Exhibit 1.07
ORLANDO PREDATORS ENTERTAINMENT, INC.
550,000 UNITS
UNDERWRITING AGREEMENT
________ ___, 1997
First Midwest Securities, Inc.
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Gentlemen:
Orlando Predators Entertainment, Inc., a Florida corporation (the
"Company"), proposes to issue and sell to you (the "Underwriter") pursuant to
this Underwriting Agreement (the "Agreement") an aggregate of 550,000 units (the
"Firm Units"), each unit ("Unit") consisting of two (2) shares of the Company's
no par value Common Stock (the "Common Stock"), and one Redeemable Common Stock
Warrant entitling the holder thereof to purchase for $7.50, one share of Common
Stock for a term of five (5) years from the effective date of the Registration
Statement described below in Section 1(a). The terms of the Units and the
components of the Units shall be as described in the Registration Statement. In
addition, for the sole purpose of covering over-allotments in connection with
the sale of the Firm Units, the Company proposes to grant to the Underwriter an
option to purchase up to an additional 82,500 Units (the "Option Units"). The
Company further agrees to sell and issue to you as Underwriter, five-year
warrants (the "Underwriter's Warrants") to purchase for $12.00 per Unit an
aggregate of 55,000 Units (the "Underwriter's Warrant Units"). Each
Underwriter's Warrant Unit consists of two shares of Common Stock and one
Redeemable Warrant ("Underlying Warrant"). The terms and conditions of the
Underwriter's Warrants, Underwriter's Warrant Units and Underlying Warrants,
including the purchase price thereof, shall be as set forth in the Underwriter's
Warrant filed as an exhibit to the Registration Statement.
The Firm Units, any Option Units purchased pursuant to this Agreement and
the Underwriter's Warrant Units are collectively called herein the "Units" and
the Warrants included in the Units and the Underwriter's Warrants are
collectively called herein the "Warrants." The shares of Common Stock issuable
upon exercise of the Warrants are collectively called the "Warrant Shares" and
the Warrant Shares, together with the shares of Common Stock included in the
Units, are collectively called the "Shares."
You have advised the Company that you intend to purchase the Firm Units,
and that you have been authorized to execute this Agreement. The Company
confirms the agreements made by it with respect to the purchase of the Firm
Units by the Underwriter, as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to, and agrees with, the Underwriter
that:
(a) A registration statement (File No. 333-___) on Form SB-2 relating to
the public offering of the Units, Warrants and Shares, including a preliminary
form of prospectus, copies of which have heretofore been delivered to you, has
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission under the Act.
"Preliminary Prospectus" shall mean each prospectus filed pursuant to Rule 430
of the Rules and Regulations. The registration statement (including all
financial schedules and exhibits) as amended at the time it becomes effective
and the final prospectus included therein are respectively referred to as the
"Registration Statement" and the "Prospectus", except that (i) if the prospectus
first filed by the Company pursuant to Rule 424(b) or Rule 430A of the Rules and
Regulations or otherwise utilized and not required to be so filed shall differ
from said prospectus as then amended, the term "Prospectus" shall mean the
prospectus first filed pursuant to Rule 424(b) or Rule 430A, or so utilized from
and after the date on which it shall have been filed or utilized and (ii) if
such registration statement or prospectus is amended or such prospectus is
supplemented, after the effective date (the "Effective Date") of such
registration statement and prior to the Option Closing Date (as defined in
Section 2(b)), the term "Registration Statement" shall include such
registration statement as so amended, and the term "Prospectus" shall include
the prospectus as so amended or supplemented, or both, as the case may be.
(b) At the time the Registration Statement becomes effective and at all
times subsequent thereto up to the Option Closing Date (defined above), (i) the
Registration Statement and Prospectus and any amendments or supplements thereto,
will contain all statements that are required to be stated therein in accordance
with the Act, the Rules and Regulations and the Blue Sky Laws and will in all
material respects conform to the requirements of the Act, the Rules and
Regulations and the Blue Sky Laws, (ii) there will be no stop order of the
Commission, any court of competent jurisdiction or the securities administrator
of any state in which the Units, Warrants and Shares have been, or are to be,
registered or qualified, in effect, pending or threatened with respect to the
effectiveness of the Registration Statement or the distribution of the
Prospectus and (iii) neither the Registration Statement nor the Prospectus will
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make statements therein not
misleading; provided, however, that the Company makes no representations,
warranties or agreements as to information contained in or omitted from the
Registration Statement or Prospectus in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of the Underwriter
specifically for use in the preparation thereof. It is understood that the
statements set forth in the Prospectus with respect to stabilization, the
material set forth under the heading "Underwriting", and the identity of counsel
to the Underwriter under the heading "Legal Matters" constitute the only
information
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furnished in writing by or on behalf of the Underwriter for inclusion in the
Registration Statement and Prospectus, as the case may be.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation. The Company has the full power and authority and all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental and regulatory officials and bodies required to own its
properties and conduct its business as described in the Prospectus; and the
Company is duly qualified to do business under the laws of (and is in good
standing as such in) each jurisdiction in which it owns or leases property, has
an office, or in which business is conducted and such qualification is required,
except where the failure to so qualify would not have a material adverse effect
on the business, assets or financial condition of the Company, and no proceeding
has been instituted in any such jurisdiction revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
(d) The authorized capital stock of the Company as of the date of the
Prospectus, as set forth under "Description of Securities" in the Prospectus,
was 10,000,000 shares of Common Stock, no par value per share, of which not more
than 1,380,000 shares will be issued and outstanding or subject to outstanding
options or warrants as of the Effective Date and 1,500,000 shares of Preferred
Stock, no par value per share, of which no shares will be issued and
outstanding. The shares of issued and outstanding capital stock of the Company
set forth thereunder have been duly authorized, validly issued and are fully
paid and non-assessable; except as set forth in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to issue,
or agreements or other rights to convert any obligation into, any shares of
capital stock of the Company have been granted or entered into by the Company.
The Preferred Stock conforms to all statements relating thereto contained in the
Registration Statement and Prospectus.
(e) The Units and their components upon issuance and delivery and payment
therefor in the manner contemplated by this Agreement will be duly authorized,
validly issued, fully paid and nonassessable. The shares of Common Stock are
not subject to preemptive rights of any security holder of the Company. Neither
the filing of the Registration Statement nor the offering or sale of the Units,
Warrants or Shares, as contemplated in this Agreement and the Underwriter's
Warrant, gives rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any shares of Common Stock or
other securities of the Company, except as described in the Registration
Statement.
(f) All offers and sales of the Company's capital stock prior to the date
hereof, other than pursuant to effective registration statements under the Act,
were at all relevant times exempt from the registration requirements of the Act
and were duly registered or the subject of an available exemption from the
registration requirements of the applicable state securities or Blue Sky laws,
or the relevant statutes of limitations have expired, or civil liability
therefor has been eliminated by an offer to rescind.
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(g) This Agreement, including the Underwriter's Warrant, the agreement
between the Company and the warrant agent (the "Warrant Agreement") and the
other agreements of the Company provided for herein, has been duly authorized,
executed and delivered by the Company and constitute the valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except insofar as rights to indemnity and/or contribution may be limited
by federal or state securities laws or the public policy underlying such laws
and except as enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, and
be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The Units,
Warrants and Shares have been duly authorized for issuance and sale, and, when
issued pursuant to this Agreement and the Underwriter's Warrant against payment
of the consideration therefor, will be validly issued, fully paid and
nonassessable and not subject to preemptive rights. The Warrant Shares issuable
upon exercise of the Warrants have been duly authorized and reserved for
issuance upon exercise of the Warrants and when issued upon payment of the
exercise price therefor will be validly issued, fully paid and nonassessable
shares of Common Stock and not subject to preemptive rights.
(h) Except as described in the Prospectus, the Company is not in
violation, breach or default of or under, and consummation of the transactions
herein contemplated and the fulfillment of the terms of this Agreement will not
(i) violate any provision of the articles of incorporation or by-laws of the
Company (in each case as amended at the time of this Agreement), (ii) result in
the breach, or be in contravention, of any provision of any agreement,
franchise, license, indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company is a party or by which the
Company or its property may be bound or affected, or any order, law, statute,
rule or regulation applicable to the Company of any court or regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or any of its property, or any order of any court or governmental agency
or authority entered in any proceeding to which the Company was or is now a
party or by which it is bound or (iii) result in the creation of any lien,
charge or encumbrance upon any property of the Company. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement by the Company, or the consummation by the Company of the
transactions contemplated hereby, other than under the Act, the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated by
the Commission thereunder, state securities laws and regulations (collectively,
the "Blue Sky Laws") applicable to the public offering of the Units as described
in the Registration Statement and the Prospectus, and/or the rules of the
National Association of Securities Dealers, Inc. ("NASD"). This Agreement has
been duly executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable in accordance with its terms, except
insofar as rights to indemnity or contribution may be limited by applicable law
and subject to bankruptcy, insolvency or similar laws generally affecting the
rights of creditors and equitable principles effecting the right to obtain
specific enforcement or similar equitable relief.
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(i) Subject to the qualifications stated in the Prospectus, the Company
has good and marketable title to all properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are not materially significant or important in
relation to its business; all of the material leases and subleases under which
the Company is the lessor or sublessor of properties or assets or under which
the Company holds properties or assets as lessee or sublessee as described in
the Prospectus are in full force and effect, and, except as described in the
Prospectus, the Company is not in default in any material respect with respect
to any of the terms or provisions of any of such leases or subleases, and no
claim has been asserted by anyone adverse to rights of the Company as lessor,
sublessor, lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the right of the Company to continued
possession of the leased or subleased premises or assets under any such lease or
sublease except as described or referred to in the Prospectus; and the Company
owns or leases all such properties described in the prospectus as are necessary
to its operations as now conducted and, except as otherwise stated in the
Prospectus, as proposed to be conducted as set forth in the Prospectus.
(j) AJ. ▇▇▇▇▇▇▇, P.C. which has certified or shall certify certain of the
financial statements filed or to be filed with the Commission as part of the
Registration Statement and Prospectus, are independent certified public
accountants within the meaning of the Act and the Rules and Regulations.
(k) The financial statements and schedules, together with related notes,
set forth in the Prospectus or the Registration Statement present fairly the
financial position and results of operations and changes in financial position
of the Company on the basis stated in the Registration Statement, at the
respective dates and for the respective periods to which they apply. The
Company has no material liabilities or obligations, contingent or otherwise,
except as disclosed in the Registration Statement and Prospectus. Said
statements and schedules and related notes have been prepared in accordance with
generally accepted accounting principles applied on a basis which is consistent
during the periods involved.
(l) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as may otherwise be stated or
contemplated therein: (i) there has not been any material adverse change in the
condition of the Company and its subsidiaries, taken as a whole, financial and
otherwise, or in the earnings, business prospects or current operations of the
Company and its subsidiaries, taken as a whole, whether or not arising in the
ordinary course of business, (ii) there have not been any material transactions
entered into by the Company or any of its subsidiaries which are required to be
disclosed in the Registration Statement, (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock or any material change in the capital stock or material
increase in the long-term indebtedness of the Company; (iv) no action, suit or
proceeding at law or in equity and no governmental or regulatory proceeding has
occurred or is pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its subsidiaries wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
consummation of this Agreement or the business, operations,
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financial condition, income or business prospects of the Company and its
subsidiaries, taken as a whole and (v) neither the Company nor any of its
subsidiaries has sustained a loss of, or damage to, its properties (whether
or not insured) which would have a material adverse effect on the business,
operations, financial condition, income or business prospects of the Company
and its subsidiaries, taken as a whole.
(m) Except as set forth in the Prospectus, there is not now pending nor,
to the knowledge of the Company, threatened, any action, suit or proceeding
(including those related to environmental matters or discrimination on the basis
of age, sex, religion or race) to which the Company is a party before or by any
court or governmental agency or body, which might result in any material adverse
change in the condition (financial or other), business prospects, net worth or
properties of the Company; and no labor disputes involving the employees of the
Company exist which might be expected to materially adversely affect the conduct
of the business, property or operations or the financial condition or earnings
of the Company.
(n) The Company is not in violation of its articles of incorporation and
by-laws, or in default or breach under any court or administrative order or
decree, or in default with respect to any provision of any lease, loan
agreement, franchise, license, permit, agreement or other contractual obligation
to which the Company is a party or by which the Company or any of its property
is bound, and there does not exist any state of facts which constitutes an event
of default or breach under such documents or which, upon notice or lapse of time
or both, would constitute such an event of default or breach except those, if
any, described in the Prospectus or such defaults or breaches which,
individually or in the aggregate, are not, and with notice or lapse of time, or
both, would not become, material to the Company. The Company is not in
violation or breach of any law, order, rule, regulation, writ, injunction or
decree of any governmental authority or instrumentality or any court, domestic
or foreign, which violation would have a materially-adverse effect on its
business as described in the Prospectus.
(o) Except as disclosed in the Prospectus, the Company has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid all taxes shown as due thereon; and there is no tax deficiency which has
been or to the knowledge of the Company might be asserted against the Company.
(p) The Company has sufficient licenses, permits and other governmental
authorizations currently required for the conduct of its business or the
ownership of its property as described in the Prospectus and is in all material
respects complying therewith and, except as disclosed in the Prospectus, owns or
possesses adequate rights to use all material patents, patent applications,
trademarks, ▇▇▇▇ registrations, copyrights and licenses necessary for the
conduct of such business and has not received any notice of conflict with the
asserted rights of others in respect thereof. To the best knowledge of the
Company, none of the activities or business of the Company is in violation of,
or cause the Company to violate, any law, rule, regulation or order of the
United States, any state, county or locality, or of any agency or locality, the
violation of which would have a material adverse impact upon the condition
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(financial or otherwise), business, property, prospective results of operations
or net worth of the Company.
(q) The Company has not, directly or indirectly, at any time (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contribution in violation of law, or (ii) made any payment to any
state, federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments or
contributions required or allowed by applicable law. The Company's internal
accounting controls and procedures are sufficient to cause the Company to comply
in all material respects with the Foreign Corrupt Practices Act of 1977, as
amended.
(r) On the Closing Dates (as defined in Section 2(c)), all transfer or
other taxes (including franchise, capital stock or other tax, other than income
taxes imposed by any jurisdiction), if any, which are required to be paid in
connection with the sale and transfer of the Units, Warrants and Shares to the
Underwriter hereunder will have been fully paid or provided for by the Company
and all laws imposing such taxes will have been fully complied with.
(s) All contracts and other documents of the Company which are, under the
Rules and Regulations, required to be filed as exhibits to the Registration
Statement have been so filed.
(t) Neither Company nor any of its affiliates, nor any director or officer
of the foregoing, have taken and will not take, directly or indirectly, any
action designed to cause or result in, or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or otherwise,
in (i) a violation of Rule l0b-6 under the Exchange Act or (ii) the manipulation
of the price of the Units, Warrants and Shares to facilitate the sale or resale
of the Units, Warrants and Shares hereunder.
(u) Except as set forth in the Prospectus, the Company has no
subsidiaries.
(v) The Company has not entered into any agreement pursuant to which any
person is entitled either directly or indirectly to compensation from the
Company for services as a finder in connection with the proposed public
offering.
(w) Except as reflected in or contemplated by the Registration Statement
or any amendment thereto, since the respective dates as of which information is
given in the Registration Statement and prior to the Closing Date(s):
(i) the Company neither has nor will have incurred any material
liabilities or obligations, direct or contingent, nor entered into any material
transactions not in the ordinary course of business;
(ii) the Company shall not be delinquent in the payment of principal
or interest on any outstanding debt obligations; and
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(iii) there has not been and will not have been any material
adverse change, or any indication of a prospective material adverse change, in
the business, operations (resulting from litigation or otherwise), property,
prospects, financial condition, net worth or results of operations of the
Company.
(x) As of the effective date of the Registration Statement, the Common
Stock has been duly registered under Section 12(g) of the 1934 Act; the Warrants
have been approved for quotation on the National Association of Securities
Dealers Automated Quotation Small Cap Market ("Nasdaq Small Cap") upon official
notification of issuance; and the Units and Common Stock have been approved for
quotation upon the official National Market System of NASDAQ (the "NASDAQ/NMS")
upon official notice of issuance.
(y) The Company keeps accurate books and records and maintains internal
accounting controls which provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization, (ii) transactions are
recorded as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (iii) access to its assets is permitted
only in accordance with management's authorization and (iv) the reported
accountability for its assets is compared with existing assets at reasonable
intervals.
(z) The Company has not distributed and will not distribute prior to the
Closing Dates any offering material in connection with the offer and sale of the
Units, Warrants or Shares other than as permitted by the Act.
(aa) The Company has not (i) had any material dealings within the twelve
(12) months prior to the date of this Agreement with any member of the NASD, or
any person related to or associated with such member, other than discussions and
meetings relating to the Offering, except as disclosed in writing to you prior
to the date hereof; (ii) entered into a financial or management consulting
agreement except as contemplated hereunder; or (iii) engaged any intermediary
between you and the Company, and/or any of the affiliates of the Company, in
connection with the offering of Units, Warrants or Shares and no person has been
or will be compensated in any manner for such service.
Any certificate signed by any officer of the Company and delivered to you
or to counsel for the Underwriter in connection with the Closing shall be deemed
a representation and warranty by the Company to the Underwriter as to the
matters covered thereby.
2. PURCHASE, DELIVERY AND SALE OF THE SHARES.
(a) Subject to the terms and conditions of this Agreement, and upon the
basis of the representations, warranties and agreements herein contained, the
Company agrees to issue and sell to the Underwriter, and the Underwriter agrees
to buy from the Company at $9.00 per Unit at the place and time hereinafter
specified, 550,000 Units.
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Delivery of the Firm Units as well as the Underwriter's Warrant against
payment therefor shall take place at the offices of First Midwest Securities,
Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such
other place as may be designated by agreement between you and the Company) at
9:00 a.m. local time on at such date as you may designate within five business
days of the effective date of the Registration Statement or the date which you
receive the Prospectus in sufficient quantity to send confirmations of sale,
such time and date of delivery for the Firm Units being herein called the "First
Closing Date." Time shall be of the essence and delivery at the time and place
specified in this subsection (a) is a further condition to the obligations of
the Underwriter hereunder. Payment shall be made to the order of the Company on
the First Closing Date.
(b) In addition, subject to the terms and conditions of this Agreement,
and upon the basis of the representations, warranties and agreements herein
contained, the Company hereby grants an option to you to purchase all or any
part of an aggregate of an additional 82,500 Units at the same price per Unit as
you shall pay for the Firm Units being sold pursuant to the provision of
subsection (a) of this Section 2. This option may be exercised within thirty
(30) days after the First Closing Date upon notice by you to the Company
advising it as to the amount of Option Units as to which the option is being
exercised, the names and denominations in which the certificates for such Option
Units are to be registered and the time and date when such certificates are to
be delivered. Such time and date shall be determined by you but shall not be
earlier than four and not later than ten full business days after the exercise
of said option, nor in any event prior to the First Closing Date, and such time
and date is referred to herein as the "Option Closing Date." Delivery of the
Option Units against payment therefor shall take place at the offices of the
Underwriter. Time shall be of the essence and delivery at the time and place
specified in this subsection (b) is a further condition to your obligations
hereunder. The Option granted hereunder may be exercised only to cover
over-allotments in the sale by the Underwriter of Firm Units referred to in
subsection (a) above.
(c) On the basis of the representations, warranties, covenants and
agreements herein contained, and subject to the terms and conditions herein set
forth, the Company shall sell to you individually, and/or your designated
officers, at the First Closing Date, as defined below, for $100, Underwriter's
Warrants to purchase an aggregate of up to 55,000 Underwriter's Warrant Units.
The price, terms and provisions of the Underwriter's Warrant Units and the
respective rights and obligations of the Company and the holders of the
Underwriter's Warrants and/or Underwriter's Warrant Units and the components
thereof are set forth in the Underwriter's Warrant between the Company and the
Underwriter.
(d) The Company will make the certificates for the securities comprising
the Units to be purchased by the Underwriter hereunder available to you for
examination at least two full business days prior to the First Closing Date or
the Option Closing Date (which are collectively referred to herein as the
"Closing Dates" and individually as a "Closing Date"), as the case may be. The
certificates shall be in such names and denominations as you may request, at
least two full business days prior to the relevant Closing Dates. Time shall be
of the essence and the
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availability of the certificates at the time and place specified in this
Agreement is a further condition to the obligations of the Underwriter.
Definitive engraved certificates in negotiable form for the Firm Units and
the Option Units to be purchased by the Underwriter hereunder will be delivered
by the Company to you for your account against payment of the purchase price by
you by certified or bank cashier's checks in certified funds, payable to the
order of the Company.
In addition, in the event you exercise the option to purchase from the
Company all or any portion of the Option Units pursuant to the provisions of
subsection (b) above, payment for such Option Units shall be made to or upon the
order of the Company not later than ten (10) business days after the Option
Closing Date by certified checks at the time and date of delivery of such Option
Units as required by the provisions of subsection (b) above, against receipt of
the certificates for such Option Units by you for your account, registered in
such names and in such denominations as you may request.
It is understood that the Underwriter proposes to offer the Units to be
purchased hereunder to the public upon the terms and conditions set forth in the
Registration Statement, after the Registration Statement becomes effective.
3. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the Underwriter that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and, upon notification from the Commission that
the Registration Statement has become effective, will so advise you and will not
at any time, whether before or after the effective date, file any amendment to
the Registration Statement or supplement to the Prospectus of which you shall
not previously have been advised and furnished with a copy or to which you or
your counsel shall have objected in writing or which is not in compliance with
the Act and the Rules and Regulations. At any time prior to the later of (i)
the completion by the Underwriter of the distribution of the Shares contemplated
hereby (but in no event more than nine months after the date on which the
Registration Statement shall have become or been declared effective) and (ii) 25
days after the Effective Date, the Company will prepare and file with the
Commission, promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus which, in your reasonable opinion, may be
necessary or advisable in connection with the distribution of the Shares.
(i) Promptly after you or the Company is advised thereof, you will
advise the Company or the Company will advise you, as the case may be, and
confirm the advice in writing, of the receipt of any comments of the Commission,
of the effectiveness of any post-effective amendment to the Registration
Statement, of the filing of any supplement to the Prospectus or any amended
Prospectus, of any request made by the Commission for amendment of the
Registration Statement or for supplementing of the Prospectus or for additional
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information with respect thereto, of the issuance by the Commission or any
state or regulatory body of any stop orders or other order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of any Preliminary Prospectus, or of the suspension of the
qualification of the Shares for offering in any jurisdiction, or the
institution of any proceedings for any of such purposes, and the Company will
use its reasonable efforts to prevent the issuance of any such order and, if
issued, to obtain as soon as possible the lifting thereof.
(ii) The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company
authorizes the Underwriter and selected dealers to use the Prospectus in
connection with the sale of the Units for such period as in the opinion of
counsel of the Underwriter (whether general, special, patent or otherwise) the
use thereof is required to comply with the applicable provisions of the Act and
the Rules and Regulations. In case of the happening, at any time within such
period as a Prospectus is required under the Act to be delivered in connection
with sales by an underwriter or dealer, of any event of which the Company has
knowledge and which materially affects the Company or the Securities, or which,
in the opinion of counsel for the Company or counsel for the Underwriter, should
be set forth in an amendment to the Registration Statement or a supplement to
the Prospectus in order to make the statements therein not then misleading, in
light of the circumstances existing at the time the Prospectus is required to be
delivered to a purchaser of the Units, or in case it shall be necessary to amend
or supplement the Prospectus to comply with the Act or with the Rules and
Regulations, the Company will notify you promptly and forthwith prepare and
furnish to you copies of such amended Prospectus or of such supplement to be
attached to the Prospectus, in such quantities as you may reasonably request, in
order that the Prospectus, as so amended or supplemented, will not contain any
untrue statement of a material fact or omit to state any material facts
necessary in order to make the statements in the Prospectus, in the light of the
circumstances under which they are made, not misleading. The preparation and
furnishing of any such amendment or supplement to the Registration Statement or
amended Prospectus or supplement to be attached to the Prospectus shall be
without expense to the Underwriter.
(iii) The Company will comply with the Act, the Rules and
Regulations and the Securities Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations thereunder in connection with the offering and issuance of
the Shares.
(b) The Company will use its best efforts and shall pay all costs and
expenses to qualify or register ("Blue Sky") the Firm Units and Option Units for
sale under the securities or "blue sky" laws of such jurisdictions as you may
designate and will make such applications
11
and furnish such information to counsel for the Underwriter as may be
required for that purpose and to comply with such laws, provided that the
Company shall not be required to qualify as a foreign corporation or a dealer
in securities or to execute a general consent of service of process in any
jurisdiction in any action other than one arising out of the offering or sale
of the Firm Units and Option Units. Blue Sky applications shall be prepared
by the Company's counsel, ▇▇▇▇ ▇. Agron, at the Company's expense. On the
Effective Date of this Agreement as defined in Section 9 below, counsel for
the Company shall deliver to Underwriter's counsel a Blue Sky Memorandum
describing, among other things, all states wherein the Offering has been
qualified or registered for sale, the number of Units registered in each such
state and the period of effectiveness of such qualification or registration.
The Company will, from time to time, prepare and file such statements and
reports as are or may be required to continue such qualification in effect
for so long a period as you may reasonably request.
(c) If the sale of the Units provided for herein is not consummated for
any reason caused by the Company, the Company shall pay all costs and expenses
incident to the performance of the Company's obligations hereunder, including
but not limited to, all of the expenses itemized in Section 8, including your
accountable expenses, as provided in Section 8(b).
(d) The Company will use its best efforts to cause a Registration
Statement under the Exchange Act to be declared effective concurrently with the
completion of the offering of the Shares or promptly thereafter, but in no event
later than three days after the date of the Prospectus.
(e) For so long as the Company is a reporting company under either Section
12(g) or 15(d) of the Exchange Act, the Company, at its expense, will furnish to
the holders of its Common Stock, Units and Warrants an annual report (including
financial statements audited by independent public accountants), in reasonable
detail and at its expense, will furnish to you during the period ending five
years from the date hereof, (i) within 90 days of the end of each fiscal year, a
balance sheet of the Company and any subsidiaries as at the end of such fiscal
year, together with statements of income, stockholders' equity and cash flows of
the Company and any subsidiaries as at the end of such fiscal year, all in
reasonable detail and accompanied by a copy of the certificate or report thereon
of independent auditors; (ii) as soon as they are available, a copy of all
reports (financial or other) mailed to security holders; (iii) as soon as they
are available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission; and (iv) such other information as
you may from time to time reasonably request.
(f) In addition to the information and reports set forth in Section 3(e)
above, for a period of two years from the Effective Date, the Company, at its
expense, shall furnish to you (i) unaudited quarterly financial statements on a
timely basis, and (ii) monthly shareholder lists prepared by the Company's
transfer agent.
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(g) In the event the Company has an active subsidiary or subsidiaries,
such financial statements referred to in subsection (e) above will be on a
consolidated basis to the extent the accounts of the Company and its subsidiary
or subsidiaries are consolidated in reports furnished to its stockholders
generally.
(h) The Company will deliver to you at or before the First Closing Date
two signed copies of the Registration Statement including all financial
statements and exhibits filed therewith, and of all amendments thereto. The
Company will deliver to or upon order of the Underwriter, from time to time
until the Effective Date, as many copies of any Preliminary Prospectus filed
with the Commission prior to the Effective Date as the Underwriter may
reasonably request. The Company will deliver to the Underwriter on the
Effective Date and thereafter for so long as a Prospectus is required to be
delivered under the Act, from time to time, as many copies of the Prospectus, in
final form, or as thereafter amended or supplemented, as the Underwriter may
from time to time reasonably request.
(i) The Company will make generally available to its security holders and
deliver to you as soon as it is practicable to do so, but in no event later than
90 days after the end of 12 months after its current fiscal quarter, an earnings
statement (which need not be audited) covering a period of at least 12
consecutive months beginning after the Effective Date, which shall satisfy the
requirements of Section 11(a) of the Act.
(j) The Company will apply the net proceeds from the sale of the Firm
Units substantially for the purposes set forth under "Use of Proceeds" in the
Prospectus, and will file such reports with the Commission with respect to the
sale of the Units and the application of the proceeds therefrom as may be
required pursuant to Rule 463 of the Rules and Regulations.
(k) The Company will, promptly upon your request, prepare and file with
the Commission any amendments or supplements to the Registration Statement,
preliminary Prospectus or Prospectus and take any other action, which in the
reasonable opinion of ▇▇▇▇▇▇▇ & Muren, S.C., counsel to the Underwriter, may be
reasonably necessary or advisable in connection with the distribution of the
Shares and will use its reasonable efforts to cause the same to become effective
as promptly as possible.
(l) Except as stated below, each of the existing stockholders of the
Company at the date hereof (the "Existing Stockholders"), will execute
agreements ("Lock Up Agreements"), in the form previously delivered, to the
effect that for a period of 12 months from the date of the Prospectus, they will
not sell, assign, hypothecate, pledge or otherwise dispose of, directly or
indirectly, any shares of Common Stock of the Company owned prior to the date
hereof without your prior written consent, and will agree to permit all
certificates evidencing their shares to be endorsed with the appropriate
restrictive legends, and consent to the placement of appropriate stop transfer
orders with the transfer agent for the Company. Further, options of Company
employees shall be excluded from the Lock-Up Agreement. Excluded from the
Lock-Up Agreement shall be those shares of Common Stock that certain Existing
Stockholders are registering for sale as part of the Registration Statement.
The Company further agrees that for
13
a period of 12 months from the date hereof, it will not register any shares
of Common Stock underlying any existing stock purchase warrants.
(m) The Company shall immediately make all filings required to seek
approval for the quotation of the Common Stock and Units on the NASDAQ National
Market and the Warrants for quotation on the Nasdaq Small Cap and will use its
reasonable efforts to effect and maintain the aforesaid approval for at least
five years from the date of this Agreement. Within 10 days after the Effective
Date, the Company shall cause the Company to be listed in Standard & Poor's
Financial Relations Program (including S&P Corporate Records, Stock Guide, OTC
Stock Reports and Market Guide) and cause such listing to be maintained for five
years from the date of this Agreement.
(n) All officers, directors, and shareholders of the Company required to
execute the Lock Up Agreement have executed the same.
(o) Prior to the First Closing Date, the Company will not issue, directly
or indirectly, without your prior written consent, a press release or other
communication or hold any press conference with respect to the Company, its
activities or the Offering.
(p) The Company and the Existing Stockholders represent that it or they
have not taken, and agree that it or they will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result in the stabilization or manipulation of the price of
the Units to facilitate the sale or resale of the Units.
(q) For a period of twenty-four months from the Closing, the Company
shall, at your option, appoint a non-voting observer to the Company's Board of
Directors, designated by you and such observer shall receive notice of and be
entitled to attend all meetings of the Board of Directors. The Company agrees
it shall fully indemnify, defend and hold harmless such observer to the fullest
extent permitted by law with respect to all acts and omissions as an observer to
the Company's Board of Directors.
(r) The Company will reserve and keep available that maximum number of its
authorized but unissued Shares which are issuable upon exercise of the Warrants
and the Underwriter's Warrant (as defined in Section 11).
(s) The Company will not, prior to the First Closing Date, incur any
material liability or obligation, direct or contingent, or enter into any
material transaction other than in the ordinary course of business, except as
disclosed prior thereto in the Prospectus.
(t) For a period of thirty-six (36) months from the Effective Date, you
shall have the right to provide a competitive 401k program to management and all
employees of the Company.
14
(u) The Company shall select Common Stock and Warrant certificates and
utilize a stock transfer agent satisfactory to you.
(v) So long as any Warrants are outstanding, the Company shall use its
best efforts to cause post-effective amendments to the Registration Statement to
become effective in compliance with the 1933 Act and without any lapse of time
between the effectiveness of any such post-effective amendments and cause a copy
of each Prospectus, as then amended, to be delivered to each holder of record of
a Warrant and to furnish to the Underwriters and each dealer as many copies of
each such Prospectus as the Underwriters or dealer may reasonably request.
4. CONDITIONS OF UNDERWRITER'S OBLIGATION.
The obligations of the Underwriter to purchase and pay for the Units which
it has agreed to purchase hereunder are subject to the accuracy (as of the date
hereof, and as of the Closing Dates) of and compliance with the representations
and warranties of the Company herein, to the performance by the Company of its
obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and you shall
have received notice thereof not later than December 1, 1997, 2:00 P.M.,
Milwaukee, Wisconsin time, on the date of this Agreement, or at such later time
or on such later date as to which you may agree in writing; on the Closing
Dates, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that or any similar purpose shall
have been instituted or shall be pending or, to your knowledge or to the
knowledge of the Company, shall be contemplated by the Commission; any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, S.C., counsel
to the Underwriter; and no stop order shall be in effect denying or suspending
effectiveness of the Registration Statement nor shall any stop order proceedings
with respect thereto be instituted or pending or threatened under the Act.
(b) Since the dates as of which information is given in the Registration
Statement:
(i) the Company shall not have sustained any material loss or
interference with its business from any labor dispute, fire, explosion, flood or
other calamity (whether or not insured), or from any court or governmental
action, order or decree; and
(ii) there shall not have been any change in the equity ownership,
short-term debt or long-term debt of the Company or a change, or a development
involving a prospective change, in or affecting the ability of the Company to
conduct its business (whether by reason of any court, legislative, other
governmental action, order, decree, or otherwise), or in the general affairs,
management, financial position, members' equity or results of operations of the
Company, whether or not arising from transactions in the ordinary course of
business, in each case other than as set forth in or contemplated by the
Registration Statement and Prospectus, the effect of which on the Company, in
any such case described in clause (i) or (ii) of this Section 4(b), is, in
15
your judgment (exercising your sole discretion), so material and adverse as
to make it impracticable or inadvisable to proceed with the distribution of
the Offering or the delivery of the Units, Warrants and Shares on the terms
and in the manner contemplated in the Registration Statement and the
Prospectus.
(c) Between the date hereof and the First Closing Date and the Option
Closing Date if the option is exercised, there shall be no litigation instituted
or threatened against the Company and there shall be no proceeding instituted or
threatened against the Company before or by any federal or state commission,
regulatory body or administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding would materially
adversely affect the business, franchises, licenses, patents, operations or
financial condition or income of the Company considered as an entity.
(d) At the First Closing Date, you shall have received the opinion, dated
as of the First Closing Date, of ▇▇▇▇ ▇. Agron, counsel for the Company, in form
and substance satisfactory to counsel for the Underwriter, to the effect that:
(i) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Florida and is
duly qualified or licensed to do business as a foreign corporation in good
standing in each other jurisdiction in which the ownership or leasing of its
properties or the conduct of its business requires such qualification except
where failure to so qualify would not result in a material adverse effect on the
Company;
(ii) to the best knowledge of such counsel, (a) the Company has
obtained, or is in the process of obtaining, all licenses, permits and other
governmental authorizations necessary to the conduct of its business as
described in the Prospectus, (b) such obtained licenses, permits and other
governmental authorizations are in full force and effect, and (c) the Company is
in all material respects complying therewith;
(iii) the authorized capitalization of the Company as of the date
of the Prospectus was as set forth under "Description of Securities" in the
Prospectus; all of the shares of the Company's outstanding stock requiring
authorization for issuance by the Company's Board of Directors have been duly
authorized and validly issued, are fully paid and non-assessable and conform to
the description thereof contained in the Prospectus; the outstanding shares of
Common Stock of the Company have not been issued in violation of the preemptive
rights of any stockholder and the stockholders of the Company do not have any
preemptive rights or other rights to subscribe for or to purchase, and there are
no restrictions upon the voting or transfer of, any of the Common Stock; the
Units, Common Stock, Warrants and the Underwriter's Warrants conform to the
respective descriptions thereof contained in the Prospectus; the Units and each
Unit component to be issued as contemplated in the Registration Statement has
been duly authorized and, when paid, will be non-assessable and free of
preemptive rights, and no personal liability will attach to the ownership
thereof; all prior sales of the Company's securities have been made in
compliance with, or under an exemption from, the Act and applicable state
16
securities laws; a sufficient number of shares of Common Stock have been
reserved for issuance upon exercise of the Warrants and the Underwriter's
Warrants; and to the best of such counsel's knowledge, neither the filing of the
Registration Statement nor the offering or sale of the Units as contemplated by
this Agreement gives rise to any registration rights or other rights, other than
those which have been waived or satisfied, for or relating to the registration
of the Units;
(iv) the Company has full power and authority to enter into and
perform each of this Agreement, the Underwriter's Warrant, the Warrant Agreement
and the Warrants; all of such agreements, and the performance of the obligations
of the Company hereunder, have been duly authorized by all necessary action and
have been duly executed and delivered by and on behalf of the Company, and
assuming due authorization, execution and delivery of this Agreement by the
Underwriter and of such other agreements by the other parties thereto, all of
such agreements are legal, valid and binding agreements of the Company
enforceable in accordance with their terms; provided that no opinion need be
expressed as to the enforceability of the indemnity provisions contained in
Section 6 or the contribution provisions contained in Section 7 of this
Agreement, and except that rights to identify or contribution may be limited by
applicable law and enforceability of the agreement may be limited by
bankruptcy, (as described in paragraph 1(f) above) insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally; and no
approval, authorization or consent of any court, board, agency or
instrumentality of the United States or of any state or other jurisdiction is
necessary in connection with the execution and delivery of this Agreement, or in
connection with the issue or sale of the Units by the Company pursuant to this
Agreement (other than under the Act, applicable Blue Sky Laws and the rules of
the NASD) or the consummation by the Company of any transaction contemplated by
this Agreement;
(v) the Warrant Shares (including those issuable upon exercise of the
Underwriter's Warrants) and Underwriter's Warrant Units have been duly
authorized and reserved for issuance and, when issued and delivered in
accordance with the terms of this Agreement and the Underwriter's Warrant,
respectively, will be duly and validly issued, fully paid and nonassessable.
(vi) the certificate evidencing the Unit components and the
Underwriter's Warrants are in valid and proper legal form; the Warrants and the
Underwriter's Warrants will be exercisable for shares of Common Stock of the
Company in accordance with the terms of the Warrant Agreement and the
Underwriter's Warrant, respectively; and at the respective prices therein
provided for; the shares of Common Stock of the Company issuable upon exercise
of the Warrants and the Underwriter's Warrants have been duly authorized and
reserved for issuance upon such exercise or conversion, and such shares, when
issued upon such exercise in accordance with the terms of the Warrants and the
Underwriter's Warrants and at the price paid, or upon such conversion, shall be
fully paid and non-assessable;
(vii) such counsel knows of no pending or threatened legal suit,
proceeding, inquiry or investigation to which the property of the Company is
subject, before or brought by any court governmental agency or body or
arbitration tribunal which could materially and
17
adversely affect the business, property, financial position/condition, net
worth, operations or prospects of the Company or its affiliates or materially
and adversely affect their respective properties or assets, or which question
the validity of the Units or the components thereof, this Agreement, the
Warrant Agreement or the Underwriter's Warrant or of any action taken or to
be taken by the Company pursuant to this Agreement, the Warrant Agreement or
the Underwriter's Warrant; no such proceedings are known to such counsel to
be contemplated against the Company, or its assets; and there are no
governmental proceedings or regulations known to such counsel required to be
described or referred to in the Registration Statement which are not so
described or referred to;
(viii) to the best knowledge of such counsel, the Company is not in
violation of or default under this Agreement, the Warrant Agreement or the
Underwriter's Warrant, and the execution and delivery hereof and thereof and the
incurrence of the obligations herein and therein set forth and the consummation
of the transactions herein or therein contemplated will not result in a
violation of, or constitute a default under, the certificate or articles of
incorporation or by-laws of the Company, or in the performance or observation of
any material obligation, agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any contract, indenture,
mortgage, loan agreement, lease, joint venture or other agreement or instrument
to which the Company is a party or in a violation of any material order, rule,
regulation, writ, injunction or decree or any government, governmental
instrumentality or court, domestic or foreign;
(ix) the Registration Statement has become effective under the Act
and, to the best of the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or is pending before, or threatened by, the
Commission or any "blue sky" or securities authority; to the best knowledge of
such counsel, all descriptions in the Registration Statement and the Prospectus
of statutes, regulations and governmental proceedings are accurate and fairly
present the information disclosed in all material respects, and such counsel
does not know of any legal, governmental or regulatory proceedings, pending or
threatened, required to be described in the Prospectus, nor of any contracts or
documents of a character required to be described in or filed as exhibits to the
Registration Statement, which are not so described or filed;
(x) such counsel has participated in the preparation of the
Registration Statement and the Prospectus, such counsel has no reason to believe
that the Registration Statement or the Prospectus or any amendment or supplement
thereto or any document incorporated by reference therein at the time it became
effective contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading (except, for the financial statements, notes
thereto and other financial information and statistical data contained therein,
as to which such counsel need express no opinion);
(xi) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and other
documents filed as exhibits to the
18
Registration Statement are accurate and fairly present the information
required to be shown, and such counsel is familiar with all contracts and
other documents filed as exhibits to the Registration Statement and the
Prospectus and any such amendment or supplement, or filed as exhibits to the
Registration Statement, and such counsel does not know of any contracts or
documents of a character required to be summarized or described therein or to
be filed as exhibits thereto which are not so summarized, described or filed;
(xii) no authorization, approval, consent or license of any
governmental or regulatory authority or agency is necessary in connection with
the authorization, issuance, transfer, sale or delivery of the Units or Unit
components by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking of
any action contemplated herein, or the issuance of the Warrants, Underwriter's
Warrants or the securities underlying the Warrants and the Underwriter's
Warrants, other than registration or qualification of the Units and
Underwriter's Warrants under applicable state or foreign securities or blue sky
laws and registration under the Act;
(xiii) the statements in the Registration Statement under the
captions "Business," "Use of Proceeds,"Management" and "Description of
Securities" have been reviewed by such counsel and, insofar as they refer to
descriptions of agreements, statements of law, descriptions of statutes,
licenses, rules or regulations or legal conclusions, are correct in all material
respects;
(xiv) to the best knowledge of such counsel, the Company has good
and marketable title to all the property and assets reflected as owned by it in
the Prospectus, subject to no lien, mortgage, pledge, charge or encumbrance of
any kind or nature whatsoever except those, if any, reflected in the Prospectus
or which are not material to the Company and do not materially affect the value
of such property and do not materially interfere with the use made or proposed
to be made of such property; to the best knowledge of such counsel, all property
held or used by the Company under leases, licenses, franchises or other
agreements are held by it under valid, subsisting and enforceable leases,
licenses, franchises or other agreements, subject to bankruptcy, insolvency or
similar laws generally affecting the rights of creditors and equitable
principles effecting the right to obtain specific enforcement or similar
equitable relief;
(xv) to the best knowledge of such counsel, there are no holders of
securities of the Company having rights to the registration of such securities,
and there are no options, warrants or other rights to purchase or otherwise
acquire any equity interest in the Company, or any security convertible such
equity interest, except as disclosed in the Prospectus; and
(xvi) to the best knowledge of such counsel, the Company is not in
violation of its articles of incorporation or by-laws, or other organizational
or charter documents or in default (nor has an event occurred which, with
notice, lapse of time or both, would constitute such a default) in the
performance of any obligation, agreement or condition contained in any bond,
indenture, mortgage, deed of trust, note, bank loan or credit agreement or any
other agreement or instrument to which the Company is a party or by which the
Company or any of its property may be bound or affected, and to the best
knowledge of such counsel, the Company is not in
19
violation of any franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where such violation or default could have a
material adverse effect on the respective business, property or operations of
the Company.
Such opinion shall also cover such matters including to the transactions
contemplated hereby as you or counsel for the Underwriter shall reasonably
request. In rendering such opinion, such counsel may rely upon certificates of
any officer of the Company or public officials as to matters of fact; and may
rely as to all matters of law other than the law of the United States or the
corporate law of the State of Utah upon opinions of counsel satisfactory to you,
which may also be addressed to you, in which case the opinion shall state that
they have no reason to believe that you and they are not entitled to so rely.
(e) All corporate proceedings and other legal matters relating to this
Agreement, the Registration Statement, the Prospectus, and other related matters
shall be reasonably satisfactory to or approved by ▇▇▇▇▇▇▇ & ▇▇▇▇▇, S.C.,
counsel to the Underwriter, and you shall have received from such counsel a
signed opinion, dated as of the First Closing Date, with respect to the validity
of the issuance of the Units, the form of the Registration Statement and
Prospectus (other than the financial statements and other financial data
contained therein), the execution of this Agreement and other related matters as
you may reasonably require. The Company shall have furnished to counsel for the
Underwriter such documents as they may reasonably request for the purpose of
enabling them to render such opinion.
(f) At both the time of the execution of this Agreement by the Company and
at the Closing Date, you shall have received letters in form and substance
satisfactory to you, from AJ. ▇▇▇▇▇▇▇, P.C. (the "Auditors"), dated respectively
as of the date of this Agreement and as of the Closing Date, to the effect that
they are independent certified public accountants with respect to the Company
within the meaning of the Act and published Rules and Regulations, and that the
Registration Statement is correct insofar as it relates to them and stating in
effect that:
(i) In their opinion the audited financial statements and notes of
the Company in the Registration Statement and the Prospectus examined by them
comply as to form in all material respects with the applicable accounting
requirements of the Act and the published Rules and Regulation with respect to
registration statements on Form SB-2.
(ii) On the basis of inquiries and procedures conducted by them (not
constituting an examination in accordance with generally accepted auditing
standards), including a reading of the financial information and other data
included in the Registration Statement and the Prospectus in response to Item
310 of Regulation S-B; that on the basis of inquiries of officials of the
Company who have responsibility for financial accounting matters, especially as
to whether there was any adverse change in revenues, net income, or any change
in the capital stock of the Company or any change in the long-term debt or any
increase in bank borrowings or any decreases in total assets, net current assets
or shareholders' equity of the Company; reviewing minutes of all meetings of
shareholders and boards of directors (and various committees thereof) of the
Company since inception and other specified inquiries and
20
procedures, nothing has come to their attention as a result of the foregoing
inquiries and procedures that caused them to believe that:
(A) the audited financial statements for the years ended
December 31, 1995 and December 31, 1996, as to the Company, included in the
Prospectus do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published Rules and Regulations with
respect to registration statements on Form SB-2; or said financial statements
are fairly presented in conformity with generally accepted accounting
principles; or the amounts included in the Registration Statement and the
Prospectus in response to Item 310 of Regulation S-B are not consistent with the
corresponding amounts in the audited or unaudited financial statements from
which such amounts were derived; or
(B) during the period from December 31, 1996 to a specified date
not more than five (5) days prior to the date of such letter, there has been any
change in the Common Stock or long-term debt of the Company or any increase in
bank borrowings of the Company or any decrease in the shareholders' equity or
working capital of the Company or change in any other item appearing on the
Company's financial statements as to which the Underwriter may request advice,
in each case as compared with amounts shown in the financial statements included
in the Prospectus, except in each case for increases or deficiencies which the
Prospectus discloses have occurred or may occur, or as specified in such letter,
in which case the letter shall be accompanied by an explanation by the Company
of the significance thereof.
(iii) On the basis of certain procedure agreed to by the
Underwriter and the Auditors and described in their letter or letters, certain
numerical data and information included in the Registration Statement and
Prospectus and referred to in their letter were in agreement with specifically
designated records of the Company which were not included in the Registration
Statement and Prospectus but from which information in the Registration
Statement or the Prospectus was derived.
(g) There shall have been furnished to you, on each Closing Date, a
certificate of the principal executive officer and the principal financial
officer of the Company, dated as of such Closing Date, to the effect that:
(i) the representations and warranties of the Company which are set
forth in this Agreement thereof are true and correct as of the date of this
Agreement and as of each Closing Date, as if again made on and as of such
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 such
Closing Date;
(ii) to the best of their knowledge, the Commission has not issued an
order preventing or suspending the use of the Prospectus or any Preliminary
Prospectus filed as part of the Registration Statement or any amendment thereto,
no stop order suspending the effectiveness
21
of the Registration Statement or enjoining the use of the Prospectus has been
issued, and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act;
(iii) each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus and, in his
opinion and to the best of his knowledge, information and belief, the
Registration Statement and the Prospectus and any amendments or supplements,
thereto contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations to be stated therein, and
neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and, 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: and
(iv) since the effective date of the Registration Statement, there has
not been any material adverse change or, to their knowledge, a development
involving a prospective material adverse change in the business, properties,
financial conditions, general affairs or earnings of the Company, whether or not
arising from transactions in the ordinary course of business, except as
disclosed in the Registration Statement and Prospectus theretofore amended
including the proposed amendment thereto delivered to you prior to or
contemporaneously with the execution of this Agreement or (but only if you
expressly consent thereto in writing) delivered to you thereafter; since such
date and except as so disclosed, or in the ordinary course of business, the
Company has not incurred any liability or obligation, direct or indirect, or
entered into any material transaction; since such date and except as so
disclosed there has not been any material change in the equity ownership of the
Company or its short-term debt or long-term debt; since such date and except as
so disclosed, no action, suit or proceeding at law shall be pending or
threatened against the Company which would be required to be disclosed in the
Registration Statement, and no proceedings shall be pending or threatened
against the Company before or by any commission, board or administrative agency
in the United States or elsewhere, wherein an unfavorable decision, ruling or
finding would materially and adversely affect the business, property, condition
(financial or otherwise), results of operations or general affairs of the
Company; and since such date and except as so disclosed, the Company has not
incurred any material contingent obligations, and no material litigation is
pending or, to their knowledge, threatened against the Company; and, since such
date and except as so disclosed, the Company has not sustained a material loss
or interference with its business from any labor dispute, fire, explosion, flood
or other calamity (whether or not insured) or from any court or governmental
action, order or decree.
The delivery of the certificate provided for in this Section shall be and
constitute a representation and warranty of the Company as to the facts required
in the immediately foregoing clauses (i), (ii), (iii) and (iv) of this Section
to be set forth in said certificate;
22
(h) Upon exercise of the option provided for in Section 2(b) hereof, your
obligations to purchase and pay for the Option Units referred to therein will be
subject (as of the date hereof and as of the Option Closing Date) to the
following additional conditions:
(i) The Registration Statement shall remain effective at the Option
Closing Date, no stop order suspending the effectiveness thereof shall have been
issued, and no proceedings for that purpose shall have been instituted or shall
be pending, or, to your knowledge or the knowledge of the Company, shall be
contemplated by the Commission, and any reasonable request on the part of the
Commission for additional information shall have been complied with to the
satisfaction of ▇▇▇▇▇▇▇ & Muren, S.C., counsel to the Underwriter.
(ii) At the Option Closing Date there shall have been delivered to you
the signed opinion of ▇▇▇▇ ▇. Agron, counsel for the Company, dated as of the
Option Closing Date, in form and substance satisfactory to ▇▇▇▇▇▇▇ & Muren,
S.C., counsel to the Underwriter, which opinion shall be substantially the same
in scope and substance as the opinion furnished to you at the First Closing Date
pursuant to Section 4(d) hereof, except that such opinion, where appropriate,
shall cover the Option Shares rather than the Firm Shares. If the First Closing
Date is the same as the Option Closing Date, such opinions may be combined.
(iii) At the Option Closing Date, there shall have been delivered
to you a certificate of the Chairman of the Board and the principal financial
officer of the Company dated the Option Closing Date, in form and substance
satisfactory to ▇▇▇▇▇▇▇ & ▇▇▇▇▇, S.C., counsel to the Underwriter, substantially
the same in scope and substance as the certificate furnished to you at the First
Closing Date pursuant to Section 4(g) hereof.
(iv) At the Option Closing Date, there shall have been delivered to
you letters in form and substance satisfactory to you from the Auditors, dated
the Option Closing Date and addressed to you, confirming the information in
their letter referred to in Section 4(f) hereof as of the date thereof and
stating that, without any additional investigation required, nothing has come to
their attention during the period from the ending date of their review referred
to in said letter to a date not more than five (5) business days prior to the
Option Closing Date which would require any change in said letter if it were
required to be dated the Option Closing Date.
(v) All proceedings taken at or prior to the Option Closing Date in
connection with the sale and issuance of the Option Units shall be satisfactory
in form and substance to you, and you and ▇▇▇▇▇▇▇ & Muren, S.C., counsel to the
Underwriter, shall have been furnished with all such documents, certificates and
opinions as you may request in connection with this transaction in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements of the Company or its compliance with any of the covenants or
conditions contained therein.
(i) If any of the conditions herein provided for in this Section shall not
have been completely fulfilled as of the date indicated, this Agreement and all
obligations of the Underwriter under this Agreement may be cancelled at, or at
any time prior to, each Closing
23
Date by your notifying the Company of such cancellation in writing or by
telegram at or prior to the applicable Closing Date. Any such cancellation
shall be without liability of the Underwriter to the Company, except as
otherwise provided herein.
(j) There shall have been furnished to you, on or before the First Closing
Date, the Lock Up Agreement signed by the Company, and each shareholder,
director and officer so required.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and your counsel. The Company shall promptly furnish you with such
manually signed or conformed copies of such opinions, certificates, letters and
other documents as you may reasonably request from time to time. With respect
to any Closing, by written instrument delivered to the Company, you may from
time to time, in your sole discretion, waive any of the requirements imposed
upon the Company pursuant to this Section, including without limitation the
requirement that any opinion, certificate, survey or other document be delivered
to you at any Closing or as of any Closing Date; any such waiver by you with
respect to a Closing shall not in any way be construed as such waiver with
respect to any other Closing. If any condition to your obligations hereunder to
be satisfied prior to or a Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company without liability
on the part of you or the Company, except for the expenses or fees to be paid or
reimbursed by the Company pursuant to Section 8 hereof and except to the extent
provided in Sections 6 and 7 hereof.
5. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to sell and deliver the Units is subject to
the following conditions:
(a) The Registration Statement shall have become effective not later than
December 1, 1997 at 2:00 p.m. Milwaukee, Wisconsin time, on the date of this
Agreement, or on such later date or time as the Company and you may agree in
writing.
(b) On the Closing Dates, no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the Act or any
proceedings therefor initiated or threatened by the Commission.
If the conditions to the obligations of the Company provided for in this
Section have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the Option Closing Date, then only the
obligation of the Company to sell and deliver the Option Units on exercise of
the option provided for in Section 2(b) hereof shall be affected.
24
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you, each of your
officers, directors, employees and agents, and each person, if any, who controls
you within the meaning of the Act or the Exchange Act against any losses,
claims, damages or liabilities, joint or several, to which you or each such
officer, director, employee, agent or controlling person may become subject
under the Act, the Exchange Act, Blue Sky Laws or other federal or state laws or
regulations, at common law 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 any untrue statement or alleged
untrue statement of any material fact contained in or incorporated in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any application filed under any Blue Sky
Law or other document executed by the Company specifically for that purpose or
based upon written information furnished by the Company and filed in any state
or other jurisdiction in order to qualify any or all of the Units under the
securities laws thereof (any such document, application or information being
hereinafter referred to as a "Blue Sky Application") 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; the Company agrees to reimburse you and each such other indemnified
person for any legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that:
(i) any such loss, claim, damage or liability 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 amendment or supplement thereto or in any Blue Sky
Application in reliance upon and in conformity with written information
furnished to the Company by you specifically for use therein (but in no event
shall the assistance in the drafting of all or any portion of the Registration
Statement, any Preliminary Prospectus, the Prospectus, such amendment or
supplement or such other document of the type referred to in the preceding
paragraph by you or your counsel constitute such information); or
(ii) if such statement or omission was contained or made in a
Preliminary Prospectus and corrected in the Prospectus and (i) any such loss,
claim, damage or liability suffered or incurred by you (or any person who
controls you) resulted from an action, claim or suit by any person who purchased
Units from you in the Offering, and (ii) you failed to deliver or provide a copy
of the Prospectus to such person at or prior to the confirmation of the sale of
such Units in any case where such delivery is required by the Securities Act
unless such failure was due to failure by the Company to provide copies of the
Prospectus to you as required by this Agreement.
25
The indemnification obligations of the Company as provided above are in
addition to any liabilities the Company may otherwise have under other
agreements, under common law or otherwise.
(b) You will indemnify and hold harmless the Company, each of the
directors and officers of the Company who sign the Registration Statement, and
each person, if any, who controls the Company within the meaning of the Act or
the Exchange Act, against any losses, claims, damages or liabilities to which
the Company or any such director, officer or controlling person may become
subject under the Act, the Exchange Act, Blue Sky Laws or other federal or state
laws or regulations, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with your written consent, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or in any
Blue Sky Application, 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 amendment or
supplement thereto, or in any Blue Sky Application, in reliance upon and in
conformity with any written information furnished to the Company by you
specifically for use therein (but in no event shall the assistance in the
drafting of all or any portion of the Registration Statement, any Preliminary
Prospectus, the Prospectus, such amendment or supplement or such other document
of the type referred above by you or your counsel constitute such information).
You agree to reimburse the Company and each such other indemnified person for
any legal or other expenses incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action.
Your indemnification obligations as provided above are in addition to any
liabilities which you may otherwise have under other agreements, under common
law or otherwise.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify in writing the indemnifying party 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 otherwise than under
this Section. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ
26
separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the indemnified
party; provided that if the indemnified party is the Underwriter or a person
who controls the Underwriter within the meaning of the Act, the fees and
expenses of such counsel shall be at the expense of the indemnifying party if
(i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party or (ii) the named parties to any such
action (including any impleaded parties) include both the Underwriter or such
controlling person and the indemnifying party, and in the reasonable judgment
of the Underwriter, it is advisable for the Underwriter or controlling
persons to be represented by separate counsel (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf
of the Underwriter or such controlling person, it being understood, however,
that the indemnifying party shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys). No settlement of any action against an indemnified party shall be
made without the consent of the indemnified party, which shall not be
unreasonably withheld in light of all factors of importance to such
indemnified party.
7. CONTRIBUTION.
In order to provide for just and equitable contribution under the Act in
any case in which (i) the Underwriter makes claims for indemnification pursuant
to Section 6 hereof but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case, notwithstanding the fact that
the express provisions of Section 6 provide for indemnification in such case, or
(ii) contribution under the Act may be required on the part of the Underwriter,
then the Company and each person who controls the Company, in the aggregate, and
the Underwriter shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees) in either such case (after
contribution from others) in such proportions that such Underwriter is
responsible in the aggregate for that portion of such losses, claims, damages or
liabilities represented by the percentage that the underwriting discount per
Unit appearing on the cover page of the Prospectus bears to the public offering
price per Unit appearing thereon, and the Company shall be responsible for the
remaining portion, provided, however, that (a) if such allocation is not
permitted by applicable law, then the relative fault of the Company and the
Underwriter and controlling persons, in the aggregate, in connection with the
statements or omissions which resulted in such damages and other relevant
equitable considerations shall also be considered. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement of a material fact or the omission to state a material fact, such
statement or omission relates to information supplied by the Company or the
Underwriter, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
27
Company and the Underwriter agree (a) that it would not be just and equitable if
the respective obligations of the Company and the Underwriter to contribute
pursuant to this Section 7 were to be determined by PRO RATA or PER CAPITA
allocation of the aggregate damages or by any other method of allocation that
does not take account of the equitable considerations referred to in the first
sentence of this Section 7 and (b) that the contribution of the Underwriter
shall not be in excess of its proportionate share of the portion of such losses,
claims, damages or liabilities for which the Underwriter is responsible. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
ll(f) of the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. As used in this paragraph, the
word "Company" includes any officer, director, or person who controls the
Company within the meaning of Section 15 of the Act. If the full amount of the
contribution specified in this paragraph is not permitted by law, then the
Underwriter and each person who controls the Underwriter shall be entitled to
contribution from the Company to the full extent permitted by law. The
foregoing contribution agreement shall in no way affect the contribution
liabilities of any persons having liability under Section 11 of the Act other
than the Company and the Underwriter. No contribution shall be requested with
regard to the settlement of any matter from any party who did not consent to the
settlement; provided, however, that such consent shall not be unreasonably
withheld in light of all factors of importance to such party.
8. COSTS AND EXPENSES.
(a) Whether or not this Agreement becomes effective or the sale of the
Firm Units or Option Units to the Underwriter is consummated, the Company will
pay all costs and expenses incident to the performance of this Agreement by the
Company, including but not limited to the fees and expenses of counsel to the
Company and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the Registration
Statement (including the financial statements therein and all amendments and
exhibits thereto), each Preliminary Prospectus and the Prospectus, as amended or
supplemented, the fee of the NASD in connection with the filing required by the
NASD relating to the offering of the Units contemplated hereby; all expenses,
including reasonable fees (but not in excess of the amount set forth in Section
3(b)) and disbursements of counsel to the Underwriter, in connection with the
qualification of the Units and Unit components under the State Securities or
Blue Sky Laws which we shall mutually designate; the cost of printing and
furnishing to the Underwriter copies of the Registration Statement, each
Preliminary Prospectus, the Prospectus, this Agreement, the Selling Agreement
and the Blue Sky Memorandum; the cost of printing the certificates representing
the components comprising the Units, expenses of Company due diligence meetings
and presentations. The Company shall pay any and all taxes (including any
transfer, franchise, capital stock or other tax imposed by any jurisdiction) on
sales to the Underwriter hereunder. The Company will also pay all costs and
expenses incident to the furnishing of any amended Prospectus or of any
supplement to be attached to the Prospectus as called for in Section 3(a) of
this Agreement except as otherwise set forth in said Section.
(b) In addition to the foregoing expenses, the Company shall at the First
Closing Date pay to you the balance of a non-accountable expense allowance of
$135,000 of which $20,000
28
has been paid. In the event the over-allotment option is exercised in full,
the Company shall pay to you at the Option Closing Date an additional amount
equal to 3% of the gross proceeds received upon exercise of the
over-allotment option. In the event the transactions contemplated hereby are
not consummated for any reason, the Underwriter will retain that portion of
the $20,000 non-accountable expense allowance deposit received from the
Company as is equal to its actual accountable expenses and will reimburse the
Company for the remainder, if any.
(c) No person is entitled either directly or indirectly to compensation
from the Company, from the Underwriter or from any other person for services as
a finder in connection with the proposed offering, and the Company agrees to
indemnify and hold harmless the Underwriter, and the Underwriter agrees to
indemnify and hold harmless the Company from and against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all attorneys' fees), to which the indemnified party may
become subject insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon the claim of any
person (other than an employee of the party claiming indemnity) or entity that
he or it is entitled to a finder's fee in connection with the proposed offering
by reason of such person's or entity's influence or prior contact with the
indemnifying party.
9. EFFECTIVE DATE.
The Agreement shall become effective upon its execution, except that you
may, at your option, delay its effectiveness until 9:00 a.m. Milwaukee,
Wisconsin time, on the first full business day following the Effective Date, or
at such earlier time after the Effective Date as you in your discretion shall
first commence the initial public offering of any of the Shares. The time of the
initial public offering shall mean the time of release by you of the first
newspaper advertisement with respect to the Shares, or the time when the Shares
are first generally offered by you to dealers by letter, telegram, or telefax
whichever shall first occur. This Agreement may be terminated by you at any time
before it becomes effective as provided above, except that Sections 3(c), 6, 7,
8, 12, 13, 14 and 17 shall remain in effect notwithstanding such termination.
10. TERMINATION.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 12, 13, 14 and 17,
may be terminated at any time prior to the First Closing Date, and the option
referred to in Section 2(b), if exercised, may be cancelled, at any time prior
to the Option Closing Date, by you if in your judgment it is impracticable to
offer for sale or to enforce contracts made by the Underwriter for the resale of
the Units agreed to be purchased hereunder, by reason of (i) the Company having
sustained a material loss, whether or not insured, by reason of fire,
earthquake, flood, accident or other calamity, or from any labor dispute or
court or government action, order or decree, (ii) trading in securities on the
New York Stock Exchange or the American Stock Exchange having been suspended or
limited, (iii) material governmental restrictions having been imposed on trading
in securities generally which are not in force and effect on the date hereof,
(iv) a banking moratorium having been declared by federal, Florida or New York
State
29
authorities, (v) an outbreak of major international hostilities or other
national or international calamity having occurred, (vi) the passage by the
Congress of the United States or by any state legislative body of similar
impact, of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting
institute or board, or any governmental executive, which is reasonably
believed likely by you to have a material adverse impact on the business,
financial condition or financial statements of the Company, (vii) any adverse
change having occurred in the sole opinion of the Underwriter in the
financial or securities markets since the date of this Agreement, (viii) any
event shall have occurred or shall exist which makes untrue or incorrect in
any material respect any statement or information contained in the
Registration Statement or which is not reflected in the Registration
Statement but should be reflected therein in order to make the statements or
information contained therein not misleading in any material respect; or (ix)
any adverse change having occurred in the sole opinion of the Underwriter
with respect to the earnings, business prospects or general condition of the
Company, financial or otherwise, other than normal fluctuations in sales,
whether or not arising in the ordinary course of business.
(b) If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 10 or in Section 9, the
Company shall be promptly notified by you, by telephone, telegram, or telefax
confirmed by letter.
(c) Any termination pursuant to section 10 or 9 of the Agreement shall be
without liability of the Underwriter to the Company or on the part of the
Company to the Underwriter, including, but not limited to, loss of anticipated
profits or consequential damages except that the Company shall remain obligated
to pay the costs and expenses provided to be paid in Section 4(b) and 8 hereof
and except as to indemnification and contribution as provided in Section 6 and 7
hereof.
11. UNDERWRITER'S WARRANT.
On the First Closing Date, the Company will issue to you, for a
consideration of $100 and upon the terms and conditions set forth in the form of
Underwriter's Warrant annexed as an exhibit to the Registration Statement, an
Underwriter's Warrant to purchase up to 55,000 Units at an exercise price of
$12.00 per Unit. In the event of conflict in the terms of this Agreement and
the Underwriter's Warrant, the language of the Underwriter's Warrant shall
control.
12. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
(a) All representations, warranties, covenants and agreements of the
Company, the Company and the Underwriter contained herein or in certificates of
officers delivered pursuant hereto, and the indemnity and contribution
agreements contained in Section 6 and 7 hereof, shall survive the delivery and
execution of this Agreement and the Closing Date and shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
you
30
or any person controlling you, the Company or any of its officers, directors,
or controlling persons.
(b) The indemnification and contribution provisions of Section 6 and 7
hereof are in addition to any and all remedies or rights which either of the
parties hereto may have, including the right to ▇▇▇ and recover damages for any
breach of any representation, warranty or covenant made or given by either of
the parties hereto to any other party.
13. NOTICE.
All communications hereunder will be in writing and, except as otherwise
expressly provided herein, if sent to you, will be mailed, certified mail,
return receipt requested, delivered or telegraphed or telefaxed and confirmed
at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telefax
(▇▇▇) ▇▇▇-▇▇▇▇, or if sent to the Company, will be mailed, certified mail,
return receipt requested, delivered, or telegraphed or telefaxed and confirmed
to it at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telefax (▇▇▇) ▇▇▇-▇▇▇▇.
14. PARTIES IN INTEREST.
The Agreement herein set forth is made solely for the benefit of the
Underwriter and the Company and any person controlling the Company, or the
Underwriter, and directors of the Company, nominees for directors of the Company
(if any) named in the Prospectus, the officers of the Company who have signed
the Registration Statement, and their respective executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser, as such purchaser, from the Underwriter of the Units.
15. INTEGRATION. This Agreement (including the Schedules hereto) constitutes
the entire agreement among the parties hereto with respect to the subject
matters hereof and supersedes all prior agreements and understandings among the
parties both written and oral.
16. PARTIAL UNENFORCEABILITY. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, such
determination shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof.
17. APPLICABLE LAW.
This Agreement will be governed by, and construed in accordance with, the
laws of the State of Wisconsin applicable to agreements made and to be entirely
performed within Wisconsin.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return this agreement, whereupon it will become a binding
agreement between the Company and the Underwriter in accordance with its terms.
31
Very truly yours,
ORLANDO PREDATORS ENTERTAINMENT, INC.
By
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
Dated: , 1997
------------------
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
FIRST MIDWEST SECURITIES, INC.
By
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
Dated: , 1997
------------------
32