjer,
Howard & Civiletti, LLP, counsel to the Company,
which opinion shall be substantially the same in
scope and substance as the opinion furnished to ALWC
on the Closing Date pursuant to Section 7(c) hereof,
except that such opinion, where appropriate, shall
cover the Additional Shares.
(3) ALWC shall have received a letter in form and
substance satisfactory to ALWC from DelSanto &
DeFreitas, independent certified public accountants
for the Company, dated the Optional Closing Date and
addressed to ALWC confirming the information in their
letter referred to in Section 7(e) hereof and stating
that nothing has come to their attention during the
period from the ending date of their review referred
to in said letter to a date not more than five (5)
days prior to the Optional Closing Date, which would
require any change in said letter if it were required
to be dated the Optional Closing Date.
(4) ALWC shall have received a certificate of the
President and chief financial officer of the Company,
dated the Optional Closing Date, in form and
substance satisfactory to ALWC, substantially the
same in scope and substance as the
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certificate furnished to ALWC on the Closing Date
pursuant to Section 7(j) hereof.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations of the
Company to sell and deliver the Shares as and when specified by this Agreement
are subject to the condition that at the Closing Date or any Optional Closing
Date, as the case may be, the Registration Statement or any post-amendment
thereto shall have been declared effective and a no Stop Order suspending the
effectiveness thereof shall have been issued and remain in effect or
proceedings therefor initiated or threatened.
9. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective at 9:30 A.M., New York
City time, on the first full business day following the day on
which the Registration Statement becomes effective or at the
time of the initial public offering by ALWC of the Shares,
whichever is earlier. The time of the initial public offering
shall mean the time, after the Registration Statement becomes
effective, of the release by ALWC for publication of the first
newspaper advertisement which is subsequently published
relating to the Shares or the time, after the Registration
Statement becomes effective, when the Shares are first
released by ALWC for offering by ALWC or dealers by letter or
telegram, whichever shall first occur. ALWC or the Company
may prevent this Agreement from becoming effective without
liability of any party to any other party, except as noted
below in this Section 9, by giving the notice indicated in
Section 9(c) before the time this Agreement becomes effective.
(b) In addition to the right to terminate this Agreement pursuant
to Section 7 hereof by reason of the Company's failure,
refusal or inability to perform all obligations and satisfy
all conditions on its part to be performed or satisfied
hereunder prior to the Closing Date or Optional Closing Date,
as the case may be, ALWC shall have the right to terminate
this Agreement at any time prior to the Closing Date or any
Optional Closing Date, as the case may be, by giving notice to
the Company, if the Company shall have sustained a material
adverse loss or material adverse interference with its
business or properties from fire, flood, accident, hurricane,
earthquake, theft, sabotage, or other calamity or malicious
act, including the death or disability of Mr. Thorburn,
whether or not covered by insurance, or from any labor dispute
or any court or governmental action, order or decree, of such
a character as to have a material adverse effect with the
conduct of the business and operations of the Company; or if
there shall have been a general suspension of, or a general
limitation on prices for, trading in securities on the New
York Stock Exchange, the American Stock Exchange or in the
over-the-counter market; or if a banking moratorium has been
declared by a state or federal authority; or if there shall
have been an outbreak of major hostilities between the United
States and any foreign power, or any other insurrection, armed
conflict or national calamity, which in the judgment of a
majority-in-interest of the underwriters, makes it
impracticable or inadvisable to proceed with the offering,
sale or delivery of the Firm Shares or the Additional Shares,
as the case may be.
(c) If ALWC elects to prevent this Agreement from becoming
effective as provided in this Section 9, or to terminate this
Agreement pursuant to Section 7, or this Section 9, ALWC
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shall notify the Company promptly by telephone, telecopier,
telex, or telegram, confirmed by letter. If, as so provided
in this Section 9, the Company elects to prevent this
Agreement from becoming effective, the Company shall notify
ALWC promptly by telephone, telecopier, telex, or telegram,
confirmed by letter.
(d) Anything in this Agreement to the contrary notwithstanding
other than Section 9(e), if this Agreement shall not become
effective by reason of an election pursuant to this Section 9
or if this Agreement shall terminate or shall otherwise not be
carried out within the time specified herein by reason of any
failure on the part of the Company to perform any covenant or
agreement or satisfy any condition of this Agreement by it to
be performed or satisfied, the sole liability of the Company
to ALWC, in addition to the obligations the Company assumed
pursuant to Section 4(g), will be to reimburse ALWC for such
reasonable out-of-pocket expenses (including the fees and
disbursements of their counsel) as shall have been incurred by
them in connection with this Agreement or the proposed offer,
sale, and delivery of the Shares, and upon demand the Company
agrees to pay promptly the full amount thereof to ALWC.
(e) Notwithstanding any election hereunder or any termination of
this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 4(b), 4(g), 6, 10(b)
and 10(c) shall not be in any way affected by such election or
termination or failure to carry out the terms of this
Agreement or any part hereof.
10. MISCELLANEOUS.
(a) Notices required to be in writing shall be mailed or delivered
(i) to the Company at its office at 9 Law Drive, Fairfield,
New Jersey 07006, Attention: Andrew Thorburn, Chairman & CEO,
with copies to Venable, Baetjer, Howard & Civiletti, LLP, 1201
New York Avenue, N.W., Washington, D.C. 20005, Attention:
David J. Levenson, Esq. or (ii) to ALWC at its office at 63
Wall Street, New York, New York 10005, Attention: Rick Bach,
President, with copies to Lehman & Eilen, 50 Charles Lindbergh
Boulevard, Suite 505, Uniondale, New York 11553, Attention:
Hank Gracin, Esq., and shall be deemed given when received.
Any notice not required to be in writing, including but not
limited to notices under Section 7(a) or 8 hereof, may be made
by telex, telecopier or telephone and shall be deemed given at
the time the telex, or telecopied communication is received or
the telephone call is made, but if so made shall be
subsequently confirmed in writing.
(b) The representations, warranties, covenants and agreements of
the Company, and the indemnity and contribution agreements,
contained in Sections 4, 5 and 6 of this Agreement will remain
in full force and effect, regardless of any investigation made
by or on behalf of ALWC, the Company or any of its officers or
directors or any controlling persons of ALWC or the Company
and will survive acceptance of and payment for any of the
Shares and the termination of this Agreement.
(c) This Agreement has been and is made solely for the benefit of
ALWC and the Company and the controlling persons, directors
and officers referred to in Section 6 hereof and their
respective successors and assigns, and no other person shall
acquire or have any
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right under or by virtue of this Agreement. The term
"successors and assigns" as used in this Agreement shall not
include a purchaser, as such purchaser, of Shares from ALWC.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, applicable
to contracts made and to be performed entirely with such
State, without regard to conflict of laws provisions thereof.
Please confirm that the foregoing correctly sets forth the agreement among the
Company and ALWC.
Very truly yours,
ALL AMERICAN FOOD GROUP, INC.
By:
--------------------------------
Andrew Thorburn, Chairman & CEO
Confirmed, as of the date first above mentioned.
ALEXANDER, WESCOTT & CO., INC.
By:
---------------------------
Rick Bach, President
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