EXHIBIT 1.1
2,021,758 Shares of Common Stock
Sterling Construction Company, Inc.
UNDERWRITING AGREEMENT
January ___, 2006
▇. ▇. ▇▇▇▇▇▇▇▇ & CO.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO., INC.
as Representatives of the Several Underwriters
c/o ▇. ▇. ▇▇▇▇▇▇▇▇ & Co.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
The Davidson Building
Great Falls, Montana 59401
Ladies and Gentlemen:
Sterling Construction Company, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
SCHEDULE I hereto (each an "Underwriter" and, collectively, the "Underwriters"),
for which you are acting as representatives (the "Representatives"), an
aggregate of 1,700,000 shares of the Company's common stock, par value $0.01 per
share (the "Common Stock"), and the stockholders of the Company named in
SCHEDULE II hereto (collectively, the "Selling Stockholders") severally propose
to sell to the Underwriters an aggregate of 321,758 shares of Common Stock. The
1,700,000 shares of Common Stock to be sold by the Company and the 321,758
shares of Common Stock to be sold by the Selling Stockholders are collectively
called the "Firm Common Shares." In addition, the Company has granted to the
Underwriters an option to purchase up to an additional 303,263 shares of Common
Stock (the "Optional Common Shares") as provided in Section 2 hereof. The Firm
Common Shares and, if and to the extent such option is exercised, the Optional
Common Shares, are collectively called the "Common Shares."
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-129780), which contains a prospectus subject to completion used in
connection with the public offering and sale of the Common Shares. Such
registration statement, as amended, at the time it was declared effective by the
Commission under the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations promulgated thereunder (collectively, the "Rules and
Regulations"), and, in the event of any amendment thereto after the effective
date and before the Closing Date (as hereinafter defined), such registration
statement as so amended (but only from and after the effectiveness of such
amendment), including a registration statement (if any)
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filed pursuant to Rule 462(b) under the Act increasing the size of the offering
registered under the Act and information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A(b)
under the Act, is hereinafter called the "Registration Statement." The
prospectus included in the Registration Statement at the time it was declared
effective by the Commission is hereinafter called the "Prospectus," except that
if any prospectus differs from the prospectus on file at the time the
Registration Statement was declared effective by the Commission, the term
"Prospectus" shall refer to such differing prospectus from and after the time
such prospectus is filed with the Commission pursuant to Rule 424(b) or from and
after the time it is first provided to the Underwriters by the Company for such
use. The term "Preliminary Prospectus" as used herein means each preliminary
prospectus included in the Registration Statement before it became effective
under the Act and any prospectus subject to completion as described in Rule 430A
under the Act contained in the Registration Statement. "Sale Preliminary
Prospectus" as used herein means the preliminary prospectus dated [-], 2006.
"Issuer Free Writing Prospectus" as used herein means any "issuer free writing
prospectus" as defined in Rule 433 under the Act relating to the Common Shares
identified on Schedule III hereto. "Disclosure Package" as used herein means the
Sale Preliminary Prospectus and any Issuer Free Writing Prospectuses. Reference
to the Registration Statement, the Prospectus, the Preliminary Prospectus and
the Sale Preliminary Prospectus include all information incorporated therein by
reference.
As part of the offering contemplated by this Agreement, ▇.▇. ▇▇▇▇▇▇▇▇ &
Co. has agreed to reserve out of the Common Shares set forth opposite its name
on Schedule I to this Agreement up to 50,000 Common Shares, for sale to parties
designated by the Company (collectively, "Participants"), as set forth in the
Preliminary Prospectus and the Prospectus under the heading
"Underwriting--Directed Share Program." The Common Shares to be sold by ▇.▇.
▇▇▇▇▇▇▇▇ & Co. pursuant to the Directed Share Program (the "Directed Shares")
will be sold by ▇.▇. ▇▇▇▇▇▇▇▇ & Co. pursuant to this Agreement at the purchase
price set forth in Section 2(a) of this Agreement. Any Directed Shares not
orally confirmed for purchase by any Participants by [the end of the first
business day after the date on which this Agreement is executed] will be offered
to the public by ▇.▇. ▇▇▇▇▇▇▇▇ & Co. as set forth in the Preliminary Prospectus
and the Prospectus.
For purposes of this Agreement, the term "Subsidiaries" refers to the
entities listed in Exhibit 21 to the Registration Statement.
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with respect to the sale of the Common Shares to the
Underwriters as follows:
1. Representations and Warranties.
A. Representations and Warranties of the Company. The Company represents and
warrants to each Underwriter as follows:
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(a) The Registration Statement has been declared effective by the
Commission under the Act. The Company has complied with all requests of the
Commission for additional or supplemental information. If the Company has
elected to rely upon Rule 430A under the Act, it will prepare and file a
prospectus pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. Copies of the
Registration Statement, each Preliminary Prospectus, and the Prospectus, any
amendments or supplements thereto, and all documents incorporated by reference
therein that were filed with the Commission on or prior to the date of this
Agreement (including one executed copy of the Registration Statement and of each
amendment thereto) have been delivered or made available to the Representatives.
(b) No order preventing or suspending the use of any Preliminary
Prospectus or any Issuer Free Writing Prospectus has been issued to the Company
by the Commission nor has the Company received notice that any proceedings have
been instituted or, to the Company's knowledge, threatened for that purpose.
(c) Each of the Sale Preliminary Prospectus and the Registration
Statement conforms and the Prospectus and any amendments or supplements to the
Registration Statement or the Prospectus will, when they become effective or are
filed with the Commission, as the case may be, conform in all respects to the
requirements of the Act and the Rules and Regulations and do not and will not,
as of the applicable effective date (as to the Registration Statement and any
amendment thereto), as of the applicable filing date (as to the Prospectus and
any amendment or supplement thereto) and as of [5:00 p.m. [Eastern Time] on the
date of this Agreement] (the "Initial Sale Time") (as to the Sale Preliminary
Prospectus and any amendment or supplement thereto) contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; as of the Initial Sale
Time, the Disclosure Package will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and each Issuer Free Writing Prospectus will not
conflict with the information contained in the Registration Statement, the Sale
Preliminary Prospectus or the Prospectus; provided that no representation or
warranty is made as to information contained in or omitted from the Registration
Statement, the Prospectus, the Sale Preliminary Prospectus or any Issuer Free
Writing Prospectus in reliance upon and in conformity with written information
furnished to the Company by the Selling Stockholders or through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein as identified in Section 11 below.
(d) At the time of the filing of the Registration Statement the Company
was not, and the Company currently is not, an "ineligible issuer," as defined in
Rule 405 under the Act. Other than written communications approved in advance by
the Representatives or listed in Schedule III hereto, the Company has not
prepared or
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used a free writing prospectus, as such term is defined in Rule 405 of the Rules
and Regulations (a "Free Writing Prospectus"), in connection with the offering
and sale of the Common Shares.
(e) There are no contracts, agreements or other documents of the
Company or any Subsidiary that are required to be described in the Sale
Preliminary Prospectus and the Prospectus or filed as exhibits to the
Registration Statement which have not been so described or filed as required by
the Act and the Rules and Regulations.
(f) There are no business relationships or related-party transactions
involving the Company or any Subsidiary or any other person required to be
described in the Sale Preliminary Prospectus and the Prospectus which have not
been described as required.
(g) The consolidated financial statements of the Company, together with
the notes thereto, filed as part of the Registration Statement or included in
the Sale Preliminary Prospectus or the Prospectus, comply in all material
respects with the requirements of the Act and the Rules and Regulations and
fairly present, in all material respects, the financial position of the Company
and its Subsidiaries as of the dates indicated and the results of operations and
changes in financial position for the periods therein specified; and said
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise stated in the related notes thereto). No
other financial statements or schedules are required to be filed as part of the
Registration Statement or included in the Sale Preliminary Prospectus or the
Prospectus. The financial information included in the Sale Preliminary
Prospectus and Prospectus under the caption "Summary Historical Financial and
Operating Data" and "Selected Historical Consolidated Financial and Operating
Data" presents fairly the information set forth therein at the dates and for the
periods indicated.
(h) ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, who has expressed its opinion with respect to
certain of the financial statements and the related notes thereto included in
the Sale Preliminary Prospectus and the Prospectus, are independent registered
public accountants with respect to the Company as required by the Act and the
Rules and Regulations.
(i) The Company and each Subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for its assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability
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for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(j) This Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the rights of creditors generally and by equitable
principles, and except as obligations of the Company under the indemnification
provisions hereof may be limited under federal or state securities laws and
public policy relating thereto.
(k) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby,
including the issuance, sale and delivery of the Common Shares by the Company,
will not (i) result in a breach or violation of any of the terms and provisions
of, or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a 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 indenture, mortgage, deed of trust, loan
agreement, note, lease or other material agreement, instrument, franchise,
license or permit to which the Company or any Subsidiary is a party or by which
it is bound, or to which any of the property or assets of the Company or any
Subsidiary is subject, or (ii) violate any judgment, decree, order, statute,
rule or regulation of any court or any governmental or regulatory agency or
body, or any arbitrator, having jurisdiction over the Company or any of its
Subsidiaries or any of their respective properties or assets, which breaches,
violations, defaults or liens would have a material adverse effect upon the
financial condition, earnings, operations, management, properties, business or
Business Prospects (as defined below) of the Company and its Subsidiaries, taken
as a whole (a "Material Adverse Effect"); or (iii) violate or conflict with any
provision of the articles or certificate of incorporation, charter, bylaws or
other governing documents of the Company or any of its Subsidiaries. No consent,
approval, authorization, order or decree of any court or governmental or
regulatory agency or body, or any arbitrator having jurisdiction over the
Company or its Subsidiaries or any of their respective properties or assets is
required for the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, except (i) such as have
been made or obtained under the Act, (ii) as may be required under state
securities or blue sky laws or (iii) such as may be required pursuant to the
rules and regulations of the National Association of Securities Dealers, Inc.
("NASD"). As used herein, "Business Prospects" refers to (a) projects included
in the Company's contract backlog as of the date hereof; and (b) projects for
which the Company has submitted bids that are pending as of the date hereof.
(l) The Common Shares have been duly authorized and, when issued and
delivered pursuant to this Agreement against payment of the consideration set
forth herein, will be validly issued and fully paid and nonassessable; the
issuance of the Common Shares is not subject to preemptive or other similar
rights and there are no
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persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, other than the Selling Stockholders
with respect to the Common Shares included in the Registration Statement, except
for such rights as have been duly waived.
(m) Other than as contemplated by this Agreement or described in each
of the Sale Preliminary Prospectus and the Prospectus, the Company has not
incurred any liability for any finder's or broker's fee or agent's commission in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.
(n) The Common Shares have been approved to be quoted on the Nasdaq
National Market.
(o) There are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision thereof,
required to be paid in connection with the execution and delivery of this
Agreement or the issuance and sale by the Company of the Common Shares.
(p) The Company has been duly organized and is validly existing as a
corporation under the laws of the State of Delaware, and is qualified to do
business and is in good standing in Texas and in each other jurisdiction in
which the ownership or leasing of properties or the conduct of its business
requires such qualification, except where failure to be so qualified would not
have a Material Adverse Effect. Each Subsidiary (other than Steel City Products,
LLC) has been duly incorporated or organized and is in good standing under the
laws of its jurisdiction of incorporation or organization and is qualified to do
business and is in good standing in each jurisdiction in which the ownership or
leasing of properties or the conduct of its business requires such
qualification, except where failure to be so qualified would not have a Material
Adverse Effect. The failure of Steel City Products, LLC to be qualified to do
business as a foreign corporation in Pennsylvania will not have a Material
Adverse Effect. The Company and its Subsidiaries have all requisite power and
authority to own their respective properties and to conduct their respective
businesses as currently being carried on and as described in the Prospectus.
(q) The authorized, issued and outstanding capital stock of the Company
is as set forth in each of the Sale Preliminary Prospectus and the Prospectus
under the captions "Capitalization" and "Description of Capital Stock" (other
than for subsequent issuances, if any, pursuant to employee benefit plans
described in the Sale Preliminary Prospectus and the Prospectus or upon exercise
of outstanding options pursuant to stock option plans or upon exercise of
warrants described in the Sale Preliminary Prospectus and the Prospectus). The
Common Stock conforms in all material respects to the description thereof
contained in each of the Sale Preliminary Prospectus and the Prospectus. All of
the issued and outstanding shares of Common Stock have been, and the shares of
Common Stock to be sold by the Selling
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Stockholders pursuant hereto, when issued pursuant to exercise of the applicable
option or warrant will be, duly authorized and validly issued, are fully paid
and nonassessable and have been issued in compliance with federal and state
securities laws. None of the outstanding shares of Common Stock were issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the Company or any
of its Subsidiaries other than those described in each of the Sale Preliminary
Prospectus and the Prospectus. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, set forth in each of the Sale Preliminary Prospectus
and the Prospectus accurately and fairly summarize, in all material respects,
such plans, arrangements, options and rights.
(r) The Company does not own or control, directly or indirectly, any
corporation, limited liability company, or other entity required to be listed in
Exhibit 21 to the Registration Statement, that is not so listed.
(s) All the outstanding shares of capital stock, membership or
partnership interests of each Subsidiary have been duly and validly authorized
and issued and are fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws and were not issued in violation of
any preemptive right, resale right, right of first refusal or similar right; and
all outstanding shares of capital stock, membership interests or partnership
interests of the Subsidiaries are owned by the Company either directly or
through wholly-owned Subsidiaries free and clear of any security interests,
claims, liens or encumbrances.
(t) Except for restrictions imposed by (i) applicable loan or credit
facilities, (ii) any bonding facility or (iii) applicable law, no Subsidiary is
currently restricted, directly or indirectly, from paying any dividends to the
Company, from making any other distribution on such Subsidiary's capital stock
or membership or partnership interests, or from repaying any loans or advances
made by the Company to such Subsidiary, and no Subsidiary is restricted from
transferring any of its property or assets to the Company.
(u) Neither the Company nor any Subsidiary is (i) in violation of its
articles or certificate of incorporation, charter, bylaws or other governing
documents, (ii) in violation of any judgment, decree, order, statue, rule or
regulation of any court or any governmental or regulatory agency or body, or any
arbitrator, having jurisdiction over the Company or any of its Subsidiaries or
any of their respective properties or assets, except for violations that,
individually or in the aggregate, would not have a Material Adverse Effect, or
(iii) in violation, breach or default of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
note, lease or other material agreement, instrument, franchise, license or
permit to which the Company or any such Subsidiary is a party
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or by which it is bound, or to which any of the property or assets of the
Company or any such Subsidiary is subject, where any such violation, breach or
default would have, individually or in the aggregate, a Material Adverse Effect.
(v) The Company and its Subsidiaries have good and marketable title in
fee simple to all real property, and good and marketable title to all items of
personal property, described as being owned by them in the Sale Preliminary
Prospectus and the Prospectus that are material to the respective businesses of
the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects, except as (i) do not materially interfere with the
current or reasonably anticipated use of such properties; (ii) described in each
of the Sale Preliminary Prospectus and the Prospectus (including pursuant to any
credit or bonding facility, or document entered into in connection therewith);
or (iii) would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect; and any real and personal property held under
leases by the Company and its Subsidiaries are held by them under valid and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use of such properties by the Company and its
Subsidiaries.
(w) Each of the Company and its Subsidiaries owns or possesses adequate
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights and know-how necessary to conduct the businesses now or
proposed to be operated by them as described in each of the Sale Preliminary
Prospectus and the Prospectus. None of the Company or its Subsidiaries has
received any notice of infringement of or conflict with (or knows of any such
infringement of or conflict with) asserted rights of others with respect to any
patents, trademarks, service marks, trade names, copyrights or know-how that, if
such assertion of infringement or conflict were sustained, would have a Material
Adverse Effect.
(x) Except to the extent that the Company is self-insured as described
in the Sale Preliminary Prospectus and the Prospectus, the Company and its
Subsidiaries have insurance coverage in such amounts and with such deductibles
and covering such risks that the Company deems to be adequate to protect the
Company and its Subsidiaries and their respective businesses and as are
customary for their respective businesses including, policies covering real and
personal property owned or leased by the Company and its Subsidiaries against
theft, damage, destruction, acts of vandalism and earthquakes, general liability
and directors' and officers' liability. The Company has no reason to believe
that it or any Subsidiary will not be able (i) to renew its existing insurance
coverage as and when such policies expire or (ii) to obtain comparable coverage
from similar institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not have a Material Adverse
Effect. Neither the Company nor any Subsidiary has been denied any insurance
coverage which it has sought or for which it has applied during the last five
years. There are no material claims by the Company or any of its Subsidiaries
under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause. The Company
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and its Subsidiaries have in effect performance and payment bonds that the
Company deems to be adequate for the conduct of their respective businesses as
currently conducted, and neither the Company nor any of its Subsidiaries has
knowledge that it will not be able to renew its existing performance and payment
bonds or obtain new bonds as may be necessary to continue its business.
(y) The Company and its Subsidiaries have filed all federal, state,
local, or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes pursuant to the Internal Revenue Code of 1986, as amended (the
"Code"), Section 59A), customs, duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax (collectively "Tax" or
"Taxes") returns, declarations, reports, claims for refund, or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof (collectively, "Tax Returns") and
have paid or made provision for the payment of all Taxes required to be paid by
any of them (whether or not shown on any Tax Return) and, if due and payable,
any related assessment, fine, penalty, or addition thereto, whether disputed or
not, and including any obligations to indemnify or otherwise assume or succeed
to the Tax liability of any other person other than those that, if not paid
would not, individually or in the aggregate, have a Material Adverse Effect. The
Company has made adequate charges, accruals and reserves in the financial
statements referred to in Section 1(g) above in respect of all Taxes for all
periods as to which the Tax liability or obligation of the Company or any of its
Subsidiaries has not been finally determined. The Company has no knowledge of
any Tax deficiency asserted or threatened against the Company that would
reasonably be expected to have a Material Adverse Effect.
(z) The Company and each of its Subsidiaries have all consents,
approvals, authorizations, orders, registrations, qualifications, certificates,
franchises, licenses and permits issued by the appropriate public, regulatory or
governmental agencies and bodies, material to the ownership of their respective
properties and conduct of their respective businesses as now being conducted and
as described in each of the Sale Preliminary Prospectus and the Prospectus. The
conduct of the business of the Company and each of the Subsidiaries is in
compliance with all applicable federal, state, local and foreign laws and
regulations, except where failure to be so in compliance would not have a
Material Adverse Effect. Neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of, or
non-compliance with, any such consents, approvals, authorizations, orders,
registrations, qualifications, certificates, franchises, licenses and permits
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would reasonably be expected to have a Material
Adverse Effect.
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(aa) Since the date as of which information was given in the Sale
Preliminary Prospectus through the date hereof, and except as otherwise
disclosed in each of the Sale Preliminary Prospectus and the Prospectus, (i)
there has been no change or development that could reasonably be expected to
have a Material Adverse Effect (a "Material Adverse Change"); (ii) there have
been no transactions entered into by the Company or its Subsidiaries which would
materially affect the Company or its Subsidiaries, taken as a whole; (iii) there
has been no dividend or distribution of any kind declared, paid or made by the
Company on its equity securities; (iv) neither the Company nor any Subsidiary
has incurred any material liabilities or obligations, indirect, direct or
contingent; and (v) there has not been (A) any issuance of warrants, convertible
securities or other rights to purchase equity securities of the Company or the
capital stock or membership or other equity interests of any Subsidiary, or (B)
any material increase in the short-term or long-term debt (including capitalized
lease obligations) of the Company or any Subsidiary, other than borrowings after
such dates under the credit facilities described in the Prospectus; except, in
the case of each of clauses (ii) and (iv), pursuant to contracts related to
construction projects awarded to the Company in the ordinary course of business.
Neither the Company nor any of its Subsidiaries has any contingent liabilities
which are not disclosed in each of the Sale Preliminary Prospectus and
Prospectus that are material to the Company and its Subsidiaries, taken as a
whole.
(bb) There is not pending or, to the knowledge of the Company,
threatened or contemplated, any investigation, action, suit or proceeding to
which the Company or any Subsidiary is a party or to which any of their assets
may be subject, before or by any court or governmental agency, authority or
body, domestic or foreign, or any arbitrator, the disposition of which,
individually or in the aggregate, would reasonably be expected to (i) have a
Material Adverse Effect, or (ii) materially and adversely affect the Company's
performance under this Agreement or the consummation of any of the transactions
contemplated hereby; and there are no current or pending actions, suits or
proceedings that are required under the Securities Act to be described in the
Sale Preliminary Prospectus and in the Prospectus that are not so described.
(cc) The Company has been advised of the rules and requirements under
the Investment Company Act of 1940, as amended (the "Investment Company Act").
None of the Company or any Subsidiary is, or after receipt of payment for the
Common Shares will be, an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act.
(dd) Neither the Company nor any of its affiliates has taken, directly
or indirectly, any action designed to cause or result in the stabilization or
manipulation of the price of the Common Stock to facilitate the sale of the
Common Shares.
(ee) Each of the Company and its Subsidiaries, and each "employee
benefit plan" (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA")) for which the Company and its Subsidiaries
or
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their "ERISA Affiliates" (as defined below) have any liability (each, a "Plan"),
are in compliance in all material respects with all applicable statutes, rules
and regulations, including ERISA and the Code. "ERISA Affiliate" means, with
respect to the Company or a Subsidiary, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Code of which the Company
or such Subsidiary is a member. With respect to each Plan subject to Title IV of
ERISA, (a) no "reportable event" (as defined in ERISA) has occurred or is
reasonably expected to occur, (b) no "accumulated funding deficiency" (within
the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived, has occurred or is reasonably expected to occur, (c) the fair market
value of the assets under each Plan exceeds the present value of all benefits
accrued under such Plan (determined based on those assumptions used to fund such
Plan), and (d) neither the Company nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under (i) Title IV of ERISA (other
than contributions to the Plan or premiums to the Pension Benefit Guaranty
Corporation in the ordinary course and without default) in respect of a Plan
(including a "multiemployer plan" within the meaning of Section 4001(c)(3) of
ERISA), or (ii) Sections 412 or 4971 of the Code. Each Plan that is intended to
be qualified under Section 401(a) of the Code is so qualified, and nothing has
occurred or is expected to occur, whether by action or by failure to act, which
would cause the loss of such qualification.
(ff) No hazardous substances, hazardous wastes, pollutants or
contaminants (i) have been released, deposited or disposed of in, on or under
any properties during the period in which the Company or any Subsidiary has
owned, leased, managed, controlled or operated such properties; or (ii) have
been released, deposited or disposed of by or on behalf of the Company in, on or
under any properties, in the case of each of clauses (i) and (ii) in violation
of any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for any
release, violation or remedial action (other than remedial actions of the type
routinely carried out at facilities of like character to those operated by the
Company and its Subsidiaries) which would not have, or would not be reasonably
expected to have, individually or in the aggregate with all such releases,
violations or remedial actions, a Material Adverse Effect.
(gg) No labor disturbance by the employees of the Company or any of its
Subsidiaries that would reasonably be expected to have a Material Adverse Effect
exists or, to the knowledge of the Company, is contemplated or threatened.
(hh) The Company has obtained for the benefit of the Underwriters the
agreement (a "Lock-Up Agreement"), in the form requested by the Underwriters, of
those individuals set forth on EXHIBIT A hereto.
(ii) The Company has established and maintains and evaluates
"disclosure controls and procedures" (as such term is defined in Rule 13a-15 (e)
under the Exchange Act of 1934, as amended (the "Exchange Act"); such disclosure
controls and
11
procedures are designed to ensure that material information relating to the
Company, and its Subsidiaries, required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is made known to the
Company's Chief Executive Officer and its Chief Financial Officer by others
within those entities, and such disclosure controls and procedures are effective
in providing reasonable assurance that material information relating to the
Company and its Subsidiaries is made known to such persons, including during the
period when the Company prepares its periodic reports to be filed with or
furnished to the Commission. The Company does not have knowledge of (a) any
material weaknesses in its internal controls over financial reporting or (b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company's internal controls.
(jj) All statistical or market-related data included in the Sale
Preliminary Prospectus or the Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate, and the Company has
obtained the written consent to the use of such data from such sources to the
extent required.
(kk) To the Company's knowledge, there are no affiliations or
associations between any member of the National Association of Securities
Dealers, Inc. (the "NASD") and any of the Company's officers, directors or 5% or
greater securityholders that are required to be described in the Sale
Preliminary Prospectus and the Prospectus and that are not so described as
required.
(ll) Neither the Company nor any of its Subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its Subsidiaries
has (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment to any government official or
employee from corporate funds; (iii) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment; or (iv) offered or caused the
Underwriters to offer any of the Common Shares to any person pursuant to the
Directed Share Program with the specific intent to unlawfully influence a
customer or supplier of the Company to alter such customer's or supplier's level
or type of business with the Company or a trade journalist or publication to
write or publish favorable information about the Company or its services.
B. Representations and Warranties of the Selling Stockholders. Each Selling
Stockholder represents and warrants, as to itself only, to each Underwriter as
follows:
(a) This Agreement has been duly executed and delivered and, with
respect to any entity, duly authorized by such Selling Stockholder and is a
valid and binding obligation of such Selling Stockholder, enforceable against
such Selling Stockholder in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, fraudulent conveyance or similar laws relating to or affecting the
rights of creditors generally
12
and by equitable principles, and except as obligations of such Selling
Stockholder under the indemnification provisions hereof may be limited under
federal or state securities laws and public policy relating thereto.
(b) The Power of Attorney and Custody Agreement signed by such Selling
Stockholder (other than ▇▇. ▇▇▇▇▇▇) and American Stock Transfer & Trust Company,
as custodian (the "Custodian"), relating to the deposit of the Common Shares to
be sold by such Selling Stockholder and appointing certain individuals named
therein as such Selling Stockholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the transactions
contemplated hereby and by the Prospectus, and, in the case of ▇▇. ▇▇▇▇▇▇, his
Power of Attorney, has been duly authorized, executed and delivered by such
Selling Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable against such Selling Stockholder in accordance with its
terms, except as enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer, fraudulent conveyance or
similar laws relating to or affecting the rights of creditors generally and by
equitable principles, and except as obligations of such Selling Stockholder
under the indemnification provisions thereof may be limited under federal or
state securities laws and public policy relating thereto.
(c) Upon valid exercise of the options or warrants owned by each
Selling Stockholder, as the case may be, pursuant to the terms of the respective
grant instruments relating to such options or warrants, and subject to payment
of the exercise price to the Company out of the proceeds of this offering, such
Selling Stockholder will be, on the Closing Date, the record and beneficial
owner of all of the Common Shares to be sold by such Selling Stockholder
pursuant to this Agreement on such date free and clear of all liens,
encumbrances or adverse claims, and the legal right, power and authority and all
authorizations and approvals required by law and under its charter or by-laws,
or other organizational documents, as applicable, to enter into this Agreement
and its Power of Attorney and Custody Agreement, to sell, transfer and deliver
the Common Shares to be sold by such Selling Stockholder pursuant to this
Agreement, and to comply with its other obligations hereunder and thereunder.
(d) On the Closing Date, such Selling Stockholder will deliver or cause
to be delivered the Common Shares to be sold by such Selling Stockholder to The
Depository Trust Company ("DTC") and will, on the Closing Date, have a security
entitlement (within the meaning of Section 8-102(a)(17) of the Uniform
Commercial Code as in effect in the State of New York (the "UCC")) to the Common
Shares to be sold by such Selling Stockholder hereunder maintained in a
securities account (within the meaning of Section 8-501 of the UCC) on the books
of DTC or its nominee free and clear of any action that may be asserted based on
an adverse claim (within the meaning of Section 8-105 of the UCC), with respect
to such security entitlement, and assuming that each Underwriter acquires its
interest in the Common Shares it has purchased without notice of any adverse
claim, upon the crediting of such Common Shares to the securities account of
such Underwriter maintained with DTC and
13
payment therefor by such Underwriter, as provided herein, such Underwriter will
have acquired a security entitlement to such Common Shares, and no action based
on any adverse claim may be asserted against such Underwriter with respect to
such security entitlement.
(e) The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, this Agreement
and the Power of Attorney and Custody Agreement will not conflict with, result
in a breach of, or constitute a default under, or require the consent of any
other party to, (i) the charter or by-laws, or other organizational documents,
of such Selling Stockholder, as applicable, or any other agreement or instrument
to which such Selling Stockholder is a party or by which it is bound or under
which it is entitled to any right or benefit, (ii) any provision of applicable
law or (iii) any judgment, order, decree or regulation applicable to such
Selling Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Stockholder. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or agency
is required for the consummation by such Selling Stockholder of the transactions
contemplated in this Agreement, except (i) such as have been obtained or made
under the Act, (ii) such as may be required under state securities or blue sky
laws and (iii) such as may be required pursuant to the rules and regulations of
the NASD.
(f) Except for the (i) consent of such Selling Stockholder to the
respective number of Common Shares to be sold by all of the Selling Stockholders
pursuant to this Agreement and (ii) waiver by certain other holders of warrants
to purchase Common Stock of certain registration rights pursuant thereto, no
consent, approval or waiver is required under any instrument or agreement to
which such Selling Stockholder is a party or by which it is bound or under which
it is entitled to any right or benefit in connection with the offering, sale or
purchase by the Underwriters of any of the Common Shares which may be sold by
such Selling Stockholder under this Agreement or the consummation by such
Selling Stockholder of any of the other transactions contemplated hereby.
(g) The information with respect to such Selling Stockholder contained
in the Registration Statement, the Prospectus or the Sale Preliminary Prospectus
(as amended, supplemented or superceded by the Prospectus), as of the applicable
date set forth in each of the Prospectus and the Sale Preliminary Prospectus,
that is in reliance upon and in conformity with information furnished to the
Company by or on behalf of such Selling Stockholder in writing (which
information is set forth on SCHEDULE 1(B)(g) hereto) does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale of the
Common Shares.
14
(i) Such Selling Stockholder does not have any registration or other
similar rights to have any equity or debt securities registered for sale by the
Company under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights that have been waived or
exercised.
(j) Such Selling Stockholder is not prompted to sell shares of Common
Stock by any information concerning the Company which is not set forth in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus.
2. Purchase, Sale and Delivery of Common Stock.
(a) On the basis of the representations, warranties and agreements
herein contained, and on the terms but subject to the conditions herein set
forth, (i) the Company agrees to issue and sell to the several Underwriters an
aggregate of 1,700,000 Common Shares and (ii) each Selling Stockholder agrees to
sell to the several Underwriters the number of Common Shares set forth opposite
such Selling Stockholder's name on SCHEDULE II, for an aggregate of 321,758
Common Shares. Each of the Underwriters agrees, severally and not jointly, to
purchase from the Company and the Selling Stockholders, the number of Firm
Common Shares set forth opposite its name on SCHEDULE I hereto. The purchase
price per share of Common Stock to be paid by the several Underwriters to the
Company and the Selling Stockholders shall be [$______]. Each Selling
Stockholder authorizes the Representatives to, and the Representatives agree
that they will, deduct from the per share purchase price payable to such Selling
Stockholder the per share exercise price of such Selling Stockholder's options
or warrant, as the case may be, as set forth on Schedule II, and pay the
aggregate exercise price to the Company on behalf of such Selling Stockholder.
(b) Delivery of the Firm Shares to be purchased by the Underwriters
against payment therefor shall be made as provided in Sections 2(d) and 2(e)
below at 7:00 a.m. Pacific time on [__________], 2006 or at such other time and
date not later than [__________], 2006 as the Representatives shall designate by
notice to the Company (or at such time and date to which payment and delivery
shall have been postponed pursuant to Section 11 hereof), such time and date of
payment and delivery being herein called the "Closing Date." If one or more of
the Selling Stockholders shall fail to sell and deliver to the Underwriters the
Common Shares to be sold and delivered by such Selling Stockholders pursuant to
this Agreement at the Closing Date, then the Underwriters shall have the right,
by written notice from the Representatives to the Company and the Selling
Stockholders, to postpone the Closing Date, but in no event for longer than
seven days in order that the required changes, if any, to the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected.
(c) In addition, on the basis of the representations, warranties and
agreements herein contained, and upon the terms but subject to the conditions
herein
15
set forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, the Optional Common Shares from the Company
at the purchase price per share to be paid by the Underwriters for the Firm
Common Shares. The option granted hereunder is for use by the Underwriters
solely in covering any over-allotments in connection with the sale and
distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time or from time to time upon notice by the Representatives to
the Company, which notice may be given at any time within 30 days from the date
of this Agreement. The time and date of delivery of the Optional Common Shares,
if subsequent to the Closing Date, is referred to herein as the "Option Closing
Date" and shall be determined by the Representatives and shall not be earlier
than three nor later than five full business days after delivery of such notice
of exercise. If any Optional Common Shares are to be purchased, each Underwriter
agrees, severally and not jointly, to purchase the number of Optional Common
Shares (subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Optional Common Shares to be purchased as the percentage set forth on
SCHEDULE I opposite the name of such Underwriter, and the Company agrees to sell
such number of Optional Common Shares to each such Underwriter. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
(d) Payment for the Common Shares to be sold by the Company shall be
made at the Closing Date (and, if applicable, at the Option Closing Date) by
wire transfer of immediately available funds to the order of the Company.
Payment for the Common Shares (subject to the deduction and payment to the
Company as set forth in the last sentence of Section 2(a) above) to be sold by
the Selling Stockholders shall be made on the Closing Date by wire transfer of
immediately available funds to the order of each Selling Stockholder. It is
understood that the Representatives have been authorized, for their own account
and the accounts of the several Underwriters, to accept delivery of and receipt
for, and make payment of the purchase price for, the Firm Common Shares and any
Optional Common Shares the Underwriters have agreed to purchase. ▇. ▇. ▇▇▇▇▇▇▇▇
& Co., individually and not as a Representative of the Underwriters, may (but
shall not be obligated to) make payment for any shares of Common Stock to be
purchased by any Underwriter whose funds shall not have been received by the
Representatives by the Closing Date or the Option Closing Date, as the case may
be, for the account of such Underwriter, but any such payment shall not relieve
such Underwriter from any of its obligations under this Agreement.
(e) Each Selling Stockholder hereby agrees that he or it will pay all
stock transfer taxes, stamp duties and other similar taxes, if any, payable upon
the sale or delivery of the Common Shares to be sold by such Selling Stockholder
to the several Underwriters, or otherwise in connection with the performance of
such Selling Stockholder's obligations hereunder.
(f) The Company and the Selling Stockholders shall deliver, or cause to
be delivered, a credit representing the Firm Common Shares to an account or
16
accounts at DTC, as designated by the Representatives for the accounts of the
Representatives and the several Underwriters at the Closing Date, against the
irrevocable release of a wire transfer of immediately available funds for the
amount of the purchase price therefor. The Company also shall deliver, or cause
to be delivered, a credit representing the Optional Common Shares that the
Underwriters have agreed to purchase at the Closing Date (or the Option Closing
Date, as the case may be), to an account or accounts at DTC as designated by the
Representatives for the accounts of the Representatives and the several
Underwriters, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. Time shall be of
the essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of each Underwriter hereunder.
(g) Not later than 12:00 noon on the second business day following the
date the shares of Common Stock are released by the Underwriters for sale to the
public, the Company shall deliver or cause to be delivered copies of the
Prospectus in such quantities and at such places as the Representatives shall
reasonably request.
3. Offering by the Underwriters.
The Representatives hereby advise the Company and the Selling
Stockholders that the Underwriters intend to offer for sale to the public, as
described in the Prospectus, their respective portions of the Firm Common Shares
(and Optional Common Shares, as the case may be) as soon after this Agreement
has been executed and the Registration Statement has been declared effective as
the Representatives, in their sole judgment, have determined is advisable and
practicable.
4. Covenants.
A. Covenants of the Company.
The Company covenants and agrees with the several Underwriters as
follows:
(a) The Company will notify the Representatives promptly (i) of the
time when the Registration Statement or any post-effective amendment to the
Registration Statement has become effective; (ii) any supplement to the
Prospectus or the Sale Preliminary Prospectus has been filed; (iii) of the
receipt of any comments from the Commission; and (iv) of any request by the
Commission for any amendment or supplement to the Registration Statement,
Prospectus or the Sale Preliminary Prospectus or additional information. If the
Company has elected to rely on Rule 430A of the Rules and Regulations, the
Company will prepare and file a Prospectus containing the information omitted
therefrom pursuant to Rule 430A with the Commission within the time period
required by, and otherwise in accordance with the provisions of, Rules 424(b)
and 430A, if applicable. If the Company has elected to rely upon Rule 462(b) of
the Rules and Regulations to increase the size of the offering registered under
the Act, the Company will prepare and file a registration
17
statement with respect to such increase with the Commission within the time
period required by, and otherwise in accordance with the provisions of, Rule
462(b). The Company will not file any amendment or supplement to the
Registration Statement, Prospectus or the Sale Preliminary Prospectus which is
not in compliance with Sections 424(b), 430A or 434 of the Act or to which the
Representatives shall reasonably object by notice to the Company after having
been furnished a copy thereof a reasonable time prior to the filing.
(b) The Company will advise the Representatives, promptly after the
Company receives notice or obtains knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Common Shares for
offering or sale in any jurisdiction or quoted for trading on the Nasdaq
National Market, or of the initiation or, to the Company's knowledge,
threatening of any proceeding for any such purpose; and the Company will use its
best efforts to prevent the issuance of any stop order or suspension or to
obtain its withdrawal if such a stop order or suspension should be issued.
(c) During the period beginning on the Initial Sale Time and ending on
the later of the Closing Date or such date, as in the opinion of the
Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Distribution Period"),
the Company will comply with all requirements imposed upon it by the Act, as now
and hereafter amended, and by the Rules and Regulations, as from time to time in
effect, so far as necessary to permit the sale and distribution of the Common
Shares by the Underwriters as contemplated by the provisions hereof and the
Prospectus. If, during the Distribution Period the Sale Preliminary Prospectus
is being used to solicit offers to purchase Common Shares at a time when the
Prospectus is not yet available and any event shall occur or condition exist as
a result of which it is necessary to amend or supplement the Sale Preliminary
Prospectus in writing in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if, in the
opinion of counsel for the Underwriters, it is necessary to amend or supplement
the Sale Preliminary Prospectus to comply with applicable law, the Company shall
promptly prepare, file with the Commission and furnish, at its own expense, to
the Underwriters and to any dealer upon request, either amendments or
supplements to the Sale Preliminary Prospectus so that the statements in the
Sale Preliminary Prospectus as so amended or supplemented will not, in the light
of the circumstances when the Sale Preliminary Prospectus is delivered to a
prospective purchaser, be misleading or so that the Sale Preliminary Prospectus,
as amended or supplemented, will comply with applicable law. If during the
Distribution Period any event occurs, or fails to occur, as a result of which,
in the judgment of the Company or in the opinion of the Representatives, (i) the
Prospectus would include an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or (ii) it becomes necessary to
amend the Registration Statement or supplement the Prospectus to comply with the
Act, then the Company will promptly notify the Representatives
18
and will prepare and file with the Commission, and furnish at its own expense to
the Underwriters, an amendment to the Registration Statement or supplement to
the Prospectus so that the Prospectus as so amended or supplemented will not, in
the light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with the Act.
(d) The Company shall cooperate with the Representatives and counsel
for the Underwriters in endeavoring to qualify the Common Shares for offering
and sale under (or obtain exemptions from the application of) the applicable
securities laws of such states and other jurisdictions of the United States as
the Representatives may reasonably designate; provided that no such
qualification shall be required in any jurisdiction where, as a result thereof,
the Company would become subject to service of general process, to qualification
to do business as a foreign entity, to registration as a securities dealer or to
taxation as a foreign corporation. In each jurisdiction in which the Common
Shares have been so qualified, the Company will file such statements and reports
as may be required to be filed by it by the laws of such jurisdiction to
continue such qualification in effect so long as required for the distribution
of such securities.
(e) During the Distribution Period, the Company shall furnish to the
Underwriters copies of (i) the Registration Statement as originally filed
(including all exhibits filed therewith), each amendment thereto (without
exhibits) and (ii) each of the Preliminary Prospectuses, the Prospectus and all
amendments and supplements thereto, in each case as soon as available and, with
respect to the documents in clause (ii), in such quantities as the
Representatives may from time to time reasonably request.
(f) For a period of two years commencing with the date hereof, the
Company will furnish to the Representatives copies of all documents, reports and
other information furnished by the Company to the holders of its Common Stock
generally except, in each case, if available on the Commission's Electronic Data
Gathering, Analysis and Retrieval System.
(g) The Company shall make generally available to holders of the Common
Stock as soon as practicable, but in any event not later than 18 months after
the "effective date of the Registration Statement" (as defined in Rule 158(c))
of the Rules and Regulations), an earnings statement (which need not be audited)
complying with Section 11(a) of the Act and the Rules and Regulations
(including, at the option of the Company, Rule 158).
(h) The Company shall apply the net proceeds received by it from the
sale of the Common Shares for the purposes set forth in the Prospectus under the
caption "Use of Proceeds," including the repayment in full, on or promptly
following the Closing Date, of the Company's five year 12% promissory notes
described under the caption "Certain Transactions -- Contemplated Transactions"
in the Registration Statement.
19
(i) The Company shall not take, directly or indirectly, prior to the
termination of the offering contemplated by this Agreement, any action designed
to or which might reasonably be expected to cause or result in the stabilization
or manipulation of the price of the Common Stock to facilitate the sale or
resale of the Common Shares.
(j) For so long as the shares of Common Stock sold in the offering
contemplated by this Agreement are listed on the Nasdaq National Market or a
comparable securities exchange or market, the Company shall engage and maintain
a registrar and transfer agent for the Common Stock.
(k) The Company shall file, on a timely basis, with the Commission all
reports and documents required to be filed under the Exchange Act during the
Distribution Period.
(l) For a period of 120 days after the date of the Prospectus (the
"Lock-Up Period") the Company shall not, without the prior written consent of
▇.▇. ▇▇▇▇▇▇▇▇ & Co., (1) sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of or
agree to dispose of, directly or indirectly, any Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock or warrants or
other rights to purchase Common Stock or any other securities of the Company
that are substantially similar to Common Stock, or enter into a transaction that
would have the same effect; or enter into any swap, hedge or other arrangement
that transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such aforementioned transaction is to
be settled by delivery of the Common Stock or such other securities, in cash or
otherwise; (2) publicly disclose the intention to make any such offer, sale,
hypothecation, pledge, grant or disposition, or to enter into any such
transaction, swap, hedge or other arrangement; or (3) file or cause to be
declared effective a registration statement under the Act relating to the offer
and sale of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock or warrants or other rights to
purchase Common Stock or any other securities of the Company that are
substantially similar to Common Stock; provided, however, that the foregoing
restrictions do not apply to (i) the registration of the Common Shares and the
sales thereof to the Underwriters pursuant to this Agreement, (ii) issuances of
Common Stock upon the exercise of options or warrants disclosed as outstanding
in the Registration Statement and the Prospectus, and (iii) the grant of
employee stock options not exercisable during the Lock-Up Period pursuant to
stock option plans and described in the Registration Statement and the
Prospectus; provided, further, that, if (x) within 15 days of the expiration of
the Lock-Up Period, the Company issues an earnings release or discloses material
news, or a material event relating to the Company occurs, or (y) before the
expiration of the Lock-Up Period, the Company announces that it will release
earnings results during the 15-day period beginning on the last day of the
Lock-Up Period, then in any such case the restrictions imposed by this Section
4A(m) shall continue to apply until the
20
expiration of the 15-day period beginning on the issuance of the earnings
release, the disclosure of the material news or the occurrence of the material
event; provided, moreover, that the foregoing clause shall not apply if the
Company delivers to ▇.▇. ▇▇▇▇▇▇▇▇ & Co., not sooner than 18 nor later than 16
days before the last day of the Lock-Up Period, a certificate, signed by the
chief financial officer or chief executive officer of the Company, certifying on
behalf of the Company that the shares of Common Stock are not an "actively
traded securities," as defined in Rule 101(c)(1) of Regulation M under the
Exchange Act.
(m) The Company will direct the transfer agent to place stop transfer
restrictions upon any such securities of the Company that are bound by existing
Lock-Up Agreements for the duration of the periods contemplated in such
agreements.
(n) The Company shall not, without the prior written consent of the
Underwriters, prepare or use a Free Writing Prospectus in connection with the
offering and sale of the Common Shares or take any actions that would require
the Company or the Underwriters to file a Free Writing Prospectus pursuant to
Rule 433 of the Rules and Regulations. The Company and the Underwriters each
represent and agree that any such Free Writing Prospectus is listed on Schedule
III. The Company has complied and will comply with the requirements of Rule 433
under the Act applicable to any Issuer Free Writing Prospectus, including timely
filing with the Commission, or retention where required, and legending. The
Company agrees that if at any time following issuance of an Issuer Free Writing
Prospectus any event occurred or occurs as a result of which such Issuer Free
Writing Prospectus would conflict with the information in the Registration
Statement, the Sale Preliminary Prospectus or the Prospectus or would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances then
prevailing, not misleading, the Company will give prompt notice thereof to the
Representatives and, if requested by the Representatives, will prepare and
furnish without charge to each Underwriter an Issuer Free Writing Prospectus or
other document which will correct such conflict, statement or omission;
provided, however, that this representation and warranty shall not apply to any
statements or omissions in an Issuer Free Writing Prospectus made in reliance
upon and in conformity with information furnished in writing to the Company by
an Underwriter expressly for use therein as identified in Section 12 below.
B. Covenants of the Selling Stockholders. Each Selling Stockholder further
covenants and agrees with each Underwriter that:
(a) Such Selling Stockholder shall deliver to the Representatives prior
to the Closing Date a properly completed and executed United States Treasury
Department Form W-9.
(b) During the Distribution Period, such Selling Stockholder will
advise ▇.▇. ▇▇▇▇▇▇▇▇ & Co. promptly, and if requested by ▇.▇. ▇▇▇▇▇▇▇▇ & Co.,
will confirm such advice in writing, of any change in information relating to
such Selling
21
Stockholder in the Registration Statement, the Prospectus or any Free Writing
Prospectus or any amendment or supplement thereto.
(c) Such Selling Stockholder agrees that it will not prepare or have
prepared on its behalf or use or refer to, any Free Writing Prospectus, and
agrees that it will not distribute any written materials in connection with the
offer or sale of the Common Shares.
C. Covenant of the Underwriters. Each Underwriter agrees that, without the prior
written consent of the Company, it will not make any offer relating to the
Common Shares that would constitute a Free Writing Prospectus required to be
filed by the Company or the Underwriters with the Commission or retained by the
Company under Rule 433 of the Act. The Company and the Underwriters each
represent and agree that any such Free Writing Prospectus, the use of which has
been consented to by the Company and the Underwriters, is listed on Schedule
III.
5. Costs and Expenses.
(a) If the sale of Firm Common Shares is consummated, then ▇.▇.
▇▇▇▇▇▇▇▇ & Co. shall be entitled to receive from the Company, for itself alone
and not as representatives of the several Underwriters, a non-accountable
expense allowance of one hundred thousand dollars ($100,000). The
Representatives shall be entitled to withhold this allowance on the Closing Date
with respect to shares of Common Stock delivered by the Company on the Closing
Date.
(b) Whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, the Company will pay or cause to be
paid all costs, fees and expenses incident to the performance of its obligations
hereunder, including, without limitation, (i) all expenses (including transfer
taxes allocated to the respective transferees) incurred in connection with the
issuance, transfer and delivery of the Common Shares; (ii) all expenses and fees
(including fees and expenses of the Company's accountants and counsel but,
except as otherwise provided below, not including fees and expenses of the
Underwriters' counsel) in connection with the preparation, printing, filing,
delivery and shipping of the Registration Statement, each Preliminary
Prospectus, the Prospectus; (iii) all filing fees and reasonable fees and
disbursements of the Underwriters' counsel incurred in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) the Common Shares for offering and sale by the Underwriters or
by dealers under the securities or blue sky laws of the states and other
jurisdictions which the Representatives shall designate; (iv) the fees and
expenses of the transfer agent and registrar; (v) the filing fees incident to,
and the reasonable fees and expenses of counsel for the Underwriters in
connection with, any required review by the NASD of the terms of the sale of the
Common Shares; and (vi) fees incurred to quote the Common Shares for trading on
the Nasdaq National Market. Whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, each Selling
Stockholder will pay or cause to be paid
22
(i) any fees and expenses of counsel for such Selling Stockholder and (ii) all
expenses and taxes incident to the sale and delivery of the Common Shares by
such Selling Stockholder.
(c) Except as provided in this Section 5, Section 7, and Section 9(b),
the Underwriters will pay all of their own costs and expenses, including,
without limitation, transfer taxes on the resale of any shares of Common Stock
by the Underwriters and any advertising expenses incurred in connection with any
offers that they may make.
(d) If the sale of the Common Stock provided for herein is not
consummated for any reason, then the Company shall either (i) reimburse the
Underwriters for all out-of-pocket disbursements (including, without limitation,
reasonable fees and disbursements of counsel for the Underwriters) incurred by
the Underwriters in connection with their investigation, preparing to market and
marketing the Common Stock or in contemplation of performing their obligations
hereunder, or (ii) pay the Representatives the non-accountable expense allowance
of one hundred thousand dollars ($100,000), whichever is less.
6. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters to purchase and pay for
the Firm Common Shares as provided herein on the Closing Date and, with respect
to the Optional Common Shares, the Option Closing Date, are subject to the
accuracy of the Company's and the Selling Stockholders' representations and
warranties set forth in Section 1 hereof, as of the date hereof and at the
Closing Date (as if made at the Closing Date) and, with respect to the Optional
Common Shares, as of the Option Closing Date (as if made at the Option Closing
Date), to the timely performance by the Company and the Selling Stockholders of
their respective covenants and other obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective prior to the
execution of this Agreement or at such later time and date as the
Representatives shall have approved in writing, and all filings required by
Rules 424 and 430A of the Rules and Regulations shall have been timely made; no
stop order suspending the effectiveness of the Registration Statement or any
amendment thereof shall have been issued and no proceedings for the issuance of
such an order shall have been initiated or, to the knowledge of the Company or
any Representative, threatened; and the NASD shall have raised no objection to
the fairness and reasonableness of the underwriting terms and arrangements.
(b) Between the date hereof and the Closing Date (or the Option Closing
Date, as the case may be), no Material Adverse Change shall have occurred or
become known to the Company that, in the Representatives' judgment, makes it
impracticable or inadvisable to proceed with the public offering of the Common
Shares as contemplated by the Prospectus.
23
(c) The Representatives shall have received, on the Closing Date and
the Option Closing Date, as the case may be, (i) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ LLP,
counsel for the Company, substantially in the form of EXHIBIT B attached hereto,
and (ii) an opinion of ▇▇▇▇▇ ▇▇▇▇▇▇, the Company's General Counsel,
substantially in the Form of EXHIBIT C attached hereto, each of which opinions
shall be dated the Closing Date and the Option Closing Date, as the case may be,
and addressed to the Underwriters. On the Closing Date the Representatives shall
have received the favorable opinion of the respective counsel for each of the
Selling Stockholders as set forth on Schedule II, dated as of such Closing Date,
the forms of which are attached as EXHIBITS D-1 AND D-2, as applicable.
(d) The Representatives shall have received, on the Closing Date and
the Option Closing Date, as the case may be, an opinion from Stoel Rives LLP,
counsel for the Underwriters, dated the Closing Date and the Option Closing
Date, as the case may be, and addressed to the Underwriters, as to such matters
as the Underwriters may reasonably request.
(e) The Representatives shall have received, on (i) the date hereof,
(ii) the Closing Date and (iii) the Option Closing Date, as the case may be, a
letter from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent certified public accountants, dated
no more than one business day prior to the date hereof and three business days
prior to the Closing Date and the Option Closing Date, as the case may be, and
addressed to the Underwriters, in the form previously agreed with the
Representatives.
(f) The Representatives shall have received, on the Closing Date and
the Option Closing Date, as the case may be, a certificate of the Company, dated
the Closing Date or the Option Closing Date, as the case may be, signed by the
Chief Executive Officer and the Chief Financial Officer of the Company, to the
effect that:
(i) the representations and warranties of the Company set
forth in Section 1(A) of this Agreement are true and correct, as if made on and
as of the Closing Date or the Option Closing Date, as the case may be, and the
Company has complied with all of the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to the Closing Date or the
Option Closing Date, as the case may be; and
(ii) for the period from and after the date hereof and prior
to the Closing Date, there has not occurred any Material Adverse Change.
(g) The Common Shares to be sold hereunder shall have been approved for
quotation on the Nasdaq National Market, subject only to official notice of
issuance.
(h) The Representatives and counsel for the Underwriters shall have
received, on or before each of the Closing Date and the Option Closing Date, as
the case may be, such information, documents and opinions as they may reasonably
24
require for the purposes of enabling them to pass upon the issuance and sale of
the Common Shares as contemplated herein, or in order to evidence the accuracy
of any of the representations and warranties or the satisfaction of any of the
conditions or agreements, herein contained.
(i) On the Closing Date the Representatives shall receive a written
certificate executed by each Selling Stockholder, dated as of such Closing Date,
to the effect that:
(i) the representations, warranties and covenants of such
Selling Stockholder set forth in Section 1(B) of this Agreement are
true and correct with the same force and effect as though expressly
made by such Selling Stockholder on and as of the Closing Date; and
(ii) such Selling Stockholder has complied with all of the
agreements and satisfied all the conditions on its, his or her part to
be performed or satisfied at or prior to the Closing Date.
(j) On or prior to the date hereof, the Company and the Selling
Stockholders shall have furnished for review by the Representatives copies of
the Power of Attorney and Custody Agreements executed by each of the Selling
Stockholders and such further information, certificates and documents as the
Representatives may reasonably request.
(k) On or prior to the date hereof, the Company shall have furnished to
the Representatives lock-up agreements in a form acceptable to the Underwriters
from each individual set forth on EXHIBIT A hereto, and each such agreement
shall be in full force and effect on each of the Closing Date and the Option
Closing Date.
If any condition specified in this Section 6 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the Closing
Date and, with respect to the Optional Common Shares, at any time prior to the
Option Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 5, Section 7 and Section 8
shall at all times be effective and shall survive such termination.
All opinions, certificates, letters and other documents delivered
pursuant to this Section 6 will be in compliance with the provisions hereof only
if they are satisfactory in form and substance to the reasonable judgment of the
Representatives.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold each Underwriter, its
officers and employees, and each person, if any, who controls any Underwriter
within the meaning of the Act, harmless against any losses, claims, damages,
liabilities or expenses ("Losses"), to which such Underwriter may become subject
under the Act or
25
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such Losses (or
actions in respect thereof) arise out of or are based (i) upon an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any Issuer
Free Writing Prospectus, Preliminary Prospectus or the Prospectus, or any
amendment or supplement thereto, or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent that
any such Losses arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by the Representatives, on behalf of the Underwriters,
specifically for use in the preparation thereof, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in Section 11 below; provided, further, that with
respect to any untrue statement in or omission from a Preliminary Prospectus,
the foregoing indemnity shall not inure to the benefit of any Underwriter to the
extent that the sale to the person asserting any such Loss was an initial resale
by such Underwriter and (i) the untrue statement in or omission from such
Preliminary Prospectus was corrected in either a subsequent Preliminary
Prospectus or the Prospectus (referred to as a "Correcting Prospectus") and (ii)
a copy of the Correcting Prospectus was not delivered by or on behalf of such
Underwriter to such person unless, (x) such failure by such Underwriter to
deliver the Correcting Prospectus was a result of non-compliance by the Company
with the provisions of Section 4(A) hereof or (y) such Underwriter had entered
into a contract of sale with such person for Common Shares prior to the time the
Correcting Prospectus was delivered by the Company to such Underwriter. The
Company and the Selling Stockholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of liability for which each shall be responsible.
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold each Underwriter, its officers and employees, and each
person, if any, who controls any Underwriter within the meaning of the Act,
harmless against any Losses to which such Underwriter may become subject under
the Act or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Selling Stockholder),
insofar as such Losses (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, Issuer Free Writing Prospectus, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
26
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, Issuer Free Writing
Prospectus, any Preliminary Prospectus, the Prospectus, in reliance upon and in
conformity with written information furnished to the Company by such Selling
Stockholder, specifically for use in the preparation thereof, it being
understood and agreed upon that the only such information furnished by any
Selling Stockholder consists of the information set forth opposite such Selling
Stockholder's name on Schedule 1(B)(g) hereto; provided, however, that with
respect to any untrue statement in or omission from a Preliminary Prospectus,
the foregoing indemnity shall not inure to the benefit of any Underwriter to the
extent that the sale to the person asserting any such Loss was an initial resale
by such Underwriter and (i) the untrue statement in or omission from such
Preliminary Prospectus was corrected in a Correcting Prospectus and (ii) a copy
of the Correcting Prospectus was not delivered by or on behalf of such
Underwriter to such person unless (x) such failure by such Underwriter to
deliver the Correcting Prospectus was a result of non-compliance by the Company
with the provisions of Section 4(A) hereof or (y) such Underwriter had entered
into a contract of sale with such person for Common Shares prior to the time the
Correcting Prospectus was delivered by the Company to such Underwriter;
provided, further, that the aggregate liability under this subsection and
subsection 7(g) below of each Selling Stockholder shall be limited to an amount
equal to the aggregate gross proceeds after underwriting commissions and
discounts, but before expenses, to such Selling Stockholder from the sale of
Common Shares sold by such Selling Stockholder hereunder.
(c) Each Underwriter agrees, severally but not jointly, to indemnify
and hold the Company, its directors, officers and employees, the Selling
Stockholders, and each person, if any, who controls the Company or any Selling
Stockholder within the meaning of the Act, harmless from and against any Losses
to which any such person may become subject, under the Act or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Representatives), insofar as such Losses (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any Issuer Free Writing Prospectus, Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Issuer Free Writing Prospectus, Preliminary
Prospectus, the Prospectus, in reliance upon and in conformity with written
information furnished to the Company by the Representatives on behalf of such
Underwriter, specifically for use in the preparation thereof, it being
understood and agreed upon that the only such information furnished by any
Underwriter consists of the information described as such in Section 11 below.
27
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a), (b) or (c) above, notify the
indemnifying party in writing of the commencement thereof; but the failure to so
notify the indemnifying party shall not relieve the indemnifying party from any
liability that it may have to any indemnified party (i) unless and to the extent
the failure results in the forfeiture by the indemnifying party of substantial
rights and defenses, (ii) for contribution or (iii) otherwise than under this
Section 7. In case any such action shall be brought against any indemnified
party, and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the extent
that it shall elect, jointly with any other indemnifying party similarly
notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or 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 such indemnified party of
the indemnifying party's election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under the
subsection for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation 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 reasonable expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party (▇.▇. ▇▇▇▇▇▇▇▇ & Co. in the case of
subsection (c) above) representing the indemnified parties who are parties to
such action); (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action; or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party, in each of which
cases the reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.
(e) The indemnifying party under this Section 7 shall not be liable for
any settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld, but if settled with such consent or
if there be a
28
final non-appealable judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party against any Losses by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement, compromise or consent to the entry of judgment
in any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes (x) an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding and (y) does not include a statement as to an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.
(f) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold an indemnified party harmless under
subsection (a), (b) or (c) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
Losses referred to in subsection (a), (b) or (c) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders, on the one hand, and the Underwriters, on the other hand,
from the offering of the Common Shares, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, then in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Selling
Stockholders, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions that resulted in such Losses, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders, on the one hand, and the
Underwriters, on the other hand, shall be deemed to be in the same respective
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Selling Stockholders, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.
The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this subsection
(f) were to be determined by pro rata allocation or by any other method of
allocation which does not take account the equitable considerations referred to
in the first paragraph of this subsection (f). The amount paid by an indemnified
party as a result of the Losses referred to in the first paragraph of this
subsection (f) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim which is the subject of this subsection (f).
Notwithstanding the provisions of this subsection (f), no Underwriter
29
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Common Shares purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (f) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(g) The obligations of the Company and the Selling Stockholders under
this Section 7 shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have, including liability for Losses incurred
by any Underwriter, its officers and employees that arise out of or are based in
whole or in part upon (i) any inaccuracy in the representations and warranties
of the Company contained herein (as to the Company) or of each Selling
Stockholder contained herein (as to such Selling Stockholder) or (ii) the
failure of the Company to perform its obligations hereunder or under law (as to
the Company) or the failure of a Selling Stockholder to perform its obligations
hereunder or under law (as to such Selling Stockholder) and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act. The obligations of the Underwriters
under this Section 7 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
or her 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 Act.
(h) Any Losses for which an indemnified party is entitled to
indemnification or contribution under this Section 7 shall be paid by the
indemnifying party to the indemnified party as such Losses are incurred, but in
all cases, no later than thirty (30) days after receipt of an invoice by the
indemnifying party.
(i) The Company agrees to indemnify and hold harmless ▇.▇. ▇▇▇▇▇▇▇▇ &
Co. and each person, if any, who controls ▇.▇. ▇▇▇▇▇▇▇▇ & Co. within the meaning
of the Act or the Exchange Act, from and against any and all Losses caused by
any untrue statement or alleged untrue statement of a material fact contained in
any material prepared by, or with the consent of, the Company for distribution
to Participants in connection with the Directed Share Program, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading.
(j) The parties to this Agreement hereby acknowledge that they are
sophisticated business entities that were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 7 fairly allocate
the risks in
30
the 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.
8. Representations and Agreements to Survive Delivery.
All representations, warranties and agreements of the Company and the
Selling Stockholders herein or in certificates delivered pursuant hereto, and
the agreements of the Company, the Selling Stockholders and the Underwriters
contained in Section 7 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof, the Company or any of its officers, directors
or controlling persons, or the Selling Stockholders, and shall survive delivery
of, and payment for, the Common Shares to and by the Underwriters hereunder and
any termination of this Agreement. A successor to any Underwriter, or to the
Company, its directors or officers, or any person controlling the Company, or
the Selling Stockholders shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in Section 7.
9. Termination.
(a) The Representatives shall have the right to terminate this
Agreement, by notice as hereinafter specified, at any time at or prior to the
Closing Date or, in the case of the Optional Common Shares, prior to the Option
Closing Date (i) there shall have occurred a Material Adverse Change (regardless
of whether any loss associated with such Material Adverse Change shall have been
insured) or development involving a prospective Material Adverse Change that, in
the judgment of the Representatives, makes it impracticable or inadvisable to
market the Common Shares in the manner and on the terms described in the
Prospectus or to enforce contracts for the sale of the Common Shares; (ii) if
there has occurred an outbreak or escalation of hostilities between the United
States and any foreign power, an outbreak or escalation of any insurrection or
armed conflict involving the United States, or any other calamity or crisis, or
material adverse change or development in political, financial or economic
conditions having an effect on the U.S. financial markets that, in the judgment
of the Representatives, makes it impracticable or inadvisable to market the
Common Shares in the manner and on the terms described in the Prospectus or to
enforce contracts for the sale of the Common Shares; or (iii) if trading in the
Common Stock has been suspended or limited by the Commission or the Nasdaq
National Market, or if trading in securities generally on either the New York
Stock Exchange or the Nasdaq National Market has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by the Nasdaq National Market or by
order of the Commission or any other governmental authority, or the NASD, or;
(iv) if a general banking moratorium has been declared by federal, Delaware, or
New York authorities.
31
(b) If this Agreement is terminated pursuant to this Section 9 or
Section 10, such termination shall be without liability of (i) the Company and
the Selling Stockholders to any Underwriter, except as provided in Section 5
hereof; (ii) any Underwriter to the Company or the Selling Stockholders, or
(iii) of any party hereto to any other party except that the provisions of
Section 7 shall at all times be effective and shall survive such termination.
10. Default By the Underwriters.
(a) If any Underwriter or Underwriters shall default in their
obligations to purchase the Common Shares which they have agreed to purchase
hereunder, the Representatives may in their discretion arrange for the purchase
of such Common Shares by themselves or another party or other parties on the
terms contained herein. If within thirty-six hours after such default by any
Underwriter, the Representatives do not arrange for the purchase of such Common
Shares, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties reasonably
satisfactory to the Representatives to purchase such Common Shares on such
terms. In the event that, within the respective prescribed periods, the
Representatives notify the Company that they have so arranged for the purchase
of such Common Shares, or the Company notifies the Representatives that it has
so arranged for the purchase of such Common Shares, the Representatives or the
Company shall have the right to postpone the Closing Date for a period of not
more than seven 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 to file promptly any
amendments to the Registration Statement or the Prospectus which in the opinion
of the Representatives may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to this Agreement
with respect to such Common Shares. The foregoing shall not relieve any
defaulting Underwriter from liability for its default.
(b) If, after giving effect to any arrangements for the purchase of the
Common Shares of a defaulting Underwriter or Underwriters by the Representatives
and the Company as provided in subsection (a) above, the aggregate number of
shares of such Common Shares which remains unpurchased does not exceed 10% of
the aggregate number of shares of all the Common Shares, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the number
of shares of Common Shares which such Underwriter agreed to purchase hereunder
and, in addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the aggregate number of Common Shares which such
Underwriter agreed to purchase hereunder) of the Common Shares of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve any defaulting Underwriter from liability
for its default.
32
(c) If, after giving effect to any arrangements for the purchase of the
Common Shares of a defaulting Underwriter or Underwriters by the Representatives
and the Company as provided in subsection (a) above, the aggregate number of
Common Shares which remains unpurchased exceeds 10% of the aggregate number of
all of the Common Shares to be purchased, or if the Company shall not exercise
the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Common Shares of the defaulting Underwriter or
Underwriters, then this Agreement shall thereupon terminate, without liability
on the part of any non-defaulting Underwriter or the Company, except for the
expenses to be borne by the Company and the Underwriters as provided in Section
5 hereof and the indemnity and contribution agreements in Section 7 hereof, but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
11. Information Furnished by Underwriters.
The Company and the Selling Stockholders hereby acknowledge that the
only information that the Underwriters have furnished to the Company expressly
for use in the Registration Statement, any Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto) are the statements set forth
under the caption "Underwriting" in the Prospectus; and the Underwriters confirm
that such statements are correct.
12. Notices.
Except as otherwise provided herein, all communications hereunder shall
be in writing and shall be mailed or delivered:
If to the Representatives:
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Syndicate Department
with a copy to:
Stoel Rives LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
If to the Company:
Sterling Construction Company, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
33
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Selling Stockholders:
To the address listed below each Selling
Stockholder's name on Schedule II
Any party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for
such purpose.
13. Persons Entitled to Benefit of Agreement.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns and the controlling
persons, officers and directors referred to in Section 7. Nothing in this
Agreement is intended or shall be construed to give to any other person any
legal or equitable remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Common Shares
from the Underwriters.
14. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to any provisions
relating to conflicts of laws.
15. Severability.
The invalidity or unenforceability of any section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other section, paragraph or provision hereof. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such changes as are necessary to
make it valid and enforceable.
16. General Provisions.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
34
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may not be amended or modified unless in writing by all
of the parties hereto (it being understood that execution by the Representatives
of any such amendment or modification shall constitute execution by the
Underwriters), and no condition herein (express or implied) may be waived unless
waived in writing by each party whom the condition is meant to benefit. Nothing
herein contained shall constitute any of the Underwriters an unincorporated
association or partner with any other Underwriter or with the Company or any
Selling Stockholder. The Company and the Selling Stockholders acknowledge and
agree that each Underwriter in providing investment banking services to the
Company and the Selling Stockholders in connection with the offering, including
acting pursuant to the terms of this Agreement, has acted and is acting as an
independent contractor and not as a fiduciary and the Company and the Selling
Stockholders do not intend such Underwriter to act in any capacity other than
independent contractor, including as a fiduciary or in any other position of
higher trust. The Company and the Selling Stockholders hereby waive and release,
to the fullest extent permitted by law, any claims that the Company and the
Selling Stockholders may have against the several Underwriters with respect to
any breach or alleged breach of agency or fiduciary duty in connection with the
transactions contemplated hereby.
17. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
35
Please sign and return to the Company and the Custodian the enclosed
duplicates of this letter whereupon this letter will become a binding agreement
in accordance with its terms.
Very Truly Yours,
STERLING CONSTRUCTION COMPANY, INC.
By
-----------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
SELLING STOCKHOLDERS
(Named on Schedule II hereto)
By
-----------------------------------------
Print Name:
----------------------------
Attorney-in-Fact
Accepted as of the date hereof.
▇.▇. ▇▇▇▇▇▇▇▇ & CO.
By:
------------------------------
Name:
------------------------
Title:
------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO., INC.
By:
------------------------------
Name:
------------------------
Title:
------------------------
For themselves and on behalf of the several Underwriters listed in
Schedule I hereto.
36
SCHEDULE I
Percentage of
Total Number of Firm Optional
Common Shares Common Shares
Underwriter To Be Purchased To Be Purchased
----------- -------------------- ---------------
▇.▇. ▇▇▇▇▇▇▇▇ & Co. ......................................________. __%
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. ................................________. __%
Total ..................................2,021,758 100%
37
SCHEDULE II
Total Number of
Shares of
Common Stock Per Share Aggregate Proceeds
Selling Stockholder To Be Sold Counsel Exercise Price Exercise Price (Net)
------------------- ---------- ------- -------------- -------------- --------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇...................... 180,492 ▇▇▇▇▇▇▇ LLP * * _____
KTI, Inc.
c/o Casella Waste Systems, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Rutland, VT 05701........................ 100,000 Esq. $1.50 $150,000 _____
▇▇▇▇▇ ▇▇▇▇▇▇▇
14 Highland Green ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
The Woodlands, TX 77380.................. 41,266 ▇▇▇▇▇▇ P.C. $1.50 $61,899 _____
TOTAL ................. 321,758
* Per Share Exercise Price of ▇▇. ▇▇▇▇▇▇' options set forth below:
PER
SHARE AGGREGATE
EXERCISE EXERCISE
SHARES PRICE PRICE
------ -------- ---------
14,996 $2.750 $41,239.00
14,996 $2.750 $41,239.00
3,000 $2.750 $8,250.00
3,000 $2.750 $8,250.00
3,000 $3.375 $10,125.00
3,000 $1.219 $3,657.00
3,000 $1.000 $3,000.00
100,000 $0.875 $87,500.00
18,500 $0.875 $16,187.50
12,000 $1.500 $18,000.00
5,000 $5.000 $25,000.00
------- ----------
TOTAL: 180,492 $262,447.50
38
SCHEDULE III
Issuer Free Writing Prospectuses
Electronic roadshow made available by means of graphic communication on a
limited password-protected basis through ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, including written
communication made available only as part of such roadshow and not separately.
EXHIBIT A
INDIVIDUALS EXECUTING
LOCK-UP AGREEMENTS
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Maarten ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, Jr.
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
North Atlantic Smaller Companies Investment Trust plc
EXHIBIT B
FORM OF OPINION OF
▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
1. The Company is validly existing as a corporation in good standing under the
laws of the State of Delaware, with the corporate power and corporate authority
to own or lease its properties and conduct its business as described in the
Registration Statement, the Disclosure Package and the Prospectus, to execute
and deliver the Underwriting Agreement and to issue, sell and deliver the
Securities as contemplated in the Underwriting Agreement.
2. (a) Each Subsidiary is validly existing as a corporation (or, as to TSC, is
validly existing as a limited partnership; or, as to SCPL, is validly existing
as a limited liability company) in good standing under the laws of its
jurisdiction of incorporation or formation, with corporate (or, as applicable,
limited partnership or limited liability company) power and corporate (or, as
applicable, limited partnership or limited liability company) authority to own
or lease its properties and to conduct its business as described in the
Registration Statement, the Disclosure Package and the Prospectus. (b) SGI is
duly qualified to do business as a foreign corporation in the State of Texas.
(c) Neither the Company nor SHH is required to be qualified to do business as a
foreign corporation in the State of Texas.
3. The Underwriting Agreement has been duly authorized, executed and delivered
by or on behalf of the Company.
4. The issuance and sale of the Securities have been duly authorized, and the
Securities, when issued and delivered against payment therefor in accordance
with the Underwriting Agreement, will be validly issued, fully paid and
nonassessable.
5. The Securities are not entitled to any preemptive rights, rights of first
refusal or other similar rights to subscribe for or to purchase Common Stock of
the Company under the Company Certificate of Incorporation or Company Bylaws,
the General Corporation Law of the State of Delaware (the "DGCL") or any
Applicable Agreement.
6. The Company has an authorized capitalization as set forth in the Preliminary
Prospectus and the Prospectus under the heading "Description of Capital Stock."
All of the shares of capital stock of the Company that were both issued from and
after June 27, 1995 and are currently outstanding have been duly authorized and
validly issued and are fully paid and nonassessable.
7. The holders of outstanding shares of Common Stock are not entitled to any
preemptive rights, rights of first refusal or other similar rights to subscribe
for or to purchase Common Stock of the Company under the Company Certificate of
Incorporation or Company Bylaws, the DGCL or any Applicable Agreement, except
for those Applicable Agreements set forth as Exhibits 4.2 and 10.44 to the
Registration Statement.
8. The Common Stock, including the Securities, conforms as to legal matters to
the description thereof contained in the Preliminary Prospectus and the
Prospectus under the heading "Description of Capital Stock."
9. All of the equity interests (a) of SHH that were both issued from and after
July 18, 2001 and are currently outstanding, (b) of SCPL that were both issued
from and after June 27, 1995 and are currently outstanding and (c) of SGI, OMI
and OHI that are issued and outstanding, have been duly authorized and validly
issued and are fully paid and nonassessable (except to the extent that such
nonassessability may be affected by Section 6.07 of the Texas Revised Limited
Partnership Act or Section 18-607 of the Delaware Limited Liability Company Act
(the "DLLCA")) and, except as otherwise stated in the Registration Statement,
the Disclosure Package and the Prospectus, are owned directly or indirectly by
the Company, and all of the limited partner and general partner interests in the
limited partnership that is a Subsidiary are owned by other Subsidiaries.
10. Each of the Registration Statement, the Disclosure Package and the
Prospectus (other than the financial statements, the notes and schedules
thereto, and the other financial, statistical or accounting data included
therein or excluded therefrom or in or from the exhibits to the Registration
Statement, as to which we express no opinion) as of the respective effective or
issue dates thereof, in each case, appeared on its face to be appropriately
responsive in all material respects to the requirements of the Securities Act
and the Rules and Regulations, except that in each case, we express no opinion
as to Regulation S-T. We do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Disclosure Package and the Prospectus, except and to the extent
set forth in paragraph 8 above and paragraph 14 below with respect to those
statements made under the captions referred to in such paragraphs.
11. No Governmental Approval, which has not been obtained or made and is not in
full force and effect, is required to authorize, or is required for, (a) the
execution and delivery by the Company of the Underwriting Agreement, (b) the
issuance and sale of the Securities pursuant to the Underwriting Agreement or
(c) the prepayment of the promissory notes referred to in Section 4(A)(h) of the
Underwriting Agreement. As used in this paragraph, "Governmental Approval" means
any consent, approval, license, authorization or validation of, or filing,
recording or registration with, any executive, legislative, judicial,
administrative or regulatory body of the State of Texas, the State of Delaware
or the United States of America, pursuant to (i) applicable laws of the State of
Texas, (ii) applicable laws of the United States of America, (iii) the DGCL or
(iv) the DLLCA.
12. The execution and delivery and performance of the Underwriting Agreement by
the Company (other than performance by the Company of its obligations under the
indemnification section of the Underwriting Agreement, as to which no opinion is
rendered) and the issuance and sale of the Securities by the Company do not and
will not (a) constitute a violation of the Company Certificate of Incorporation
or Company Bylaws, (b) result in any breach or violation of any of the terms or
provisions of, or constitute a default under (nor constitute any event which
with notice, lapse of time or both would result in any breach or violation of or
constitute a default under) any Applicable Agreement or (c) constitute a
violation of (i) any applicable law or (ii) any administrative or court order to
which the Company or any Subsidiary is bound and that is known to us.
13. The Company is not and, after giving effect to the offering and sale of the
Securities, will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
14. The statements in the Registration Statement, the Disclosure Package and the
Prospectus under the headings "Business--Government and Environmental
Regulation," "Management--Employment Contracts; Termination of Employment; and
Change-in-Control Arrangements," "Securities Eligible for Future Sale" and under
the heading "Item 14--Indemnification of Directors and Officers" of the
Registration Statement, insofar as such statements constitute summaries of legal
documents or legal matters, fairly summarize such legal documents and legal
matters in all material respects in accordance with the requirements applicable
to the Registration Statement, the Disclosure Package and the Prospectus,
subject to the qualifications and assumptions stated therein.
In addition, we have participated in conferences with officers and
other representatives of the Company, the independent registered public
accounting firm for the Company, your counsel and your representatives at which
the contents of the Registration Statement, the Disclosure Package and the
Prospectus and related matters were discussed and, although we have not
independently verified and are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Disclosure Package and the
Prospectus (except as and to the extent set forth in paragraphs 0 and 0 above),
on the basis of the foregoing (relying with respect to factual matters to the
extent we deem appropriate upon statements by officers and other representatives
of the Company), no facts have come to our attention that have led us to believe
that (i) the Registration Statement, at the time it became effective, contained
an untrue statement of a material fact or omitted to state any material fact
required to
be stated therein or necessary to make the statements therein not misleading;
(ii) the Prospectus, as of its date and as of the date hereof, contained or
contains an untrue statement of a material fact or omitted or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) as of the
Initial Sale Time (as defined in the Underwriting Agreement) (which you have
informed us is a time prior to the time of the first sale of the Securities by
any Underwriter), the Disclosure Package contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, it being understood
that we express no statement or belief with respect to (i) the financial
statements and related schedules, including the notes and schedules thereto and
the auditor's report thereon, (ii) any other financial or accounting data
included in the Registration Statement, the Disclosure Package or the Prospectus
or excluded therefrom, (iii) representations and warranties and other statements
of fact included in the exhibits to the Registration Statement [and (iv) the
exclusion from the Disclosure Package of any pricing information (and directly
related disclosure) included in the Prospectus].
We hereby confirm to you that, without having made any investigation or
inquiry, attorneys working on matters related to the sale of the Securities do
not have actual knowledge that (a) there are any actions or proceedings against
the Company or any Subsidiary, pending or overtly threatened in writing, before
any court, governmental agency or arbitrator which (i) seek to affect the
enforceability of the Underwriting Agreement or (ii) are required to be
described in the Disclosure Package and the Prospectus, and are not so described
or (b) the equity interests of each Subsidiary are not owned by the Company or
another Subsidiary, as applicable, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or pending or threatened claim, except as
otherwise described in the Registration Statement, Disclosure Package and
Prospectus.
Furthermore, we advise you that we have been orally advised by the SEC
that (a) the Registration Statement was declared effective under the Securities
Act on January [__], 2006 and (b) no stop order suspending the effectiveness of
the Registration Statement has been issued. To our knowledge based solely upon
such oral communication with the SEC, no proceedings for that purpose have been
instituted or are pending or threatened by the SEC. Furthermore, the Prospectus
was filed with the Commission pursuant to Rule 424 under the Act on January
[__], 2006. The Common Stock has been accepted for quotation on the Nasdaq
National Market.
EXHIBIT C
FORM OF OPINION OF
▇▇▇▇▇ ▇▇▇▇▇▇
1. To my knowledge, there are no:
(a) transactions between the Company and its directors, executive
officers, principal stockholders, or any member of the immediate family
of any of the foregoing,
(b) business relationships between the Company and any director or
nominee for director,
(c) off-balance sheet transactions, or
(d) contracts, licenses, agreements, leases or documents,
in each case of a character or materiality that are required to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement that have not been so
described or filed.
2. To my knowledge, there are no actions, suits, claims, investigations or
proceedings pending, threatened or contemplated to which the Company or any
Subsidiary or any of their respective directors or officers is or would be a
party or to which any of their respective properties is or would be subject at
law or in equity, before or by any federal, state, local or foreign governmental
or regulatory commission, board, body, authority or agency which are required to
be described in the Registration Statement or the Prospectus but are not so
described.
3. Except for such rights as have been complied with or waived, I have no
knowledge of any person having the right to cause the Company to include in the
offering contemplated by the Prospectus any shares of Common Stock or other
securities of the Company.
4. The repayment by the Company of its five-year 12% promissory notes as
described in the Registration Statement under the heading "Certain
Transactions--Contemplated Transactions," does not
(a) violate the Company's certificate of incorporation or bylaws;
(b) breach, or result in a default under, any existing obligation of
the Company known to me under any agreement or instrument to which the
Company is a party; or
(c) breach or otherwise violate any existing obligation of the Company
known to me under any court order that names the Company and is
specifically directed to it or its property, except in each case as
consented to or waived in writing by the parties to whom such
obligations are due.
5. The statements in the Registration Statement, the Disclosure Package
(as defined in the Underwriting Agreement) and the Prospectus under the headings
"Certain Transactions" and under the heading "Item 15--Recent Sales of
Unregistered Securities" of the Registration Statement, insofar as such
statements constitute summaries of legal documents or legal matters, fairly
summarize such legal documents and legal matters in all material respects in
accordance with the requirements applicable to the Registration Statement, the
Disclosure Package and the Prospectus, subject to the qualifications and
assumptions stated therein.
In addition, I have participated in certain conferences with officers and other
representatives of the Company, the independent registered public accounting
firm for the Company, your counsel and your representatives at which the
contents of the Registration Statement, the Disclosure Package and the
Prospectus and related matters were discussed and, although I have not
independently verified and am not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Disclosure Package and the
Prospectus (except as and to the extent set forth in paragraph 5 above), on the
basis of the foregoing (relying with respect to factual matters to the extent I
deem appropriate upon statements by officers and other representatives of the
Company), no facts have come to my attention that have led me to believe that
(i) the Registration Statement, at the time it became effective, contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; (ii) the Prospectus, as of its date and as of the date hereof,
contained or contains an untrue statement of a material fact or omitted or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; or (iii)
at the Initial Sale Time (which you have informed me is a time prior to the time
of the first sale of the Securities by any Underwriter), the Disclosure Package
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, it being understood that I express no statement or belief with
respect to (i) the financial statements and related schedules, including the
notes and schedules thereto and the auditor's report thereon, (ii) any other
financial or accounting data included in the Registration Statement, the
Disclosure Package or the Prospectus or excluded therefrom, (iii)
representations and warranties and other statements of fact included in the
exhibits to the Registration Statement [and (iv) the exclusion from the
Disclosure Package of any pricing information (and directly related disclosure)
included in the Prospectus].
EXHIBIT D-1 AND D-2
FORM OF OPINION OF
COUNSEL TO SELLING STOCKHOLDERS
EXHIBIT D-1
OPINION RE ENTITY SELLING STOCKHOLDER:
1. The Underwriting Agreement has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, the Selling Stockholder,
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except that we give no opinion with respect to the indemnification
provisions thereof.
2. The execution and delivery by the Selling Stockholder of, and the
performance by the Selling Stockholder of its obligations under, the
Underwriting Agreement and the Custody Agreement will not, contravene or
conflict with, result in a breach of, or constitute a default under (a) the
charter or by-laws, partnership agreement, trust agreement or other
organizational documents, as the case may be, of the Selling Stockholder or (b)
to our knowledge any provision of applicable federal or [state] law or
regulation, or violate, result in a breach of or constitute a default under the
terms of any other agreement or instrument to which the Selling Stockholder is a
party or by which it is bound, or any judgment, order or decree applicable to
the Selling Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Selling
Stockholder.
3. The Selling Stockholder has the legal right and power, and all authorizations
and approvals required under its charter and by-laws, or other organizational
documents, as the case may be, to enter into the Underwriting Agreement and the
Custody Agreement and grant the Power of Attorney, to sell, transfer and deliver
all of the Shares which may sold by the Selling Stockholder under the
Underwriting Agreement and to comply with its other obligations under the
Underwriting Agreement and Custody Agreement.
4. The Custody Agreement has been duly authorized, executed and delivered by the
Selling Stockholder and, assuming due authorization, execution and delivery by
the other parties thereto, is a valid and binding agreement of the Selling
Stockholder, enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether such
enforceability is considered in a proceeding in equity or at law) and except
that we give no opinion with respect to the indemnification provisions thereof.
5. Upon payment for the Shares to be sold by the Selling Stockholder as provided
in the Underwriting Agreement, delivery of such Shares as directed by the
Underwriters, to Cede & Co. or such other nominee as may be designated by The
Depository Trust Company ("DTC"), registration of such Shares in the name of
Cede & Co. or such other nominee and the crediting of such Shares on the records
of DTC to securities accounts of the Underwriters (the "DTC Securities
Accounts"), assuming that neither DTC nor the Underwriters have notice of any
adverse claim (as determined pursuant to Section 8-105 of the Uniform Commercial
Code as in effect in the state of New York (the "UCC") to such Shares, (i) DTC
shall be a "protected purchaser" of such Shares within the meaning of Section
8-303 of the UCC, (ii) under Section 8-501 of the UCC, the Underwriters will
acquire security entitlements in respect of such Shares and (iii) no action
based on any "adverse claim" (as defined in Section 8-102 of the UCC) to such
Shares may be asserted against the Underwriters with respect to such security
entitlements.
6. To the best of our knowledge, no consent, approval, authorization or other
order of, or registration or filing with, any federal or [State] court or
governmental authority or agency, is required for the consummation by the
Selling Stockholder of the transactions contemplated in the Underwriting
Agreement, except as required under the Act, applicable state securities or blue
sky laws, and from the NASD.
EXHIBIT D-2
OPINION RE INDIVIDUAL SELLING STOCKHOLDER:
1. The Underwriting Agreement has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, the Selling Stockholder,
enforceable against him/her in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except that we give no opinion with respect to the indemnification
provisions thereof.
2. The execution and delivery by the Selling Stockholder of, and the
performance by the Selling Stockholder of his/her obligations under, the
Underwriting Agreement and the Custody Agreement will not, to our knowledge (a)
contravene or conflict with, result in a breach of, or constitute a default
under any provision of applicable federal or New York law or regulation, or (b)
violate, result in a breach of or constitute a default under the terms of any
other agreement or instrument to which the Selling Stockholder is a party or by
which he/she is bound, or any judgment, order or decree applicable to the
Selling Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Selling
Stockholder.
3. The Selling Stockholder has the legal right and power to enter into the
Underwriting Agreement and the Custody Agreement and grant the Power of
Attorney, to sell, transfer and deliver all of the Shares which may sold by the
Selling Stockholder under the Underwriting Agreement and to comply with his/her
other obligations under the Underwriting Agreement and Custody Agreement.
4. The Custody Agreement has been duly authorized, executed and delivered by the
Selling Stockholder and, assuming due authorization, execution and delivery by
the other parties thereto, is a valid and binding agreement of the Selling
Stockholder, enforceable against him/her in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws relating to or
affecting creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except that we give no opinion with respect to the
indemnification provisions thereof.
5. Upon payment for the Shares to be sold by the Selling Stockholder as provided
in the Underwriting Agreement, delivery of such Shares as directed by the
Underwriters, to Cede & Co. or such other nominee as may be designated by The
Depository Trust Company ("DTC"), registration of such Shares in the name of
Cede & Co. or such other nominee and the crediting of such Shares on the records
of DTC to securities accounts of the Underwriters (the "DTC Securities
Accounts"), assuming that neither DTC nor the Underwriters have notice of any
adverse claim (as determined pursuant
to Section 8-105 of the Uniform Commercial Code as in effect in the state of New
York (the "UCC") to such Shares, (i) DTC shall be a "protected purchaser" of
such Shares within the meaning of Section 8-303 of the UCC, (ii) under Section
8-501 of the UCC, the Underwriters will acquire security entitlements in respect
of such Shares and (iii) no action based on any "adverse claim" (as defined in
Section 8-102 of the UCC) to such Shares may be asserted against the
Underwriters with respect to such security entitlements.
6. To the best of our knowledge, no consent, approval, authorization or other
order of, or registration or filing with, any federal or New York court or
governmental authority or agency, is required for the consummation by the
Selling Stockholder of the transactions contemplated in the Underwriting
Agreement, except as required under the Act, applicable state securities or blue
sky laws, and from the NASD.