EXHIBIT 1
UNDERWRITING AGREEMENT
October 1, 2003
▇▇▇▇ Capital Partners, LLC
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
INTRODUCTION. Subject to the terms and conditions herein, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
(the "Selling Stockholder") agrees to sell on a firm commitment basis directly
to ▇▇▇▇ Capital Partners, LLC, a Delaware limited liability company (the
"Underwriter"), 1,000,000 warrants (the "Warrants") to purchase shares of the
common stock, par value $0.01 per share (the "Common Stock"), of Collegiate
Pacific, Inc., a Delaware corporation (the "Company"), and the Company agrees to
issue and sell 1,000,000 shares of Common Stock (the "Warrant Shares") directly
to the Underwriter upon the exercise of the Warrants by the Underwriter. The
Warrants and the Warrant Shares are sometimes herein referred to as the
"Securities," and the offer and sale of the Securities to the Underwriter
hereunder is sometimes herein referred to as the "Offering."
The Selling Stockholder and the Company each hereby confirms its agreement with
the Underwriter as follows:
SECTION 1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLING STOCKHOLDER
AND THE COMPANY.
The Selling Stockholder and the Company hereby represent, warrant and covenant
to the Underwriter as of the date hereof, and as of the Closing Date of the
Offering, as follows:
(a) Securities Law Filings. The Company meets the requirements for the
use of Form SB-2 under the Securities Act of 1933, as amended (the "Act"), and
has filed with the Securities and Exchange Commission (the "Commission")
Registration Statement No. 333-34294 on Form SB-2 (the "Registration
Statement"), which became effective April 7, 2000, for the registration of the
Securities under the Act. Such registration statement meets the requirements set
forth in Rule 415(a)(1)(i) and (iii) under the Act and complies in all other
material respects with said Rule. The Company will file with the Commission
pursuant to Rule 424(b) under the Act a supplement to the form of prospectus
included in such registration statement relating to the sale of Securities and
the plan of distribution thereof and has advised the Underwriter of all further
information (financial and other) with respect to the Selling Stockholder and
the Company to be set forth therein. Such registration statement, including the
exhibits thereto, as amended at the date of this Agreement, is hereinafter
called the "Registration Statement;" such prospectus in the form in which it
appears in the Registration Statement is hereinafter called the "Base
Prospectus;" and the supplemented form of prospectus, in the form in which it
will be filed with the Commission pursuant to Rule 424(b) (including the Base
Prospectus as so supplemented) is hereinafter called the "Prospectus
Supplement." Any reference herein to the Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to and include
the documents, if any, which may be incorporated by reference therein (the
"Incorporated Documents") pursuant to Form SB-2 which were filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before
the date
of this Agreement, or the issue date of the Base Prospectus or Prospectus
Supplement, as the case may be; and any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to and include
the filing of any document under the Exchange Act after the date of this
Agreement, or the issue date of the Base Prospectus or the Prospectus
Supplement, as the case may be, deemed to be incorporated therein by reference.
All references in this Agreement to financial statements and schedules and other
information which is "contained," "included" or "stated" in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement, the Base
Prospectus or the Prospectus Supplement, as the case may be.
(b) No Stop Order. No stop order suspending the effectiveness of the
Registration Statement or the use of the Base Prospectus or the Prospectus
Supplement has been issued, and no proceeding for any such purpose is pending or
has been initiated or, to the Selling Stockholder's or Company's knowledge, is
threatened by the Commission.
(c) Compliance with Applicable Regulations. The Registration Statement
(and any further documents to be filed with the Commission) contains all
exhibits and schedules as required by the Act. Each of the Registration
Statement and any post-effective amendment thereto, at the time it became
effective, complied in all material respects with the Act and the Exchange Act
and the applicable rules and regulations of the Commission thereunder and did
not and, as amended or supplemented, if applicable, will not, contain any 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. Each
of the Base Prospectus and the Prospectus Supplement, as of its respective date,
complied (or in the case of the Prospectus Supplement will comply) in all
material respects with the Act and the Exchange Act and the applicable rules and
regulations of the Commission thereunder. Each of the Base Prospectus and the
Prospectus Supplement, as amended or supplemented, did not (or in the case of
the Prospectus Supplement will not) contain as of the date thereof any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Incorporated Documents, if any, when they were
filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the applicable rules and regulations of the
Commission thereunder, and none of such documents, when they were filed with the
Commission, contained any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein not misleading;
and any further documents so filed and incorporated by reference in the Base
Prospectus or Prospectus Supplement, when such documents are filed with the
Commission, will conform in all material respects to the requirements of the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, as applicable, and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading. Notwithstanding the foregoing, the Selling Stockholder
and Company make no representations or warranties as to the information
contained in or omitted from the Prospectus Supplement or any amendment thereof
or supplement thereto in reliance upon and in conformity with information
furnished in writing to the Selling Stockholder or the Company by or on behalf
of the Underwriter specifically for use in the Registration Statement or the
Prospectus Supplement. No post-effective amendment to the Registration Statement
reflecting any facts or events arising after the effective date thereof which
represent, individually or in the aggregate, a fundamental change in the
information set forth therein is required to be filed with the Commission prior
to the Closing Date (as defined below).
(d) Reports and Documents, etc. There are no documents required to be
filed with the Commission in connection with the transaction contemplated hereby
that (x) have not been filed as required pursuant to the Act or (y) will not be
filed within the requisite time period. There are no
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contracts or other documents required to be described in the Prospectus
Supplement, or to be filed as exhibits or schedules to the Registration
Statement, which have not been described or filed as required.
(e) Offering Materials Furnished to the Underwriter. The Selling
Stockholder and the Company have delivered, or will as promptly as practicable
deliver, to the Underwriter complete conformed copies of the Registration
Statement and of each consent and certificate of experts filed as a part
thereof, and conformed copies of the Registration Statement (without exhibits)
and the Base Prospectus and the Prospectus Supplement, as amended or
supplemented, in such quantities and at such places as the Underwriter
reasonably requests.
(f) Distribution of Offering Material. Neither the Selling Stockholder
nor the Company has distributed and will not distribute, prior to the completion
of the distribution of the Securities, any offering material in connection with
the Offering other than the Base Prospectus and the Prospectus Supplement or the
Registration Statement and copies of the documents incorporated by reference
therein. For the avoidance of doubt, any other material prepared and distributed
solely by the Underwriter is not deemed to be distributed by the Selling
Stockholder or the Company for purposes of this paragraph (f).
(g) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Selling Stockholder and the Company, enforceable against the Selling
Stockholder and the Company in accordance with its terms, except as rights to
indemnification and contribution hereunder may be limited by applicable law or
public policy and except as the enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(h) Authorization of the Securities. The Securities have been duly
authorized for issuance and sale, and when, as applicable, delivered by the
Selling Stockholder or issued and delivered by the Company against payment
therefor pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(i) No Applicable Registration or Other Similar Rights. There are no
persons with registration, preemptive or other similar rights to have any
securities (whether equity, debt or any combination thereof) registered or
qualified for sale under the Registration Statement or the Prospectus Supplement
or included in the Offering contemplated by this Agreement, except for such
rights as have been duly waived or satisfied.
(j) No Material Adverse Change or Material Adverse Effect. Except as
disclosed in the Base Prospectus, the Prospectus Supplement or the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 2003: (i) there
has been no material adverse change or effect, or any development that could
reasonably be expected to result in a material adverse change or effect, in the
financial condition or in the earnings, business or operations, whether or not
arising from transactions in the ordinary course of business, of the Company and
the significant subsidiaries of the Company, as that term is defined in Rule
1-02(w) of Regulation S-X (the "Significant Subsidiaries") taken as a whole (any
such change or effect, where the context so requires, is called a "Material
Adverse Change" or a "Material Adverse Effect"); (ii) the Company and the
Significant Subsidiaries have not incurred any material liability or obligation,
indirect, direct or contingent, not in the ordinary course of business nor
entered into any material transaction or agreement not in the ordinary course of
business; and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of capital stock or
repurchase or redemption by the Company of any class of capital stock.
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(k) Independent Accountants. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes and schedules thereto) and supporting
schedules filed with the Commission as a part of the Registration Statement and
incorporated by reference in the Base Prospectus or Prospectus Supplement, are
independent public or certified public accountants as required by the Act and
the Exchange Act.
(l) Preparation of the Financial Statements. The financial statements
and the selected financial data filed with the Commission as a part of the
Registration Statement or included or incorporated by reference in the Base
Prospectus, Prospectus Supplement, or the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 2003, present fairly, in all material
respects, the financial position of the Company and its consolidated
subsidiaries as of and at the dates indicated and the results of their
operations and cash flows for the periods specified therein. The supporting
exhibits and schedules included in the Registration Statement, if any, present
fairly, in all material respects, the information required to be stated therein
subject to the normal year-end adjustments which are not expected to be material
in amount. The assumptions used in preparing any pro forma financial statements
provide a reasonable basis for presenting the significant effects attributable
to the transactions or events described therein, the related pro forma
adjustments give appropriate effect to the assumptions and the pro forma columns
therein reflect the proper application of the adjustments to the corresponding
historical financial statements. Such financial statements and supporting
schedules, if any, have been prepared in conformity with generally accepted
accounting principles as applied in the United States and in effect as of the
date of the applicable financial statements and supporting schedules ("GAAP"),
as applicable, applied on a consistent basis throughout the periods involved,
except as may be expressly stated in the related notes thereto and comply in all
material respects with the Act, the Exchange Act and the applicable rules and
regulations of the Commission thereunder. No other financial statements or
supporting schedules or exhibits are required by the Act or the rules and
regulations of the Commission thereunder to be included in the Registration
Statement, Base Prospectus or the Prospectus Supplement.
(m) Incorporation and Good Standing. Each of the Company and its
Significant Subsidiaries has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
with full corporate power and authority to own its properties and other assets
and conduct its business as described in the Prospectus Supplement, and is duly
qualified or licensed to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such qualification
or license, except where the failure to be so qualified or in good standing
would not have a Material Adverse Effect.
(n) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Registration Statement and in the Prospectus Supplement (other than for
issuances after the dates thereof, if any, pursuant to employee benefit plans
described in any Prospectus Supplement or upon exercise of outstanding options
or warrants described in any Prospectus Supplement). The Securities conform in
all material respects to the description thereof contained in the Base
Prospectus and the Prospectus Supplement. The outstanding capital stock of the
Company, and the outstanding options, warrants, or convertible securities of the
Company, are as described in the Base Prospectus and Prospectus Supplement, as
of the date such information is presented therein. Since August 31, 2003, the
Company has not issued any securities other than Common Stock of the Company
pursuant to (i) the exercise of previously outstanding options in connection
with the Company's employee stock purchase and option plans (the "Plans") and
options granted pursuant to the Plans in the ordinary course of business
consistent with past practice and (ii) the exercise of previously outstanding
warrants. All the issued and outstanding shares of the capital stock of the
Company and the Significant Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance, in
all material respects, with federal and state securities laws, as applicable.
Except as set forth in the Base Prospectus and the Prospectus Supplement, all of
the
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outstanding shares of capital stock of the Significant Subsidiaries are owned,
directly or indirectly, by the Company. None of the outstanding shares of
capital stock of the Company or any Significant Subsidiary were issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any
Significant Subsidiary other than those described in the Base Prospectus and the
Prospectus Supplement and other than options granted pursuant to the Plans in
the ordinary course of business consistent with past practice. The description
of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options, warrants or other rights granted thereunder, set
forth in the Base Prospectus and the Prospectus Supplement accurately and fairly
presents the information required by the Act to be shown with respect to such
plans, arrangements, options and rights. Except for the Significant Subsidiaries
or as set forth in the Base Prospectus or in the Prospectus Supplement, the
Company does not have any subsidiaries or own directly or indirectly any of the
capital stock or other equity or long-term debt securities or have any equity
interest in any other person.
(o) Stock Exchange Listing. The Securities are registered under the
Exchange Act and are or will be as of the Closing Date listed on AMEX, and
neither the Selling Stockholder nor the Company have taken any action designed
to, or likely to have the effect of terminating the registration of the
Securities under the Exchange Act or delisting or suspending from trading the
Securities from AMEX, nor have the Selling Stockholder or the Company received
any information suggesting that the Commission or AMEX is contemplating
terminating or suspending such registration or listing.
(p) No Consents, Approvals or Authorizations Required. No consent,
approval, authorization, filing with or order of any court or governmental
agency or regulatory body or vote of the Company's stockholders is required in
connection with the performance by the Selling Stockholder or the Company of its
respective obligations under this Agreement or the offering or sale of the
Securities hereunder, except such as have been obtained or made or are
contemplated by this Agreement to be obtained or made.
(q) Non-Contravention of Existing Instruments and Agreements. Neither
the issue and sale of the Securities nor the performance by the Selling
Stockholder or the Company of its respective obligations under this Agreement
nor the fulfillment of the terms hereof will conflict with, result in a breach
or violation of, or the loss of any benefit under, or give rise to a right of
acceleration or any other right, or the imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any Significant
Subsidiary pursuant to: (i) the charter or by-laws of the Company or any
Significant Subsidiary; (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or any
Significant Subsidiary is a party or is bound or to which any of its property is
subject and which conflict, breach or violation is reasonably likely to have a
Material Adverse Effect; or (iii) any statute, law, rule, regulation, judgment,
order or decree applicable to the Company or any Significant Subsidiary, as the
case may be, of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or such
Significant Subsidiary, as the case may be, or any of its property.
(r) No Defaults or Violations. None of the Company or the Significant
Subsidiaries is in violation or default of: (i) any provision of its charter or
by-laws; (ii) the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or by which it is bound or to
which any of its property is subject; or (iii) any foreign, federal, state or
local statute, law or rule applicable to the Company or Significant Subsidiary,
as the case may be, or any regulation, judgment, order or decree of any court,
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governmental body, or agency having jurisdiction over the Company or Significant
Subsidiary, as the case may be, or any of its property, as applicable, except in
case of clause (ii) and (iii) any such violation or default which would not,
singly or in the aggregate, reasonably be expected to result in a Material
Adverse Change not specifically disclosed in the Base Prospectus or the
Prospectus Supplement.
(s) No Actions, Suits or Proceedings. No action, suit or proceeding by
or before any foreign, federal, state or local court or governmental agency,
authority or body or any arbitrator involving the Selling Stockholder or the
Company or any Significant Subsidiary, as the case may be, or any of its
property is pending or, to the best of the Selling Stockholder's and Company's
knowledge, threatened that if adversely determined: (i) could reasonably be
expected to have a Material Adverse Effect on the performance of this Agreement
or the consummation of any of the transactions contemplated hereby; or (ii)
could reasonably be expected to result in a Material Adverse Change.
(t) All Necessary Permits, Etc. To the best of the Selling
Stockholder's and Company's knowledge, each of the Company and the Significant
Subsidiaries possesses such valid and current certificates, authorizations and
permits issued by the appropriate foreign, federal, state or local regulatory
agencies or bodies necessary to conduct its business as currently conducted,
except to the extent that the failure to obtain such certificates,
authorizations or permits would not have a Material Adverse Effect, and neither
the Company nor any Significant Subsidiary has received any notice of
proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
reasonably be expected to result in a Material Adverse Change.
(u) Title to Properties. Neither the Company nor any Significant
Subsidiary owns any real property. Each of the Company and the Significant
Subsidiaries has good and marketable title to all personal property and assets
reflected as owned by it in the financial statements referred to in Section 1(l)
above (or elsewhere in the Base Prospectus or the Prospectus Supplement) and
which are material to the business of the Company, in each case free and clear
of any security interests, mortgages, liens, encumbrances, claims and other
defects, except such as do not materially and adversely affect the value of such
property and do not materially interfere with the use made or proposed to be
made of such property. The real property, improvements, equipment and personal
property held under lease by each of the Company and the Significant
Subsidiaries are held under valid and enforceable leases, with such exceptions
as are not material, and do not materially interfere with the use made or
proposed to be made of such real property, improvements, equipment or personal
property. The Company and the Significant Subsidiaries own or have valid rights
to use the intellectual property assets used in their business, necessary to
conduct the business described in the Base Prospectus and the Prospectus
Supplement, and no material right is expected to expire, terminate or be
disposed of in the foreseeable future, except as disclosed therein. The Company
has not received any notice of, and neither the Company nor any Significant
Subsidiary has any knowledge that, any property or assets of either the Company
or any Significant Subsidiary infringes or conflicts with the rights of others,
except where the loss of any such property or asset would not reasonably be
expected to have a Material Adverse Effect.
(v) Tax Law Compliance. Each of the Company and the Significant
Subsidiaries has filed all necessary foreign, federal, state and local income
and franchise Tax returns, except to the extent that the failure to file such
Tax returns would not have a Material Adverse Effect, and have paid all Taxes
required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them. Adequate
charges, accruals and reserves have been made in the applicable financial
statements referred to in Section 1(l) above in respect of all federal, state
and foreign income and franchise taxes for all periods as to which the tax
liability of the Company or any Significant Subsidiary has not been finally
determined. Neither the Company nor any Significant Subsidiary is aware of any
tax deficiency that has been or might reasonably be asserted or threatened
against it that could
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reasonably be expected to result in a Material Adverse Change. For purposes of
this Agreement, the terms "Tax" and "Taxes" mean all federal, state, local and
foreign taxes, and any other assessments of a similar nature (whether imposed
directly or through withholding), including, without limitation, any interest,
additions to tax, or penalties applicable thereto. All such Tax returns are
true, complete and correct in all material respects.
(w) No Transfer Taxes or Other Fees. There are no transfer Taxes or
other similar fees or charges under United States law or the laws of any state
or any political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the sale of the Warrants by the
Selling Stockholder or issuance and sale of the Warrant Shares by the Company.
(x) Accounting Controls. Each of the Company and the Significant
Subsidiaries (i) makes and keeps accurate books and records and (ii) maintains a
system of 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 GAAP, the Act and the
Exchange Act and the rules and regulations of the Commission thereunder, 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.
(y) Company Not an "Investment Company." None of the Company or the
Significant Subsidiaries is, or immediately after receipt of payment for the
Securities will be, an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. Each of the Company and the Significant Subsidiaries will conduct
its business in a manner so that it will not become subject to the Investment
Company Act.
(z) Insurance. Each of the Company and the Significant Subsidiaries is
insured by recognized, financially sound and reputable institutions with
policies in such amounts and with such deductibles and covering such risks as
are prudent and customary in the business in which it is engaged, including
directors and officers liability. Neither the Company nor any Significant
Subsidiary has any reason to believe that it will not be able: (i) to renew its
existing insurance coverage as and when such policies expire; or (ii) to obtain
comparable coverage from similar institutions as may be necessary or appropriate
to conduct its business as now conducted. Neither the Company nor any
Significant Subsidiary has been denied any insurance coverage which it has
sought or for which it has applied, such as would have a Material Adverse
Effect.
(aa) Labor Matters. No material labor disturbance by the employees of
the Company or any Significant Subsidiary exists or, to the knowledge of the
Selling Stockholder or the Company or any Significant Subsidiary, is threatened
or imminent, and neither the Selling Stockholder, the Company nor any
Significant Subsidiary is aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers, manufacturers,
contractors or customers that could reasonably be expected to result in a
Material Adverse Effect.
(bb) No Price Stabilization or Manipulation. Neither the Selling
Stockholder nor the Company has taken and will not take, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in stabilization or manipulation of the price of the Securities to facilitate
the sale or resale of the Securities.
(cc) Prior Stock Issuances. All offers and sales of capital stock of
the Company prior to the date hereof were at all relevant times duly registered
or exempt from the registration requirements of the
7
Act and were duly registered or subject to an available exemption from the
registration requirements of the applicable state securities or blue sky laws.
(dd) Related Party Transactions. There are no business relationships or
related-party transactions involving the Selling Stockholder, the Company or any
Significant Subsidiary or any other person required by the Act to be described
in the Base Prospectus or the Prospectus Supplement, which have not been
described, or incorporated by reference, therein as required.
(ee) Exchange Act Reports Filed. The Company has timely filed all
reports required of it to be filed pursuant to the Act and the Exchange Act and
has filed all such reports in the manner prescribed thereby.
(ff) Exhibits. Each agreement described in or filed as an exhibit to
the Registration Statement, the Base Prospectus and/or the Prospectus
Supplement, including all documents incorporated by reference therein, is in
full force and effect and is valid and enforceable by the Company or Significant
Subsidiary, as the case may be, in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally. Neither the Company nor any
Significant Subsidiary, as the case may be, nor, to the knowledge of the Selling
Stockholder, Company or any such Significant Subsidiary, any other party, is in
default in the observance or performance of any term or obligation to be
performed by it under any such agreement, and no event has occurred that with
notice or lapse of time or both would constitute such a default, in any such
case where such default or event would have a Material Adverse Effect.
(gg) Blue Sky Laws, NASD Matters. The Securities have been or will be
qualified for sale under the securities laws of such jurisdictions (United
States and foreign) as the Underwriter determines, or are or will be exempt from
the qualification and broker-dealer requirements of such jurisdictions. With
respect to the compensation to be paid to the Underwriter in connection with
this Agreement, either (i) the Company has made or will make prior to Closing
the appropriate filings required by NASD Rule 2710 with respect to such
compensation arrangements; or (ii) such compensation arrangements are exempt
from the filing requirements of NASD Rule 2710 because the Company has met and
continues to meet the pre-1992 eligibility requirements for the use of the
Registration Statement on Form S-3 in connection with the offering(s)
contemplated thereby and hereby. Neither the Selling Stockholder nor the Company
has any affiliations with any broker-deal which could reasonably be expected to
result in a violation of "free-riding and withholding" prohibition contained in
NASD IM-2110-1.
Any certificate signed by an officer of the Company and delivered to
the Underwriter or to counsel for the Underwriter in connection herewith or in
connection with the Offering shall be deemed to be a representation and warranty
by the Company to the Underwriter as to the matters set forth therein.
SECTION 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLING STOCKHOLDER
In addition to the representations, warranties and covenants contained
in Section 1, the Selling Stockholder hereby represents, warrants and covenants
to the Underwriter as of the date hereof, and as of the Closing Date of the
Offering, as follows:
(a) This Agreement has each been duly authorized, executed and
delivered by the Selling Stockholder and such document constitutes a valid and
binding obligation of the Selling Stockholder, enforceable in accordance with
its terms.
(b) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the sale of the Warrants by the
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Selling Stockholder or the consummation by the Selling Stockholder of the
transactions on its part contemplated by this Agreement, except such as have
been obtained under the Act or the rules and regulations promulgated thereunder,
and such as may be required under state securities or blue sky laws or the
by-laws and rules of the NASD in connection with the purchase by the Underwriter
of the Warrants.
(c) The sale of the Warrants by the Selling Stockholder and the
performance by the Selling Stockholder of this Agreement and the consummation of
the transactions contemplated hereby will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Selling Stockholder pursuant to the terms or provisions of, or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or give any party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement or other evidence of indebtedness, lease, contract or
other agreement or instrument to which the Selling Stockholder is a party or by
which the Selling Stockholder or any of its properties is bound or affected, or
violate or conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable to the
Selling Stockholder or, if the Selling Stockholder is a corporation, partnership
or other entity, the organizational documents of the Selling Stockholder.
(d) The Selling Stockholder has, and at the Closing Date will have,
good and marketable title to the Warrants, free and clear of all liens,
encumbrances, equities or claims whatsoever; and, upon delivery of the Warrants
and payment therefor, good and marketable title to the Warrants, free and clear
of all liens, encumbrances, equities or claims whatsoever, will be delivered to
the Underwriter.
(e) On the Closing Date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Warrants to the Underwriter will be fully paid or provided for
by the Selling Stockholder and all laws imposing such taxes will be fully
complied with.
(f) All information with respect to the Selling Stockholder contained
in the Registration Statement, Base Prospectus and Prospectus Supplement or any
amendment or supplement thereto complied or will comply in all material respects
with all applicable requirements of the Act and rules and regulations
promulgated thereunder and does not and will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(g) The Selling Stockholder, directly or indirectly, has not entered
into any commitment, transaction or other arrangement, including any prepaid
forward contract, 10b5-1 plan or similar agreement, which transfers or may
transfer any of the legal or beneficial ownership or any of the economic
consequences of ownership of the Warrants, except as has been previously
disclosed in writing to the Underwriter.
SECTION 3. STOCK PURCHASE, WARRANT EXERCISE AND CLOSING.
(a) Stock Purchase, Warrant Exercise and Underwriter Compensation.
(i) At the Closing (as defined below), Selling Stockholder
hereby agrees to sell, and the Underwriter agrees to purchase from the Selling
Stockholder the Warrants for a purchase price of $1.95 per Warrant (the "Warrant
Purchase Price").
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(ii) The Underwriter hereby agrees to exercise on the Closing
Date all the Warrants for an exercise price of $5.00 per Warrant (the "Exercise
Price"), and the Company will issue and sell the Warrant Shares to the
Underwriter on the Closing Date.
(iii) As compensation for services rendered in connection with
the sale of the Securities, on the Closing Date the Company will pay to the
Underwriter a commission of $450,000.
(b) Closing. The closing of the purchase and sale of the Securities
(the "Closing") shall take place at the offices of ▇▇▇▇▇▇, Lidji & Werbner, ▇▇▇▇
▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 a.m., Central time, on October
3, 2003, or at such other place or such other time or date as the Underwriter,
the Selling Stockholder and the Company may designate (the "Closing Date").
(c) Underwriter Closing Deliverables. At or prior to the Closing, the
Underwriter will deliver to the Selling Stockholder and the Company, as
applicable:
(i) to the Selling Stockholder, against delivery of a
certificate or certificates (electronically by DWAC to an account designated by
the Underwriter or otherwise) representing the Warrants being purchased by the
Underwriter pursuant to Section 3(a)(i), by wire transfer of immediately
available funds to an account designated by the Selling Stockholder, an amount
equal to the aggregate Warrant Purchase Price;
(ii) to the Company, against delivery of a certificate or
certificates (electronically by DWAC to an account designated by the Underwriter
or otherwise) representing the Warrant Shares being purchased by the Underwriter
pursuant to Section 3(a)(ii), by wire transfer of immediately available funds to
an account designated by the Company, an amount equal to the aggregate Exercise
Price;
(iii) an officer's certificate of the Underwriter to the
effect that each of the conditions specified in Sections 3(e)(i) and (ii) has
been satisfied with respect to the Underwriter.
(d) Selling Stockholder and Company Closing Deliverables. At or prior
to the Closing, the Selling Stockholder and Company will deliver to the
Underwriter, as applicable:
(i) from the Selling Stockholder, against payment of the
Warrant Purchase Price therefor, a validly issued certificate or certificates
(electronically by DWAC to an account designated by the Underwriter or
otherwise) representing the Warrants being purchased by the Underwriter pursuant
to Section 3(a)(i), which shall be in definitive form and registered in the name
of the Underwriter or its nominee or designee and in a single certificate or in
such other denominations as the Underwriter shall request not later than one
business day prior to the Closing Date;
(ii) from the Company, against payment of the Exercise Price
therefor, a validly issued certificate or certificates (electronically by DWAC
to an account designated by the Underwriter or otherwise) representing the
Warrants Shares being purchased by the Underwriter pursuant to Section 3(a)(ii),
which shall be in definitive form and registered in the name of the Underwriter
or its nominee or designee and in a single certificate or in such other
denominations as the Underwriter shall request not later than one business day
prior to the Closing Date;
(iii) from the Company, $450,000 as a commission for services
rendered by the Underwriter in connection with the sale of the Securities.
(iv) an officer's certificate of the Company to the effect
that each of the conditions specified in Section 3(e) has been satisfied;
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(e) Closing Conditions.
(i) All representations and warranties of the parties
contained herein shall remain true and correct in all material
respects as of the Closing Date.
(ii) As of the Closing Date, there shall have been no Material
Adverse Effect with respect to the Company since the date hereof.
(iii) From the date hereof to the Closing Date, trading in the
Company's common stock shall not have been suspended or limited, or minimum
prices shall not have been established on AMEX, nor shall a banking moratorium
have been declared either by the United States or applicable state authorities.
SECTION 4. COVENANTS OF THE SELLING STOCKHOLDER AND THE COMPANY.
The Selling Stockholder and the Company further covenant to and agree with the
Underwriter as follows:
(a) Registration Statement Matters. The Selling Stockholder and the
Company agree to advise the Underwriter promptly during the period in which a
prospectus is required by law to be delivered by a Underwriter or a dealer in
connection with the distribution of Securities contemplated by the Base
Prospectus or Prospectus Supplement (the "Prospectus Delivery Period"), of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus Supplement or any amended
Prospectus Supplement has been filed; to file promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus Supplement and for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Securities; to advise the Underwriter, promptly after it receives notices
thereof (i) of any request by the Commission to amend the Registration Statement
or to amend or supplement the Prospectus Supplement or for additional
information and (ii) of the issuance by the Commission, of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or any order directed at any Incorporated Document or any
amendment or supplement thereto or any order preventing or suspending the use of
the Base Prospectus or the Prospectus Supplement or any amendment or supplement
thereto or any post-effective amendment to the Registration Statement, of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, of the institution or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus Supplement or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of the Base Prospectus or Prospectus Supplement
or suspending any such qualification, promptly to use its reasonable best
efforts to obtain the withdrawal of such order.
(b) Blue Sky Compliance. The Company will, and the Selling Stockholder
will use reasonable efforts to cause the Company to, cooperate with the
Underwriter in endeavoring to qualify the Securities for sale under the
securities laws of such jurisdictions (United States and foreign) as the
Underwriter may reasonably request and will make such applications, file such
documents, and furnish such information as may be reasonably required for that
purpose, provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent, and provided further that the Company shall not be required to produce
any new disclosure document other than the Prospectus Supplement. The Company
will, and the Selling Stockholder will use reasonable efforts to cause the
Company to, from time to time, prepare and file such statements, reports and
other documents as are or
11
may be required to continue such qualifications in effect for so long a period
as the Underwriter may reasonably request for distribution of the Securities.
(c) Amendments and Supplements to the Prospectus Supplement and Other
Securities Act Matters. The Company will, and the Selling Stockholder will use
reasonable efforts to cause the Company to, comply with the Act and the Exchange
Act, and the rules and regulations of the Commission thereunder, so as to permit
the completion of the distribution of the Securities as contemplated in this
Agreement, the Base Prospectus and the Prospectus Supplement. If during the
Prospectus Delivery Period any event shall occur as a result of which, in the
judgment of the Selling Stockholder or the Company or in the reasonable opinion
of the Underwriter or counsel for the Underwriter, it becomes necessary to amend
or supplement the Base Prospectus or the Prospectus Supplement in order to make
the statements therein, in the light of the circumstances existing at the time
the Prospectus Supplement is delivered to a purchaser, not misleading, or, if it
is necessary at any time to amend or supplement the Base Prospectus or the
Prospectus Supplement to comply with any law, the Company promptly will, and the
Selling Stockholder will use reasonable efforts to cause the Company to, prepare
and file with the Commission, and furnish at its own expense to the Underwriter
and to dealers, an appropriate amendment to the Registration Statement or
supplement to the Base Prospectus or the Prospectus Supplement so that the
Prospectus Supplement as so amended or supplemented will not, in the light of
the circumstances when it is so delivered, be misleading, or so that the Base
Prospectus or the Prospectus Supplement will comply with such law. Before
amending the Registration Statement or supplementing the Base Prospectus in
connection with the Offering, the Company will, and the Selling Stockholder will
use reasonable efforts to cause the Company to, furnish the Underwriter with a
copy of such proposed amendment or supplement and will not file such amendment
or supplement to which you reasonably and promptly object.
(d) Copies of any Amendments and Supplements to the Prospectus
Supplement. The Selling Stockholder and the Company agree to furnish the
Underwriter, without charge, during the period beginning on the date hereof and
ending on the later of the Closing Date of the Offering or such date that is, in
the opinion of counsel for the Underwriter, the end of the Prospectus Delivery
Period, as many copies of the Base Prospectus and Prospectus Supplement and any
amendments and supplements thereto (including any Incorporated Documents) as the
Underwriter may reasonably request.
(e) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Warrant Shares in the manner described under the caption "Use of
Proceeds" in the Prospectus Supplement.
(f) Transfer Agent. The Company shall, and the Selling Stockholder will
use reasonable efforts to cause the Company to maintain, Continental Stock
Transfer and Trust Company, at its expense, as the registrar and transfer agent
for the Securities.
(g) Earnings Statement. As soon as practicable and in accordance with
applicable requirements under the Act, but in any event not later than 18 months
after the Closing Date of the Offering, the Company will, and the Selling
Stockholder will use reasonable efforts to cause the Company to, make generally
available to its security holders and to the Underwriter an earnings statement,
covering a period of at least 12 consecutive months beginning after the Closing
Date, that satisfies the provisions of Section 11(a) and Rule 158 under the Act.
(h) Periodic Reporting Obligations. During the Prospectus Delivery
Period, the Company shall, and the Selling Stockholder will use reasonable
efforts to cause the Company to, duly file, on a timely basis, with the
Commission and AMEX all reports and documents required to be filed under the
Exchange Act within the time periods and in the manner required by the Exchange
Act.
12
(i) Additional Documents. The Selling Stockholder and the Company will
enter into any subscription, purchase or other customary agreements as the
Underwriter deems necessary or appropriate to consummate the Offering, all of
which will be in form and substance reasonably acceptable to the Underwriter,
the Selling Stockholder and the Company.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITER.
The obligations of the Underwriter hereunder shall be subject to the accuracy of
the representations and warranties on the part of the Selling Stockholder and
the Company set forth in Section 1 and the Selling Stockholder set forth in
Section 2 as of the date hereof and as of the Closing Date of the Offering as
though then made, to the timely performance by the Selling Stockholder and the
Company of its covenants and other obligations hereunder on and as of such
dates, and to each of the following additional conditions:
(a) Compliance with Registration Requirements; No Stop Order; No
Objection from the NASD. The Prospectus Supplement shall have been duly filed
with the Commission in accordance with Rule 424(b); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; no order preventing or suspending the use of the
Prospectus Supplement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; no order having the
effect of ceasing or suspending the distribution of the Securities or any other
securities of the Company shall have been issued by any securities commission,
securities regulatory authority or stock exchange and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Selling Stockholder or the Company, contemplated by any securities
commission, securities regulatory authority or stock exchange; all requests for
additional information on the part of the Commission shall have been complied
with. With respect to the compensation to be paid by the Company to the
Underwriter hereunder, the NASD shall have issued an opinion that the terms of
such compensation are fair and reasonable.
(b) Corporate Proceedings. All corporate proceedings and other legal
matters in connection with this Agreement, the Registration Statement and the
Prospectus Supplement, and the registration, authorization, issue, sale and
delivery of the Securities, shall have been reasonably satisfactory to the
Underwriter's counsel, and such counsel shall have been furnished with such
papers and information as they may reasonably have requested to enable them to
pass upon the matters referred to in this Section 5.
(c) No Material Adverse Change or Material Adverse Effect. Subsequent
to the execution and delivery of this Agreement and prior to the Closing Date,
there shall not have occurred any Material Adverse Change or Material Adverse
Effect, which, in the Underwriter's reasonable judgment, makes it impracticable
or inadvisable to proceed with the Offering on the terms and in the manner
contemplated by the Prospectus Supplement.
(d) Opinion of Counsel for the Company. The Underwriter shall have
received on the Closing Date of the Offering, and the Selling Stockholder and
Company shall cause to be delivered to the Underwriter, an opinion substantially
in the form of "Exhibit A" attached hereto, of legal counsel to the Company,
dated the Closing Date, addressed to the Underwriter.
(e) Accountants' Comfort Letter. The Underwriter shall have received on
the Closing Date and the Selling Stockholder and the Company shall cause to be
delivered to the Underwriter, a letter from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (or the Company's
then current independent auditors), addressed to the Underwriter, dated as of
the Closing Date, in a form mutually agreed upon. The letter shall not disclose
any change in the financial condition, earnings, operations or business of the
Company from that set forth in the
13
Registration Statement or the Prospectus Supplement, which, in the Underwriter's
sole judgment, is material and adverse and that makes it, in the Underwriter's
sole judgment, impracticable or inadvisable to proceed with the public offering
of the Securities as contemplated by the Prospectus Supplement.
(f) Officers' Certificate. The Underwriter shall have received on the
Closing Date a certificate of the Company, dated as of the Closing Date and
signed by the Chief Executive Officer and 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, as if made on and as of the Closing
Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement or the use of the Base Prospectus or the
Prospectus Supplement has been issued and no proceedings for that
purpose have been instituted or are pending or, to the Company's
knowledge, threatened under the Act; no order having the effect of
ceasing or suspending the distribution of the Securities or any other
securities of the Company has been issued by any securities commission,
securities regulatory authority or stock exchange in the United States
and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, contemplated by any securities
commission, securities regulatory authority or stock exchange in the
United States;
(iii) When the Registration Statement became effective and at
all times subsequent thereto up to the delivery of such certificate,
the Registration Statement, the Base Prospectus and the Prospectus
Supplement and any amendments or supplements thereto, and Incorporated
Documents, when such documents became effective or were filed with the
Commission, contained all material information required to be included
therein by the Act and the Exchange Act and the applicable rules and
regulations of the Commission thereunder, as the case may be, and in
all material respects conformed to the requirements of the Act and the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, as the case may be, and the Registration Statement and the
Base Prospectus and the Prospectus Supplement, and any amendments or
supplements thereto, did not and do not include any 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 (provided,
however, that the preceding representations and warranties contained in
this paragraph (iii) shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by the Underwriter expressly for use therein)
and, since the effective date of the most recent post-effective
amendment to the Registration Statement, there has occurred no event
required by the Act and the rules and regulations of the Commission
thereunder to be set forth in an amended or supplemented Prospectus
Supplement which has not been so set forth;
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement, the Base Prospectus
and the Prospectus Supplement, there has not been: (a) any Material
Adverse Change; (b) any transaction that is material to the Company and
the Significant Subsidiaries taken as a whole, except transactions
entered into in the ordinary course of business; (c) any obligation,
direct or contingent, that is material to the Company and the
Significant Subsidiaries taken as a whole, incurred by the Company or
any Significant Subsidiary, except obligations incurred in the ordinary
course of business; (d) any material change in the capital stock
(except changes thereto resulting from the exercise of outstanding
14
stock options or warrants) or outstanding indebtedness of the Company
or any Significant Subsidiary; (e) any undisclosed dividend or
distribution of any kind declared, paid or made on the capital stock of
the Company; or (f) any loss or damage (whether or not insured) to the
property of the Company or any Significant Subsidiary which has been
sustained or will have been sustained which has a Material Adverse
Effect.
(g) Stock Exchange Listing. The Securities are registered under the
Exchange Act and are or will as of the Closing Date be listed on AMEX, and
neither the Selling Stockholder nor the Company has taken any action designed
to, or likely to have the effect of terminating the registration of the
Securities under the Exchange Act or delisting or suspending from trading the
Securities from AMEX, nor has the Selling Stockholder or the Company received
any information suggesting that the Commission or AMEX is contemplated
terminating such registration or listing.
(h) Compliance with Prospectus Delivery Requirements. The Selling
Stockholder and the Company shall have complied with the provisions of Sections
1(e) and (f) and 4(a), (c) and (d) with respect to the furnishing of the
Prospectus Supplement.
(i) Additional Documents. On or before each Closing Date, the
Underwriter and counsel for the Underwriter shall have received such information
and documents as they may reasonably require for the purposes of enabling them
to pass upon the sale of the Warrants and issuance and sale of the Warrant
Shares as contemplated herein, or in order to evidence the accuracy of any of
the representations and warranties, or the satisfaction of any of the conditions
or agreements, herein contained.
SECTION 6. PAYMENT OF EXPENSES.
Subject to the limitations set forth in Section 7 below on the amounts to be
reimbursed to the Underwriter if the Closing shall occur, the Company agrees to
pay all costs, fees and expenses incurred in connection with the performance of
its and the Selling Stockholder's obligations hereunder and in connection with
the transactions contemplated hereby, including without limitation: (i) all
expenses incident to the issuance, delivery and qualification of the Securities
(including all printing and engraving costs); (ii) all fees and expenses of the
registrar and transfer agent of the Securities; (iii) all necessary issue,
transfer and other stamp taxes in connection with the issuance and sale of the
Securities; (iv) all fees and expenses of the Company's counsel, independent
public or certified public accountants and other advisors; (v) all costs and
expenses incurred in connection with the preparation, printing, filing, shipping
and distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), the Base Prospectus
and the Prospectus Supplement, and all amendments and supplements thereto, and
this Agreement; (vi) all filing fees, reasonable attorneys' fees and expenses
incurred by the Company or the Underwriter in connection with qualifying or
registering (or obtaining exemptions from the qualification or registration of)
all or any part of the Securities for offer and sale under the state securities
or blue sky laws or the securities laws of any other country; (vii) the filing
fees incident to, and the reasonable fees and expenses of counsel for the
Underwriter in connection with, any review and approval by the NASD of the
Underwriter's participation in the offering and distribution of the Securities,
including review and approval of Underwriter's compensation; (viii) all costs
and expenses incident to the travel and accommodation of the Company's employees
on the "roadshow," if any; and (ix) all other fees, costs and expenses referred
to in Part II of the Registration Statement.
SECTION 7. REIMBURSEMENT OF UNDERWRITER'S EXPENSES.
If the sale to the Underwriter of the Warrants and the issuance to the
Underwriter of the Warrant Shares on the Closing Date is consummated, the
Selling Stockholder and the Company agree to reimburse the Underwriter, upon
demand, for legal fees incurred by the Underwriter in an amount not to exceed
$20,000
15
in connection with such Offering, plus an amount not to exceed $10,000 for the
following out-of-pocket expenses that shall have been reasonably incurred by the
Underwriter in connection with the Offering: printing expenses; travel and
accommodation expenses; postage; and facsimile and telephone charges.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification of the Underwriter. The Selling Stockholder and the
Company agree to indemnify and hold harmless the Underwriter, its officers and
employees, and each person, if any, who controls the Underwriter within the
meaning of the Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which the Underwriter or such controlling
person may become subject, under the Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company and the Selling Stockholder, which consent shall not be
unreasonably withheld), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based: (i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment thereto,
or the omission or alleged omission therefrom of 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; or (ii) upon any
untrue statement or alleged untrue statement of a material fact contained in the
Base Prospectus or the Prospectus Supplement (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Selling
Stockholder or the Company contained herein; or (iv) in whole or in part upon
any failure of the Selling Stockholder or the Company to perform its obligations
hereunder or under law; or (v) any act or failure to act or any alleged act or
failure to act by the Underwriter in connection with, or relating in any manner
to, the Securities or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action arising
out of or based upon any matter covered by clause (i), (ii), (iii) or (iv)
above, provided that the Selling Stockholder or the Company shall not be liable
under this clause (v) to the extent that a court of competent jurisdiction shall
have determined by a final judgment that such loss, claim, damage, liability or
action resulted from any such acts or failures to act undertaken or omitted to
be taken by the Underwriter through its bad faith, willful misconduct or gross
negligence; and to reimburse such Underwriter and each such controlling person
for any and all expenses (including the reasonable fees and disbursements of
counsel chosen by the Underwriter) as such expenses are reasonably incurred by
such Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Selling Stockholder or the Company by the Underwriter expressly for use in the
Registration Statement, the Base Prospectus or the Prospectus Supplement (or any
amendment or supplement thereto).
(b) Indemnification of the Company, its Directors and Officers. The
Underwriter agrees to indemnify and hold harmless the Selling Stockholder and
the Company, each of its directors, each of its officers and each person, if
any, who controls the Company within the meaning of the Act or the Exchange Act,
against any loss, claim, damage, liability or expense, as incurred, to which the
Selling Stockholder or the Company, or any such director, officer or controlling
person may become subject, under the Act, the Exchange Act, or other federal,
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter, which consent shall not be unreasonably withheld),
insofar as such loss, claim,
16
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon any untrue or alleged untrue statement of
a material fact contained in the Prospectus Supplement (or any amendment or
supplement thereto), or arises out of or is 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, in light of the circumstances under
which they were made, 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 such Prospectus Supplement (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Selling Stockholder or the Company by the Underwriter expressly
for use therein and to reimburse the Selling Stockholder or the Company, or any
such director, officer or controlling person for any legal and other expense
reasonably incurred by the Selling Stockholder or the Company, or any such
director, officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. The indemnity agreement set forth in this Section
8(b) shall be in addition to any liabilities that the Underwriter may otherwise
have.
(c) Information Provided by the Underwriter. The Selling Stockholder
and the Company and each person, if any, who controls the Company within the
meaning of the Act or the Exchange Act, hereby acknowledges that the only
information that the Underwriter will furnish to the Selling Stockholder and the
Company expressly for use in any Prospectus Supplement (or any amendment or
supplement thereto) are the statements regarding the Underwriter set forth under
the caption "Plan of Distribution" in the Prospectus Supplement.
(d) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability,
which it may have to any indemnified party for contribution to the extent it is
not prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless: (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with local counsel),
approved by the indemnifying party, representing the indemnified parties who are
parties to such action); (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action; or (iii)
the indemnifying party has
17
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party.
(e) Settlements. The indemnifying party under this Section 8 shall not
be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes: (i) an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such action, suit or
proceeding; and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.
(f) Contribution. If the indemnification provided for in this Section 8
is for any reason held unenforceable in respect of any losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) then each
indemnifying party shall contribute to the aggregate amount paid or payable by
an indemnified party under Section 8(a) or 8(b) above in such proportion as is
appropriate to reflect the relative benefits received by such party on the one
hand and the Underwriter on the other from the offering of the Securities. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of such indemnifying party on the one hand and the Underwriter on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. 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 Selling
Stockholder, the Company or the "control" stockholders on the one hand or the
Underwriter on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Selling Stockholder, the Company and the Underwriter agree that it would not
be just and equitable if contributions pursuant to this Section 8(f) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 8(f). The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(f) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (f): (i) the Underwriter shall
not be required to contribute any amount in excess of the amount of the
Underwriter fees actually received by the Underwriter pursuant to the Offering;
and (ii) 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; and (iii) the Selling
Stockholder shall not be required to contribute any amount in excess of the
amount of net proceeds actually received by the Selling Stockholder from his
sale of the Warrants pursuant to the Offering.
(g) Timing of Any Payments of Indemnification. Any losses, claims,
damages, liabilities or expenses for which an indemnified party is entitled to
indemnification or contribution under this Section 8 shall be paid by the
indemnifying party to the indemnified party as such losses, claims, damages,
18
liabilities or expenses are incurred, but in all cases, no later than forty-five
(45) days of invoice to the indemnifying party (subject to receipt of an
undertaking to repay such amounts if an indemnified party is ultimately found
not to be eligible for indemnification hereunder).
(h) Survival. Section 6 (Payment of Expenses), Section 7 (Reimbursement
of Underwriter's Expenses), Section 8 (Indemnification and Contribution) and
Section 9 (Representations and Indemnities to Survive Delivery) shall remain
operative and in full force and effect, regardless of: (i) any investigation
made by or on behalf of the Underwriter or any person controlling the
Underwriter, the Selling Stockholder, the Company, its directors or officers or
any persons controlling the Company; (ii) acceptance of any Securities and
payment therefor hereunder; and (iii) any termination of this Agreement. A
successor to the Underwriter, or to the Selling Stockholder, the Company, its
directors or officers or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 8.
(i) Acknowledgements of Parties. The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 8, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 8 fairly allocate the risks in light of the ability of the parties to
investigate the Selling Stockholder, the Company and its business in order to
assure that adequate disclosure is made in the Registration Statement and the
Prospectus Supplement as required by the Act and the Exchange Act.
SECTION 9. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and other
statements of the Selling Stockholder, the Company or any person controlling the
Company, of its officers, and of the Underwriter set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter, the Selling Stockholder
or the Company or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Securities sold or issued and sold hereunder and any termination of this
Agreement.
SECTION 10. NOTICES.
All communications hereunder shall be in writing and shall be mailed, hand
delivered or telecopied and confirmed to the parties hereto as follows: If to
the Underwriter:
▇▇▇▇ Capital Partners, LLC
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Managing Director
With a copy to
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
19
If to the Selling Stockholder or Company:
Collegiate Pacific, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇, Lidji & Werbner
4400 Renaissance Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 11. SUCCESSORS.
This Agreement will inure to the benefit of and be binding upon the parties
hereto, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8, and to their respective
successors, and personal representatives, and no other person will have any
right or obligation hereunder.
SECTION 12. PARTIAL UNENFORCEABILITY.
The invalidity or unenforceability of any section, paragraph or provision of
this Agreement shall not affect the validity or enforceability of any other
section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
SECTION 13. GOVERNING LAW PROVISIONS.
(a) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the state of California applicable to
agreements made and to be performed in such state.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in Dallas, Texas or Los Angeles, California
(collectively, the "Specified Courts"), and each party irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court (a "Related Judgment"), as to which
such jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying
20
of venue of any suit, action or other proceeding in the Specified Courts and
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 14. GENERAL PROVISIONS.
This Agreement constitutes the entire agreement of the parties to this Agreement
and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
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[Signature Page Follows]
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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Selling Stockholder and the Company the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
Very truly yours,
COLLEGIATE PACIFIC, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chairman and CEO
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, AS SELLING
STOCKHOLDER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
The foregoing Underwriting Agreement is hereby confirmed and accepted by the
Underwriter as of the date first above written.
▇▇▇▇ CAPITAL PARTNERS, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman & CEO
22