2,100,000 Shares(1)
ALL-COMM MEDIA CORPORATION
Common Stock
UNDERWRITING AGREEMENT
January __, 1997
CRUTTENDEN ▇▇▇▇ INCORPORATED
As Lead Representative of the Several Underwriters
c/o Cruttenden ▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
All-Comm Media Corporation, a Nevada corporation (the "Company"),
confirms its agreement with Cruttenden ▇▇▇▇ Incorporated (the "Lead
Representative") and ▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc. ("▇▇ ▇▇▇▇▇▇▇▇"; the Lead
Representative and ▇▇ ▇▇▇▇▇▇▇▇, collectively, the "Representatives") and the
other members of the underwriting group set forth on Schedule A hereto
(collectively with the Representatives, the "Underwriters") as follows:
1. Description of Shares. The Company proposes to issue and sell
1,750,000 shares of its authorized and unissued common stock, $0.01 par value
per share ("Common Stock"), to the several Underwriters, and the stockholders of
the Company listed in Schedule B hereto (the "Selling Stockholders") propose to
sell an aggregate of 350,000 shares of Common Stock of the Company to the
several Underwriters. Such 2,100,000 Shares are hereinafter referred to as the
"Firm Shares." The Company, certain of the Selling Stockholders and certain
other stockholders named in Schedule C hereto (the "Over-Allotment Selling
Stockholders") also propose to grant to the Underwriters an option to purchase
up to
--------
1 Plus an option to purchase up to 315,000 additional shares from the
Company and the Over-Allotment Selling Stockholders to cover
over-allotments.
315,000 additional shares of Common Stock for the purpose of covering
over-allotments, if any (the "Option Shares"), as provided in Section 10 hereof.
In addition, the Company proposes to sell to the Representatives, individually
and not in their capacity as Representatives, warrants (the "Underwriters'
Warrants") to purchase up to 210,000 shares of Common Stock (the "Underwriters'
Warrant Stock"), which sale will be consummated in accordance with the terms and
conditions of the Underwriters' Warrant Agreement dated the date hereof (the
"Underwriters' Warrant Agreement"). As used in this Agreement, the term "Shares"
shall include the Firm Shares and the Option Shares. All shares of Common Stock
of the Company to be outstanding after giving effect to the sales contemplated
hereby, including the Shares, are hereinafter referred to as "Common Stock."
2. Representations, Warranties and Agreements of the
Company.
The Company hereby represents and warrants to, and agrees with,
each Underwriter as of the date hereof, and as of the Closing Date (hereinafter
defined) and each Option Closing Date (hereinafter defined), if any, as follows
(it being expressly understood and agreed that "materiality" for purposes of
this Agreement shall be determined by the Lead Representative in its sole and
reasonable discretion):
(a) A registration statement on Form SB-2 (File No. 333-14339)
with respect to the Shares, the Underwriters' Warrants and the Underwriters'
Warrant Stock, including a prospectus subject to completion, has been prepared
by the Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), and the applicable rules and regulations of the
Securities and Exchange Commission (the "Commission") under the Act and has been
filed with the Commission (such rules and regulations under the Act and under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
hereinafter referred to as the "Rules and Regulations"); such amendments to such
registration statement and such amended prospectuses subject to completion as
may have been required prior to the date hereof have been similarly prepared and
filed with the Commission; and the Company will file such additional amendments
to such registration statement and such amended prospectuses subject to
completion as may hereafter be required. Copies of such registration statement
and amendments and of each related prospectus subject to completion (the
"Preliminary Prospectuses") have been delivered to the Representatives.
If the registration statement relating to the Shares has been
declared effective under the Act by the Commission, the Company will prepare and
promptly file with the Commission the information omitted from the registration
statement pursuant to Rule 430A(a) of the Rules and Regulations pursuant to
subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as part
of a
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post-effective amendment to the registration statement (including a final form
of prospectus). If the registration statement relating to the Shares has not
been declared effective under the Act by the Commission, the Company will
prepare and promptly file an amendment to the registration statement, including
a final form of prospectus. The term "Registration Statement" as used in this
Agreement shall mean such registration statement, including financial
statements, schedules and exhibits, in the form in which it became or becomes,
as the case may be, effective (including, if the Company omitted information
from the registration statement pursuant to Rule 430A(a) of the Rules and
Regulations, the information deemed to be a part of the registration statement
at the time it became effective pursuant to Rule 430A(b) of the Rules and
Regulations) and, in the event of any amendment thereto after the effective date
of such registration statement, shall also mean (from and after the
effectiveness of such amendment) such registration statement as so amended. The
term "Prospectus" as used in this Agreement shall mean the prospectus relating
to the Shares as included in such Registration Statement at the time it becomes
effective (including, if the Company omitted information from the Registration
Statement pursuant to Rule 430A(a) of the Rules and Regulations, the information
deemed to be a part of the Registration Statement at the time it became
effective pursuant to Rule 430A(b) of the Rules and Regulations), except that if
any revised prospectus shall be provided to the Underwriters by the Company for
use in connection with the offering of the Shares that differs from the
prospectus on file with the Commission at the time the Registration Statement
became or becomes, as the case may be, effective (whether or not such revised
prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided to the
Underwriters for such use.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings for
that purpose, and each such Preliminary Prospectus has conformed in all material
respects to the requirements of the Act and the Rules and Regulations and, as of
its date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the time
the Registration Statement became or becomes, as the case may be, effective and
at all times subsequent thereto up to and on the Closing Date (hereinafter
defined) and on any later date on which Option Shares are to be purchased (each
such date an "Option Closing Date"), (i) the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained and will
contain all material information required to be included therein by the Act and
the Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, (ii) the Registration
Statement, and any
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amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(iii) the Prospectus, and any amendments or supplements thereto, did not and
will not include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties contained in this subparagraph
(b) shall apply to information contained in or omitted from the Registration
Statement or Prospectus, or any amendment or supplement thereto, in reliance
upon, and in conformity with, written information relating to any Underwriter,
or to any Selling Stockholder or Over-Allotment Selling Stockholder, furnished
to the Company by such Underwriter, Selling Stockholder or Over-Allotment
Selling Stockholder specifically for use in the preparation thereof.
(c) Each of the Company and its directly and indirectly
wholly-owned subsidiaries, All-Comm Acquisition Corporation (formerly BH
Acquisitions, Inc.), All-Comm Holdings, Inc. (formerly Bullhead Casino
Corporation), Alliance Media Corporation ("Alliance"), ▇▇▇▇▇▇▇ ▇▇▇▇ &
Associates, Inc. ("SD&A") and Metro Services Group, Inc. ("Metro") (each of the
foregoing individually a "Subsidiary" and collectively, the "Subsidiaries") has
been duly organized and is validly existing as a corporation under the laws of
the jurisdiction of its incorporation or organization with full power and
authority (corporate and other) to own, lease and operate its properties and
conduct its business as described in the Prospectus; each of the Company and the
Subsidiaries is in good standing in the jurisdiction of its incorporation or
organization (to the extent the laws of such jurisdiction provide for the good
standing of corporations); each of the Company and the Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure to
be so qualified or be in good standing would not have a material adverse effect
on the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and the Subsidiaries taken as a whole; no
proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification; the Company and each of the Subsidiaries is in possession of and
operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from state, federal and other regulatory
authorities which are material to the conduct of its business, all of which are
valid and in full force and effect; neither the Company nor any Subsidiary is in
violation of its charter or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material bond, debenture, note or other evidence of
indebtedness, or in any
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material lease, contract, indenture, mortgage, deed of trust, loan agreement,
joint venture or other agreement or instrument to which the Company or such
Subsidiary is a party or by which it or its properties may be bound; and neither
the Company nor any Subsidiary is in material violation of any law, order, rule,
regulation, writ, injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or such Subsidiary or over its properties of which it has knowledge. The
Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the Subsidiaries. Except as otherwise
noted in the Registration Statement, the Company owns, directly or indirectly,
100% of the capital stock of each of the Subsidiaries. The disclosures in the
Registration Statement concerning the effects of federal, state, local and
foreign laws, rules and regulations on each of the Company's and the
Subsidiaries' businesses as currently conducted and as contemplated are correct
in all material respects.
(d) The Company has full legal right, power and authority to
enter into this Agreement and the Underwriters' Warrant Agreement and to perform
the transactions contemplated hereby and thereby. Each of this Agreement and the
Underwriters' Warrant Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement on the part of the Company,
enforceable in accordance with its terms, except as rights to indemnification or
contribution under this Agreement or the Underwriters' Warrant Agreement may be
limited by applicable law and except as the enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles; the performance of this Agreement and the Underwriters'
Warrant Agreement and the consummation of the transactions herein or therein
contemplated will not result in a material breach or violation of any of the
terms and provisions of, or constitute a default under, (i) any material bond,
debenture, note or other evidence of indebtedness, or under any material lease,
contract, license, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company's or any of the Subsidiaries'
properties or assets may be bound, (ii) the charter or by-laws of the Company,
or (iii) any law, order, rule, regulation, writ, injunction, judgment or decree
(except that no representation is made as to matters arising under any state
securities or Blue Sky law) of any court, government or governmental agency or
body, domestic or foreign, having jurisdiction over the Company or over its
properties. No consent, approval, authorization or order of or qualification
with any court, government or governmental agency or body, domestic or foreign,
having jurisdiction over the Company or over its properties is required for the
execution and delivery of this Agreement or the Underwriters' Warrant Agreement
and the consummation by the Company of the transactions herein and therein
contemplated, except such as
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may be required under the Act or under state or other securities or Blue Sky
laws, all of which requirements have been satisfied in all material respects.
(e) There is not any pending or, to the best of the Company's
knowledge, threatened action, suit, claim or proceeding against the Company or
any of the Subsidiaries, or any of such companies' officers or any of their
properties, assets or rights before any court, government or governmental agency
or body, domestic or foreign, which (i) would or could reasonably be expected to
result in any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and the
Subsidiaries taken as a whole or might reasonably be expected to materially and
adversely affect the properties, assets or rights thereof, (ii) questions the
validity of the capital stock of the Company, this Agreement or the
Underwriters' Warrant Agreement, or of any action taken or to be taken by the
Company pursuant to or in connection with this Agreement or the Underwriters'
Warrant Agreement, (iii) might prevent consummation of the transactions
contemplated hereby or (iv) is required to be disclosed in the Registration
Statement or Prospectus and is not so disclosed; and there are no agreements,
contracts, leases or documents of a character required to be described or
referred to in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement by the Act, or the Rules and Regulations
which have not been accurately described in all material respects in the
Registration Statement or Prospectus or filed as exhibits to the Registration
Statement.
(f) The Recapitalization and the agreements, documents and
instruments executed and delivered by the Company in connection therewith (the
"Recapitalization Documents") were duly authorized by all necessary corporate
action on the part of the Company. Each of the Recapitalization Documents was
executed and delivered by the Company and is a valid and binding agreement on
the part of the Company, enforceable in accordance with its terms, except as the
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles; the performance of the
Recapitalization Documents and the consummation of the Recapitalization therein
contemplated will not result in a material breach or violation of any of the
terms and provisions of, or constitute a default under, (i) any material bond,
debenture, note or other evidence of indebtedness, or under any material lease,
contract, license, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company's or any of the Subsidiaries'
properties or assets may be bound, (ii) the charter or by-laws of the Company,
or (iii) any law, order, rule, regulation, writ, injunction, judgment or decree
of any court, government or governmental agency or body, domestic or foreign,
having jurisdic-
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tion over the Company or over its properties. No consent, approval,
authorization or order of or qualification with (i) any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or over its properties or (ii) any other third party is or was required
for the execution and delivery of the Recapitalization Documents and the
consummation by the Company of the Recapitalization therein contemplated, except
for the consents which were obtained. All outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable securities
laws, were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and the authorized and
outstanding capital stock of the Company is as set forth in the Prospectus under
the captions "Capitalization" and "Description of Capital Stock" and conforms in
all material respects to the statements relating thereto contained in the
Registration Statement and the Prospectus (and such statements correctly state
the substance of the instruments defining the capitalization of the Company);
the Firm Shares and the Option Shares to be sold by the Company have been duly
authorized for issuance and sale to the Underwriters pursuant to this Agreement
and, when issued and delivered by the Company against payment therefor in
accordance with the terms of this Agreement, will be duly and validly issued and
fully paid and nonassessable, and will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest created by the
Company. No further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the issuance and sale or
transfer of the Shares to be sold by the Company except as may be required under
the Act or under state securities or Blue Sky laws. Except as disclosed in or
contemplated by the Prospectus and the financial statements of the Company, and
the related notes thereto, included in the Prospectus, the Company has no
outstanding options to purchase, or preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts, plans or commitments to issue or sell, shares of its capital
stock or any such options, rights, convertible securities or obligations (other
than as disclosed in the Prospectus and other than pursuant to the 1991 Stock
Option Plan (the "Stock Option Plan"), filed as Exhibit 10.1 to the Registration
Statement).
(g) The consolidated financial statements of the Company and the
Subsidiaries set forth in the Registration Statement, together with the related
schedules and notes, fairly present the consolidated financial position, income
(loss), changes in cash flow, changes in stockholders' equity and the results of
operations of the Company and the Subsidiaries at the respective dates and for
the respective periods to which they apply; and all audited financial statements
of the Company, SD&A and Metro, together with the related schedules and notes,
and the unaudited financial information, filed with the Commission as part of
the Registration State-
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ment, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as may be
otherwise stated therein. The selected and summary financial and statistical
data included in the Registration Statement and the Prospectus present fairly
the information shown therein and have been compiled on a basis consistent with
the audited financial statements presented therein. The pro forma financial
information included in the Registration Statement and the Prospectus (A) has
been prepared, in all material respects, in accordance with the applicable
requirements of Item 310(d) of Regulation S-B promulgated under the Exchange
Act, and (B) the pro forma adjustments have been properly applied on the bases
described therein and the assumptions used in the preparation of the pro forma
financial information and included in the Registration Statement and the
Prospectus are reasonable and appropriate to give effect to the transactions or
circumstances referred to therein. Other than as disclosed in the Prospectus,
there has been no material adverse change or development involving a materially
adverse prospective change in the financial condition, earnings, prospects,
operations, properties, business or results of operations of the Company and the
Subsidiaries taken as a whole whether or not arising in the ordinary course of
business, since the date of the financial statements included in the
Registration Statement and the Prospectus. The outstanding debt, the property,
both tangible and intangible, and the businesses of each of the Company and the
Subsidiaries conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (i) any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company or any Subsidiary,
(ii) any transaction that is material to the Company or any Subsidiary, except
transactions entered into in the ordinary course of business, (iii) any material
obligation, direct or contingent, incurred by the Company or any Subsidiary,
except obligations incurred in the ordinary course of business, (iv) any change
in the capital stock or outstanding indebtedness of the Company or any
Subsidiary that is material to the Company or such Subsidiary, (v) any dividend
or distribution of any kind declared, paid or made on the capital stock of the
Company or any Subsidiary, or (vi) any loss or damage (whether or not insured)
to the property of the Company which has been sustained or will have been
sustained which has a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and the Subsidiaries taken as a whole.
(i) Except as set forth in the Registration Statement and
Prospectus, (i) the Company and each of the Subsidiaries has good and marketable
title to all properties and assets owned by it,
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free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest, other than such as would not have a material adverse effect
on the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and the Subsidiaries taken as a whole, (ii)
assuming due execution and delivery by the parties thereto other than the
Company or any of its Subsidiaries, the agreements to which the Company or any
Subsidiary is a party described in the Registration Statement are valid
agreements, enforceable by the Company, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles and, to the best of the Company's knowledge, the
other contracting party or parties thereto are not in material breach or
material default under any of such agreements, and (iii) the Company and each of
the Subsidiaries has valid and enforceable leases for all properties and assets
leased by it, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and except for such as would not have a material adverse effect on
the condition (financial or otherwise) earnings, operations, business or
business prospects of the Company and the Subsidiaries taken as a whole. Except
as set forth in the Registration Statement and Prospectus, the Company owns or
leases all such properties as are necessary to its operations as now conducted
or as proposed to be conducted.
(j) The Company and each of the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid all taxes shown thereon as due, and there is no tax deficiency or penalty
that has been or, to the best of the Company's knowledge, is threatened to be
asserted against the Company or any Subsidiary that might have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company, and the Company knows of no basis
for the assertion against it or any of the Subsidiaries of any such tax
deficiency or penalty. All known tax liabilities are adequately provided for on
the books of the Company.
(k) No transfer tax, stamp duty or other similar tax is payable
by or on behalf of any Underwriter in connection with (i) the issuance by the
Company of the Firm Shares and the Option Shares to be sold by it, (ii) the
purchase by any Underwriter of the Firm Shares, the Option Shares and the
Underwriters' Warrants from the Company, (iii) the consummation by the Company
of any of its obligations under this Agreement, or (iv) resales of the Firm
Shares or Option Shares sold by the Company to the Underwriters in connection
with the distribution contemplated hereby.
(l) Each of the Company and the Subsidiaries maintains insurance
with insurers of recognized financial responsibility of
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the types and in the amounts generally deemed adequate for its business and
consistent with insurance coverage maintained by companies of similar size in
similar businesses; neither the Company nor any of the Subsidiaries has been
refused any insurance coverage sought or applied for; and each of the Company
and the Subsidiaries does not have any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and the Subsidiaries taken as a whole.
(m) To the best of the Company's knowledge, no labor disturbance
by the employees of the Company or any of the Subsidiaries exists or is
imminent. No collective bargaining agreement exists with any of the Company's or
any of the Subsidiaries' employees and, to the best of the Company's knowledge,
no such agreement is imminent.
(n) The Company and each of the Subsidiaries owns or possesses
adequate rights to use all patents, patent rights, inventions, designs,
processes, works of authorship, computer programs and technical data, trade
secrets, know-how (including all other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, trade names and copyrights (collectively herein "intellectual
property") which are necessary to conduct its business as described in the
Registration Statement and Prospectus, the expiration of any patents, patent
rights, trade secrets, trademarks, service marks, trade names or copyrights
would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and the Subsidiaries taken as a whole; the Company has not received any notice
of, and has no knowledge of, any infringement of or conflict with asserted
rights of the Company or any of the Subsidiaries by others with respect to any
patent, patent rights, inventions, designs, processes, works of authorship,
computer programs, trade secrets, know-how, trademarks, service marks, trade
names or copyrights; and the Company has not received any notice of, and has no
knowledge of, any infringement of or conflict with asserted rights of others
with respect to any patent, patent rights, inventions, designs, processes, works
of authorship, computer programs, trade secrets, know-how, trademarks, service
marks, trade names or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would or could reasonably
be expected to have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and the Subsidiaries taken as a whole.
(o) Each of the Company and the Subsidiaries has taken reasonable
security measures to protect the secrecy, confidenti-
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ality and value of all their material intellectual property in all material
aspects.
(p) The Common Stock is registered pursuant to Section 12(g) of
the Exchange Act and has been approved for quotation on the Nasdaq SmallCap
Market, and the Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Nasdaq SmallCap Market, nor has the
Company received any notification that the Commission or the National
Association of Securities Dealers, Inc. (the "NASD") is contemplating
terminating such registration or listing.
(q) The Company has been advised concerning the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to conduct,
its affairs in such a manner as to ensure that it will not become an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the 1940 Act and such rules and regulations.
(r) The Company has not distributed and will not distribute prior
to the later of (i) the Closing Date, or any Option Closing Date, as the case
may be, and (ii) completion of the distribution of the Shares, any offering
material in connection with the offering and sale of the Shares other than any
Preliminary Prospectuses, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Act.
(s) Except as set forth in the Registration Statement and
Prospectus, (i) the Company and each of the Subsidiaries is in compliance in all
material respects with all rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances and protection of health or
the environment ("Environmental Laws") which are applicable to its business,
(ii) the Company has received no notice from any governmental authority or third
party of an asserted claim under Environmental Laws, which claim is required to
be disclosed in the Registration Statement and the Prospectus, (iii) the Company
has no reason to believe it will be required to make future material capital
expenditures to comply with Environmental Laws and (iv) no property which is
owned, leased or occupied by the Company has been designated as a Superfund site
pursuant to the Comprehensive Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. 'SS' 9601, et. seq.), or otherwise designated as a
contaminated site under applicable state or local law.
(t) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity
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with generally accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(u) None of the Company, the Subsidiaries, nor any of their
respective employees, directors, stockholders or affiliates (within the meaning
of the Rules and Regulations) of any of the foregoing has taken, directly or
indirectly, any action designed to or which has constituted or which might be
expected to cause or result in, under the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or otherwise.
(v) Except as disclosed to the Representatives in writing or
described in the Prospectus, neither the Company nor any of the Subsidiaries
maintains, sponsors or contributes to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). Neither the Company nor any of the Subsidiaries
maintains or contributes now, or at any time previously maintained or
contributed, to a defined benefit plan, as defined in Section 3(35) of ERISA. No
ERISA Plan (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code, which could subject the Company or any of the Subsidiaries to any tax
penalty on prohibited transactions and which has not adequately been corrected.
Each ERISA Plan is in compliance with all material reporting, disclosure and
other requirements of the Code and ERISA as they relate to such ERISA Plan.
Neither the Company nor any Subsidiary has ever completely or partially
withdrawn from a "multiemployer plan."
(w) The Company has caused to be duly executed legally binding
and enforceable agreements (the "Lock-up Agreements") pursuant to which the
Company, its directors and officers and certain of its stockholders and holders
of options, warrants, conversion or contractual rights to acquire Common Stock,
who will hold in the aggregate up to 10,202,092 Restricted Shares (as defined in
the Registration Statement under "Risk Factors" - "Shares Eligible for Future
Sale") outright or issuable upon exercise of such rights, depending on the
extent to which the Underwriters' over-allotment options are exercised, if at
all (10,199,782 Restricted Shares if the Underwriters' over-allotment options
are exercised in full), have agreed that they will not, directly or indirectly,
offer, sell, offer to sell, contract to sell, pledge, grant any option to
purchase or otherwise dispose of or transfer (or announce any offer, sale, offer
of sale, pledge, contract of sale, grant of any
-12-
option to purchase or other disposition or transfer of) any shares of Common
Stock or any capital stock or any other securities convertible into or
exercisable for, or any right to purchase or acquire, Common Stock or any other
capital stock, for a period of nine (9) months after the date of the final
Prospectus, subject to earlier termination if the final Prospectus relating to
the Shares is not filed with the Commission by March 31, 1997 pursuant to Rule
424(b) under the Act (such period being the "Lock-up Period"), without the prior
written consent of the Lead Representative, on behalf of the Underwriters,
except (x) in the case of the Company, with respect to (i) private issuances in
connection with acquisitions if the holders thereof agree to be bound by the
foregoing nine-month restriction to the same extent as the Company and (ii)
grants of options and other rights pursuant to the Stock Option Plan and
issuances of Common Stock pursuant to the exercise of currently outstanding
employee options and (y) in the case of the holders of such Restricted Shares,
with respect to bona fide gifts of shares of Common Stock or securities
convertible into or exchangeable for Common Stock provided that the donee agrees
in writing to be bound by the foregoing provisions.
(x) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company, or any of the members of the families of any of them,
required by the Rules and Regulations to be disclosed which are not disclosed as
is required.
(y) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Shares hereunder or
any other arrangements, agreements, understandings, payments or issuance with
respect to the Company, the Subsidiaries or any of their respective officers,
directors, stockholders, employees or affiliates that may affect the
Underwriters' compensation, as determined by the NASD other than those, if any,
arising out of commitments or actions of the Underwriters.
(z) Neither the Company nor the Subsidiaries, nor any of their
respective officers, employees, agents or any other person acting on behalf of
the Company or any of the Subsidiaries has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or employee
of any governmental agency (domestic or foreign) or instrumentality of any
government (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a position to
help or hinder the business of the Company or any of the Subsidiaries (or assist
-13-
the Company or any of the Subsidiaries in connection with any actual or proposed
transaction) which (a) would or could reasonably be expected to subject the
Company or any of the Subsidiaries, or any other such person to any damage or
penalty in any civil, criminal or governmental litigation or proceeding
(domestic or foreign), (b) if not given in the past, would or could reasonably
be expected to have had a materially adverse effect on the assets, business or
operations of the Company or any of the Subsidiaries, or (c) if not continued in
the future, would or could reasonably be expected to adversely affect the
assets, business, operations or prospects of the Company or any of the
Subsidiaries.
(aa) There are no contracts, arrangements or understandings of a
character required to be disclosed in the Prospectus under Rule 404 of
Regulation S-B which are not disclosed as so required.
(ab) Any certificate signed by any officer of the Company or any
officer of any of the Subsidiaries, and delivered to any Underwriter or to ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ Constant & ▇▇▇▇▇▇▇▇ ("Underwriters' Counsel") shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
(ac) Schedule 2.1 hereto contain a description of the minute
books of the Company and the Subsidiaries that have been made available to the
Representatives (the "Existing Records"). The Company has diligently searched
for the minute books and stock records of the Company and each of the
Subsidiaries for all periods since the respective dates of their incorporation
and, except for the Existing Records, has been unable to locate such minute
books and stock records. Each minute book included in the Existing Records
contains an accurate summary in all material respects of all meetings and
actions of the directors and stockholders of the Company and the Subsidiaries,
respectively, included therein, and reflects all transactions referred to in
such minutes accurately in all material respects. The Existing Records for all
periods beginning on or after January 1, 1992 contain accurate summaries in all
material respects of all meetings and actions of the directors and stockholders
of the Company and the Subsidiaries, respectively, during the time periods
covered thereby and reflect all transactions referred to therein accurately in
all material respects.
(ad) The Underwriters' Warrants have been duly and validly
authorized by the Company and upon delivery to the Underwriters in accordance
with the Underwriters' Warrant Agreement will be duly issued and legal, valid
and binding obligations of the Company except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles.
-14-
(ae) The Underwriters' Warrant Stock has been duly authorized and
reserved for issuance upon the exercise of the Underwriters' Warrants and, when
issued upon payment of the exercise price therefor, will be validly issued,
fully paid and nonassessable shares of Common Stock of the Company.
(af) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba.
3. Representations, Warranties and Covenants of the Selling
Stockholders and the Over-Allotment Selling Stockholders with Respect to the
Shares held by them. Each of the Selling Stockholders and the Over-Allotment
Selling Stockholders, severally and not jointly, represents, warrants and
covenants to the several Underwriters as of the date hereof and as of the
Closing Date and each Option Closing Date as applicable:
(a) Such Selling Stockholder or Over-Allotment Selling
Stockholder has good and valid title to the Shares to be sold by such Selling
Stockholder or Over-Allotment Selling Stockholder hereunder, free and clear of
all voting trust agreements, restrictions on transfer, pledges, liens,
encumbrances, equities, security interests and claims whatsoever, with full
right and authority to deliver the same hereunder, subject, in the case of each
Selling Stockholder or Over-Allotment Selling Stockholder, to the rights of
Bankers Trust Company, as Custodian (the "Custodian"), and that upon the
delivery of and payment for such Shares hereunder, the several Underwriters will
receive good and marketable title thereto, free and clear of encumbrances,
equities, security interests and claims whatsoever.
(b) Certificates in negotiable form for the Shares to be sold by
such Selling Stockholder or Over-Allotment Selling Stockholder have been placed
in custody with the Custodian under a Custody Agreement for delivery under this
Agreement; such Selling Stockholder or Over-Allotment Selling Stockholder
specifically agrees that the Shares represented by the certificates so held in
custody for such Selling Stockholder or Over-Allotment Selling Stockholder are
subject to the interests of the several Underwriters and the Company, that the
arrangements made by such Selling Stockholder or Over-Allotment Selling
Stockholder for such custody, including the Power of Attorney referred to in
such Custody Agreement, are to that extent irrevocable, and that the obligations
of such Selling Stockholder or Over-Allotment Selling Stockholder hereunder and
under the Custody Agreement and the Power of Attorney shall not be terminated by
any act of such Selling Stockholder or Over-Allotment Selling Stockholder or by
operation of law, whether by the death or incapacity of such Selling Stockholder
or Over-Allotment Selling Stockholder (or, in the case of a Selling Stockholder
or Over-Allotment Selling Stockholder that is not an individual, the dissolution
or liquidation of such Selling Stockholder
-15-
or Over-Allotment Selling Stockholder) or the occurrence of any other event; if
any such death, incapacity, dissolution, liquidation or other such event should
occur before the delivery of the shares hereunder, certificates for the Shares
shall be delivered by the Custodian in accordance with the terms and conditions
of this Agreement as if such death, incapacity, dissolution, liquidation or
other event had not occurred, regardless of whether the Custodian shall have
received notice of such death, incapacity, dissolution, liquidation or other
event.
(c) All information in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, relating to such Selling
Stockholder or Over-Allotment Selling Stockholder (including, without
limitation, the information relating to such Selling Stockholder or
Over-Allotment Selling Stockholder which is set forth in the Prospectus under
the caption "Principal and Selling Stockholders"), and all representations and
warranties of such Selling Stockholder or Over-Allotment Selling Stockholder in
the Custody Agreement are true and correct in all material respects and do not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the information in the
light of the circumstances under which they were made not misleading. The sale
of the Shares by such Selling Stockholder or Over-Allotment Selling Stockholder
pursuant hereto is not promoted by such Selling Stockholder's or Over-Allotment
Selling Stockholder's knowledge of any material adverse information concerning
the Company or any of the Subsidiaries which is not set forth in the Prospectus.
(d) Such Selling Stockholder or Over-Allotment Selling
Stockholder has full power and authority to enter into this Agreement and the
Custody Agreement and perform the transactions contemplated hereby and thereby.
This Agreement and the Custody Agreement have been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder or Over-Allotment Selling
Stockholder and the form of such Custody Agreement has been delivered to the
Lead Representative.
(e) The making and performance of this Agreement and the Custody
Agreement and the consummation by such Selling Stockholder or Over-Allotment
Selling Stockholder of the transactions contemplated hereby and thereby will not
result in a breach or violation by such Selling Stockholder or Over-Allotment
Selling Stockholder of any terms or provisions of, or constitute a default by
such Selling Stockholder or Over-Allotment Selling Stockholder under, any
material indenture, mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other material agreement or instrument
to which such Selling Stockholder or Over-Allotment Selling Stockholder is a
party or by which such Selling Stockholder or Over-Allotment Selling Stockholder
or any of their properties is bound, any statute, or any judgment, decree,
order, rule or regulation of any court or governmental agency or
-16-
body, domestic or foreign, applicable to such Selling Stockholder or
Over-Allotment Selling Stockholder or any of their properties, nor will such
action result in any violation of the provisions of the certificate of
incorporation or by-laws of such Selling Stockholder or Over-Allotment Selling
Stockholder if such Selling Stockholder or Over-Allotment Selling Stockholder is
a corporation, the partnership agreement or other governing documents of such
Selling Stockholder or Over-Allotment Selling Stockholder if such Selling
Stockholder or Over-Allotment Selling Stockholder is a limited or general
partnership, or the governing documents of such Selling Stockholder or
Over-Allotment Selling Stockholder if such Selling Stockholder or Over-Allotment
Selling Stockholder is organized as a limited liability company, limited
liability partnership or other partnership, association or entity.
(f) Such Selling Stockholder or Over-Allotment Selling
Stockholder has not taken and will not take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(g) No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body that
has not already been obtained is required for the execution and delivery of this
Agreement by such Selling Stockholder or Over-Allotment Selling Stockholder or
the consummation by such Selling Stockholder or Over-Allotment Selling
Stockholder of the transactions contemplated by this Agreement, the Custody
Agreement or the Power of Attorney except for compliance with the Act, the Rules
and Regulations and the Blue Sky laws applicable to the public offering of
Shares pursuant to this Agreement by the several Underwriters and the clearance
of such offering with the NASD.
(h) Such Selling Stockholder or Over-Allotment Selling
Stockholder has not distributed, and will not distribute any prospectus or other
offering material in connection with the offering and sale of the Shares.
4. Representations, Warranties and Covenants of the Selling
Stockholders and the Over-Allotment Selling Stockholders with respect to the
Company and the Registration Statement. Each Selling Stockholder and
Over-Allotment Selling Stockholder designated by the Lead Representative will
deliver a certificate or other instrument satisfactory in form and substance to
the Lead Representative as to the matters set forth in Schedule 4.1 hereto.
5. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Under-
-17-
writers, and each Underwriter agrees, severally and not jointly, to purchase
from the Company, at a purchase price of $ _.__ per share, the respective number
of Firm Shares as hereinafter set forth. The obligation of each Underwriter to
the Company shall be to purchase from the Company that number of Firm Shares
which is set forth opposite the name of such Underwriter in Schedule A hereto
(subject to adjustment as provided in Section 13 hereof).
(b) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company and the Selling Stockholders and Over-Allotment Selling
Stockholders listed on Schedule C hereto hereby grant options to the several
Underwriters to purchase, severally and not jointly, up to 315,000 shares of
Common Stock from the Company, such Selling Stockholders and Over-Allotment
Selling Stockholders pursuant to the provisions set forth in Section 10 hereof.
Said options may be exercised only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the Firm
Shares upon written notice by the Lead Representative to the Company, such
Selling Stockholders and Over-Allotment Selling Stockholders, as applicable,
setting forth the number of Option Shares as to which the Underwriters are then
exercising the options and the time and date of payment and delivery for any
such Option Shares. Any such time and date of delivery (an "Option Closing
Date") shall be determined by the Lead Representative but shall not be later
than five (5) full business days after the exercise of said option, nor in any
event prior to the Closing Date, as hereinafter defined, unless otherwise agreed
upon by the Lead Representative and the Company. The Company has agreed with the
Selling Stockholders and the Over-Allotment Selling Stockholders that the first
124,173 shares as to which the Underwriters' over-allotment options are
exercised will be sold by such Selling Stockholders and Over-Allotment Selling
Stockholders on a pro rata basis based on the relative amounts subject to sale
by such persons as set forth in Schedule C, and any of the remaining 190,827
shares as to which the Underwriters' over-allotment options are exercised will
be sold by the Company.
(c) Subject to any agreement between the Company and the Lead
Representative with respect to delivery of a global certificate through
Depository Trust Company ("DTC"), delivery of definitive certificates for the
Firm Shares, and the Option Shares, if any, to be purchased by the Underwriters
pursuant to this Section 5 shall be made against payment of the purchase price
therefor by the several Underwriters by certified or official bank check or
checks drawn in next-day funds (or, at the option of the Underwriters by wire
transfer), to the order of the Company, the Selling Stockholders and the
Over-Allotment Selling Stockholders, as applicable, on the third business day
following the effective date of the Registration Statement, at the offices of
the Lead Representative at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, at 10:00 A.M. (New York City time) on _________, 1997, provided that
-18-
the delivery of all documents and instruments required to be delivered on the
Closing Date other than the certificates for the Firm Shares and Option Shares,
if any, shall be made at the offices of Underwriter's Counsel in New York, New
York not later than the (3) full business days after the effective date of the
Registration Statement (such time and date of payment and delivery being herein
called the "Closing Date"). In addition, in the event that any or all of the
Option Shares are purchased by the Underwriters, payment of the purchase price
for, and delivery of certificates for, such Option Shares shall be made at the
above mentioned office of the Lead Representative or at such other place as
shall be agreed upon by the Lead Representative and the Company on each Option
Closing Date as specified in the notice from the Lead Representative to the
Company. Certificates for the Firm Shares and the Option Shares, if any (or the
global DTC certificate, if applicable) shall be in definitive, fully registered
form, shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Underwriters may request in writing at least two
(2) business days prior to the Closing Date or the relevant Option Closing Date,
as the case may be. The certificates for the Firm Shares and the Option Shares,
if any, shall be made available to the Lead Representative at such office or
such other place as the Lead Representative may designate for inspection,
checking and packaging no later than 9:30 a.m. on the last business day prior to
the Closing Date or the relevant Option Closing Date, as the case may be. The
certificate for the Firm Shares shall be in such form so as to qualify with the
provisions of DTC book-entry and allow for a "fast" closing in compliance with
DTC requirements.
(d) On the Closing Date, the Company shall issue and sell to the
Representatives the Underwriters' Warrants at a collective purchase price of one
mill, which warrants shall entitle the holders thereof to purchase an aggregate
of 210,000 shares of Common Stock. The Underwriters' Warrants shall be
exercisable for a period of four (4) years commencing one (1) year from the
effective date of the Registration Statement at an exercise price equal to one
hundred twenty percent (120%) of the initial price to public of the Shares. The
Underwriters' Warrant Agreement and form of Warrant Certificate shall be
substantially in the forms filed as Exhibits 1.2 and 10.9 to the Registration
Statement. Payment for the Underwriters' Warrants shall be made on the Closing
Date by New York Clearing House funds.
(e) It is understood that the Representatives, individually, and
not as the Representatives of the several Underwriters, may (but shall not be
obligated to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by the
Representatives prior to the Closing Date for the Firm Shares to be purchased by
such Underwriter or Underwriters. Any such payment by the Representatives shall
not relieve any such Underwriter or Underwriters of any of its or their
obligations hereunder.
-19-
6. Public Offering of the Shares. As soon after the Registration
Statement becomes effective as the Underwriters deem advisable, the Underwriters
shall make a public offering of the Shares (other than to residents of or in any
jurisdiction in which qualification of the Shares is required and has not become
effective) at the price and upon the other terms set forth in the Prospectus and
this Agreement. The Underwriters may from time to time increase or decrease the
public offering price after distribution of the Shares has been completed to
such extent as the Underwriters, in their sole discretion deem advisable. The
Underwriters may enter into one of more agreements as the Underwriters, in their
sole discretion, deem advisable with one or more broker-dealers who shall act as
dealers in connection with such public offering.
7. Further Agreements of the Company. The Company
covenants and agrees with the several Underwriters that:
(a) The Company will use its reasonable best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto, to
become effective as promptly as possible; it will notify the Lead
Representative, promptly after it shall receive notice thereof, of the time when
the Registration Statement or any subsequent amendment to the Registration
Statement has become effective or any supplement to the Prospectus has been
filed; if the Company omitted information from the Registration Statement at the
time it was originally declared effective in reliance upon Rule 430A(a) of the
Rules and Regulations, the Company will provide evidence satisfactory to the
Lead Representative that the Prospectus contains such information and has been
filed, within the time period prescribed, with the Commission pursuant to
subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as part
of a post effective amendment to such Registration Statement as originally
declared effective which is declared effective by the Commission; if for any
reason the filing of the final form of Prospectus is required under Rule
424(b)(3) of the Rules and Regulations, it will provide evidence satisfactory to
the Lead Representative that the Prospectus contains such information and has
been filed with the Commission within the time period prescribed; it will notify
the Lead Representative promptly of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus or for
additional information; promptly upon the Lead Representative's request, it will
prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of Underwriters'
Counsel, may be necessary or advisable in connection with the distribution of
the Shares by the Underwriters; it will promptly prepare and file with the
Commission, and promptly notify the Lead Representative of the filing of, any
amendments or supplements to the Registration Statement or Prospectus which may
be necessary to correct any statements or omissions, if, at any time when a
prospectus relating to the Shares is required to be
-20-
delivered under the Act, any event shall have occurred as a result of which the
Prospectus or any other prospectus relating to the Shares as then in effect
would include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; in case any
Underwriter is required to deliver a prospectus nine (9) months or more after
the effective date of the Registration Statement in connection with the sale of
the Shares, it will prepare promptly upon request, but at the expense of such
Underwriter, such amendment or amendments to the Registration Statement and such
prospectus or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act; and it will file no amendment or
supplement to the Registration Statement or Prospectus which shall not
previously have been submitted to the Lead Representative a reasonable time
prior to the proposed filing thereof or to which the Lead Representative shall
reasonably object in writing, subject, however, to compliance with the Act and
the Rules and Regulations, and the provisions of this Agreement.
(b) The Company will advise the Lead Representative, promptly
after it shall receive notice or obtain knowledge, of the issuance of any stop
order by the Commission suspending the effectiveness of the Registration
Statement or of the initiation or threat of any proceeding for that purpose; and
it will promptly use its reasonable best efforts to prevent the issuance of any
stop order or to obtain its withdrawal at the earliest possible moment if such
stop order should be issued.
(c) The Company will use its reasonable best efforts to qualify
the Shares for offering and sale under the securities laws of such jurisdictions
as the Lead Representative may designate and to continue such qualifications in
effect for so long as may be required for purposes of the distribution of the
Shares, except that the Company shall not be required in connection therewith or
as a condition thereof to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction in which it is not
otherwise required to be so qualified or to so execute a general consent to
service of process. In each jurisdiction in which the Shares shall have been
qualified as above provided, the Company will make and file such statements and
reports in each year as are or may be reasonably required by the laws of such
jurisdiction.
(d) The Company will furnish to the Representatives, without
charge, as soon as available, at such place as the Representatives may
designate, copies of the Registration Statement and any pre-effective or
post-effective amendments thereto (two of which copies will be manually signed,
if so requested by the Representatives, and will include all financial
statements and exhibits), each Preliminary Prospectus, the Prospectus and any
amendments or supplements to such documents, including any prospectus
-21-
prepared to permit compliance with Section 10(a)(3) of the Act all in such
quantities as the Representatives may from time to time reasonably request.
(e) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than the forty-fifth
(45th) day following the end of the fiscal quarter first occurring after the
first anniversary of the effective date of the Registration Statement, an
earnings statement (which will be in reasonable detail but need not be audited)
complying with the provisions of Section 11(a) of the Act and Rule 158(a) of the
Rules and Regulations, and covering a twelve (12) month period beginning after
the effective date of the Registration Statement.
(f) During a period of five (5) years after the date hereof, the
Company will furnish to its stockholders, as soon as practicable, annual reports
(including financial statements audited by independent certified public
accountants), and unaudited quarterly reports of earnings, and will deliver to
the Representatives:
(i) concurrently with furnishing such quarterly reports to
its stockholders, statements of income of the Company and the
Subsidiaries for each quarter in the form furnished to the Company's
stockholders;
(ii) concurrently with furnishing such annual reports to
its stockholders, a balance sheet of the Company and the Subsidiaries as
at the end of the preceding fiscal year, together with statements of
operations, stockholders' equity, and cash flows of the Company and the
Subsidiaries for such fiscal year, accompanied by a copy of the report
thereon of independent certified public accountants;
(iii) as soon as they are available, copies of all
reports (financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of all reports
and financial statements furnished to or filed with the Commission, the
NASD or any securities exchange; and
(v) any additional information as of the date of such
delivery of a public nature concerning the Company or the Subsidiaries
(and any future subsidiaries) or their businesses which the
Representatives may reasonably request.
In addition, during such five-year period, the Company will cause the Lead
Representative to be included on the list maintained by the Company's public
relations firm for distribution of any press release, whether such distribution
is for general dissemination or for more limited distribution to certain
newswires in compliance with any federal or state securities law, rule or
regulation.
-22-
During such five-year period, if the Company has active
subsidiaries, the foregoing financial statements will be on a consolidated basis
to the extent that the accounts of the Company and its subsidiaries are
consolidated, and will be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(g) The Company will (and will cause the Subsidiaries to, where
applicable), apply the net proceeds from the sale of the Shares being sold by it
in the manner set forth under the caption "Use of Proceeds" in the Prospectus.
Except as set forth in the Prospectus and except as provided in the next
sentence, for a period of three (3) years after the consummation of the Offering
(or, if earlier, until such time as the Company has provided the Lead
Representative with the accounting referred to in the last sentence of this
Section 7(g)), no portion of the net proceeds of the Offering will be used,
directly or indirectly, to acquire any securities issued by the Company or the
Subsidiaries from any person who was a stockholder of the Company prior to the
Offering or who acquired such securities from any person who was a stockholder
of the Company prior to the Offering without the prior written consent of the
Lead Representative (which consent shall not be unreasonably withheld or
delayed). Notwithstanding the foregoing, the Company and/or the Subsidiaries
shall be entitled to acquire securities of the Company or the Subsidiaries (i)
from any officer, director and/or key employee of the Company in connection with
any matter relating to such person's employment, death, disability or severance
or in connection with the settlement of any non-compete agreement with such
person, (ii) from any person (other than any person who was a stockholder of the
Company prior to the Offering and who is not a current or former officer,
director and/or key employee of the Company) in connection with any acquisition
consummated after the Offering, including without limitation, in connection with
the grant or satisfaction of any "put" or "call" right with respect to
securities of the Company or any Subsidiary in connection with any such
acquisition and (iii) in connection with any recapitalization in which all
holders of the class of securities being purchased are treated pari passu. The
Company will set apart and separately account for the net proceeds of the
Offering. Not later than 30 days after all such net proceeds have been expended,
the Company will provide the Lead Representative with an accounting of the
application of such net proceeds.
(h) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which may
be the same entity as the transfer agent) for its Common Stock.
(i) The Company will timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form SR as may be
required pursuant to Rule 463 under the
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Act) from time to time, under the Act and the Rules and Regulations, and all
such reports, forms and documents filed will comply as to form and substance
with the applicable requirements under the Act, the Exchange Act and the Rules
and Regulations.
(j) If the transactions contemplated hereby are not consummated
by reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed hereunder or to fulfill any
condition of the Underwriters' obligations hereunder, in either case in
accordance with the express provisions of this Agreement, or if the Company
shall terminate this Agreement pursuant to Section 14 hereof, or if the
Underwriters shall terminate this Agreement pursuant to Section 15, the Company
will pay the several Underwriters, upon submission of reasonable supporting
documentation, all out-of-pocket expenses (including fees and disbursements of
Underwriters' Counsel) incurred by the Underwriters in investigating or
preparing to market or marketing the Shares, not to exceed 3% of the expected
proceeds of the offering.
(k) If at any time during the ninety (90) day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in the
Lead Representative's opinion the market price of the Common Stock has been or
is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after written notice from the Lead Representative
advising the Company to the effect set forth above, consult with the Lead
Representative concerning a possible press release or other public statement,
with respect to such rumor, publication or event.
(l) The Company shall furnish to the Lead Representative as early
as practicable prior to each of the date hereof, the Closing Date and each
Option Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date earlier than November
30, 1996, or more than seventy-five (75) days prior to the date of the
Registration Statement) which have been read by the Company's independent public
accountants, as stated in their letters to be furnished pursuant to Section 9(f)
hereof.
(m) The Company shall cause the Shares to be listed or quoted on
The Nasdaq SmallCap Market (or, if the Company shall qualify, Nasdaq National
Market ("NMS") or such other national securities exchange such as the New York
Stock Exchange ("NYSE") or American Stock Exchange ("AMEX")) and, for a period
of not less than five (5) years from the date hereof, use its best efforts to
maintain The Nasdaq SmallCap Market, NMS, NYSE or AMEX, as the case may be,
listing or quotation of the Shares to the extent outstanding.
-24-
(n) Prior to the Closing Date and for a period of twenty-five
(25) days thereafter, the Company will not issue any press release or engage in
other publicity without having provided the Lead Representative with advance
notice of any such proposed press release as may be reasonable under the
circumstances and a reasonable opportunity to review and comment upon the same.
8. Expenses.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs and expenses
in connection with the offering of the Firm Shares and the Option Shares
pursuant to this Agreement, including but not limited to, the costs of
preparing, printing and filing with the Commission the Registration Statement
and all pre- and post-effective amendments thereto; preparing, printing, filing
and delivering exhibits thereto and copies of the preliminary and final
Prospectus, and any supplements thereto; filing, copying and delivering to such
parties as are designated by the Lead Representative a reasonable number of all
underwriting and selling documents, including but not limited to this Agreement,
the Agreement Among Underwriters, the Selected Dealer Agreement and the
Underwriter's Questionnaire and any Blue Sky memoranda; and preparing, printing
and delivering stock certificates. The Company shall also be responsible for the
payment when due of all fees and disbursements incurred in connection with the
offering of the Firm Shares and the Option Shares, including but not limited to,
NASD fees; Blue Sky fees; filing fees for listing and/or quotation of the
Shares, other securities contemplated herein or otherwise; the Company's legal
and accounting fees and disbursements; issue and transfer taxes (other than
transfer taxes associated with shares being sold by the Selling Stockholders and
the Over-Allotment Selling Stockholders, which taxes shall be the responsibility
of the respective Selling Stockholders and Over-Allotment Selling Stockholders),
if any; legal fees of the Underwriters' Counsel in connection with Blue Sky
matters which shall not exceed $35,000, of which $17,500 has been heretofore
paid and such Underwriters' Counsel's reasonable disbursements in connection
with such Blue Sky matters; fees and disbursements of the transfer agent; and
the cost (not to exceed $25,000 in the aggregate) of at least one tombstone
advertisement (all of the foregoing expenses are hereinafter referred to as the
"Company Expenses").
(ii) The Company further agrees that, in addition to the
expenses payable pursuant to Section 8(a)(i) hereof, it will pay to the
Representatives a non-accountable expense allowance in the aggregate equal to
three percent (3%) of the total proceeds of the offering of the Firm Shares
(including any Option Shares sold pursuant to the over-allotment option
described above, but less the portion, if any, of such non-accountable expense
allowance paid by any Selling Stockholder or Over-Allotment Selling
Stockholder), of which $50,000 has been paid to ▇▇ ▇▇▇▇▇▇▇▇ to date, to cover
the
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cost of the Representatives' advertising, mailing, telephone, telegraph, travel,
due diligence meetings and other similar expenses including legal fees of the
Underwriters' Counsel (other than legal fees in connection with Blue Sky matters
as to which fees the Company shall be responsible, as provided in Section
8(a)(i) hereof).
(iii) In addition to its other obligations under Section
11(a) hereof, the Company agrees that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding described in
Section 11(a) hereof, it will reimburse the Underwriters on a monthly basis for
all reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) listed from time to
time in The Wall Street Journal which represents the base rate on corporate
loans posted by a substantial majority of the nation's thirty (30) largest banks
(the "Prime Rate"). Any such interim reimbursement payments which are not made
to the Underwriters within thirty (30) days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request.
(b) In addition to their other obligations under Section 11(b)
hereof, the Underwriters severally and not jointly agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding described in Section 11(b) hereof, they will reimburse the
Company on a monthly basis for all reasonable legal or other expenses incurred
in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return such payment to the Underwriters together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within thirty (30) days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.
-26-
9. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Shares as provided herein
shall be subject to the continuing accuracy, as of the date hereof and the
Closing Date and any Option Closing Date, as the case may be, of the
representations and warranties of the Company to the performance by the Company
of its obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective not
later than 10:00 A.M., New York time, on the date following the date of this
Agreement, or such later date as shall be consented to in writing by the Lead
Representative; and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been initiated
or, to the knowledge of the Company or any Underwriter, threatened by the
Commission, and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in
connection with this Agreement, the Registration Statement and the Prospectus,
and the registration, authorization, issue, sale and delivery of the Shares,
shall have been reasonably satisfactory to Underwriters' Counsel, and such
counsel shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to in
this Section 9.
(c) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date there shall not have been any change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and the Subsidiaries from that set forth in the
Registration Statement or Prospectus, which, in the Lead Representative's sole
judgment, is material and adverse, and there shall not have been any adverse
change in market conditions in either case that makes it, in the Lead
Representative's sole judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus.
(d) The Representatives shall have received on the Closing Date
and on each Option Closing Date, as the case may be, the following opinion of
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, special counsel for the Company, dated the Closing
Date or such Option Closing Date, addressed to the Underwriters and with
reproduced copies or signed counterparts thereof for each of the Underwriters,
to the effect that:
(i) Metro is a corporation duly incorporated and in
good standing under the laws of the State of New York, and
-27-
Alliance is a corporation duly incorporated and in good standing under the laws
of the State of Delaware;
(ii) Each of Metro and Alliance has the corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus. None of the Company or the Subsidiaries
other than Metro is required to be qualified to do business as a foreign
corporation in the State of New York;
(iii) This Agreement and the Underwriters' Warrant
Agreement have been duly executed and delivered by the Company. Each of this
Agreement and the Underwriters' Warrant Agreement, assuming due authorization by
the Company and due authorization, execution and delivery by the
Representatives, is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except insofar as indemnification and contribution
provisions may be limited by applicable law and except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally or by general equitable
principles;
(iv) The Registration Statement has become effective
under the Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose are pending or threatened by the Commission;
(v) The Registration Statement and the Prospectus,
and each amendment or supplement thereto (other than operating statistics,
financial statements, financial schedules and other financial and statistical
data included therein as to which such counsel need express no opinion), at the
time the Registration Statement became effective, complied as to form in all
material respects with the Act and the applicable Rules and Regulations;
(vi) The statements in the Prospectus under "SHARES
ELIGIBLE FOR FUTURE SALE" have been reviewed by such counsel, and insofar as
they refer to statements of law, descriptions of statutes, licenses, rules or
regulations or legal conclusions, are correct in all material respects;
(vii) The description of the Recapitalization in the
Prospectus is correct in all material respects. Each of the Recapitalization
Documents was executed and delivered by the Company and, assuming due
authorization, execution and delivery by the other parties thereto, is a valid
and binding agreement on the part of the Company, enforceable in accordance with
its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles; the
performance of the Recapitalization
-28-
Documents and the consummation of the Recapitalization therein contemplated does
not and will not, to such counsel's knowledge, result in a material breach or
violation of any of the terms and provisions (as currently in effect) of, or
constitute a default under, any material bond, debenture, note or other evidence
of indebtedness, or under any material lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument
known to such counsel to which the Company is a party or by which its properties
are bound, or any applicable statute, rule or regulation known to such counsel
or, to such counsel's knowledge, any order, writ or decree of any court,
government or governmental agency or body having jurisdiction over the Company
or over any of its properties or operations. No consent, approval, authorization
or order of or qualification with (i) any court, government or governmental
agency or body having jurisdiction over the Company or over its properties or
(ii) to the best of such counsel's knowledge, any other third party is or was
required for the execution and delivery of the Recapitalization Documents and
the consummation by the Company of the Recapitalization therein contemplated,
except for the consents which were obtained;
(viii) To such counsel's knowledge, there are no
agreements, contracts, leases or other documents to which the Company is a party
of a character required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement that are not
described or filed as required;
(ix) The performance of this Agreement and the
Underwriters' Warrant Agreement and the consummation of the transactions herein
and therein contemplated (other than performance of the Company's
indemnification and contribution obligations hereunder or under the
Underwriters' Warrant Agreement, concerning which no opinion need be expressed)
will not, to such counsel's knowledge, result in a material breach or violation
of any of the terms and provisions (as currently in effect) of, or constitute a
default under, any material bond, debenture, note or other evidence of
indebtedness, or under any material lease, contract, indenture, mortgage, deed
of trust, loan agreement, joint venture or other agreement or instrument known
to such counsel to which the Company is a party or by which its properties are
bound, or any applicable statute, rule or regulation known to such counsel or,
to such counsel's knowledge, any order, writ or decree of any court, government
or governmental agency or body having jurisdiction over the Company or over any
of its properties or operations;
(x) No consent, approval, authorization or order of
or qualification with any court, governmental body or agency having jurisdiction
over the Company or over any of its properties or operations is required in
connection with the consummation by the Company of the transactions herein
contemplated, except such as have been obtained under the Act or such as may be
-29-
required under state or other securities or Blue Sky laws in connection with the
purchase and the distribution of the Shares by the Underwriters;
(xi) To such counsel's knowledge, there are no legal
or governmental proceedings pending or threatened against the Company of a
character required to be disclosed in the Registration Statement or the
Prospectus by the Act or the Rules and Regulations or by the Exchange Act or the
applicable rules and regulations of the Commission thereunder that are not
described as required;
(xii) To such counsel's knowledge, the Company is not
presently in material breach of any applicable statute, rule or regulation known
to such counsel or, to such counsel's knowledge, any order, writ or decree of
any court or governmental body or agency having jurisdiction over the Company or
over any of its properties or operations;
(xiii) To such counsel's knowledge, except as set forth
in the Registration Statement and Prospectus, no holders of Common Stock or
other securities of the Company have registration rights with respect to
securities of the Company in connection with the offering under the Registration
Statement and, except as set forth in the Registration Statement and Prospectus,
all holders of securities of the Company having rights known to such counsel to
registration of such shares of Common Stock or other securities, because of the
filing of the Registration Statement by the Company have, with respect to the
offering contemplated thereby, waived such rights or such rights have expired by
reason of lapse of time following notification of the Company's intent to file
the Registration Statement or have included securities in the Registration
Statement pursuant to the exercise of and in full satisfaction of such rights;
(xiv) Assuming due execution by, and full power and
authority of, the parties thereto including the Company, the Lock-up Agreements
are legal, valid and binding obligations of the parties thereto, enforceable
against each such party and any subsequent holder of the securities subject
thereto in accordance with their respective terms.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which such conferences the
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which leads them to believe
that, at the time the Registration Statement became effective and at all times
subsequent thereto up to and on the
-30-
Closing Date and on any Option Closing Date, the Registration Statement and any
amendment or supplement, when such documents became effective or were filed with
the Commission (other than the operating statistics, financial statements,
financial schedules and other financial and statistical information included
therein, as to which such counsel need express no comment) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or at
the Closing Date or any Option Closing Date, as the case may be, the
Registration Statement, the Prospectus and any amendment or supplement thereto
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
Counsel rendering the foregoing opinions may rely as to questions
of fact upon representations or certificates of officers of the Company, and of
government officials, in which case its opinion is to state that they are so
relying. Copies of any representation or certificate so relied upon shall be
delivered to the Lead Representative and to Underwriters' Counsel. In addition,
counsel rendering the foregoing opinions may state that its opinions are limited
to matters arising under the laws in effect in the State of New York and the
United States of America and the General Corporation Law of the State of
Delaware.
(e) The Representatives shall have received on the Closing Date
and on each Option Closing Date, as the case may be, the following opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special Nevada counsel for the Company, dated the
Closing Date or such Option Closing Date, addressed to the Underwriters and with
reproduced copies or signed counterparts thereof for each of the Underwriters,
to the effect that:
(i) The Company is a corporation duly incorporated
and in good standing under the laws of the jurisdiction of its incorporation;
(ii) The Company has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus;
(iii) None of the Subsidiaries is required to be
qualified to do business as a foreign corporation in the State of Nevada. To
such counsel's knowledge, the Company does not own or control, directly or
indirectly, any corporation, association or other entity other than as listed in
the Registration Statement;
(iv) The Recapitalization and the Recapitalization
Documents were duly authorized by all necessary corporate action on the part of
the Company. Each of the Recapitalization Documents, assuming due execution and
delivery by
-31-
the Company and the other parties thereto, is a valid and binding agreement on
the part of the Company, enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles; the performance
of the Recapitalization Documents and the consummation of the Recapitalization
therein contemplated does not and will not result in a material breach or
violation of any of the terms and provisions of, or constitute a default under,
(i) the articles of incorporation or by-laws of the Company or (ii) any
applicable statute, rule or regulation known to such counsel or, to such
counsel's knowledge, any order, writ or decree of any court, government or
governmental agency or body having jurisdiction over the Company or over any of
its properties or operations. No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body having
jurisdiction over the Company or over its properties is or was required for the
execution and delivery of the Recapitalization Documents and the consummation by
the Company of the Recapitalization therein contemplated. The authorized, issued
and outstanding capital stock of the Company is as set forth in the Prospectus
under the captions "Capitalization" and "Description of Capital Stock" as of the
dates stated therein, the issued and outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and nonassessable,
and, to such counsel's knowledge, have not been issued in violation of or
subject to any preemptive right, or other right to subscribe for and purchase
securities, the opinion with respect to the foregoing matters to be
substantially as set forth in Schedule 8(e) hereto;
(v) The Firm Shares and the Option Shares, as the
case may be, to be issued by the Company pursuant to the terms of this Agreement
each have been duly authorized and, upon issuance and delivery against payment
therefor in accordance with the terms hereof, will be duly and validly issued
and fully paid and nonassessable, and will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest of
stockholders, the opinion with respect to the foregoing matters to be
substantially as set forth in Schedule 8(e) hereto;
(vi) The Company has the corporate power and authority
to enter into this Agreement and to issue, sell and deliver to the Underwriters
the Shares to be issued and sold by it hereunder;
(vii) The Company has the corporate power and authority
to enter into the Underwriters' Warrant Agreement and to issue, sell and deliver
to the Representatives the Underwriters' Warrants to be issued and sold by it
thereunder;
-32-
(viii) This Agreement and the Underwriters' Warrant
Agreement each has been duly authorized by all necessary corporate action on the
part of the Company. Such counsel has been advised that ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, special counsel to the Company, has on this date delivered its opinion to
the Underwriters to the effect that each of this Agreement and the Underwriters'
Warrant Agreement has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by the Representatives, is a
valid and binding agreement of the Company, enforceable in accordance with its
terms, except insofar as indemnification and contribution provisions may be
limited by applicable law and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally or by general equitable principles, and
there is no provision under the laws of the State of Nevada that would, in and
of itself, cause this Agreement or the Underwriters' Warrant Agreement to be
invalid or unenforceable in accordance with its terms;
(ix) The statements in the Prospectus under
"DESCRIPTION OF CAPITAL STOCK" have been reviewed by such counsel, and insofar
as they refer to statements of law, descriptions of statutes, licenses, rules or
regulations or legal conclusions, are correct in all material respects;
(x) The description in the Registration Statement and
the Prospectus of the charter and by-laws of the Company and of statutes are
correct in all material respects;
(xi) The performance of this Agreement and the
Underwriters' Warrant Agreement and the consummation of the transactions herein
and therein contemplated (other than performance of the Company's
indemnification and contribution obligations hereunder or under the
Underwriters' Warrant Agreement, concerning which no opinion need be expressed)
will not (a) result in any violation of the Company's articles of incorporation
or by-laws (as currently in effect) or (b) result in a breach or violation of
any applicable statute, rule or regulation known to such counsel or, to such
counsel's knowledge, any order, writ or decree of any court, government or
governmental agency or body having jurisdiction over the Company or over any of
its properties or operations;
(xii) No consent, approval, authorization or order of
or qualification with any court, governmental body or agency having jurisdiction
over the Company or over any of its properties or operations is required in
connection with the consummation by the Company of the transactions herein
contemplated, except such as have been obtained under the Act or such as may be
required under state or other securities or Blue Sky laws in connection with the
purchase and the distribution of the Shares by the Underwriters;
-33-
(xiii) To such counsel's knowledge, the Company is not
presently (a) in material violation of its articles of incorporation or by-laws,
or (b) in material breach of any applicable statute, rule or regulation known to
such counsel or, to such counsel's knowledge, any order, writ or decree of any
court of the state of Nevada or governmental body or agency of the state of
Nevada;
(xiv) The Underwriters' Warrant Stock to be issued by
the Company as of the date hereof pursuant to the terms of the Underwriters'
Warrants have been duly authorized and, upon issuance and delivery against
payment therefor in accordance with the terms of the Underwriters' Warrant
Agreement, will be duly and validly issued and fully paid and nonassessable.
The Company shall also deliver an opinion of California counsel
reasonably satisfactory to the Underwriters as to the matters referred to in
clauses (i) and (ii) above with respect to all Subsidiaries other than Metro and
Alliance.
Counsel rendering the foregoing opinion may rely as to questions
of fact upon representations or certificates of officers of the Company, and of
government officials, in which case its opinion is to state that they are so
relying. Copies of any representation or certificate so relied upon shall be
delivered to the Lead Representative and to Underwriters' Counsel. In addition,
counsel rendering the foregoing opinion may state that its opinions are limited
to matters arising under the laws in effect in the State of Nevada.
(f) The Lead Representative shall have received on the Closing
Date and each Option Closing Date, as the case may be, a letter from Coopers &
▇▇▇▇▇▇▇ L.L.P. (the "Accounting Firm"), addressed to the Company and the
Underwriters, dated the Closing Date or such Option Closing Date, as the case
may be, confirming that they are independent certified public accountants with
respect to the Company and the Subsidiaries within the meaning of the Act and
the applicable published Rules and Regulations and based upon the procedures
described in such letter delivered to the Lead Representative concurrently with
the execution of this Agreement (herein called the "Original Letter"), but
carried out to a date not more than five (5) business days prior to the Closing
Date or such Option Closing Date, as the case may be:
(i) stating that it is their opinion that the consolidated
financial statements and supporting schedules of the Company and the
Subsidiaries included in the Registration Statement comply as to form in
all material respects with the applicable accounting requirements of the
Act and the Rules and Regulations;
-34-
(ii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim
consolidated financial statements of the Company and the Subsidiaries
(with an indication of the date of the latest available unaudited
interim financial statements), a reading of the latest available minutes
of the stockholders and board of directors and the various committees of
the boards of directors of the Company and the Subsidiaries,
consultations with officers and other employees of the Company and the
Subsidiaries responsible for financial and accounting matters and other
specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that (A) the unaudited financial
statements and supporting schedules of the Company and the Subsidiaries
included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the Act
and the Rules and Regulations or are not fairly presented in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated financial
statements of the Company and the Subsidiaries included in the
Registration Statement, or (B) at a specified date not more than five
(5) days prior to the effective date of the Registration Statement,
there has been any change in the capital stock or long-term debt of the
Company and the Subsidiaries, as compared with amounts shown in the
September 30, 1996 balance sheet, in the case of the Company and the
Subsidiaries included in the Registration Statement, other than as set
forth in or contemplated by the Registration Statement, or, if there was
any change or decrease, setting forth the amount of such change or
decrease, and (C) during the period from July 1, 1996 in the case of the
Company and the Subsidiaries other than Metro, and January 1, 1996 in
the case of Metro, to the latest unaudited interim financial statements
available prior to the effective date of the Registration Statement,
there was any decrease in net earnings or decrease in net earnings per
common share of the Company and the Subsidiaries, in each case as
compared with the corresponding period in the preceding year, other than
as set forth in or contemplated by the Registration Statement, or, if
there was any such decrease, setting forth the amount of such decrease;
(iii) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings,
statements and other financial or statistical information pertaining to
the Company and the Subsidiaries set forth in the Prospectus in each
case to the extent that such amounts, numbers, percentages, statements
and information may be derived from the general accounting records,
including work sheets, of the Company and the Subsidiaries and excluding
any questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified read-
-35-
ings, inquiries and other appropriate procedures (which procedures do
not constitute an examination in accordance with generally accepted
auditing standards) set forth in the letter and found them to be in
agreement; and
(iv) statements as to such other matters incident to the
transaction contemplated hereby as the Lead Underwriter may request,
including without limitation with respect to the pro forma financial
information pertaining to the Company and the Subsidiaries set forth in
the Prospectus.
In addition, the Lead Representative shall have received from the Accounting
Firm a letter addressed to the Company and made available to the Lead
Representative for the use of the Underwriters stating that its review of the
Company's system of internal accounting controls, to the extent they deemed
necessary in establishing the scope of its examination of the Company's
financial statements as of June 30, 1996 did not disclose any weaknesses in
internal controls that they considered to be material weaknesses.
(g) The Lead Representative shall have received on the Closing
Date and on any Option Closing Date, as the case may be, a certificate of the
Company, dated the Closing Date or such Option Closing Date, as the case may be,
signed by the President and Chief Financial Officer of the Company, to the
effect that, and the Lead Representative shall be satisfied that:
(i) The representations and warranties of the Company
in this Agreement are true and correct, as if made on and as of the Closing Date
or any Option Closing Date, as the case may be, and the Company has complied
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date or any Option Closing
Date, as the case may be;
(ii) 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 or, to the Company's knowledge, threatened under
the Act;
(iii) When the Registration Statement became effective
and at all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained all material information required to be included therein by
the Act and the Rules and Regulations or the Exchange Act and the applicable
rules and regulations of the Commission thereunder, as the case may be, and in
all material respects conformed to the requirements of the Act and the Rules and
Regulations or the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, the Registration Statement, and any
amendment or supplement thereto, did not and does not include any untrue state-
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ment of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, the
Prospectus, and any amendment or supplement thereto, did not and does not
include any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and, since the effective date of the
Registration Statement, there has occurred no event required to be set forth in
an amended or supplemented Prospectus which has not been so set forth; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been (a) any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company, (b) any
transaction that is material to the Company, except transactions entered into in
the ordinary course of business, (c) any obligation, direct or contingent, that
is material to the Company, incurred by the Company, except obligations incurred
in the ordinary course of business, (d) any change in the capital stock or
outstanding indebtedness of the Company that is material to the Company, (e) any
dividend or distribution of any kind declared, paid or made on the capital stock
of the Company, or (f) any loss or damage (whether or not insured) to the
property of the Company which has been sustained or will have been sustained
which has a material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company.
(h) The Company shall have furnished to the Lead Representative
such further certificates and documents as the Lead Representative shall
reasonably request (including certificates of officers of the Company as to the
accuracy of the representations and warranties of the Company, as to the
performance by the Company of its obligations hereunder and as to the other
conditions concurrent and precedent to the obligations of the Underwriters
hereunder).
(i) On or before the Closing Date, the Company shall have
executed and delivered to the Lead Representative, (i) the Underwriters' Warrant
Agreement substantially in the form filed as Exhibit 1.2 to the Registration
Statement in final form and substance satisfactory to the Lead Representative,
and (ii) the Underwriters' Warrants in such denominations and to such designees
as shall have been sold by the Company to the Underwriters pursuant thereto.
(j) The Company and each officer and director of the Company and
the holders of up to 10,229,855 shares of Common Stock referred to in the
Prospectus under "Registration Rights and Certain Lock-up Arrangements" shall
have executed and delivered the Lock-up Agreements. The Company will have
provided to Underwrit-
-37-
ers' Counsel true, accurate and complete copies of all of the Lock-up Agreements
presently in effect. The Company hereby represents and warrants that it will not
release any of its officers, directors or other stockholders from any Lock-up
Agreements currently existing or hereafter effected without the prior written
consent of the Lead Representative.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish the Lead Representative with
such number of conformed copies of such opinions, certificates, letters and
documents as the Lead Representative shall reasonably request.
(k) The Lead Representative shall have received on the Closing
Date and on any Option Closing Date, as the case may be, an opinion of the
Underwriters' Counsel in form and substance satisfactory to the Lead
Representative, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as the Lead Representative may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may have requested for the purpose of enabling them to pass upon such
matters.
10. Option Shares.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company, certain of the Selling Stockholders and the Over-Allotment
Selling Stockholders, all as identified on Schedule C, hereby grant to the
several Underwriters, for the purpose of covering over-allotments in connection
with the distribution and sale of the Firm Shares only, nontransferable options
to purchase up to an aggregate of 315,000 Option Shares at the purchase price
per share for the Firm Shares set forth in Section 5 hereof. Such options may be
exercised by the Representatives on behalf of the several Underwriters on one
(1) or more occasions in whole or in part during the period of forty-five (45)
days after the date on which the Firm Shares are initially offered to the
public, by giving written notice to the Company, such Selling Stockholders and
Over-Allotment Selling Stockholders, as the case may be. The number of Option
Shares to be purchased by each Underwriter upon the exercise of such option
shall be the same proportion of the total number of Option Shares to be
purchased by the several Underwriters pursuant to the exercise of such option as
the number of Firm Shares purchased by such Underwriter (set forth in Schedule A
hereto) bears to the total number of Firm Shares purchased by the several
Underwriters (set forth in Schedule A hereto), adjusted by the Lead
Representative in such manner as to avoid fractional shares. The Company has
agreed with certain of the Selling Stockholders and the Over-Allotment Selling
Stockhold-
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ers and the Underwriters hereby agree that the first 124,173 shares as to which
the Underwriters' over-allotment options are exercised will be sold by such
Selling Stockholders and Over-Allotment Selling Stockholders on a pro rata basis
based on the relative amounts subject to sale by such persons as set forth under
"Principal and Selling Stockholders," and any of the remaining 190,827 shares as
to which the Underwriters' over-allotment options are exercised will be sold by
the Company.
(b) Upon exercise of any option provided for in Section 10(a)
hereof, the obligations of the several Underwriters to purchase such Option
Shares will be subject (as of the date hereof and as of the date of payment and
delivery for such Option Shares) to the accuracy of and compliance with the
representations, warranties and agreements of the Company herein, to the
accuracy of the statements of the Company and officers of the Company made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the condition that all proceedings taken at or
prior to the payment date in connection with the sale and transfer of such
Option Shares shall be satisfactory in form and substance to the Lead
Representative and to Underwriters' Counsel, and the Lead Representative shall
have been furnished with all such documents, certificates and opinions as the
Lead Representative may request in order to evidence the accuracy and
completeness of any of the representations, warranties or statements, the
performance of any of the covenants or agreements of the Company or the
compliance with any of the conditions herein contained.
11. Indemnification and Contribution.
(a) (i) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any breach of any representation, warranty, agreement or covenant of the Company
herein contained, (ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such
-39-
case to the extent that any such loss, claim, damage, liability or action arises
solely out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, such
Preliminary Prospectus or the Prospectus, or any such amendment or supplement
thereto, in reliance upon, and in conformity with, written information furnished
to the Company by any Underwriter, directly or through either Representative,
any Selling Stockholder or any Over-Allotment Selling Stockholder specifically
for use in the preparation thereof and, provided further, that the indemnity
agreement provided in this Section 11(a) (i) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any losses, claims, damages, liabilities or actions based upon
any untrue statement or alleged untrue statement of material fact or omission or
alleged omission to state therein a material fact purchased Shares, if a copy of
the Prospectus in which such untrue statement or alleged untrue statement or
omission or alleged omission was corrected had not been sent or given to such
person within the time required by the Act and the Rules and Regulations, unless
such failure is the result of noncompliance by the Company with Section 7(d)
hereof.
(ii) The Selling Stockholders and Over-Allotment Selling
Stockholders, severally and not jointly, agree to indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any breach of any representation, warranty, agreement or covenant of such
Selling Stockholder or Over-Allotment Selling Stockholder herein contained, (ii)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each Underwriter for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that no
Selling Stockholder or Over-Allotment Selling Stockholder shall be liable in any
such case to the extent that any such loss, claim, damage, liability or action
arises solely out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
such Preliminary Prospectus or the Prospectus, or any such amendment or
supplement thereto, in reliance upon, and
-40-
in conformity with, written information furnished by the Company or any
Underwriter, directly or through either Representative, any other Selling
Stockholder or any other Over-Allotment Selling Stockholder specifically for use
in the preparation thereof and, provided further, that the indemnity agreement
provided in this Section 11(a) (ii) with respect to any Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any losses, claims, damages, liabilities or actions based upon any untrue
statement or alleged untrue statement of material fact or omission or alleged
omission to state therein a material fact purchased Shares, if a copy of the
Prospectus in which such untrue statement or alleged untrue statement or
omission or alleged omission was corrected had not been sent or given to such
person within the time required by the Act and the Rules and Regulations, unless
such failure is the result of noncompliance by the Company with Section 7(d)
hereof.
The indemnity agreement in this Section 11(a) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each other Underwriter, each Selling
Stockholder and each Over-Allotment Selling Stockholder against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
Selling Stockholder, Over-Allotment Selling Stockholder and other Underwriter
may become subject under the Act or otherwise, specifically including, but not
limited to, losses, claims, damages or liabilities, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any breach of any representation, warranty, agreement or
covenant of such Underwriter herein contained, (ii) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) any untrue
statement or alleged untrue statement of any material fact contained in any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or the omission or alleged omission to state therein a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, in the case of subparagraphs (ii) and (iii) of
this Section 11(b) to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter, directly or through either Representative,
specifically for use in the preparation thereof, and
-41-
agrees to reimburse the Company, each Selling Stockholder, Over-Allotment
Selling Stockholder and other Underwriter for any legal or other expenses
reasonably incurred by such party in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
obligation of each Underwriter to indemnify the Company, each Selling
Stockholder, Over-Allotment Selling Stockholder and other Underwriter shall be
limited to the total price at which the Shares purchased by such Underwriter
hereunder were offered to the public. The Company, each Selling Stockholder,
Over-Allotment Selling Stockholder and other Underwriter acknowledges that the
statements with respect to the public offering of the Shares set forth under the
heading "Underwriting," the information set forth in the Risk Factors entitled
"Lack of Underwriting History" and the stabilization legend in the Prospectus
have been furnished by the Representatives expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus.
The indemnity agreement in this Section 11(b) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
officer of the Company who signed the Registration Statement and each director
of the Company and each person, if any, who controls the Company, any Selling
Stockholder or any Over-Allotment Selling Stockholder within the meaning of the
Act or the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which each Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 11, notify the indemnifying party in writing of the
commencement thereof but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 11. In case any such action is brought against
any indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it shall elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to
-42-
such indemnified party of the indemnifying party's election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 11 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with appropriate local counsel) approved by the
indemnifying party representing all the indemnified parties under Section 11(a)
or 11(b) hereof who are parties to such action), (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has given prior
written authorization for the employment of counsel for the indemnified party at
the expense of the indemnifying party. In no event shall any indemnifying party
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying party shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any-pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnification could have
been sought hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section 11 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a), (b) or (c)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company, the Selling Stockholders, the Over-Allotment Selling
Stockholders and the Underwriters from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, the
Selling Stockholders, the Over-Allotment Selling Stockholders and the
Underwriters in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company, the
Selling Stockholders, the Over-Allotment Selling Stockholders and the
Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Shares (before deducting expenses) received by
the Company bear to the total underwriting discounts and commis-
-43-
sions received by the Underwriters, in each case as set forth in the table on
the cover page of the final Prospectus. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any and all costs and expenses,
including reasonable attorneys' fees, incurred by such indemnified party in
connection with investigating or defending against any action or claim which is
the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint. Each party entitled to
contribution agrees that upon the service of a summons or other initial legal
process upon it in any action instituted against it in respect of which
contribution may be sought, it shall promptly give written notice of such
service to the party or parties from whom contribution may be sought, but the
omission so to notify such party or parties of any such service shall not
relieve the party from whom contribution may be sought from any obligation it
may have hereunder or otherwise.
(e) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 11, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 11 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act. The parties are advised
-44-
that federal or state public policy, as interpreted by the courts in certain
jurisdictions, may be contrary to certain of the provisions of this Section 11,
and the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under this Section
11 and further agree not to attempt to assert any such defense.
12. Representations, Warranties, Covenants and Agreements to
Survive Delivery. All representations, warranties, covenants and agreements of
the Company and the Underwriters herein or in certificates delivered pursuant
hereto, and the indemnity and contribution agreements contained in Section 11
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person
within the meaning of the Act or the Exchange Act, or by or on behalf of the
Company or any of its officers, directors or controlling persons within the
meaning of the Act or the Exchange Act, and shall survive the delivery of the
Shares to the several Underwriters hereunder or termination of this Agreement.
13. Substitution of Underwriters and Substitution for Defaulting
Selling Stockholders or Over-Allotment Selling Stockholders.
(a) (i) If any Underwriter or Underwriters shall fail to take up
and pay for the number of Firm Shares agreed by such Underwriter or Underwriters
to be purchased hereunder upon tender of such Firm Shares in accordance with the
terms hereof, and if the aggregate number of Firm Shares which such defaulting
Underwriter or Underwriters so agreed but failed to purchase does not exceed 10%
of the Firm Shares, the remaining Underwriters shall be obligated, severally in
proportion to their respective commitments hereunder, to take up and pay for the
Firm Shares of such defaulting Underwriter or Underwriters.
(ii) If any Underwriter or Underwriters so defaults and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed to take up and pay for exceeds 10% of the Firm
Shares, the remaining Underwriters shall have the right, but shall not be
obligated, to take up and pay for (in such proportions as may be agreed upon
among them) the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase. If such remaining Underwriters do not, at the
Closing Date, take up and pay for the Firm Shares which the defaulting
Underwriter or Underwriters so agreed but failed to purchase, the Closing Date
shall be postponed for twenty-four (24) hours to allow the several Underwriters
the privilege of substituting within twenty-four (24) hours (including
non-business hours) another underwriter or underwriters (which may include any
nondefaulting Underwriter) satisfactory to the Company. If no such underwriter
or underwriters shall have been substituted as aforesaid by such postponed
Closing Date, the Closing Date may, at the
-45-
option of the Company, be postponed for a further twenty-four (24) hours, if
necessary, to allow the Company the privilege of finding another underwriter or
underwriters, satisfactory to the Lead Representative, to purchase the Firm
Shares which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If it shall be arranged for the remaining Underwriters or substituted
underwriter or underwriters to take up the Firm Shares of the defaulting
Underwriter or Underwriters as provided in this Section 13(a), (i) the Company
shall have the right to postpone the time of delivery for a period of not more
than seven (7) full business days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective number of Firm Shares to
be purchased by the remaining Underwriters and substituted underwriter or
underwriters shall be taken as the basis of their underwriting obligation. If
the remaining Underwriters shall not take up and pay for all such Firm Shares so
agreed to be purchased by the defaulting Underwriter or Underwriters or
substitute another underwriter or underwriters as aforesaid and the Company
shall not find or shall not elect to seek another underwriter or underwriters
for such Firm Shares as aforesaid, then this Agreement shall terminate.
(iii) In the event of any termination of this Agreement pursuant
to the preceding paragraph of this Section 13(a), the Company shall not be
liable to any Underwriter (except as provided in Sections 8 and 11 hereof) nor
shall any Underwriter (other than an Underwriter who shall have failed,
otherwise than for some reason permitted under this Agreement, to purchase the
number of Firm Shares agreed by such Underwriter to be purchased hereunder,
which Underwriter shall remain liable to the Company and the other Underwriters
for damages, if any, resulting from such default) be liable to the Company
(except to the extent provided in Sections 8 and 11 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section 13(a). Nothing herein will
relieve a defaulting Underwriter from liability for its default.
(b) If one or more of the Selling Stockholders or Over-Allotment
Selling Stockholders (each a "Defaulting Selling Stockholder") shall fail to
sell and deliver to the Underwriters the Shares to be sold and delivered by such
Defaulting Selling Stockholder, then the Company shall have the right, upon
written notice to the Lead Representative, to substitute for such Defaulting
Selling Stockholder's shares, such number of additional newly issued shares of
Common Stock as shall equal the aggregate number of shares as which such
Defaulting Selling Stockholder has failed to deliver. If one or more Defaulting
Selling Stockholder(s) shall
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fail to sell and deliver to the Underwriters the Shares to be sold and delivered
by them, the Closing Date shall be postponed for twenty-four (24) hours to allow
the Company the privilege of substituting within such twenty-four (24) hours
(including non-business hours) newly issued shares for the Shares of such
Defaulting Selling Stockholder. If it shall be arranged for the Company to issue
new shares to substitute for such Defaulting Selling Stockholder(s)' shares as
provided in this Section 13(b), the Company shall take any and all action as is
required, including the filing of one or more amendments, to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be required.
14. Effective Date.
(a) This Agreement shall become effective at 10:00 a.m., New York
City time, on the next full business day following the date hereof, or at such
earlier time after the Registration Statement becomes effective as the Lead
Representative, in its discretion, shall release the Shares for the sale to the
public; provided, however, that the provisions of Sections 8, 11 and 15 of this
Agreement shall at all times be effective. For purposes of this Section 14, the
Shares to be purchased hereunder shall be deemed to have been so released upon
the earlier of dispatch by the Lead Representative of telegrams to securities
dealers releasing such shares for offering or the release by the Lead
Representative for publication of the first newspaper advertisement which is
subsequently published relating to the Shares. By giving notice as set forth in
Section 16 before the time of this Agreement becomes effective, the Lead
Representative, or the Company, may prevent this Agreement from becoming
effective without liability of any party to any other party, except as provided
in Sections 7(j), 8 and 11 hereof.
15. Termination. The Lead Representative shall have the right to
terminate this Agreement by giving notice as hereinafter specified at any time
at or prior to the Closing Date or on or prior to each Option Closing Date, as
the case may be, (i) if the Company shall have failed, refused or been unable to
perform any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled is
not fulfilled, including, without limitation, any change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company from that set forth in the Registration Statement or Prospectus,
which, in your sole judgment, is material and adverse, or (ii) if additional
material governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally which in the sole
judgment of the Lead Representative make it impractical or impossible to proceed
with the Offering or mini-
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mum or maximum prices shall have been generally established on the New York
Stock Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been suspended
on either such exchange or in the over the counter market by the NASD, or if a
banking moratorium shall have been declared by federal, New York or California
authorities, or (iii) if the Company shall have sustained a loss by strike,
fire, flood, earthquake, accident or other calamity of such character as to
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured, or (iv)
if there shall have been a material adverse change in the general political or
economic conditions or financial markets as in your reasonable judgment makes it
inadvisable or impracticable to proceed with the offering, sale and delivery of
the Shares, or (v) if any other event shall have occurred which, in the
reasonable opinion of the Lead Representative, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Prospectus. In the event of termination pursuant to subparagraphs (i)
through (v) above, the Company shall also remain obligated to pay costs and
expenses pursuant to Sections 7(j), 8 and 11 hereof.
16. Default by the Company. If the Company shall fail at the Closing
Date or any Option Closing Date, as applicable, to sell and deliver the number
of Shares which it is obligated to sell hereunder on such date, then this
Agreement shall terminate (or, if such default shall occur with respect to any
Option Shares to be purchased on an Option Closing Date, the Lead Representative
may at the Lead Representative's option, by notice from the Lead Representative
to the Company, terminate the Underwriters' obligation to purchase Option Shares
from the Company on such date) without any liability on the part of any
non-defaulting party other than pursuant to Section 8, Section 11 and Section 15
hereof. No action taken pursuant to this Section 16 shall relieve the Company
from liability, if any, in respect of such default.
17. Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and if sent to the
Lead Representative shall be mailed, delivered, telegraphed (and confirmed by
letter) or telecopied (and confirmed by letter) to: c/o Cruttenden ▇▇▇▇
Incorporated, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier
number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Corporate Finance Department, with a copy to
▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc., ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ ▇. Gold, Executive Vice President, with a copy to the Underwriters' Counsel
at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Constant & ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq. Notices to the Company shall be
directed to the Company at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Chairman of the Board and Chief
Executive Officer, with a copy to ▇▇▇▇▇, Day,
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▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
18. Parties. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and their respective
executors, administrators, successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
or corporation, other than the parties hereto and their respective executors,
administrators, successors and assigns, and the controlling persons within the
meaning of the Act or the Exchange Act, officers and directors referred to in
Section 11 hereof, any legal or equitable right, remedy or claim in respect of
this Agreement or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective executors,
administrators, successors and assigns and said controlling persons and said
officers and directors, and for the benefit of no other person or corporation.
No purchaser of any of the Shares from any Underwriter shall be construed a
successor or assign by reason merely of such purchase.
In all dealings with the Company under this Agreement, the Lead
Representative shall act on behalf of each of the several Underwriters, and the
Company shall be entitled to act and rely upon any statement, request, notice or
agreement made or given by the Lead Representative.
19. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the choice of law or conflict of law principles.
20. Entire Agreement; Amendments. This Agreement and the
Underwriters' Warrant Agreement constitute the entire agreement of the parties
hereto and supersede all prior written or oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may not
be amended except in a writing, signed by the Representatives and the Company.
In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement.
21. Counterparts. This Agreement may be signed in several
counterparts, each of which will constitute an original.
If the foregoing correctly sets forth the understanding among the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose, whereupon this letter
-49-
shall constitute a binding agreement among the Company and the several
Underwriters.
Very truly yours,
ALL-COMM MEDIA CORPORATION
By:
______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
[Selling Stockholder Signatures]
________________________________
________________________________
________________________________
[Over-Allotment Selling Stockhold-
ers]
________________________________
________________________________
________________________________
Accepted as of the date first above written:
CRUTTENDEN ▇▇▇▇ INCORPORATED
On its behalf and on behalf of each of the several Underwriters named in
Schedule A hereto.
By: CRUTTENDEN ▇▇▇▇ INCORPORATED
By:
____________________________
Authorized Signatory
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▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
On its behalf and on behalf of each
of the several Underwriters named in
Schedule A hereto.
By: ▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
By:
____________________________
Authorized Signatory
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SCHEDULE A
Number of Firm Shares
to Be Purchased
---------------
Underwriters
-------------
Cruttenden ▇▇▇▇ Incorporated............................
▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
Total .................................................. 2,100,000
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SCHEDULE B
Number of Firm Shares
to Be Sold
----------
Selling Stockholders
--------------------
Total ...................................................... 350,000
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SCHEDULE C
Number of Option Shares
to Be Sold
----------
Over-Allotment Selling Stockholders
-----------------------------------
Total ........................................................ 315,000
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