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EXHIBIT 1.01
700,000 SHARES
GRAND ADVENTURES TOUR & TRAVEL PUBLISHING CORPORATION
(an Oregon corporation)
(Par Value $0.___ Per Share)
UNDERWRITING AGREEMENT
December ___, 1997
CAPITAL WEST SECURITIES, INC.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
16th Floor, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
Grand Adventures Tour & Travel Publishing Corporation, an Oregon
corporation (the "Company"), hereby confirms its agreement with Capital West
Securities, Inc. ("Capital West") as representative of the several underwriters
named in Schedule A hereto (herein collectively called the "Underwriters") as
follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell
700,000 shares (the "Firm Shares") of its authorized and unissued common stock,
par value $0.___ per share (the "Common Stock") to the Underwriters upon the
terms and subject to the conditions set forth herein. The Company also
proposes to grant to the Underwriters an option to purchase, for the sole
purpose of covering over-allotments in connection with the sale of Firm Shares,
an aggregate of up to 105,000 additional shares ("Option Shares") of Common
Stock upon the terms and subject to the conditions set forth herein and as
provided in Section 7 hereof. 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, including the Shares, are hereinafter referred to as
"Common Stock."
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
Unless otherwise indicated or the context otherwise requires, references to the
"Company" in this Section 2 are references to Grand Adventures Tour & Travel
Publishing Corporation, an Oregon corporation. The Company represents and
warrants to and agrees with the Underwriters, as follows:
(a) A registration statement on Form SB-2 (File No.
333-______) with respect to the Shares, 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 (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Act and has
been filed with the Commission; 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
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amendments to such registration statement and such amended prospectuses subject
to completion, as may hereafter be required. The Company meets the requirements
for use of a Registration Statement on Form SB-2. Copies of such registration
statement and any amendments and of each related prospectus subject to
completion have been delivered to you.
If the registration statement 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 or as part of a
post-effective amendment to the registration statement (including a final form
of prospectus). If the registration statement has not been declared effective
under the Act by the Commission, the Company will prepare and promptly file a
further 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,
or 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, (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,
and (ii) neither the Registration Statement nor the Prospectus, nor any
amendments or supplements thereto, will include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to
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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 shall apply to information
contained in or omitted from the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon, and in conformity with,
written information furnished to the Company by any Underwriter specifically
for inclusion therein.
(c) Each contract, agreement, instrument, lease, license
or other item required to be described in the Registration Statement or the
Prospectuses or filed as an exhibit to the Registration Statement has been so
described or filed, as the case may be.
(d) The Company and each of its Subsidiaries (as such
term is defined in Rule 405 under the Act) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its organization, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement; each of the Company and its 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 to 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 its Subsidiaries considered
as a whole; each of the Company and its 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 its Subsidiaries is
in violation of its charter or bylaws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, or any
material lease, contract, joint venture, or other agreement or instrument to
which it is a party or by which its property is bound or in violation of any
law, order, rule, regulation, writ, injunction, judgment or decree of any
government, governmental agency or body or court, domestic or foreign, of which
it has knowledge except such failures to comply as would not, individually or
in the aggregate, have a material adverse effect on the Company and its
Subsidiaries considered as a whole.
(e) The Company has full legal right, power and authority
to enter into this Agreement and perform the transactions contemplated hereby.
This Agreement and the Warrant Agreement (the "Warrant Agreement") by and
between the Company and the Underwriters have been duly authorized, executed
and delivered by the Company and are valid and binding agreements on the part
of the Company, enforceable in accordance with their respective terms, except
as rights to indemnification and contribution hereunder may be limited by
applicable law and except as the enforcement hereof 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 Warrant
Agreement and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any material indenture,
mortgage, deed of trust, loan agreement, bond,
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debenture, note agreement or other evidence of indebtedness, or any material
lease, contract, joint venture or other agreement or instrument to which the
Company is a party or by which the property of the Company is bound including
any licenses from third parties, or (ii) the Certificate of Incorporation and
Bylaws of the Company, or (iii) any law, order, rule, regulation, writ,
injunction, judgment or decree of any government or governmental agency or body
or court, domestic or foreign, having jurisdiction over the Company or over the
properties of the Company, except for breaches, violations or defaults that
individually or in the aggregate, would not have a material adverse effect on
the Company; and no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions herein contemplated, except such as may be required under the Act,
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
under state or other securities or Blue Sky laws, all of which requirements
have been satisfied in all material respects.
(f) Except as disclosed in the Registration Statement or
the Prospectus, there is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or its
Subsidiaries which (i) is required to be disclosed in the Registration
Statement or the Prospectus or which might result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered as
one enterprise, or which might materially and adversely affect the properties
or assets thereof; or (ii) which might be expected to materially and adversely
affect the consummation of the transactions contemplated by this Agreement; all
pending legal or governmental proceedings to which the Company or its
Subsidiaries is a party or of which any of their respective properties or
assets is the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the Company's business,
could not reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or
business properties of the Company and its Subsidiaries considered as one
enterprise; and there are no contracts or documents of the Company or its
Subsidiaries which are required to be described in the Registration Statement
or the Prospectus, or to be filed as exhibits thereto, by the Act or by the
Rules and Regulations which have not been accurately described in all material
respects and filed as exhibits to the Registration Statement. To the best of
the Company's knowledge, the contracts so described in the Prospectus are in
full force and effect on the date hereof, and neither the Company nor its
Subsidiaries is in breach of or default under, and to the Company's knowledge,
no other party is in material breach of or material default under, any of such
contracts.
(g) 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 Federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities (other than such
preemptive rights or other rights to subscribe for or purchase securities as
were fully complied with or expressly waived or with respect to the violation
of which the right to make claim is barred by the applicable statute of
limitations), and the authorized and outstanding capital stock of the Company
conforms in all material respects to the statements relating thereto contained
in the Registration Statement and the Prospectus (and such statements correctly
state the
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substance of the instruments defining the capitalization of the Company); the
Firm Shares and the Option Shares to be purchased from the Company hereunder
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; the shares of Common Stock
issuable under the warrant (the "Underwriters' Warrant") to be granted to the
Underwriters under the Warrant Agreement 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 the Warrant Agreement, will be duly and validly issued and fully paid and
nonassessable; and no preemptive right, co-sale right, registration right,
right of first refusal or other similar right of stockholders exists with
respect to any of the Firm Shares, Option Shares or shares of Common Stock
issuable under the Underwriters' Warrant or the issuance and sale thereof other
than those that have been expressly waived prior to the date hereof and those
that will automatically expire upon the consummation of the transactions
contemplated on the Closing Date. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and
sale or transfer of the Shares except as may be required under the Act, the
Exchange Act or under state or other securities or Blue Sky laws. Except as
disclosed in or contemplated by the Prospectus and the financial statements of
the Company (including the notes thereto) included in the Prospectus, the
Company has no outstanding options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted and
exercised thereunder, set forth in the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights. The shares of Common Stock reserved for
issuance upon exercise of the Company's outstanding options and warrants have
been duly and validly authorized and are sufficient in number to meet the
exercise requirements of such options.
(h) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇.▇., which has examined
the financial statements (together with related schedules and notes) of the
Company filed with the Commission as a part of the Registration Statement and
which are included in the Prospectus, are independent accountants within the
meaning of the Act and the Rules and Regulations; the audited and pro forma
financial statements of the Company, together with the related schedules and
notes, and the unaudited financial information, forming part of the
Registration Statement and Prospectus, fairly present the financial position
and the results of operations of the Company at the respective dates and for
the respective periods to which they apply; and all audited and pro forma
financial statements, together with the related schedules and notes, and the
unaudited and pro forma financial information, filed with the Commission as
part of the Registration Statement, 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
present fairly the information shown therein and have been compiled on a basis
consistent with the audited financial statements presented therein. No other
financial statements or schedules are required to be included in the
Registration Statement.
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(i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (i) there has been no material adverse change in the business,
properties, operations, condition (financial or otherwise) or in the earnings,
business affairs or business prospects of the Company and its Subsidiaries,
whether or not arising in the ordinary course of business, (ii) there have been
no transactions entered into by the Company other than those in the ordinary
course of business, which are material with respect to the Company, (iii) there
has been no obligation that is material to the Company, direct or contingent,
incurred by the Company or any Subsidiary, except obligations incurred in the
ordinary course of business, (iv) there has been no change in the capital stock
of the Company, (v) there has been no change in the outstanding indebtedness of
the Company which is material to the Company, (vi) there has been no dividend
or distribution of any kind declared, paid or made by the Company on behalf of
any class of its respective capital stock, (vii) there has been no redemption,
purchase or acquisition or agreement to redeem, purchase or acquire shares of
Common Stock of the Company, or (viii) to the knowledge of the Company, there
has been no change in any Federal, state, or other laws, rules, or regulations
(or interpretations thereof) applicable to the business of the Company that
would have a material adverse effect on the Company, and, to the knowledge of
the Company, no such change is pending other than as described in the
Prospectus.
(j) Except as described in the Prospectus, (i) the
Company and its Subsidiaries have good and marketable title to all properties
and assets described in the Prospectus as owned by them, free and clear of all
liens, charges, encumbrances or restrictions of any kind, except those
described in the Prospectus, or those not material, singly or in the aggregate,
to the business of the Company and its Subsidiaries considered as a whole, (ii)
the agreements to which the Company is a party described in the Prospectus 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 affecting creditors' rights generally or by general
equitable principles, and (iii) the Company has valid and enforceable leases
for the properties described in the Prospectus as leased by it except as
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.
(k) All Federal, state, local and foreign tax returns
required to be filed by the Company or its Subsidiaries in any jurisdiction
have been filed, and all material taxes, including withholding taxes, penalties
and interest, assessments, fees and other charges due or claimed to be due from
such entities have been paid other than those being contested in good faith and
for which adequate reserves have been provided or those currently payable
without penalty or interest; and adequate charges, accruals and reserves have
been provided for in the financial statements referred to in Section 2(g) above
in respect of all Federal, state, local and foreign taxes for all periods as to
which the tax liability of the Company or its Subsidiaries has not been finally
determined or remains open to examination by applicable taxing authorities.
(l) No labor dispute with the employees of the Company or
its Subsidiaries exists or, to the knowledge of the Company, is imminent; and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers, contractors or
customers which might be expected to result in any material
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adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise. No collective bargaining agreement exists with
any of the Company's employees and, to the Company's knowledge, no such
agreement is imminent.
(m) The Company and its Subsidiaries own or possess, or
can acquire on reasonable terms, the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names presently employed by
them in connection with the business now operated by them and neither the
Company nor its Subsidiaries has received any notice or is otherwise aware of
any infringement of or conflict with asserted rights of others with respect to
any patent or proprietary rights or of any facts or circumstances which would
render any patent and proprietary rights invalid or inadequate to protect the
interest of the Company or its Subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy singly or in the aggregate, would result in any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise.
(n) Except as set forth in the Prospectus, the Company
and its Subsidiaries are in compliance in all material respects with all
applicable laws, statutes, ordinances, rules or regulations, the enforcement of
which, individually or in the aggregate, would be reasonably expected to have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise.
(o) The Common Stock has been approved for quotation on
__________ subject to official notice of issuance.
(p) 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" within the meaning of the 1940 Act and such
rules and regulations.
(q) The Company has not distributed and will not
distribute prior to the Closing Date or on any date on which Option Shares are
to be purchased, as the case may be, any offering material in connection with
the offering and sale of the Shares other than the Prospectus, the Registration
Statement and other materials permitted by the Act.
(r) The Company has not at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign office,
or failed to disclose fully any contribution in violation of law, or (ii) made
any payment to any Federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
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(s) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares. The Company has not
effected any sales of securities required to be disclosed in Item 26 of Form
SB-2 under the Act, other than as disclosed in the Registration Statement.
(t) Each officer and director of the Company and each
beneficial owner of at least 5% of the outstanding shares of Common Stock and
options and warrants to purchase Common Stock outstanding prior to the
effective date of the Registration Statement have agreed in writing that such
persons will not, for a period expiring 12 months after the effective date of
the Registration Statement, offer to sell, contract to sell, sell short, or
otherwise sell or dispose of any shares of Common Stock of the Company, any
options or warrants to purchase any shares of Common Stock of the Company, or
any securities convertible into or exchangeable for shares of the Common Stock
owned directly by such person or with respect to which such person has the
power of disposition otherwise than (i) as a gift or gifts, provided the donee
or donees thereof agree to be bound by this restriction or (ii) with the prior
written consent of Capital West. Messrs. ▇'▇▇▇▇▇, Juba and ▇▇▇▇▇▇▇ shall be
subject to a two (2) year lock-up unless the trading price of the Common Stock
of the Company is equal to or greater than 115% of the registered offering
price for 20 consecutive trading days, at which time, ▇'▇▇▇▇▇ may sell up to
2,000 shares of Common Stock per month during the second year and Juba and
▇▇▇▇▇▇▇ may sell up to 1,000 shares of Common Stock per month during the second
year; and, subject to the limitations of Rule 144, to the extent that any of
Messrs. ▇'▇▇▇▇▇, Juba and ▇▇▇▇▇▇▇ do not sell, in any given month, the full
number of shares of Common Stock which they were entitled to sell, such unsold
amount shall be available for sale in subsequent months without regard to any
other sales.
(u) Except as described in the Registration Statement,
(i) neither the Company nor its Subsidiaries is in violation of any Federal,
state, local or foreign laws or regulations relating to pollution or protection
of human health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Environmental Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Environmental Materials (collectively, the "Environmental Laws"), except such
violations as would not, singly or in the aggregate, have a material adverse
effect on the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered as
one enterprise, and (ii) to the best of the Company's knowledge, there are no
events or circumstances that could form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or its
Subsidiaries relating to any Environmental Materials or the violation of any
Environmental Laws, which, singly or in the aggregate, could reasonably be
expected to have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise.
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(v) The Company and its Subsidiaries maintain 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 with generally accepted
accounting principles as in effect in the United States and to maintain asset
accountability; (iii) access to bank accounts 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.
(w) 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, except as disclosed in the Registration Statement and the
Prospectus. Neither the Company nor any employee or agent of the Company has
made any payment or transfer of any funds or assets of the Company or conferred
any personal benefit by use of the Company's assets, or received any funds,
assets or personal benefit in violation of any law, rule or regulation.
(x) On the Closing Date and upon delivery of the Option
Shares, as applicable, all transfer and other taxes (other than income taxes)
that are required to be paid in connection with the sale and transfer of the
Shares to the Underwriters will have been paid.
(y) The Company does not currently have and has never had
any pension plan subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any liability, the Company has not incurred
and does not expect to incur liability under (i) Title IV of ERISA with respect
to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412
or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(z) The Company confirms as of the date hereof that it is
in compliance with all provisions of Section 517.075, Florida Statutes (Chapter
92-198, Laws of Florida) An Act Relating to Disclosure of Doing Business with
Cuba (the "Cuba Act"), and the Company further agrees that if it commences
engaging in business with the government of Cuba or with any person or
affiliate located in Cuba after the date the Registration Statement becomes or
has become effective with the Commission or the Florida Department of Banking
and Finance (the "Department"), whichever date is later, or if the information
reported or incorporated by reference in the Prospectus, if any, concerning the
Company's business in Cuba or with any person or affiliate located in Cuba
changes in any material way, the Company will provide the Department notice of
such business or change, as appropriate, in a form acceptable to the
Department.
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(aa) Any certificate signed by any officer of the Company
and delivered to the Underwriters or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
(ab) Except as may be set forth in the Prospectus, the
Company has not incurred any liability for a fee, commission, or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by the Underwriting Agreement.
(ac) The Company and each subsidiary is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the subsidiaries are engaged.
3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter,
severally and not jointly, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, respectively, at a purchase price per
share of $_____ per Share, the number of Shares set forth in Schedule A hereto
(subject to adjustment as provided in Section 10).
Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 shall be made against
payment of the purchase price therefor by the Underwriters by certified or
official bank check in next day funds, payable to the order of the Company at
the offices of Capital West Securities, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, 16th Floor, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as
shall be agreed upon by the Underwriters and the Company, at 9:30 a.m. on the
fourth business day following the first day that Shares are traded (or at such
time and date to which payments and delivery shall have been postponed pursuant
to Section 10 hereof), such time and date of payment and delivery being herein
called the "Closing Date." The certificates for the Firm Shares to be so
delivered will be made available to you at such office or at such other
location as you may reasonably request for checking at least one business day
prior to the Closing Date and will be in such names and denominations as you
may request, such request to be made at least two business days prior to the
Closing Date. If the Underwriters so elect, delivery of the Shares may be made
by credit through full fast transfer to the accounts at Depository Trust
Company designated by the Underwriters.
It is understood that Capital West, individually and not as
representative 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 Capital West prior to the
Closing Date for the Firm Shares to be purchased by such Underwriter or
Underwriters. Any such payment by Capital West shall not relieve any such
Underwriter or Underwriters of any of its or their obligations hereunder.
After the Registration Statement becomes effective, the
several Underwriters intend to offer the Firm Shares to the public as set forth
in the Prospectus.
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The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters) and under
"Underwriting" in any Preliminary Prospectus and in the final form of
Prospectus filed pursuant to Rule 424(b) constitutes the only information
furnished by the Underwriters to the Company for inclusion in any Preliminary
Prospectus, the Prospectus or the Registration Statement, and you, on behalf of
the Underwriters, represent and warrant to the Company that the statements made
therein do not include any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make such
statements, in the light of the circumstances in which they were made, not
misleading.
4. FURTHER COVENANTS OF THE COMPANY. The Company covenants with
the several Underwriters as follows:
(a) The Company will use its 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 you, 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 you 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 you that the Prospectus contains such
information and has been filed with the Commission within the time period
prescribed; it will notify you promptly of any request by the Commission for
the amending or supplementing of the Registration Statement or Prospectus or
for additional information; promptly upon your request, it will prepare and
file with the Commission any amendments or supplements to the Registration
Statement or Prospectus which, in the opinion of counsel for the several
Underwriters, 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 you 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 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 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 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 you a reasonable time prior to the proposed
filing
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thereof or to which you shall reasonably object in writing, subject, however,
to compliance with the Act, the Rules and Regulations thereunder and the
provisions of this Agreement.
(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof 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 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 cooperate with the Underwriters and
Underwriters' counsel in connection with their efforts to qualify the Shares
for offering and sale under the securities laws of such jurisdictions as you
may designate as 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 or to make any undertaking with respect to the
conduct of its business. 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 you, as soon as available,
copies of the Registration Statement (three of which will be signed a include
all exhibits), each Preliminary Prospectus, the Prospectus and any amendments
or supplements to such documents, including any prospectus prepared to permit
compliance with Section 10(a)(3) of the Act, all in such quantities as you may
from time to time reasonably request.
(e) The Company will make generally available to its
stockholders as soon as practicable, but in any event not later than the 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 covering a
twelve-month period beginning after the effective date of the Registration
Statement.
(f) As long as the Company is a reporting company under
the Exchange Act, the Company will furnish to its stockholders, as soon as
practicable after the end of each respective period, annual reports (including
financial statements audited by independent certified public accountants) and
unaudited quarterly reports of operations for each of the first three quarters
of the fiscal year, and for a period of five years after the effective date of
the Registration Statement, the Company will furnish to the several
Underwriters hereunder, upon request (i) concurrently with furnishing such
reports to its stockholders, statements of operations of the Company for each
of the first three quarters in the form furnished to the Company's
stockholders; (ii) concurrently with furnishing to its stockholders, a balance
sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity, and of cash flows of the
Company for such fiscal year, accompanied by a copy of the certificate or
report thereon of independent accountants; (iii) as soon as they are available,
copies of all reports and financial statements furnished to or filed with the
Commission, any securities exchange or the National Association of Securities
Dealers, Inc.
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("NASD"); (v) every material press release and every material news item or
article in respect of the Company or its affairs which was released or prepared
by the Company (excluding, in each case customary product-related press
releases and articles); and (vi) any additional information of a public nature
concerning the Company, or its business which you may reasonably request.
During such five-year period, if the Company shall have active subsidiaries,
the foregoing financial statements shall be on a consolidated basis to the
extent that the accounts of the Company and its Subsidiaries are consolidated,
and shall be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated. For a period of five years from the
date of the Registration Statement, the Company will furnish to you and, upon
request, to each of the other Underwriters, as soon as available, a copy of
each report of the Company mailed to holders of the Common Stock or publicly
filed with the Commission or any automated quotation system or national
securities exchange on which any class of securities of the Company is listed.
(g) The Company will 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.
(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 file Form SR in conformity with the
requirements of the Act and the Rules and Regulations.
(j) The Company shall comply with all provisions of all
undertakings contained in the Registration Statement.
(k) 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, or if the
Company shall terminate this Agreement under Section 11(a), the Company will
reimburse the several Underwriters for all out-of-pocket accountable expenses
(including fees and disbursements of counsel for the several Underwriters)
actually incurred by the Underwriters in investigating, preparing to market or
marketing the Shares, up to an aggregate of $45,000, which amount has already
been paid and which shall be reimbursed to the Company to the extent not
actually incurred.
(l) If at any time during the 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 your
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 you advising the Company to the effect set forth
above, forthwith prepare, consult with you concerning the substance of, and
disseminate a press release or other public statement, reasonably satisfactory
to you, responding to or commenting on such rumor, publication or event.
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(m) For a period of 180 days after the date of this
Agreement, without the prior written consent of Capital West, the Company shall
not, directly or indirectly, offer, sell, contract to sell, pledge, grant any
option to purchase or otherwise dispose (or announce any offer, sale, contract
of sale or other disposition of), any shares of Common Stock or any other
shares of capital stock of the Company, or any securities convertible into or
exercisable or exchangeable for, or warrants, options or rights to purchase or
acquire, shares of Common Stock or any other shares of capital stock of the
Company, or any interest in the Common Stock (including derivative interests)
other than the Company's issuance and sale of Shares in accordance with the
Underwriting Agreement, and the issuance of stock options under, or the
issuance of Common Stock upon the exercise of stock options granted under, any
stock option plan described in the Prospectuses.
(n) During a period of 90 days from the effective date of
the Registration Statement, the Company will not file a registration statement
registering shares under any employee benefit plan.
(o) On the Closing Date the Company will sell to you, for
$.001 per share of Common Stock covered by each warrant, the Underwriters'
Warrants to purchase one share of Common Stock of the Company for each ten
shares of the Company's Common Stock which have been sold (or purchased by the
Underwriters), excluding any over-allotment shares, as set forth in the
Prospectus. The Underwriters' Warrants shall have the terms and be in the form
filed as an exhibit to the Registration Statement. At any time during the
period commencing 12 months and ending five years after the effective date of
the offering and at the written request of the then holders of 51% of the
Underwriters' Warrants and the Common Stock of the Company issued upon the
exercise of the Underwriters' Warrants, and on one occasion, the Company will
file with the Commission and process to effectiveness a registration statement
covering not less than 51% of the shares of the Common Stock of the Company
issuable and/or issued upon the exercise of the Underwriters' Warrants. The
Company must file a registration statement only if the shares of Common Stock
issuable under the Underwriters' Warrants cannot be sold without registration
under Rule 144 promulgated under the Act. The Company agrees to use its
commercially reasonable best efforts to cause the filing to become effective.
The costs of the filing of such registration statement including but not
limited to, legal (including legal fees relating to clearance in the various
states, limited however to such states as may be reasonably requested),
accounting and printing fees, shall be borne by the Company but the Company
shall not be responsible for the cost of any separate counsel to review the
registration statement on behalf of or to advise the selling stockholders and
shall not be responsible for the payment of any underwriting discount or
commissions with respect to such sale. Such registration statement shall
comply with any undertaking applicable to such shares. If the Company
otherwise than upon the request of the owners of the Underwriters' Warrants or
the shares of Common Stock issuable upon the exercise thereof files a
registration statement under the Act with respect to any of its securities at
any time (other than on Form ▇-▇, ▇-▇, or any other form that does not provide
for resales by selling security holders), the Company will give such persons 30
days' notice of its intention to do so, and at their written request given
within 10 days of the receipt of such notice, will include in such registration
statement such number of such Shares as they may specify, all at no cost to
them (except for underwriting discounts and the fees and expenses of counsel to
such holders). In connection with any such registration statement covering all
or a part of such shares, the
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Company agrees that it will covenant with the owners of such shares with
respect to such shares and the offering thereof, in customary form
substantially to the effect contained in this Section 4. If the offering
pursuant to any registration statement provided for herein is made through
Underwriters, the Company agrees to enter into an underwriting agreement in
customary form with such underwriters in which the Company and the underwriters
and each person who controls such underwriters within the meaning of the Act
grant to each other customary reciprocal indemnities against liabilities under
the Act.
(p) As long as the Company is a reporting company under
the Exchange Act, the Company will comply with the Act, the Exchange Act, the
rules and regulations of the NASD and applicable state securities or Blue Sky
laws so as to permit the continuance of sales and dealings in the Common Stock
under the Act, the Exchange Act, the rules and regulations of the NASD, and
applicable state securities or Blue Sky laws, including the filing with the
NASD and the Commission of all reports required to be filed pursuant to the
applicable provisions of the rules and regulations of the NASD, the Act, and
the Exchange Act, and will deliver to the holders of the Common Stock all
reports required to be provided to such holders pursuant to the applicable
provisions of the rules and regulations of the NASD, the Act, the Exchange Act,
and applicable state securities or Blue Sky laws.
(q) Immediately following the later to occur of: (i) the
Option Closing Date, as defined in Section 6(h)(3), below, or (ii) 30 days
following the Closing Date, the Company shall take and complete all necessary
corporate and stockholder action that will allow Capital West to designate one
person of its choosing to serve as a member of the Board of Directors of the
Company.
5. EXPENSES.
(a) The Company agrees with each Underwriter that the
Company will pay and bear all costs and expenses in connection with the
preparation, printing and filing of the Registration Statement (including
financial statements, schedules and exhibits), Preliminary Prospectuses and the
Prospectus and any amendments or supplements thereto; the printing of this
Agreement, the Preliminary Blue Sky Survey and any Supplemental Blue Sky
Survey, the Underwriters' Questionnaire and Power of Attorney and any
instruments related to any of the foregoing; the issuance and delivery of the
Shares hereunder to the Underwriters, including transfer taxes, if any, and the
cost of all certificates representing the Shares and transfer agents' and
registrars' fees; the fees and disbursements of counsel for the Company; all
fees and other charges of the Company's independent public accountants; the
cost of furnishing to the Underwriters copies of the Registration Statement
(including appropriate exhibits), Preliminary Prospectus and the Prospectus,
and any amendments or supplements to any of the foregoing; and all postage
costs incurred in connection with the qualification of the Shares under the
laws of such jurisdictions as you may designate; and all other expenses
directly incurred by the Company in connection with the performance of its
obligations hereunder.
(b) Capital West shall be entitled to receive from the
Company, for itself and not as representative of the Underwriters, a
nonaccountable expense allowance equal to three percent of the aggregate public
offering price of Shares sold to the Underwriters in connection with the
Offering (out of which the Capital West shall pay all filing fees, expenses and
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disbursements, except for postage costs, incurred in connection with the
qualification of the Shares under the laws of such jurisdictions as you may
designate including fees and expenses of Underwriters' counsel), reduced by any
amounts advanced by the Company to Capital West pursuant to the terms of the
Letter of Intent. Capital West shall be entitled to withhold this allowance on
the Closing Date.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase and pay for Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date and any
later date on which Option Shares are to be purchased (the "Option Closing
Date"), as the case may be, of the representations and warranties of the
Company herein, 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 5:30 p.m. on the date hereof, or with the consent of
the Underwriters, at a later time and date, not later, however, than 5:30 p.m.
on the first business day following the date hereof, or at such later time and
date as may be approved by a majority in interest of the Underwriters; and no
stop order suspending the effectiveness of the Registration Statement shall
have been issued under the Act or proceedings therefor initiated or threatened
by the Commission and any request on the part 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 reasonable satisfaction of
counsel to the Underwriters. If the Company has elected to rely upon Rule 430A
of the Rules and Regulations, the price of the Shares and any price-related
information previously omitted from the effective Registration Statement
pursuant to such Rule 430A shall have been transmitted to the Commission for
filing pursuant to Rule 424(b) of the Rules and Regulations within the
prescribed time period, and prior to the Closing Date the Company shall have
provided evidence satisfactory to the Underwriters of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A
of the Rules and Regulations. Qualification under the securities laws of such
states as you may deem necessary to the success of the underwriting of the
issue and sale of the Shares upon the terms and conditions set forth in this
Agreement or contemplated by this Agreement and containing no provisions
unacceptable to you will have been secured, and no stop order (or the
equivalent thereof) will be in effect denying or suspending effectiveness of
such qualification, nor will any stop order proceedings (or the equivalent
thereof) with respect thereto be instituted or pending or threatened under such
laws.
(b) At the Closing Date and the Option Closing Date, if
any, counsel for the Underwriters shall have been furnished with such documents
and opinions as they may require for the purpose of enabling them to pass upon
the issuance and sale of the Shares as contemplated herein and related
proceedings or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Shares as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
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(c) There shall not have been, since the date hereof or
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any change in the condition (financial or
otherwise), earnings, operations, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business which, in your sole judgment, is
material and adverse and that makes it, in your sole judgment, impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus, and the Underwriters shall have received a certificate of
the President or Vice President of the Company and of the chief financial or
chief accounting officer of the Company, dated as of the Closing Date, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 2 hereof are true and correct with
the same force and effect as though expressly made at and as of the Closing
Date, (iii) the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Date, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission or any Blue Sky jurisdiction.
(d) At the Closing Date the Underwriters shall have
received:
(1) The opinion, dated as of the Closing Date of
Kuperman, Orr, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Oregon.
(ii) The Company has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus and to enter into
and perform its obligations under this Agreement and to issue, sell and deliver
to the Underwriters the Firm Shares or the Option Shares, as the case may be,
to be issued and sold by it hereunder.
(iii) The Company is duly qualified to do business
as a foreign corporation and is in good standing in the States of Texas and
_______, and to the best of its knowledge is not required to be qualified to do
business as a foreign corporation in any other jurisdiction.
(iv) At the Closing Date, after giving effect to
the sale of the Firm Shares, the authorized capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization" as of the dates
stated therein; the issued and outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable and
have not been issued in violation of any preemptive right contained in the
Certificate of Incorporation or Bylaws of the Company or, to such counsel's
knowledge, any co-sale right, registration right, right of first refusal or
other similar right (other than such preemptive rights or other rights to
subscribe for or purchase securities as were fully complied with or expressly
waived or with respect to the violation of which the right to make a claim is
barred by the applicable statute of limitation).
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(v) The Firm Shares and the Option Shares, as the
case may be, to be purchased from the Company hereunder have been duly
authorized for issuance and sale to the Underwriters pursuant to this Agreement
and, when issued and delivered by the Company pursuant to this Agreement
against payment therefor in accordance with the terms hereof, will be validly
issued and fully paid and nonassessable, and will not be issued in violation of
any preemptive right under the Certificate of Incorporation or Bylaws of the
Company or, to such counsel's knowledge, any co-sale right, right of first
refusal or other similar right and the stockholders of the Company have no
preemptive right under the Certificate of Incorporation or Bylaws of the
Company or, to such counsel's knowledge, other rights to purchase any of the
Shares; the shares of Common Stock reserved for issuance upon the exercise of
the Underwriters' Warrants have been duly and validly authorized and are
sufficient in number to meet the exercise requirements thereof, and such shares
of Common Stock, when issued upon exercise, will be duly and validly issued,
fully paid (assuming exercise in accordance with the Warrant Agreement and
receipt by the Company of the exercise price thereof) and nonassessable; the
stockholders of the Company have no preemptive right under the Certificate of
Incorporation or Bylaws of the Company or, to such counsel's knowledge, other
rights to purchase any of the Shares; and the shares of Common Stock reserved
for issuance upon the exercise of the Company's outstanding options have been
duly and validly authorized and are sufficient in number to meet the exercise
requirements of such options, and such shares of Common Stock, when issued upon
exercise, will be duly and validly issued, fully paid (assuming exercise in
accordance with the governing instruments therefor and receipt by the Company
of the exercise price thereof) and nonassessable.
(vi) The issuance of the Shares to be purchased
hereunder is not subject to preemptive or other similar rights arising by
operation of law or, to the best of their knowledge and information, otherwise.
(vii) Each Subsidiary has been duly incorporated
and is validly existing as a corporation and is in good standing under the laws
of the jurisdiction of its incorporation, has full corporate power and
authority to own, lease and operate its properties and to conduct it business
as described in the Registration Statement, and is duly qualified as a foreign
corporation to transact business and is in good standing in the States of Texas
and _______, and to the best of its knowledge any Subsidiary is not required to
be qualified to do business as a foreign corporation in any other jurisdiction;
all of the issued and outstanding capital stock of such Subsidiary have been
duly authorized and validly issued, is fully paid and nonassessable and, to the
best of their knowledge and information, is owned by the Company directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(viii) This Agreement and the Warrant Agreement have
been duly authorized by all necessary corporate action on the part of the
Company and have been duly executed and delivered by the Company and assuming
due authorization, execution and delivery by the Underwriters, are valid and
binding agreements of the Company, except insofar as indemnification and
contribution provisions may be limited by applicable law or equitable
principles, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or any general equitable principles;
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(ix) The Registration Statement has been declared
effective under the Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required by Rule
424(b) and, to the best of their knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been issued
under the Act or proceedings therefor have been initiated or are pending or
threatened by the Commission.
(x) The Registration Statement, Prospectus and
each amendment or supplement to the Registration Statement and Prospectus, as
of their respective effective or issue dates (other than the financial
statements and supporting schedules included therein, as to which no opinion
need be rendered) complied as to form in all material respects with the
requirements of the Act and the applicable Rules and Regulations.
(xi) The terms and provisions of the capital stock
of the Company conform in all material respects to the description thereof
contained in the Prospectus under the caption "Description of Securities";
(xii) The information in the Prospectus under the
caption "Description of Securities" to the extent that they constitute matters
of law or legal conclusions, has been reviewed by such counsel and accurately
and fairly summarizes in such counsel's opinion the matters described therein
and to the knowledge of such counsel, there are no outstanding options,
warrants, convertible securities, or other rights to acquire from the Company
any capital stock, except as described in the Registration Statement; in
addition, the forms of certificates evidencing the Company stock comply with
Oregon law;
(xiii) To the best of their knowledge and
information, except as set forth in the Prospectus, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which the
Company or its Subsidiaries is a party, or to which the property of the Company
or its Subsidiaries is subject, before or brought by any court or government
agency or body, which might reasonably be expected to result in any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of this Agreement or the performance by the Company of its
obligations hereunder; and all pending legal or governmental proceedings to
which the Company or its Subsidiaries is a party or that affect any of their
respective properties that are not described in the Prospectus, including
ordinary routine litigation incidental to the business, could not reasonably be
expected to result in a material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise.
(xiv) The information in the Prospectus under the
captions "Business and Properties - Legal Proceedings", "- Governmental
Regulation" and "- Properties", "Certain Transactions" and "Description of
Capital Stock" in the Prospectus and Items 24 and 26 of Part II of the
Registration Statement to the extent that such items constitute matter of law,
summaries of legal matters, documents or proceedings, or legal conclusions, has
been reviewed by them and is correct in all material respects, and there are no
legal or governmental actions,
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suits or proceedings pending or threatened against the Company or its
Subsidiaries that are required to be described in the Prospectus are not
described as required by the Act or the applicable Rules and Regulations.
(xv) All descriptions in the Prospectus of
contracts and other documents are accurate in all material respects; to the
best of their knowledge and information, there are no agreements, no contracts,
indentures, mortgages, loan agreements, notes, leases or other instrument
required to be described or referred to in the Registration Statement or to be
filed as exhibits thereto other than those described or referred to therein or
filed as exhibits thereto, the descriptions thereof or references thereto are
correct in all material respects, and to the best of counsel's knowledge and
information, the Company is not in default in the due performance or observance
of any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
so described, referred to or filed as exhibits thereto.
(xvi) No authorization, approval, consent or order
of any court or governmental authority or agency (other than under the Act or
the Rules and Regulations, which have been obtained, or as may be required
under the securities or Blue Sky laws of the various states) is required in
connection with the due authorization, execution and delivery of this Agreement
or for the offering, issuance or sale of the Shares to the Underwriters; and
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated herein and compliance by the Company with its
obligations hereunder (other than performance of the Company's indemnification
and contribution obligations hereunder, concerning which no opinion need be
expressed) will not, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach or violation of, or default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its Subsidiaries
pursuant to any material contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company or its Subsidiaries is a party
or by which it or any of them may be bound, or to which any of the property or
assets of the Company or its Subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of Incorporation
or Bylaws of the Company, or any applicable law, administrative regulation or
court decree, provided, however, no opinion need be rendered concerning state
securities or Blue Sky laws.
(xvii) To the best of such counsel's knowledge and
information, with the exception of the Underwriters' Warrants, no holder of any
security of the Company has any right to require registration of any shares of
Common Stock or any other security of the Company and, except as set forth in
the Registration Statement and Prospectus, all holders of securities of the
Company having rights 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 such
rights.
(xviii) The Company is not an "investment company" or
an entity "controlled" by an "investment company" as such terms are defined in
the 1940 Act.
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(xix) To the best of such counsel's knowledge and
information, neither the Company nor its Subsidiaries are in violation of their
charter or by-laws.
In rendering such opinion, such counsel may rely as to matters
of fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it
is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including with limitation, the Legal Opinion Accord
of the ABA Section of Business Law (1991).
In giving their opinion required by subsection (d)(1) of this
Section, Kuperman, Orr, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. shall additionally state that
nothing has come to their attention that would lead them to believe that the
Registration Statement, at the time it became effective, contained an 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
that the Prospectus, at the effective date of the Registration Statement
(unless the term "Prospectus" refers to a prospectus which has been provided to
the Underwriters by the Company for use in connection with the offering of the
Shares which differs from the Prospectus declared effective by the Commission,
in which case at the time it is first provided to the Underwriters for such
use) or at the Closing Date, included an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Such opinion may state that such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus except as otherwise
expressly provided in such opinion, and such counsel need express no opinion or
belief as to the financial statements, schedules, and other financial or
statistical data included in the Registration Statement or Prospectus.
(2) The opinion, dated as of Closing Date, of
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Inc., counsel for the Underwriters, in form and substance
satisfactory to you, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably require, and the Company
shall have furnished to such counsel such papers, opinions and information as
they request to enable them to pass upon such matters.
(e) At the time of the execution of this Agreement, the
Underwriters shall have received from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇.▇. a letter
dated such date, in form and substance satisfactory to the Underwriters, to the
effect that:
(1) they are independent public accountants with
respect to the Company and its Subsidiaries within the meaning of the Act and
the Rules and Regulations;
(2) it is their opinion that the consolidated
balance sheet included in the Registration Statement and covered by their
opinion therein complies as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations;
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(3) based upon limited procedures set forth in
detail in such letter, nothing has come to their attention which causes them to
believe that, at a specified date not more than three days prior to the date of
this Agreement, (A) the unaudited consolidated balance sheet of the Company and
its Subsidiaries included in the Registration Statement does not comply as to
form in all material respects with the applicable accounting requirements of
the Act and the Rules and Regulations or is not presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement, or (B) at a specified date not more than three days
prior to the date of this Agreement, there has been any change in the capital
stock of the Company or any increase in the combined long term debt of the
Company and its Subsidiaries or any decrease in combined net current assets or
net assets as compared with the amounts shown in the December 31, 1996 balance
sheet included in the Registration Statement or, during the period from
December 31, 1996 to a specified date not more than three days prior to the
date of this Agreement, there were any decreases, as compared with the
corresponding period in the preceding year, in combined revenues, net income or
net income per share of the Company and its Subsidiaries, except in all
instances for changes, increases or decreases which the Registration Statement
and the Prospectus disclose have occurred or may occur;
(4) in addition to the examination referred to in
their opinion and the limited procedures referred to in clause (3) above, they
have carried out certain specified procedures, not constituting an audit, with
respect to certain amounts, percentages and financial information which are
included in the Registration Statement and Prospectus and which are specified
by the Underwriters, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial and
other records of the Company and its Subsidiaries identified in such letter;
and
(5) they have compared the information in the
Prospectus under selected captions with the disclosure requirements of
Regulation S-B and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all material
respects with the disclosure requirements of Item 402 of Regulation S-B.
(f) At the Closing Date, the Underwriters shall have
received from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇.▇. a letter, dated as of the
Closing Date, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section 6, except that the
specified date referred to shall be a date not more than three days prior to
the Closing Date and, if the Company has elected to rely on Rule 430A of the
1933 Act Regulations, to the further effect that they have carried out
procedures as specified in clause (4) of subsection (e) of this Section 6 with
respect to certain amounts, percentages and financial information specified by
the Underwriters and deemed to be a part of the Registration Statement pursuant
to Rule 430(A)(b) and have found such amounts, percentages and financial
information to be in agreement with the records specified in such clause (4).
(g) At the Closing Date, the Common Stock shall have been
approved for listing on the American Stock Exchange.
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(h) In the event that the Underwriters exercise their
option provided in Section 7 hereof to purchase all or any portion of the
Option Shares, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company
hereunder shall be true and correct as of the Option Closing Date and, at the
Option Closing Date, the Underwriters shall have received:
(1) A certificate, dated the Option Closing Date,
of the President or a Vice President of the Company and of the Chief
Financial or Chief Accounting Officer of the Company confirming that
the certificate delivered at the Closing Date pursuant to Section 5(c)
hereof remains true and correct as of the Option Closing Date (except
that all references in such Section to "Closing Date" shall be deemed
to refer to the "Option Closing Date").
(2) The opinions of Kuperman, Orr, ▇▇▇▇▇ &
▇▇▇▇▇▇, P.C., counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated the Option Closing
Date, relating to the Option Shares and otherwise to the same effect
as the opinion required by Section 5(b)(1) hereof (except that all
references in such Section to "Closing Date" shall be deemed to refer
to the "Option Closing Date").
(3) The opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Inc.,
counsel for the Underwriters, dated the Option Closing Date, relating
to the Option Shares to be purchased on the Option Closing Date and
otherwise to the same effect as the opinion required by Section
5(b)(2) hereof (except that all references in such Section to "Closing
Date" shall be deemed to refer to the "Option Closing Date").
(4) A letter from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
▇.▇. in form and substance satisfactory to the Underwriters and dated
the Option Closing Date, substantially the same in form and substance
as the letter furnished to the Underwriters pursuant to Section 5(e)
hereof, except that the "specified date" in the letter furnished
pursuant to this Section 6(h)(4) shall be a date not more than three
days prior to the Option Closing Date.
(i) The Company and the Underwriters shall have entered
into the Warrant Agreement and the Company shall have sold to the Underwriters
the Underwriters' Warrants, which shall be in the form attached as an exhibit
to the Warrant Agreement.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representative by notice to the Company at any time at or
prior to Closing Date, and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 4(j) and 8 shall survive any such termination and remain in full force
and effect.
7. OPTION SHARES.
(a) On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants to the several Underwriters, for the purpose of covering
over-allotments in connection with the distribution
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and sale of the Firm Shares only, a non-transferable option to purchase up to
an aggregate 105,000 Option Shares at the purchase price per share for the Firm
Shares set forth in Section 3 hereof. Such option may be exercised by Capital
West on behalf of the several Underwriters on one occasion in whole or in part
during the period of 30 days from and after the date on which the Firm Shares
are initially offered to the public, by giving notice to the Company. 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
Underwriters in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to
be purchased by the several Underwriters pursuant to the exercise of the option
granted by this Section 7 shall be made against payment of the purchase price
therefor by the several Underwriters by certified or official bank check or
checks drawn in same day funds, payable to the order of the Company. Such
delivery and payment shall take place at the offices of Capital West
Securities, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or at such other place as may be agreed upon between the Underwriters and the
Company on the Closing Date, if written notice of the exercise of such option
is received by the Company not later than three full business days prior to the
Closing Date.
The certificates for the Options Shares so to be delivered
will be made available to you at such office or other location including,
without limitation, in Oklahoma City, as you may reasonably request for
checking at least two full business days prior to the date of payment and
delivery and will be in such names and denominations as you may request, such
request to be made at least three full days prior to such date of payment and
delivery. If the Underwriters so elect, delivery of the Shares may be made by
credit through full fast transfer to the accounts at Depository Trust Company
by the Underwriters.
It is understood that Capital West, individually, and not as
the representative of the 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 you prior to the date of
payment and delivery for the Option Shares to be purchased by such Underwriter
or Underwriters. Any such payment by Capital West shall not relieve any
Underwriter of any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section
7(a) hereof the obligations of the Underwriters to purchase such Option Shares
will be subject (as of the date hereof and as of the date of payment for such
Option Shares) to the accuracy of and compliance with the representations and
warranties 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 their respective 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 you and to Underwriters' counsel, and you
shall have been furnished with all such documents, certificates and opinions as
you may reasonably request in order to evidence the accuracy and
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completeness of any of the representations, warranties or statements, the
performance of any of the covenants of the Company or the compliance with any
of the conditions herein contained.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities, joint or
several, as incurred, to which such Underwriter may become subject under the
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, or (ii) any untrue statement or alleged untrue statement made by the
Company in Section 2 hereof, or (iii) any untrue statement or alleged untrue
statement of a material fact contained (A) in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (B) in any blue sky application or other document executed by the Company
specifically for that purpose or based upon written information furnished by
the Company filed in any state or other jurisdiction in order to qualify any or
all of the Shares under the securities laws thereof (any such application,
documents or information being hereinafter called a "Blue Sky Application"), or
(iii) the omission or alleged omission to state in the Registration Statement
or any amendment thereto a material fact required to be stated therein or
necessary to make the statements therein not misleading, or the omission or
alleged omission to state in any Preliminary Prospectus, the Prospectus or any
supplement thereto or in any Blue Sky Application 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 shall
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments for
such expenses might later be held to be improper, in which case the person
receiving them shall promptly refund them; except that the Company shall not be
liable in any such case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, such Preliminary Prospectus or the Prospectus, or
any amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for use in the preparation thereof and, provided further, that the
indemnity agreement provided in this Section 8(a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any losses, claims, charges, liabilities or
litigation 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 has not
been sent or given to such person within the time required by the Act and the
Rules and Regulations thereunder, unless such failure is the result of
noncompliance by the Company with Section 4(c) hereof.
(b) Each Underwriter severally, but not jointly, shall
indemnify and hold harmless the Company against any losses, claims, damages or
liabilities, joint or several, as incurred, to which the Company may become
subject, under the Act or otherwise, insofar as
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such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in the Registration Statement,
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (B) in any Blue Sky Application, or (ii) the omission or alleged omission to
state in the Registration Statement or any amendment thereto a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or the omission or alleged omission to state in any Preliminary
Prospectus, the Prospectus or any supplement thereto or in any Blue Sky
Application 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; except that such indemnification shall be available in
each such case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company through the Underwriters by or on behalf of such Underwriter
specifically for use in the preparation thereof; and shall reimburse any legal
or other expenses reasonably incurred by the Company in connection with
investigation or defending against any such loss, claim, damage, liability or
action.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the claim or the commencement of that action;
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under such
subsection. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party; provided, however, if the defendants in any such action include both the
indemnified parties 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. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under such subsection for any legal or other expenses subsequently incurred by
the 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 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 8(a)
and 8(b) hereof who are parties to such action), (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized 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
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of any action unless the indemnifying party shall have approved the terms of
such settlement; provided, however, that such consent shall not be unreasonably
withheld.
(d) In order to provide for just and equitable
contribution in any action in which a claim for indemnification is made
pursuant to this Section 8 for which it is judicially determined (by the entry
of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 8 provides for indemnification in such case, all the parties
hereto shall contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such
proportion so that the Underwriters are responsible pro rata for the portion
represented by the percentage that the underwriting discount bears to the
initial public offering price, and the Company is responsible for the remaining
portion; provided, however, that (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Shares purchased by such Underwriter, and (ii) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to a contribution from any person who is not guilty of such fraudulent
misrepresentation. This subsection (d) shall not be operative as to any
Underwriter to the extent that the Company has received indemnity under this
Section 8.
(e) The obligations of the Company under this Section 8
shall be in addition to any liability which the Company may otherwise have, and
shall extend, upon the same terms and conditions, to each officer and director
of each Underwriter and to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability that the respective
Underwriters may otherwise have, and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
consent, is named in the Registration Statement as about to become a director
of the Company), to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Securities Act, in either case, whether or not such person is a
party to any action or proceeding.
(f) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions hereof including without limitation
the provisions of this Section 8, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 8
fairly allocate the risks in light of the ability of the parties to investigate
the 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 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 8, 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 8 and further agree not to
attempt to assert any such defense.
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties, covenants and agreements of the
Company contained in this
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Agreement (including, without limitation, the agreements of the Company set
forth in Sections 4(i)-(n)), or contained in certificates of officers of the
Company submitted pursuant hereto, and the indemnity and contribution
agreements contained in Section 8 hereof, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, or any of
its officers, controlling persons or directors and shall survive delivery of
the Shares to the several Underwriters hereunder or termination of this
Agreement.
10. SUBSTITUTION OF UNDERWRITER. 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.
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 hours to allow the several Underwriters the privilege of
substituting within twenty-four hours (including non-business hours) another
underwriter or underwriters (which may include any non-defaulting 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 option of the Company, be postponed for a further twenty-four
hours, if necessary to allow the Company the privilege of finding another
underwriter or underwriters, satisfactory to you, 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 underwriters to take up the Firm Shares of the defaulting
Underwriter or Underwriters as provided in this Section, (i) the Company shall
have the right to postpone the time of delivery for a period of not more than
seven 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 substitute 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.
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In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section, neither the Company shall be liable to any
Underwriter (except as provided in Sections 5 and 8 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 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at the later of
(i) execution of this Agreement, or (ii) when notification of the effectiveness
of the Registration Statement has been released by the Commission.
(b) You shall have the right to terminate this Agreement
by giving notice as hereinafter specified at any time at or prior to the
Closing Date (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
by the Company is not fulfilled including, without limitation, any change in
the financial condition, earnings, operations, business, management, technical
staff, 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 trading on the New York Stock Exchange or the Nasdaq
Stock Market shall have been suspended, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for securities
shall have been required on the New York Stock Exchange or the Nasdaq Stock
Market, by the New York Stock Exchange, the Nasdaq Stock Market or by order of
the Commission or any other governmental authority having jurisdiction, or if a
banking moratorium shall have been declared by Federal, New York, Oklahoma or
Texas authorities, or (iii) if on or prior to the Closing Date, or on or prior
to any later date on which Option Shares are to be purchased, as the case may
be, the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as to interfere materially and
adversely 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 in the United States as in your
reasonable judgment makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Shares, or (v) if on or prior to the Closing
Date, or on or prior to any later date on which Option Shares are to be
purchased, as the case may be, there shall have been an outbreak or escalation
of hostilities or other international or domestic calamity, crises or material
adverse change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is such as to make it in
your reasonable judgment, inadvisable to proceed with the marketing of the
Shares. In the event of termination pursuant to this Section 11(b), the
Company shall remain obligated to pay costs and expenses pursuant to Section
4(k), 5 and 8 hereof.
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If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Section 11, you shall
promptly notify the Company by telephone or telecopy, in each case confirmed by
letter. If the Company shall elect to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone or telecopy, in
each case, confirmed by letter.
12. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given if mailed or transmitted
by any standard form of telecommunication. Notices to the Underwriters shall be
directed to the Underwriters in care of Capital West Securities, Inc., ▇▇▇ ▇.
▇▇▇▇▇▇▇▇, 16th Floor, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; notices to the Company shall be directed to
it at 1120 Capital of Texas ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇.
13. 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
and officers and directors referred to in Section 8 hereof any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provisions herein contained. This Agreement and all conditions and provisions
hereof are intended to be 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 the Shares from any
Underwriter shall be construed to be a successor by reason merely of such
purchase.
14. GOVERNING LAW. This Agreement and the Pricing Agreement shall
be governed by and construed in accordance with the laws of the State of
Oklahoma applicable to agreements made and to be performed in said State.
Specified times of day refer to Central time.
15. COUNTERPARTS. This Agreement may be signed in several
counterparts, each of which will constitute an original.
* * * * * * *
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If the foregoing correctly sets forth your understanding of our
agreement, please sign in the space provided below for that purpose, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriter and the Company in accordance with its terms.
GRAND ADVENTURES TOUR & TRAVEL
PUBLISHING CORPORATION
By:
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▇▇▇▇▇▇▇ ▇'▇▇▇▇▇, Chairman and CEO
CONFIRMED AND ACCEPTED, as of the date first above written:
CAPITAL WEST SECURITIES, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
Draft Date: October 24, 1997
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SCHEDULE A
UNDERWRITER SHARES PURCHASED
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Capital West Securities, Inc.