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EXHIBIT 1.0
1,100,000 SHARES OF COMMON STOCK
LEISURE TIME CASINOS & RESORTS, INC.
UNDERWRITING AGREEMENT
________, 1999
▇▇▇▇▇▇▇▇▇ Securities, Inc.
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▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Leisure Time Casinos & Resorts, Inc., a Colorado corporation (the
"Company") hereby confirms its agreement with you (who are sometimes hereinafter
referred to as the "Representative") and with the other members of the
underwriting group (the "Underwriters") named on Schedule 1 hereto as follows:
1. Introductory. Subject to the terms and conditions herein contained, the
Company proposes to sell to the several Underwriters an aggregate of 1,100,000
shares (the "Firm Shares") of the Company's Common Stock, par value $.001 per
share (the "Common Stock"). The Company also proposes to sell to the several
Underwriters not more than 165,000 additional shares of Common Stock (15% of the
number of shares constituting the Firm Shares) if requested by the
Representatives as provided in Section 3 of this Agreement. Any and all shares
of Common Stock to be purchased by the Underwriters pursuant to such option are
referred to herein as the "Additional Shares." The Firm Shares and any
Additional Shares are collectively referred to herein as the "Shares."
2. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, each of the Underwriters that:
a. The Company has filed with the Commission a registration statement, and
may have filed one or more amendments thereto, on Form S-1 (Registration
No. 333-______), including in such registration statement and each such
amendment a facing sheet, the information called for by Part I, audited
consolidated financial statements for the past three fiscal years or such
other period as may be appropriate, the information called for by Part II,
the undertakings to deliver certificates, file reports and file
post-effective amendments, the required signatures, consents of experts,
exhibits, a related preliminary prospectus (a "Preliminary Prospectus") and
any other information or documents which are required for the registration
of the Shares, and the warrants referred to in Section 2(n) (the
"Representative's Warrants") and the shares referred to in Section 2(n) and
Section 5(p) purchasable upon exercise of the Representative's
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Warrants (the "Representative's Warrant Shares"), under the Securities Act
of 1933, as amended (the "Act"). As used in this Agreement, the term
"Registration Statement" means such registration statement, including
incorporated documents, all exhibits and consolidated financial statements
and schedules thereto, as amended, when it becomes effective, and shall
include the information with respect to the Shares, the Representative's
Warrants, and the Representative's Warrant Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the General Rules and Regulations
promulgated under the Act (the "Regulations"), which information is deemed
to be included therein when it becomes effective as provided by Rule 430A;
the term "Preliminary Prospectus" means each prospectus included in the
Registration Statement, or any amendments thereto, before it becomes
effective under the Act and any prospectus filed by the Company with the
consent of the Representative pursuant to Rule 424(a) of the Regulations;
and the term "Prospectus" means the final prospectus included as part of
the Registration Statement, except that if the prospectus relating to the
securities covered by the Registration Statement in the form first filed on
behalf of the Company with the Commission pursuant to Rule 424(b) of the
Regulations shall differ from such final prospectus, the term "Prospectus"
shall mean the prospectus as filed pursuant to Rule 424(b) from and after
the date on which it shall have first been used.
b. When the Registration Statement becomes effective, and at all times
subsequent thereto, to and including the Closing Date (as defined in
Section 3) and each Additional Closing Date (as defined in Section 3), and
during such longer period as the Prospectus may be required to be delivered
in connection with sales by the Representative or any dealer, and during
such longer period until any post-effective amendment thereto shall become
effective, the Registration Statement (and any post-effective amendment
thereto) and the Prospectus (as amended or as supplemented if the Company
shall have filed with the Commission any amendment or supplement to the
Registration Statement or the Prospectus) will contain all statements which
are required to be stated therein in accordance with the Act and the
Regulations, will comply with the Act and the Regulations, and will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and no event will have occurred which
should have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not then been set forth
in such an amendment or supplement; and no Preliminary Prospectus, as of
the date filed with the Commission, included any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; except
that no representation or warranty is made in this Section 2(b) with
respect to statements or omissions made in reliance upon
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and in conformity with written information furnished to the Company as
stated in Section 8(b) with respect to the Underwriters by or on behalf of
the Underwriters expressly for inclusion in any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto.
c. Neither the Commission nor the "blue sky" or securities authority of any
jurisdiction have issued an order (a "Stop Order") suspending the
effectiveness of the Registration Statement, preventing or suspending the
use of any Preliminary Prospectus, the Prospectus, the Registration
Statement, or any amendment or supplement thereto, refusing to permit the
effectiveness of the Registration Statement, or suspending the registration
or qualification of the Shares, the Representative's Warrants, and the
Representative's Warrant Shares, nor has any of such authorities instituted
or threatened to institute any proceedings with respect to a Stop Order.
d. Any contract, agreement, instrument, lease, or license required to be
described in the Registration Statement or the Prospectus has been properly
described therein. Any contract, agreement, instrument, lease, or license
required to be filed as an exhibit to the Registration Statement has been
filed with the Commission as an exhibit to or has been incorporated as an
exhibit by reference into the Registration Statement.
e. The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Colorado, with full power and
authority, and all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and declarations and
filings with, all federal, state, local, and other governmental authorities
and all courts and other tribunals, to own, lease, license, and use its
properties and assets and to carry on the business in the manner described
in the Prospectus. Each of the Subsidiaries of the Company (the
"Subsidiaries") is a corporation duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization, with
full corporate power and authority to own, lease, and operate its
properties and to conduct its business as described in the Prospectus. The
Company and each Subsidiary is duly qualified to do business and is in good
standing in every jurisdiction in which its ownership, leasing, licensing,
or use of property and assets or the conduct of its business makes such
qualifications necessary. The Company has no Subsidiaries except as
disclosed in the Prospectus.
f. The authorized capital stock of the Company consists of 45,000,000
shares of Common Stock, of which 6,018,334 shares of Common Stock are
issued and outstanding, 5,536,751 shares of Common Stock are reserved for
issuance upon the exercise of currently outstanding options and warrants,
2,302,700 shares of Common Stock are reserved for issuance upon the
exercise of the remaining options authorized under the Company's option
plan; and 5,000,000 shares of Preferred Stock, none of which are issued or
outstanding. Each outstanding share of
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Common Stock is validly authorized, validly issued, fully paid, and
nonassessable, without any personal liability attaching to the ownership
thereof, and has not been issued and is not owned or held in violation of
any preemptive rights of stockholders. There is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other right
calling for the issuance of, any share of capital stock of the Company or
any security or other instrument which by its terms is convertible into,
exercisable for, or exchangeable for capital stock of the Company, except
as set forth above, and as may be properly described in the Prospectus.
g. The consolidated financial statements of the Company included in the
Registration Statement and the Prospectus fairly present with respect to
the Company the consolidated financial position, the results of operations,
and the other information purported to be shown therein at the respective
dates and for the respective periods to which they apply. Such consolidated
financial statements have been prepared in accordance with generally
accepted accounting principles, except to the extent that certain footnote
disclosures regarding any stub period may have been omitted in accordance
with the applicable rules of the Commission under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), consistently applied
throughout the periods involved, are correct and complete, and are in
accordance with the books and records of the Company. The accountants whose
reports on the audited consolidated financial statements are filed with the
Commission as a part of the Registration Statement are, and during the
periods covered by their reports included in the Registration Statement and
the Prospectus were, independent certified public accountants with respect
to the Company within the meaning of the Act and the Regulations. No other
financial statements are required by Form S-1 or otherwise to be included
in the Registration Statement or the Prospectus. There has at no time been
a material adverse change in the consolidated financial condition, results
of operations, business, properties, assets, liabilities, or future
prospects of the Company from the latest information set forth in the
Registration Statement or the Prospectus, except as may be properly
described in the Prospectus.
h. There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, or, to the
knowledge of the Company, threatened, or in prospect with respect to the
Company or any of its Subsidiaries, operations, businesses, properties, or
assets, except as may be properly described in the Prospectus or such as
individually or in the aggregate do not now have and will not in the future
have a material adverse effect upon the operations, business, properties,
or assets of the Company. The Company and each Subsidiary is not in
violation of, or in default with respect to, any law, rule, regulation,
order, judgment, or decree except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in the
future have a material adverse
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effect upon the operations, business, properties, or assets of the Company,
nor is the Company required to take any action in order to avoid any such
violation or default.
i. The Company has good and marketable title in fee simple absolute to all
real properties and good title to all other properties and assets which the
Prospectus indicates are owned by it, free and clear of all liens, security
interests, pledges, charges, encumbrances, and mortgages except as may be
properly described in the Prospectus or such as in the aggregate do not now
have and will not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company. No real
property owned, leased, licensed, or used by the Company lies in an area
which is, or to the knowledge of the Company will be, subject to zoning,
use, or building code restrictions which would prohibit, and no state of
facts relating to the actions or inaction of another person or entity or
his or its ownership, leasing, licensing, or use of any real or personal
property exists or will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the business
of the Company as presently conducted or as the Prospectus indicates it
contemplates conducting, except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in the
future have a material adverse effect upon the operations, business,
properties, or assets of the Company.
j. Neither the Company nor any other party is now or is expected by the
Company to be in violation or breach of, or in default with respect to
complying with, any material provision of any contract, agreement,
instrument, lease, license, arrangement, or understanding which is material
to the Company, and each such contract, agreement, instrument, lease,
license, arrangement, and understanding is in full force and is the legal,
valid, and binding obligation of the parties thereto and is enforceable as
to them in accordance with its terms. The Company enjoys peaceful and
undisturbed possession under all leases and licenses under which it is
operating. The Company is not a party to or bound by any contract,
agreement, instrument, lease, license, arrangement, or understanding, or
subject to any charter or other restriction, which has had or may in the
future have a material adverse effect on the financial condition, results
of operations, business, properties, assets, liabilities, or future
prospects of the Company. The Company and each of the Subsidiaries is not
in violation or breach of, or in default with respect to, any term of its
Articles of Incorporation (or other charter document) or by-laws.
k. All patents, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, franchises, technology, know-how
and other intangible properties and assets (all of the foregoing being
herein called "Intangibles") that the Company owns or has pending, or under
which it is licensed, are in good standing and uncontested. Except as
otherwise disclosed in the Registration Statement, the Intangibles are
owned by the Company,
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free and clear of all liens, security interests, pledges, and encumbrances.
The Company has filed an application with the United States Patent and
Trademark Office to register "Leisure Time Casinos & Resorts" as a
registered trademark. There is no right under any Intangible necessary to
the business of the Company as presently conducted or as the Prospectus
indicates it contemplates conducting (except as may be so designated in the
Prospectus). The Company has not infringed, is not infringing, and has not
received notice of infringement with respect to asserted Intangibles of
others. To the knowledge of the Company, there is no infringement by others
of Intangibles of the Company. To the knowledge of the Company, there is no
Intangible of others which has had or may in the future have a materially
adverse effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company.
l. Neither the Company nor any of the Subsidiaries, nor any director,
officer, agent, employee, or other person associated with or acting on
behalf of the Company has, directly or indirectly: used any corporate funds
for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended by the
International Anti-Bribery Act of 1998; or made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment. Each of the Company
and the Subsidiaries has not accepted any material advertising allowances
or marketing allowances from suppliers to the Company and, to the extent
any advertising allowance has been accepted, the Company has provided
proper documentation to the supplier with respect to advertising as to
which the advertising allowance has been granted.
m. The Company has all requisite power and authority to execute and
deliver, and to perform thereunder each of this Agreement and the
Representative's Warrants. All necessary corporate proceedings of the
Company have been duly taken to authorize the execution and delivery, and
performance thereunder by the Company of this Agreement and the
Representative's Warrants. This Agreement has been duly authorized,
executed, and delivered by the Company, is a legal, valid, and binding
obligation of the Company, and is enforceable as to the Company in
accordance with its terms. The Representative's Warrants have been duly
authorized by the Company and, when executed and delivered by the Company,
will each be a legal, valid, and binding obligation of the Company, and
will be enforceable against the Company in accordance with its respective
terms. No consent, authorization, approval, order, license, certificate, or
permit of or from, or declaration or filing with, any federal, state,
local, or other governmental authority or any court or other tribunal is
required by the Company for the execution and delivery, or performance
thereunder by the Company of this Agreement or
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the Representative's Warrants except filings under the Act which have been
or will be made before the Closing Date and such consents consisting only
of consents under "blue sky" or securities laws which are required in
connection with the transactions contemplated by this Agreement and which
have been obtained at or prior to the date of this Agreement. No consent of
any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party, or to which
any of its properties or assets are subject, is required for the execution
or delivery, or performance thereunder of this Agreement or the
Representative's Warrants; and the execution and delivery, and performance
thereunder of this Agreement and the Representative's Warrants will not
violate, result in a breach of, conflict with, or (with or without the
giving of notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract, agreement, instrument,
lease, license, arrangement, or understanding, or violate or result in a
breach of any term of the Articles of Incorporation or by-laws of the
Company, or violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the Company or to which
any of its operations, businesses, properties, or assets are subject.
n. The Shares, the Representative's Warrants and the Representative's
Warrant Shares are validly authorized and reserved for issuance. The
Shares, when issued and delivered in accordance with this Agreement and the
Representative's Warrant Shares, when issued and delivered upon exercise of
the Representative's Warrants, and upon payment of the exercise price
therefor, will be validly issued, fully paid, and nonassessable, without
any personal liability attaching to the ownership thereof, and will not be
issued in violation of any preemptive rights of stockholders, and the
Underwriters will receive good title to the Shares purchased, the
Representative will receive good title to the Representative's Warrants
purchased and any purchaser of the Representative `s Warrant Shares will
receive good title thereto, all such title free and clear of all liens,
security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts.
o. The Shares, the Representative's Warrants and the Representative's
Warrant Shares conform to all statements relating thereto contained in the
Registration Statement and the Prospectus.
p. Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as may otherwise
be properly described in the Prospectus, the Company has not (i) issued any
securities or incurred any liability or obligation, primary or contingent,
for borrowed money, (ii) entered into any transaction not in the ordinary
course of business, or (iii) declared or paid any dividend on its capital
stock.
q. Neither the Company nor any of its officers, directors, or affiliates
(as defined in the Regulations), has taken or will take, directly or
indirectly, prior to the termination of the
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distribution of securities contemplated by this Agreement, any action
designed to stabilize or manipulate the price of any security of the
Company, or which has caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or
resale of the Shares.
r. The Company has not incurred any liability for a fee, commission, or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement.
s. The Company has obtained from each officer, director and person or
entity that beneficially owns the Company's capital stock or derivative
securities convertible into shares of the Company's capital stock his, her
or its enforceable written agreement that for a period of 12 months from
the Effective Date, he, she or it will not, without the Representative's
prior written consent, offer, pledge, sell, contract to sell, grant any
option for the sale of, enter into any swap or other arrangement that
transfers all or a portion of the economic consequences associated with the
ownership of the Company's capital stock, or otherwise dispose of, directly
or indirectly, any shares of capital stock or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for shares of Common Stock (except that, subject to compliance
with applicable securities laws, any such officer, director or stockholder
may transfer his or her stock pursuant to a bona fide gift or gifts,
provided that any such transferee shall agree, as a condition to such
transfer, to be bound by the restrictions set forth in this Agreement and
further provided that the transferor, except in the case of the
transferor's death, shall continue to be deemed the beneficial owner of
such shares in accordance with Regulation 13d-(3) of the Exchange Act).
Notwithstanding the foregoing, commencing 180 days after the Effective
Date, the stockholders of the Company who are not officers or directors of
the Company shall have the right to sell up to 20% of the shares of Common
Stock owned by them, up to a maximum aggregate amount of 150,000 shares of
Common Stock, through and until expiration of the 12 month restriction
provided herein. Any such sales will comply with applicable exemptions from
the registration requirements of the Act. For a period of three (3) years,
commencing (i) six months from the Effective Date, with respect to sales by
stockholders that are not officers or directors of the Company, and (ii) 12
months from the Effective Date with respect to sales by officers or
directors of the Company, all public sales of the Company's securities by
officers, directors and stockholders of the Company shall be effected
through or with the Representative on an exclusive basis, provided that the
Representative offers the best price reasonably available to the selling
holders. Public or private sales of Common Stock by such persons shall not
include gifts, intra-family transfers or transfers for estate planning
purposes, which shall be exempt from the foregoing provisions. The Company,
on behalf of
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itself, and all officers, directors and holders of five percent or more of
the Common Stock of the Company, have provided the Representative their
enforceable written agreements not to sell, transfer, or hypothecate
capital stock or derivative securities of the Company through a "Regulation
S" transaction for a minimum period of five years from the Effective Date
without the prior written consent of the Representative, and the Company
has provided the Representative with the Company's enforceable written
agreement not to sell capital stock or derivative securities of the Company
through a "Regulation D" transaction for a minimum period of 24 months from
the Effective Date.
t. Except as otherwise provided in the Registration Statement, no person or
entity has the right to require registration of shares of Common Stock or
other securities of the Company because of the filing or effectiveness of
the Registration Statement.
u. The Company is eligible to use Form S-1 for registration of the Shares,
the Representative's Warrants and the Representative's Warrant Shares.
v. No unregistered securities of the Company, of an affiliate of the
Company or of a predecessor of the Company have been sold within three
years prior to the date hereof, except as described in the Registration
Statement.
w. Except as set forth in the Registration Statement, there is and at the
Closing Date there will be no action, suit or proceeding before any court,
arbitration tribunal or governmental agency, authority or body pending or,
to the knowledge of the Company, threatened which might result in judgments
against the Company not adequately covered by insurance or which
collectively might result in any material adverse change in the condition
(financial or otherwise), the business or the prospects of the Company or
would materially affect the properties or assets of the Company.
x. The Company has filed all federal and state tax returns which are
required to be filed by it and has paid all taxes shown on such returns and
all assessments received by it to the extent such taxes have become due.
All taxes with respect to which the Company is obligated have been paid or
adequate accruals have been set up to cover any such unpaid taxes.
y. Except as set forth in the Registration Statement:
i. The Company has obtained all permits, licenses and other
authorizations which are required under the Environmental Laws for the
ownership, use and operation of each location operated or leased by the
Company (the "Property"), all such permits, licenses and
authorizations, if any, obtained are in effect, no appeal nor any other
action is pending to revoke any such permit, license or authorization,
and the Company is in full compliance with all terms and conditions of
all such permits, licenses and authorizations, if any, obtained by the
Company.
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ii. To the best knowledge of the Company's executive officers,
the Company and the Property are in compliance with all Environmental
Laws including, without limitation, all restrictions, conditions,
standards, limitations, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or
contained in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder.
iii. The Company has not, and to the best knowledge of the
Company's executive officers, no other person has, released, placed,
stored, buried or dumped any Hazardous Substances, Oils, Pollutants or
Contaminants or any other wastes produced by, or resulting from, any
business, commercial, or industrial activities, operations, or
processes, on, beneath, or adjacent to the Property or any property
formerly owned, operated or leased by the Company except for
inventories of such substances to be used, and wastes generated
therefrom, in the ordinary course of business of the Company (which
inventories and wastes, if any, were and are stored or disposed of in
accordance with applicable laws and regulations and in a manner such
that there has been no release of any such substances into the
environment).
iv. Except as provided to the Representative, there exists no
written or tangible report, synopsis or summary of any asbestos, toxic
waste or Hazardous Substances, Oils, Pollutants or Contaminants
investigation made with respect to all or any portion of the assets of
the Company (whether or not prepared by experts and whether or not in
the possession of the executive officers of the Company).
v. Definitions: As used herein:
(1) Environmental Laws means all federal, state and local
laws, regulations, rules and ordinances relating to pollution
or protection of the environment, including, without
limitation, laws relating to Releases or threatened Releases
of Hazardous Substances, Oils, Pollutants or Contaminants into
the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, land,
surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, Release, transport or handling of Hazardous
Substances, Oils, Pollutants or Contaminants.
(2) Hazardous Substances, Oils, Pollutants or
Contaminants means all substances defined as such in the
National Oil and Hazardous Substances Pollutant Contingency
Plan, 40 C.F.R. Section 300.6, or defined as such under any
Environmental Law.
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(3) Release means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or
outdoor environmental (including, without limitation, ambient
air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement
of Hazardous Substances, Oils, Pollutants or Contaminants
through or in the air, soil, surface water, groundwater or any
property.
z. No authorization, approval, consent or order of, or filing
with, any Federal, Native American, state or local governmental body,
authority, self regulatory authority, agency or official (collectively
the "Gaming Authorities") including specifically from the Gaming
Authorities in the States of Kansas, Michigan, Minnesota, New Mexico
(with respect to Native American tribes only), New York, North Carolina,
South Carolina and Wisconsin and the Kingdom of Norway and Brazil
(collectively, the "Gaming Jurisdictions") is necessary in connection
with the issuance and sale of the Shares and the consummation of the
transactions contemplated hereby, except such as may be required by the
NASD or have been obtained under the applicable laws, rules and
regulations maintained and enforced by the Gaming Authorities in their
respective jurisdictions (collectively, the "Gaming Laws"), the Act, or
state securities or Blue Sky laws or regulations.
aa. The Company, each of the Subsidiaries and each of the persons
listed under the caption "Management" in the Registration Statement has
all material certificates, consents, exemptions, orders, permits,
licenses, authorizations or other approvals or rights (each, an
"Authorization") of and from, and has made all material declarations and
filings with, all Federal, state, tribal, local and other governmental
authorities, including the Gaming Authorities, all self-regulatory
organizations and all courts and other tribunals, and holds all such
Authorizations with respect to engaging in gaming operations, offshore
gaming cruises and the manufacture of gaming machines in the Gaming
Jurisdictions or that are required to own, lease, license and use its
properties and assets and to conduct its current business in the manner
described in or contemplated by the Prospectus, (ii) all such
Authorizations are valid and in full force and effect, (iii) the Company,
each of the Subsidiaries and each of the persons listed under the caption
"Management" in the Registration Statement is in compliance in all
material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the Gaming
Authorities and governing bodies having jurisdiction with respect
thereto, and (iv) neither the Company nor any Subsidiary nor any of the
persons listed under the caption "Management" in the Registration
Statement has received any notice of proceedings relating to the
revocation or modification of any such Authorization and no such
Authorization contains any restrictions that are materially burdensome to
any of them. To the best knowledge
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of the Company and each of the persons listed under the caption
"Management" in the Registration Statement, the Company and all such
persons do not have any reason to believe that any Gaming Authority is
considering modifying, limiting, conditioning, suspending, revoking or
not renewing any such Authorization of the Company, any of the
Subsidiaries or any of the persons listed under the caption "Management"
in the Registration Statement or that any Gaming Authority or any other
governmental agency is investigating the Company or any of the
Subsidiaries or related parties (other than normal overseeing reviews of
the Gaming Authorities incident to the gaming activities of the Company
and the Subsidiaries). To the best knowledge of the Company and each of
the persons listed under the caption "Management" in the Registration
Statement, the Company, its Subsidiaries and none of the persons listed
under the caption "Management" in the Registration Statement has any
reason to believe that there is an existing basis for any of the Gaming
Authorities to deny the renewal of current gaming licenses held by any of
them.
bb. The Company, through one of its Subsidiaries, has applied
to the Gaming Authorities for licensing to sell gaming machines and
engage in gaming operations in the States of Mississippi and Montana
and in the Province of Ontario, Canada. The Company has not received
any communication (whether written or oral) threatening or stating that
the Company's or the Subsidiary's application for licensing in any of
such jurisdictions, or the qualification or licensing of those persons
listed under the caption "Management" in the Prospectus, has been or
will be denied. Each license application filed by the Company or any
Subsidiary with such jurisdictions complies as to form with the gaming
laws of each of the respective jurisdictions in which such applications
are filed, are correct in all material respects, present fairly the
information purported to be shown and have not been modified, withdrawn
or abandoned by the Company or a Subsidiary.
cc. To the best of the Company's knowledge, neither the Company
nor any of the Subsidiaries has engaged in any business or operations of
any variety in any state or jurisdiction in which the applicable gaming
laws would require the Company or its Subsidiaries to have been licensed
in order to conduct such business or operations, except as otherwise
permitted by the gaming laws of any such jurisdiction.
dd. The Company's and its Subsidiaries' conduct of offshore gaming
activities in international waters is in accordance with applicable
United States and international laws, rules and regulations, or
exemptions therefrom, and the Company and its Subsidiaries have complied
in all material respects with the jurisdictional and other requirements
imposed on such activities. Neither the Company nor any of the
Subsidiaries has been notified of any violation, breach or conduct that
would constitute a violation of applicable gaming laws within the State
of Massachusetts.
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ee. The Company and each of its Subsidiaries has conducted its
gaming route operations within the State of South Carolina in accordance
with applicable laws, rules and regulations established by the Gaming
Authorities within the State of South Carolina. The Company and each of
its Subsidiaries is in material compliance with each individual revenue
sharing agreement by and between the Company, any of its Subsidiaries and
third parties.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
1. Purchase, Sale, and Delivery of the Shares. On the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriters, severally and not jointly, and the
Underwriters, severally and not jointly, agree to purchase from the Company the
number of Firm Shares set forth opposite the Underwriters' names in Schedule 1
hereto.
2. The purchase price per Firm Share to be paid by the Underwriters shall be
$______. The initial public offering price of the Shares shall be $______.
3. Payment for the Firm Shares by the Underwriters shall be made by certified or
official bank check in clearing house funds, payable to the order of the Company
at the offices of ▇▇▇▇▇▇▇▇▇ Securities, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place in Denver, Colorado as the
Representative shall determine and advise the Company by at least two full days'
notice in writing, upon delivery of the Shares to the Representative. Such
delivery and payment shall be made at 10:00 a.m., Mountain Time, on the third
business day following the time of the initial public offering, as defined in
Section 10(a) hereof, unless the Commission declares the Registration Statement
effective after 4:30 p.m. Eastern time, in which event delivery and payment
shall be made on the fourth (4th) business day following the time of the initial
public offering. The time and date of such delivery and payment are herein
called the "Closing Date."
4. In addition, the Company hereby grants to the Representative the option to
purchase all or a portion of the Additional Shares as may be necessary to cover
over-allotments, at the same purchase price per Additional Share as the price
per Firm Share provided for in this Section 3. The Representative may purchase
Additional Shares when exercising such option, in its sole discretion. This
option may be exercised by the Representative on the basis of the
representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, at any time
and from time to time on or before the 45th day following the Effective Date of
the Registration Statement, by written notice by the Representative to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the time and date, as determined
by the Representative, when such Additional Shares are to be delivered (such
time and date are herein called an "Additional Closing Date"); provided,
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however, that no Additional Closing Date shall be earlier than the Closing Date
nor earlier than the third business day after the date on which the notice of
the exercise of the option shall have been given nor later than the eighth
business day after the date on which such notice shall have been given; and
further provided, that not more than two Additional Closings shall be noticed
and held following purchase of Additional Shares by the Representative.
5. Payment for the Additional Shares shall be made by certified or official bank
check in clearing house funds payable to the order of the Company at the offices
of ▇▇▇▇▇▇▇▇▇ Securities, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
or at such other place in Denver, Colorado as you shall determine and advise the
Company by at least two full days' notice in writing, upon delivery of
certificates representing the Additional Shares to you.
6. Certificates for the Shares purchased shall be registered in such name or
names and in such authorized denominations as you may request in writing at
least two full business days prior to the Closing Date or Additional Closing
Date, as applicable. The Company shall permit you to examine and package such
certificates for delivery at least one full business day prior to any such
closing with respect thereto.
7. If for any reason one or more Underwriters shall fail or refuse (otherwise
than for a reason sufficient to justify the termination of this Agreement under
the provisions of Section 10 hereof) to purchase and pay for the number of Firm
Shares agreed to be purchased by such Underwriter, the Company shall immediately
give notice thereof to the Representative, and the non-defaulting Underwriters
shall have the right within 24 hours after the receipt by the Representative of
such notice, to purchase or procure one or more other Underwriters to purchase,
in such proportions as may be agreed upon among the Representative and such
purchasing Underwriter or Underwriters and upon the terms herein set forth, the
Firm Shares which such defaulting Underwriter or Underwriters agreed to
purchase. If the non-defaulting Underwriters fail so to make such arrangements
with respect to all such Firm Shares, the number of Firm Shares which each
non-defaulting Underwriter is otherwise obligated to purchase under the
Agreement shall be automatically increased pro rata to absorb the remaining Firm
Shares which the defaulting Underwriter or Underwriters agreed to purchase;
provided, however, that the non-defaulting Underwriters shall not be obligated
to purchase the Firm Shares which the defaulting Underwriter or Underwriters
agreed to purchase in excess of 10% of the total number of Shares which such
non-defaulting Underwriter agreed to purchase hereunder, and provided further
that the non-defaulting Underwriters shall not be obligated to purchase any Firm
Shares which the defaulting Underwriter or Underwriters agreed to purchase if
such additional purchase would cause the Underwriter to be in violation of the
net capital rule of the Commission or other applicable law. If the total number
of Firm Shares which the defaulting Underwriter or Underwriters agreed to
purchase shall not be purchased or absorbed in accordance with the two preceding
sentences, the Company shall have the right, within 24 hours next succeeding the
24-hour period above referred to, to make arrangements
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with other underwriters or purchasers satisfactory to the Representative for the
purchase of such Firm Shares on the terms herein set forth. In any such case,
either the Representative or the Company shall have the right to postpone the
Closing for not more than seven business days after the date originally fixed as
the Closing in order that any necessary changes in the Registration Statement,
the Prospectus or any other documents or arrangements may be made. If neither
the non-defaulting Underwriters nor the Company shall make arrangements within
the 24-hour periods stated above for the purchase of all the Firm Shares which
the defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter, except
the Company shall be liable for actual expenses incurred by the Representative
as provided in Section 10 hereof, and without any liability on the part of any
non-defaulting Underwriter to the Company.
8. Nothing contained herein shall relieve any defaulting Underwriter of its
liability, if any, to the Company or to the remaining Underwriters for damages
occasioned by its default hereunder.
9. Offering. The Underwriters are to make a public offering of the Shares as
soon, on or after the effective date of the Registration Statement, as the
Representative deems it advisable so to do. The Shares are to be initially
offered to the public at the initial public offering price as provided for in
Section 3 (such price being herein called the "public offering price"). After
the initial public offering, you may from time to time increase or decrease the
price of the Shares in your sole discretion, by reason of changes in general
market conditions or otherwise.
10. Covenants of the Company. The Company covenants that it will:
a. Use its best efforts to cause the Registration Statement to become
effective as promptly as possible. If the Registration Statement has become
or becomes effective with a form of Prospectus omitting certain information
pursuant to Rule 430A of the Regulations, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will file the Prospectus,
properly completed, pursuant to Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to you of such timely
filing.
b. Notify you immediately, and confirm such notice in writing, (i) when the
Registration Statement and any post-effective amendment thereto become
effective, (ii) of the receipt of any comments from the Commission or the
"blue sky" or securities authority of any jurisdiction regarding the
Registration Statement, any post-effective amendment thereto, the
Prospectus, or any amendment or supplement thereto, and (iii) of the
receipt of any notification with respect to a Stop Order or the initiation
or threatening of any proceeding with respect to a Stop Order. The Company
will use its best efforts to prevent the issuance of any Stop Order and, if
any Stop Order is issued, to obtain the lifting thereof as promptly as
possible.
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c. During the time when a prospectus relating to the Shares is required to
be delivered hereunder or under the Act or the Regulations, comply so far
as it is able with all requirements imposed upon it by the Act, as now
existing and as hereafter amended, and by the Regulations, as from time to
time in force, so far as necessary to permit the continuance of sales of or
dealings in the Shares and Representative's Warrant Shares in accordance
with the provisions hereof and the Prospectus. If, at any time when a
prospectus relating to the Shares or Representative's Warrant Shares is
required to be delivered hereunder or under the Act or the Regulations, any
event shall have occurred as a result of which, in the reasonable opinion
of counsel for the Company or counsel for the Representative, the
Registration Statement or the Prospectus, as then amended or supplemented,
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or if, in the opinion of either of such
counsel, it is necessary at any time to amend or supplement the
Registration Statement or the Prospectus to comply with the Act or the
Regulations, the Company will immediately notify you and promptly prepare
and file with the Commission an appropriate amendment or supplement (in
form and substance satisfactory to you) which will correct such statement
or omission or which will effect such compliance and will use its best
efforts to have any such amendment declared effective as soon as possible.
d. Deliver without charge to you such number of copies of each Preliminary
Prospectus as you may reasonably request and, as soon as the Registration
Statement or any amendment thereto becomes effective or a supplement is
filed, deliver without charge to you two signed copies of the Registration
Statement or such amendment thereto, as the case may be, including
exhibits, and two copies of any supplement thereto, and deliver without
charge to you such number of copies of the Prospectus, the Registration
Statement, and amendments and supplements thereto, if any, without
exhibits, as you may reasonably request for the purposes contemplated by
the Act.
e. Endeavor in good faith, in cooperation with you, at or prior to the time
the Registration Statement becomes effective, to qualify the Shares and
Representative's Warrant Shares for offering and sale under the "blue sky"
or securities laws of such jurisdictions as you may designate; provided,
however, that no such qualification shall be required in any jurisdiction
where, as a result thereof, the Company would be subject to service of
general process or to taxation as a foreign corporation doing business in
such jurisdiction to which it is not then subject. In each jurisdiction
where such qualification shall be effected, the Company will, unless you
agree in writing that such action is not at the time necessary or
advisable, file and make such statements or reports at such times as are or
may be required by the laws of such jurisdiction.
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f. Make generally available (within the meaning of Section 11(a) of the Act
and the Regulations) to its security holders as soon as practicable, but
not later than fifteen (15) months after the date of the Prospectus, an
earnings statement (which need not be certified by independent certified
public accountants unless required by the Act or the Regulations, but which
shall satisfy the provisions of Section 11(a) of the Act and the
Regulations) covering a period of at least 12 months beginning after the
effective date of the Registration Statement.
g. For a period of 12 months after the date of the Prospectus, not, without
your prior written consent, offer, issue, sell, contract to sell, grant any
option for the sale of, or otherwise dispose of, directly or indirectly,
any shares of Common Stock (or any security or other instrument which by
its terms is convertible into, exercisable for, or exchangeable for shares
of Common Stock) except as provided in Section 3 and except for (i) the
issuance of Additional Shares or issuance of Common Stock underlying
options and warrants outstanding on the date hereof which are properly
described in the Prospectus, (ii) the issuance of the Representative's
Warrant Shares, or (iii) the grant of options pursuant to the Company's
existing stock option plan, or (iv) the issuance of capital stock in
connection with any acquisitions undertaken by the Company.
h. For a period of five years after the Effective Date of the registration
statement, furnish you, without charge, the following:
i. Within 105 days after the end of each fiscal year, three
copies of consolidated financial statements certified by independent
certified public accountants, including a balance sheet, statement of
operations, and statement of cash flows of the Company and its then
existing Subsidiaries, with supporting schedules, prepared in
accordance with generally accepted accounting principles, at the end of
such fiscal year and for the 12 months then ended;
ii. As soon as practicable after they have been sent to
stockholders of the Company or filed with the Commission, three copies
of each annual and interim financial and other report or communication
sent by the Company to its stockholders or filed with the Commission;
iii. As soon as practicable, two copies of every press release
and every material news item and article in respect of the Company or
its affairs which was released by the Company;
iv. Notice of any regular or special meeting of the Company's
Board of Directors concurrently with the sending of such notice to the
Company's directors; and
v. Such additional documents and information with respect to
the Company and its affairs and the affairs of any of its Subsidiaries
as you may from time to time reasonably request.
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a. Designate an Audit Committee and a Compensation Committee, the members of
which shall be subject to your reasonable approval, which will generally
supervise the financial affairs of the Company and review executive
compensation, respectively.
b. Furnish to you as early as practicable prior to the Closing Date and any
Additional Closing Date, as the case may be, but not less than two full business
days prior thereto, a copy of the latest available unaudited interim
consolidated financial statements of the Company which have been read by the
Company's independent certified public accountants, as stated in their letters
to be furnished pursuant to Section 7(e).
c. File no amendment or supplement to the Registration Statement or Prospectus
at any time, whether before or after the Effective Date of the Registration
Statement, unless such filing shall comply with the Act and the Regulations and
unless you shall previously have been advised of such filing and furnished with
a copy thereof, and you and counsel for the Representative shall have approved
such filing in writing within a reasonable time of receipt thereof.
d. Comply with all periodic reporting and proxy solicitation requirements which
may from time to time be applicable to the Company as a result of the Company's
registration under the Exchange Act on a registration statement on Form 8-A .
e. Comply with all provisions of all undertakings contained in the Registration
Statement.
f. Prior to the Closing Date or any Additional Closing Date, as the case may be,
issue no press release or other communication, directly or indirectly, and hold
no press conference and grant no interviews with respect to the Company, the
financial condition, results of operations, business, properties, assets, or
liabilities of the Company, or this offering, without your prior written
consent.
g. Appoint American Securities Transfer & Trust, Incorporated as its transfer
agent.
h. On or prior to the Closing Date, sell to the Representative for a total
purchase price of $10, Representative's Warrants entitling the Representative or
its assigns to purchase 110,000 shares of Common Stock at a price equal to 120%
of the public offering price of the Shares, with the terms of the
Representative's Warrants, including exercise period, anti-dilution provisions,
exercise price, exercise provisions, transferability, and registration rights,
to be in the form filed as an exhibit to the Registration Statement.
i. Until expiration of the Representative's Warrants, keep reserved sufficient
shares of Common Stock for issuance as Representative's Warrant Shares upon full
exercise of the Representative's Warrants.
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j. Adopt procedures for the application of the net proceeds it receives from the
sale of the Shares and apply the net proceeds from the sale of the Shares
substantially in the manner set forth in the Registration Statement, which does
not contemplate repayment of debt to officers, directors, stockholders or
affiliates of the Company, unless any deviation from such application is in
accordance with the Registration Statement and occurs only after approval by the
Board of Directors of the Company and then only after the Board of Directors has
obtained the written opinion of recognized legal counsel experienced in federal
and state securities laws as to the propriety of any such deviation.
k. Within the time period which the Prospectus is required to be delivered under
the Act, comply, at its own expense, with all requirements imposed upon it by
the Act, as now or hereafter amended, by the Rules and Regulations, as from time
to time may be enforced, and by any order of the Commission, so far as necessary
to permit the continuance of sales or dealing in the Shares.
l. At the Closing, deliver to the Representative true and correct copies of the
Articles of Incorporation of the Company and all amendments thereto, all such
copies to be certified by the Secretary of the Company; true and correct copies
of the by-laws of the Company and of the minutes of all meetings of the
directors and stockholders of the Company held prior to the Closing which in any
way relate to the subject matter of this Agreement or the Registration
Statement.
m. Use all reasonable efforts to comply or cause to be complied with the
conditions precedent to the several obligations of the Underwriters in Section 7
hereof.
n. File with the Commission all required information concerning use of proceeds
of the Public Offering in Forms 10-Q and 10-K in accordance with the provisions
of the Exchange Act and to provide a copy of such reports to the Representative
and its counsel.
o. Supply to the Representative and the Representative's counsel at the
Company's cost, two bound volumes each containing material documents relating to
the offering of the Shares within a reasonable time after the Closing, not to
exceed 90 days.
p. As soon as possible prior to the Effective Date, and as a condition of the
Underwriter's obligations hereunder, (i) if requested by the Representative,
have the Company listed on an accelerated basis, and to maintain such listing
for not less than ten years from the Closing Date, in Standard & Poor's Standard
Corporation Records; and (ii) have the Common Stock quoted on the Nasdaq
National Market as of the Effective Date, on the Closing Date, on the Additional
Closing Date and thereafter for at least ten years provided the Company is in
compliance with the Nasdaq National Market maintenance requirements.
y. Continue, for a period of at least five years following the
Effective Date of the Registration Statement, to appoint such auditors as are
reasonably acceptable to the Representative, which auditors shall (i) prepare
consolidated financial statements in accordance
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with Regulation S-X under the General Rules and Regulations of the Act and (ii)
examine (but not audit) the Company's consolidated financial statements for each
of the first three (3) fiscal quarters prior to the announcement of quarterly
financial information, the filing of the Company's 10-Q quarterly report and the
mailing of quarterly financial information to security holders.
z. Within 90 days of the Effective Date of the Registration Statement,
obtain "key man" life insurance policies in the amount of $1,000,000 each on the
lives of such key employees as may be mutually agreed upon between the Company
and the Representative, with the Company designated as the beneficiary of such
policy, and pay the annual premiums thereon for a period of not less than five
years from the Effective Date of the Registration Statement.
aa. Cause its transfer agent to furnish the Representative a duplicate
copy of the daily transfer sheets prepared by the transfer agent during the
six-month period commencing on the Effective Date of the Registration Statement
and instruct the transfer agent to timely provide, upon the request of the
Representative, duplicate copies of such transfer sheets and/or a duplicate copy
of a list of stockholders, all at the Company's expense, for a period of 4 1/2
years after such six-month period.
bb. Refrain from filing a Form S-8 registration statement for a period
of 12 months from the Effective Date of the Registration Statement without the
Representative's prior written consent. The Company will also obtain from each
holder of options to acquire Common Stock of the Company such person's written
enforceable agreement not to sell shares of Common Stock pursuant to the
exemption afforded by Rule 701 under the 1933 Act for a minimum period of 12
months from the Effective Date without the prior written consent of the
Representative.
cc. Afford the Representative the right, but not the obligation,
commencing on the Effective Date and surviving for a period of three years, to
designate an observer to attend meetings of the Board of Directors. The
designee, if any, and the Representative will receive notice of each meeting of
the Board of Directors in accordance with Colorado law, of which no less than
four meetings will be held in person or by video conference each year. Any such
designee will receive reimbursement for all reasonable costs and expenses
incurred in attending meetings of the Board of Directors, including but not
limited to, food, lodging and transportation, together with such other fee or
compensation (but excluding options or securities) as is paid by the Company to
other members of the Board of Directors. Moreover, to the extent permitted by
law, the Representative and its designee shall be indemnified for the actions of
such designee as an observer to the Board of Directors and in the event the
Company maintains a liability insurance policy affording coverage for the acts
of its officers and/or
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directors, to the extent permitted under such policy, each of the
Representative and its designee shall be an insured under such policy.
1. Payment of Expenses. The Company hereby agrees to pay all expenses (subject
to the last sentence of this Section 6) in connection with the offering,
including but not limited to (a) the preparation, printing, filing,
distribution, and mailing of the Registration Statement and the Prospectus,
including NASD, SEC, Nasdaq filing and/or application fees, and the printing,
filing, distribution, and mailing of this Agreement, any Agreement Among
Underwriters, Selected Dealers Agreement, preliminary and final Blue Sky
Memorandums, material to be circulated to the Underwriters by you and other
incidental or related documents, including the cost of all copies thereof and of
the Preliminary Prospectuses and of the Prospectus, and any amendments or
supplements thereto, supplied to the Representative in quantities as herein
above stated, (b) the issuance, sale, transfer, and delivery of the Firm Shares,
Additional Shares, the Representative's Warrants and the Representative's
Warrant Shares, including, without limitation, any original issue, transfer or
other taxes payable thereon and the costs of preparation, printing and delivery
of certificates representing such securities, as applicable, (c) the
qualification of the Firm Shares, Additional Shares, the Representative's
Warrants and the Representative's Warrant Shares under state or foreign "blue
sky" or securities laws, which qualification shall be undertaken by counsel to
the Representative at the Company's expense, (d) the fees and disbursements of
counsel for the Company and the accountants for the Company, (e) the listing of
the Shares on the Nasdaq National Market and (f) the Representative's
non-accountable expense allowance equal to 3% of the aggregate gross proceeds
from the sale of the Shares. Prior to or immediately following the Closing Date,
the Company shall bear the costs of tombstone announcements if requested to do
so by the Representative.
2. The Company has previously remitted to the Representative the sum of $50,000,
which sum has been credited as a partial payment in advance of the
non-accountable expense allowance provided for in Section 6(f) above.
3. Conditions of Underwriters' Obligations. The Underwriters' obligation to
purchase and pay for the Firm Shares and Additional Shares, as provided herein,
shall be subject to the continuing accuracy of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to you, as of the date hereof
and as of the Closing Date (or the Additional Closing Date, as the case may be),
to the performance by the Company of its obligations hereunder, and to the
following conditions:
a. The Registration Statement shall have become effective not later than
5:00 p.m., Mountain time, on the date of this Agreement or such later date
and time as shall be consented to in writing by you.
b. At the Closing Date and any Additional Closing Date, you shall have
received the favorable opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, P.C., counsel for the
Company, dated the date of
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delivery, addressed to you, and in form and scope satisfactory to your
counsel, to the effect that:
i. The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Colorado, with full
power and authority, and, after reasonable investigation, counsel has no
knowledge that the Company does not have all necessary consents,
authorizations, approvals, orders, certificates, and permits of and from,
and declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to conduct its
business in the manner described in the Prospectus. The Company is duly
qualified to do business and is in good standing in every jurisdiction in
which its ownership, leasing, licensing, or use of property and assets or
the conduct of its business makes such qualification necessary;
ii. Each Subsidiary is a corporation duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization, with full corporate power and authority to own, lease, and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto); and all the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable, and are owned by the Company directly,
or indirectly through one of the other Subsidiaries, free and clear of
any perfected security interest, or, to the best knowledge of such
counsel after reasonable inquiry, any other security interest, lien,
adverse claim, equity or other encumbrance;
iii. The authorized capital stock of the Company as of the date of
this Agreement consisted of 45,000,000 shares of Common Stock, of which
6,018,334 shares of Common Stock are issued and outstanding, 5,536,751
shares of Common Stock are reserved for issuance upon the exercise of
outstanding options and warrants and 2,302,700 shares of Common Stock are
reserved for issuance upon the exercise of the remaining options
authorized under the Company's option plan; and 5,000,000 shares of
Preferred Stock, none of which are issued and outstanding; and there have
been no changes in the authorized and outstanding capital stock of the
Company since the date of this Agreement, except as contemplated by the
Registration Statement and the Prospectus. Each outstanding share of
capital stock is validly authorized, validly issued, fully paid, and
nonassessable, with no personal liability attaching to the ownership
thereof, has not been issued and is not owned or held in violation of any
preemptive right of stockholders. There is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other right
calling for the issuance of, any share of capital stock of the Company or
any security or other instrument which by its
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terms is convertible into, exercisable for, or exchangeable for capital
stock of the Company, except as set forth above, and except as is
properly described in the Prospectus. There is outstanding no security or
other instrument which by its terms is convertible into or exchangeable
for capital stock of the Company, except as described in the Prospectus;
iv. To the knowledge of counsel, after reasonable investigation,
there is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, threatened, or
in prospect (or any basis therefor) with respect to the Company or any of
its respective operations, businesses, properties, or assets, except as
may be properly described in the Prospectus or such as individually or in
the aggregate do not now have and will not in the future have a material
adverse effect upon the operations, business, properties, or assets of
the Company. To the knowledge of counsel, the Company is not in violation
of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree, except as may be properly described in the
Prospectus or such as in the aggregate have been disclosed to the
Representative and do not now have and will not in the future have a
material adverse effect upon the operations, business, properties, or
assets of the Company; nor is the Company required to take any action in
order to avoid any such violation or default;
v. Based upon the certificates received from the Company's officers,
neither the Company nor any other party is now or is expected by the
Company to be in violation or breach of, or in default with respect to,
complying with any material provision of any contract, agreement,
instrument, lease, license, arrangement, or understanding which is
material to the Company;
vi. Neither the Company nor any Subsidiary is in violation or breach
of, or in default with respect to, any term of its Articles of
Incorporation or by-laws;
vii. The Company has all requisite power and authority to execute
and deliver and to perform thereunder this Agreement and the
Representative's Warrants. All necessary corporate proceedings of the
Company have been taken to authorize the execution and delivery and
performance thereunder by the Company of this Agreement and the
Representative's Warrants. Each of this Agreement and the
Representative's Warrants have been duly authorized, executed and
delivered by the Company, and is a legal, valid, and binding obligation
of the Company, and (subject to applicable bankruptcy, insolvency, and
other laws affecting the enforceability of creditors' rights generally)
enforceable as to the Company in accordance with its respective terms. No
consent, authorization, approval, order, license, certificate, or permit
of or from, or declaration or filing with, any federal, state, local, or
other governmental authority or any court or other tribunal is required
by the Company for the execution or delivery, or
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performance thereunder by the Company of this Agreement or the
Representative's Warrants (except filings under the Act which have been
made prior to the Closing Date, such as have been obtained under the
Gaming Laws, and consents consisting only of consents under "blue sky" or
securities laws which are required in connection with the transactions
contemplated by this Agreement, and which counsel has been advised by
counsel to the underwriters have been obtained on or prior to the date
the Registration Statement becomes effective under the Act). No consent
of any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which the Company is a party, or to
which any of its properties or assets are subject, is required for the
execution or delivery, or performance thereunder of this Agreement or the
Representative's Warrants; and the execution and delivery and performance
thereunder of this Agreement and the Representative's Warrants will not
violate, result in a breach of, conflict with, or (with or without the
giving of notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract, agreement,
instrument, lease, license, arrangement, or understanding, or violate or
result in a breach of any term of the Articles of Incorporation or
by-laws of the Company, or violate, result in a breach of, or conflict
with any law, rule, regulation, order, judgment, or decree binding on the
Company or to which any of its operations, businesses, properties, or
assets are subject;
viii. The Shares are, and the Representative's Warrant Shares will
be upon exercise of the Representative's Warrants, validly authorized,
validly issued, fully paid, and nonassessable and are not issued in
violation of any preemptive rights of shareholders, and the Underwriters
have received good title to the Shares purchased by them from the
Company, free and clear of all liens, security interests, pledges,
charges, encumbrances, shareholders' agreements, and voting trusts. The
Representative's Warrant Shares have been duly and validly reserved for
issuance pursuant to the terms of the Representative's Warrants. The
Shares, the Representative's Warrants and the Representative's Warrant
Shares conform to all statements relating thereto contained in the
Registration Statement or the Prospectus;
ix. To the knowledge of counsel, after reasonable investigation, all
contracts, agreements, instruments, leases, and licenses that are
required to be described in the Registration Statement or the Prospectus
have been properly described therein. To the knowledge of counsel, after
reasonable investigation, all contracts, agreements, instruments, leases,
or licenses required to be filed as an exhibit to the Registration
Statement have been filed with the Commission as an exhibit to or have
been incorporated as an exhibit by reference into the Registration
Statement;
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x. Insofar as statements in the Prospectus purport to summarize the
status of litigation or the provisions of laws, rules, regulations,
orders, judgments, decrees, contracts, agreements, instruments, leases,
or licenses (excluding, however, those matters opined to specifically by
gaming counsel), such statements have been prepared or reviewed by such
counsel and accurately reflect the status of such litigation and
provisions purported to be summarized and are correct in all material
respects;
xi. Except as provided in the Registration Statement, no person or
entity has the right to require registration of shares of Common Stock or
other securities of the Company because of the filing or effectiveness of
the Registration Statement;
xii. The Registration Statement has become effective under the Act.
No Stop Order has been issued and no proceedings for that purpose have
been instituted or threatened;
xiii. The Registration Statement and the Prospectus, and any
amendment or supplement thereto, comply as to form in all material
respects with the requirements of the Act and the Regulations;
xiv. After reasonable investigation, such counsel has no knowledge
that either the Registration Statement or the Prospectus, or any
amendment or supplement thereto, contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading
(except that no opinion need be expressed as to the consolidated
financial statements and other financial data and schedules which are or
should be contained therein);
xv. After reasonable investigation, such counsel has no knowledge of
any event which has occurred since the Effective Date which should have
been set forth in an amendment or supplement to the Registration
Statement or the Prospectus that has not been set forth in such an
amendment or supplement;
xvi. The Company is not currently offering any securities for sale
except as described in the Registration Statement;
xvii. After reasonable investigation, such counsel has no knowledge
of any promoters, affiliates, parents or Subsidiaries of the Company
except as are described in the Registration Statement;
xviii. The Company and its Subsidiaries own or possess, free and
clear of all liens or encumbrances and rights thereto or therein by third
parties, the requisite licenses or other rights to use all trademarks,
copyrights, service marks, service names, trade names and licenses
necessary to conduct business (including without limitation, any such
licenses or rights described in the Registration Statement as being owned
or possessed by the Company or any Subsidiary) (all of which are
collectively referred to herein as the "Intellectual Property"); there is
no actual or, to the knowledge of
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counsel, pending, or threatened claim, proceeding or action by any person
pertaining to or which challenges the exclusive rights of the Company
with respect to any of the Company's Intellectual Property; based on a
review of all the Company's products, proposed products and Intellectual
Property, to the knowledge of counsel, such products, proposed products
or Intellectual Property do not and will not infringe on any trademarks,
copyrights, service marks, service names, trade names or valid patents or
patents pending held by third parties known to the Company and such
counsel;
xix. The Company is not a party to any agreement giving rise to any
obligation by the Company or any Subsidiary to pay any third-party
royalties or fees of any kind whatsoever with respect to any technology
developed, employed, used or licensed by the Company or any Subsidiary,
other than is disclosed in the Prospectus;
xx. The Shares are eligible for quotation on the Nasdaq National
Market; and
xxi. All issued and outstanding shares of Common Stock and all other
securities issued and sold or exchanged by the Company or its
Subsidiaries have been issued and sold or exchanged in compliance with
all applicable state and federal securities laws and regulations. Such
opinion shall be governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991) and shall be subject to the qualifications,
exceptions, definitions, limitations on coverage and other limitations
set forth therein and in such opinion. Qualifications in such opinion as
to knowledge or the absence of knowledge shall be based upon and limited
to the "Actual Knowledge" (as defined in the Accord) of the "Primary
Lawyer Group" (as identified in such opinion). In rendering such opinion,
such legal counsel shall be entitled to rely upon Public Authority
Documents and upon information provided by client officials in written
Certificates provided that copies of such Public Authority Documents and
Certificates are attached as exhibits to the written opinion of legal
counsel. The term "Public Authority Documents" shall have the meaning
ascribed to it in the Legal Opinion Accord of the ABA Section of Business
Law (1991).
c. At the Closing Date and any Additional Closing Date, you shall have
received a signed opinion of gaming counsel for the Company, dated the date of
delivery, addressed to you, and in form and scope satisfactory to your counsel,
to the effect that:
i. The Company has the requisite corporate power and authority to
execute, deliver and perform all of its obligations pursuant to this
Agreement and to authorize, issue and sell the Shares as contemplated by
this Agreement; this Agreement has been duly authorized, executed and
delivered by the Company;
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ii. The Shares have been duly authorized, executed and delivered by
the Company;
iii. The Company and each of the Subsidiaries is duly incorporated
and is validly existing as a corporation under the laws of their
respective states of incorporation and has the requisite corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and Prospectus;
iv. The issuance and sale of the Shares and the consummation of the
transactions contemplated hereby will not conflict with or result in a
breach or violation of or constitute a default or cause an acceleration
of any obligation under, or result in the imposition or creation of (or
the obligation to create or impose) any lien with respect to (A) any of
the respective charters and by-laws of any of the Company or the
Subsidiaries, (B) any applicable statute, rule or regulation, or (C) any
order of any court or governmental agency, body or official, including
the Gaming Authorities, having jurisdiction over the Company or any of
the Subsidiaries or any of their properties except, in the case of clause
(B) and (C), for such conflicts, breaches, violations or defaults that
could not reasonably be expected to have, singly or in the aggregate, a
material adverse effect on the Company;
v. No authorization, approval, consent or order of the Gaming
Authorities or any other governmental body, agency or official is
necessary in connection with the issuance of the Shares and the due and
valid execution, delivery and performance by the Company or any of the
Subsidiaries, as the case may be, of this Agreement and any of the
transactions contemplated hereby to be entered into prior to or
contemporaneously with such agreements, except (a) as disclosed in the
Registration Statement, (b) such authorizations, approvals, consents or
licenses of the Gaming Authorities that have been obtained prior to the
date of such opinion, and (c) the transactions described therein that
have been approved by the Gaming Authorities to the extent required by
the Gaming Laws. Such counsel has received no notice that such approvals
have been revoked, modified or rescinded as of the date of such opinion;
vi. Except as disclosed in the Registration Statement, (a) to the
best knowledge of such counsel, the Company and each of its Subsidiaries
has made all declarations and filings with the Gaming Authorities
necessary to use its properties and assets and to conduct its business
pursuant to Gaming Laws, as of the date of such opinion, (b) no facts
have come to the attention of such counsel that would lead such counsel
to believe that all authorizations of and from the Gaming Authorities are
not valid and in full force and effect as of the date of such opinion,
(c) no facts have come to the attention of such counsel that would lead
such counsel to believe that the
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Company and each of its Subsidiaries is not in compliance in all material
respects with the terms and conditions of all authorizations of and from
the Gaming Authorities and with the Gaming Laws, as of the date of such
opinion, and (d) as of the date of such opinion, such counsel has
received no notice of any proceedings relating to the revocation or
modification of any authority granted by any of the Gaming Authorities to
the Company and its Subsidiaries, and such counsel is aware of no
restrictions imposed by any of the Gaming Authorities which would have a
material adverse effect on the properties, plans, results of operations,
management, condition (financial or otherwise) or business affairs of the
Company or its Subsidiaries, in the aggregate; no facts have come to the
attention of such counsel that would lead such counsel to believe that
any of the Gaming Authorities is considering modifying, limiting,
conditioning, suspending, revoking or not renewing the licenses, permits,
certificates, consents, orders, approvals and other authorizations from
such Gaming Authority (collectively, the "Gaming Licenses") of the
Company or any of its Subsidiaries, except where such modification,
revocation, suspension, limitation or condition would not have a material
adverse effect on the properties, plans, results of operations,
management, condition (financial or otherwise) or business affairs of the
Company or its Subsidiaries, in the aggregate; such counsel is aware of
no notice given to the Company or any of its Subsidiaries that any of the
Gaming Authorities are investigating the Company or any of its
Subsidiaries (other than normal overseeing reviews incident to the gaming
activities of the Company and its Subsidiaries); and such counsel has
received no notice that the Company or any of its Subsidiaries has any
reason to believe there is an existing basis for any of the Gaming
Authorities to deny the renewal of the Gaming Licenses held by the
Company or any of its Subsidiaries;
vii. Each of the persons listed under the caption "Management" in
the Prospectus has been or will be qualified or licensed by the Gaming
Laws as required by the Gaming Laws; and
viii. (a) The statements in the Prospectus under the captions "Risk
Factors -- New or revised regulations could adversely affect Leisure
Time's business," "Risk Factors -- Changes in laws pertaining to gaming
route operations could affect Leisure Time's business" and "Business --
Regulation" fairly present the information with respect to such Gaming
Laws and proceedings thereunder, and (b) no facts have come to the
attention of such counsel that would lead such counsel to believe that
the statements listed in clause (a) of this paragraph (viii) contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make such statements, in
light of the circumstances under which they are made, not misleading, or
that the statements listed in clause (a) of this paragraph (viii), as
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contained in the Prospectus at the time of filing thereof or on the date
of such counsel's opinion, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make such statements, in light of the circumstances
under which they were made, not misleading.
ix. To the best of such counsel's knowledge and information, after
due investigation, nothing has come to such counsel's attention that
leads them to believe that the licensing or other applications filed by
the Company or its Subsidiaries with the States of Mississippi and
Montana and with the Province of Ontario, Canada will not eventuate in an
issued license or permit or will not otherwise afford the Company the
right to conduct operations or business within such jurisdictions.
x. To the best of such counsel's knowledge and information, after
due inquiry of the officers of the Company, such counsel has no reason to
believe that the Company has conducted operations or business in any
jurisdiction within which, in order to conduct such operations or
business, the Company would have been required to be licensed or to
otherwise have submitted applications or documents under the gaming laws
of any such jurisdiction except as otherwise permitted under the
respective gaming laws of any such jurisdiction.
xi. To the best of such counsel's knowledge and information, after
due investigation, nothing has come to such counsel's attention that
leads them to believe that the Company's operation of vessels offering
gaming activities has not been in accordance with applicable United
States and international laws, rules and regulations.
xii. To the best of such counsel's knowledge and information, after
due investigation, the Company and each of its Subsidiaries is in
compliance in all material respects with the Gaming Laws of the State of
South Carolina applicable to the conduct of gaming route operations, and
each of the Company and its Subsidiaries is in material compliance with
revenue sharing agreements with third parties.
xiii. To the best of such counsel's knowledge and information, after
due investigation, each of the Company and its Subsidiaries is in
compliance in all material respects with the Gaming Laws applicable to
the manufacture and sale of video gaming machines in the State of
Georgia.
d. On or prior to the Closing Date and any Additional Closing Date, as
the case may be, you shall have been furnished such information, documents,
certificates, and opinions as you may reasonably require for the purpose of
enabling you to review the matters referred to in Section 7(b), and in order to
evidence the accuracy, completeness, or satisfaction of any of the
representations, warranties, covenants, agreements, or conditions herein
contained, or as you may reasonably request.
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e. At the Closing Date and any Additional Closing Date, as the case may
be, you shall have received a certificate of the chief executive officer
and of the chief financial officer of the Company, dated the Closing Date
or such Additional Closing Date, as the case may be, to the effect that the
conditions set forth in Section 7(a) have been satisfied, that as of the
date of this Agreement and as of the Closing Date or such Additional
Closing Date, as the case may be, the representations and warranties of the
Company contained herein were and are accurate, and that as of the Closing
Date or such Additional Closing Date, as the case may be, the obligations
to be performed by the Company hereunder on or prior thereto have been
fully performed.
f. At the time this Agreement is executed and at the Closing Date and
any Additional Closing Date, as the case may be, you shall have received
letters from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ PC, Certified Public
Accountants, addressed to you and dated the date of delivery but covering a
period within three business days of such date, in form and substance
satisfactory to you.
g. All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Firm Shares and the Additional Shares shall
be satisfactory in form and substance to you and to counsel for the
Representative, and you shall have received a favorable opinion from
counsel to the Company, dated as of the Closing Date or the Additional
Closing Date, as the case may be, with respect to such of the matters set
forth under Section 7(b) and with respect to such other related matters as
you may reasonably request.
h. The NASD, upon review of the terms of the public offering of the
Firm Shares and the Additional Shares shall not have objected to your
participation in such offering.
i. The Company shall have received notice that the Common Stock will be
quoted on the Nasdaq National Market as of the Effective Date.
Any certificate or other document signed by any officer of the Company and
delivered to you or to counsel for the Representative shall be deemed a
representation and warranty by such officer individually and by the Company
hereunder to the Representative as to the statements made therein. If any
condition to your obligations hereunder to be fulfilled prior to or at the
Closing Date or any Additional Closing Date, as the case may be, is not so
fulfilled, you may terminate this Agreement or, if you so elect, in writing
waive any such conditions which have not been fulfilled or extend the time for
their fulfillment.
1. Indemnification and Contribution.
a. Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Underwriters, the Representative, and each
of their officers, directors, partners, employees, agents, and counsel, and
each person, if any, who controls the Representative or any one of the
Underwriters within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act, against any and all loss, liability, claim, damage,
and
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expense whatsoever (which shall include, for all purposes of this Section
8, but not be limited to, attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement, or the Prospectus
(as from time to time amended and supplemented), or any amendment or
supplement thereto, or (B) in any application or other document or
communication (in this Section 8 collectively called an "application") in
any jurisdiction in order to qualify the Common Stock under the "blue sky"
or securities laws thereof or filed with the Commission or any securities
exchange; or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or (ii) any breach of any representation, warranty,
covenant, or agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this
Agreement; however, the Company shall have no liability under this Section
8 if such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company as stated in Section 8(b)
with respect to the Underwriters by or on behalf of the Underwriters
expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto, or in
any application, as the case may be.
If any action is brought against the Underwriters, the Representative
or any of their officers, directors, partners, employees, agents, or
counsel, or any controlling persons of an Underwriter or the Representative
(an "indemnified party") in respect of which indemnity may be sought
against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve
the Company from any liability it may have other than pursuant to this
Section 8(a)) and the Company shall promptly assume the defense of such
action, including the employment of counsel (satisfactory to such
indemnified party or parties) and payment of expenses. Such indemnified
party or parties shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at the
expense of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in connection
with the defense of such action or the Company shall not have promptly
employed counsel satisfactory to such indemnified party or parties to have
charge of the defense of such action or such indemnified party or parties
shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of
which events such fees and expenses shall be borne by the Company.
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Anything in this paragraph to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action
effected without its written consent. The Company agrees promptly to
notify the Underwriters and the Representative of the commencement of
any litigation or proceedings against the Company or against any of its
officers or directors in connection with the sale of the Shares, any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto, or any application.
a. The Underwriters agree to indemnify and hold harmless the Company,
the Company's counsel, each director of the Company, each officer of
the Company who shall have signed the Registration Statement, each
other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to the Underwriters
in Section 8(a), but only with respect to statements or omissions, if
any, made in any Preliminary Prospectus, the Registration Statement, or
the Prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application, in reliance
upon and in conformity with written information furnished to the
Company as stated in this Section 8(b) with respect to the Underwriters
by or on behalf of the Underwriters expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto, or in any application, as the
case may be; provided, however, that the obligation of the Underwriters
to provide indemnity under the provisions of this Section 8(b) shall be
limited to the amount which represents the product of the number of
Firm Shares and Additional Shares sold hereunder and the initial public
offering price per Share set forth on the cover page of the Prospectus.
For all purposes of this Agreement, the amounts of the selling
concession and reallowance set forth in the Prospectus, the information
under "Underwriting" and the identification of counsel to the
Representative under "Legal Matters" constitute the only information
furnished in writing by or on behalf of the Underwriters expressly for
inclusion in any Preliminary Prospectus, the Registration Statement, or
the Prospectus (as from time to time amended or supplemented), or any
amendment or supplement thereto, or in any application, as the case may
be. If any action shall be brought against the Company or any other
person so indemnified based on any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or any application, and in respect of which
indemnity may be sought against the Underwriters pursuant to this
Section 8(b), the Underwriters shall have the rights and duties given
to the Company, and the Company and each other person so indemnified
shall have the rights and duties given to the indemnified parties, by
the provisions of Section 8(a).
b. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 8 is for any reason held to be unavailable to the Underwriters
or the Company, then the Company shall contribute to the damages paid
by
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the several Underwriters, and the several Underwriters shall contribute
to the damages paid by the Company; provided, however, that 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. In determining the
amount of contribution to which the respective parties are entitled,
there shall be considered the relative benefits received by each party
from the sale of the Firm Shares and Additional Shares (taking into
account the portion of the proceeds of the offering realized by each),
the parties' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and any
other equitable considerations appropriate in the circumstances. The
Company and the Underwriters agree that it would not be equitable if
the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity
for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in
the aggregate exceeds the total public offering price of the Firm
Shares and Additional Shares purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages which such
Underwriter and its controlling persons have otherwise been required to
pay in respect of the same or any substantially similar claim. The
Underwriters' obligations to contribute hereunder are several in
proportion to their respective underwriting obligations and not joint.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act shall have the
same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, shall have the same rights to
contribution as the Company. Anything in this Section 8(c) to the
contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without
its written consent. This Section 8(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
2. Representations and Agreements to Survive Delivery. All representations,
warranties, covenants, and agreements contained in this Agreement shall be
deemed to be representations, warranties, covenants, and agreements at the
Closing Date and any Additional Closing Date, and such representations,
warranties, covenants, and agreements of the Underwriters and the Company,
including the indemnity and contribution agreements contained in Section 8,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Representative, the Underwriters or
any indemnified person, or by or on behalf of the Company or any person or
entity which is entitled to be indemnified under Section 8(b), and shall survive
termination of this Agreement or the delivery of the Firm Shares and Additional
Shares to the Underwriters for a period equal to the statute of limitations for
claims related hereto, but not to exceed an aggregate of five years from the
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date hereof. In addition, the provisions of Sections 5(a), 6, 8, 9, 10, and 12
shall survive termination of this Agreement, whether such termination occurs
before or after the Closing Date or any Additional Closing Date.
3.
4.
5. Effective Date of This Agreement and Termination Thereof.
a. This Agreement shall be executed within 24 hours of the Effective
Date of the Registration Statement and shall become effective on the
Effective Date or at the time of the initial public offering of the
Shares, whichever is earlier. The time of the initial public offering
shall mean the time, after the Registration Statement becomes
effective, of the release by the Representative for publication of the
first newspaper advertisement which is subsequently published relating
to the Shares or the time, after the Registration Statement becomes
effective, when the Shares are first released by the Representative for
offering by dealers by letter or telegram, whichever shall first occur.
The Representative or the Company may prevent this Agreement from
becoming effective without liability of any party to any other party,
except as noted below in this Section 10, by giving the notice
indicated in Section 10(c) before the time this Agreement becomes
effective.
b. The Representative shall have the right to terminate this Agreement
at any time prior to the Closing Date or any Additional Closing Date,
as the case may be, by giving notice to the Company if there shall have
been a general suspension of, or a general limitation on prices for,
trading in securities on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market; or if there shall
have been an outbreak of major hostilities or other national or
international calamity; or if a banking moratorium has been declared by
a state or federal authority; or if a moratorium in foreign exchange
trading by major international banks or persons has been declared; or
if there shall have been a material interruption in the mail service or
other means of communication within the United States; or if the
Company shall have sustained a material or substantial loss by fire,
flood, accident, hurricane, earthquake, theft, sabotage, or other
calamity or malicious act which, whether or not such loss shall have
been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the offering, sale, or delivery of the Firm
Shares and Additional Shares, as the case may be; or if there shall
have been such material and adverse change in the market for securities
in general so as to make it inadvisable to proceed with the offering,
sale, and delivery of the Shares, as the case may be, on the terms
contemplated by the Prospectus due to the impaired investment quality
of the Shares; or if the Dow ▇▇▇▇▇ Industrial Average shall have fallen
by 15% or more from its closing price on the day immediately preceding
the date that the Registration Statement is declared effective by the
Commission.
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c. If the Representative elects to prevent this Agreement from becoming
effective as provided in this Section 10, or to terminate this
Agreement, it shall notify the Company promptly by telephone, telex, or
telegram, confirmed by letter. If, as so provided, the Company elects
to prevent this Agreement from becoming effective, the Company shall
notify the Representative promptly by telephone, telex, or telegram,
confirmed by letter.
d. Anything in this Agreement to the contrary notwithstanding other
than Section 10(e), if this Agreement shall not become effective by
reason of an election pursuant to this Section 10 or if this Agreement
shall terminate or shall otherwise not be carried out prior to January
29, 2000 because (i) of any reason solely within the control of the
Company or its stockholders and not due to the breach of any
representation, warranty or covenant or bad faith of the
Representative, (ii) the Company unilaterally withdraws the proposed
Public Offering from the Representative in favor of another
underwriter, (iii) the Company does not permit the Registration
Statement to become effective, (iv) of any material discrepancy in any
representation by the Company and/or its officers, directors,
stockholders, agents, advisers or representatives, made in writing,
including but not limited to the Registration Statement, to the
Representative, (v) the Company is, directly and/or indirectly,
negotiating with other persons or entities of whatsoever nature
relating to a possible Public Offering of its securities, or (vi) of
any failure on the part of the Company to perform any covenant or
agreement or satisfy any condition of this Agreement by it to be
performed or satisfied, then, in any of such events, the Company shall
be obligated to reimburse the Representative for its out-of-pocket
expenses on an accountable basis. Should the Representative be required
to account for "out-of-pocket" expenses, any expense incurred by the
Representative shall be deemed to be reasonable and unobjectionable
upon a reasonable showing by the Representative that such expenses were
incurred, directly or indirectly, in connection with the proposed
transaction and/or relationship of the parties hereto, as described
herein. In no event will the Representative be entitled to
reimbursement of accountable expenses exceeding $100,000, inclusive of
the $50,000 advanced against the non-accountable expense allowance. The
Representative will return to the Company any portion of the $50,000
payment previously received that is not used in the payment of
accountable expenses if the Public Offering is not completed.
e. Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out,
the provisions of Sections 5(a), 6, 8, 9, and 10 shall not be in any
way affected by such election or termination or failure to carry out
the terms of this Agreement or any part hereof.
6. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the
Representative, shall be mailed, delivered, or sent by facsimile transmission
and confirmed by original letter, to ▇▇▇▇▇▇▇▇▇ Securities, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, with a copy to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
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Esq., Berliner ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; or if sent to the Company shall be mailed, delivered, or
telexed or telegraphed and confirmed by letter, to Leisure Time Casinos &
Resorts, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. , ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
All notices hereunder shall be effective upon receipt by the party to which it
is addressed.
7. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters, the Company, and the persons and entities
referred to in Section 8 who are entitled to indemnification or contribution,
and their respective successors, legal representatives, and assigns (which shall
not include any buyer, as such, of the Firm Shares and Additional Shares) and no
other person shall have or be construed to have any legal or equitable right,
remedy, or claim under or in respect of or by virtue of this Agreement or any
provision herein contained.
8. Construction. This Agreement shall be construed in accordance with the laws
of the State of Colorado, without giving effect to conflict of laws. Time is of
the essence in this Agreement. The parties acknowledge that this Agreement was
initially prepared by the Representative, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that, because
all parties participated in negotiating and drafting this Agreement, no rule of
construction shall apply to this Agreement which construes ambiguous language in
favor of or against any party by reason of that party's role in drafting this
Agreement.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement between us.
Very truly yours,
LEISURE TIME CASINOS & RESORTS, INC.
By:
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
By:
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President
Accepted as of the date first above written.
Denver, Colorado
▇▇▇▇▇▇▇▇▇ SECURITIES, INC.
for itself and any other Underwriters:
By:
----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
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LEISURE TIME CASINOS & RESORTS, INC.
(a Colorado corporation)
SCHEDULE 1
This Schedule sets forth the name of each Underwriter referred to in
the Underwriting Agreement and the number of Shares to be sold by the Company.
Number of
Name Shares
-------------------------- ---------
▇▇▇▇▇▇▇▇▇ Securities, Inc.
Total 1,100,000
=========
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