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EXHIBIT 1.1
1,400,000 SHARES OF COMMON STOCK
1,400,000 COMMON STOCK PURCHASE WARRANTS
▇▇▇▇▇▇ INDUSTRIES, INC.
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
UNDERWRITING AGREEMENT
_______________, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.,
as Representative of the Several Underwriters
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Syndicate Department
Ladies and Gentlemen:
▇▇▇▇▇▇ Industries, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") 700,000 shares of its common stock, par
value $.10 per share (the "Common Stock"), and 1,050,000 Common Stock Purchase
Warrants, and those certain stockholders of the Company named in Schedule II
hereto (the "Selling Stockholders") propose to sell to the Underwriters 700,000
shares of Common Stock and 350,000 Common Stock Purchase Warrants. Each such
Common Stock Purchase Warrant shall entitle the holder thereof to purchase one
share of Common Stock at an exercise price equal to 120% of the public offering
price per share of Common Stock during the first 13 months of the warrant's term
and 130% during the remaining 12 months of the warrant's term. The Common Stock
Purchase Warrants shall expire 25 months after the closing of the offering,
unless such term is extended pursuant to the Warrant Agreement governing the
terms of the Common Stock Purchase Warrants (the "Warrant Agreement"). The
Warrant Agreement shall be in the form of the Warrant Agreement attached as an
exhibit to the Registration Statement on Form S-1 (as amended from time to time,
the "Registration Statement") on file with the Securities and Exchange
Commission (the "Commission") on the date hereof covering the offer and sale of
the shares of Common Stock, the Common Stock Purchase Warrants, and the shares
of Common Stock issuable upon the exercise of the Common Stock Purchase
Warrants.
The 1,400,000 shares of Common Stock to be purchased by the
Underwriters are hereinafter referred to as the "Firm Shares" and the 1,400,000
Common Stock Purchase Warrants
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to be purchased by the Underwriters as the "Firm Warrants." The Firm Shares and
the Firm Warrants are hereinafter collectively referred to as the "Firm
Securities." In addition, the Company proposes to grant to the several
Underwriters, solely for the purpose of covering over-allotments in the sale of
the Firm Securities, the option described in Section 2 of this Agreement (this
"Agreement") to purchase up to 210,000 additional shares of Common Stock (the
"Additional Shares") and 210,000 additional Common Stock Purchase Warrants (the
"Additional Warrants"). The Additional Shares and the Additional Warrants are
hereinafter collectively referred to as the "Additional Securities."
The Firm Warrants and the Additional Warrants are hereinafter
collectively referred to as the "Warrants"; the Shares of Common Stock to be
issued or sold upon the exercise of the Warrants as the "Warrant Shares"; and
the Firm Securities, the Additional Securities, and the shares of Common Stock
issuable upon the exercise of the Firm Warrants and the Additional Warrants as
the "Offered Securities." All the warrants included in the Securities as the
"Warrants" and all of the shares of Common Stock to be issued or sold upon
exercise of the Warrants as the "Warrant Shares." The Warrant Agreement, the
Deposit Agreement, the Managing Underwriters' Warrant Agreement, and the
Registration Rights Agreement (as such terms are defined herein) are hereinafter
collectively referred to as the "Operative Documents."
You, as the representative of the Underwriters (the
"Representative"), have advised the Company and the Selling Stockholders that
you and the other Underwriters desire to purchase, severally and not jointly,
the Firm Shares and Firm Warrants as described on Schedule I hereto and that you
have been authorized by the Underwriters to execute this Agreement on their
behalf.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Commission in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), the Registration
Statement (File No. 333-_____), including a prospectus subject to completion,
relating to the Offered Securities. The prospectus in the form included in the
Registration Statement when the Commission declares the Registration Statement
effective, or if the prospectus included in the Registration Statement omits
information in reliance upon Rule 430A under the Securities Act and such
information is included in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Securities Act or as part of a post-effective amendment to
the Registration Statement after the Registration Statement becomes effective,
the prospectus as so filed, is referred to in this Agreement as the
"Prospectus." The prospectus subject to completion in the form included in the
Registration Statement at the time of the initial filing of such Registration
Statement with the Commission and as such prospectus is amended from time to
time until the date of the Prospectus is referred to in this Agreement as the
"Prepricing Prospectus."
2. AGREEMENTS TO SELL AND PURCHASE. The Company and the
Selling Stockholders (in accordance with Schedule II hereto) hereby agree,
severally and not jointly, to sell the Firm Securities to the Underwriters, and
upon the basis of the representations, warranties and agreements of the Company
and the Selling Stockholders contained herein and subject to all
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the terms and conditions set forth herein, each Underwriter agrees, severally
and not jointly, to purchase from the Company and the Selling Stockholders at a
purchase price of $_____ per Firm Share and $.0935 per Firm Warrant, the number
of Firm Shares and Firm Warrants set forth opposite the name of such Underwriter
in Schedule I hereto (or such number of Firm Shares and Firm Warrants as
adjusted pursuant to Section 11 hereof).
The Company hereby also agrees to sell to the Underwriters,
and upon the basis of the representations, warranties and agreements of the
Company and the Selling Stockholders herein contained and subject to all the
terms and conditions set forth herein, the Underwriters shall have the right for
30 days after the Closing Date (as defined herein) to purchase from the Company
up to an aggregate of 210,000 Additional Shares and 210,000 Additional Warrants
at a price identical to the price per Firm Share and Firm Warrant, respectively,
set forth above. The Additional Shares and Additional Warrants may be purchased
solely for the purpose of covering over-allotments, if any, made in connection
with the offering of the Firm Securities. If any Additional Shares and
Additional Warrants are to be purchased, each Underwriter, severally and not
jointly, agrees to purchase the number of Additional Shares and Additional
Warrants (subject to such adjustments as you may determine to avoid fractional
shares) that bears the same proportion to the total number of Additional Shares
and Additional Warrants to be purchased by the Underwriters as the number of
Firm Shares and Firm Warrants, respectively, set forth opposite the name of such
Underwriter in Schedule I hereto (or such number of Firm Shares and Firm
Warrants as adjusted pursuant to Section 11 hereof) bears to the total number of
Firm Shares and Firm Warrants. Upon any election by the Underwriters to purchase
less than all the Additional Shares and Additional Warrants, the aggregate
number of Additional Shares and Additional Warrants to be purchased from the
Company by all the Underwriters shall be in the same proportion as the maximum
number of Additional Shares and Additional Warrants that may be purchased from
the Company as set forth on Schedule II hereto.
At the Closing (as defined herein), the Company shall sell to the
Representative and Southwest Securities, Inc. (collectively with the
Representative, the "Managing Underwriters") a warrant (the "Managing
Underwriters' Warrant") for $___________ entitling the holder thereof to (i)
purchase up to 140,000 shares of Common Stock for five years after the Closing
Date for an exercise price per share equal to 120% of the per share offering
price set forth on the cover page of the Prospectus, and (ii) purchase up to
140,000 Warrants, identical to the Firm Warrants and the Additional Warrants,
for an exercise price per Warrant equal to 120% of the per Warrant offering
price set forth on the cover page of the Prospectus. The Managing Underwriters'
Warrant shall be exercisable with respect to the Warrants for the 25 months
immediately after the Closing Date. The Managing Underwriters' Warrant shall be
exercisable with respect to the shares of Common Stock for a period of four
years commencing one year after the Closing Date, and the Managing Underwriters'
Warrant shall be exercisable with respect to the Warrants for a period of 13
months commencing one year after the Closing Date. The Managing Underwriters'
Warrant shall also contain the other terms and conditions as set forth in the
Managing Underwriters' Warrant Agreement included as an exhibit to the
Registration Statement on the date hereof (the "Managing Underwriters' Warrant
Agreement"). In addition, the holders of the Managing Underwriters' Warrant
shall be entitled to the registration rights with respect to the resale of the
shares of Common Stock issuable upon the exercise of such warrant, the resale of
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the Warrants issuable upon the exercise of such warrant, and the issuance of the
shares of Common Stock issuable upon the exercise of such Warrants as set forth
in the Registration Rights Agreement included as an exhibit to the Registration
Statement on the date hereof (the "Registration Rights Agreement"). As used
herein, "Managing Underwriters' Securities" shall mean the Managing
Underwriters' Warrant, including the shares of Common Stock and Warrants
issuable upon the exercise thereof and the shares of Common Stock issuable upon
the exercise of such Warrants. At the Closing, the Company also shall pay to the
Managing Underwriters a fee equal to 1.33% of the Company's gross proceeds from
its sale of the Firm Securities (the "Financial Advisory Fee").
3. TERMS OF PUBLIC OFFERING. The Company and the Selling
Stockholders have been advised by you that the Underwriters propose to make a
public offering of their respective portions of the Firm Securities and any
Additional Securities as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable, and initially
to offer the Firm Securities and any Additional Securities upon the terms set
forth in the Prospectus.
4. DELIVERY OF CERTAIN SECURITIES AND PAYMENT THEREFOR. You
contemplate that the delivery to the Underwriters of the Firm Securities and
payment therefor (the "Closing") shall be made at the office of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., New York
City time, on _____________ __, 1997 (the "Closing Date"). The place of closing
for the Firm Securities and the Closing Date may be varied by you as you
consider advisable.
Delivery to the Underwriters of and payment for any Additional
Securities to be purchased by the Underwriters shall be made at the office of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m.,
New York City time, on such date or dates (each an "Additional Closing Date,"
which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than three nor later than ten business days after
the giving of the notice hereinafter referred to) as shall be specified in a
written notice from you on behalf of the Underwriters to the Company of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional Securities. Such notice may be given to the Company by you at any
time within 30 days after the date of the Prospectus. The place of closing for
the Additional Securities and the Additional Closing Date may be varied by you
as you consider advisable.
Certificates for the Firm Securities and for any Additional
Securities to be purchased hereunder shall be registered in such names and in
such denominations as you shall request prior to 1:00 p.m., New York City time,
not later than the second full business day preceding the Closing Date or the
Additional Closing Date, as the case may be. Such certificates shall be made
available to you in New York, New York for inspection and packaging not later
than 9:30 a.m., New York City time, on the business day immediately preceding
the Closing Date or the Additional Closing Date, as the case may be. The
certificates evidencing the Firm Securities and any Additional Securities to be
purchased hereunder shall be delivered to you, for the respective accounts of
the several Underwriters, on the Closing Date or the Additional
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Closing Date, as the case may be, against payment of the purchase price therefor
by wire transfer to accounts designated in writing to you by the Company and
each of the Selling Stockholders or by certified or official bank check or
checks payable in New York Clearing House funds. Time shall be of the essence
and delivery at the time and place specified in this Agreement is a further
condition to the obligations of each Underwriter.
5. COVENANTS AND AGREEMENTS. The Company and each Selling
Stockholder severally, and not jointly, covenants and agrees with the several
Underwriters as follows (except with respect to the covenants and agreements
below made by the Company, for which the Selling Stockholders shall bear no
responsibility):
a. The Company will cause the Registration Statement
and any post-effective amendments thereto to be prepared in conformity
with the requirements of the Securities Act. In addition, the Company
will use its best efforts to cause the Registration Statement and any
post-effective amendments thereto to become effective and will advise
you promptly, and if requested by you, will confirm such advice in
writing (i) when the Registration Statement has become effective and
when any post-effective amendment thereto becomes effective; (ii) if
Rule 430A under the Securities Act is used, when the Prospectus has
been timely filed pursuant to Rule 424(b) under the Securities Act;
(iii) of any request by the Commission for amendments or supplements to
the Registration Statement, any Prepricing Prospectus or the Prospectus
or for additional information; (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Offered
Securities for offering or sale in any jurisdiction or the initiation
of any proceeding for such purposes and (v) of any change in the
Company's condition (financial or other), business, properties, net
worth, results of operations, or prospects or of any event that comes
to the attention of the Company that makes any statement made in the
Registration Statement or the Prospectus (as then amended or
supplemented) untrue in any material respect or that requires the
making of any additions thereto or changes therein in order to make the
statements therein not misleading in any material aspect, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Securities Act or any other law. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will use its
best efforts to obtain the withdrawal of such order at the earliest
possible time.
b. The Company will furnish to you, without charge,
three signed duplicate originals of the Registration Statement as
originally filed with the Commission and of each amendment thereto,
including financial statements and all exhibits thereto, and will also
furnish to you, without charge, such number of conformed copies of the
Registration Statement as originally filed and of each amendment
thereto as you may reasonably request.
c. Neither the Company nor any Selling Stockholder
will file any amendment to the Registration Statement or make any
amendment or supplement to the Prospectus of which you shall not
previously have been advised (with a reasonable
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opportunity to review such amendment or supplement) or to which you
have reasonably objected after being so advised.
d. The Company will prepare and file with the
Commission, upon your reasonable request, any amendments or supplements
to the Registration Statement or Prospectus, in form and substance
reasonably satisfactory to counsel for the Company, as in the opinion
of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel for the
Underwriters, may be necessary or advisable in connection with the
distribution of the Offered Securities and the exercise of the Warrants
included therein, and will use its best efforts to cause the same to
become effective as promptly as possible. The Company will keep the
Registration Statement effective for the term of the Firm Warrants and
Additional Warrants with respect to the issuance and sale of the
related Warrant Shares.
e. Prior to the execution and delivery of this
Agreement, the Company has delivered to you, without charge, in such
quantities as you have requested copies of each form of the Prepricing
Prospectus. The Company and the Selling Stockholders have consented to
the use, in accordance with the provisions of the Securities Act and
with the securities or Blue Sky laws of the jurisdictions in which the
Offered Securities are offered by the several Underwriters and by
dealers, prior to the date of the Prospectus, of each Prepricing
Prospectus so furnished.
f. As soon after the execution and delivery of this
Agreement as is practicable and thereafter from time to time for such
period as in the reasonable opinion of counsel for the Underwriters a
prospectus is required by the Securities Act to be delivered in
connection with sales by any Underwriter or a dealer, and for so long a
period as you may request for the distribution of the Offered
Securities, the Company will deliver to each Underwriter, without
charge, as many copies of the Prospectus (and of any amendment or
supplement thereto) as they may reasonably request. The Company and the
Selling Stockholders consent to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of
the Securities Act and with the securities or Blue Sky laws of the
jurisdictions in which the Offered Securities are offered by the
several Underwriters and by all dealers to whom Offered Securities may
be sold, both in connection with the offering and sale of the Offered
Securities and for such period of time thereafter as the Prospectus is
required by the Securities Act to be delivered in connection with sales
by any Underwriter or dealer. If at any time during the period during
which a Prospectus is required to be delivered in accordance with the
Securities Act any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriters is required
to be set forth in the Prospectus (as then amended or supplemented) or
should be set forth therein in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus
to comply with the Securities Act or any other law, the Company will
forthwith prepare and, subject to Sections 5(a) and 5(c) hereof, file
with the Commission and use its best efforts to cause to become
effective as promptly as possible an appropriate supplement or
amendment thereto, and
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will furnish to each Underwriter who has previously requested
Prospectuses, without charge, a reasonable number of copies thereof.
g. The Company and the Selling Stockholders will
cooperate with you and counsel for the Underwriters in connection with
the registration or qualification of the Offered Securities for
offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may reasonably
designate and will file such consents to service of process or other
documents as may be reasonably necessary in order to effect such
registration or qualification; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction
where it is not now required to be qualified or to take any action that
would subject it to service of process in suits, other than those
arising out of the offering or sale of the Offered Securities, in any
jurisdiction where it is not now so subject.
h. The Company will make generally available to its
security holders as soon as practicable, but not later than 45 days
after the end of the 12 month period beginning at the end of the fiscal
quarter of the Company during which the date on which the Commission
declares the Registration Statement effective (the "Effective Date"),
or 90 days if such 12 month period coincides with the Company's fiscal
year, a consolidated earnings statement (in form complying with the
provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act), which need not be audited, covering such 12 month
period.
i. During the period beginning on the date hereof
ending on the fifth anniversary of the Closing Date, the Company will
furnish to you and, upon your request, to each of the other
Underwriters, (i) as soon as available, a copy of each proxy statement,
quarterly or annual report or other report of the Company mailed to
stockholders or filed with the Commission, the National Association of
Securities Dealers, Inc. (the "NASD") or any securities exchange or the
Nasdaq National Market (as defined herein) and (ii) from time to time
such other information concerning the Company as you may reasonably
request.
j. If this Agreement is terminated after the
execution hereof (other than pursuant to Section 11 hereof), including
any termination by the Underwriters because of breach of any
representation and warranty of, or failure to perform any agreement by,
the Company or any Selling Stockholder herein or to comply with any of
the terms or provisions hereof, the Company agrees to reimburse you and
the other Underwriters for all out-of pocket expenses (including travel
expenses and fees and expenses of counsel for the underwriters)
reasonably incurred by the Underwriters in connection herewith.
k. The Company will apply the net proceeds from the
sale of the Offered Securities to be sold by it substantially in
conformity with the purposes set forth under "Use of Proceeds" in the
Prospectus.
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l. If Rule 430A under the Securities Act is used, the
Company will timely file the Prospectus pursuant to Rule 424(b) under
the Securities Act.
m. Prior to the Closing Date or the Additional
Closing Date, as the case may be, the Company will furnish to you, as
promptly as possible, copies of any unaudited interim consolidated
financial statements of the Company and its subsidiaries for any
quarterly period subsequent to the periods covered by the financial
statements appearing in the Prospectus.
n. The Company and the Selling Stockholders, to the
extent applicable, will comply in all material respects with all
provisions of the undertakings contained in the Registration Statement.
o. Neither the Company nor any Selling Stockholder
will take any action constituting, or which might reasonably be
expected to constitute or result in, stabilization or manipulation of
the trading price of the Common Stock or the Warrants to facilitate the
sale or resale of the Offered Securities.
p. The Company and the Selling Stockholders will use
their best efforts to qualify or register their respective shares of
Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of each state
where necessary to permit market making transactions and secondary
trading if you, based on advice of counsel, advise the Company that
such qualification, registration or exemption is necessary or
desirable, and will comply with such Blue Sky laws and will continue
such qualifications, registrations and exemptions in effect for a
period of five years after the Closing Date.
q. The Company will timely file with the National
Association of Securities Dealers, Inc. Automated Quotation National
Market System (the "Nasdaq National Market") or such other exchange
upon which its securities are listed all documents and notices required
by the Nasdaq National Market or such other applicable exchange of
companies that have issued securities that are traded on such market.
r. So long as the Company shall be subject to the
reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Company shall furnish to its
stockholders and warrant holders annual reports containing financial
statements of the Company audited by its independent certified public
accountants and will make available to such stockholders and warrant
holders upon their request quarterly reports for the first three
quarters of its fiscal year containing financial information, which may
be unaudited.
s. So long as the Company shall be subject to the
reporting requirements of the Exchange Act, the Company will, from time
to time, after the date the Registration Statement becomes effective,
file with the Commission such reports as are required by the Securities
Act and Exchange Act and with state securities commissions in
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states where the Offered Securities have been sold by the Underwriters
such reports as are required to be filed by the securities acts and the
regulations of those states.
t. The Company will cause the Selling Stockholders
and each officer, director and employee of the Company or any
Subsidiary (as defined herein) who owns shares of Common Stock or
options or warrants to acquire shares of Common Stock and who is listed
on Schedule III attached hereto to enter into an agreement with the
Representative to the effect that, for the period beginning on the date
hereof and ending (i) 180 days for all Selling Stockholders, and (ii)
120 days for each such officer, director and employee who is not a
Selling Stockholder, from the Effective Date, he or she will not,
without the prior consent of the Representative, directly or
indirectly, offer, sell, offer to sell, grant any option to purchase or
otherwise sell or dispose of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable (other than
in connection with a conversion, exercise or exchange in which the
holder retains the Shares of Common Stock) therefor or with respect to
which such person has the power of disposition.
u. The Prospectus and any amendment or supplement
thereto will at all times up to and including the Closing Date and any
Additional Closing Date, and during such longer period as the
Prospectus may be required to be delivered in connection with the
issuance and/or sale by the Company or the Selling Stockholders of
shares of Common Stock or Warrants or the exercise of any of the
Warrants, comply in all material respects with the provisions of the
Securities Act and will not contain any untrue statement of a material
fact and will not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
v. Until the second anniversary of the Effective
Date:
(i) All members of the Audit and
Compensation Committees of the Company's Board of
Directors (the "Board of Directors") shall be
Independent Directors as defined in the Bylaws of the
Company attached as an exhibit to the Registration
Statement on the date hereof.
(ii) Article ___ of the Company's Bylaws,
which concerns certain corporate governance matters,
shall not be modified or rescinded without the
approval of the holders of 66 2/3% of the
outstanding shares of Common Stock.
(iii) The Company shall not (x) issue or
sell shares of Common Stock or securities convertible
into, or exchangeable for, or options or other rights
to acquire, shares of Common Stock to ▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or any relative or
affiliate of any such person (collectively, the
"Executives"), except for issuances of shares of
Common Stock upon the exercise of stock options and
warrants outstanding on the
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date hereof and described in the Prospectus, or (y)
increase any compensation payable to any of the
Executives, unless such issuance or sale of
securities or increase of compensation is unanimously
approved by the Compensation Committee of the Board
of Directors.
(iv) The Company shall base the compensation
for the Company's directors and executive officers
upon standards established with the assistance of an
outside compensation specialist.
w. At the Closing, the Company will enter into the
Managing Underwriters' Warrant Agreement and the Registration Rights
Agreement.
x. The Company will not reprice any stock options or
warrants before the second anniversary of the Closing Date.
y. The Company and the Selling Stockholders will do
and perform all things required to be done and performed under this
Agreement by them prior to the Closing Date and use their best efforts
to satisfy all conditions precedent within their control to the
delivery of the Offered Securities.
z. The Company and the Selling Stockholders will
comply in all material respects with the Operative Documents.
aa. At the Closing, the Company and the Selling
Stockholders will enter into the Warrant Agreement with American Stock
Transfer & Trust Company ("American Stock Transfer" or the "Warrant
Agent").
bb. At the Closing, the Selling Stockholders will
enter into the Deposit Agreement with American Stock Transfer in the
form set forth as an exhibit to the Registration Statement on the date
hereof (the "Deposit Agreement"), and pursuant to the Deposit Agreement
the Selling Stockholders will deposit their shares of Common Stock
subject to the Warrants that they sell in escrow for transfer upon the
exercise of such Warrants.
cc. At the Closing, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ will repay all indebtedness owed to the Company or any
Subsidiary (as defined herein), including the indebtedness evidenced by
their non-negotiable promissory notes payable to the Company set forth
as exhibits to the Registration Statement on the date hereof.
6. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The
Company represents and warrants to each Underwriter on the date hereof, and
shall be deemed to represent and warrant to each Underwriter on the Closing Date
and any Additional Closing Date, that:
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a. Each Prepricing Prospectus included as part of the
Registration Statement as originally filed or as part of any amendment
or supplement thereto, or filed pursuant to Rule 424(a) under the
Securities Act, complied when so filed in all material respects with
the provisions of the Securities Act, except that this representation
and warranty does not apply to statements in or omissions from such
Prepricing Prospectus (or any amendment or supplement thereto) made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by or on behalf of any
Underwriter through you expressly for use therein. The Commission has
not issued any order preventing or suspending the use of any Prepricing
Prospectus.
b. The Registration Statement, in the form in which
it becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective, and the
Prospectus, and any supplement or amendment thereto when filed with the
Commission under Rule 424(b) under the Securities Act, will comply in
all material respects with the provisions of the Securities Act and
will not at any such times contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, except that
this representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectus (or any
amendment or supplement thereto) made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by or on behalf of any Underwriter through you
expressly for use therein.
c. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of
Delaware, with full power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as
described in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or
place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure
to so register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth,
results of operations or prospects of the Company and the Subsidiaries
taken as a whole (a "Material Adverse Effect").
d. Except for the subsidiaries listed in Exhibit 21.1
to the Registration Statement as of the date hereof, the Company does
not own a material interest in or control, directly or indirectly, any
other corporation, partnership, joint venture, association, trust or
other business organization that is material to the business of the
Company. Each of the subsidiaries described on Exhibit 21.1 to the
Registration Statement as of the date hereof (collectively, the
"Subsidiaries") is a corporation duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization,
with full power and authority to own, lease and operate its properties
and to conduct its business as presently conducted and as described in
the Registration Statement and the Prospectus (and any amendment or
supplement thereto), and is duly registered and qualified to conduct
its business and is in good standing in each other
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12
jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except
where the failure to so register or qualify does not have a Material
Adverse Effect. All of the outstanding shares of capital stock of each
of the Subsidiaries has 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
security interest, lien, adverse claim, equity or other encumbrance.
e. The capitalization of the Company is and will be
as set forth in the Prospectus as of the date set forth therein. All of
the outstanding shares of Common Stock have been, and as of the Closing
Date will be, duly authorized and validly issued, are fully paid and
nonassessable and free of any preemptive or similar rights; the Firm
Shares and Additional Shares to be issued and sold to the Underwriters
by the Company hereunder have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights; the capital
stock of the Company conforms in all material respects to the
description thereof in the Registration Statement and the Prospectus
(and any amendment or supplement thereto); and the delivery of
certificates for the Firm Shares and the Additional Shares pursuant to
the terms of this Agreement and payment for the Firm Shares and the
Additional Shares will pass valid title to the Firm Shares and the
Additional Shares, free and clear of any claim, encumbrance or defect
in title to the several Underwriters purchasing the Firm Shares and the
Additional Shares. The certificates for the Firm Shares and the
Additional Shares are in valid and sufficient form.
f. The Firm Shares to be sold to the Underwriters by
the Selling Stockholders were duly authorized and validly issued, are
fully paid and nonassessable, and were not issued in violation of any
preemptive or similar rights.
g. There are no legal or governmental proceedings
pending or, to the knowledge of the Company after reasonable inquiry
and investigation, threatened, against the Company or any of the
Subsidiaries, or to which the Company, any of the Subsidiaries, or any
of their respective properties is subject, that are required to be
described in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) but are not described as required.
Except as described in the Prospectus, there is no action, suit,
inquiry, proceeding, or investigation by or before any court or
governmental or other regulatory or administrative agency or commission
pending or, to the best knowledge of the Company after reasonable
inquiry and investigation, threatened, against or involving the Company
or any Subsidiary, which might individually or in the aggregate prevent
or adversely affect the transactions contemplated by this Agreement or
result in a Material Adverse Effect, nor is there any basis for any
such action, suit, inquiry, proceeding, or investigation. There are no
agreements, contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement thereto) or to be filed as
an exhibit to the Registration Statement that are not
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13
described or filed as required by the Securities Act. All such
contracts to which the Company or any Subsidiary is a party have been
duly authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the Company or
such Subsidiary and are enforceable against and by the Company or such
Subsidiary in accordance with the terms thereof except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally, (ii) as the
enforceability of any indemnification provision may be limited under
federal or state securities laws and (iii) that the remedy of specific
forms of equitable relief may be subject to equitable defenses and
discretion of the court before which any proceeding may be brought
(collectively, the "Enforceability Exceptions"), and neither the
Company nor any Subsidiary, nor to the Company's knowledge after
reasonable inquiry and investigation, any other party, is in breach of
or default under any of such contracts.
h. Neither the Company nor any of the Subsidiaries is
in violation in any material respect of its certificate or articles of
incorporation or bylaws, or other organizational documents, or of any
law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries or of any decree
of any court or governmental agency or body having jurisdiction over
the Company or any of the Subsidiaries, or in default in the
performance of any obligation, agreement or condition contained in (i)
any bond, debenture, note or any other evidence of indebtedness, or
(ii) any material agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by which any
of them or any of their respective properties may be bound; and to the
Company's knowledge after reasonable inquiry and investigation there
does not exist any state of facts that constitutes an event of default
on the part of the Company or any Subsidiary as defined in such
documents or which, with notice or lapse of time or both, would
constitute such an event of default.
i. The execution and delivery of this Agreement and
the performance by the Company of its obligations under this Agreement,
including the issuance and sale of the Offered Securities on the terms
set forth in this Agreement, have been duly and validly authorized by
the Company, and this Agreement has been duly executed and delivered by
the Company and constitutes the valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its
terms subject to the Enforceability Exceptions.
j. The execution and delivery of the Warrant
Agreement and the performance by the Company of its obligations under
the Warrant Agreement has been duly and validly authorized by the
Company, and at the Closing the Warrant Agreement will be duly executed
and delivered by the Company and constitute the valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms subject to the Enforceability Exceptions.
k. The execution and delivery of the Managing
Underwriters' Warrant Agreement and the performance by the Company of
its obligations under the
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14
Managing Underwriters' Warrant Agreement has been duly and validly
authorized by the Company, and at the Closing the Managing
Underwriters' Warrant Agreement will be duly executed and delivered by
the Company and constitutes the valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its
terms subject to the Enforceability Exceptions.
l. The execution and delivery of the Registration
Rights Agreement and the performance by the Company of its obligations
under the Registration Rights Agreement has been duly and validly
authorized by the Company, and at the Closing the Registration Rights
Agreement will be duly executed and delivered by the Company and
constitute the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms subject to
the Enforceability Exceptions.
m. The Warrants to be issued by the Company have been
duly and validly authorized by the Company for issuance and sale
pursuant to this Agreement and, when issued and countersigned in
accordance with the terms of the Warrant Agreement and delivered
against payment therefor in accordance with the terms hereof and
thereof, will be validly issued and the legal, valid and binding
obligation of the Company subject to the Enforceability Exceptions. The
Company has duly reserved a sufficient number of shares of Common Stock
for the issuance of the Warrant Shares upon the exercise of the
Warrants to be issued by the Company (including the Warrant Shares
underlying the Warrants to be sold by the Selling Stockholders based
upon the Company's contingent obligation to issue such shares if the
Selling Stockholders fail to deliver them) and has duly and validly
authorized the issuance of such Warrant Shares upon the exercise of
such Warrants. Upon the exercise of such Warrants and the payment of
the exercise price thereof, the respective Warrant Shares will be
validly issued, fully paid and nonassessable, and not issued in
violation of any preemptive or similar rights. The Warrants conform in
all material respects to the description thereof contained in the
Prospectus.
n. The Warrants to be issued by the Selling
Stockholders, when issued and countersized in accordance with the terms
of the Warrant Agreement and delivered against payment therefor in
accordance with the terms hereof and thereof, will be the legal, valid
and binding obligations of the Selling Stockholders. At the Closing,
the Selling Stockholders will deposit with the Warrant Agent a
sufficient number of shares of Common Stock for the transfer of the
Warrant Shares upon exercise of the Warrants to be issued by the
Selling Stockholders. Such Warrant Shares were duly authorized and
validly issued, are fully paid and nonassessable, and were not issued
in violation of any preemptive or similar rights.
o. The Managing Underwriters' Warrant has been duly
and validly authorized by the Company for issuance and sale pursuant to
this Agreement and, when payment is made therefor in accordance with
the terms hereof and the Managing Underwriters' Warrant Agreement, will
be validly issued and the legal, valid and binding obligation of the
Company subject to the Enforceability Exceptions. The Company has
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15
duly reserved a sufficient number of its shares of Common Stock for the
issuance of the shares of Common Stock upon the exercise of the
Managing Underwriters' Warrant, including the shares of Common Stock
issuable upon the exercise of the Warrants issuable upon the exercise
of the Managing Underwriters' Warrant, and has duly and validly
authorized the issuance of such shares of Common Stock upon the
exercise of the Managing Underwriters' Warrant and the Warrants
issuable upon the exercise of the Managing Underwriters' Warrant. Upon
the exercise of the Managing Underwriters' Warrant and the shares of
Common Stock issuable upon the exercise of the Warrants issuable upon
the exercise of the Managing Underwriters' Warrant, and the payment of
the exercise price thereof, the respective shares of Common Stock will
be validly issued, fully paid and nonassessable, and not issued in
violation of any preemptive or similar rights. The Managing
Underwriters' Warrant conforms in all material respects to the
description thereof contained in the Prospectus.
p. Neither the issuance and sale of the Offered
Securities, the execution, delivery or performance of this Agreement
and the other Operative Documents by the Company nor the consummation
by the Company of the transactions contemplated hereby or thereby (i)
requires any consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except such as
may be required under the Securities Act and compliance with the
securities or Blue Sky laws of various jurisdictions or conflicts with
or will conflict with or constitutes or will constitute a breach of, or
a default under, the certificate or articles of incorporation or
bylaws, or other organizational documents, of the Company or any of the
Subsidiaries or (ii) conflicts or will conflict with or constitutes a
breach of, or a default under, any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party
or by which any of them or any of their respective properties is bound,
or violates any statute, law, regulation, filing, judgment, injunction,
order or decree applicable to the Company or any of the Subsidiaries or
any of their respective properties, or results in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to the terms
of any agreement or instrument to which any of them is a party or by
which any of them is bound or to which any of the property or assets of
any of them is subject.
q. Except as set forth in the Prospectus, the Company
does not have outstanding and at the Closing Date (and any Additional
Closing Date) will not have outstanding any options to purchase, or any
warrants to subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell, any shares of
Common Stock or any such options, warrants or convertible securities or
obligations. No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of
the Registration Statement that have not been satisfied or heretofore
waived in writing.
r. The financial statements, together with related
schedules and notes, included in the Registration Statement and the
Prospectus (and any amendment or
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16
supplement thereto), comply as to form in all material respects with
the applicable accounting requirements of the Securities Act for
Registration Statements on a Form S-1 and present fairly the
consolidated financial position, results of operations and changes in
cash flows of the Company and the Subsidiaries on the basis stated in
the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial
and statistical information and data set forth in the Registration
Statement and Prospectus (and any amendment or supplement thereto) is
accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company. No other
financial statements or schedules are required to be included in the
Registration Statement. Neither the Company nor any Subsidiary has
undergone any Material Adverse Effect since the date of the most recent
balance sheet included in the financial statements set forth in the
Prospectus.
s. Except as disclosed in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), subsequent
to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or
supplement thereto), (i) the Company and its Subsidiaries have not
incurred any liabilities or obligations, indirect, direct or
contingent, or entered into any transaction that is not in the ordinary
course of business or that could result in a material reduction in the
future earnings of the Company and the Subsidiaries; (ii) the Company
and the Subsidiaries have not sustained any material loss or
interference with respect to their businesses or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any dividends or
other distributions with respect to its capital stock and the Company
and its Subsidiaries are not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been
any change in the capital stock (other than upon the sale of the
Offered Securities and the Managing Underwriters' Warrant hereunder and
upon the exercise of options and warrants described in the Prospectus)
or indebtedness material to the Company and the Subsidiaries (other
than in the ordinary course of business); and (v) there has not been
any material adverse change, or any development involving or that may
reasonably be expected to involve a potential future material adverse
change in the condition (financial or otherwise), business, properties,
net worth, results of operations or prospects of the Company and the
Subsidiaries.
t. The Company and each of the Subsidiaries has good
and marketable title to all property (real and personal) described in
the Prospectus as being owned by it, free and clear of all liens,
claims, security interests or other encumbrances except (i) such as are
described in the financial statements included in the Prospectus or
(ii) such as are not materially burdensome and do not interfere in any
material respect with the use of the property or the conduct of the
business of the Company and the Subsidiaries taken as a whole. The
property (real and personal) held under lease by each of the Company
and the Subsidiaries is held by it under valid, subsisting and
enforceable
-16-
17
leases, with only such exceptions as in the aggregate are not material
and do not interfere in any material respect with the conduct of the
business of the Company and the Subsidiaries taken as a whole.
u. The Company has not distributed and will not
distribute any offering material in connection with the offering and
sale of the Offered Securities other than the Prepricing Prospectus and
the Prospectus.
v. The Company has not taken, directly or indirectly,
any action constituting, or which might reasonably be expected to
constitute or result in, stabilization or manipulation of the trading
price of the Common Stock to facilitate the sale or resale of the
Offered Securities.
w. The Company is not, and does not intend to conduct
its business in a manner in which it would become, an "investment
company" under the Investment Company Act of 1940, as amended.
x. The Company and each of the Subsidiaries have all
permits, licenses, franchises, approvals, consents and authorizations
of governmental or regulatory authorities (hereinafter "permit" or
"permits") as are necessary to own their respective properties and to
conduct their respective businesses in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus; the Company and each of the Subsidiaries have fulfilled and
performed all of their material obligations with respect to each such
permit and no event has occurred that allows, or after notice or lapse
of time would allow, revocation or termination of any such permit or
result in any other material impairment of the rights of the holder of
any such permit, subject in each case to such qualification as may be
set forth in the Prospectus.
y. The Company and the Subsidiaries have complied and
will comply with wage and hour determinations issued by the U.S.
Department of Labor under the Service Contract Act of 1965 and the Fair
Labor Standards Act in paying its employee salaries, fringe benefits,
and other compensation for the performance of work or other duties in
connection with contracts with the U.S. government. The Company and the
Subsidiaries have complied and will comply with the terms of all
certifications and representations made to the U.S. government in
connection with the submission of any bid or proposal or any contract.
The Company and the Subsidiaries have complied and will comply with
their obligations under their agreements and contracts with the U.S.
government and agencies thereof. Neither the Company nor any of the
Subsidiaries is involved in any labor dispute that might reasonably be
expected to result in a Material Adverse Effect nor, to the best
knowledge of the Company after reasonable investigation and inquiry, is
any such dispute threatened.
z. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii)
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18
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorizations; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
aa. Neither the Company nor any Subsidiary has,
directly or indirectly, (i) made any unlawful contribution to any
candidate for political office, or failed to disclose fully any
contribution in violation of law; or (ii) made any payment to any
federal, state or foreign governmental official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States and applicable
foreign jurisdictions.
bb. The Company and the Subsidiaries have obtained
all required permits, licenses and other authorizations, if any, which
are required under federal, state, local and foreign statutes,
ordinances and other laws relating to pollution or protection of the
environment ("Environmental Laws"). The Company and the Subsidiaries
are in compliance with all terms and conditions of all required
permits, licenses and authorizations, and are also in compliance with
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws. There is no pending or, to the
knowledge of the Company after reasonable inquiry and investigation,
threatened civil or criminal litigation, notice of violation, or
administrative proceeding relating to the Environmental Laws involving
the Company or the Subsidiaries. There have not been and there are not
any past, present, or to the Company's knowledge, foreseeable future
events, conditions, circumstances, activities, practices, incidents,
actions or plans relating to the Company or the Subsidiaries that may
interfere with or prevent continued compliance with, or that may give
rise to any common law or legal liability, or otherwise form the basis
of any claim, action, demand, suit, proceeding, hearing, study or
investigation under the Environmental Laws.
cc. Each of the Company and the Subsidiaries has
sufficient trademarks, trade names, registered service marks, patents,
patent applications, patent rights, licenses, permits, copyright
protection and governmental or other authorizations currently required
for the conduct of its business, and each of the Company and the
Subsidiaries is in all material respects complying therewith, and the
products and services, and the marks associated therewith, used by the
Company and each Subsidiary do not violate or infringe any trademarks,
trade names, registered service marks, patents, patent rights,
licenses, permits or copyrights held or owned by any other party.
Neither the Company nor any Subsidiary has received any notice of
violation or infringement of or conflict with asserted rights of others
with respect to any trademarks, trade
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names, registered service marks, patents, patent rights, licenses,
permits, copyrights or authorizations owned or used by the Company, any
Subsidiary or any other person. Other than as disclosed in the
Prospectus, the expiration of any such trademarks, trade names,
registered service marks, patents, patent rights, licenses, permits,
copyrights and governmental or other authorizations would not
materially adversely affect the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, and neither the Company nor any
Subsidiary has received any notice of violation or infringement of or
conflict with asserted rights of others with registered service marks,
patents, patent rights, licenses, permits, copyrights or authorizations
owned or used by the Company, any Subsidiary or any other person.
dd. The Company has filed with the Nasdaq National
Market an application for listing on the Nasdaq National Market of the
additional shares of Common Stock that the Company will issue in this
offering, the Warrants, and the shares of the Common Stock issuable
upon the exercise of the Warrants that the Company will issue in this
offering upon exercise of the Warrants that the Company will issue in
this offering. The Nasdaq National Market has approved this
application, subject to the occurrence of the Closing. The Company has
previously filed with the Nasdaq National Market applications for the
listing on the Nasdaq National Market of all outstanding shares of
Common Stock, including the shares subject to the Warrants that the
Selling Stockholders will sell and shares subject to sale under the
Company's stock option plans and warrants previously issued to certain
directors and officers. The Nasdaq National Market has approved all of
such applications.
ee. All federal, state and local tax returns required
to be filed by or on behalf of the Company or any Subsidiary have been
filed (or are the subject of valid extension) with the appropriate
federal, state and local authorities and all such tax returns, as
filed, are accurate in all material respects. All federal, state and
local taxes (including estimated tax payments) required to be shown on
all such tax returns or claimed to be due from or with respect to the
business of the Company or any Subsidiary have been paid or reflected
as a liability on the consolidated financial statements of the Company
for the appropriate periods, except for those taxes or claims therefor
which are being contested by the Company in good faith and for which
appropriate reserves are reflected in the Company's consolidated
financial statements. All deficiencies asserted as a result of any
federal, state or local tax audits have been paid or finally settled
and no issue has been raised in any such audit that, by application of
the same or similar principles, reasonably could be expected to result
in a proposed deficiency for any other period not so audited. To the
Company's knowledge after reasonable inquiry and investigation, no
state of facts exists or has existed that would constitute grounds for
the assessment of any tax liability with respect to the periods that
have not been audited by appropriate federal, state or local
authorities. There are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any federal, state or
local tax return of the Company or any Subsidiary. On the Closing Date,
and any Additional Closing Date, all stock transfer and other taxes
that are required to be paid in connection with the sale of the Firm
Securities, Additional Securities and Managing Underwriters' Warrant to
be sold by the Company or the Selling Stockholders will have been fully
paid by the Company and the Selling Stockholders and all laws imposing
such taxes will have been complied with.
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ff. Except as set forth in the Prospectus, there are
no transactions with affiliates, as defined in Rule 405 promulgated
under the Securities Act, which are required by the Securities Act and
the applicable rules and regulations thereunder to be disclosed in the
Registration Statement.
gg. The Company has procured the written agreement of
the Selling Stockholders, and each officer, director and employee of
the Company or any Subsidiary who owns shares of Common Stock or
options or warrants to acquire shares of Common Stock and who is listed
on Schedule III attached hereto not to sell, offer to sell or contract
to sell, or otherwise dispose of or transfer, directly or indirectly,
any shares of Common Stock owned or controlled, or hereafter acquired,
by such persons, or any rights to purchase any of such shares of Common
Stock (other than in connection with a conversion, exercise or exchange
in which the holder retains the Shares of Common Stock), for the period
beginning the date hereof and ending (i) 180 days for all Selling
Stockholders and (ii) 120 days for each such officer, director and
employee who is not a Selling Stockholder, after the Effective Date
without the prior written consent of the Representative.
hh. No officer, director, nominee for director or
stockholder of the Company has any direct or indirect affiliation or
association with any member of the NASD.
ii. The Company and each of the Subsidiaries has its
property adequately insured against loss or damage by fire, maintains
adequate insurance against liability for negligence, and maintains such
other insurance in such nature and amounts of coverage as is usually
maintained by companies engaged in the same or similar business.
jj. To the Company's knowledge after reasonable
inquiry and investigation, the Company has not incurred any liability
for any finder's fees or similar payments in connection with any of the
transactions herein contemplated.
kk. Neither the Company, any of the Subsidiaries, nor
to the Company's knowledge after reasonable inquiry and investigation,
any of their respective officers, directors, employees, agents or any
other person acting on their behalf, has directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or an agent of a customer or supplier,
or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is,
or may be in a position to help or hinder their respective businesses
(or assist in connection with any actual or proposed transaction) which
(a) reasonably may subject any of them to any damage or penalty in any
civil, criminal or governmental litigation or proceeding; (b) if not
given in the past, could have resulted in a Material Adverse Effect; or
(c) if not continued in the future, could reasonably be expected to
result in a Material Adverse Effect. The internal accounting controls
and procedures of the Company and the
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Subsidiaries are sufficient to enable them to comply with the Foreign
Corrupt Practices Act of 1977, as amended.
ll. The Company has entered into the amended and
restated employment agreements with ▇▇▇ ▇▇▇▇▇, Chairman and Chief
Executive Officer of the Company, ▇▇▇▇▇ ▇▇▇▇, President of the Company,
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ that are attached as exhibits to the Registration
Statement on the date hereof (collectively, the "Employment
Agreements"). The execution and delivery of the Employment Agreements
and the performance by the Company of its obligations under the
Employment Agreements has been duly and validly authorized by the
Company, and the Employment Agreements have been duly executed and
delivered by the Company and the employees that are parties thereto and
constitute the valid and legally binding agreements of the Company and
such employees, enforceable against and by the Company and such
employees in accordance with their terms subject to the Enforceability
Exceptions. No payment under any Employment Agreement will constitute
an "excess parachute payment" under Section 280G of the Internal
Revenue Code of 1986, as amended.
mm. The Company has amended and restated the Bylaws
as set forth as an exhibit to the Registration Statement on the date
hereof.
nn. As contemplated under Section 3.02 of the Joint
Venture Agreement, dated as of August 26, 1997 (the "ATI Agreement"),
between the Company and Advanced Techcom, Inc. ("ATI"), the Company and
ATI approached ATI's bank and requested such bank to increase ATI's
line of credit with the bank by $1,000,000 based upon the Company's
guarantee of such incremental borrowing or delivery of a letter of
credit with respect thereto. As the bank nevertheless declined to
increase the line of credit, the Company will not provide any financing
to ATI pursuant to the ATI Agreement or otherwise. In addition, the
Company has abandoned the ATI Agreement because of the bank's failure
to increase ATI's line of credit and for other reasons. The Company's
abandonment of the ATI Agreement will not have a Material Adverse
Effect.
oo. None of the execution, delivery and performance
of this Agreement, the issuance and sale of the Offered Securities, the
application of the proceeds from the issuance and sale of the Offered
Securities and the consummation of the transactions contemplated
thereby as set forth in the Prospectus, will violate Regulations G, T,
U or X promulgated by the Board of Governors of the Federal Reserve
System or analogous foreign laws and regulations.
pp. There exist no conditions that would constitute a
default by the Company or the Selling Stockholders (or an event which
with notice or the lapse of time, or both, would constitute a default)
under any of the Operative Documents.
qq. The Company has applied for and obtained a CUSIP
number for the Warrants.
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rr. The Company and the Subsidiaries have obtained
proper export licenses for all foreign sales and will obtain proper
export licenses for all future foreign sales.
ss. The Company has terminated its agreement with
Stonegate Securities, Inc., dated July 25, 1997, pursuant to its terms.
Each certificate signed by an officer of the Company and
delivered to the Representative or counsel for the Representative shall be
deemed to be a representation and warranty by the Company to the Underwriters as
to the matters covered thereby.
7. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLING
STOCKHOLDERS. Each Selling Stockholder, severally, and not jointly, represents
and warrants to each Underwriter on the date hereof, and shall be deemed to
represent and warrant to each Underwriter on the Closing Date and any Additional
Closing Date, that:
a. All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder of
this Agreement, the Power of Attorney (the "Power of Attorney")
referred to in the last paragraph of this Section 7, the Warrant
Agreement and the Deposit Agreement, and for the sale and delivery of
the Firm Securities to be sold by such Selling Stockholder hereunder,
have been obtained; and such Selling Stockholder has, as to himself or
herself the full right, power and authority to enter into this
Agreement, the Power of Attorney, the Warrant Agreement and the Deposit
Agreement, and to sell, assign, transfer and deliver the Firm
Securities to be sold by such Selling Stockholder hereunder.
b. This Agreement and the Power of Attorney have been
duly executed and delivered by such Selling Stockholder and constitute
the valid and binding agreements of such Selling Stockholder,
enforceable against such Selling Stockholder in accordance with their
respective terms subject to the Enforceability Exceptions.
c. At the Closing, the Warrant Agreement and the
Deposit Agreement will be duly executed and delivered by such Selling
Stockholder and constitute the valid and legally binding agreements of
such Selling Stockholder, enforceable against such Selling Stockholder
in accordance with their respective terms subject to the Enforceability
Exceptions.
d. The performance of this Agreement, the Power of
Attorney, the Warrant Agreement and the Deposit Agreement and the
consummation of the transactions contemplated herein and therein will
not result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any statute, indenture, mortgage,
deed of trust, voting trust agreement, note agreement, lease or other
agreement or instrument to which such Selling Stockholder is a party or
by which such Selling Stockholder or his or her properties are bound,
or under any order, rule or regulation of
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any court or governmental agency or body applicable to such Selling
Stockholder or his or her business or property.
e. Such Selling Stockholder has, and immediately
prior to the Closing Date (and any Additional Closing Date) such
Selling Stockholder will have, good and valid title to the Firm
Securities to be sold by such Selling Stockholder hereunder, free and
clear of all liens, encumbrances, equities, stockholder agreements,
voting trusts or claims of any nature whatsoever, and upon delivery of
such Firm Securities and payment therefor pursuant hereto, good and
valid title to such Firm Securities, free and clear of all liens,
encumbrances, equities, stockholder agreements, voting trusts or claims
of any nature whatsoever, will pass to the several Underwriters.
f. Such Selling Stockholder will not from the date
hereof until 180 days after the Effective Date, directly or indirectly,
sell, offer to sell, contract to sell or otherwise dispose of or
transfer any shares of Common Stock or rights to purchase shares of
Common Stock (other than a connection with a conversion, exercise or
exchange in which the holder retains the shares of Common Stock),
otherwise than hereunder without the prior written consent of the
Representative.
g. Such Selling Stockholder has not taken, directly
or indirectly, any action constituting or which might reasonably be
expected to constitute or result in, stabilization or manipulation of
the trading price of the Common Stock to facilitate the sale or resale
of the Offered Securities.
h. No consent, approval, authorization or order of,
or any filing of declaration with, any court or governmental agency or
body is required for the consummation by such Selling Stockholder of
the transactions on its part contemplated herein, in the Power of
Attorney, the Warrant Agreement or the Deposit Agreement, except such
as have been obtained under the Securities Act and such as may be
required under state securities or Blue Sky laws or the by-laws and
rules of the NASD in connection with the purchase and distribution by
the Underwriters of the Firm Securities to be sold by such Selling
Stockholder.
i. All information with respect to such Selling
Stockholder contained in the Registration Statement, the Prepricing
Prospectus and the Prospectus (as amended or supplemented, if the
Company shall have filed with the Commission any amendment or
supplement thereto) complied and will comply in all material respects
with all applicable provisions of the Securities Act, contains and will
contain all statements required to be stated therein in accordance with
the Securities Act, and does not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not misleading.
j. Such Selling Stockholders have not distributed and
will not distribute any offering material in connection with the
offering and sale of the Offered Securities other than the Prepricing
Prospectus and the Prospectus.
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k. On the Closing Date, and any Additional Closing
Date, all stock transfer and other taxes (other than income taxes) that
are required to be paid in connection with the sale and transfer of the
Firm Securities to be sold by such Selling Stockholder to the several
Underwriters hereunder will have been fully paid for by such Selling
Stockholder and all laws imposing such taxes will have been fully
complied with.
l. The Firm Shares to be sold to the Underwriters by
such Selling Stockholders were duly authorized and validly issued, are
fully paid and nonassessable, and were not issued in violation of any
preemptive or similar rights.
In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Stockholder agrees to deliver to you at least two days prior to the Closing a
properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
Such Selling Stockholder acknowledges, represents and warrants
that it has duly executed and delivered a Power of Attorney, in the form
heretofore furnished to you, appointing ▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ as such
Selling Stockholder's attorneys-in-fact (the "Attorneys-in-Fact") with authority
to execute and deliver this Agreement, the Warrant Agreement, the Deposit
Agreement and any other agreements or documents related to this offering on
behalf of such Selling Stockholder, authorize the delivery of the Firm
Securities to be sold by such Selling Stockholder hereunder or otherwise to act
on behalf of such Selling Stockholder in connection with the transactions
contemplated by this Agreement. Prior to the date of this Agreement, each
Selling Stockholder has delivered to the Attorneys-in-Fact certificates in
negotiable form representing all the Firm Shares and the Warrant Shares
underlying the Warrants to be sold by such Selling Stockholder hereunder, to be
held by the Attorneys-in-Fact until such time as the Attorneys-in-Fact shall
deliver such Firm Shares to the Underwriters and Warrant Shares to the Warrant
Agent, or if this Agreement is terminated prior to such delivery, to return such
Firm Shares and Warrant Shares to such Selling Stockholder. Each Selling
Stockholder specifically agrees that the Firm Shares and Warrant Shares
represented by the certificates held in custody with respect to such Selling
Stockholder under the Power of Attorney are subject to the interest of the
Underwriters hereunder, and that the arrangements made by such Selling
Stockholder for the custody, and the appointment by such Selling Stockholder of
the Attorneys-in-Fact by the Powers of Attorney, are to that extent irrevocable.
Each certificate signed by such Selling Stockholder, or by
such Selling Stockholder's agent pursuant to the Powers of Attorney, and
delivered to the Representative or counsel for the Representative shall be
deemed to be a representation and warranty by the Company and such Selling
Stockholder to the Underwriters as to the matters covered thereby.
8. EXPENSES. Whether or not the transactions contemplated
hereby are consummated or this Agreement becomes effective or is terminated, the
Company and the
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Selling Stockholders, jointly and severally, shall be responsible for and shall
pay or cause to be paid the following: (i) all fees, disbursements and expenses
of the Company's and each Selling Stockholder's respective counsel and
accountants in connection with the registration of the Offered Securities under
the Securities Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof and of any Prepricing Prospectus to the Underwriters and dealers; (ii)
all registration and filing fees of the Commission; (iii) all printing and
delivery (including, without limitations postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, the Prospectus, each Prepricing Prospectus, the Operative Documents,
the Blue Sky memoranda, the Agreement Among Underwriters, the Selected Dealers
Agreement, any ancillary agreements and documents, and all amendments or
supplements to any of them as may be reasonably requested for use in connection
with the offering and sale of the Firm Securities and Additional Securities;
(iv) all expenses in connection with the qualification of the Firm Securities
and Additional Securities for offering and sale under state securities laws or
Blue Sky laws, including the reasonable fees of the counsel for the Underwriters
in connection therewith; (v) all filing fees incident to securing the review by
the NASD of the terms of the sale of the Offered Securities; (vi) all Nasdaq
National Market listing, designation and other filing fees; (vii) all costs of
preparing stock and warrant certificates; (viii) all costs and charges of any
transfer agent, warrant agent or registrar; (ix) all costs of the tax stamps, if
any, in connection with the issuance and delivery of the Firm Securities and
Additional Securities to the respective Underwriters; (x) all expenses in
connection with the "road shows"; (xi) all fees, disbursements and expenses of
the Warrant Agent's counsel in connection with the review of the Warrant
Agreement and the Deposit Agreement; (xii) all other fees, costs and expenses
referred to in Item 13 of the Registration Statement, except that the Financial
Advisory Fee shall only be payable if the Closing occurs; and (xiii) all other
costs and expenses incurred in the performance of the obligations of the Company
and the Selling Stockholders hereunder that are not otherwise specifically
provided for in this section. In addition, in the event that the proposed
offering is terminated for the reasons set forth in Section 5(j) hereof, the
Company agrees to reimburse the Underwriters as provided in Section 5(j).
9. INDEMNIFICATION AND CONTRIBUTION. The Company and each of
the Selling Stockholders, jointly and severally, agree to indemnify and hold
harmless you and each other Underwriter, the directors, officers, employees and
agents of each Underwriter, and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees and costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or in any application or other document executed by the Company or any
Selling Stockholder, or arising out of or based upon any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of or based upon any
inaccuracy in the representations and warranties of the Company or any of the
Selling Stockholders contained herein or any failure of the Company or any of
the Selling Stockholders to perform their respective obligations under
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this Agreement, any other Operative Document, or applicable law, except insofar
as such losses, claims, damages, liabilities or expenses arise out of or are
based upon an untrue statement or omission or alleged untrue statement or
omission that has been made therein or omitted therefrom in reliance upon and in
conformity with the information furnished in writing to the Company by or on
behalf of any Underwriter through you expressly for use in connection therewith;
provided, however, that with respect to any untrue statement or omission made in
any Prepricing Prospectus, the indemnity agreement contained in this paragraph
shall not inure to the benefit of any Underwriter (or to the benefit of any
other person entitled to such indemnification) from whom the person asserting
any such losses, claims, damages or liabilities purchased the Offered Securities
concerned if both (i) a copy of the Prospectus was not sent or given to such
person at or prior to the written confirmation of the sale of such Offered
Securities to such person as required by the Securities Act, and (ii) the untrue
statement or omission in the Prepricing Prospectus was corrected in the
Prospectus. Notwithstanding anything in this Section 9, in no event shall any
Selling Stockholder's obligation under the preceding sentence exceed the total
net proceeds from the offering received by such Selling Stockholder (it being
agreed that the Company shall bear the balance.)
If any action or claim shall be brought against any
Underwriter, any director, officer, employee or agent of any Underwriter, or any
person controlling any Underwriter (the "indemnified parties") in respect of
which indemnity may be sought against the Company and the Selling Stockholders
(the "indemnifying parties"), the indemnified party shall promptly notify in
writing the indemnifying parties, and such indemnifying parties shall assume the
defense thereof, including the employment of counsel reasonably acceptable to
the indemnified party and payment of all fees and expenses. The indemnified
party shall have the right to employ separate counsel (but the indemnifying
parties shall not be liable for the fees and expenses of more than one counsel)
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel reasonably acceptable to the indemnified party or (iii) the named
parties to any such action (including any impleaded parties) include the
indemnified party and the indemnifying parties, and the indemnified party shall
have been advised by its counsel that one or more legal defenses may be
available to the indemnified party that may be unavailable to the indemnifying
parties, or that representation of such indemnified party and any indemnifying
parties by the same counsel would be inappropriate under applicable standards of
professional conduct due to actual or potential differing interests between them
(in which case the indemnifying parties shall not have the right to assume the
defense of such action on behalf of the indemnified party (notwithstanding their
obligation to bear the fees and expenses of such counsel)). The indemnifying
parties shall not be liable for any settlement of any such action effected
without their written consent, which may not be unreasonably withheld, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, the indemnifying parties agree to indemnify and
hold harmless any indemnified party from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment, but in the case
of a judgment only to the extent provided in this Section 9.
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Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and the Selling Stockholders, to the same extent as the foregoing indemnity from
the Company and the Selling Stockholders, but only with respect to information
furnished in writing by or on behalf of such Underwriter through you expressly
for use in the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto. If any action or claim shall
be brought or asserted against the Company, any of its directors, any such
officers, any such controlling person or the Selling Stockholders based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any Underwriter pursuant to this paragraph, such Underwriter shall have
the rights and duties of the indemnifying party in the preceding paragraph
(except that if the Company shall have assumed the defense thereof such
Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof), and the Company, its directors,
any such officers, and any such controlling persons and the Selling Stockholders
shall have the rights and duties given to the indemnified party in such
paragraph.
If the indemnification provided for in this Section 9 is
unavailable or insufficient for any reason whatsoever in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then the persons
otherwise responsible for providing such indemnification shall contribute to the
amount paid or payable by the persons otherwise entitled to such indemnification
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and each of the Selling Stockholders on the one hand and
the Underwriters on the other hand from the offering of the Offered Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Stockholders on the one hand and the Underwriters on
the other hand in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Stockholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholders bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus; provided that, in the event that the Underwriters shall have
purchased any Additional Securities hereunder, any determination of the relative
benefits received by the Company and the Selling Stockholders or the
Underwriters from the offering of the Offered Securities shall include the net
proceeds (before deducting expenses) received by the Selling Stockholders, and
the underwriting discounts and commissions received by the Underwriters, from
the sale of such Additional Securities, in each case computed on the basis of
the respective amounts set forth in the notes to the table on the cover page of
the Prospectus. The relative fault of the Company and the Selling Stockholders
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the
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Company and the Selling Stockholders on the one hand or by the Underwriters on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, each of the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by a pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
as a result of the losses, claims, damages, liabilities and expenses referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
underwriting discounts and commissions with respect to the Firm Securities and
Additional Securities underwritten by it and distributed to the public exceeds
the amount of any damages which such Underwriter has otherwise been required to
pay with respect to the public offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to the respective numbers
of Firm Shares set forth opposite their names in Schedule I hereto (or such
numbers of Firm Shares increased as set forth in Section 11 hereof), and not
joint.
Notwithstanding anything to the contrary in this Section 9,
any losses, claims, damages, liabilities or expenses for which a person is
entitled to indemnification or contribution under this Section 9 shall be paid
by the person required to provide such indemnification or contribution as such
losses, claims, damages, liabilities or expenses are incurred. The indemnity,
contribution and reimbursement agreements contained in this Section 9 and the
representations and warranties of the Company and each of the Selling
Stockholders, respectively, set forth in this Agreement shall remain operative
and in full force and effect, regardless of (i) any investigation made by or on
behalf of any Underwriter, any person controlling any Underwriter, the Company,
its directors or officers, any person controlling the Company or any of the
Selling Stockholders, (ii) acceptance of any Firm Securities and Additional
Securities and payment therefor hereunder and (iii) any termination of this
Agreement. A successor to any Underwriter, any person controlling any
Underwriter, the Company, its directors or officers, any person controlling the
Company or any of the Selling Stockholders, shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this
Section 9.
Any controversy arising out of the operation of the interim
reimbursement arrangements set forth in this Section 9, including the amounts of
any requested reimbursement payments and the method of determining such amounts,
shall be settled by arbitration conducted under the provisions of the
Constitution and Rules of the Board of Governors of the New York Stock Exchange,
Inc. or pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding
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arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration will be limited to the operation of the
interim reimbursement provisions contained in this Section 9, and will not
resolve the ultimate propriety or enforceability of the obligation to reimburse
expenses created by the provisions of this Section 9.
10. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Securities hereunder are
subject to the following conditions:
a. The Registration Statement shall have become
effective not later than 10:00 a.m. New York City time, on the day
following the date hereof, or at such later date and time as shall be
consented to in writing by you, and all filings required by Rules
424(b) and 430A under the Securities Act shall have been timely made.
b. You shall be reasonably satisfied that since the
respective dates as of which information is given in the Registration
Statement and Prospectus, (i) there shall not have been any change in
the capital stock (other than pursuant to the exercise of outstanding
options disclosed in the Prospectus or granted under the stock option
plans described in the Prospectus) of the Company or any of the
Subsidiaries or any material change in the indebtedness (other than in
the ordinary course of business) of the Company or any of the
Subsidiaries, (ii) except as set forth or contemplated by the
Registration Statement or the Prospectus, no material verbal or written
agreement or other transaction shall have been entered into by the
Company or any of the Subsidiaries that was not in the ordinary course
of business or that could reasonably be expected to result in a
material reduction in the future earnings of the Company and the
Subsidiaries, (iii) no loss or damage (whether or not insured) to the
property of the Company or any of the Subsidiaries shall have been
sustained that has a Material Adverse Effect, (iv) no legal or
governmental action, suit or proceeding affecting the Company or any of
the Subsidiaries that is material to the Company and the Subsidiaries
or that affects or could reasonably be expected to affect the
transactions contemplated by this Agreement shall have been instituted
or threatened, and (v) there shall not have been any material change in
the condition (financial or otherwise), business, management,
properties, net worth, results or operations or prospects of the
Company and the Subsidiaries.
c. You shall have received an opinion of Blau,
Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C., counsel for the Company and the
Selling Stockholders, dated the Closing Date (and any Additional
Closing Date), in form and substance reasonably satisfactory to you and
your counsel, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, with full power and authority to own, lease
and operate its properties and to conduct its business as
presently conducted and as described in the Registration
Statement and the Prospectus (and any amendment or supplement
thereto), and is duly registered and
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qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties
or the conduct of its business requires such registration or
qualification, except where the failure to so register or
qualify does not have a Material Adverse Effect.
(ii) The Company has no subsidiaries material to its
operations or business other than the Subsidiaries set forth
in Exhibit 21.1 to the Registration Statement; and each of the
Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of the
jurisdiction of its organization, with full 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 is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its
business requires such registration or qualification, except
where the failure to so register or qualify does not have a
Material Adverse Effect; and all of 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 knowledge
of such counsel, any other security interest, lien, adverse
claim, equity or other encumbrance.
(iii) The authorized capital stock of the Company,
including the Common Stock and the Warrants, conforms in all
material respects to the description thereof under the caption
"Description of Securities" in the Prospectus and such
statements present fairly the matters respecting such
securities required to be set forth in the Registration
Statement and the Prospectus.
(iv) All of the outstanding shares of Common Stock
have been, and as of the Closing Date will be, duly authorized
and validly issued, are fully paid and nonassessable and free
of preemptive rights; the Firm Shares and Additional Shares to
be issued and sold to the Underwriters by the Company
hereunder have been duly authorized, and when issued and
delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be validly issued,
fully paid and nonassessable and free of any preemptive
rights; and the delivery of certificates for the Firm Shares
and the Additional Shares pursuant to the terms of this
Agreement and payment for the Firm Shares and the Additional
Shares will pass valid title to the Firm Shares and the
Additional Shares, free and clear of any claim, encumbrance or
defect in title to the several Underwriters purchasing the
Firm Shares and the Additional Shares, assuming that such
Underwriters purchased such shares in good faith and without
notice of any adverse claim.
(v) The Firm Shares to be sold to the Underwriters
by the Selling Stockholders were duly authorized and validly
issued, are fully paid and
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nonassessable, and were not issued in violation of any
preemptive or similar rights.
(vi) (A) The Registration Statement has become
effective under the Securities Act, and to the knowledge of
such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or
contemplated by the Commission; (B) the Registration Statement
and the Prospectus and each amendment or supplement thereto
(except for the financial statements and the notes thereto,
schedules, and other financial and statistical data included
therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the
requirements of the Securities Act; and (C) to the knowledge
of such counsel, the descriptions in the Prospectus of
statutes, regulations and governmental proceedings insofar as
they purport to summarize certain of the provisions thereof,
are accurate and present fairly in all material respects the
information required to be presented.
(vii) Neither the Company nor any of the Subsidiaries
is in violation of its certificate or articles of
incorporation or bylaws, or other organizational documents, or
to the knowledge of such counsel, of any law, ordinance,
administrative or governmental rule or regulation applicable
to the Company or any of the Subsidiaries or of any decree of
any court or governmental agency or body having jurisdiction
over the Company or any of the Subsidiaries, or to the
knowledge of such counsel, in default in the performance of
any obligation, agreement or condition contained in (A) any
bond, debenture, note or any other evidence of indebtedness,
or (B) any agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be
bound; and to the knowledge of such counsel, there does not
exist any state of facts that constitutes an event of default
on the part of the Company or any Subsidiary as defined in
such documents or which, with notice or lapse of time or both,
would constitute such an event of default.
(viii) The execution and delivery of this Agreement and
the performance by the Company of its obligations under this
Agreement, including the issuance and sale of the Offered
Securities on the terms set forth in this Agreement, have been
duly and validly authorized by the Company, and this Agreement
has been duly executed and delivered by the Company.
(ix) The execution and delivery of the Warrant
Agreement and the performance by the Company of its
obligations under the Warrant Agreement has been duly and
validly authorized by the Company, and the Warrant Agreement
has been duly executed and delivered by the Company, and
assuming due authorization, execution and delivery by each of
the other parties thereto, constitutes the valid and legally
binding agreement of the Company, enforceable
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against the Company in accordance with its terms subject to
the Enforceability Exceptions.
(x) The execution and delivery of the Managing
Underwriters' Warrant Agreement and the performance by the
Company of its obligations under the Managing Underwriters'
Warrant Agreement has been duly and validly authorized by the
Company, and the Managing Underwriters' Warrant Agreement has
been duly executed and delivered by the Company, and assuming
due authorization, execution and delivery by each of the other
parties thereto, constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms subject to the Enforceability
Exceptions.
(xi) The execution and delivery of the Registration
Rights Agreement and the performance by the Company of its
obligations under the Registration Rights Agreement has been
duly and validly authorized by the Company, and the
Registration Rights Agreement has been duly executed and
delivered by the Company, and assuming due authorization,
execution and delivery by each of the other parties thereto,
constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with
its terms subject to the Enforceability Exceptions.
(xii) Such counsel has reviewed all agreements,
contracts, indentures, leases or other documents or
instruments referred to in the Registration Statement and the
Prospectus and such agreements, contracts, indentures, leases
or other documents or instruments are fairly summarized and
disclosed therein, and filed as exhibits thereto as required,
and such counsel does not know of any agreements, contracts,
indentures, leases or other documents or instruments required
to be so summarized and disclosed or filed which have not been
so summarized, disclosed and filed.
(xiii) The Warrants to be issued by the Company have
been duly and validly authorized by the Company for issuance
and sale pursuant to this Agreement, and when issued and
countersigned in accordance with the terms of the Warrant
Agreement and delivered against payment therefor in accordance
with the terms hereof and thereof, will be validly issued and
the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms
subject to the Enforceability Exceptions; the Company has duly
reserved a sufficient number of its shares of Common Stock for
the issuance of the Warrant Shares upon the exercise of the
Warrants to be issued by the Company (including the Warrant
Shares underlying the Warrants to be sold by the Selling
Stockholders based upon the Company's contingent obligation to
issue such shares if the Selling Stockholders fail to deliver
them); the Company has duly and validly authorized the
issuance of such Warrant Shares upon the exercise of such
Warrants; upon the exercise of such Warrants and the
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payment of the exercise price thereof, the respective Warrant
Shares will be validly issued, fully paid and nonassessable,
and not issued in violation of any preemptive or similar
rights.
(xiv) The Warrants to be issued by the Selling
Stockholders, when issued and countersigned in accordance with
the terms of the Warrant Agreement and delivered against
payment therefor in accordance with the terms hereof and
thereof, will be the legal, valid and binding obligation of
the Selling Stockholders. The respective Warrant Shares were
duly authorized and validly issued, are fully paid and
nonassessable, and were not issued in violation of any
preemptive or similar rights.
(xv) The Managing Underwriters' Warrant has been duly
and validly authorized by the Company for issuance and sale
pursuant to this Agreement, and when payment is made therefor
in accordance with the terms hereof and the Managing
Underwriters' Warrant Agreement and assuming due
authorization, execution and delivery by each other party
thereto, will be validly issued and the legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to the
Enforceability Exceptions; the Company has duly reserved a
sufficient number of its shares of Common Stock for the
issuance of the shares of Common Stock upon the exercise of
the Managing Underwriters' Warrant, including the shares of
Common Stock issuable upon the exercise of the Warrants
issuable upon the exercise of the Managing Underwriters'
Warrant; the Company has duly and validly authorized the
issuance of the shares of Common Stock upon the exercise of
the Managing Underwriters' Warrant, including the shares of
Common Stock issuable upon the exercise of the Warrants
issuable upon the exercise of the Managing Underwriters'
Warrant; upon the upon the exercise of the Managing
Underwriters' Warrant and the shares of Common Stock issuable
upon the exercise of the Warrants issuable upon the exercise
of the Managing Underwriters' Warrant, and the payment of the
exercise price thereof, the respective shares of Common Stock
will be validly issued, fully paid and nonassessable, and not
issued in violation of any preemptive or similar rights; and
the Managing Underwriters' Warrant conforms in all material
respects to the description thereof contained in the
Prospectus.
(xvi) To the knowledge of such counsel, neither the
issuance and sale of the Offered Securities, the execution,
delivery or performance of this Agreement and the other
Operative Documents by the Company nor the consummation by the
Company of the transactions contemplated hereby or thereby (A)
requires any consent, approval, authorization or other order
of, or registration or filing with, any court, regulatory
body, administrative agency or other governmental body, agency
or official or conflicts with or will conflict with or
constitutes or will constitute a breach of, or a default
under, the certificate or articles of incorporation or bylaws,
or other organizational documents, of the Company or any of
the Subsidiaries (other than approval or consent required
under the securities laws or
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state blue sky laws) or (B) conflicts or will conflict with or
constitutes a breach of, or a default under, any agreement,
indenture, lease or other instrument to which the Company or
any of the Subsidiaries is a party or by which any of them or
any of their respective properties may be bound, or violates
any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any
of the Subsidiaries or any of their respective properties, or
results in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any
of the Subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of
them may be bound or to which any of the property or assets of
any of them is subject.
(xvii) To the knowledge of such counsel, except as
described in the Prospectus, the Company does not have
outstanding any options to purchase, or any warrants to
subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell, any
shares of Common Stock or any such options, warrants or
convertible securities or obligations.
(xviii) Except as set forth in the Prospectus, to the
knowledge of such counsel, the Company and each of the
Subsidiaries has good and marketable title to all property
(real and personal) described in the Prospectus as being owned
by it, free and clear of all liens, claims, security interests
or other encumbrances except (A) such as are described in the
financial statements included in the Prospectus or (B) such as
are not materially burdensome and do not interfere in any
material respect with the conduct of the business of the
Company and the Subsidiaries taken as a whole; to the
knowledge of such counsel the property (real and personal)
held under lease by each of the Company and the Subsidiaries
is held by it under valid, subsisting and enforceable leases,
with only such exceptions as in the aggregate are not material
and do not interfere in any material respect with the conduct
of the business of the Company and the Subsidiaries taken as a
whole.
(xix) To the knowledge of such counsel, (A) there are
no legal or governmental proceedings pending or threatened
against the Company or any of the Subsidiaries, or to which
the Company or any of the Subsidiaries, or any of their
property, is subject, that are required to be described in the
Registration Statement or Prospectus (or any amendment or
supplement thereto) that are not described as required
therein, and (B) there are no agreements, contracts,
indentures, leases or other instruments that are required to
be described in the Registration Statement or the Prospectus
or to be filed as an exhibit to the Registration Statement
that are not described or filed as required, as the case may
be.
(xx) To the knowledge of such counsel, neither the
Company nor any of the Subsidiaries is in violation of any
law, ordinance, administrative or
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governmental rule or regulation applicable to the Company
or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries.
(xxi) The Company is not an "investment company" under
the Investment Company Act of 1940, as amended, and if the
Company conducts its business and uses the proceeds of the
offering as set forth in the Prospectus, will not become an
"investment company" and will not be required to register
under such act.
(xxii) To the knowledge of such counsel, the Company
and each of the Subsidiaries have all permits, as are
necessary to own their respective properties and to conduct
their respective businesses substantially in the manner
described in the Prospectus, the Company and each of the
Subsidiaries have fulfilled and performed all of their
obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would
allow, revocation or termination of any such permit or result
in any other material impairment of the rights of the holder
of any such permit.
(xxiii) The forms of certificates for the Common Stock
and the Warrants conform in all material respects with the
requirements of the Delaware General Corporation Law.
(xxiv) To the knowledge of such counsel, no consent,
approval, authorization or order has been or is required for
the performance of this Agreement, the Powers of Attorney, the
Warrant Agreement and the Deposit Agreement by each of the
Selling Stockholders or the consummation of the transactions
contemplated by this Agreement, the Powers of Attorney, the
Warrant Agreement and the Deposit Agreement in connection with
the Firm Securities to be sold by the Selling Stockholders
hereunder, except consents, approvals, authorizations or
orders that have been duly obtained and are in full force and
effect.
(xxv) This Agreement, the Powers of Attorney, the
Warrant Agreement and the Deposit Agreement have been duly
executed and delivered by each Selling Stockholder; the Powers
of Attorney, the Warrant Agreement and the Deposit Agreement
constitute the valid and binding agreements of such Selling
Stockholders and assuming due authorization, execution, and
delivery by each other party thereto, are enforceable against
the Selling Stockholders in accordance with their respective
terms subject to the Enforceability Exceptions; and the
performance of this Agreement, the Powers of Attorney, the
Warrant Agreement and the Deposit Agreement and the
consummation of the transactions contemplated herein and
therein will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, voting trust
agreement, note agreement, lease or other
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agreement or instrument of which such counsel is aware to
which any of the Selling Stockholders is a party or by which
any of the Selling Stockholders or their properties are bound,
or under any order, rule or regulation, known to such counsel,
of any court or governmental agency or body applicable to any
of the Selling Stockholders or the business or property of any
of the Selling Stockholders.
(xxvi) Each Selling Stockholder has good and valid
title to the Firm Securities to be sold by such Selling
Stockholder hereunder, free and clear of all liens,
encumbrances, equities, stockholder agreements, voting trusts
or claims of any nature whatsoever, and upon delivery of such
Firm Securities and payment therefor pursuant hereto, good and
valid title to such Firm Securities, free and clear of all
liens, encumbrances, equities, stockholder agreements, voting
trusts or claims of any nature whatsoever, will pass to the
several Underwriters.
In rendering such opinion, counsel may rely, to the
extent such counsel deems such reliance proper, upon an opinion or
opinions, each dated the Closing Date, of other counsel as to matters
governed by the laws of jurisdictions other than the United States or
the States of Delaware or New York, provided that (i) each such local
counsel is acceptable to you and your counsel, (ii) counsel shall state
in its opinion that it believes that it and you are justified in
relying thereon, and (iii) such reliance is expressly authorized by
each opinion so relied upon and a copy of each such opinion is
delivered to you and is in form and substance satisfactory to you and
your counsel. In rendering such opinion, counsel may rely, to the
extent such counsel deems such reliance proper, as to matters of fact
upon certificates of officers of the Company, the Selling Stockholders,
and government officials. Copies of all such certificates shall be
acceptable to you and your counsel and furnished to you and your
counsel at the Closing.
In addition, such counsel shall state that such
counsel has participated in conferences with officers and other
representatives of the Company, counsel for the Underwriters,
representatives of the independent public accountants for the Company,
and the Underwriters, at which the contents of the Registration
Statement and Prospectus and related matters were discussed, and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus, on
the basis of the foregoing, no facts have come to such counsel's
attention that lead such counsel to believe (i) that the Registration
Statement or any amendment or supplement thereto (other than the
financial statements, schedules and reports thereon, and other
financial and statistical data included therein, as to which such
counsel need not comment), as of its effective date, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or (ii) that the Prospectus or any amendment or
supplement thereto (other than financial statements, schedules and
reports thereon, and other financial and statistical data included
therein, as to which such counsel need not comment), as of its issue
date and as of the Closing Date, contained or contains an untrue
statement of a material fact or
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omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
d. You shall have received an opinion of Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., as counsel for the Underwriters, dated
the Closing Date, with respect to such matters related to this offering
as you may reasonably request, and the Company and its counsel shall
have furnished to your counsel such documents as your counsel may
reasonably request for the purpose of enabling your counsel to pass
upon such matters.
e. You shall have received comfort letters addressed
to you and dated the date hereof and the Closing Date from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, independent certified public accountants, in the forms
heretofore approved by you.
f. No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall be pending, threatened or contemplated by the
Commission; no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Offered
Securities under the securities or Blue Sky laws of any jurisdiction
shall be in effect and no proceeding for such purpose shall be pending,
threatened or contemplated by the Commission or the authorities of any
jurisdiction; any request for additional information on the part of the
staff of the Division of Corporation Finance of the Commission or any
such authorities shall have been complied with to the satisfaction of
such staff or such authorities; after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have
been filed unless a copy thereof was first submitted to you and you did
not object thereto in good faith; and all of the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all respects on and as of the date hereof and on and as of
the Closing Date as if made on and as of the Closing Date, and you
shall have received a certificate, dated the Closing Date and signed by
the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you) to the effect
set forth in this Section 10(f) and in Sections 10(b) and 10(g) hereof.
g. Neither the Company nor any Selling Stockholder
shall have failed in any respect at or prior to the Closing Date to
have performed or complied with any of such person's agreements herein
contained and required to be performed or complied with by such person
hereunder at or prior the Closing Date.
h. You shall have received a certificate, dated on
and as of the Closing Date, by or on behalf of the Selling Stockholders
to the effect that as of the Closing Date each Selling Stockholder's
representations and warranties in this Agreement are true and correct
as if made on and as of such Closing Date, and that each Selling
Stockholder has performed all of his or her obligations and satisfied
all the conditions on his or her part to be performed or satisfied at
or prior to the Closing Date.
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i. The Company and each of the Selling Stockholders
shall have furnished or caused to have been furnished to you such
further certificates and documents as you shall have reasonably
requested.
j. At or prior to the Closing Date, you shall have
received the written commitment of each of the individuals named on
Schedule III hereto not to sell, offer to sell, contract to sell, or
otherwise dispose of or transfer any shares of Common Stock or rights
to purchase any shares of Common Stock (other than in connection with a
conversion, exercise or exchange in which the holder retains the shares
of Common Stock), directly or indirectly, except to the Underwriters
pursuant to this Agreement, for a period of (i) 180 days for each
Selling Stockholder, and (ii) 120 days for the officers, directors and
employees who are not Selling Stockholders, after the Effective Date
without the prior written consent of the Representative.
k. Prior to the date of this Agreement, the issuance
and sale of the Offered Securities to be sold by the Company and the
Managing Underwriters' Warrant shall have been approved by all
requisite corporate action of the Company.
l. The NASD shall have indicated that it had no
objection to the underwriting arrangements pertaining to the sale of
the Firm Securities and the Additional Securities and the participation
by the Underwriters in the sale thereof.
m. No action shall have been taken by the Commission
or the NASD the effect of which would make it improper for members of
the NASD to execute transactions (as principal or agent) in any of the
Offered Securities, and no proceedings for the taking of such action
shall have been instituted or shall be pending or contemplated by the
Commission or the NASD.
n. The Company, the Selling Stockholders, the
Representative and the Warrant Agent shall have entered into the
Warrant Agreement and the Representative shall have received
counterparts, conformed as executed, thereof.
o. The Company and the Managing Underwriters shall
have entered into the Managing Underwriters' Warrant Agreement and the
Representative shall have received counterparts, conformed as executed,
thereof.
p. The Company and the Managing Underwriters shall
have entered into the Registration Rights Agreement and the
Representative shall have received counterparts, conformed as executed,
thereof.
q. The Selling Stockholders and American shall have
entered into the Deposit Agreement and the Representative shall have
received counterparts, conformed as executed, thereof.
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r. The Company and ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall have entered into the respective Employment
Agreements and the Representative shall have received counterparts,
conformed as executed, thereof.
s. The Company shall have amended its Bylaws as set
forth in the exhibit included in the Registration Statement.
▇. ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
shall have repaid all indebtedness owed to the Company or any
Subsidiary, including the indebtedness evidenced by their
non-negotiable promissory notes payable to the Company set forth as
exhibits to the Registration Statement on the date hereof.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
The several obligations of the Underwriters to purchase
Additional Securities hereunder are subject to the satisfaction on and as of the
Additional Closing Date of the conditions set forth in this Section 10, except
that if the Additional Closing Date is other than the Closing Date, the
certificates, opinions and letters shall be as of the Additional Closing Date.
If any of the conditions hereinabove provided for in this
Section 10 shall not have been satisfied when and as required by this Agreement,
this Agreement may be terminated by you by notifying the Company and the Selling
Stockholders of such termination in writing (which you may deliver by facsimile
transmission) prior to the Closing, but you shall be entitled to waive any of
such conditions.
11. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective upon execution and delivery by all of the parties hereto and the
release of notification of the effectiveness of the Registration Statement by
the Commission; provided, however, that the provisions of Sections 8 and 9 shall
at all times be effective following the execution and delivery of this Agreement
by the parties hereto.
If any one or more of the Underwriters shall fail or refuse to
purchase Firm Securities that it or they have agreed to purchase hereunder, and
the aggregate number of Firm Securities that such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Firm Securities, each non-defaulting Underwriter
shall be obligated, severally, in the proportion that the number of Firm
Securities set forth opposite its name in Schedule I hereto bears to the
aggregate number of Firm Securities set forth opposite the names of all
nondefaulting Underwriters or in such other proportion as you may specify in the
Agreement Among Underwriters, to purchase the Firm Securities that such
defaulting Underwriter or Underwriters agreed, but failed or refused to
purchase. In that event, the Representative, for the accounts of the several
nondefaulting Underwriters, may take up and pay for all or any part of such Firm
Securities to be purchased by each nondefaulting Underwriter under this section,
and may postpone the Closing Date to a time
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not exceeding three full business days after the Closing Date determined as
provided in Section 4 of this Agreement. If any Underwriter or Underwriters
shall fail or refuse to purchase Firm Securities and the aggregate number of
Firm Securities with respect to which such default occurs is more than one-tenth
of the aggregate number of Firm Securities and the nondefaulting Underwriters do
not purchase such Firm Securities, another person or persons to substitute for
the defaulting Underwriters and purchase such Firm Securities is not found, or
other arrangements satisfactory to you, the Company and the Selling Stockholders
for the purchase of such Firm Securities are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
nondefaulting Underwriter, the Company or the Selling Stockholders. In any such
case that does not result in termination of this Agreement, either you or the
Company and each of the Selling Stockholders shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. As used in this Agreement,
the term "Underwriter" includes any person substituted for an Underwriter under
this Section 11. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement.
12. TERMINATION OF AGREEMENT. This Agreement shall be subject
to termination in your absolute discretion, without liability on the part of any
Underwriter to the Company or any of the Selling Stockholders by notice to the
Company and each of the Selling Stockholders, if on or prior to the Closing Date
or the Additional Closing Date (if different from the Closing Date and then only
as to the Additional Securities), as the case may be, in your sole judgment, (i)
trading in the Common Stock shall have been suspended by the Commission or the
Nasdaq National Market; (ii) trading in securities generally on the New York
Stock Exchange, American Stock Exchange or Nasdaq National Market shall have
been suspended or materially limited, or minimum or maximum prices shall have
been generally established on such exchange or market, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by any such exchange or
market or by order of the Commission or any court or other governmental
authority; (iii) a general moratorium on commercial banking activities shall
have been declared by either federal or New York state authorities; (iv) there
shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or
economic conditions or other material event the effect of which on the financial
markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to market the Offered Securities or to enforce
contracts for the sale of the Offered Securities; (v) except as set forth in the
Prospectus, there shall be pending or threatened against the Company or any of
the Subsidiaries or notification has been received by the Company or any of the
Subsidiaries of the threat of any material legal or governmental proceeding or
action relating generally to the business or prospects of the Company or any of
the Subsidiaries which could have a Material Adverse Effect (including action
with respect to credit or interest rates) or which in your reasonable judgment
makes it impracticable or inadvisable to proceed with the offering; (vi) any of
the certificates, opinions or other documents to be delivered on the date of
this Agreement or at the Closing Date (or the Additional Closing Date with
respect to any Additional Securities) are not in form reasonably satisfactory to
counsel to the Underwriters; (vii) any conditions set forth
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in Section 10 of this Agreement shall not have been satisfied; or (viii) the
Company is merged or consolidated or all or substantially all of the capital
stock or assets of the Company are acquired by another company or group, or
there exists a binding legal commitment for the foregoing or any other material
change of ownership or control occurs.
13. INFORMATION FURNISHED BY THE UNDERWRITERS. The Company and
the Selling Stockholders acknowledge that the statements set forth in the last
paragraph on the cover page of the Prospectus and in the third, fifth, sixth and
seventh paragraphs under the caption "Underwriting" in any Prepricing Prospectus
and in the Prospectus, constitute the only information furnished by or on behalf
of the Underwriters through you or on your behalf as such information is
referred to in Sections 6(a), 6(b) and 9 hereof.
14. MISCELLANEOUS. Notice given pursuant to any of the
provisions of this Agreement shall be in writing and shall be delivered (i) if
to the Company or the Selling Stockholders, to the office of the Company at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, President,
Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇ (with a copy to Blau, Kramer, Wactlar &
▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire, Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇), or
(ii) if to you, as Representative of the Underwriters, to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Inc., ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Senior Vice President, Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇ (with copy to
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C., Facsimile Number
(▇▇▇) ▇▇▇-▇▇▇▇).
This Agreement has been and is made solely for the benefit of
the several Underwriters, the Company, the Selling Stockholders, the other
persons entitled to indemnification and contribution under Section 9 hereof, and
their respective successors and assigns. No other person shall acquire or have
any right under or by virtue of this Agreement. Neither of the terms "successor"
and "successors and assigns" as used in this Agreement shall include a purchaser
from any Underwriter of any of the Offered Securities solely by reason of such
person's status as such a purchaser.
This Agreement constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof, except for the
section of the Letter of Intent, dated October 30, 1997, between the Company and
you, entitled "Investment Banking Agreement," which shall remain in full force
and effect.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to choice of
law principles thereunder. Time is of the essence in this Agreement.
All representations and warranties, covenants and agreements
of the Company and the Selling Stockholders contained in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Underwriters and shall
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survive delivery of and payment for the Offered Securities to and by the
Underwriters. The agreements contained in Sections 5(j), 8 and 9 shall survive
the termination of this Agreement, including any termination pursuant to Section
12.
For purposes of this Agreement, any representation and
warranty concerning the Company or any Subsidiary concerning any liabilities,
obligations, or violations of the Company or such Subsidiary shall be deemed to
refer to the Company and each of its predecessors or such Subsidiary and each of
its predecessors, respectively.
The Company, each of the Selling Stockholders and the
Underwriters each hereby irrevocably waive any right they may have to a trial by
jury in respect to any claim based upon or arising out of this Agreement or the
transactions contemplated hereby.
This Agreement may be signed in various counterparts which
together shall constitute one and the same agreement.
Subject to Section 11 hereof, this Agreement shall be
effective when, but only when, at least one counterpart hereof shall have been
executed and delivered on behalf of each party hereto.
[THE REMAINDER OF THIS PAGE HAS
BEEN INTENTIONALLY LEFT BLANK]
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43
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Stockholders and the several
Underwriters.
Very truly yours,
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
Selling Stockholders:
-----------------------------------------
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
CONFIRMED as of the date first above mentioned, on
behalf of itself and the other several Underwriters
named in Schedule I hereto:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
By:
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
-43-
44
SCHEDULE I
UNDERWRITERS
Number Number
of Firm of Firm
Name Shares Warrants
---- ------ --------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.........
Southwest Securities, Inc ..........
--------- ---------
TOTAL............. 1,400,000 1,400,000
========= =========
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45
SCHEDULE II
OFFERED SECURITIES
Additional Additional
Firm Shares Firm Warrants Shares Warrants
----------- ------------- ---------- ----------
Company ............. 700,000 1,050,000 210,000 210,000
--------- --------- ------- -------
Selling Stockholders:
▇▇▇ ▇. ▇▇▇▇▇ .... 550,000 250,000 -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ . 75,000 75,000 -- --
▇▇▇▇▇ ▇▇▇▇▇▇ .... 75,000 25,000 -- --
--------- --------- ------- -------
Total Selling
Stockholders .... 700,000 350,000 0 0
--------- --------- ------- -------
TOTAL ............... 1,400,000 1,400,000 210,000 210,000
--------- --------- ------- -------
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46
SCHEDULE III
INDIVIDUALS SUBJECT TO LOCK-UP AGREEMENTS
Adm. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (▇▇▇.)
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. Silver
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Adm. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (▇▇▇.)
III-1