Exhibit 1.1
Tejas Incorporated
1,600,000 Shares *
Common Stock
($0.001 par value)
Underwriting Agreement
New York, New York
, 2005
▇.▇. ▇▇▇▇▇▇▇▇▇, Towbin LLC
As Representative of the several Underwriters,
c/o ▇.▇. ▇▇▇▇▇▇▇▇▇, Towbin LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Ladies and Gentlemen:
Tejas Incorporated, a Delaware corporation (the "Company"), proposes
to issue and sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representative") are acting as
representative, 1,600,000 shares of Common Stock, $0.001 par value ("Common
Stock") of the Company, (said shares to be issued and sold by the Company being
hereinafter called the "Underwritten Securities"). The Company also proposes to
grant to the Underwriters an option to purchase up to 60,000 additional shares
of Common Stock (the "Company Option Securities"). The stockholder listed in
Schedule II hereto (the "Selling Stockholder") proposes to grant to the
Underwriters an option to purchase up to an aggregate of 180,000 shares of
Common Stock (the "Selling Stockholder Option Securities" and together with the
Company Option Securities, hereinafter called the "Option Securities"; and the
Option Securities, together with the Underwritten Securities hereinafter called
the "Securities"). To the extent there are no additional Underwriters listed on
Schedule I other than you, the term Representative as used herein shall mean
you, as Underwriter, and the terms Representative and Underwriters shall mean
either the singular or plural as the context requires.
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* Plus an option to purchase from the Company up to 60,000 additional
shares and from the Selling Stockholder 180,000 additional shares to cover
over-allotments.
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The terms which follow, when used in this Agreement, shall have the
meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder
"Business Day" shall mean any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration Statement at
the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a), including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration Statement
becomes effective prior to the Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended or any Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A Information
deemed to be included therein at the Effective Date as provided by Rule 430A.
"Rule 424," "Rule 430A" and "Rule 462(b)" refer to such rules under
the Act.
"Rule 430A Information" means information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A. "Rule
462(b) Registration Statement" shall mean a registration statement and any
amendments thereto filed pursuant to Rule 462(b)
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relating to the offering covered by the registration statement referred to in
Section 1(a) hereof.
1. Representations and Warranties. (a) The Company represents and
warrants to, and agrees with, each Underwriter that:
(i) The Company has prepared and filed with the Commission a
registration statement (file number 333-12521) on Form S-1, including a
related preliminary prospectus, for the registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus, each
of which has previously been furnished to you. The Company will next file
with the Commission either (i) prior to the Effective Date of such
registration statement, a further amendment to such registration statement
(including the form of final prospectus) or (ii) after the Effective Date
of such registration statement, a final prospectus in accordance with
Rules 430A and 424(b). In the case of clause (ii), the Company has
included in such registration statement, as amended at the Effective Date,
all information (other than Rule 430A Information) required by the Act and
the rules thereunder to be included in such registration statement and the
Prospectus. As filed, such amendment and form of final prospectus, or such
final prospectus, shall contain all Rule 430A Information, together with
all other such required information, and, except to the extent the
Representative shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company has advised
you, prior to the Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date and on any date on which Option
Securities are purchased, if such date is not the Closing Date (a
"settlement date"), the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the
Act and the rules thereunder; on the Effective Date and at the Execution
Time, the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein
not misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, the
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to the
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information contained in or omitted from the Registration Statement, or
the Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Representative specifically for
inclusion in the Registration Statement or the Prospectus.
(iii) Each of the Company and Tejas Securities Group, Inc., a
Texas corporation, (the "Subsidiary") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized with full corporate
power and authority to own its properties and conduct its business as
described in the prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the failure
to so qualify would not, individually or in the aggregate, have a material
adverse effect on the prospects, earnings, business or properties of the
Company and the Subsidiary, taken as a whole.
(iv) The Subsidiary is the only subsidiary of the Company
within the meaning of Rule 405 under the Securities Act and is the only
significant subsidiary of the Company as defined by Rule 1-02 of
Regulation S-X. All the outstanding shares of capital stock of the
Subsidiary have been duly and validly authorized and issued and are fully
paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the Subsidiary are
owned by the Company directly, free and clear of any perfected security
interest and any other security interests, claims, liens or encumbrances.
(v) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectus;
the outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable; the Securities
being sold hereunder have been duly and validly authorized, and, when
issued and delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the certificates for the
Securities are in valid and sufficient form; the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive or
other rights to subscribe for the Securities and, except as set forth in
the Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital stock
of or ownership interests in the Company are outstanding.
(vi) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not described
or filed as required; and the statements in the Prospectus under the
heading
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"Description of Capital Stock" fairly summarize the matters therein
described.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms.
(viii) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(ix) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection with
the transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in
the Prospectus.
(x) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or the Subsidiary pursuant to (i) the
charter or by-laws of the Company or the Subsidiary or (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or the Subsidiary is a party or bound or
to which its or their property is subject, except where such conflict,
breach violation or imposition of any such lien, charge or encumbrance
would not, individually or in the aggregate, have a material adverse
effect on the prospects, earnings, business or properties of the Company
and the Subsidiary, taken as a whole, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or the
Subsidiary of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
the Company or the Subsidiary or any of their respective properties.
(xi) No holders of securities of the Company have rights to
the registration of such securities under the Registration Statement
except for such rights of ▇▇▇▇▇▇ Family Partnership, Ltd. as have been
effectively waived.
(xii) The consolidated financial statements and schedules of
the Company and the Subsidiary included in the Prospectus and the
Registration Statement present fairly in all material respects the
financial condition, results of operations, cash flows and stockholders'
equity of the Company as of the dates and for the periods indicated,
comply as to form with the applicable
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accounting requirements of the Act and the rules and regulations
thereunder and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise noted therein). The selected financial data
set forth under the caption "Selected Financial Information" and the
summary financial data set forth under the caption "Summary Financial
Data", each in the Prospectus and Registration Statement fairly present,
on the basis stated in the Prospectus and the Registration Statement, the
information included therein.
(xiii) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or the Subsidiary or their respective property is pending or, to
the best knowledge of the Company, threatened that (A) could reasonably be
expected to have a material adverse effect on the performance of this
Agreement or the consummation of any of the transactions contemplated
hereby or (B) could reasonably be expected to have a material effect on in
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiary, taken as a whole, except as
set forth in or contemplated in the Prospectus (except, in the case of
this clause (B), for those that have been disclosed in the Prospectus);
and no labor disturbance by or dispute with the employees of the Company
exists or is threatened or is imminent that could reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
the Subsidiary, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or contemplated
in the Prospectus.
(xiv) Each of the Company and the Subsidiary, owns or leases
all such properties as are necessary to the conduct of its operations as
presently conducted; neither the Company nor the Subsidiary is in
violation of any law, rule or regulation of any Federal, state or local
governmental or regulatory authority applicable to it or is in
non-compliance with any term or condition of, or has failed to obtain and
maintain in effect, any license, certificate, permit or other governmental
authorization required for the ownership or lease of its property or the
conduct of its business, which violation, non-compliance or failure would
individually or in the aggregate have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiary, taken as a whole, except as
set forth in or contemplated in the Prospectus; and the Company has not
received written notice of any proceedings relating to the revocation or
material modification of any such license, certificate, permit or other
authorization.
(xv) Neither the Company nor the Subsidiary is in violation or
default of (i) the terms of any indenture, contract, lease, mortgage, deed
of trust, note agreement, loan agreement or other agreement, obligation,
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condition, covenant or instrument to which it is a party or bound or to
which its property is subject, except where such violation or default,
individually or in the aggregate would not have a material adverse effect
on the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and the Subsidiary, taken as a whole, whether
or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus and (ii) any
provision of its charter or bylaws.
(xvi) Each of Helin, Donovan, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇▇ &
Young LLP and KPMG LLP, who have certified certain financial statements of
the Company and the Subsidiary and delivered their respective reports with
respect to the audited consolidated financial statements and schedules
included in the Prospectus, are independent public accountants with
respect to the Company within the meaning of the Act and the applicable
published rules and regulations thereunder.
(xvii) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution
and delivery of this Agreement or the issuance by the Company or sale by
the Company of the Securities.
(xviii) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
the Subsidiary, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or contemplated
in the Prospectus) and has paid all taxes required to be paid by it and
any other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or as described in or as would not have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiary, taken as a whole, except as
set forth in or contemplated in the Prospectus.
(xix) The Company and the Subsidiary are insured by insurers
of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which
they are engaged; neither the Company nor the Subsidiary has been refused
any insurance coverage which (A) the Company or the Subsidiary sought or
applied for and (B) is material to the business of the Company and
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Subsidiary, taken as a whole; and neither the Company nor the Subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiary, taken as a whole.
(xx) The Subsidiary is not currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any
other distribution on the Subsidiary's capital stock, from repaying to the
Company any loans or advances to the Subsidiary from the Company or from
transferring any of the Subsidiary's property or assets to the Company,
except as described in or contemplated by the Prospectus.
(xxi) The Company and the Subsidiary are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses
and (iii) have not received notice of any actual or potential liability
under any environmental law, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals, or liability would not, individually or in the aggregate, have
a material adverse change in the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and the
Subsidiary, taken as a whole, except as set forth in or contemplated in
the Prospectus. Except as set forth in the Prospectus, neither the Company
nor the Subsidiary has been named as a "potentially responsible party"
under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
(xxii) The Company and the Subsidiary maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxiii) The Company and the Subsidiary own, possess, license
or have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service ▇▇▇▇
registrations,
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trade names, copyrights, licenses, inventions, trade secrets, technology,
know-how and other intellectual property (collectively, the "Intellectual
Property") necessary for the conduct of the Company's business as now
conducted or as proposed in the Prospectus to be conducted. Except as set
forth in the Prospectus (a) there are no rights of third parties to any
such Intellectual Property; (b) there is no material infringement by third
parties of any such Intellectual Property; (c) there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the Company's rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a
reasonable basis for any such claim; (d) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intellectual
Property, and the Company is unaware of any facts which would form a
reasonable basis for any such claim; (e) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by
others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of others,
and the Company is unaware of any other fact which would form a reasonable
basis for any such claim; (f) to the Company's knowledge, there is no U.S.
patent or published U.S. patent application which contains claims that
dominate or may dominate any Intellectual Property described in the
Prospectus as being owned by or licensed to the Company or that interferes
with the issued or pending claims of any such Intellectual Property; and
(g) there is no prior art of which the Company is aware that may render
any U.S. patent held by the Company invalid or any U.S. patent application
held by the Company unpatentable which has not been disclosed to the U.S.
Patent and Trademark Office. Each of the Company and the Subsidiary owns
the Intellectual Property or has the rights to the Intellectual Property
that is necessary to conduct its business as described in the Prospectus.
(xxiv) The minimum funding standard under Section 302 of the
Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder ("ERISA"), has been
satisfied by each "pension plan" (as defined in Section 3(2) of ERISA)
which has been established or maintained by the Company and/or the
Subsidiary, and the trust forming part of each such plan which is intended
to be qualified under Section 401 of the Code is so qualified; each of the
Company and the Subsidiary has fulfilled its obligations, if any, under
Section 515 of ERISA; neither the Company nor the Subsidiary maintains or
is required to contribute to a "welfare plan" (as defined in Section 3(1)
of ERISA) which provides retiree or other post-employment welfare benefits
or insurance coverage (other than "continuation coverage" (as defined in
Section 602 of ERISA)); each pension plan and welfare plan established or
maintained by the Company and/or the Subsidiary is in compliance in all
material respects with the currently applicable provisions of ERISA; and
neither the Company nor the Subsidiary has incurred or could reasonably be
expected to incur any material withdrawal liability under Section 4201 of
ERISA, any liability
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under Section 4062, 4063, or 4064 of ERISA, or any other liability under
Title IV of ERISA.
(xxv) There is and has been no failure on the part of the
Company and any of the Company's directors or officers, in their
capacities as such, to comply with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002 and the rules and regulations promulgated in connection therewith
(the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"), including Section 402 related to loans and
Sections 302 and 906 related to certifications.
(xxvi) The Company is in compliance with all the applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act that are currently in effect and
require compliance on or before the date hereof. The Company is taking
commercially reasonable steps it deems appropriate to ensure that it will
be in compliance with other applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act that are not currently in effect upon the effectiveness of such
provisions.
(xxvii) The statistical, industry-related and market-related
data included in the Registration Statement and the Prospectus are based
on or derived from sources which the Company in good faith believes are
reliable and accurate, and such data agree in all material respects with
the sources from which they are derived.
(xxviii) Neither the Company nor the Subsidiary nor, to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or the Subsidiary is aware of or has taken any
action, directly or indirectly, that would result in a violation by such
Persons of the Foreign Corrupt Practice Act of 1977, as amended and the
rules and regulations thereunder ("FCPA"), including, without limitation,
making use of the mails or any means or instrumentality of interstate
commerce corruptly in furtherance of an offer, payment, promise to pay or
authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to
any "foreign official" as such term is defined in the FCPA or any foreign
political party or official thereof or any candidate for foreign political
office, in contravention of the FCPA and the Company, the Subsidiary and,
to the knowledge of the Company, its affiliates have conducted their
businesses in compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith.
(xxix) The Company and the Subsidiary are in compliance with
all applicable rules and regulations promulgated by the National
Association of Broker Dealers, Inc. (the "NASD"), except where such
non-compliance would not would not, individually or in the aggregate, have
a material adverse effect on the prospects, earnings, business or
properties of the Company and the
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Subsidiary, taken as a whole, and the Company and the Subsidiary have
instituted and maintain policies and procedures designed to ensure, and
which are reasonably expected to continue to ensure, continued compliance
therewith.
Any certificate signed by any officer of the Company and delivered
to the Representative or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
(b) The Selling Stockholder represents and warrants to, and
agrees with, each Underwriter that:
(i) The Selling Stockholder shall have, immediately prior
to the Closing Date, good and valid title to the Securities to be sold
by the Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Securities
and payment therefor pursuant hereto, good and valid title to such
Securities, free and clear of all liens, encumbrances, equities or
claims, will pass to the several Underwriters.
(ii) The Selling Stockholder has not taken, directly or
indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in, under the Exchange
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(iii) No consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in
connection with the sale of Securities by the Selling Stockholder,
except such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the Underwriters in
the manner contemplated herein and in the Prospectus.
(iv) Neither the sale of the Securities by the Selling
Stockholder nor the fulfillment of the terms hereof by the Selling
Stockholder will conflict with, result in a breach or violation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Selling Stockholder pursuant to (A) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Selling Stockholder is a party or bound or to
which his property is subject, or (B) any statute, law, rule,
regulation, judgment, order or decree applicable to the Selling
Stockholder of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Selling Stockholder or his properties.
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(v) The sale of Securities by the Selling Stockholder
pursuant hereto is not prompted by any information concerning the
Company or the Subsidiary which is not set forth in the Prospectus or
any supplement thereto.
(vi) This Agreement has been duly authorized, executed and
delivered by the Selling Stockholder and constitutes a valid and
binding obligation of the Selling Stockholder enforceable in accordance
with its terms.
(vii) In respect of any statements in or omissions from the
Registration Statement of the Prospectus or any supplements thereto, in
each case made in reliance upon and in conformity with information
furnished in writing to the Company by the Selling Stockholder
specifically for use in connection with the preparation thereof, such
statements comply in all material respects with the applicable
requirements of the Act and the rules thereunder; and, on the Effective
Date, the Prospectus, if not filed pursuant to Rule 424(b), will not,
and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date and any settlement date, the such statements will not,
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
Any certificate signed by the Selling Stockholder and delivered to
the Representative or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Selling Stockholder, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a
purchase price of $ per share, the amount of the Underwritten
Securities set forth opposite such Underwriter's name in Schedule I
hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Selling
Stockholder hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 180,000
shares of Selling Stockholder Option Securities at the same purchase
price per share as the Underwriters shall pay for the Underwritten
Securities. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Securities by the
Underwriters. Said option may be exercised in whole or in part at
any time on or before the 30th day after the date of the Prospectus
upon written or telegraphic notice by the Representative to the
Selling Stockholder setting forth the number of shares of the
Selling Stockholder Option
13
Securities as to which the several Underwriters are exercising the
option and the settlement date. Delivery of certificates for the
shares of Selling Stockholder Option Securities, and payment
therefor, shall be made as provided in Section 3 hereof. The number
of shares of the Selling Stockholder Option Securities to be
purchased by each Underwriter shall be the same percentage of the
total number of shares of the Selling Stockholder Option Securities
to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten Securities, subject to such
adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
(c) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company
hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to 60,000 shares of the Company Option
Securities at the same purchase price per share as the Underwriters
shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be
exercised in whole or in part at any time on or before the 30th day
after the date of the Prospectus upon written or telegraphic notice
by the Representative to the Company setting forth the number of
shares of the Company Option Securities as to which the several
Underwriters are exercising the option and the settlement date.
Delivery of certificates for the shares of Company Option
Securities, and payment therefor, shall be made as provided in
Section 3 hereof. The number of shares of the Company Option
Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Company Option
Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to
such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
(d) Prior to or concurrently with the exercise of the
Underwriters' option granted by the Company with respect to the
Company Option Securities, the Underwriters must exercise in whole
their option granted by the Selling Stockholder with respect to the
Selling Stockholder Securities.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) and/or (c) hereof shall have been exercised on or before the third
Business Day prior to the Closing Date) shall be made at 10:00 AM, New York City
time, on , 2005, or such time on such later date not more than three
Business Days after the foregoing date as the Representative shall designate,
which date and time may be postponed by agreement between the Representative and
the Company or as provided in Section 9 hereof (such date and time of delivery
and payment for the Securities being herein called the "Closing Date"). Delivery
of the Securities shall be made to the Representative for the respective
14
accounts of the several Underwriters against payment by the several Underwriters
through the Representative of the purchase price thereof to or upon the order of
the Company by wire transfer payable in same day funds to an account specified
by the Company. Delivery of the Underwritten Securities and the Option
Securities shall be made through the facilities of The Depository Trust Company
unless the Representative shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Selling Stockholder will
deliver the Option Securities (at the expense of the Company) to the
Representative on the date specified by the Representative (which shall be
within three Business Days after exercise of said option), for the respective
accounts of the several Underwriters against payment by the several Underwriters
through the Representative of the purchase price thereof to or upon the order of
the Selling Stockholder by wire transfer payable in same day funds to accounts
specified by the Selling Stockholder. Delivery of the Option Securities shall be
made through facilities of the Depository Trust Company unless the
Representative shall otherwise instruct.
If the option provided for in Section 2(c) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representative on the
date specified by the Representative (which shall be within three Business Days
after exercise of said option), for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representative of the purchase price thereof to or upon the order of the Company
by wire transfer payable in same day funds to an account specified by the
Company. Delivery of the Option Securities shall be made through facilities of
the Depository Trust Company unless the Representative shall otherwise instruct.
If settlement for the Option Securities occurs after the Closing
Date, the Company and the Selling Stockholder will deliver to the Representative
on the settlement date for the Option Securities, and the obligation of the
Underwriters to purchase the Option Securities shall be conditioned upon receipt
of, supplemental opinions, certificates and letters confirming as of such date
the opinions, certificates and letters delivered on the Closing Date pursuant to
Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. (a) The Company agrees with the several Underwriters
that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectus or any Rule 462(b)
15
Registration Statement unless the Company has furnished you a copy for
your review prior to filing and will not file any such proposed amendment
or supplement to which you reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required
under Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representative of
such timely filing. The Company will promptly advise the Representative
(i) when the Registration Statement, if not effective at the Execution
Time, shall have become effective, (ii) when the Prospectus, and any
supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration
Statement shall have been filed with the Commission, (iii) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (iv) of
any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or for
any supplement to the Prospectus or for any additional information, (v) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (vi) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The Company
will use its best efforts to prevent the issuance of any such stop order
or the suspension of any such qualification and, if issued, to obtain as
soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as
a result of which the Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to
amend the Registration Statement or supplement the Prospectus to comply
with the Act or the rules thereunder, the Company promptly will (i) notify
the Representative of any such event, (ii) prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this
Section 5, an amendment or supplement which will correct such statement or
omission or effect such compliance and (iii) supply any supplemented
Prospectus to you in such quantities as you may reasonably request.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Representative an earnings
statement or statements of the Company and the Subsidiary which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
16
(iv) The Company will furnish to the Representative and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representative may reasonably request.
(v) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representative may designate, will maintain such
qualifications in effect so long as required for the distribution of the
Securities; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of
the Securities, in any jurisdiction where it is not now so subject.
(vi) The Company will not, for a period of 180 days following
the Execution Time, without the prior written consent of ▇.▇. ▇▇▇▇▇▇▇▇▇,
Towbin LLC, offer, sell or contract to sell, pledge, or otherwise dispose
of (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act,
any other shares of Common Stock or any securities convertible into, or
exercisable, or exchangeable for, shares of Common Stock, or publicly
announce an intention to effect any such transaction, provided, however,
that the Company may issue and sell Common Stock pursuant to any employee
stock option plan, stock ownership plan or dividend reinvestment plan of
the Company in effect at the Execution Time and the Company may issue
Common Stock issuable upon the conversion of securities or the exercise of
warrants outstanding at the Execution Time.
(vii) The Company will comply with all applicable securities
and other applicable laws, rules and regulations, including, without
limitation, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and to use its best efforts to cause
the Company's directors and officers, in their capacities as such, to
comply with such laws, rules and regulations, including, without
limitation, the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
17
(viii) The Company will not take, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(ix) The Company agrees to pay the costs and expenses relating
to the following matters: (i) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary Prospectus,
the Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of
the Securities; (iii) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of
the Securities; (v) the registration of the Securities under the Exchange
Act and the listing of the Securities on the Nasdaq SmallCap Market; (vi)
any registration or qualification of the Securities for offer and sale
under the securities or blue sky laws of the several states (including
filing fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification); (vii) any
filings required to be made with the National Association of Securities
Dealers, Inc. (including filing fees and the reasonable fees and expenses
of counsel for the Underwriters relating to such filings); (viii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers
of the Securities; (ix) the fees and expenses of the Company's accountants
and the fees and expenses of counsel (including local and special counsel)
for the Company; and (x) all other costs and expenses incident to the
performance by the Company of its obligations hereunder.
(b) The Selling Stockholder agrees with the several Underwriters
that:
(i) The Selling Stockholder will not, for a period of 180 days
following the Execution Time, without the prior written consent of ▇.▇.
▇▇▇▇▇▇▇▇▇, Towbin LLC, offer, sell or contract to sell, pledge, or
otherwise dispose of (or enter into any transaction which is designed to,
or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash
settlement or otherwise) by the Selling Stockholder or any affiliate of
the Selling Stockholder or any person in privity with such Stockholder or
any affiliate of
18
the Selling Stockholder) directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act, any other shares of Common
Stock or any securities convertible into, or exercisable, or exchangeable
for, shares of Common Stock, or publicly announce an intention to effect
any such transaction, provided, however, that nothing in this clause (i)
shall prohibit the Selling Stockholder from disposing any shares of Common
Stock (x) as contemplated by this Agreement; (y) as a bona fide gift or
gifts, provided the donee or donees thereof agree in writing to be bound
by this restriction; or (z) as a distribution to members, partners or
shareholders of such person, provided that the distributees thereof agree
in writing to be bound by the terms of this restriction;
(ii) The Selling Stockholder will not take, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
(iii) The Selling Stockholder will advise the Representative
promptly, and if requested by the Representative, will confirm such advice
in writing, so long as delivery of a prospectus relating to the Securities
may be required under the Act, of any change in information in the
Registration Statement or Prospectus relating to the Selling Stockholder.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and on the part of the
Selling Stockholder contained herein as of the Execution Time, the Closing Date
and any settlement date pursuant to Section 3 hereof, to the accuracy of the
statements of the Company made in any certificates pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representative agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the Prospectus, or any supplement thereto, is required pursuant
to Rule 424(b), the Prospectus, and any such supplement, will be filed in
the manner and within the time period required by Rule 424(b);
19
and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or threatened.
(b) The Company shall have requested and caused ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP to have furnished to the Representative their opinion, dated the
Closing Date and addressed to the Representative, to the effect that:
(i) each of the Company and the Subsidiary is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation; each of the Company and the Subsidiary has full corporate
power and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the Prospectus,
and, to such counsel's knowledge, is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein (A) (based solely
upon a certificate of an officer of the Company) the Company or the
Subsidiary owns or leases material properties or conducts material
business and (B) where the failure to be so qualified would, individually
or in the aggregate, have a material adverse effect on the Company and the
Subsidiary, taken as a whole, except as set forth in or contemplated in
the Prospectus; notwithstanding the foregoing, the Company is duly
qualified to do business as a foreign corporation and is in good standing
under the laws of ;
(ii) all the outstanding shares of capital stock of the
Subsidiary have been duly and validly authorized and issued and are fully
paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the Subsidiary are
owned by the Company directly, free and clear of any perfected security
interest and, to the knowledge of such counsel, any other security
interests, claims, liens or encumbrances;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectus;
the Securities have been duly and validly authorized, and, when issued and
delivered to and paid for by the Underwriters pursuant to this Agreement,
will be fully paid and nonassessable; the certificates for the Securities
are in valid and sufficient form; and the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or, to such
counsel's knowledge, other rights to subscribe for the Securities; and
except as set forth in the Prospectus, to such counsel's knowledge, no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership
interests in the Company issued by the Company are outstanding;
20
(iv) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or the Subsidiary or their respective property of a character
required to be disclosed in the Registration Statement which is not
adequately disclosed in the Prospectus, and there is no franchise,
contract or other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit
thereto, which is not described or filed as required; and the statements
included in the Prospectus under the heading "Description of Capital
Stock" insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are accurate and fair
summaries of such legal matters, agreements, documents or proceedings;
(v) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has been
issued, no proceedings for that purpose have been instituted or threatened
and the Registration Statement and the Prospectus (in each case, other
than the financial statements, supporting schedules, footnotes to
financial statements and other financial and statistical information
contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the rules thereunder;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended;
(viii) no consent, approval, authorization, filing with or
order of any court or governmental agency or authority is required in
connection with the consummation of the transactions contemplated herein,
except such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction or with the NASD in
connection with the purchase and distribution of the Securities by the
Underwriters in the manner contemplated in this Agreement and in the
Prospectus;
(ix) the issue and sale of the Securities, the consummation of
any other of the transactions herein contemplated and the performance by
the Company of the terms hereof will not violate, result in a violation,
or (in the case of clause (B)) result in a breach or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
the Subsidiary
21
pursuant to, (A) the charter or by-laws of the Company or the Subsidiary
or (B) to such counsel's knowledge, the terms of any material indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement
or other agreement, obligation, condition or covenant or instrument to
which the Company or the Subsidiary is a party or bound or any of their
respective properties is subject, including, but not limited to, those
agreements of the Company and the Subsidiary required to be filed with the
Commission as exhibits to the Registration Statement pursuant to the Act,
or (C) any federal or New York or Delaware state statute, law, rule,
regulation, judgment, order or decree applicable to the Company or the
Subsidiary, known to such counsel, of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or the Subsidiary or any of their
respective properties, which violation or default would, in the case of
clause (C) above, either individually or in the aggregate with all other
violations and defaults referred to in this paragraph (ix) (if any), have
a material adverse effect on the Company and the Subsidiary, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus, and in
the case of clause (B), as to such agreements which by their terms are or
may be governed by the laws of a jurisdiction other than those of the
State of New York, such counsel may assume such agreements are governed by
the laws of the State of New York and may exclude from the scope of such
opinion any covenants requiring specified levels of financial performance,
including, but not limited to, covenants which require that the Company
maintain a minimum net worth or prohibit the Company from assuming
liabilities beyond a certain defined maximum, the failure to achieve or
maintain or the exceeding of which will result in a default under any such
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition or covenant or
instrument;
(x) to such counsel's knowledge, no holders of securities of
the Company have rights to the registration of such securities under the
Registration Statement as a result of the filing of the Registration
Statement except for such rights of ▇▇▇▇▇▇ Family Partner, Ltd. as have
been waived in writing; and
(xi) such counsel has participated in conferences with
representatives of the Company and its accountants concerning the
Registration Statement and the Prospectus and has considered the matters
required to be stated therein and the statements contained therein,
although such counsel has not verified the accuracy, completeness or
fairness of such statements; based upon and subject to the foregoing,
nothing has come to such counsel's attention that leads it to believe that
on the Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus at the time it was filed with the
Commission pursuant to Rule 424(b) and on the Closing
22
Date contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (in each case, other than the financial statements, supporting
schedules, footnotes to financial statements and other financial and
statistical information contained therein, as to which such counsel need
express no opinion).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the States of
New York or Delaware or the Federal laws of the United States, to the extent
they deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the
Company and public officials. References to the Prospectus in this paragraph (b)
shall also include any supplements thereto at the Closing Date.
(c) The Selling Stockholder shall have requested and caused counsel
for the Selling Stockholder to have furnished to the Representative their
opinion, dated the Closing Date or applicable settlement date, as the case
may be, and addressed to the Representative, to the effect that:
(i) immediately prior to the Closing Date, or applicable
settlement date, as the case may be, the Selling Stockholder is the sole
record owner of the Selling Stockholder Option Securities and based solely
upon (A) such counsel's review of the stock certificates representing the
Selling Stockholder Option Securities, (B) a search of filed and recorded
liens or other encumbrances and (C) a certificate provided by the Selling
Stockholder, the Selling Stockholder's title to the Selling Stockholder
Option Securities is free and clear of all liens, encumbrances or claims;
(ii) upon the sale of the Selling Stockholder Option
Securities to the Underwriters in accordance with this Agreement, no
action based on an adverse claim (as such term is defined in Section 8-102
of the New York Uniform Commercial Code (the "UCC Section")) to the
Selling Stockholder Option Securities, whether framed in conversion,
replevin, constructive trust, equitable lien or other theory, may be
asserted against the Underwriters, assuming that the Underwriters acquire
the Selling Stockholder Option Securities without notice of any adverse
claim (as such term is defined in the UCC Section);
(iii) no consent, approval, authorization, filing with or
order of any court or governmental agency or authority is required in
connection with the sale of the Selling Stockholder Option Securities,
except such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction or with the NASD in
connection with the purchase
23
and distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus;
(iv) the issue and sale of the Selling Stockholder Option
Securities by the Selling Stockholder and the performance by the Selling
Stockholder of the terms hereof will not violate, result in a violation,
or (in the case of clause (A)) result in a breach or imposition of any
lien, charge or encumbrance upon any property or assets of the Selling
Stockholder pursuant to, (A) to such counsel's knowledge, the terms of any
material indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition or
covenant or instrument to which the Selling Stockholder is a party or
bound or any of his properties is subject, or (B) any federal or New York
or Delaware state statute, law, rule, regulation, judgment, order or
decree applicable to the Selling Stockholder, known to such counsel, of
any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Selling
Stockholder or any of his properties is subject; and in the case of clause
(A), as to such agreements which by their terms are or may be governed by
the laws of a jurisdiction other than those of the State of New York, such
counsel may assume such agreements are governed by the laws of the State
of New York and may exclude from the scope of such opinion any covenants
requiring specified levels of financial performance, including, but not
limited to, covenants which require that the Selling Stockholder to
maintain a minimum net worth or prohibit the Selling Stockholder from
assuming liabilities beyond a certain defined maximum, the failure to
achieve or maintain or the exceeding of which will result in a default
under any such indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition or
covenant or instrument; and
(v) this Agreement has been executed and delivered by the
Selling Stockholder.
In rendering the opinion in paragraph (i), such counsel may rely
upon a certificate of the Selling Stockholder in respect of matters of fact as
to ownership of, and liens, encumbrances or claims on, the Securities sold by
the Selling Stockholder, provided that such counsel shall state that they
believe that both the Underwriters and they are justified in relying upon such
certificate.
(d) The Representative shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, such opinion
or opinions, dated the Closing Date and addressed to the
Representative, with respect to the issuance and sale of the
Securities, the Registration Statement, the Prospectus (together
with any supplement thereto) and other related matters as the
Representative may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
24
(e) The Company shall have furnished to the Representative a
certificate of the Company, signed by the Chairman of the Board or
the President and the principal financial or accounting officer of
the Company, dated the Closing Date, to the effect that the signers
of such certificate have carefully examined the Registration
Statement, the Prospectus, any supplements to the Prospectus and
this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus, there has been no material adverse effect on
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and the Subsidiary, taken as a whole, whether or
not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus.
(f) The Selling Stockholder shall have furnished to the
Representative a certificate, signed by the Selling Stockholder or,
if any, the Selling Stockholder's principal financial or accounting
officer, general partner or managing member, dated the Closing Date,
to the effect that the representations and warranties of the Selling
Stockholder in this Agreement are true and correct in all material
respects on and as of the Closing date or applicable settlement
date, as the case may be, to the same effect as if made on such
date.
(g) The Company shall have requested and caused Helin, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP to have furnished to the Representative, at
the Execution Time and at the Closing Date, letters, dated
respectively as of the Execution Time and as of the Closing Date, in
form and substance satisfactory to the Representative, confirming
that they are independent accountants within the meaning of the Act
and the applicable rules and regulations adopted by the Commission
thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement and
the Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations adopted by the Commission;
25
(ii) on the basis of carrying out certain specified procedures
(but not an examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of the minutes
of the meetings of the stockholders, directors and audit and compensation
committees of the Company and the Subsidiary; and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company and the Subsidiary as to transactions
and events subsequent to September 30, 2004, nothing came to their
attention which caused them to believe that:
(1) with respect to the period subsequent to September 30,
2004, there were any changes, at a specified date not more than five days
prior to the date of the letter, in the notes payable and notes payable to
stockholder and the Subsidiary or capital stock of the Company, decreases
in the total stockholders' equity of the Company or decreases in
securities owned, at market value as compared with the amounts shown on
the September 30, 2004, consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the period from October
1, 2004 to such specified date there were any decreases, as compared with
the corresponding period in the preceding year or, in total revenues, net
income or per share amounts of net income of the Company and the
Subsidiary, except in all instances for changes or decreases set forth in
such letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representative; or
(2) the information included in the Registration Statement and
Prospectus in response to Regulation S-K, Item 301 (Selected Financial
Data), Item 302 (Supplementary Financial Information) and Item 402
(Executive Compensation) is not in conformity with the applicable
disclosure requirements of Regulation S-K;
(3) the unaudited amounts of total revenue and net income, for
the three months ended December 31, 2004 as stated in the Prospectus and
the Registration Statement under the heading "Recent Financial Results" do
not agree with the amounts set forth in the unaudited financial statements
for the same period or were not determined on a basis substantially
consistent with that of the corresponding amounts in the audited financial
statements included in the Registration Statement and the Prospectus;
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the general
accounting records of the Company and the Subsidiary) set forth in the
Registration Statement and the
26
Prospectus agrees with the accounting records of the Company and the
Subsidiary, excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
The Company shall have received from Helin, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ LLP (and furnished to the Representative) a report with respect to a
review of unaudited interim financial information of the Company for the
three-month period ended September 30, 2004 in accordance with Statement on
Auditing Standards No. 100.
(h) The Company shall have requested and caused Ernst & Young
LLP to have furnished to the Representative, at the Execution Time
and at the Closing Date, letters, dated respectively as of the
Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representative, confirming that they are
independent accountants within the meaning of the Act and the
applicable rules and regulations adopted by the Commission
thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement and
the Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations adopted by the Commission; and
(ii) on the basis of their limited review, in accordance with
standards established under Statement on Auditing Standards No. 100 or
Statement on Auditing Standards No. 71, as the case may be, of the
unaudited interim financial information for the for each of the
three-month periods ended March 31, 2003, June 30, 2003, September 30,
2003, December 31, 2003, March 31, 2003 and June 30, 2003, respectively;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments
set forth in such letter; inquiries of certain officials of the Company
who have responsibility for financial and accounting matters of the
Company and its subsidiaries as to whether such unaudited financial
statements comply as to form in all material respects with the applicable
accounting requirements of the Act and the related rules and regulations
adopted by the Commission; nothing came to their attention which caused
them to believe that:
(1) any such unaudited financial statements do not comply as
to form in all material respects with applicable accounting requirements
of the Act and with the related rules and regulations adopted by the
Commission; and said unaudited financial statements are not in conformity
with accounting principles generally accepted in the United States.
27
(i) The Company shall have requested and caused KPMG LLP to
have furnished to the Representative, at the Execution Time and at the
Closing Date, letters, dated respectively as of the Execution Time and as
of the Closing Date, in form and substance satisfactory to the
Representative, confirming that they are independent accountants within
the meaning of the Act and the applicable rules and regulations adopted by
the Commission thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement and
the Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations adopted by the Commission; and
(ii) on the basis of their limited review, in accordance with
standards established under Statement on Auditing Standards No. 100 or
Statement on Auditing Standards No. 71, as the case may be, of the
unaudited interim financial information for the for each of the three
month periods ended March 31, 2002, June 30, 2002, September 30, 2003 and
December 31, 2003; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect to
the comments set forth in such letter; inquiries of certain officials of
the Company who have responsibility for financial and accounting matters
of the Company and its subsidiaries as to whether such unaudited financial
statements comply as to form in all material respects with the applicable
accounting requirements of the Act and the related rules and regulations
adopted by the Commission; nothing came to their attention which caused
them to believe that:
(1) any such unaudited financial statements do not comply as
to form in all material respects with applicable accounting requirements
of the Act and with the related rules and regulations adopted by the
Commission; and said unaudited financial statements are not in conformity
with accounting principles generally accepted in the United States.
(j) Prior to the Closing Date, the Company shall have
furnished to the Representative a letter substantially in the form of
Exhibit A hereto from each officer and director of the Company and
shareholders who beneficially own more than five percent of the Company's
outstanding Common Stock addressed to the Representative.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representative and counsel
for the Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be
28
canceled at, or at any time prior to, the Closing Date by the Representative.
Notice of such cancellation shall be given to the Company in writing or by
telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, counsel for the
Underwriters, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through ▇.▇. ▇▇▇▇▇▇▇▇▇, Towbin LLC on demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter and the
within the meaning of either the Act or the Exchange Act and the
Selling Stockholder against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise,
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 a material fact contained
in the registration statement for the registration of the Securities
as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment
thereof or supplement thereto, 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, or arise out of or are based upon any breach
of any representation, warranty or covenant contained in this
Agreement and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably 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 to any Underwriter in any such case to
the extent that any such loss, claim, damage or liability arises out
of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the
29
Representative specifically for inclusion therein; and provided
further that the Company will not be liable to the Selling
Stockholder in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the
Selling Stockholder specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) The Selling Stockholder agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers
who signs the Registration Statement, each Underwriter, the
directors, officers, employees and agents of each Underwriter and
each person who controls the Company or any Underwriter within the
meaning of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Underwriter, but
only with reference to written information furnished to the Company
by or on behalf of the Selling Stockholder specifically for
inclusion in the documents referred to in the foregoing indemnity.
This indemnity will be in addition to any liability which the
Selling Stockholder may otherwise have.
(c) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each
of its officers who signs the Registration Statement, each person
who controls the Company within the meaning of either the Act or the
Exchange Act and the Selling Stockholder, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only
with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through
the Representative specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which any Underwriter may
otherwise have. The Company and the Selling Stockholder acknowledge
that (i) the statements set forth in the last paragraph of the cover
page regarding delivery of the Securities and (ii) under the heading
"Plan of Distribution", (A) the list of Underwriters and their
respective participation in the sale of the securities, (ii) the
sentences related to concessions and reallowances and (iii) the
paragraph related to stabilization syndicate covering transactions
and penalty bids in any Preliminary Prospectus and the Prospectus,
in sum, constitute the only information furnished in writing by or
on behalf of the several Underwriters for inclusion in any
Preliminary Prospectus or the Prospectus.
(d) The Company hereby confirms that at its request ▇.▇.
▇▇▇▇▇▇▇▇▇ Towbin LLC has acted as "qualified independent
underwriter" (in such capacity, the "QIU") within the meaning of
Rule 2720 of the
30
Conduct Rules of the NASD in connection with the offering of the
Securities. Without limitation of and in addition to its obligations
under the other paragraphs of this Section 8, the Company agrees to
indemnify and hold harmless the QIU, including its officers and
employees and each person, if any, who controls the QIU within the
meaning of the Act or the Exchange Act (collectively with the QIU,
the "QIU Entities") from and against any and all losses, claims,
damages or liabilities, joint or several, to which any of the QIU
Entities may become subject, under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon the
QIU's acting, or any alleged failing to act, as such "qualified
independent underwriter" and agrees to reimburse each of the QIU
Entities for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company
shall not be liable under this paragraph (d) to the extent that any
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or result from the gross negligence or willful
misconduct or fraud of a QIU Entity as finally adjudicated by a
court of competent jurisdiction.
(e) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a), (b) or (c) above unless and to
the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided
in paragraph (a), (b) or (c) above. The indemnifying party shall be
entitled to appoint counsel of the indemnifying party's choice at
the indemnifying party's expense to represent the indemnified party
in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that
such counsel shall be reasonably satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including one local counsel), and the indemnifying party shall bear
the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of
interest, as determined by counsel chosen by the indemnified party,
(ii) the actual or potential defendants in, or targets of, any such
action include both the
31
indemnified party and the indemnifying party and counsel chosen by
the indemnified party shall have reasonably concluded that there may
be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after
notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying
party will not, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(f) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 8 is unavailable to or insufficient to
hold harmless an indemnified party for any reason, the Company, the
Selling Stockholder and each of the Underwriters severally agree to
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to
which the Company, the Selling Stockholder and one or more of the
Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company, by the
Selling Stockholder and by each of the Underwriters from the
offering of the Securities; provided, however, that in no case shall
any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or
commission applicable to the Securities purchased by such
Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company, the
Selling Stockholder and each of the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company,
of the Selling Stockholder and each of the Underwriters in
connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the
total net proceeds from the offering (before deducting expenses)
received by it, benefits received by the Selling Stockholder shall
be deemed to be equal to the total net proceeds from the offering
(before deducting expenses) received by the Selling Stockholder and
benefits received by the Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each case as
set forth on the cover page of the Prospectus. Relative fault shall
be determined by
32
reference to, among other things, whether any untrue or any alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information provided by
the Company, by the Selling Stockholder or each of the Underwriters,
the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue
statement or omission. The Company, the Selling Stockholder and each
of the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (e), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each
person who controls an Underwriter within the meaning of either the
Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution
as such Underwriter, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, each officer of
the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (e).
(g) The liability of the Selling Stockholder under such
Selling Stockholder's representations and warranties contained in
Section 1 hereof and under the indemnity and contribution agreements
contained in this Section 8 shall be limited to an amount equal to
the aggregate gross proceeds, net of underwriting discounts,
received by the Selling Stockholder from the sale of Securities by
the Selling Stockholder to the Underwriters. The Company and the
Selling Stockholder may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to
the respective amounts of such liability for which they each shall
be responsible.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any
33
obligation to purchase any, of the Securities, and if such nondefaulting
Underwriters do not purchase all the Securities, this Agreement will terminate
without liability to any nondefaulting Underwriter or the Company. In the event
of a default by any Underwriter as set forth in this Section 9, the Closing Date
shall be postponed for such period, not exceeding five Business Days, as the
Representative shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representative, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the Nasdaq SmallCap Market or trading in securities generally
on the New York Stock Exchange or the Nasdaq SmallCap Market shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchange or SmallCap Market, (ii) a banking moratorium shall have been
declared either by Federal, New York State or Texas State authorities or (iii)
there shall have occurred any outbreak or escalation of hostilities, declaration
by the United States of a national emergency or war or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the Representative, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered or telefaxed and confirmed to them, care of ▇.▇. ▇▇▇▇▇▇▇▇▇, Towbin
LLC, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇; if sent to the Company, will
be mailed, delivered or telefaxed and confirmed to it at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, attention of Chief Operating Officer; or if sent to
the Selling Stockholder, will be mailed, delivered or telefaxed and confirmed to
it in accordance with the contact information provided in Schedule II hereto.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
34
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.
[Remainder of the page intentionally left blank]
35
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
Tejas Incorporated
By: ___________________________________
[Name]
[Title]
[Selling Stockholder]
By: ___________________________________
[Name]
[Title]
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
▇.▇. ▇▇▇▇▇▇▇▇▇, Towbin LLC
By: ___________________________________
For itself and the other several
Underwriters named in Schedule I to the
foregoing Agreement.
SCHEDULE I
NUMBER OF SHARES
UNDERWRITERS TO BE PURCHASED
------------ ---------------
▇.▇. ▇▇▇▇▇▇▇▇▇, Towbin LLC...........................
---------------
Total................................................
===============
37
SCHEDULE II
38
Exhibit A
Lock-Up Agreement
January __, 2005
▇.▇. ▇▇▇▇▇▇▇▇▇, TOWBIN
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Tejas Incorporated
Ladies and Gentlemen:
In consideration of and as an inducement to the several
Underwriters, for which ▇.▇. ▇▇▇▇▇▇▇▇▇, Towbin intends to act as Representative,
agreeing to underwrite the proposed follow-on offering (the "Offering") of
shares of common stock, par value $.001 per share (the "Common Stock"), of Tejas
Incorporated, a corporation organized under the laws of the State of Delaware
(the "Company"), as contemplated by a registration statement with respect to
such shares of Common Stock to be filed with the Securities and Exchange
Commission on Form S-1, the undersigned hereby (i) agrees that the undersigned
will not, directly or indirectly, during a period of 180 days from the date of
the final prospectus for the Offering (the "Lock-Up Period"), without the prior
written consent of ▇.▇. ▇▇▇▇▇▇▇▇▇, Towbin, issue, sell, offer, agree to sell,
grant any option or contract for the sale of, pledge, make any short sale of,
maintain any short position with respect to, establish or maintain a "put
equivalent position" (within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended) with respect to, enter into any swap,
derivative transaction or other arrangement (whether any such transaction is to
be settled by delivery of Common Stock, other securities, cash or other
consideration) that transfers to another, in whole or in part, any of the
economic consequences of ownership, or otherwise dispose of, any shares of
capital stock of the Company (or any securities convertible into, exercisable
for or exchangeable for shares of capital stock of the Company) or interest
therein, or any capital stock of any of the Company's subsidiaries, otherwise
than (a) as sales included in the Offering; (b) as a bona fide gift or gifts,
provided the donee or donees thereof agree in writing to be bound by this
restriction; or (c) as a distribution to members, partners or shareholders of
such person, provided that the distributees thereof agree in writing to be bound
by the terms of this restriction, and (ii) authorizes the Company during the
Lock-Up Period to cause the transfer agent for the Common Stock to decline to
transfer, or to note stop transfer restrictions on the transfer books and
records of the Company with respect to, any shares of capital stock of the
Company and any securities convertible into, or exercisable for or exchangeable
for capital stock of the Company for which the undersigned is the record
39
holder, and, in the case of any such shares or securities for which the
undersigned is the beneficial but not the record holder, agrees to cause the
record holder thereof to cause the transfer agent to decline to transfer or to
note stop transfer restrictions on such books and records with respect to such
shares or securities.
In the event that (a) the registration statement relating to the
Offering has not been declared effective by the United States Securities and
Exchange Commission on or before March 31, 2005, or (b) subsequent to filing,
such registration statement is withdrawn by the Company, this Lock-Up Agreement
shall be of no further force or effect.
The undersigned further agrees, from the date hereof until the end
of the Lock-Up Period, that the undersigned will not exercise, and will waive
his, her or its rights, if any, to require the Company to register any shares of
capital stock of the Company beneficially owned by the undersigned.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into the agreements set forth herein, and
that, upon request, the undersigned will execute any additional documents
necessary in connection with any enforcement hereof. The obligations of the
undersigned hereunder shall be binding upon the successors, assigns and heirs of
the undersigned.
Very truly yours,
_______________________________________
(signature)
Name: ______________________
Address: ______________________
______________________