Exhibit 1.2
DISCAS, INC.
800,000 Shares of Common Stock
and
800,000 Redeemable Common Stock Purchase Warrants
UNDERWRITING AGREEMENT
, 1997
Roan Capital Partners L.P.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
Merit Capital Associates, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Discas, Inc., a Delaware corporation (the "Company") hereby
confirms the agreement with Roan Capital Partners L.P. ("Roan") and
Merit Capital Associates, Inc. ("Merit"), the Underwriters named in
Schedule A of this Underwriting Agreement (the "Agreement") (the
"Underwriters"), as follows:
1. Description of the Securities.
The Company proposes to issue and sell to the Underwriters an
aggregate of 800,000 shares of common stock, $.0001 par value per share (the
"Common Stock"), and 800,000 redeemable common stock purchase warrants of the
Company (the "Warrants," and collectively with the Common Stock, the
"Securities") in the amounts set forth on Schedule A hereto. Each Warrant shall
entitle the holder to purchase one share of Common Stock for $6.25, subject to
adjustment. The Company proposes to grant to the Underwriters an option to
purchase up to 120,000 additional shares of Common Stock and up to an
additional 120,000 Warrants (the "Additional Securities"). The offering of
Securities and Additional Securities contemplated hereby may sometimes be
referred to as the "Offering."
(a) The Warrants.
The Warrants are exercisable beginning thirteen (13) months from the
effective date of the Registration Statement, as defined in Paragraph 2(a) (the
"Effective Date"), and expire five years and one month after the Effective
Date, subject to prior redemption by
the Company. The shares of Common Stock issuable upon the exercise
of the Warrants are hereinafter referred to as the "Warrant
Shares."
The Warrants will be redeemable at a price of $.10 per Warrant,
commencing thirteen (13) months after the Effective Date upon at least 30 days
prior written notice provided that the average of the closing bid prices of the
Common Stock (or closing sales price if listed on an exchange or on a reporting
system that provides last sales prices) for 20 consecutive trading days ending
on the fifteenth day immediately prior to the date on which notice of
redemption is given shall exceed 150% ($9.375 per share) of the current Warrant
exercise price (subject to adjustment), subject to the right of the holder to
exercise his purchase rights thereunder until redemption.
(b) Underwriters' Warrants.
The Company will sell to the Underwriters, for $10, a warrant to
purchase one share of Common Stock and one Warrant for each ten shares of
Common Stock and ten Warrants sold in this Offering excluding the Additional
Securities (a maximum of 80,000 shares of Common Stock and 80,000 Warrants) at
a price equal to $8.25 per share of Common Stock and $.165 per Warrant (the
"Underwriters' Warrants," and collectively with the Securities underlying the
Underwriters' Warrants, the "Underwriters' Securities"). The Warrants
underlying the Underwriters' Warrants shall be exercisable at a price of $6.25
per Warrant. The Underwriters' Warrants shall be non-transferable (other than
to (i) officers of the Underwriters, and (ii) members of the selling group and
their officers or partners) for a period of 12 months following the Effective
Date. Thereafter, they are transferable for a period of four years. If the
Warrants underlying the Underwriters' Warrants are not exercised during their
term, they shall, by their terms, automatically expire. The Underwriters'
Securities shall be registered for sale to the public and shall be included in
the Registration Statement filed in connection with the Offering.
2. Representations and Warranties of the Company.
The Company represents and warrants to the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form SB-2 (File No.
333-26543), including any related preliminary prospectus ("Preliminary
Prospectus"), for the registration of the Securities under the Securities Act
of 1933 (the "Act"). The Company will file further amendments to said
registration statement in the form to be delivered to you and will not, before
the registration statement becomes effective, file any other amendment
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thereto to which you shall have objected in writing after having been furnished
with a copy thereof. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time the
registration statement becomes effective (including the prospectus, financial
statements, exhibits and all other documents filed as a part thereof or
incorporated therein), is hereinafter called the "Registration Statement", and
the prospectus, in the form filed with the Commission pursuant to Rule 424(b)
of the General Rules and Regulations of the Commission under the Act (the
"Regulations") or, if no such filing is made, the definitive prospectus used in
the Offering, is hereinafter called the "Prospectus". The Company has delivered
to you copies of each Preliminary Prospectus as filed with the Commission and
has consented to the use of such copies for purposes permitted by the Act.
(b) The Commission has not issued any orders preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed in all material respects with the requirements of the
Act and has not included 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, subject to the provisions set forth below
and except as such untrue statement or omission has been cured in the a
subsequent preliminary prospectus or in the final prospectus.
(c) When the Registration Statement becomes effective under
the Act and at all times subsequent thereto including the Closing Date
(hereinafter defined) and the Option Closing Date (hereinafter defined) and for
such longer periods as in the opinion of counsel for the Underwriters, a
Prospectus is required to be delivered in connection with the sale of the
Securities by the Underwriters, the Registration Statement and Prospectus, and
any amendment thereof or supplement thereto, will contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations, and will in all material respects conform to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
not misleading; provided, however, that this representation and warranty does
not apply to statements or omissions made in reliance upon and in conformity
with written information furnished to the Company by you, for use in connection
with the preparation of the Registration Statement or Prospectus, or in any
amendment thereof or supplement thereto. It is understood that the statements
set forth under the heading "Underwriting" in the Prospectus with respect to
(i) the amounts of the selling concession and reallowance; (ii) the identity of
counsel to the Underwriters under
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the heading "Legal Matters;" (iii) the information concerning the NASD
affiliation of the Underwriters; and (iv) the Risk Factor entitled "Limited
Experience of Underwriters" constitute for purposes of this Section the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Registration Statement and Prospectus, as the case may be.
(d) The Company and each of its subsidiaries (each a
"Subsidiary") are, and at the Closing Date and the Option Closing Date will be,
corporations duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation. The Company and each of its
Subsidiaries are duly qualified or licensed and in good standing as foreign
corporations in each jurisdiction in which their ownership or leasing of any
properties or the character of their operations requires such qualification or
licensing, except those jurisdictions in which the failure to so qualify would
not have a material adverse effect. The Company and each of its Subsidiaries
have all requisite corporate powers and authority, and, except as set forth in
the Registration Statement, the Company and each of its Subsidiaries and their
employees' have all material and necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies to own or lease their properties and conduct their
businesses as described in the Prospectus, and the Company and each of its
Subsidiaries are doing business and have been doing business during the period
described in the Registration Statement in compliance with all such material
authorizations, approvals, orders, licenses, certificates and permits and all
material federal, state and local laws, rules and regulations concerning the
businesses in which the Company or its Subsidiaries are engaged. The
disclosures in the Registration Statement concerning the effects of federal,
state and local regulation on the Company's or its Subsidiaries' businesses as
currently conducted and as contemplated are correct in all material respects
and do not omit to state a material fact. The Company has all corporate power
and authority to enter into this Agreement and carry out the provisions and
conditions hereof, and all consents, authorizations, approvals and orders
required in connection therewith have been obtained or will have been obtained
prior to the Closing Date.
(e) This Agreement has been duly and validly authorized and
executed by the Company. The Securities (including the Common Stock and the
Warrants), the Warrant Shares, the Underwriters' Warrants to be issued and sold
by the Company pursuant to this Agreement, the Securities issuable upon
exercise of the Underwriters' Warrants and payment therefor, and the Common
Stock and Warrant Shares underlying such Underwriters' Warrants, have been duly
authorized (and, in the case of the Common Stock and the Warrant Shares, have
been duly reserved for issuance) and, when
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issued and paid for in accordance with this Agreement (and, in the case of the
Warrant Shares, upon exercise of the Warrants and payment to the Company of the
exercise price therefor), the Common Stock and Warrant Shares will be validly
issued, fully paid and non-assessable; the Common Stock, Warrants, Warrant
Shares, Underwriters' Warrants, Additional Securities and Underwriters' Warrant
Shares are not and will not be subject to the preemptive rights of any
stockholder of the Company and conform and at all times up to and including
their issuance will conform in all material respects to all statements with
regard thereto contained in the Registration Statement and Prospectus; and all
corporate action required to be taken for the authorization, issuance and sale
of the Common Stock, Warrants, Warrant Shares and Underwriters' Warrants has
been taken, and this Agreement constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms, to issue and sell, upon
exercise in accordance with the terms thereof, the number and kind of
securities called for thereby.
(f) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, the Certificate of Incorporation, as amended, or Bylaws of the Company
or any of its Subsidiaries or of any evidence of material indebtedness, lease,
contract or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of their material properties is bound, or under any applicable law, rule,
regulation, judgment, order or decree of any government, professional advisory
body, administrative agency or court, domestic or foreign, having jurisdiction
over the Company or any of its Subsidiaries or their properties which are
material to the Company or its business, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries; and no consent, approval,
authorization or order of any court or governmental or other regulatory agency
or body is required for the consummation by the Company or any of its
Subsidiaries of the transactions on their part herein contemplated, except such
as may be required under the Act or under state securities or blue sky laws,
except where a breach, violation or failure to obtain such consent would not
have a material adverse effect upon the business or operation of the Company or
its Subsidiaries.
(g) Subsequent to the date hereof, and prior to the Closing
Date and the Option Closing Date, the Company will not issue or acquire any
equity securities other than securities of a wholly-owned subsidiary, except
that the Company may make short-term investments as contemplated in the "Use of
Proceeds"
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section of the Prospectus. Except as described in the Registration Statement,
the Company does not have, and at the Closing Date and at the Option Closing
Date will not have, outstanding any options to purchase or rights or warrants
to subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell shares of its Preferred Stock, Common
Stock or any such options, warrants, convertible securities or obligations.
(h) The financial statements and notes thereto included in
the Registration Statement and the Prospectus fairly present the financial
position and the results of operations of the Company at the respective dates
and for the respective periods to which they apply; and such financial
statements have been prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods involved.
(i) Except as set forth in the Registration Statement, the
Company and each Subsidiary are not, and at the Closing Date and at the Option
Closing Date will not be, in violation or breach of, or default in, the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, note, loan or credit agreement, or any other agreement
or instrument evidencing an obligation for borrowed money, or any other
agreement or instrument to which the Company or any of its Subsidiaries are a
party or by which the Company or any of its Subsidiaries may be bound or to
which any of the property or assets of the Company or any of its Subsidiaries
are subject, which violations, breaches, default or defaults, singularly or in
the aggregate, would have a material adverse effect on the Company or any of
its Subsidiaries. The Company and each of its Subsidiaries have not and will
not have taken any action in material violation of the provisions of the
Certificate of Incorporation, as amended, or the Bylaws of the Company or its
Subsidiaries or any statute or any order, rule or regulation of any court or
regulatory authority or governmental body having jurisdiction over or
application to the Company or its Subsidiaries, their businesses or properties.
(j) The Company and each of its Subsidiaries have, and at the
Closing Date and at the Option Closing Date will have, good and marketable
title to all properties and assets described in the Prospectus as owned by
them, free and clear of all liens, charges, encumbrances, claims, security
interests, restrictions and defects of any material nature whatsoever, except
such as are described or referred to in the Prospectus and liens for taxes not
yet due and payable. All of the material leases and subleases under which the
Company or any of its Subsidiaries are the lessor or sublessor of properties or
assets or under which the Company or any of its Subsidiaries hold properties or
assets as lessee as described in the Prospectus are, and will on the Closing
Date and the Option
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Closing Date be, in full force and effect, and except as described in the
Prospectus, the Company and its Subsidiaries are not and will not be in default
in respect to any of the terms or provisions of any of such leases or subleases
(which would have a material adverse effect on the business, business prospects
or operations of the Company or any of its Subsidiaries taken as a whole), and
no claim has been asserted by anyone adverse to rights of the Company or any of
its Subsidiaries as lessor, sublessor, lessee or sublessee under any of the
leases or subleases mentioned above, or affecting or questioning the right of
the Company or any of its Subsidiaries to continue possession of the leased or
subleased premises or assets under any such lease or sublease except as
described or referred to in the Prospectus, and the Company and each of its
Subsidiaries owns or leases all such properties as are necessary to its
operations as now conducted and, except as otherwise stated in the Prospectus,
as proposed to be conducted set forth in the Prospectus (which would have a
material adverse effect on the business, business prospects or operations of
the Company or any of its Subsidiaries taken as a whole).
(k) The authorized, issued and outstanding capital stock
of the Company as of April 30, 1997 and as of the date of the
Prospectus is as set forth in the Prospectus under "Capitalization"; the shares
of issued and outstanding capital stock of the Company set forth thereunder
have been duly authorized, validly issued and are fully paid and
non-assessable; except as set forth in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or
agreements or other rights to convert any obligation into, any shares of
capital stock of the Company have been granted or entered into by the Company;
and the Common Stock, the Warrants and all such options and warrants conform in
all material respects, to all statements relating thereto contained in the
Registration Statement and Prospectus.
(l) Except as described in the Prospectus, the Company does
not own or control any capital stock or securities of, or have any proprietary
interest in, or otherwise participate in any other corporation, partnership,
joint venture, firm, association or business organization; provided, however,
that this provision shall not be applicable to the investment, if any, of the
net proceeds from the sale of the Securities sold by the Company in
certificates of deposits, savings deposits, short-term obligations of the
United States Government, money market instruments or other short-term
investments.
(m) To the knowledge of the Company, Jump, Green, ▇▇▇▇▇▇ &
Company, who have given their reports on certain financial statements filed and
to be filed with the Commission as a part of the Registration Statement, which
are incorporated in the
7
Prospectus, are with respect to the Company, independent public accountants as
required by the Act and the Rules and Regulations.
(n) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, and except
as may otherwise be indicated or contemplated herein or therein, the Company
has not (i) issued any securities or incurred any material liability or
obligation, direct or contingent, for borrowed money; or (ii) entered into any
material transaction other than in the ordinary course of business; or (iii)
declared or paid any dividend or made any other distribution on or in respect
to its capital stock.
(o) There is no litigation or governmental proceeding pending
or to the knowledge of the Company or any Subsidiary threatened against, or
involving the properties or business of the Company or any Subsidiary which
might materially adversely affect the value, assets or the operation of the
properties or the business of the Company or any Subsidiary, except as referred
to in the Prospectus. Further, except as referred to in the Prospectus, there
are no pending actions, suits or proceedings related to environmental matters
or related to discrimination on the basis of age, sex, religion or race, nor is
the Company or any Subsidiary charged with or, to its knowledge, under
investigation with respect to any violation of any statutes or regulations of
any regulatory authority having jurisdiction over its business or operations,
and no labor disturbances by the employees of the Company or any Subsidiary
exist or, to the knowledge of the Company or any Subsidiary, have been
threatened.
(p) The Company has, and at the Closing Date and at the
Option Closing Date will have, filed all necessary federal, state and foreign
income and franchise tax returns or has requested extensions thereof (except in
any case where the failure to so file would not have a material adverse effect
on the Company), and has paid all taxes which it believes in good faith were
required to be paid by it except for any such tax that currently is being
contested in good faith or as described in the Prospectus.
(q) The Company has not at any time (i) made any contribution
to any candidate for political office, or failed to disclose fully any such
contribution, in violation of law, or (ii) made any payment to any state,
federal, foreign governmental or professional regulatory agency, officer or
official or other person charged with similar public, quasi-public or
professional regulatory duties, other than payments or contributions required
or allowed by applicable law.
(r) Except as set forth in the Registration Statement,
to the knowledge of the Company, neither the Company nor any of
8
officer, director, employee or agent of the Company has made any payment or
transfer of any funds or assets of the Company or conferred any personal
benefit by use of the Company's assets or received any funds, assets or
personal benefit in violation of any law, rule or regulation, which is required
to be stated in the Registration Statement or necessary to make the statements
therein not misleading.
(s) On the Closing Date and on the Option Closing Date, all
transfer or other taxes, if any (other than income tax) which are required to
be paid, and are due and payable, in connection with the sale and transfer of
the Securities by the Company to the Underwriters will have been fully paid or
provided for by the Company as the case may be, and all laws imposing such
taxes will have been fully complied with in all material respects.
(t) There are no contracts or other documents of the Company
which are of a character required to be described in the Registration Statement
or Prospectus or filed as exhibits to the Registration Statement which have not
been so described or filed.
(u) The Company will apply the net proceeds from the sale of
the Securities sold by it for the purposes and in the manner set forth in the
Registration Statement and Prospectus under the heading "Use of Proceeds."
(v) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (1) transactions are
executed in accordance with management's general or specified authorizations;
(2) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (3) access to assets is permitted only in
accordance with management's general or specific authorizations; and (4) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) Except as set forth in the Prospectus, no holder of any
securities of the Company has the right to require registration of any
securities because of the filing or effectiveness of the Registration
Statement.
(x) The Company has not taken and at the Closing Date will
not have taken, directly or indirectly, any action designed to cause or result
in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the Common Stock
or the Warrants to facilitate the sale or resale of such securities.
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(y) To the Company's knowledge, there are no claims for
services in the nature of a finder's origination fee with respect to the sale
of the Securities hereunder, except as set forth in the Prospectus.
(z) No right of first refusal exists with respect to any
sale of securities by the Company.
(aa) No statement, representation, warranty or covenant made
by the Company in this Agreement or made in any certificate or document
required by this Agreement to be delivered to Underwriters was, when made, or
as of the Closing Date or as of the Option Closing Date will be materially
inaccurate, untrue or incorrect.
(bb) The Company and each of its Subsidiaries have generally
enjoyed satisfactory employer/employee relationships with their respective
employees and are in compliance with all federal, state and local laws and
regulations respecting the employment of their respective employees and
employment practices, terms and conditions of employment and wages and hours
relating thereto. To the knowledge of the Company, there are no pending or
threatened investigations involving the Company or any of its Subsidiaries by
the U.S. Department of Labor or any other federal, state or local agency
responsible for the enforcement of such laws and regulations. To the knowledge
of the Company, there are no unfair labor practice charges or complaints
against the Company or any Subsidiary pending before the National Labor
Relations Board or any strikes, picketing, boycotts, disputes, slowdowns or
stoppage pending or threatened against or involving the Company or any
Subsidiary, or any predecessor entity, and none has occurred. No collective
bargaining agreements or modifications thereof are currently in effect or being
negotiated by the Company or any Subsidiary and their respective employees. No
grievance or arbitration proceeding is pending under any expired or existing
collective bargaining agreements of the Company and any Subsidiary.
(cc) The Company has not maintained or contributed to any
deferred compensation, profit sharing, savings, retirement, pension or other
benefit plan or arrangements with or for the benefit of any person resulting
from a relationship with the Company, except as may be disclosed in the
Prospectus.
(dd) The Company is in compliance with all federal and state
laws, rules and regulations relating to consumer protection, occupational
safety and health and to the storage, handling or transportation of hazardous
or toxic materials and the Company has received all permits, licenses or other
approvals required of the Company under applicable federal and state
occupational safety and health and environmental laws and regulations to
conduct its business and the Company is in compliance with all terms and
10
conditions of any such permit, license or approval, except any such violation
of law or regulation, failure to receive required permits, licenses or other
approvals which would not, singly or in the aggregate, result in a material
adverse change in the condition (financial or otherwise), business, net worth
or results of operations of the Company, except as may be described in or
contemplated by the Prospectus.
3. Covenants of the Company.
The Company covenants and agrees that:
(a) It will deliver to the Underwriters, without charge, two
conformed copies of each Registration Statement and of each amendment or
supplement thereto, including all financial statements and exhibits.
(b) The Company has delivered to each of the Underwriters,
and each of the Selected Dealers (as hereinafter defined) without charge, as
many copies as have been requested of each Preliminary Prospectus heretofore
filed with the Commission in accordance with and pursuant to the Commission's
Rule 430 under the Act and will deliver to the Underwriters and to others whose
names and addresses are furnished by the Underwriters or a Selected Dealer,
without charge, on the Effective Date of the Registration Statement, and
thereafter from time to time during such reasonable period as you may request
if, in the opinion of counsel for the Underwriters, the Prospectus is required
by law to be delivered in connection with sales by the Underwriters or a
dealer, as many copies of the Prospectus (and, in the event of any amendment of
or supplement to the Prospectus, of such amended or supplemented Prospectus) as
the Underwriters may reasonably request for the purposes contemplated by the
Act. The Company will take all necessary actions to furnish to whomever
directed by the Underwriters, when and as requested by the Underwriters, all
necessary documents, exhibits, information, applications, instruments and
papers as may be reasonably required or, in the written opinion of counsel to
the Underwriters desirable, in order to permit or facilitate the sale of the
Securities.
(c) The Company has authorized the Underwriters to use, and
make available for use by prospective dealers, the Preliminary Prospectus, and
authorizes the Underwriters, all dealers selected by you in connection with the
distribution of the Securities (the "Selected Dealers") to be purchased by the
Underwriters and all dealers to whom any of such Securities may be sold by the
Underwriters or by any Selected Dealer, to use the Prospectus, as from time to
time amended or supplemented, in connection with the sale of the Securities in
accordance with the applicable provisions of the Act, the applicable
Regulations and applicable state law,
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until completion of the distribution of the Securities and for such longer
period as you may request if the Prospectus is required under the Act, the
applicable Regulations or applicable state law to be delivered in connection
with sales of the Securities by the Underwriters or the Selected Dealers.
(d) The Company will use its best efforts to cause the
Registration Statement to become effective and will notify the Underwriters
immediately, and confirm the notice in writing: (i) when the Registration
Statement or any post-effective amendment thereto becomes effective; (ii) of
the issuance by the Commission of any stop order or of the initiation, or to
the best of the Company's knowledge, the threatening, of any proceedings for
that purpose; (iii) the suspension of the qualification of the Securities and
the Underwriters' Warrants, or underlying securities, for offering or sale in
any jurisdiction or of the initiating, or to the best of the Company's
knowledge the threatening, of any proceeding for that purpose; and (iv) of the
receipt of any comments from the Commission. If the Commission shall enter a
stop order at any time, the Company will make every reasonable effort to obtain
the lifting of such order at the earliest possible moment.
(e) During the time when a prospectus is required to be
delivered under the Act, the Company will comply with all requirements imposed
upon it by the Act and the Securities Exchange Act of 1934 (the "Exchange
Act"), as now and hereafter amended and by the Regulations, as from time to
time in force, as necessary to permit the continuance of sales of or dealings
in the Securities in accordance with the provisions hereof and the Prospectus.
If at any time when a prospectus relating to the Securities is required to be
delivered under the Act, any event shall have occurred as a result of which, in
the opinion of counsel for the Company or counsel for the Underwriters, the
Prospectus as then amended or supplemented includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify you promptly and prepare and file with the Commission an
appropriate amendment or supplement in accordance with Section 10 of the Act
and will furnish to you copies thereof.
(f) The Company will endeavor in good faith, in cooperation
with you, at or prior to the time the Registration Statement becomes effective,
to qualify the Securities for offering and sale under the securities laws or
blue sky laws of such jurisdictions as you may reasonably designate. In each
jurisdiction where such qualification shall be effected, the Company will,
unless you agree that such action is not at the time necessary or advisable,
file and make such statements or reports at such times
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as are or may reasonably be required by the laws of such jurisdiction.
(g) The Company will make generally available to its security
holders, as soon as practicable, but in no event later than the first day of
the fifteenth full calendar month following the Effective Date of the
Registration Statement, an earnings statement of the Company, which will be in
reasonable detail but which need not be audited, covering a period of at least
twelve months beginning after the Effective Date of the Registration Statement,
which earnings statements shall satisfy the requirements of Section 11(a) of
the Act and the Regulations as then in effect. The Company may discharge this
obligation in accordance with Rule 158 of the Regulations.
(h) During the period of five years commencing on the
Effective Date of the Registration Statement, the Company will make available
to its stockholders an annual report (including financial statements audited by
its independent public accountants), in reasonable detail, and, at its expense,
furnish each of the Underwriters (i) within 90 days after the end of each
fiscal year of the Company, a consolidated balance sheet of the Company and its
consolidated subsidiaries and a separate balance sheet of each subsidiary of
the Company the accounts of which are not included in such consolidated balance
sheet as of the end of such fiscal year, and consolidated statements of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries and separate statements of operations, stockholders'
equity and cash flows of each of the subsidiaries of the Company the accounts
of which are not included in such consolidated statements, for the fiscal year
then ended all in reasonable detail and all certified by independent
accountants (within the meaning of the Act and the Regulations), (ii) within 45
days after the end of each of the first three fiscal quarters of each fiscal
year, similar balance sheets as of the end of such fiscal quarter and similar
statements of operations, stockholders' equity and cash flows for the fiscal
quarter then ended, all in reasonable detail, and subject to year end
adjustment, all certified by the Company's principal financial officer or the
Company's principal accounting officer as having been prepared in accordance
with generally accepted accounting principles applied on a consistent basis,
(iii) as soon as available, each report furnished to or filed with the
Commission or any securities exchange and each report and financial statement
furnished to the Company's shareholders generally and (iv) as soon as
available, such other material as the Underwriters may from time to time
reasonably request regarding the financial condition and operations of the
Company.
(i) For a period of eighteen months from the Closing
Date, the Company, at its expense, shall cause its regularly
13
engaged independent certified public accountants to review (but not audit), the
Company's financial statements for each of the first three quarters prior to
the announcement of quarterly financial information, the filing of the
Company's 10-Q quarterly report and the mailing of quarterly financial
information to stockholders.
(j) Prior to the Closing Date or the Option Closing Date, the
Company will not issue, directly or indirectly, without your prior written
consent and that of counsel for the Underwriters, any press release or other
public announcement or hold any press conference with respect to the Company or
its activities with respect to this Offering.
(k) The Company will deliver to you prior to filing, any
amendment or supplement to the Registration Statement or Prospectus proposed to
be filed after the Effective Date of the Registration Statement and will not
file any such amendment or supplement to which you shall reasonably object
after being furnished such copy.
(l) During the period of 120 days commencing on the date
hereof, the Company will not at any time take, directly or indirectly, any
action designed to, or which will constitute or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Securities to facilitate the sale or resale of any of the Securities.
(m) The Company will apply the net proceeds from the Offering
received by it in the manner set forth under "Use of Proceeds" in the
Prospectus.
(n) Counsel for the Company, the Company's accountants, and
the officers and directors of the Company will, respectively, furnish the
opinions, the letters and the certificates referred to in subsections of
Paragraph 9 hereof, and, in the event that the Company shall file any amendment
to the Registration Statement relating to the offering of the Securities or any
amendment or supplement to the Prospectus relating to the offering of the
Securities subsequent to the Effective Date of the Registration Statement, such
counsel, such accountants, such officers and directors, respectively, will, at
the time of such filing or at such subsequent time as you shall specify, so
long as securities being registered by such amendment or supplement are being
underwritten by the Underwriters, furnish to you such opinions, letters and
certificates, each dated the date of its delivery, of the same nature as the
opinions, the letters and the certificates referred to in said Paragraph 9, as
you may reasonably request, or, if any such opinion or letter or certificate
cannot be furnished by reason of the fact that such counsel or such accountants
or any such officer or director believes that the same would be inaccurate,
such counsel or such accountants or such officer or
14
director will furnish an accurate opinion or letter or certificate with respect
to the same subject matter.
(o) The Company will comply with all of the provisions
of any undertakings contained in the Registration Statement in all
material respects.
(p) The Company will reserve and keep available for issuance
that maximum number of its authorized but unissued shares of Common Stock which
are issuable upon exercise of the Warrants and issuable upon exercise of the
Underwriters' Warrants (including the underlying securities) outstanding from
time to time.
(q) Following the Effective Date and from time to time
thereafter, so long as the Warrants are outstanding, the Company will timely
prepare and file at its sole cost and expense one or more post-effective
amendments to the Registration Statement or a new registration statement as
required by law as will permit Warrant holders to be furnished with a current
prospectus in the event Warrants are exercised, and to use its best efforts and
due diligence to have same be declared effective. The Company will deliver a
draft of each such post-effective amendment or new registration statement to
the Underwriters at least ten days prior to the filing of such post-effective
amendment or registration statement.
(r) Following the Effective Date and from time to time
thereafter so long as any of the Warrants remain outstanding, the Company will
timely deliver and supply to its warrant agent sufficient copies of the
Company's current Prospectus, as will enable such Warrant Agent to deliver a
copy of such Prospectus to any Warrant or other holder where such Prospectus
delivery is by law required to be made.
(s) So long as any of the Warrants remain outstanding, the
Company shall continue to employ the services of a firm of independent
certified public accountants reasonably acceptable to the Underwriters in
connection with the preparation of the financial statements to be included in
any registration statement to be filed by the Company hereunder, or any
amendment or supplement thereto (it being understood that Jump, Green, ▇▇▇▇▇▇ &
Company is acceptable to the Underwriters). During the same period, the Company
shall employ the services of a law firm(s) suitably experienced in corporate
and securities laws in connection with all legal work of the Company, including
the preparation of a registration statement to be filed by the Company
hereunder, or any amendment or supplement thereto.
15
(t) So long as any of the Warrants remain outstanding, the
Company shall continue to appoint a Warrant Agent for the Warrants, who shall
be reasonably acceptable to the Underwriters.
(u) The Company agrees that it will, upon the Closing Date,
for a period of no less than three (3) years, engage a designee of Roan as an
advisor (the "Advisor") to its Board of Directors where such Advisor shall
attend meetings of the Board, receive all notices and other correspondence and
communications sent by the Company to members of its Board of Directors and
shall be entitled to receive compensation therefor equal to the entitlement of
all non-employee directors. Such Advisor shall also be entitled to receive
reimbursement for all reasonable costs incurred in attending such meetings
including, but not limited to, food, lodging, and transportation. The Company
further agrees that during said three (3) year period, it shall schedule no
less than four (4) formal and "in person" meetings of its Board of Directors in
each such year and fifteen (15) days advance notice of such meetings shall be
given to the Advisor. Further, during such three (3) year period, the Company
shall give notice to Roan with respect to any proposed acquisitions, mergers,
reorganizations or other similar transactions. In lieu of Roan's right to
designate an Advisor, Roan shall have the right during such three-year period,
in its sole discretion, to designate one person for election as a Director of
the Company and the Company will utilize its best efforts to obtain the
election of such person who shall be entitled to receive the same compensation,
expense reimbursements and other benefits set forth above.
The Company agrees to indemnify and hold the Underwriters and
such Advisor or Director harmless against any and all claims, actions, damages,
costs and expenses, and judgments arising solely out of the attendance and
participation of your designee at any such meeting described herein. In the
event the Company maintains a liability insurance policy affording coverage for
the acts of its of officers and directors, it agrees, if possible, to include
the Underwriters's designee as an insured under such policy.
(v) Upon the Closing Date, the Company shall have entered
into a two year agreement with the Underwriters in form reasonably satisfactory
to the Underwriters (the "Consulting Agreement"), pursuant to which the
Underwriters will be retained as a management and financial consultant and will
be paid an aggregate fee of $85,400 all of which shall be paid upon the Closing
Date.
(w) The Company's Common Stock and Warrants shall be listed
on the Nasdaq SmallCap Market ("Nasdaq"), and on the Boston Stock Exchange
("BSE"), not later than the Effective Date. Prior to the Effective Date, the
Company will make all filings required, including registration under the
Exchange Act, to obtain the
16
listing of the Common Stock and Warrants on Nasdaq and the BSE, and will effect
and use its best efforts to maintain such listings (unless the Company is
acquired) for at least five years from the date of this Agreement.
(x) The Company will apply for listing in Standard and Poors
Corporation Reports or Moodys OTC Guide and shall use its best efforts to have
the Company included in such publications, as soon as is practicable following
the Closing Date and for at least five years from the Closing Date.
(y) For a period of twenty-four (24) months from the
Effective Date, no officer, director or holder of any securities of the Company
prior to the Offering (other than Christie Enterprises, Inc.) will, directly or
indirectly, offer, sell (including any short sale), grant any option for the
sale of, acquire any option to dispose of, or otherwise dispose of any shares
of Common Stock into public markets, including shares of Common Stock issuable
upon exercise of options, warrants or any convertible securities of the
Company, without the prior written consent of Roan, other than as set forth in
the Registration Statement. In order to enforce this covenant, the Company
shall impose stop-transfer instructions with respect to the securities owned by
every stockholder prior to the Offering until the end of such period (subject
to any exceptions to such limitation on transferability set forth in the
Registration Statement). Notwithstanding the foregoing, the Company's current
stockholders shall be permitted to make transfers for estate planning purposes
or in private sales, so long as the transferee agrees in writing to be bound by
the foregoing provisions. If necessary to comply with any applicable Blue-sky
Law, the shares held by such stockholders will be escrowed with counsel for the
Company or otherwise as required.
(z) Except for the issuance of shares of capital stock by the
Company in connection with a dividend, recapitalization, reorganization,
acquisition of a business or similar transactions or as result of the exercise
of warrants or options disclosed in or issued or granted pursuant to plans
disclosed in the Registration Statement, the Company shall not, for a period of
twenty-four (24) months following the Closing Date, directly or indirectly,
offer, sell, issue or transfer any shares of its capital stock, or any security
exchangeable or exercisable for, or convertible into, shares of the capital
stock or register any of its capital stock (under any form of registration
statement, including Form S-8), without the prior written consent of Roan.
Options granted pursuant to plans must be exercisable at the fair market value
on the date of grant.
(aa) For so long as any of the Warrants remain
outstanding, the Company shall maintain key person life insurance
17
payable to the Company on the life of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, its Chief Executive,
in the amount of $1,000,000, unless his employment with the Company is earlier
terminated. In such event, the Company will obtain a comparable policy on the
life of his successor for the balance of such period.
(bb) The Company will use its best efforts to obtain, as soon
after the Closing Date as is reasonably possible, liability insurance covering
its officers and directors.
(cc) The Company agrees that any conflict of interest arising
between a member of the Company's Board of Directors and the Company in
connection with such Director's dealing with, or obligations to, the Company,
shall be resolved by a vote of the majority of the independent members of the
Board of Directors.
(dd) The Company agrees that it will employ the services of a
financial public relations firm reasonably acceptable to the Underwriters for a
period of at least twelve months following the Effective Date.
(ee) For a period of two (2) years from the Effective Date,
at the request of the Underwriters, the Company shall provide promptly, at its
expense, copies of the Company's monthly transfer sheets furnished to it by its
transfer agent and copies of the securities positions provided to it by the
Depository Trust Company.
4. Sale, Purchase and Delivery of Securities: Closing Date.
(a) The Company agrees to sell to the Underwriters, and the
Underwriters, on the basis of the warranties, representations and agreements of
the Company herein, and subject to the terms and conditions herein, agree to
purchase the Securities from the Company at a price of $5.00 per share of
Common Stock and $.10 per Warrant, less an underwriting discount of ten percent
(10%) of the offering price for each security. The Underwriters may allow a
concession not exceeding $ per share of Common Stock and $ per Warrant to
Selected Dealers who are members of the National Association of Securities
Dealers, Inc ("NASD"), and to certain foreign dealers.
(b) Delivery of the Securities and payment therefor shall be
made at 10:00 A.M., New York time on the Closing Date, as hereinafter defined,
at the offices of Roan or such other location as may be agreed upon by you and
the Company. Delivery of certificates for the Common Stock and Warrants (in
definitive form and registered in such names and in such denominations as you
shall request by written notice to the Company delivered at least two business
days' prior to the Closing Date), shall be made to you for
18
the account of the Underwriters against payment of the purchase price therefor
by certified or bank check or wire transfer payable in New York Clearing House
funds to the order of the Company. The Company will make such certificates
available for inspection at least two business days prior to the Closing Date
at such place as you shall designate.
(c) The "Closing Date" shall be , 1997, or such other
date not later than the sixth business day following the effective date of the
Registration Statement as you shall determine and advise the Company by at
least three full business days' notice, confirmed in writing.
(d) The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Securities by the Company to
the Underwriters shall be borne by the Company. The Company will pay and hold
the Underwriters, and any subsequent holder of the Securities, harmless from
any and all liabilities with respect to or resulting from any failure or delay
in paying federal and state stamp taxes, if any, which may be payable or
determined to be payable in connection with the original issuance or sale to
the Underwriters of the Securities or any portions thereof.
5. Sale Purchase and Delivery of Additional Securities:
Option Closing Date.
(a) The Company agrees to sell to the Underwriters, and upon
the basis of the representations, warranties and agreements of the Company
herein contained, subject to the satisfaction of all the terms and conditions
of this Agreement, the Underwriters shall have the option (the "Option") to
purchase the Additional Securities from the Company, at the same price per
Security as set forth in Paragraph 4(a) above. Additional Securities may be
purchased solely for the purpose of covering over-allotments made in connection
with the distribution and sale of the Securities.
(b) The Option to purchase all or part of the Additional
Securities covered thereby is exercisable by you at any time and from time to
time before the expiration of a period of 45 calendar days from the date of the
Effective Date of the Registration Statement (the "Option Period") by written
notice to the Company setting forth the number of Additional Securities for
which the Option is being exercised, the name or names in which the
certificates for such Additional Securities are to be registered and the
denominations of such certificates. If less than all of the Additional
Securities are purchased, than the Underwriters shall exercise their Option to
purchase an equal number of shares of Common Stock and Warrants. Upon each
exercise of the Option,
19
the Company shall sell to the Underwriters the aggregate number of Additional
Securities specified in the notice exercising such Option.
(c) Delivery of the Additional Securities with respect to
which Options shall have been exercised and payment therefor shall be made at
10:00 A.M., New York time on the Option Closing Date, as hereinafter defined,
at the offices of Roan or at such other locations as may be agreed upon by you
and the Company. Delivery of certificates for Additional Securities shall be
made to you for the account of the Underwriters against payment of the purchase
price therefor by certified or bank check or wire transfer in New York Clearing
House Funds to the order of the Company. The Company will make certificates for
Additional Securities to be purchased at the Option Closing Date available for
inspection at least two business days prior to such Option Closing Date at such
place as you shall designate.
(d) The "Option Closing Date" shall be the date not later
than five business days after the end of the Option Period as you shall
determine and advise the Company by at least three full business days' notice,
unless some other time is agreed upon between you and the Company.
(e) The obligations of the Underwriters to purchase and pay
for Additional Securities at such Option Closing Date shall be subject to
compliance as of such date with all the conditions specified in Paragraph 2
herein and the delivery to you of opinions, certificates and letters, each
dated such Option Closing Date, substantially similar in scope to those
specified in Paragraph 9 herein.
(f) The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Additional Securities by the
Company to the Underwriters shall be borne by the Company. The Company will pay
and hold the Underwriters, and any subsequent holder of Additional Securities,
harmless from any and all liabilities with respect to or resulting from any
failure or delay in paying federal and state stamp taxes, if any, which may be
payable or determined to be payable in connection with the original issuance or
sale to the Underwriters of the Additional Securities or any portion thereof.
6. Warrant Solicitation Fee.
The Company agrees to pay Roan or Merit a fee of seven percent (7%) of
the aggregate exercise price of the Warrants if: (i) the market price of the
Common Stock is greater than the exercise price of the Warrants on the date of
exercise; (ii) the exercise of the Warrants are solicited by a member of the
NASD and the customer
20
states in writing that the transaction was solicited and designates in writing
the broker-dealer to receive compensation for the exercise; (iii) the Warrants
are not held in a discretionary account; (iv) the disclosure of compensation
arrangements was made both at the time of the Offering and at the time of the
exercise of the Warrant; and (v) the solicitation of the Warrant is not in
violation of Regulation M promulgated under the Exchange Act. The Company
agrees not to solicit the exercise of any Warrants other than through Roan or
Merit and will not authorize any other dealer to engage in such solicitation
without the prior written consent of the Underwriters which will not be
unreasonably withheld. The Warrant solicitation fee will not be paid in a
non-solicited transaction. No Warrant solicitation by the Underwriters will
occur prior to one year from the Effective Date.
7. Representations and Warranties of the Underwriters.
The Underwriters represent and warrant to the Company that:
(a) The Underwriters are each members in good standing of the
National Association of Securities Dealers, Inc., and have complied with all
NASD requirements concerning net capital and compensation to be received in
connection with the Offering.
(b) To the Underwriters' knowledge, there are no claims for
services in the nature of a finder's origination fee with respect to the sale
of the Securities hereunder to which the Company is, or may become, obligated
to pay.
(c) Neither the Underwriters nor their respective registered
representatives have provided purchasers of the Securities with any information
concerning the Company other than the Preliminary Prospectus and the
Prospectus.
8. Payment of Expenses.
(a) The Company will pay and bear all costs, fees, taxes and
expenses incident to and in connection with: (i) the issuance, offer, sale and
delivery of the Securities, including all expenses and fees incident to the
preparation, printing, filing and mailing (including the payment of postage
with respect to such mailing) of the Registration Statement (including all
exhibits thereto), each Preliminary Prospectus, the Prospectus, and amendments
and post-effective amendments thereof and supplements thereto, and this
Agreement and related documents, Preliminary and Final Blue Sky Memoranda,
including the cost of preparing and copying all copies thereof in quantities
deemed necessary by the Underwriters; (ii) the costs of preparing and printing
all "Tombstone" and other appropriate advertisements as mutually agreed upon by
the Company and the Underwriters; (iii) the printing, engraving, issuance and
21
delivery of the Common Stock, Warrants, Warrant Shares, Additional Securities,
Underwriters' Warrants and the securities underlying the Underwriters' Warrant,
including any transfer or other taxes payable thereon in connection with the
original issuance thereof; (iv) the qualification of the Common Stock and
Warrants under the state or foreign securities or "Blue Sky" laws selected by
the Underwriters and the Company, and disbursements and reasonable fees of
counsel for the Underwriters in connection therewith; (v) fees to be paid to
counsel to the Underwriters for the preparation of secondary trading
memorandums until such time as the Common Stock is listed on the New York Stock
Exchange or the American Stock Exchange or quoted on the NASDAQ National Market
System not to exceed $6,250 in any one year period and $12,500 in the
aggregate; (vi) fees and disbursements of counsel and accountants for the
Company; (vii) other expenses and disbursements reasonably incurred on behalf
of the Company; (viii) the filing fees payable to the Commission and the
National Association of Securities Dealers, Inc. ("NASD"); and (ix) any listing
of the Common Stock and Warrants on a securities exchange or on NASDAQ.
(b) In addition to the expenses to be paid and borne by the
Company referred to in Paragraph 8(a) above, the Company shall reimburse you at
closing for expenses incurred by you in connection with the Offering (for which
you need not make any accounting), in the amount of 3% of the price to the
public of the Securities and Additional Securities sold in the Offering. This
3% non-accountable expense allowance shall cover the fees of your legal
counsel, but shall not include any expenses for which the Company is
responsible under Paragraph 8(a) above, including the reasonable fees and
disbursements of your legal counsel with respect to Blue Sky matters. As of the
date hereof, $40,000 has been advanced by the Company to the Underwriters with
respect to such non-accountable expense allowance.
(c) In the event that the Company does not or cannot, for any
reason whatsoever other than a default by the Underwriters, proceed with the
Offering, or if any of the representations, warranties or covenants contained
in this Agreement are not materially correct or cannot be complied with by the
Company, or business prospects or obligations of the Company are adversely
affected and the Company does not commence or continue with the Offering at any
time or terminates the proposed transaction prior to the Closing Date, the
Company shall reimburse the Underwriters on an accountable basis for all
out-of-pocket expenses actually incurred in connection with the Underwriting,
this Agreement and all of the transactions hereby contemplated (including,
without limitation, your legal fees and expenses), up to an aggregate total of
$100,000 less such sums which have already been paid.
22
9. Conditions of Underwriters' Obligations.
The obligations of the Underwriters to consummate the transactions
contemplated by this Agreement shall be subject to the continuing accuracy of
the representations and warranties of the Company contained herein as of the
date hereof and as of the Closing Date, the accuracy of the statements of the
Company and its officers and directors made pursuant to the provisions hereof,
and to the performance by the Company of its covenants and agreements hereunder
and under each certificate, opinion and document contemplated hereunder and to
the following additional conditions:
(a) The Registration Statement shall have become effective
not later than 5:00 p.m., New York time, on the date following the date of this
Agreement, or such later date and time as shall be consented to in writing by
you and, on or prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement or the qualification or
registration of the Securities under the securities laws of any jurisdiction
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or to your knowledge or the knowledge of the
Company, shall be contemplated by the Commission or any such authorities of any
jurisdiction and any request on the part of the Commission or any such
authorities for additional information shall have been complied with to the
reasonable satisfaction of the Commission or such authorities and counsel to
the Underwriters and after the date hereof no amendment or supplement shall
have been filed to the Registration Statement or Prospectus without your prior
consent.
(b) The Registration Statement or the Prospectus or any
amendment thereof or supplement thereto shall not contain an untrue statement
of a fact which is material, or omit to state a fact which is material and is
required to be stated therein or is necessary to make the statements therein,
not misleading.
(c) Between the time of the execution and delivery of this
Agreement and the Closing Date, there shall be no litigation instituted against
the Company or any of its officers or directors and between such dates there
shall be no proceeding instituted or, to the Company's knowledge, threatened
against the Company or any of its officers or directors before or by any
federal, state or county commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding would have a material adverse effect
on the Company or its business, business prospects or properties, or have a
material adverse effect on the financial condition or results of operation of
the Company.
23
(d) Each of the representations and warranties of the Company
contained herein and each certificate and document contemplated under this
Agreement to be delivered to you shall be true and correct at the Closing Date
as if made at the Closing Date, and all covenants and agreements contained
herein and in each such certificate and document to be performed on the part of
the Company, and all conditions contained herein and in each such certificate
and document to be fulfilled or complied with by the Company at or prior to the
Closing Date shall be fulfilled or complied with.
(e) At the Closing Date, you shall have received the opinion
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Green, P.C., counsel to the Company, dated as of such
Closing Date, addressed to the Underwriters and in form and substance
satisfactory to counsel to the Underwriters, to the effect that:
(i) The Company and each of its Subsidiaries are
corporations duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation with full corporate power and
authority, and all licenses, permits, certifications, registrations, approvals,
consents and franchises to own or lease and operate their properties and to
conduct their businesses as described in the Registration Statement. The
Company and each of its Subsidiaries are duly qualified to do business as
foreign corporations and are in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify could have a material
adverse effect on the financial condition, results of operations, business or
properties of the Company and each of its Subsidiaries;
(ii) The Company has full corporate power and
authority to execute, deliver and perform the Underwriting Agreement, the
Consulting Agreement, the Warrant Agreement and the Underwriters' Warrants and
to consummate the transactions contemplated thereby. The execution, delivery
and performance of the Underwriting Agreement, the Consulting Agreement, the
Warrant Agreement and the Underwriters' Warrants by the Company, the
consummation by the Company of the transactions therein contemplated and the
compliance by the Company with the terms of the Underwriting Agreement, the
Consulting Agreement, the Warrant Agreement and the Underwriters' Warrants have
been duly authorized by all necessary corporate action, and each of the
Underwriting Agreement, the Consulting Agreement, the Warrant Agreement and the
Underwriters' Warrants have been duly executed and delivered by the Company.
Each of the Underwriting Agreement, the Consulting Agreement, the Warrant
Agreement and the Underwriters' Warrants is a valid and binding obligation of
the Company, enforceable in accordance with their respective terms, subject, as
to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization,
24
moratorium and other laws affecting the rights of creditors generally and the
discretion of courts in granting equitable remedies and except that
enforceability of the indemnification provisions and the contribution
provisions set forth in the Underwriting Agreement may be limited by the
federal securities laws or public policy underlying such laws;
(iii) The execution, delivery and performance of the
Underwriting Agreement, the Consulting Agreement, the Warrant Agreement and the
Underwriters' Warrants by the Company, the consummation by the Company of the
transactions therein contemplated and the compliance by the Company with the
terms of the Underwriting Agreement, the Consulting Agreement, the Warrant
Agreement and the Underwriters' Warrants do not, and will not, with or without
the giving of notice or the lapse of time, or both, (A) result in a violation
of the Certificate of Incorporation, as the same may be amended, or Bylaws of
the Company or any of its Subsidiaries, (B) to the best of our knowledge,
result in a breach of, or conflict with, any terms or provisions of or
constitute a default under, or result in the modification or termination of, or
result in the creation or imposition of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, any indenture, mortgage, note, contract, commitment
or other material agreement or instrument to which the Company or any of its
Subsidiaries are a party or by which the Company or any of its Subsidiaries or
any of their properties or assets are or may be bound or affected, except where
any of the foregoing would not result in a material adverse effect upon the
Company's or any Subsidiaries business or operations; (C) to the best of our
knowledge, violate any existing applicable law, rule or regulation or judgment,
order or decree known to us of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its Subsidiaries or any
of their properties or businesses; or (D) to the best of our knowledge, have
any effect on any permit, certification, registration, approval, consent,
license or franchise necessary for the Company or any of its Subsidiaries to
own or lease and operate their properties and to conduct their business or the
ability of the Company or any of its Subsidiaries to make use thereof;
(iv) To the best of our knowledge, no
authorization, approval, consent, order, registration, license or permit of any
court or governmental agency or body (other than under the Act, the Regulations
and applicable state securities or Blue Sky laws) is required for the valid
authorization, issuance, sale and delivery of the Securities, the Additional
Securities, the Common Stock, the Warrants, the Warrant Shares, or the
Underwriters' Warrants, and the consummation by the Company of the transactions
contemplated by the Underwriting Agreement,
25
the Consulting Agreement, the Warrant Agreement or the Underwriters' Warrants;
(v) The Registration Statement was declared
effective under the Act on , 1997; to the best our knowledge, no stop
order suspending the effectiveness of the Registration Statement has been
issued, and no proceedings for that purpose have been instituted or are
pending, threatened or contemplated under the Act or applicable state
securities laws;
(vi) The Registration Statement and the Prospectus,
as of the Effective Date (except for the financial statements and other
financial data included therein or omitted therefrom, as to which we express no
opinion), comply as to form in all material respects with the requirements of
the Act and Regulations and the conditions for use of a registration statement
on Form SB-2 have been satisfied by the Company;
(vii) The description in the Registration Statement
and the Prospectus of statutes, regulations, contracts and other documents have
been reviewed by us, and, based upon such review, are accurate in all material
respects and present fairly the information required to be disclosed, and to
the best of our knowledge, there are no material statutes or regulations, or,
to the best of our knowledge, material contracts or documents, of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement, which are not so described
or filed as required.
To the best of our knowledge, none of the material
provisions of the contracts or instruments described above violates any
existing applicable law, rule or regulation or judgment, order or decree known
to us of any United States governmental agency or court having jurisdiction
over the Company or any of its assets or businesses;
(viii) The outstanding Common Stock and Warrants
have been duly authorized and validly issued. The outstanding Common stock is
fully paid an nonassessable. To the best of our knowledge, none of the
outstanding Common Stock has been issued in violation of the preemptive rights
of any stockholder of the Company. None of the holders of the outstanding
Common Stock is subject to personal liability solely by reason of being such a
holder. The authorized Common Stock conforms to the description thereof
contained in the Registration Statement and Prospectus. To the best of our
knowledge, except as set forth in the Prospectus, no holders of any of the
Company's securities has any rights, "demand," "piggyback" or otherwise, to
have such securities registered under the Act;
26
(ix) The issuance and sale of the Securities, the Additional
Securities, the Common Stock, the Warrants, the Warrant Shares and the
Underwriters' Warrants have been duly authorized and when issued and paid
for in accordance with the Underwriting Agreement or the respective Warrants
will be validly issued, fully paid and nonassessable, and the holders thereof
will not be subject to personal liability solely by reason of being such
holders. Neither the Securities, the Additional Securities, nor the Common
Stock are subject to preemptive rights of any stockholder of the Company. The
certificates representing the Securities are in proper legal form;
(x) The issuance and sale of the Warrant Shares and
the Underwriters' Warrants have been duly authorized and, when paid for, issued
and delivered pursuant to the terms of the Warrant Agreement or the
Underwriters' Warrants, as the case may be, the Warrants and the Underwriters'
Warrants will constitute the valid and binding obligations of the Company,
enforceable in accordance with their terms, to issue and sell the Warrants, the
Warrant Shares and/or Underwriters' Warrants. All corporate action required to
be taken for the authorization, issuance and sale of the securities has been
duly, validly and sufficiently taken. The Common Stock and the Warrants have
been duly authorized by the Company to be offered in the form of the
Securities. The Warrants, the Warrant Shares and the Underwriters' Warrants
conform to the descriptions thereof contained in the Registration Statement and
Prospectus;
(xi) The Underwriters have acquired good title to the
Securities, free and clear of all liens, encumbrances, equities, security
interests and claims, provided that the Underwriters are bona fide purchasers
as defined in ss.8-302 of the Uniform Commercial Code;
(xii) Assuming that the Underwriters exercise the over-allotment
option to purchase the Additional Securities and make payments therefor in
accordance with the terms of the Underwriting Agreement, upon delivery of the
Additional Securities to the Underwriters thereunder, the Underwriters will
acquire good title to the Additional Securities, free and clear of any liens,
encumbrances, equities, security interests and claims, provided that the
Underwriters are bona fide purchasers as defined in ss.8-302 of the Uniform
Commercial Code;
(xiii) To the best of our knowledge, there are no claims,
actions, suits, proceedings, arbitrations, investigations or inquiries before
any governmental agency, court or tribunal, foreign or domestic, or before any
private arbitration tribunal, pending or threatened against the Company or any
of its Subsidiaries or involving their properties or businesses, other
27
than as described in the Prospectus, such description being accurate, and other
than litigation incident to the kind of business conducted by the Company or
any of its Subsidiaries which, individually and in the aggregate, is not
material, and, except as otherwise disclosed in the Prospectus and the
Registration Statement, the Company and its Subsidiaries have complied with all
federal and state laws, statutes and regulations concerning its business;
(xiv) All sales of the Company's securities have been made
in compliance with or under an exemption from the registration requirements
of the Act, and no purchaser of such securities in any such sale has a right
of action against the Company for failure to comply with the registration or
filing requirements of any state; and
(xv) We have participated in reviews and
discussions in connection with the preparation of the Registration Statement
and the Prospectus. Although we are not passing upon and do not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, no facts came to our attention which
lead us to believe that (A) the Registration Statement (except as to the
financial statements and other financial data contained therein, as to which we
express no opinion), on the Effective Date, contained any untrue statement of a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or that (B) the Prospectus (except as to the financial statements
and other financial data contained therein, as to which we express no opinion)
contains any untrue statement or a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(f) On or prior to the Closing Date, counsel for the
Underwriters shall have been furnished such documents, certificates and
opinions as they may reasonably require for the purpose of enabling them to
review the matters referred to in subparagraph (e) of this Paragraph 9, or in
order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
(g) Prior to the Closing Date:
(i) There shall have been no material adverse change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in
the Registration Statement and Prospectus;
28
(ii) There shall have been no transaction, outside
the ordinary course of business, entered into by the Company from the latest
date as of which the financial condition of the Company is set forth in the
Registration Statement and Prospectus which is material to the Company, which
is either (x) required to be disclosed in the Prospectus or Registration
Statement and is not so disclosed, or (y) likely to have a material adverse
effect on the Company's business or financial condition;
(iii) The Company shall not be in default under any
material provision of any instrument relating to any outstanding indebtedness,
except as described in the Prospectus;
(iv) No material amount of the assets of the Company shall
have been pledged, mortgaged or otherwise encumbered, except as set forth
in the Registration Statement and Prospectus;
(v) No action, suit or proceeding, at law or in
equity, shall have been pending or to its knowledge threatened against the
Company or affecting any of its properties or businesses before or by any court
or federal or state commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding would materially and adversely affect
the business, operations, prospects or financial condition or income of the
Company, taken as a whole, except as set forth in the Registration Statement
and Prospectus; and
(vi) No stop order shall have been issued under the
Act and no proceedings therefor shall have been initiated or, to the Company's
knowledge, threatened by the Commission.
(vii) Each of the representations and warranties of
the Company contained in this Agreement and in each certificate and document
contemplated under this Agreement to be delivered to you was, when originally
made and is at the time such certificate is dated, true and correct.
(h) Concurrently with the execution and delivery of this
Agreement and at the Closing Date, you shall have received a certificate of the
Company signed by the Chief Executive Officer of the Company and the principal
financial officer of the Company, dated as of the Closing Date, to the effect
that the conditions set forth in subparagraph (g) above have been satisfied and
that, as of the Closing Date, the representations and warranties of the Company
set forth in Paragraph 2 herein and the statements in the Registration
Statement and Prospectus were and are true and correct in all material
respects. Any certificate signed by any officer of the Company and delivered to
you or for counsel for the Underwriters shall be deemed a representation and
warranty by the Company to the Underwriters as to the statements made therein.
29
(i) At the time this Agreement is executed, and at the
Closing Date, you shall have received a "cold comfort" letter, addressed to the
Underwriters and in form and substance satisfactory in all respects to you and
counsel for the Underwriters, from Jump, Green, ▇▇▇▇▇▇ & Company, dated as of
the date of this Agreement and as of the Closing Date.
(j) All proceedings taken in connection with the
authorization, issuance or sale of the Common Stock, Warrants, Warrant Shares,
Additional Securities, the Underwriters' Warrants and the Underwriters' Warrant
Shares as herein contemplated shall be satisfactory in form and substance to
you and to counsel to the Underwriters, and the Underwriters shall have
received from such counsel an opinion, dated as the Closing Date with respect
to such of these proceedings as you may reasonably require.
(k) The Company shall have furnished to you such
certificates, additional to those specifically mentioned herein, as you may
have reasonably requested in a timely manner as to the accuracy and
completeness, at the Closing Date, of any statement in the Registration
Statement or the Prospectus, as to the accuracy, at the Closing Date, of the
representations and warranties of the Company herein and in each certificate
and document contemplated under this Agreement to be delivered to you, as to
the performance by the Company of its obligations hereunder and under each such
certificate and document or as to the fulfillment of the conditions concurrent
and precedent to your obligations hereunder.
(l) The obligation of the Underwriters to purchase Additional
Securities hereunder is subject to the accuracy of the representations and
warranties of the Company contained herein on and as of the Option Closing Date
and to the satisfaction on and as of the Option Closing Date of the conditions
set forth herein.
(m) On the Closing Date there shall have been duly tendered
to you for your account the appropriate number of shares of Common Stock and
Warrants constituting the Securities.
10. Indemnification and Contribution.
(a) Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Underwriters and each person, if any,
who controls the Underwriters ("controlling person") within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act, against any and
all losses, liabilities, claims, damages, actions and expenses or liability,
joint or several, whatsoever (including but not limited to any and all expense
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), joint or
several, to which it
30
or such controlling persons may become subject under the Act, the Exchange Act
or under any other statute or at common law or otherwise or under the laws of
foreign countries, arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any Preliminary Prospectus or the Prospectus (as from time to time amended and
supplemented); in any post-effective amendment or amendments or any new
registration statement and prospectus in which is included the Warrant Shares
of the Company issued or issuable upon exercise of the Warrants, or
Underwriters' Warrant Shares upon exercise of the Underwriters' Warrant; or in
any application or other document or written communication (in this Paragraph
10 collectively called "application") executed by the Company or based upon
written information furnished by the Company filed in any jurisdiction in order
to qualify the Common Stock, Warrants, Warrant Shares, Additional Securities,
Underwriters' Warrants and Underwriters' Warrant Shares (including the Shares
issuable upon exercise of the Warrants underlying the Underwriters' Warrants)
under the securities laws thereof or filed with the Commission or any
securities exchange; or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of the Prospectus, in the light of the
circumstances under which they were made), unless such statement or omission
was made in reliance upon or in conformity with written information furnished
to the Company with respect to the Underwriters by or on behalf of the
Underwriters expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in
application, as the case may be. Notwithstanding the foregoing, the Company
shall have no liability under this Paragraph 10(a) if any such untrue statement
or omission made in a Preliminary Prospectus, is cured in the Prospectus and
the Underwriters failed to deliver to the person or persons alleging the
liability upon which indemnification is being sought, at or prior to the
written confirmation of such sale, a copy of the Prospectus. This indemnity
will be in addition to any liability which the Company may otherwise have.
(b) The Underwriters agree to indemnify and hold harmless the
Company and each of the officers and directors of the Company who have signed
the Registration Statement and each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
the Underwriters in Paragraph 10(a), but only with respect to any untrue
statement or alleged untrue statement of any material fact contained in or any
omission or alleged omission to state a material fact required to be stated in
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereof or necessary to make the statements therein not
31
misleading or in any application made solely in reliance upon, and in
conformity with, written information furnished to the Company by you
specifically expressly for use in the preparation of such Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriters in connection with this Offering.
This indemnity agreement will be in addition to any liability which the
Underwriters may otherwise have. Notwithstanding the foregoing, the
Underwriters shall have no liability under this Paragraph 10(b) if any such
untrue statement or omission made in a Preliminary Prospectus is cured in the
Prospectus, and the Prospectus is delivered to the person or persons alleging
the liability upon which indemnification is being sought.
(c) If any action is brought against any indemnified party
(the "Indemnitee") in respect of which indemnity may be sought against another
party pursuant to the foregoing (the "Indemnitor"), the Indemnitor shall assume
the defense of the action, including the employment and fees of counsel
(reasonably satisfactory to the Indemnitee) and payment of expenses. Any
Indemnitee shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
Indemnitee unless the employment of such counsel shall have been authorized in
writing by the Indemnitor in connection with the defense of such action. If the
Indemnitor shall have employed counsel to have charge of the defense or shall
previously have assumed the defense of any such action or claim, the Indemnitor
shall not thereafter be liable to any Indemnitee in investigating, preparing or
defending any such action or claim. Each Indemnitee shall promptly notify the
Indemnitor of the commencement of any litigation or proceedings against the
Indemnitee in connection with the issue and sale of the Common Stock, Warrants,
Warrants Shares, Additional Securities, Underwriters' Securities or in
connection with the Registration Statement or Prospectus.
(d) In order to provide for just and equitable contribution
under the Act in any case in which: (i) the Underwriters make a claim for
indemnification pursuant to Paragraph 10 hereof, but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the time to appeal has expired or the last right of appeal has
been denied) that such indemnification may not be enforced in such case
notwithstanding the fact that this Paragraph 10 provides for indemnification of
such case; or (ii) contribution under the Act may be required on the part of
the Underwriters in circumstances for which indemnification is provided under
this Paragraph 10, then, and in each such case, the Company and the
Underwriters shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after any contribution from others)
32
in such proportion so that the Underwriters are responsible for the portion
represented by dividing the total compensation received by the Underwriters
herein by the total purchase price of all Securities sold in the public
offering and the Company is responsible for the remaining portion; provided,
that in any such case, no person guilty of a fraudulent misrepresentation
(within the meaning of Section 11 (f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The foregoing contribution agreement shall in no way affect
the contribution liabilities of any persons having liability under Section 11
of the Act other than the Company and the Underwriters. As used in this
Paragraph 10, the term "Underwriters" includes any officer, director, or other
person who controls the Underwriters within the meaning of Section 15 of the
Act, and the word "Company" includes any of officer, director or person who
controls the Company within the meaning of Section 15 of the Act. If the full
amount of the contribution specified in this paragraph is not permitted by law,
then the Underwriters and each person who controls the Underwriters shall be
entitled to contribution from the Company to the full extent permitted by law.
No contribution shall be requested with regard to the settlement of any matter
from any party who did not consent to the settlement.
(e) Within fifteen (15) days after receipt by any party to
this Agreement (or its representative) of notice of the commencement of any
action, suit or proceeding, such party will, if a claim for contribution in
respect thereof is made against another party (the "contributing party"),
notify the contributing party of the commencement thereof, but the omission so
to notify the contributing party will not relieve it from any liability it may
have to any other party other than for contribution hereunder.
In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or his or its
representative of the commencement thereof within the aforesaid fifteen (15)
days, the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution without the written consent of such contributing
party. The indemnification provisions contained in this Paragraph 10 are in
addition to any other rights or remedies which either party hereto may have
with respect to the other or hereunder.
33
11. Representations Warranties Agreements to Survive Delivery.
The respective indemnity and contribution agreements by the
Underwriters and the Company contained in Paragraph 10 hereof, and the
covenants, representations and warranties of the Company and the Underwriters
set forth in this Agreement, shall remain operative and in full force and
effect regardless of (i) any investigation made by the Underwriters or on their
behalf or by or on behalf of any person who controls the Underwriters, or by
the Company or any controlling person of the Company or any director or any of
officer of the Company, (ii) acceptance of any of the Securities and payment
therefor, or (iii) any termination of this Agreement, and shall survive the
delivery of the Securities and any successor of the Underwriters or the
Company, or of any person who controls you or the Company or any other
indemnified party, as the case may be, shall be entitled to the benefit of such
respective indemnity and contribution agreements. The respective indemnity and
contribution agreements by the Underwriters and the Company contained in this
Paragraph 11 shall be in addition to any liability which the Underwriters and
the Company may otherwise have.
12. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective at 10:00 A.M., New
York time, on the first full business day following the day on which you and
the Company receive notification that the Registration Statement became
effective.
(b) This Agreement may be terminated by the Underwriters by
notifying the Company at any time on or before the Closing Date, if any
domestic or international event or act or occurrence has materially disrupted,
or in your opinion will in the immediate future materially disrupt, securities
markets; or if trading on the New York Stock Exchange, the American Stock
Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or NASDAQ or by order of the Commission or any other
governmental authority having jurisdiction; or if a moratorium in foreign
exchange trading by major international banks or persons has been declared; or
if the Company shall have sustained a loss material or substantial to the
Company taken as a whole by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in your opinion, make it inadvisable to
proceed with the delivery of the Securities; or if there shall have been a
material adverse change in the conditions of the securities market in general,
as in your
34
reasonable judgment would make it inadvisable to proceed with the offering,
sale and delivery of the Securities; or if there shall have been a material
adverse change in the financial or securities markets, particularly in the
over-the-counter market, in the United States having occurred since the date of
this Agreement.
(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Paragraph 12, the
Company shall be notified promptly by you by telephone or facsimile, confirmed
by letter.
(d) If this Agreement shall not become effective or if this
Agreement shall not be carried out within the time specified herein by reason
of any failure on the part of the Company to perform any undertaking, or to
materially satisfy any condition of this Agreement by it to be performed or
satisfied, the sole liability of the Company to the Underwriters, in addition
to the obligations assumed by the Company pursuant to Paragraph 8 herein, will
be to reimburse the Underwriters for the following: (i) Blue Sky counsel fees
and expenses to the extent set forth in Paragraph 8(a)(iv); (ii) Blue Sky
filing fees; and (iii) such reasonable out-of-pocket expenses of the
Underwriters (including the fees and disbursements of their counsel), to the
extent set forth in Paragraph 8(c), in connection with this Agreement and the
proposed offering of the Securities, but in no event to exceed the sum of
$100,000 less such amounts already paid.
Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the provisions of
Paragraph 8 and 10 hereof shall not be in any way affected by such election or
termination or failure to carry out the terms of this Agreement or any part
hereof.
13. Notices.
All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to the Underwriters, shall be
mailed, delivered or telegraphed and confirmed to the Underwriters at Roan
Capital Partners L.P., ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, with a copy thereof to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.,
Gusrae ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and, if sent
to the Company, shall be mailed, delivered or telegraphed and confirmed to the
Company at ▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President, with a copy thereof to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Green,
P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Esq.
35
14. Parties.
This Agreement shall inure solely to the benefit of and shall be
binding upon, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Paragraph 10 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
15. Construction.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York and shall supersede any
agreement or understanding, oral or in writing, express or implied, between the
Company and you relating to the sale of any of the Securities.
16. Jurisdiction and Venue.
The Company agrees that the courts of the State of New York shall have
jurisdiction over any litigation arising from this Agreement, and venue shall
be proper in the Southern District of New York.
17. Counterparts.
This agreement may be executed in counterparts.
If the foregoing correctly sets forth the understanding
between you, the Selling Stockholders and the Company, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.
Very truly yours,
DISCAS, INC.
By:
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Accepted as of the date first above written:
ROAN CAPITAL PARTNERS L.P.
By:
------------------------------
MERIT CAPITAL ASSOCIATES, INC.
By:
-------------------------------
36
SCHEDULE A
NUMBER OF SHARES NUMBER OF
OF COMMON STOCK WARRANTS TO
TO BE PURCHASED TO BE PURCHASED
----------------- ----------------
UNDERWRITER
Roan Capital Partners L.P.
Merit Capital Associates, Inc.
----------------- ----------------
Total: 800,000 800,000
================= ================