EXHIBIT 1
1,750,000 SHARES/1/
MATRIX CAPITAL CORPORATION
Common Stock
PURCHASE AGREEMENT
------------------
____________, 1996
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
PEACOCK, HISLOP, ▇▇▇▇▇▇ & GIVEN, INC.
As Representatives of the several
Underwriters named in Schedule I hereto
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Matrix Capital Corporation, a Colorado corporation (the "Company"),
proposes to sell to the several Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 1,750,000 shares (the "Firm Shares") of Common
Stock, $.0001 par value per share (the "Common Stock"), of the Company and to
sell to ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., individually and
not in their capacity as Representatives, five year warrants (the "Warrants") to
purchase 75,000 shares of the Common Stock (the "Warrant Shares"), which sale
shall be consummated in accordance with the terms and conditions of the Warrant
Agreements as filed as exhibits to the registration statement described below.
The Company has also granted to the several Underwriters an option to purchase
up to 262,500 additional shares of Common Stock, on the terms and for the
purposes set forth in Section 3 hereof (the "Option Shares"). The Firm Shares
and any Option Shares purchased pursuant to this Purchase Agreement are herein
collectively called the "Securities."
The Company hereby confirms its agreement with respect to the sale of the
Securities to the several Underwriters, for whom you are acting as
Representatives (the "Representatives").
1. Registration Statement and Prospectus. A registration statement on
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Form S-1 (File No. 333-10223) with respect to the Securities, including a
preliminary form of prospectus, has been
--------------------
/1/Plus an option to purchase up to 262,500 additional shares to cover over-
allotments.
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prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations ("Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder and has been filed with the Commission; one or more amendments to
such registration statement have also been so prepared and have been, or will
be, so filed; and, if the Company has elected to rely upon Rule 462(b) of the
Rules and Regulations to increase the size of the offering registered under the
Act, the Company will prepare and file with the Commission a registration
statement with respect to such increase pursuant to Rule 462(b). Copies of such
registration statement(s) and amendments and each related preliminary prospectus
have been delivered to you.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to the
registration statement and an amended prospectus (including a term sheet meeting
the requirements of Rule 434 of the Rules and Regulations). If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, it will prepare and
file a prospectus (or a term sheet meeting the requirements of Rule 434)
pursuant to Rule 424(b) that discloses the information previously omitted from
the prospectus in reliance upon Rule 430A. Such registration statement as
amended at the time it is or was declared effective by the Commission, and, in
the event of any amendment thereto after the effective date and prior to the
First Closing Date (as hereinafter defined), such registration statement as so
amended (but only from and after the effectiveness of such amendment), including
a registration statement (if any) filed pursuant to Rule 462(b) of the Rules and
Regulations increasing the size of the offering registered under the Act and
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rules 430A(b) and 434(d) of the Rules and
Regulations, is hereinafter called the "Registration Statement." The prospectus
included in the Registration Statement at the time it is or was declared
effective by the Commission is hereinafter called the "Prospectus," except that
if any prospectus (including any term sheet meeting the requirements of Rule 434
of the Rules and Regulations provided by the Company for use with a prospectus
subject to completion within the meaning of Rule 434 in order to meet the
requirements of Section 10(a) of tile Rules and Regulations) filed by the
Company with the Commission pursuant to Rule 424(b) (and Rule 434, if
applicable) of the Rules and Regulations or any other such prospectus provided
to the Underwriters by the Company for use in connection with the offering of
the Securities (whether or not required to be filed by the Company with the
Commission pursuant to Rule 424(b) of the Rules and Regulations) differs from
the prospectus on file at the time the Registration Statement is or was declared
effective by the Commission, the term "Prospectus" shall refer to such differing
prospectus (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations) from and after the time such prospectus is filed with the
Commission or transmitted to the Commission for filing pursuant to such Rule
424(b) (and Rule 434, if applicable) or from and after the time it is first
provided to the Underwriters by the Company for such use. The term "Preliminary
Prospectus" as used herein means any preliminary prospectus included in the
Registration Statement prior to the time it becomes or became effective under
the Act and any prospectus subject to completion as described in Rule 430A or
434 of the Rules and Regulations.
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2. Representations and Warranties of the Company.
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(a) The Company represents and warrants to, and agrees with, the
several Underwriters as follows:
(i) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission and each Preliminary Prospectus, at
the time of filing thereof, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; except that the foregoing shall not apply to
statements in or omissions from any Preliminary Prospectus in reliance upon, and
in conformity with, written information furnished to the Company by you, or by
any Underwriter through you, specifically for use in the preparation thereof.
(ii) As of the time the Registration Statement (or any post-
effective amendment thereto, including a registration statement (if any) filed
pursuant to Rule 462(b) of the Rules and Regulations increasing the size of the
offering registered under the Act) is or was declared effective by the
Commission, upon the filing or first delivery to the Underwriters of the
Prospectus (or any supplement to the Prospectus (including any term sheet
meeting the requirements of Rule 434 of the Rules and Regulations)) and at the
First Closing Date and Second Closing Date (as hereinafter defined), (A) the
Registration Statement and Prospectus (in each case, as so amended and/or
supplemented) conformed or will conform in all material respects to the
requirements of the Act and the Rules and Regulations, (B) the Registration
Statement (as so amended) did not or will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) the Prospectus
(as so supplemented) did not or will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are or were made, not misleading; except that the foregoing shall not
apply to statements in or omissions from any such document in reliance upon, and
in conformity with, written information furnished to the Company by you, or by
any Underwriter through you, specifically for use in the preparation thereof. If
the Registration Statement has been declared effective by the Commission, no
stop order suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission.
(iii) The financial statements of the Company, together with the
notes thereto, set forth in the Registration Statement and Prospectus comply in
all material respects with the requirements of the Act and fairly present in all
material respects the financial condition of the Company as of the dates
indicated and the results of operations and changes in cash flows for the
periods therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise stated therein); and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. No other financial statements or schedules are required to be included
in the Registration Statement or Prospectus. Ernst & Young LLP, which has
expressed its opinion with respect to the financial statements and schedules
filed as a part of the Registration Statement and included in the
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Registration Statement and Prospectus, are independent public accountants as
required by the Act and the Rules and Regulations.
(iv) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation. Each of the Company and its
subsidiaries has full corporate power and authority to own its properties and
conduct its business as currently being carried on and as described in the
Registration Statement and Prospectus, and is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would have a
material adverse effect upon its business, condition (financial or otherwise) or
properties, taken as a whole ("Material Adverse Effect"). Matrix Capital Bank,
FSB (the "Bank") is a member in good standing with the Federal Home Loan Bank of
Dallas and the Bank's deposit accounts are insured up to applicable limits by
the Federal Deposit Insurance Corporation ("FDIC").
(v) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries has incurred
any material liabilities or obligations, direct or contingent, or entered into
any material transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock, other than in the
ordinary course of business; and there has not been any change in the capital
stock (other than a change in the number of outstanding shares of Common Stock
due to the issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt, or any
issuance of options, warrants, convertible securities or other rights to
purchase the capital stock, of the Company or any of its subsidiaries, or any
material adverse change, or any development involving a prospective material
adverse change, in the general affairs, condition (financial or otherwise),
business, key personnel, property, net worth or results of operations of the
Company and its subsidiaries, taken as a whole.
(vi) Except as set forth in the Prospectus, there is not pending
or, to the knowledge of the Company, threatened or contemplated, any action,
suit or proceeding to which the Company or any of its subsidiaries is a party
before or by any court or governmental agency, authority or body, or any
arbitrator, which might result in any material adverse change in the condition
(financial or otherwise), business, properties, net worth or results of
operations of the Company and its subsidiaries, taken as a whole.
(vii) There are no contracts or documents of the Company or any of
its subsidiaries that are required to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations that have not been so
filed.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general
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principles of equity. The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated will not result in
a breach or violation of any of the terms and provisions of, or constitute a
default under, any statute, any agreement or instrument to which the Company is
a party or by which it is bound or to which any of its property is subject, the
Company's charter or by-laws, or any order, rule, regulation or decree of any
court or governmental agency or body having jurisdiction over the Company or any
of its properties; no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or for the consummation of the
transactions contemplated hereby, including the issuance or sale of the
Securities by the Company, except such as may be required under the Act or state
securities or blue sky laws; and the Company has full power and authority to
enter into this Agreement and to authorize, issue and sell the Securities as
contemplated by this Agreement.
(ix) All of the issued and outstanding shares of capital stock of
the Company, including the outstanding shares of Common Stock, are duly
authorized and validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and the holders thereof are not subject to personal
liability by reason of being such holders; the Securities which may be sold
hereunder by the Company have been duly authorized and, when issued, delivered
and paid for in accordance with the terms hereof, will have been validly issued
and will be fully paid and nonassessable, and the holders thereof will not be
subject to personal liability by reason of being such holders; and the capital
stock of the Company, including the Common Stock, conforms to the description
thereof in the Registration Statement and Prospectus. Except as otherwise stated
in the Registration Statement and Prospectus, there are no preemptive rights or
other rights to subscribe for or to purchase, or any restriction upon the voting
or transfer of, any shares of Common Stock pursuant to the Company's charter,
by-laws or any agreement or other instrument to which the Company is a party or
by which the Company is bound. Neither the filing of the Registration Statement
nor the offering or sale of the Securities as contemplated by this Agreement
gives rise to any rights for or relating to the registration of any shares of
Common Stock or other securities of the Company. All of the issued and
outstanding shares of capital stock of each of the Company's subsidiaries have
been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise described in the Registration Statement
and Prospectus and except for any directors' qualifying shares, the Company owns
of record and beneficially, free and clear of any security interests, claims,
liens, proxies, equities or other encumbrances, all of the issued and
outstanding shares of such stock. Except as described in the Registration
Statement and the Prospectus, there are no options, warrants, agreements,
contracts or other rights in existence to purchase or acquire from the Company
or any subsidiary of the Company any shares of the capital stock of the Company
or any subsidiary of the Company.
(x) The Company and each of its subsidiaries holds, and is
operating in compliance with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any governmental or
self-regulatory body required for the conduct of its business, except for any
non-compliance that would not have a Material Adverse Effect, and all such
franchises, grants, authorizations, licenses, permits, easements, consents,
certifications and orders are valid and in full force and effect; and the
Company and each of its subsidiaries is in compliance in all
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material respects with all applicable federal, state, local and foreign laws,
regulations, orders and decrees.
(xi) The Company and its subsidiaries have good and indefeasible
title to all property described in the Registration Statement and Prospectus as
being owned by them, in each case free and clear of all liens, claims, security
interests or other encumbrances, except such as are described in the
Registration Statement and the Prospectus; the property held under lease by the
Company and its subsidiaries is held by them under valid, subsisting and
enforceable leases with only such exceptions with respect to any particular
lease as do not interfere in any material respect with the conduct of the
business of the Company or its subsidiaries; the Company and each of its
subsidiaries owns or possesses all patents, patent applications, trademarks,
service marks, tradenames, trademark registrations, service ▇▇▇▇ registrations,
copyrights, licenses, inventions, trade secrets and rights necessary for the
conduct of the business of the Company and its subsidiaries as currently carried
on and as described in the Registration Statement and Prospectus; except as
stated in the Registration Statement and Prospectus, no name which the Company
or any of its subsidiaries uses and no other aspect of the business of the
Company or any of its subsidiaries will involve or give rise to any infringement
of, or license or similar fees for, any patents, patent applications,
trademarks, service marks, tradenames, trademark registrations, service ▇▇▇▇
registrations, copyrights, licenses, inventions, trade secrets or other similar
rights of others material to the business of the Company and neither the Company
nor any of its subsidiaries has received any notice alleging any such
infringement or fee.
(xii) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in breach of or otherwise in
default in the performance of any obligation, agreement or condition contained
in any bond, debenture, note, indenture, loan agreement or any other material
contract, lease or other instrument to which it is subject or by which any of
them may be bound, or to which any of the material property or assets of the
Company or any of its subsidiaries is subject, except for such violations or
defaults in performance that would not have a Material Adverse Effect.
(xiii) The Company and its subsidiaries have filed all federal,
state, local and foreign income and franchise tax returns required to be filed,
or have obtained extensions therefor, and are not in default in the payment of
any taxes which were payable pursuant to said returns or any assessments with
respect thereto, other than any which the Company or any of its subsidiaries is
contesting in good faith.
(xiv) The Company has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Securities other than any Preliminary Prospectus or the Prospectus or
other materials permitted by the Act to be distributed by the Company.
(xv) The Securities have been approved for quotation on the Nasdaq
National Market and, on the date the Registration Statement became or becomes
effective, the Company's Registration Statement on Form 8-A or other applicable
form under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
became or will become effective.
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(xvi) Other than the subsidiaries of the Company listed in Exhibit
21 to the Registration Statement, the Company owns no capital stock or other
equity or ownership or proprietary interest in any corporation, partnership,
association, trust or other entity.
(xvii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xviii) Other than as contemplated by this Agreement, the Company
has not incurred any liability for any finder's or broker's fee or agent's
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
(xix) Neither the Company nor any of its affiliates is presently
doing business with the government of Cuba or with any person or affiliate
located in Cuba.
(xx) The Company and its subsidiaries are in compliance with all
laws, rules and regulations relating to environmental protection, and neither
the Company nor any of its subsidiaries has any reason to believe that the
Company or any of its subsidiaries is subject to liability under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or any similar law, except for violations which, if asserted, would not
have a material adverse effect on the Company and its subsidiaries, taken as a
whole. There are no actions, suits, regulatory investigations or other
proceedings, pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries relating to environmental protection. No
disposal, release or discharge of hazardous or toxic substances, pollutants or
contaminants, including petroleum and gas products, as any of such terms may be
defined under federal, state or local law, has been caused by the Company or its
subsidiaries or, to the knowledge of the Company, has occurred on, in, at or
about any of the facilities or properties of the Company or its subsidiaries,
except such disposal, release or discharge which, if discovered, would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole.
(xxi) The Company has an outstanding capitalization as set forth
under "Capitalization" in the Prospectus as of the date indicated therein and
there has been no material change therein except as disclosed in or contemplated
by the Prospectus. The financial and numerical information and data in the
Prospectus under "Prospectus Summary," "Use of Proceeds," "Dilution," "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business," "Management," "Certain
Relationships and Related Transactions," "Principal Stockholders," "Shares
Available for Future Sale," "Regulation and Supervision" and "Description of
Capital Stock" are fairly presented in all material respects and
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prepared on a basis consistent in all material respects with the audited
financial statements of the Company.
(xxii) The minutes books of the Company and its subsidiaries are
current and contain a correct and complete record in all material respects of
all corporate action taken by the Board of Directors and the stockholders of the
Company and its subsidiaries, and all signatures contained therein are true
signatures of the persons whose signatures they purport to be.
(xxiii) The provisions of any qualified retirement plans sponsored
by the Company or its subsidiaries are in compliance with the Employee
Retirement Income Security Act of 1974 ("ERISA"), and the Company and its
subsidiaries are in material compliance with ERISA, including, without
limitation, ERISA's fiduciary and prohibited transaction rules, or the funding
requirements with respect to any such plan, except for any noncompliance that
would not have a Material Adverse Effect. The Company or its subsidiaries has
timely filed the reports required to be filed by ERISA in connection with the
maintenance of plans sponsored by the Company or its subsidiaries, and no fact,
including, without limitation, any "reportable event" as defined by ERISA and
the regulations thereunder, exists in connection with any plan sponsored by the
Company or its subsidiaries which would constitute grounds for the termination
of such plan by the Pension Benefit Guaranty Corporation or for the appointment
by the appropriate United States District Court of a trustee to administer any
such plan. With respect to multiemployer plans in which the Company or its
subsidiaries participates on behalf of its employees who are members of
collective bargaining units, neither the Company nor its subsidiaries has any
withdrawal liability. The provisions of any employee benefit welfare plan, as
defined in ERISA's Section 3(1), sponsored by the Company or its subsidiaries,
is in material compliance with ERISA's fiduciary and prohibited transaction
rules and reporting and disclosure requirements with respect to any such plan.
(xxiv) Neither the Company nor any of its subsidiaries is subject
to any directive or order (including any memorandum of understanding) specific
to the Company or any of its subsidiaries from the Office of Thrift Supervision
("OTS") or any governmental or quasi-governmental agency to make any material
change in the method of conducting its business as described in the Prospectus
or as otherwise presently contemplated; there are no directives or orders
specific to the Company or any of its subsidiaries from the OTS or any other
regulatory agency; and each of the Company and its subsidiaries is conducting
its business so as to comply in all material respects with all applicable
statutes and regulations.
(xxv) The Company and its subsidiaries are in compliance in all
material respects with the applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transaction Reporting Act of 1970, as
amended, and the rules and regulations thereunder, and the lending practices of
the Company and its subsidiaries are and have been, in all material respects, in
conformity with the Real Estate Settlement Procedures Act, as amended, and the
rules and regulations thereunder.
(xxvi) All of the loans represented as assets on the most recent
financial statements or selected financial information of the Company and its
subsidiaries included in the Prospectus meet or are exempt from all requirements
of federal, state or local law pertaining to
8
lending, including without limitation, truth in lending (including the
requirements of Regulation Z and 12 C.F.R. Part 226), consumer credit
protection, equal credit opportunity and all disclosure laws applicable to such
loans, except for violations which, if asserted, would not have a material
adverse effect on the Company and its subsidiaries.
(xxvii) To the knowledge of the Company, none of the Company or
its subsidiaries has made any payment of funds of the Company as a loan for the
purchase of the Common Stock or made any other payment of funds prohibited by
law, and no funds have been set aside to be used for any payment prohibited by
law.
(xxviii) The Warrants and Warrant Agreements have been duly and
validly authorized by the Company and upon delivery to you in accordance
herewith will be duly issued and legal, valid and binding obligations of the
Company.
(xxix) The Warrant Shares have been duly authorized and reserved
for issuance upon the exercise of the Warrants and when issued upon payment of
the exercise price therefor will be validly issued, fully paid and nonassessable
shares of the Common Stock.
(b) Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Underwriters shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of Securities.
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(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell 1,750,000 Firm Shares to the several
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto. The purchase price for each Firm Share
shall be $___ per share. The obligation of each Underwriter to the Company shall
be to purchase from the Company that number of Firm Shares (to be adjusted by
the Representatives to avoid fractional shares) which represents the same
proportion of the number of Firm Shares to be sold by the Company pursuant to
this Agreement as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto represents to the total number of Firm Shares
to be purchased by all Underwriters pursuant to this Agreement. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraph (c) of this Section 3 and in Section 6 hereof, the
agreement of each Underwriter is to purchase only the respective number of Firm
Shares specified in Schedule I.
The Firm Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by certified or official bank check or other next day funds payable to
the order of the Company, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇
Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other location as
may be mutually acceptable, at 9:00 a.m. Central time on the third (or if the
Securities are priced, as contemplated by Rule 15c6-I(c) under the Exchange Act,
after 4:30 p.m. Eastern time, the fourth)
9
full business day following the date hereof, or at such other time and date as
you and the Company determine pursuant to Rule 15c6- I(a) under the Exchange
Act, such time and date of delivery being herein referred to as the "First
Closing Date." If the Representatives so elect, delivery of the Firm Shares may
be made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Representatives. Certificates representing the
Firm Shares, in definitive form and in such denominations and registered in such
names as you may request upon at least two business days' prior notice to the
Company, will be made available for checking and packaging not later than 10:30
a.m., Central time, on the business day next preceding the First Closing Date at
the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable.
(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company, with respect to the 262,500 Option Shares, hereby grants to the several
Underwriters an option to purchase all or any portion of the Option Shares at
the same purchase price as the Firm Shares, for use solely in covering any over-
allotments made by the Underwriters in the sale and distribution of the Firm
Shares. The option granted hereunder may be exercised at any time (but not more
than once) within 30 days after the effective date of this Agreement upon notice
(confirmed in writing) by the Representatives to the Company setting forth the
aggregate number of Option Shares as to which the several Underwriters are
exercising the option, the names and denominations in which the certificates for
the Option Shares are to be registered and the date and time, as determined by
you, when the Option Shares are to be delivered, such time and date being herein
referred to as the "Second Closing" and "Second Closing Date", respectively;
provided, however, that the Second Closing Date shall not be earlier than the
First Closing Date nor earlier than the second business day after the date on
which the option shall have been exercised. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage of the total number
of Option Shares to be purchased by the several Underwriters as the number of
Firm Shares to be purchased by such Underwriter is of the total number of Firm
Shares to be purchased by the several Underwriters, as adjusted by the
Representatives in such manner as the Representatives deem advisable to avoid
fractional shares. No Option Shares shall be sold and delivered unless the Firm
Shares previously have been, or simultaneously are, sold and delivered.
The Option Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by certified or official bank check or other next day funds payable to
the order of the Company, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇
Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other location as
may be mutually acceptable at 9:00 a.m., Central time, on the Second Closing
Date. If the Representatives so elect, delivery of the Option Shares may be made
by credit through full fast transfer to the accounts at The Depository Trust
Company designated by the Representatives. Certificates representing the Option
Shares in definitive form and in such denominations and registered in such names
as you have set forth in your notice of option exercise, will be made available
for checking and packaging not later than 10:30 a.m., Central time, on the
business day next preceding the Second Closing Date at the office of ▇▇▇▇▇
▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable.
10
(c) It is understood that you, individually and not as Representatives
of the several Underwriters, may (but shall not be obligated to) make payment to
the Company on behalf of any Underwriter for the Securities to be purchased by
such Underwriter. Any such payment by you shall not relieve any such Underwriter
of any of its obligations hereunder. Nothing herein contained shall constitute
any of the Underwriters an unincorporated association or partner with the
Company.
4. Covenants. The Company covenants and agrees with the several
---------
Underwriters as follows:
(a) If the Registration Statement has not already been declared
effective by the Commission, the Company will use its best efforts to cause the
Registration Statement and any post-effective amendments thereto to become
effective as promptly as possible; the Company will notify you promptly of the
time when the Registration Statement or any post-effective amendment to the
Registration Statement has become effective or any supplement to the Prospectus
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations) has been filed and of any request by the Commission for any
amendment or supplement to the Registration Statement or Prospectus or
additional information; if the Company has elected to rely on Rule 430A of the
Rules and Regulations, the Company will prepare and file a Prospectus (or term
sheet within the meaning of Rule 434 of the Rules and Regulations) containing
the information omitted therefrom pursuant to Rule 430A of the Rules and
Regulations with the Commission within the time period required by, and
otherwise in accordance with the provisions of, Rules 424(b), 430A and 434, if
applicable, of the Rules and Regulations; if the Company has elected to rely
upon Rule 462(b) of the Rules and Regulations to increase the size of the
offering registered under the Act, the Company will prepare and file a
registration statement with respect to such increase with the Commission within
the time period required by, and otherwise in accordance with the provisions of,
Rule 462(b); the Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration Statement
or Prospectus (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) that, in your opinion, may be necessary or advisable in
connection with the distribution of the Securities by the Underwriters; and the
Company will not file any amendment or supplement to the Registration Statement
or Prospectus (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) to which you shall reasonably object by notice to the
Company after having been furnished a copy a reasonable time prior to the
filing.
(b) The Company will advise you, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, of the suspension of
the qualification of the Securities for offering or sale in any jurisdiction, or
of the initiation or threatening of any proceeding for any such purpose; and the
Company will promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such a stop order should be issued.
(c) Within the time during which a prospectus (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations) relating to the
Securities is required to be delivered under the Act, the Company will comply as
far as it is able with all requirements imposed upon it by the Act, as now and
hereafter amended, and by the Rules and Regulations, as from time
11
to time in force, so far as necessary to permit the continuance of sales of or
dealings in the Securities as contemplated by the provisions hereof and the
Prospectus. If during such period any event occurs as a result of which the
Prospectus would include an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend the Registration Statement or supplement the Prospectus to
comply with the Act, the Company will promptly notify you and will amend the
Registration Statement or supplement the Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify the Securities for
sale under the securities laws of such jurisdictions as you reasonably designate
and to continue such qualifications in effect so long as required for the
distribution of the Securities, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process in any state.
(e) The Company will furnish to the Underwriters copies of the
Registration Statement (one of which will be signed and will include all
exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and
supplements (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) to such documents, in each case as soon as available and
in such quantities as you may from time to time reasonably request.
(f) During a period of five years commencing with the date hereof, the
Company will furnish to the Representatives, and to each Underwriter who may so
request in writing, copies of all periodic and special reports furnished to the
stockholders of the Company and all information, documents and reports filed
with the Commission, the National Association of Securities Dealers, Inc., the
Nasdaq National Market or any securities exchange.
(g) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than 15 months after the end
of the Company's current fiscal quarter, an earnings statement (which need not
be audited) covering a 12-month period beginning after the effective date of the
Registration Statement that shall satisfy the provisions of Section 11(a) of the
Act and Rule 158 of the Rules and Regulations.
(h) The Company, whether or not the transactions contemplated hereunder
are consummated or this Agreement is prevented from becoming effective under the
provisions of Section 9(a) hereof or is terminated, will pay or cause to be paid
(A) all expenses (including transfer taxes allocated to the respective
transferees) incurred in connection with the delivery to the Underwriters of the
Securities, (B) all expenses and fees (including, without limitation, fees and
expenses of the Company's accountants and counsel but, except as otherwise
provided below, not including fees of the Underwriters' counsel) in connection
with the preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein and all
amendments, schedules, and exhibits thereto), the Securities, each Preliminary
Prospectus, the Prospectus, and any amendment thereof or supplement thereto, and
the printing, delivery, and shipping of this Agreement and other underwriting
documents, including Blue Sky Memoranda, (C) all filing fees and fees and
disbursements of the Underwriters' counsel incurred in connection with the
qualification of the
12
Securities for offering and sale by the Underwriters or by dealers under the
securities or blue sky laws of the states and other jurisdictions which you
shall designate in accordance with Section 4(d) hereof, (D) the fees and
expenses of any transfer agent or registrar, (E) the filing fees incident to any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Securities, (F) listing fees, if any, and (G) all other
costs and expenses incident to the performance of its obligations hereunder that
are not otherwise specifically provided for herein. If the sale of the
Securities provided for herein is not consummated by reason of action by the
Company pursuant to Section 9(a) hereof which prevents this Agreement from
becoming effective, or by reason of any failure, refusal or inability on the
part of the Company to perform any agreement on its part to be performed, or
because any other condition of the Underwriters' obligations hereunder required
to be fulfilled by the Company is not fulfilled, the Company will reimburse the
several Underwriters for all out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Company shall not
in any event be liable to any of the Underwriters for loss of anticipated
profits from the transactions covered by this Agreement.
(i) The Company will apply the net proceeds from the sale of the
Securities to be sold by it hereunder for the purposes set forth in the
Prospectus and will file such reports with the Commission with respect to the
sale of the Securities and the application of the proceeds therefrom as may be
required in accordance with Rule 463 of the Rules and Regulations.
(j) For a period of 180 days after the commencement of the public
offering of the Securities by the Underwriters, the Company will not, without
your prior written consent, offer for sale, sell, contract to sell, grant any
option for the sale of or otherwise issue or dispose of any Common Stock or any
securities convertible into or exchangeable for, or any options or rights to
purchase or acquire, Common Stock, except to the Underwriters pursuant to this
Agreement, to ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., pursuant to
the Warrants or pursuant to the Company's stock option and stock purchase plans
as described in the Registration Statement.
(k) The Company either has caused to be delivered to you or will cause
to be delivered to you prior to the effective date of the Registration Statement
a letter from each of the Company's directors and officers stating that such
person agrees that he or she will not, without your prior written consent, offer
for sale, sell, contract to sell or otherwise dispose of any shares of Common
Stock or rights to purchase Common Stock, except to the Underwriters pursuant to
this Agreement, for a period of 180 days after commencement of the public
offering of the Securities by the Underwriters.
(l) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities, and has not effected any sales of Common Stock which are
required to be disclosed in response to Item 701 of Regulation S-K under the Act
which have not been so disclosed in the Registration Statement.
13
(m) The Company will inform the Florida Department of Banking and
Finance at any time prior to the consummation of the distribution of the
Securities by the Underwriters if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba. Such
information will be provided within 90 days after the commencement thereof or
after a change occurs with respect to previously reported information.
5. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
several Underwriters hereunder are subject to the material accuracy, as of the
date hereof and at each of the First Closing Date and the Second Closing Date
(as if made at such Closing Date), of and material compliance with all
representations, warranties and agreements of the Company contained herein, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., Central time, on the date of this Agreement, or such later time
and date as you, as Representatives of the several Underwriters, shall approve
and all filings required by Rules 424, 430A and 434 of the Rules and Regulations
shall have been timely made; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereof shall have been issued; no
proceedings for the issuance of such an order shall have been initiated or
threatened; and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with.
(b) No Underwriter shall have advised the Company that the Registration
Statement or the Prospectus, or any amendment thereof or supplement thereto
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations), contains an untrue statement of fact which is material, or omits
to state a fact which is material and is required to be stated therein or
necessary to make the statements therein not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries shall have
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transactions, or declared or paid any dividends or
made any distribution of any kind with respect to its capital stock; and there
shall not have been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the issuance of shares upon
the exercise of outstanding options or warrants), or any material change in the
short-term or long-term debt of the Company, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock
of the Company or any of its subsidiaries, or any material adverse change or any
development involving a prospective material adverse change (whether or not
arising in the ordinary course of business), in the general affairs, condition
(financial or otherwise), business, key personnel, property, net worth or
results of operations of the Company and its subsidiaries, taken as a whole,
that, in your judgment, makes it impractical or inadvisable to offer or deliver
the Securities on the terms and in the manner contemplated in the Prospectus.
(d) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, the opinion of Jenkens & ▇▇▇▇▇▇▇▇▇,
a Professional
14
Corporation, counsel for the Company, dated such Closing Date and addressed to
you, to the effect that:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. Each of the
Company and its subsidiaries has the requisite corporate power and
authority to own its properties and conduct its business as currently
being carried on and as described in the Registration Statement and
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which it
owns or leases real property or in which the conduct of its business
makes such qualification necessary and in which the failure to so
qualify would have a material adverse effect upon the business,
condition (financial or otherwise) or properties of the Company and its
subsidiaries, taken as a whole.
(ii) The capital stock of the Company conforms as to legal matters
in all material respects to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock." All of the
issued and outstanding shares of the capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable, and the holders thereof are not subject to personal
liability by reason of being such holders. The Securities to be issued
and sold by the Company hereunder and pursuant to the Warrants have
been duly authorized and, when issued, delivered and paid for in
accordance with the terms of this Agreement or the Warrant Agreements,
as the case may be, will have been validly issued and will be fully
paid and nonassessable, and the holders thereof will not be subject to
personal liability by reason of being such holders. Except as otherwise
stated in the Registration Statement and Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, or
any restriction upon the voting or transfer of, any shares of Common
Stock pursuant to the Company's charter, by-laws or any agreement or
other instrument certified by the Company to such counsel to which the
Company is a party or by which the Company is bound. To such counsel's
knowledge, neither the filing of the Registration Statement nor the
offering or sale of the Securities as contemplated by this Agreement
gives rise to any rights for or relating to the registration of any
shares of Common Stock or other securities of the Company. The Company
has reserved a sufficient number of shares of Common Stock for issuance
upon exercise of the Warrants.
(iii) All of the issued and outstanding shares of capital stock of
each of the Company's subsidiaries have been duly and validly
authorized and issued and are fully paid and nonassessable, and, to
such counsel's knowledge, except as otherwise described in the
Registration Statement and Prospectus and except for directors'
qualifying shares, the Company owns of record and beneficially, free
and clear of any security interests, claims, liens, proxies, equities
or other encumbrances, all of the issued and outstanding shares of such
stock. To such counsel's knowledge, except as described in the
Registration Statement and Prospectus, there are no options,
15
warrants, agreements, contracts or other rights in existence to
purchase or acquire from the Company or any subsidiary any shares of
the capital stock of the Company or any subsidiary of the Company.
(iv) The Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
such counsel, threatened by the Commission.
(v) The descriptions in the Registration Statement and Prospectus
of statutes, legal and governmental proceedings, contracts and other
documents are accurate summaries and fairly present in all material
respects the information required to be shown; and such counsel does
not know of any statutes or legal or governmental proceedings required
to be described in the Prospectus that are not described as required,
or of any contracts or documents of a character required to be
described in the Registration Statement or Prospectus or included as
exhibits to the Registration Statement that are not described or
included as required.
(vi) The Company has the requisite corporate power and authority
to enter into this Agreement and the Warrant Agreements, and this
Agreement and the Warrant Agreements have been duly authorized,
executed and delivered by the Company and constitute valid, legal and
binding obligations of the Company enforceable against the Company in
accordance with their terms (except as rights to indemnity hereunder
may be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally and subject
to general principles of equity); the execution, delivery and
performance of this Agreement and the Warrant Agreements and the
consummation of the transactions herein and therein contemplated will
not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, rule or regulation, or
any agreement or instrument certified by the Company to such counsel to
which the Company is a party or by which it is bound or to which any of
its property is subject, or the Company's charter or by-laws, or any
order or decree certified by the Company to such counsel of any court
or governmental agency or body having jurisdiction over the Company or
any of its properties; and no consent, approval, authorization or order
of, or filing with, any court or governmental agency or body is
required for the execution, delivery and performance of this Agreement
and the Warrant Agreements or for the consummation of the transactions
contemplated hereby and thereby, including the issuance or sale of the
Securities by the Company, except such as may be required under the Act
or state securities laws.
(vii) The Registration Statement and the Prospectus, and any
amendment thereof or supplement thereto (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations), comply as
to form in all material respects with the requirements of the Act and
the Rules and Regulations.
16
(viii) The certificates for the Securities to be delivered
hereunder are in due and proper form and, when duly countersigned by
the Company's transfer agent and delivered to you or upon your order
against payment of the agreed consideration therefor in accordance with
the provisions of this Agreement, the Securities represented thereby
will be duly authorized and validly issued, fully paid and
nonassessable and, upon consummation of the purchase by the
Underwriters, and assuming they have no knowledge of any liens, claims
or marketable title thereto, free and clear of any claim, security
interest, community property right, or other encumbrance or restriction
on transfer (except for restrictions under the Act and under the blue
sky laws of various jurisdictions).
(ix) The information in the Prospectus under "Dividend Policy,"
"Regulation and Supervision" and "Description of Capital Stock," to the
extent that it constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been reviewed by
such counsel and are correct summaries in all material respects.
In rendering such opinion such counsel may rely (i) as to matters of law
other than Texas and federal law, upon the opinion or opinions of local counsel
provided that the extent of such reliance is specified in such opinion and that
such counsel shall state that such opinion or opinions of local counsel are
satisfactory to them and that they believe they and you are justified in relying
thereon and (ii) as to matters of fact, to the extent such counsel deems
reasonable upon certificates of officers of the Company and its subsidiaries
provided that the extent of such reliance is specified in such opinion. With
respect to the opinion set forth in subparagraph (vi) above as to
enforceability, such counsel may assume that the laws of the State of Minnesota
are identical to the laws of the State of Texas. In addition, such counsel shall
state that such counsel has participated in conferences with officers and
representatives of the Company, representatives of the independent public
accountants for the Company and the Underwriters at which the contents of the
Registration Statement and the Prospectus and related matters were discussed,
and, although such counsel is not passing upon and does not assume any
responsibility for and has not verified the accuracy, completeness or fairness
of the statements contained in the Registration Statement and the Prospectus,
and has not made any independent check or verification thereof, on the basis of
the foregoing (relying as to materiality to a large extent upon facts provided
by officers and other representatives of the Company), no facts have come to the
attention of such counsel that lead such counsel to believe that either the
Registration Statement at the time it became effective (including the
information deemed to be part of the Registration Statement at the time of
effectivess pursuant to Rule 430A(b), if applicable, and including any
Registration Statement filed pursuant to Rule 462(b)), or any amendment thereof
made prior to the Closing Date as of the date of such amendment, contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date (or any amendment thereof or
supplement thereto made prior to the Closing Date as of the date of such
amendment or supplement) and as of the Closing Date contained or contains an
untrue statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (it
being
17
understood that such counsel need express no belief or opinion with respect to
the exhibits and the financial statements and other financial and statistical
data included therein).
(e) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, such opinion or opinions from
Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, counsel for the several Underwriters, dated such
Closing Date and addressed to you, with respect to the formation of the Company,
the validity of the Securities, the Registration Statement, the Prospectus and
other related matters as you reasonably may request, and such counsel shall have
received such papers and information as they request to enable them to pass upon
such matters.
(f) On each Closing Date you, as Representatives of the several
Underwriters, shall have received a letter of Ernst & Young LLP dated such
Closing Date and addressed to you, confirming that they are independent public
accountants within the meaning of the Act and are in compliance with the
applicable requirements relating to the qualifications of accountants under Rule
2-01 of Regulation S-X of the Commission, and stating, as of the date of such
letter (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date of such
letter), the conclusions and findings of said firm with respect to the financial
information and other matters covered by its letter delivered to you
concurrently with the execution of this Agreement, and the effect of the letter
so to be delivered on such Closing Date shall be to confirm the conclusions and
findings set forth in such prior letter. Such letter shall be to the effect set
forth in Schedule II to this Agreement and shall contain such additional
information as shall be requested by the Representatives as of a date within
five days of such letter.
(g) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, a certificate, dated such Closing
Date and addressed to you, signed by the chief executive officer and by the
chief financial officer of the Company, to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects as if made at
and as of such Closing Date, and the Company has complied in all
material respects with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such
Closing Date;
(ii) No stop order or other order suspending the effectiveness of
the Registration Statement or any amendment thereof or the
qualification of the Securities for offering or sale has been issued,
and no proceeding for that purpose has been instituted or, to their
knowledge, is threatened by the Commission or any state or regulatory
body; and
(iii) The signers of said certificate have carefully examined the
Registration Statement and the Prospectus, and any amendments thereof
or supplements thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), and (A) such documents contain
all statements and information required
18
to be included therein, the Registration Statement, or any amendment
thereof, does 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 the
Prospectus, as amended or supplemented, does not include any untrue
statement of material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading, (B) since the effective date of
the Registration Statement, there has occurred no event required to be
set forth in an amended or supplemented prospectus which has not been
so set forth, (C) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its subsidiaries has incurred any
material liabilities or obligations, direct or contingent, or entered
into any material transactions, not in the ordinary course of business,
or declared or paid any dividends or made any distribution of any kind
with respect to its capital stock, and except as disclosed in the
Prospectus, there has not been any change in the capital stock (other
than a change in the number of outstanding shares of Common Stock due
to the issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt,
or any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock, of the Company, or any of its
subsidiaries, or any material adverse change or any development
involving a prospective material adverse change (whether or not arising
in the ordinary course of business), in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects,
net worth or results of operations of the Company and its subsidiaries,
taken as a whole, and (D) except as stated in the Registration
Statement and the Prospectus, there is not pending, or, to the
knowledge of the Company, threatened, any action, suit or proceeding to
which the Company or any of its subsidiaries is a party before or by
any court or governmental agency, authority or body, or any arbitrator,
which would result in any material adverse change in the condition
(financial or otherwise), business or results of operations of the
Company and its subsidiaries, taken as a whole.
(h) At or prior to the First Closing Date, the Warrant Agreements shall
have been entered into by the Company, ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc., and the Warrants shall have been issued and sold to ▇▇▇▇▇ ▇▇▇▇▇▇▇
Inc. and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., pursuant thereto. The Company shall
have furnished to you and counsel for the Underwriters such additional
documents, certificates and evidence as you or they may have reasonably
requested.
(i) The Securities shall have been approved for quotation on the Nasdaq
National Market.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and counsel for the Underwriters. The Company will furnish you
with such conformed copies of such opinions, certificates, letters and other
documents as you shall reasonably request.
19
6. Indemnification and Contribution.
--------------------------------
(a) The Company and each of its subsidiaries, jointly and severally,
agree to indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
including the information deemed to be a part of the Registration Statement at
the time of effectiveness pursuant to Rules 430A and 434(d) of the Rules and
Regulations, if applicable, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by it in connection with defending against such loss, claim, damage,
liability or action; provided, however, that neither the Company nor any of its
subsidiaries shall be liable in any such case to the extent that any such loss,
claim, damage, liability or action (i) arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by you, or by any Underwriter through you,
specifically for use in the preparation thereof; or (ii) results from the fact
that such Underwriter failed to send or give a copy of the Prospectus (as
amended or supplemented) to such person at or prior to the confirmation of the
sale of such Shares to such person in any case where such delivery is required
by the Act, and arises out of or is based upon an untrue statement or omission
of a material fact contained in such Preliminary Prospectus that was corrected
in the Prospectus (or any amendment or supplement thereto).
In addition to their other obligations under this Section 6(a), the
Company and each subsidiary, jointly and severally, agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 6(a), they will
reimburse each Underwriter on a monthly basis for all reasonable legal fees or
other reasonable expenses incurred in connection with defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Company's and/or any subsidiary's obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Underwriter
that received such payment shall promptly return it to the party or parties that
made such payment, together with interest, compounded daily, determined on the
basis of the prime rate (or other commercial lending rate for borrowers of the
highest credit standing) announced from time to time by Norwest Bank Minnesota,
National Association (the "Prime Rate"). Any such interim reimbursement payments
which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of
20
such request. This indemnity agreement shall be in addition to any liabilities
which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by you, or by such Underwriter through you,
specifically for use in the preparation thereof, and will reimburse the Company
for any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending against any such loss, claim, damage, liability
or action.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party shall
not relieve the indemnifying party from any liability that it may have to any
indemnified party. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party's election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
if, in the sole judgment of the Representatives, it is advisable for the
Underwriters to be represented as a group by separate counsel, the
Representatives shall have the right to employ a single counsel to represent the
Representatives and all Underwriters who may be subject to liability arising
from any claim in respect of which indemnity may be sought by the Underwriters
under subsection (a) of this Section 6, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the indemnifying party or
parties and reimbursed to the Underwriters as incurred (in accordance with the
provisions of the second paragraph in subsection (a) above). An indemnifying
party shall not be obligated under any settlement agreement relating to any
action under this Section 6 to which it has not agreed in writing.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each
21
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Underwriters on the other in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relevant intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (d)
were to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first sentence of this subsection (d). The amount paid by an indemnified party
as a result of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 6 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company (including any person who, with
his or her consent, is named in the Registration Statement as about to become a
director of the Company), to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
7. Representations and Agreements to Survive Delivery. All
--------------------------------------------------
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the
22
agreements of the several Underwriters, the Company and its subsidiaries
contained in Section 6 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof, or the Company or any of its officers,
directors, or controlling persons and shall survive delivery of, and payment
for, the Securities to and by the Underwriters hereunder.
8. Substitution of Underwriters.
----------------------------
(a) If any Underwriter or Underwriters shall fail to take up and pay
for the amount of Firm Shares agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased does not aggregate
more than 10% of the total amount of Firm Shares set forth in Schedule I hereto,
the remaining Underwriters shall be obligated to take up and pay for (in
proportion to their respective underwriting obligations hereunder as set forth
in Schedule I hereto except as may otherwise be determined by you) the Firm
Shares that the withdrawing or defaulting Underwriters agreed but failed to
purchase.
(b) If any Underwriter or Underwriters shall fail to take up and pay
for the amount of Firm Shares agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased aggregates more than
10% of the total amount of Firm Shares set forth in Schedule I hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination, the Company shall not be under any
liability to any Underwriter (except to the extent provided in Section 4(h) and
Section 6 hereof) nor shall any Underwriter (other than an Underwriter who shall
have failed, otherwise than for some reason permitted under this Agreement, to
purchase the amount of Firm Shares agreed by such Underwriter to be purchased
hereunder) be under any liability to the Company (except to the extent provided
in Section 6 hereof).
If Firm Shares to which a default relates are to be purchased by
the non-defaulting Underwriters or by any other party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 8.
9. Effective Date of this Agreement and Termination.
------------------------------------------------
(a) This Agreement shall become effective at 10:00 a.m., Central time,
on the first full business day following the effective date of the Registration
Statement, or at such earlier time after the effective time of the Registration
Statement as you in your discretion shall first release the Securities for sale
to the public; provided, that if the Registration Statement is effective at the
time this Agreement is executed, this Agreement shall become effective at such
time as you in your discretion shall first release the Securities for sale to
the public. For the purpose of this Section, the Securities shall be deemed to
have been released for sale to the public upon release by you of the
23
publication of a newspaper advertisement relating thereto or upon release by you
of telexes offering the Securities for sale to securities dealers, whichever
shall first occur. By giving notice as hereinafter specified before the time
this Agreement becomes effective, you, as Representatives of the several
Underwriters, or the Company may prevent this Agreement from becoming effective
without liability of any party to any other party, except that the provisions of
Section 4(h) and Section 6 hereof shall at all times be effective.
(b) You, as Representatives of the several Underwriters, shall have the
right to terminate this Agreement by giving notice as hereinafter specified at
any time at or prior to the First Closing Date, and the option referred to in
Section 3(b), if exercised, may be canceled at any time prior to the Second
Closing Date, if (i) the Company shall have failed, refused or been unable, at
or prior to such Closing Date, to perform any agreement on its part to be
performed hereunder, (ii) any other condition of the Underwriters' obligations
hereunder is not fulfilled, (iii) trading on the New York Stock Exchange or the
American Stock Exchange shall have been wholly suspended, (iv) minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for securities shall have been required, on the New York Stock Exchange or the
American Stock Exchange, by such Exchange or by order of the Commission or any
other governmental authority having jurisdiction, (v) a banking moratorium shall
have been declared by Federal, New York, Arizona, Colorado or New Mexico
authorities, or (vi) there has occurred any material adverse change in the
financial markets in the United States or an outbreak of major hostilities (or
an escalation thereof) in which the United States is involved, a declaration of
war by Congress, any other substantial national or international calamity or any
other event or occurrence of a similar character shall have occurred since the
execution of this Agreement that, in your judgment, makes it impractical or
inadvisable to proceed with the completion of the sale of and payment for the
Securities. Any such termination shall be without liability of any party to any
other party except that the provisions of Section 4(h) and Section 6 hereof
shall at all times be effective.
(c) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section, the Company shall be
notified promptly by you by telephone or telegram, confirmed by letter. If the
Company elects to prevent this Agreement from becoming effective, you shall be
notified by the Company by telephone or telegram, confirmed by letter.
10. Default by the Company. If the Company shall fail at the First
----------------------
Closing Date to sell and deliver the number of Securities which it is obligated
to sell hereunder, then this Agreement shall terminate without any liability on
the part of any non-defaulting party. No action taken pursuant to this Section
shall relieve the Company from liability, if any, in respect of such default.
11. Information Furnished by Underwriters. The statements set forth in
-------------------------------------
the last paragraph of the cover page and under the caption "Underwriting" in any
Preliminary Prospectus and in the Prospectus constitute the written information
furnished by or on behalf of the Underwriters referred to in Section 2 and
Section 6 hereof.
12. Notices. Except as otherwise provided herein, all communications
-------
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to the
24
Representatives c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, except that notices given to an
Underwriter pursuant to Section 6 hereof shall be sent to such Underwriter at
the address stated in the Underwriters' Questionnaire furnished by such
Underwriter in connection with this offering; if to the Company, shall be
mailed, telegraphed or delivered to it at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, President. All notices given by telegram shall
be promptly confirmed by letter. Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
13. Persons Entitled to Benefit of Agreement. This Agreement shall inure
----------------------------------------
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 6. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Securities from any of
the several Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Minnesota.
[Signature Page Follows]
25
Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement between the Company
and the several Underwriters in accordance with its terms.
Very truly yours,
MATRIX CAPITAL CORPORATION
By
------------------------------------------
Name:
Title:
Confirmed as of the date first above
mentioned, on behalf of themselves
and the other several Underwriters
named in Schedule I hereto.
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By
-----------------------------------
Name:
Title:
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By
-----------------------------------
Name:
Title:
PEACOCK, HISLOP, ▇▇▇▇▇▇ & GIVEN, INC.
By:
----------------------------------
Name:
Title:
26
Acknowledged and agreed as
to Section 6 hereof by the following:
MATRIX CAPITAL BANK, FSB
By
-----------------------------------
Name:
Title:
MATRIX FINANCIAL SERVICES CORPORATION
By
-----------------------------------
Name:
Title:
UNITED FINANCIAL, INC.
By
-----------------------------------
Name:
Title:
UNITED SPECIAL SERVICES, INC.
By
-----------------------------------
Name:
Title:
27
SCHEDULE I
Underwriter Number of Firm Shares (1)
----------- -------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
Peacock, Hislop, ▇▇▇▇▇▇ & Given, Inc.
Total. . . . . . . . . . . . . . . . . . . . 1,750,000
=========
---------------------
(1) The Underwriters may purchase up to an additional 262,500 Option Shares, to
the extent the option described in Section 3(b) of the Agreement is
exercised, in the proportions and in the manner described in the Agreement.
28
SCHEDULE II
COMFORT LETTER OF ERNST & YOUNG LLP
-----------------------------------
(1) They are independent public accountants with respect to the Company
within the meaning of the Act and the applicable rules and regulations
thereunder, and the answer to Item 10 of the Registration Statement on Form S-1,
insofar as it relates to them, is correct.
(2) In their opinion, the financial statements of the Company included in
the Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the rules and regulations
thereunder.
(3) They have not audited any financial statements of the Company as of any
date or for any period subsequent to December 31, 1995; although they have
conducted an audit for the year ended December 31, 1995, the purpose (and
therefore the scope) of the audit was to enable them to express their opinion on
the financial statements as of December 31, 1995, and for the year then ended,
but not on the financial statements for any interim period within that period.
Therefore, they are unable to and do not express any opinion on the unaudited
balance sheet as of June 30, 1996 or the unaudited statements of operations,
changes in stockholders' equity and cash flows for the six months ended June
30, 1996 and June 30, 1995 included in the Registration Statement.
(4) For purposes of their letter, they have read the minutes of meetings of
the stockholders and Board of Directors as set forth in the Company's minute
books as of __________, 1996, officials of the Company having advised them that
the minutes of all such meetings through that date were set forth therein, and
have carried out other procedures to _____________, 1996, as follows:
(a) With respect to the six-month periods ended June 30, 1996 and June
30, 1995, they have:
(i) Read the unaudited balance sheet of the Company as of June 30,
1996 and the unaudited statements of operations, changes in
stockholders' equity and cash flows for the six-month periods ended
June 30, 1996 and June 30, 1995 included in the Registration Statement;
and
(ii) Made inquiries of certain officials of the Company who have
responsibility for financial and accounting matters regarding (1)
whether the unaudited financial statements referred to under (4)(a)(i)
comply in form in all material respects with the applicable accounting
requirements of the Act and the rules and regulations thereunder and
(2) whether those financial statements are stated on a basis
substantially consistent with that of the audited financial statements
included in the Registration Statement.
(b) With respect to the period from July 1, 1996 to ________, 1996,
they have:
(i) Read the unaudited financial statements of the Company and
subsidiaries for _________, __________ and ___________ of both 1995 and
1996 furnished to them by the Company, officials of the Company having
advised them that no financial statements as of any date or for any
period subsequent to __________, 1996, were available; and
(ii) Made inquiries of certain officials of the Company who have
responsibility for financial and accounting matters as to whether the
unaudited financial statements referred to in (4)(b)(i) are stated on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement.
(5) Nothing came to their attention as a result of the foregoing
procedures, however, that caused them to believe that:
(a) The financial statements described in (4)(a)(i), included in the
Registration Statement, do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the rules and
regulations thereunder or are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that
of the audited financial statements; or
(b) At _________, 1996 there was any change in the capital stock or
increase in long-term debt of the Company as compared with amounts shown in
the June 30, 1996 unaudited balance sheet included in the Registration
Statement.
(6) Company officials have advised them that no statements as of any date
or for any period subsequent to __________, 1996 are available; accordingly, the
procedures carried out by them after ________, 1996 have, of necessity, been
even more limited than those with respect to the periods referred to in 4 above.
They have made inquiries of certain Company officials who have responsibility
for financial and accounting matters regarding whether (a) there was any change
at __________, 1996 in the capital stock or long-term debt of the Company or any
decreases in consolidated total assets or stockholders' equity as compared with
amounts shown on the June 30, 1996 unaudited balance sheet included in the
Registration Statement or (b) for the period from July 1, 1996 to _________,
1996 there were any decreases, as compared with the corresponding period in the
preceding year, in the total or per share amounts of net earnings. On the basis
of these inquiries and their reading of the minutes as described in 4 above,
nothing came to their attention that caused them to believe that there was any
such change or decrease except in all instances for changes or decreases that
the Registration Statement discloses have occurred or may occur.
(7) In addition to the procedures referred to in 4, 5 and 6 above, they
have carried out certain specified procedures, not constituting an audit, with
respect to certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement, which have previously been
specified by the Representatives and which are specified in their letter, and
have compared certain of such items with, and have found such amounts,
percentages, numerical data and financial information to be in agreement with,
the accounting, financial and other records of the Company.