ECO SOIL SYSTEMS, INC.
3,300,000 SHARES OF COMMON STOCK1
UNDERWRITING AGREEMENT
____________, 1997
▇. ▇. ▇▇▇▇▇▇▇▇ & Company
Midwest Plaza
Suite 1100
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
Eco Soil Systems, Inc., a Nebraska corporation (the "Company"),
addressing you as the representative (the "Representative") of each of the
underwriters, including the Representative, named in Schedule I hereto (the
"Underwriters"), hereby confirms its agreement to sell to the Underwriters an
aggregate of 3,300,000 authorized and unissued shares (the "Firm Shares") of
common stock, $0.005 par value ("Common Stock"), of the Company. The Company
also hereby confirms its agreement to grant to the Underwriters an option to
purchase up to 495,000 additional authorized and unissued shares of Common Stock
(the "Option Shares") on the terms and for the purposes set forth in Section
2(b) hereof. As used in this Agreement, the term "Shares" shall consist of the
Firm Shares and the Option Shares. The Company also hereby confirms its
agreement to issue to the Representative warrants for the purchase of a total of
330,000 shares of Common Stock as described in Section 6 hereof (the
"Representative's Warrants"), assuming purchase by the Underwriters of the Firm
Shares. The shares issuable upon exercise of the Representative's Warrants are
referred to in this Agreement as the "Warrant Shares."
1. Representations, Warranties and Agreements of the Company.
(a) The Company represents and warrants to and agrees with each of the
Underwriters as follows:
(i) A registration statement on Form SB-2 (File No. 333-15883)
with respect to the Shares, including a prospectus subject to
completion, has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations
(the "Rules and
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1 Plus an option to purchase up to 495,000 additional shares to cover
over-allotments.
Regulations") of the Securities and Exchange Commission (the
"SEC") thereunder and has been filed with the SEC under the
Securities Act; one or more amendments to such registration
statement have also been so prepared and have been, or will
be, so filed. Copies of the registration statement and
amendments and each related preliminary prospectus to date
have been delivered by the Company to the Underwriters, and,
to the extent applicable, were identical to the electronically
transmitted copies thereof filed with the SEC pursuant to the
SEC's Electronic Data Gathering Analysis and Retrieval System
("▇▇▇▇▇"), except to the extent permitted by Regulation S-T
under the Securities Act. If the Company has elected not to
rely upon Rule 430A of the Rules and Regulations, the Company
has prepared and will promptly file an amendment to the
registration statement and an amended prospectus. If the
Company has elected to rely upon Rule 430A of the Rules and
Regulations, it will prepare and file a prospectus pursuant to
Rule 424(b) that discloses the information previously omitted
from the prospectus in reliance upon Rule 430A. Such
registration statement as amended at the time it is or was
declared effective by the SEC and, in the event of any
amendment thereto after the effective date and prior to the
First Closing Date (as hereinafter defined), such registration
statement as so amended (but only from and after the
effectiveness of such amendment), including the information
deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A(b), if applicable, is
hereinafter called the "Registration Statement." The
prospectus included in the Registration Statement at the time
it is or was declared effective by the SEC is hereinafter
called the "Prospectus," except that if any prospectus filed
by the Company with the SEC pursuant to Rule 424(b) of the
Rules and Regulations or any other prospectus provided to the
Underwriters by the Company for use in connection with the
offering of the Shares (whether or not required to be filed by
the Company with the SEC pursuant to Rule 424(b) of the Rules
and Regulations) differs from the prospectus on file at the
time the Registration Statement is or was declared effective
by the SEC, the term "Prospectus" shall refer to such
differing prospectus from and after the time such prospectus
is filed with the SEC or transmitted to the SEC for filing
pursuant to such Rule 424(b) or from and after the time it is
first provided to the Underwriters by the Company for such
use. The term "Preliminary Prospectus" as used herein means
any preliminary prospectus included in the Registration
Statement prior to the time it becomes or became effective
under the Securities Act and any prospectus subject to
completion as described in Rule 430A of the Rules and
Regulations. For purposes of this Agreement, all references to
the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement to any of the
foregoing, shall be deemed to include the respective copies
thereof filed with the SEC pursuant to ▇▇▇▇▇.
(ii) At the time the Registration Statement is or was declared
effective by the SEC and at all times subsequent thereto up to
the "First Closing Date" and the "Second Closing Date" (as
such terms are hereinafter defined), the Registration
Statement and Prospectus, and all amendments thereof and
supplements thereto, will comply or complied with the
provisions and requirements of the Securities Act and the
Rules and Regulations. Neither the SEC nor any state
securities authority has issued any order preventing or
suspending the use of any Preliminary Prospectus or requiring
the recirculation of a Preliminary Prospectus, or issued a
stop order with respect to the offering of the Shares (if the
Registration Statement has been declared effective), or
instituted or, to the Company's knowledge, threatened the
institution of, proceedings for any of such purposes. When the
Registration Statement shall become effective and when any
post-effective amendment thereto shall become effective, the
Registration Statement (as amended, if the Company shall have
filed with the SEC any post-effective amendments thereto) will
not or did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. When
the Registration Statement is or was declared effective by the
SEC and at all times subsequent thereto up to the First
Closing Date and the Second Closing Date, the Prospectus (as
amended or supplemented, if the Company shall have filed with
the SEC any amendment thereof or supplement thereto) will not
or did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
When any Preliminary Prospectus was first filed with the SEC
and when any amendment thereof or supplement thereto was first
filed with the SEC, such Preliminary Prospectus and any
amendment thereof and supplement thereto complied in all
material respects with the applicable provisions of the
Securities Act and the Rules and Regulations and did not
contain an untrue statement of a material fact and did not
omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not
misleading. None of the representations and warranties in this
Subsection 1(a) shall apply to statements in, or omissions
from, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, which are based upon
and conform to written information relating to any Underwriter
furnished to the Company by such Underwriter specifically for
use in the preparation of the Registration Statement or the
Prospectus, or any such amendment or supplement.
(iii) The Company has no subsidiaries other than Turf
Products, Ltd., Aspen Consulting, Inc. and Turf Specialty,
Inc. (each one a "Subsidiary" and collectively the
"Subsidiaries") and is not affiliated with any other company
or business entity, except as disclosed in the Prospectus. The
Company and each Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with full power
and authority (corporate and other) to own, lease and operate
its properties and conduct its business as described in the
Registration Statement and Prospectus; the Company owns all of
the outstanding capital stock of each of the Subsidiaries free
and clear of any pledge, lien, security interest, incumbrance,
claim or equitable interest; the Company and each Subsidiary
is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the
ownership or lease of its properties or the conduct of its
business requires such qualification and in which the failure
to be qualified or in good standing would have a material
adverse effect on the condition (financial or otherwise),
earnings, operations or business of the Company; and no
proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
(iv) The Company and each Subsidiary has and is operating in
material compliance with all authorizations, licenses,
certificates, consents, permits, approvals and orders of and
from all state, federal and other governmental regulatory
officials and bodies necessary to own its properties and to
conduct its business as described in the Registration
Statement and Prospectus, all of which are, to the Company's
knowledge, valid and in full force and effect; the Company and
each Subsidiary is conducting its business in substantial
compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business; and
neither the Company nor any Subsidiary is in material
violation of any applicable law, order, rule, regulation,
writ, injunction, judgment or decree of any court, government
or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or over their
respective properties, except as would not materially and
adversely affect the condition (financial or otherwise),
earnings, operations, business or business prospects of the
Company. Except as set forth in the Registration Statement and
Prospectus, (A) the Company is in material compliance with all
material rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances and
protection of health or the environment (the "Environmental
Laws") which are applicable to its business, (B) the Company
has received no notice from any governmental authority or
third party of an asserted claim under Environmental Laws,
which claim is required to be disclosed in the Registration
Statement and the Prospectus, (C) the Company will not be
required to make any future material capital expenditures to
comply with Environmental Laws, and (D) no property which is
owned, leased or occupied by the Company has been designated
as a Superfund site pursuant to the Comprehensive Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C.
ss. 9601, et seq.), or otherwise designated as a contaminated
site under applicable state or local law.
(v) Neither the Company nor any Subsidiary is in violation of
its respective articles of incorporation or bylaws or in
default in the performance or observance of any obligation,
agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any
contract, lease, indenture, mortgage, loan agreement, joint
venture or other agreement or instrument to which it is a
party or by which it or its respective properties are bound,
which default is material to the business of the Company and
its Subsidiaries.
(vi) The Company has full requisite power and authority to
enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company and is a valid and
binding agreement on the part of the Company, enforceable
against the Company in accordance with its terms, except as
enforceability may be limited by the application of
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by judicial limitations on the right of specific performance,
and except as the enforceability of the indemnification or
contribution provisions hereof may be affected by applicable
federal or state securities laws. The performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a material breach or violation
of any of the terms and provisions of, or constitute a
material default under, (A) any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note, agreement or
other evidence of indebtedness, any lease, contract,
indenture, mortgage, loan agreement, joint venture or other
agreement or instrument to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or their
respective properties may be bound, (B) the respective
articles of incorporation or bylaws of the Company or any
Subsidiary, or (C) any material applicable law, order, rule,
regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any
Subsidiary or over their respective properties. No consent,
approval, authorization or order of or qualification with any
court, governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any Subsidiary or over
their respective properties is required for the execution and
delivery of this Agreement and the consummation by the Company
of the transactions herein contemplated, except such as may be
required under the Securities Act, the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or under state or
other securities or Blue Sky laws, all of which requirements
have been satisfied.
(vii) Except as is otherwise expressly described in the
Registration Statement or Prospectus, there is not any pending
or, to the best of the Company's knowledge, threatened, any
action, suit, claim or proceeding against the Company, any
Subsidiary, or any of their respective officers or any of
their respective properties, assets or rights before any
court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any
Subsidiary or over their respective officers or properties or
otherwise which (i) might result in any material adverse
change in the condition (financial or otherwise), earnings,
operations or business of the Company or a Subsidiary or might
materially and adversely affect their properties, assets or
rights, or (ii) might prevent consummation of the transactions
contemplated hereby.
(viii) The Company has, and at the First Closing Date and
Second Closing Date (collectively, the "Closing Dates") will
have, the duly authorized and outstanding capitalization set
forth in the Prospectus. All outstanding shares of capital
stock of the Company are duly authorized and validly issued,
fully paid and non-assessable, have been issued in compliance
with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities, and the
authorized and outstanding capital stock of the Company
conforms in all material respects with the statements relating
thereto contained in the Registration Statement and the
Prospectus; the Shares to be sold hereunder by the Company
have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and
delivered by the Company against payment therefor in
accordance with the terms of this Agreement, will be duly and
validly issued and fully paid and nonassessable and will be
sold free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest; and no preemptive
right, co-sale right, registration right, right of first
refusal or other similar right of shareholders exists with
respect to any of the Shares to be sold hereunder by the
Company or the issuance and sale thereof, or the issuance and
sale or exercise of the Representative's Warrants, other than
those that have been expressly waived prior to the date
hereof. Except as disclosed in the Prospectus, the Company has
no outstanding options to purchase, or any preemptive rights
or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock
or any such options, rights, convertible securities or
obligations.
(ix) The Representative's Warrants and the Warrant Shares have
been duly authorized. The Representative's Warrants, when
issued and delivered to the Representative, will constitute
valid and binding obligations of the Company in accordance
with their terms, except as enforceability may be limited by
the application of bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of
creditors generally and by judicial limitations on the right
of specific performance. The Warrant Shares, when issued in
accordance with the terms of this Agreement and pursuant to
the Representative's Warrants, will be fully paid and
non-assessable and subject to no preemptive rights or similar
rights on the part of any person or entity. A sufficient
number of shares of Common Stock of the Company has been
reserved for issuance by the Company upon exercise of the
Representative's Warrants.
(x) Ernst & Young LLP, which has expressed its opinion with
respect to the financial statements filed as part of the
Registration Statement and included in the Registration
Statement and Prospectus, are independent accountants within
the meaning of the Securities Act and the Rules and
Regulations. The financial statements of the Company set forth
in the Registration Statement and Prospectus comply in all
material respects with the requirements of the Securities Act
and fairly present the financial position and the results of
operations of the Company and the Subsidiaries at the
respective dates and for the respective periods to which they
apply in accordance with generally accepted accounting
principles consistently applied throughout the periods
involved (subject, in the case of unaudited financial
statements, to normal year-end adjustments which in the
opinion of management of the Company are not material, and
except as otherwise stated therein); and the supporting
schedules included in the Registration Statement present
fairly the information required to be stated therein. The
selected and summary financial and statistical data included
in the Registration Statement present fairly the information
shown therein and have been compiled on a basis consistent
with the audited financial statements presented therein. No
other financial statements or schedules are required by the
Securities Act or the Rules and Regulations to be included in
the Registration Statement.
(xi) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, and at each Closing Date, except as is otherwise
disclosed in the Registration Statement or Prospectus, there
has not been: (A) any change in the capital stock or long-term
debt (including any capitalized lease obligation) or material
increase in the short-term debt of the Company or a
Subsidiary; (B) any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock of
the Company; (C) any material adverse change, or any
development involving a material adverse change, in or
affecting the condition (financial or otherwise), earnings,
operations, business, or business prospects, management,
financial position, shareholders' equity, results of
operations or general condition of the Company; (D) any
material transaction entered into by the Company or a
Subsidiary; (E) any material obligation, direct or contingent,
incurred by the Company or a Subsidiary, except obligations
incurred in the ordinary course of business that, in the
aggregate, are not material; (F) any dividend or distribution
of any kind declared, paid or made on the capital stock of the
Company or a Subsidiary; or (G) any loss or damage (whether or
not insured) to the property of the Company or a Subsidiary
which has been sustained which has a material adverse effect
on the condition (financial or otherwise), earnings,
operations or business of the Company or a Subsidiary.
(xii) Except as is otherwise expressly disclosed in the
Registration Statement or Prospectus, (A) the Company and each
Subsidiary has good and marketable title to all of the
property, real and personal, and assets described in the
Registration Statement or Prospectus as being owned by it,
free and clear of any and all pledges, liens, security
interests, encumbrances, equities, charges or claims, other
than such as would not have a material adverse effect on the
condition (financial or otherwise), earnings, operations or
business of the Company, (B) the agreements to which the
Company is a party described in the Registration Statement and
Prospectus are valid agreements, enforceable by the Company
and the Subsidiary (as applicable), except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by judicial
limitations on the right of specific performance, and (C) each
of the Company and the Subsidiaries has valid and enforceable
leases for all properties described in the Registration
Statement and Prospectus as leased by it, except as is
otherwise disclosed in the Registration Statement and
Prospectus and except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
creditors' rights generally or by judicial limitations on the
right of specific performance. Except as set forth in the
Registration Statement and Prospectus, the Company owns or
leases all such properties as are necessary to its operations
as now conducted.
(xiii) The Company and each Subsidiary has timely filed (or
has timely requested an extension of time to file) all
necessary federal and state income and franchise tax returns
and has paid all taxes shown thereon as due, other than any
which the Company is contesting in good faith; there is no tax
deficiency that has been or, to the best of the Company's
knowledge, could be asserted against the Company or a
Subsidiary that might have a material adverse effect on the
condition (financial or otherwise), earnings, operations,
business or properties of the Company or a Subsidiary; and all
tax liabilities are adequately provided for in the books of
the Company and each Subsidiary.
(xiv) No labor disturbance by the employees of the Company or
a Subsidiary exists or, to the best of the Company's
knowledge, is imminent. Except as disclosed in the
Registration Statement and the Prospectus, no collective
bargaining agreement exists with any of the employees of the
Company or any Subsidiary and, to the best of the Company's
knowledge, no such agreement is imminent.
(xv) The Company and each Subsidiary owns, or possesses
adequate rights to use, all patents, patent applications,
patent rights, inventions, trademarks, trade secrets,
know-how, technology, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations,
copyrights, licenses and proprietary rights or information
(collectively, the "Proprietary Rights") which are necessary
for the conduct of its present or intended business as
described in the Registration Statement or Prospectus; the
expiration of any patents, patent rights, trade secrets,
trademarks, service marks, trade names or copyrights would not
have a material adverse effect on the condition (financial or
otherwise), earnings, operations or business of the Company or
any Subsidiary; and the Company has not received any notice
of, and has no knowledge of, any infringement of or conflict
with the asserted rights of others with respect to any
Proprietary Rights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might
have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business
prospects of the Company or any Subsidiary. Except as
disclosed in the Registration Statement or Prospectus, the
Company is not obligated or under any liability whatsoever to
make any payments by way of royalties, fees or otherwise to
any owner of, licensor of, or other claimant to, any
Proprietary Rights or other intangible assets, with respect to
the use thereof or in connection with the conduct of its
business or otherwise.
(xvi) The Shares have been approved for quotation on The
Nasdaq SmallCap Market.
(xvii) The Company has no defined benefit pension plan or
other pension benefit plan which is intended to comply with
the provisions of the Employee Retirement Income Security Act
of 1974 as amended from time to time, except as disclosed in
the Registration Statement.
(xviii) The Company has not taken and will not take, directly
or indirectly, any action (and does not know of any action by
its directors, officers, shareholders or others) which has
constituted or is designed to, or which might reasonably be
expected to, cause or result in stabilization or manipulation,
as defined in the Exchange Act or otherwise, of the price of
any security of the Company to facilitate the sale or resale
of the Shares. The Company has not distributed and will not
distribute prior to the later of (A) the First Closing Date or
the Second Closing Date, as the case may be, and (B)
completion of the distribution of the Shares, any offering
material in connection with the offering and sale of the
Shares other than any Preliminary Prospectus, the Prospectus,
the Registration Statement and other materials, if any,
permitted by the Securities Act. Except as is otherwise
disclosed in the Registration Statement or Prospectus, and to
the best of the Company's knowledge, no person is entitled,
directly or indirectly, to compensation from the Company or
the Underwriters for services as a "finder" or otherwise in
connection with the transactions contemplated by this
Agreement.
(xix) The Company and each Subsidiary maintains insurance,
which is in full force and effect, with insurers of recognized
financial responsibility of the types and in the amounts
generally deemed adequate for their respective businesses; and
neither the Company nor any Subsidiary has any reason to
believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not
materially and adversely affect the condition (financial or
otherwise), earnings, operations, business or business
prospects of the Company.
(xx) Each officer and director of the Company, and each of
such shareholders of the Company as the Representative shall
identify in its discretion, has agreed pursuant to the form of
Lock-up Agreement attached hereto as Appendix A (the "Lock-up
Agreement") that such person will not, for a period of 180
days from the date (the "Effective Date") that the
Registration Statement is declared effective by the SEC (the
"Lock-up Period"), without the prior written consent of the
Representative, offer to sell, contract to sell, sell, pledge,
hypothecate, transfer or otherwise dispose of, or grant any
rights with respect to (collectively, a "Disposition"), any
shares of Common Stock and options, warrants and other rights
to purchase any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for shares of
Common Stock now owned or hereafter acquired by such person
(collectively, "Securities") or with respect to which such
person has or hereafter acquires the power of Disposition,
other than as permitted by the Lock-Up Agreement. The Company
has provided to counsel for the Underwriters ("Underwriters'
Counsel") true, accurate and complete copies of all of the
Lock-up Agreements. The Company has provided to Underwriters'
Counsel a complete and accurate list of all security holders
of the Company and the number and type of securities held by
each security holder.
(xxi) Neither the Company nor any Subsidiary has at any time
during the last five (5) years made any unlawful contribution
to any candidate for an office or failed to disclose fully any
contribution in violation of law, or made any payment to any
federal or state governmental officer or official, domestic or
foreign, or other person charged with similar public or
quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
The Company and each Subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable
assurances that transactions are executed in accordance with
management's general or specific authorizations, transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, access
to assets is permitted only in accordance with management's
general or specific authorization, and the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with
respect to any differences.
(xxii) Neither the Company nor any of its affiliates is
presently doing business with the government of Cuba or with
any person or affiliate located in Cuba.
(b) Any certificate signed by any officer of the Company and delivered
to you or to Underwriters' Counsel shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered
thereby.
2. Purchase, Sale, Delivery and Payment.
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase from the
Company, at a purchase price of $__________ per Share, the Firm Shares.
The obligation of each Underwriter to the Company shall be to purchase
from the Company that number of Firm Shares (to be adjusted by the
Representative to avoid fractional shares) which represents the same
proportion of the number of Firm Shares to be sold by the Company
pursuant to this Agreement as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto represents
to the total number of Firm Shares to be purchased by all Underwriters
pursuant to this Agreement; and except as provided in Section 2(c), the
agreement of each Underwriter is to purchase only the respective number
of Firm Shares specified in Schedule I. The Underwriters will purchase
all of the Firm Shares if any are purchased.
The Firm Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase
price therefor by certified or official bank check or checks or other
next-day funds payable to the order of the Company at the offices of ▇.
▇. ▇▇▇▇▇▇▇▇ & Company, Midwest Plaza, Suite 1100, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other place as may be agreed
upon by the Representative and the Company), at 9:00 a.m., Minneapolis,
Minnesota time, on (i) the third (3rd) full business day following the
date hereof if the price of the Firm Shares is determined before 3:30
p.m. Minneapolis, Minnesota time, (ii) the fourth (4th) full business
day following the date hereof if the price of the Firm Shares hereunder
is determined after 3:30 p.m. Minneapolis, Minnesota time, or (iii)
such other time and date as the Representative and the Company may
determine, such time and date of payment and delivery being herein
called the "First Closing Date." The Firm Shares, in definitive form
and in such denominations and registered in such names as the
Representative may request upon at least two (2) business days' prior
notice to the Company, will be made available to the Representative at
the offices of ▇. ▇. ▇▇▇▇▇▇▇▇ & Company, Midwest Plaza, Suite 1100, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other place as
may be agreed upon by the Representative and the Company). If the
Representative so elects, delivery of the Firm Shares may be made by
credit to "full fast" transfer to the accounts at The Depository Trust
Company designated by the Representative.
(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters
to purchase an aggregate of up to 495,000 Option Shares, all at the
same purchase price as the Firm Shares, for use solely in covering any
over-allotments made by the Underwriters in the sale and distribution
of the Firm Shares. The option granted hereunder may be exercised by
the Representative on behalf of the several Underwriters at any time
(but not more than once), in whole or in part, during the period of
forty-five (45) days after the date of this Agreement by giving written
notice to the Company, which notice shall set forth the aggregate
number of Option Shares as to which the Underwriters are exercising the
option, the names and denominations in which the certificates for the
Option Shares are to be registered, and the date and time, as
determined by the Representative, when the Option Shares are to be
delivered, such time and date being herein referred to as the "Second
Closing Date"; provided, however, that the Second Closing Date shall
not be earlier than the First Closing Date nor earlier than the second
business day after the date on which the option shall have been
exercised. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage of the total number of Option
Shares to be purchased by the Underwriters as the number of Firm Shares
to be purchased by such Underwriter bears to the total number of Firm
Shares to be purchased by the Underwriters, as adjusted by the
Representative in its sole discretion in such manner as it shall deem
advisable to avoid fractional shares. No Option Shares shall be sold
and delivered unless the Firm Shares previously have been, or
simultaneously are, sold and delivered.
The Option Shares will be delivered by the Company, as appropriate, to
the Representative for the accounts of the Underwriters against payment
of the purchase price therefor by certified or official bank check or
other next-day funds payable to the order of the Company at the offices
of ▇. ▇. ▇▇▇▇▇▇▇▇ & Company, Midwest Plaza, Suite 1100, ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at such other place as may be
agreed upon by the Representative and the Company) at 9:00 a.m.,
Minneapolis, Minnesota time, on the Second Closing Date. The Option
Shares, in definitive form and in such denominations and registered in
such names as the Representative has set forth in its notice of option
exercise, will be made available to you at the offices of ▇. ▇.
▇▇▇▇▇▇▇▇ & Company, Midwest Plaza, Suite 1100, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as may be agreed upon
by the Representative and the Company at least one business day prior
to the Second Closing Date. If the Representative so elects, delivery
of the Option Shares may be made by credit to "full fast" transfer to
the accounts at The Depository Trust Company designated by the
Representative.
(c) It is understood that any of the Underwriters, may (but shall not
be obligated to) make payment to the Company, on behalf of any
Underwriter, for the Shares to be purchased by such Underwriter. Any
such payment shall not relieve any such Underwriter of any of its
obligations hereunder. Nothing herein contained shall constitute any of
the Underwriters an unincorporated association or partner with the
Company.
3. Covenants of the Company. The Company hereby covenants and agrees with
each of the Underwriters as follows:
(a) If the Registration Statement has not already been declared
effective by the SEC, the Company will use its best efforts to cause
the Registration Statement and any post-effective amendments thereto to
become effective as promptly as possible; the Company will notify the
Representative promptly of the time when the Registration Statement or
any post-effective amendment to the Registration Statement has become
effective or any supplement to the Prospectus has been filed and of any
request by the SEC for any amendment or supplement to the Registration
Statement or Prospectus or additional information; if the Company has
elected to rely on Rule 430A of the Rules and Regulations, the Company
will file a Prospectus containing the information omitted therefrom
pursuant to such Rule 430A with the SEC within the time period required
by, and otherwise in accordance with the provisions of, Rules 424(b)
and 430A of the Rules and Regulations; the Company will prepare and
file with the SEC, promptly upon your request, any amendments or
supplements to the Registration Statement or Prospectus that, in your
opinion, may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters; and the Company will
not file any amendment or supplement to the Registration Statement or
Prospectus to which the Representative shall reasonably object by
notice to the Company after having been furnished a copy a reasonable
time prior to the filing.
(b) The Company will advise the Representative, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the SEC
of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the initiation or
threatening of any proceeding for any such purpose; and the Company
will promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such a stop order should be
issued.
(c) Within the time during which a prospectus relating to the Shares is
required to be delivered under the Securities Act, the Company will
comply as far as it is able with all requirements imposed upon it by
the Securities Act, as now and hereafter amended, and by the Rules and
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Shares as
contemplated by the provisions hereof and the Prospectus. If, during
such period, any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if, during such
period, it is necessary to amend the Registration Statement or
supplement the Prospectus to comply with the Securities Act, the
Company will promptly notify the Representative and will amend the
Registration Statement or supplement the Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect such
compliance.
(d) The Company will use its best efforts to arrange for the
qualification of the Shares for offering and sale under the securities
laws of such jurisdictions as the Representative may designate and to
continue such qualifications in effect for so long as may be required
for purposes of the distribution of the Shares; provided, however, that
in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any action
which would subject it to the service of process in suits, other than
those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject. In each jurisdiction in
which the Shares shall have been qualified as herein provided, the
Company will make and file such statements and reports in each year as
are or may be reasonably required by the laws of such jurisdiction.
(e) The Company will furnish to the Underwriters copies of the
Registration Statement (one of which will be signed and will include
all exhibits), each Preliminary Prospectus, the Prospectus, and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Representative may from time to
time reasonably request.
(f) For a period of five years from the Effective Date, the Company
will furnish directly to the Representative as soon as the same shall
be sent to its shareholders generally copies of all annual or interim
shareholder reports of the Company and will, for the same period, also
furnish the Representative with the following:
(i) Two copies of any report, application or document (other
than exhibits, which, however, will be furnished on your
request) filed by the Company with the SEC, Nasdaq, the NASD
or any securities exchange;
(ii) As soon as the same shall be sent to shareholders
generally, copies of each communication sent to shareholders;
and
(iii) From time to time, such other information concerning the
Company as the Representative may reasonably request.
The Company will, for a period of five (5) years from the Effective
Date, and as soon as practicable following the close of each applicable
period, furnish directly to the Representative detailed quarterly and
annual profit and loss statements, reports of the Company's cash flow,
other financial statements, and statements of application of the
proceeds of the offering of the Shares by the Company.
(g) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than the fifteen
(15) months after the end of the Company's current fiscal quarter, an
earnings statement (which will be in reasonable detail but need not be
audited) complying with the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Rules and Regulations and covering a
twelve (12)- month period beginning after the Effective Date of the
Registration Statement.
(h) If required by the Securities Act or the Rules and Regulations
thereunder, the Company will prepare and file with the SEC reports on
Form SR in accordance with the Securities Act and the Rules and
Regulations.
(i) After completion of the offering of the Shares, the Company will
make all filings required to maintain the quotation of the Common Stock
on The Nasdaq SmallCap Market or any national stock exchange.
(j) The Company will apply the net proceeds from the sale of the Shares
being sold by it substantially in the manner set forth under the
caption "Use of Proceeds" in the Prospectus.
(k) During the Lock-Up Period, and except for the sale of Shares by the
Company pursuant to this Agreement, the Company will not, without the
prior written consent of the Representative, effect the Disposition of,
directly or indirectly, any Securities including, without limitation,
any Securities that are convertible into or exchangeable or exercisable
for Common Stock, and shall not accelerate the exercisability of any
Securities that are convertible into or exchangeable or exercisable for
Common Stock.
(l) The Company will not take, and will use its best efforts to cause
each of its officers and directors not to take, directly or indirectly,
any action designed to or which might reasonably be expected to cause
or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
(m) The Company will inform the Florida Department of Banking and
Finance at any time prior to the consummation of the distribution of
the Shares by the Underwriters if it commences engaging in business
with the government of Cuba or with any person or affiliate located in
Cuba. Such information shall be provided within 90 days after the
commencement thereof or after a change occurs with respect to
previously reported information.
4. Expenses.
(a) The Company agrees with each Underwriter that:
(i) Whether or not this Agreement becomes effective or is
terminated or cancelled or the sale of the Shares hereunder is
consummated, and regardless of the reason for or cause of any
such termination, cancellation, or failure to consummate, the
Company will pay or cause to be paid its costs and expenses
related to the Offering, including, but not limited to, the
following: (A) all expenses (including any transfer taxes)
incurred in connection with the delivery to the Underwriters
of the Shares, (B) all expenses and fees (including, without
limitation, fees and expenses of the Company's accountants and
of counsel to the Company, excluding, however, fees of
Underwriters' Counsel) in connection with the preparation,
printing, filing, delivery, and shipping of the Registration
Statement (including the financial statements therein and all
amendments, schedules, and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and any amendment thereof or
supplement thereto, in such quantities as the Representative
shall reasonably request, including filing any such documents
on ▇▇▇▇▇, (C) all fees and reasonable expenses, including all
reasonable counsel fees of counsel to the Company, incurred in
connection with the qualification of the Shares for offering
and sale by the Underwriters or by dealers under the
securities or Blue Sky laws of the states and other
jurisdictions which the Representative may designate in
accordance with Section 3(d) hereof, (D) all costs and
expenses incident to qualification with The Nasdaq SmallCap
Market, (E) postage and express mail charges and any other
expenses in connection with delivery to the Underwriters and
potential investors of the Preliminary Prospectus and
Prospectus, (F) all travel, lodging and entertainment expenses
associated with investor meetings, marketing "roadshows," and
otherwise marketing and selling the Shares, and (G) all other
costs and expenses incident to the performance of the
Company's obligations hereunder that are not otherwise
specifically described herein. In addition to the foregoing,
the Company shall pay to the Representative on each Closing
Date for out-of-pocket expenses (including fees of
Underwriters' Counsel) a nonaccountable expense allowance
equal to two percent (2.0%) of the aggregate Price to Public
for all the Shares sold to the Underwriters on each Closing
Date, including Shares sold pursuant to orders received
through the Company. The Representative acknowledges receipt
of a total of $10,000.00 from the Company as an advance (the
"Advance") against such nonaccountable expense allowance. If
the Underwriters withdraw from the sale of the Shares as
herein proposed for any reason beyond their control, or if the
sale of the Shares as herein proposed is abandoned by the
Company, the Company will pay to the Representative an amount
equal to (AA) the lesser of $20,000.00 or the amount of the
Representative's accountable expenses including, but not
limited to, its travel expenses and the fees and expenses of
Underwriters' Counsel, less (BB) the amount of the Advance;
and, upon any such termination of the sale of the Shares, the
Representative shall refund to the Company any amount of the
Advance that exceeds the amount of the Representative's
Accountable Expenses. The provisions of this Section 4(a)(i)
are intended to relieve the Underwriters from the payment of
the expenses and costs which the Company hereby agrees to pay
and shall not impair the obligations of the Company hereunder
to the several Underwriters.
(ii) In addition to its other obligations under Sections 7(a)
and 8 hereof, the Company agrees that, as an interim measure
during the pendency of any claim, action, investigation,
inquiry or other proceeding described in Section 7(a), it will
reimburse the Underwriters on a monthly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety
and enforceability of the Company's obligation to reimburse
the Underwriters for such expenses and the possibility that
such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been
improper, the Underwriters shall promptly return such payment
to the Company together with interest, compounded daily,
determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing)
listed from time to time in The Wall Street Journal which
represents the base rate on corporate loans posted by a
substantial majority of the nation's thirty (30) largest banks
(the "Prime Rate"). Any such interim reimbursement payments
which are not made to the Underwriters within thirty (30) days
of a request for reimbursement shall bear interest at the
Prime Rate from the date of such request.
(b) It is agreed that any controversy rising out of the operation of
the interim reimbursement arrangements set forth in Section 4(a)(ii)
hereof, including the amounts of any requested reimbursement payments,
the method of determining such amounts, and the basis on which such
amounts shall be apportioned among the reimbursing parties, shall be
settled by arbitration conducted 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 a written notice of
intention to arbitrate, therein electing the arbitration tribunal. If
the party demanding 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. Any such
arbitration will be limited to the operation of the interim
reimbursement provisions contained in Section 4(a)(ii) hereof and will
not resolve the ultimate propriety or enforceability of the obligation
to indemnify for expenses which is created by the provisions of
Sections 7(a) and 7(b) hereof or the obligation to contribute to
expenses which is created by the provisions of Section 8(a) hereof.
5. Conditions of the Underwriters' Obligations. The obligation of the
Underwriters to purchase and pay for the Shares as provided herein shall be
subject to the accuracy of the representations and warranties of the Company, in
the case of the Firm Shares, as of the date hereof and the First Closing Date
(as if made on and as of the First Closing Date), and in the case of the Option
Shares, as of the date hereof and the Second Closing Date (as if made on and as
of the Second Closing Date); to the performance by the Company of its
obligations hereunder; and to the satisfaction of the following additional
conditions on or before the First Closing Date in the case of the Firm Shares
and on or before the Second Closing Date in the case of the Option Shares:
(a) The Registration Statement shall have become effective not later
than 4:00 p.m. Minneapolis, Minnesota time on the date of this
Agreement, or such later date or time as shall be consented to in
writing by you (the "Effective Date"); and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for
that purpose shall have been initiated or, to the knowledge of the
Company, or any of the Underwriters, threatened by the SEC or any state
securities commission or similar regulatory body; and any request of
the SEC for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with
to the satisfaction of the Underwriters and Underwriters' Counsel.
(b) The Underwriters shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, contains any untrue statement of a fact which is
material or omits to state a fact which is material and is required to
be stated therein or is necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that this Section 5(b) shall not apply
to statements in, or omissions from, the Registration Statement or
Prospectus, or any amendment thereof or supplement thereto, which are
based upon and conform to written information furnished to the Company
by the Underwriters specifically for use in the preparation of the
Registration Statement or the Prospectus, or any such amendment or
supplement.
(c) Subsequent to the Effective Date and prior to each Closing Date,
there shall not have occurred any change, or any development involving
a prospective change, which materially and adversely affects the
Company's condition (financial or otherwise), earnings, operations,
properties, business or business prospects from that set forth in the
Registration Statement or Prospectus, and which, in the
Representative's sole judgment, is material and adverse and that makes
it, in the Representative's sole judgment, impracticable or inadvisable
to proceed with the public offering of the Shares as contemplated by
the Prospectus and this Agreement.
(d) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to
Underwriters' Counsel, and such counsel shall have been furnished with
such papers and information as it may reasonably have requested to
enable it to pass upon the matters referred to in this Section.
(e) On each Closing Date, the Underwriters shall have received the
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Company, dated as of
such Closing Date, satisfactory in form and substance to the
Underwriters and Underwriters' Counsel, to the effect that:
(i) Each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to
own, lease and operate its properties and to conduct its
business as currently being carried on and as described in the
Registration Statement and Prospectus.
(ii) Each of the Company and the Subsidiaries is duly
qualified to do business as a foreign corporation and is in
good standing in each jurisdiction, if any, in which the
ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure
to be so qualified or be in good standing would not have a
material adverse effect on the condition (financial or
otherwise), earnings, operations or business of the Company
and the Subsidiaries considered as one enterprise. To the best
of such counsel's knowledge, the Company does not own or
control, directly or indirectly, any corporation, association
or other entity other than the Subsidiaries.
(iii) The capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus
under the caption "Description of Securities." The issued and
outstanding shares of capital stock of the Company have been
duly and validly issued and are fully paid and nonassessable,
and the holders thereof are not subject to any personal
liability by reason of being such holders.
(iv) The Shares to be issued by the Company pursuant to the
terms of this Agreement have been duly authorized and, upon
issuance and delivery against payment therefor in accordance
with the terms hereof, will be duly and validly issued and
fully paid and nonassessable, and the holders thereof will not
be subject to personal liability by reason of being such
holders. Except as otherwise stated in the Registration
Statement and Prospectus, there are no preemptive rights or
other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of
Common Stock pursuant to the Company's articles of
incorporation, by-laws or any agreement or other instrument
known to such counsel to which the Company is a party or by
which the Company is bound. To the best of such counsel's
knowledge, except as set forth in the Prospectus, neither the
filing of the Registration Statement nor the offering or sale
of the Shares as contemplated by this Agreement gives rise to
any rights for or relating to the registration of any shares
of Common Stock or other securities of the Company and no such
rights exist, other than those rights that have been waived
prior to the date hereof. To the best of such counsel's
knowledge, except as described in the Registration Statement
and Prospectus, there are no options, warrants, agreements,
contracts or rights in existence to purchase or acquire from
the Company any shares of capital stock of the Company.
(v) The Company has the requisite corporate power and
authority to enter into this Agreement and to issue, sell and
deliver to the Underwriters the Shares to be issued and sold
by it hereunder. This Agreement has been duly authorized by
all necessary corporate action on the part of the Company and
has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by the
Representative on behalf of the Underwriters, is a valid,
legal and binding agreement of the Company, enforceable in
accordance with its terms, except insofar as indemnification
and contribution provisions may be limited by applicable law
and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(vi) The Registration Statement has become effective under the
Securities Act and, to the best of such counsel's knowledge,
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
has been instituted or is pending or threatened under the
Securities Act.
(vii) The Registration Statement and the Prospectus, and each
amendment thereof or supplement thereto, (other than the
financial statements, including the notes thereto and the
supporting schedules, and other financial, numerical,
statistical and accounting data derived therefrom, 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 the Rules and Regulations.
(viii) The form of certificates evidencing the Common Stock
and filed as an exhibit to the Registration Statement complies
with Nebraska law.
(ix) The description in the Registration Statement and the
Prospectus of the Company's articles of incorporation and
bylaws and of statutes, legal and governmental proceedings,
contracts and other documents are accurate in all material
respects and fairly present the information required to be
presented by the Securities Act and the applicable Rules and
Regulations; and such counsel does not know of any statutes or
legal or governmental proceedings required to be described in
the Prospectus that are not described as required, or of any
agreements, contracts, leases or documents of a character
required to be described or referred to in the Registration
Statement or Prospectus or to be filed as an exhibit to the
Registration Statement which are not described or referred to
therein or filed as required.
(x) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated
do not result in any violation of the Company's articles of
incorporation or bylaws or, to the best of such counsel's
knowledge, result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any bond,
debenture, note or other evidence of indebtedness, or any
material lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other material agreement or
instrument known to such counsel to which the Company is a
party or by which its properties are bound, or any applicable
statute, rule or regulation known to such counsel or, to the
best of such counsel's knowledge, any order, writ or decree of
any court, government or governmental agency or body having
jurisdiction over the Company or the Subsidiaries or other any
of their material properties or operations.
(xi) To the best of such counsel's knowledge, no consent,
approval, authorization or order of, or filing with, or
qualification with, any court, government or governmental
agency or body is necessary in connection with the execution,
delivery and performance of this Agreement or for the
execution, delivery and performance of this Agreement or for
the consummation of the transactions herein contemplated,
except such as have been obtained under the Securities Act or
such as may be required under state or other securities or
Blue Sky laws in connection with the purchase and the
distribution of the Shares by the Underwriters.
(xii) To the best of such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened
against the Company or any of the Subsidiaries of a character
required to be disclosed in the Registration Statement or the
Prospectus by the Securities Act or the Rules and Regulations,
other than those described therein.
(xiii) To the best of such counsel's knowledge, neither the
Company nor any of the Subsidiaries is presently (A) in
material violation of its respective articles of incorporation
or bylaws, (B) in breach or violation of any applicable
statute, rule or regulation known to such counsel or any
order, writ or decree of any court or governmental agency or
body, or (C) in breach of or otherwise in default in the
performance of any material obligation, agreement or condition
contained in any bond, debenture, note, loan agreement or any
other material contract, lease or other instrument to which
the Company is subject or by which it may be bound, or to
which any of the material assets or property of the Company is
subject.
(xiv) To the best of such counsel's knowledge, the Company
holds, and is operating in compliance in all material respects
with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any
government or self-regulatory body required for the conduct of
its business, and all such franchises, grants, authorizations,
licenses, permits, easements, consents, certifications and
orders are valid and in full force and effect.
(xv) On the basis of information obtained as a result of
discussions and meetings with officers and other
representatives of the Company, discussions with
representatives of the independent public accountants for the
Company in connection with the preparation of the Registration
Statement and the Prospectus, and the examination of other
information and documents requested by such counsel, nothing
has come to such counsel's attention that has caused them to
believe that the Registration Statement and any amendment
thereof, at the time it became effective and at all times
subsequent thereto up to and on that Closing Date, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or that
the Prospectus, and any amendment or supplement thereto, at
the first date of its issuance and up to and at all times
subsequent thereto up to and on that Closing Date, contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Such
counsel may further state that in making the foregoing
comments, such counsel does not intend them to include or
cover the financial statements and notes thereto and related
schedules and other financial, numerical, statistical and
accounting data contained or omitted from the Registration
Statement and any amendment or supplement thereto and the
Prospectus.
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or the States of Minnesota
and Nebraska, upon opinions of local counsel, and, as to questions of
fact, upon representations or certificates of officers of the Company
or its Subsidiaries and of government officials, in which case their
opinion is to state the extent of such reliance. Copies of any opinion,
representation or certificate so relied upon shall be delivered to the
Representative and to Underwriters' Counsel.
(f) On each Closing Date, the Underwriters shall have received the
opinion of Brown, Martin, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ LLP, intellectual property
and patent counsel for the Company, dated as of such Closing Date,
satisfactory in form and substance to the Underwriters and
Underwriters' Counsel, to the effect that:
(i) To the best of such counsel's knowledge, neither the
Company nor any Subsidiary requires any United States or
foreign patent for the conduct of its business as presently
conducted, except as may be disclosed in the Registration
Statement and Prospectus;
(ii) The Company has not received any notice of claim by a
third party asserting infringement or violation of its
Proprietary Rights, and such counsel is not aware that the
Company or any Subsidiary is infringing or otherwise violating
the Proprietary Rights of others; and
(iii) Such counsel has reviewed the Registration Statement and
Prospectus and each amendment and supplement thereto filed by
the Company prior to such Closing Date, and such counsel has
no reason to believe that insofar as concerns Proprietary
Rights owned by or affecting the business or operations of the
Company and any Subsidiary, either the Registration Statement
or the Prospectus or any amendment or supplement thereto
contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein
not misleading.
(g) The Underwriters shall have received from Winthrop & Weinstine,
P.A., Underwriters' Counsel, such opinion or opinions as the
Underwriters may reasonably require, dated as of the First Closing Date
and the Second Closing Date, which are satisfactory in form and
substance to the Underwriters, with respect to the sufficiency of
corporate proceedings and other legal matters relating to this
Agreement and the transactions contemplated hereby, and the Company
shall have furnished to Underwriters' Counsel such documents as it may
have requested for the purpose of enabling it to pass upon such
matters. In connection with such opinion, as to matters of fact
relevant to conclusions of law, Underwriters' Counsel may rely, to the
extent that it deems proper, upon representations or certificates of
public officials and of responsible officers of the Company.
(h) At the time of execution of this Agreement, the Underwriters shall
have received from Ernst & Young LLP a letter dated the date of such
execution, in form and substance satisfactory to the Representative, to
the effect that they are independent accountants with respect to the
Company within the meaning of the Securities Act and the applicable
published instructions, and the Rules and Regulations thereunder, and
further stating in effect that:
(i) In their opinion, the audited financial statements
included in the Registration Statement and Prospectus covered
by their report included therein comply as to form in all
material respects with the applicable requirements of the
Securities Act, the published instructions and the Rules and
Regulations.
(ii) On the basis of (A) a reading of the minutes of the
shareholders' and directors' meetings of the Company since
_____________, (B) inquiries of certain officials of the
Company responsible for financial and accounting matters, (C)
a reading of the Company's monthly operating statements
subsequent to _____________, and (D) other specified
procedures and inquiries (but not an audit in accordance with
generally accepted accounting principles), nothing came to
their attention causing them to believe that:
(1) the unaudited consolidated financial statements
of the Company and its Subsidiaries contained in the
Prospectus and any amendment thereof or supplement
thereto do not comply as to form, in all material
respects, with the applicable accounting requirements
of the Securities Act and the published Rules and
Regulations or were not prepared in conformity with
generally accepted accounting principles and
practices applied on a basis consistent in all
material respects with those followed in the
preparation of the audited consolidated financial
statements of the Company and its Subsidiaries
included therein; or
(2) the unaudited consolidated amounts of revenues,
income before provision for income taxes, net income
and ratio of earnings to fixed charges of the Company
and its Subsidiaries, if any, contained in the
Prospectus, or any amendment thereof or supplement
thereto, were not derived from consolidated financial
statements prepared in conformity with generally
accepted accounting principles and practices applied
on a basis consistent in all material respects with
those followed in the preparation of the audited
consolidated financial statements of the Company and
its Subsidiaries included therein; or
(3) the unaudited pro forma consolidated financial
statements of the Company and its Subsidiaries and
recently-acquired companies, if any, contained in the
Prospectus or any amendment thereof or supplement
thereto, were not properly compiled in accordance
with generally accepted accounting principles or did
not provide for all adjustments necessary for a fair
presentation of the information purported to be shown
thereby; or
(4) with respect to the period subsequent to
___________, there were, at a specified date, not
more than five (5) business days prior to the date of
the letter, any changes or any material increases or
decreases in capital stock, long-term or short-term
debt or shareholders' equity, decreases in net
assets, net current assets, or net worth or any
material decrease, as compared with the corresponding
period of the prior year, in revenues or net income
of the Company as compared with the amounts shown in
the consolidated balance sheet included in the
Registration Statement, except as disclosed or
referred to in the Prospectus and Registration
Statement.
(iii) Certain information set forth on the cover of the
Prospectus and page ____ of the Prospectus and in the
Prospectus under the headings ___________________ and that are
expressed in dollars (or percentages derived from dollar
amounts) or numbers have been compared to accounting records
of the Company which were subject to the internal accounting
controls of the Company and are in agreement with such records
or computations made therefrom, excluding any questions of
legal interpretation.
(i) The Underwriters shall have received from Ernst & Young LLP a
letter dated as of each Closing Date to the effect that such
accountants reaffirm, as of such Closing Date, and as though made on
such Closing Date, the statements made in the letter furnished by such
accountants pursuant to Section 5(g), except that the specified date
referred to in such letter will be a date not more than five (5)
business days prior to such Closing Date.
(j) The Underwriters shall have received from the Company a
certificate, dated as of the First Closing Date and the Second Closing
Date, of the principal executive officer and the principal financial or
accounting officer of the Company, to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct as if made on and as of such
Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at, or prior to, such Closing Date;
(ii) No stop order or other order suspending the effectiveness
of the Registration Statement or any amendment thereof or the
qualification of the Shares for offering or sale has been
issued, and no proceedings for that purpose has been
instituted or, to the best of their knowledge, is contemplated
by the SEC or any state or regulatory body; and
(iii) The signers of said certificate have carefully examined
the Registration Statement and the Prospectus and any
amendments thereof or supplements thereto, and (A) such
documents contain all statements and information required to
be included therein; the Registration Statement, or any
amendment thereof, does not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading; and the Prospectus, as amended or
supplemented, does not include any untrue statement of
material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading; (B) since the
Effective Date of the Registration Statement, there has
occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth; (C)
subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the
Company has not incurred any material liabilities or material
obligations, direct or contingent, or entered into any
material transactions, not in the ordinary course of business
consistent with past practice, or declared or paid any
dividends or made any distribution of any kind with respect to
its capital stock, or entered into any agreement, arrangement
or understanding (whether written or oral) whereby the
consummation of a merger, exchange or similar business
combination with any other person or entity or the purchase of
the assets, securities, or business of any other person or
entity has become likely or probable, and except as disclosed
in the Prospectus, there has not been any change in the
capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of
shares upon the exercise of outstanding options or warrants or
pursuant to employee benefit plans described to in the
Registration Statement), or any material increase in the
short-term debt or long-term debt, or in the issuance of
options, warrants, convertible securities or other rights to
purchase the capital stock, of the Company, or any material
adverse change or any development involving a prospective
material adverse change (whether or not arising in the
ordinary course of business) in the general affairs, condition
(financial or otherwise), business, key personnel, property,
prospects, net worth or results of operations of the Company;
and (D) except as stated in the Registration Statement and
Prospectus, there is not pending or, to their knowledge,
threatened or contemplated, any action, suit or proceeding to
which the Company is a party before or by any court or
governmental agency, authority or body, or any arbitrator,
which might result in any material adverse change of the
condition (financial or otherwise), business, prospects, or
results of operations of the Company.
(k) On each Closing Date, there shall have been furnished to you a
certificate of Secretary of the Company, dated as of such Closing Date,
with the documents listed herein attached, and to the effect and
certifying as follows:
(i) Attached thereto are true and correct copies of the
articles of incorporation of the Company, as amended to the
date of the certificate, and stating that there have been no
changes or amendments to the attached articles of
incorporation of the Company, and no resolutions have been
adopted by the Board of Directors or shareholders of the
Company relating to (A) the amendment of said articles of
incorporation, (B) the merger, consolidation or dissolution of
the Company, or (C) the sale of all or substantially all of
the assets or business of the Company, and that the Company is
in good standing in the State of Nebraska and has paid all of
its corporate franchise taxes due as of the date of such
certificate.
(ii) Attached thereto is a true and correct copy of the bylaws
of the Company as in effect as of the date of such certificate
and no resolutions have been adopted by the Board of Directors
or shareholders of the Company relating to changes or
amendments to the attached Bylaws.
(iii) Attached thereto are true and correct copies of the
resolutions of the Board of Directors of the Company relating
to the preparation and signing of the Registration Statement
and this Agreement, the issuance and sale of the Shares and
other related matters, and such resolutions have not been
amended, modified or rescinded and are in full force and
effect as of the date of such certificate and are the only
resolutions adopted by the Board of Directors of the Company
with respect to the offering contemplated by the Registration
Statement.
(iv) Attached thereto are true and correct copies of all
material correspondence with respect to the Registration
Statement and Prospectus and related matters between the
Company, its counsel, and/or Ernst & Young LLP, on the one
hand and the SEC on the other.
(v) This Agreement, as executed and delivered by the Company,
is in the form presented to and approved by officers
authorized to do so by the Board of Directors of the Company.
(vi) Attached thereto is a specimen of the certificate for the
Common Stock in the form authorized and approved for use by
the Board of Directors of the Company.
(vii) The persons who have signed the Registration Statement
and all amendments thereto were duly elected at the respective
times of such signing and duly acting as officers and
directors of the Company or as an attorney-in-fact therefor,
as set forth in the Registration Statement.
(l) The Underwriters shall have received from each of the officers and
directors of the Company, and each of such shareholders of the Company
as the Representative shall identify in its discretion, a written
agreement in the form of Appendix A hereto whereby each such person
agrees that during the Lock-up Period such person will not, without the
Representative's prior written consent, effect the Disposition of any
Securities now owned or hereafter acquired directly or indirectly by
such person other than by gift to donees who agree to be bound by the
same restriction or by will or the laws of descent.
(m) The Common Stock of the Company shall be included and quoted on The
Nasdaq SmallCap Market.
(n) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP shall deliver to the Representative a Blue Sky
Memorandum reasonably satisfactory to the Representative confirming
that all requisite actions for the offer and sale of the Shares in all
jurisdictions requested by the Representative have been taken.
(o) The Company shall have furnished to the Representative and to
Underwriters' Counsel such additional certificates, documents and
evidence as the Representative shall reasonably request.
All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory to the Representative and Underwriters' Counsel. All statements
contained in any certificate, letter or other document delivered pursuant hereto
by, or on behalf of, the Company shall be deemed to constitute representations
and warranties of the Company.
The Representative may waive in writing the performance of any
one or more of the conditions specified in this Section 5 or extend the time for
their performance.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement to be fulfilled and
if the fulfillment of said condition has not been waived by the Representative,
this Agreement and all obligations of the Underwriters hereunder may be canceled
at, or at any time prior to, each Closing Date by the Representative on behalf
of the Underwriters. Any such cancellation shall be without liability of the
Underwriters to the Company and shall not relieve the Company of its obligations
under Section 4(a) hereof. Notice of such cancellation shall be given to the
Company at the address specified in Section 12 hereof in writing, or by
telegraph or telephone confirmed in writing.
6. Representative's Warrants. In consideration of the agreement of the
Representative to act as an Underwriter and as Representative of the
Underwriters, and upon payment of a purchase price of $______, on the First
Closing Date the Company will issue and deliver to the Representative, for its
account, the Representative's Warrants to purchase Shares in an amount equal to
ten percent (10%) of the number of Firm Shares purchased by the Underwriters in
the offering. The Representative's Warrants shall be issued on the First Closing
Date and shall be dated as of the Effective Date. The Representative's Warrants
shall be exercisable commencing one year after the Effective Date and for a
period of five years after the Effective Date at a price equal to 120% of the
Price to Public per Share set forth on the cover page of the Prospectus. As to
other terms, the Representative's Warrants shall be in form and substance
substantially the same as Appendix B hereto. The Company represents and warrants
that the Representative's Warrants have been duly authorized and, when granted
and delivered in accordance with the terms hereof, will be valid, binding and
enforceable obligations of the Company; the securities issuable upon exercise of
the Representative's Warrants have been duly authorized and reserved for
issuance upon exercise; and upon receipt by the Company of the consideration for
such securities in accordance with the terms of the Representative's Warrants,
the Warrant Shares shall have been duly and validly issued, fully paid and
nonassessable.
7. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or each such controlling person may become subject under
the Securities Act, the Exchange Act, the common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of, or are based upon, (i) any breach of any
representation, warranty, agreement or covenant of the Company
contained in this Agreement, (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or any amendment thereof or supplement thereto, or the
omission or alleged omission to state in the Registration Statement or
any amendment thereof or supplement thereto 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; (iii)
any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, if used prior to the Effective
Date of the Registration Statement, or in the Prospectus (as amended or
as supplemented, if the Company shall have filed with the SEC any
amendment thereof or supplement thereto), or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iv) any
untrue statement or alleged untrue statement of a material fact
contained in any application or other statement executed by the Company
or based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Shares under, or exempt the Shares
or the sale thereof from qualification under, the securities laws of
such jurisdiction, or the omission or alleged omission to state in such
application or statement 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. The Company
will reimburse each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such Underwriter or
controlling person in connection with investigating or defending
against any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity
with written information relating to any Underwriter furnished to the
Company by such Underwriter or through you specifically for use in the
preparation of the Registration Statement or any such post-effective
amendment thereof, any such Preliminary Prospectus, or the Prospectus,
or any such amendment thereof or supplement thereto, or in any
application or other statement executed by the Company or the
Underwriters filed in any jurisdiction in order to qualify the Shares
under, or exempt the Shares or the sale thereof from qualification
under, the securities laws of such jurisdiction; and provided further
that the foregoing indemnity agreement is subject to the condition
that, insofar as it relates to any untrue statement, alleged untrue
statement, omission or alleged omission made in any Preliminary
Prospectus but eliminated or remedied in the Prospectus, such indemnity
agreement shall not inure to the benefit of an Underwriter if the
person asserting any loss, claim, damage or liability purchased the
Shares from such Underwriter which is the subject thereof (or to the
benefit of any person who controls such Underwriter), if a copy of the
Prospectus was not sent or given to such person with, or prior to, the
written confirmation of the sale of such Shares to such person. This
indemnity agreement is in addition to any liability which the Company
may otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the
Registration Statement, and each person who controls the Company within
the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities to which the Company or any such
director, officer or controlling person may become subject under the
Securities Act, the Exchange Act, the common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof or supplement thereto,
or the omission or alleged omission to state in the Registration
Statement or any amendment thereof or supplement thereto, a material
fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus,
if used prior to the Effective Date of the Registration Statement, or
in the Prospectus (as amended or as supplemented, if the Company shall
have filed with the SEC any amendment thereof or supplement thereto),
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading; or (iii) any untrue statement or alleged untrue
statement of a material fact contained in any application or other
statement executed by the Company or by the Underwriters and filed in
any jurisdiction in order to qualify the Shares under, or exempt the
Shares or the sale thereof from qualification under, the securities
laws of such jurisdiction, or the omission or alleged omission to state
in such application or statement 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; in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to
the Company by, or on behalf of, the Underwriters specifically for use
in the preparation of the Registration Statement or any such
post-effective amendment thereof, any such Preliminary Prospectus, or
the Prospectus or any such amendment thereof or supplement thereto, or
in any application or other statement executed by the Company or by the
Underwriters and filed in any jurisdiction; and the Underwriters will
reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, or controlling person in
connection with investigating or defending against any such loss,
claim, damage, liability or action. This indemnity agreement is in
addition to any liability which the Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 7, notify in writing the
indemnifying party of the commencement thereof. The omission so to
notify the indemnifying party will relieve it from any liability under
this Section 7 as to the particular item for which indemnification is
then being sought, but not from any other liability which it may have
to any indemnified party. In case any such action is brought against
any indemnified party, and the indemnified party notifies an
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel who shall be reasonably
satisfactory to such indemnified party; and after notice from the
indemnifying party to such indemnified party of the indemnifying
party's election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this Section 7
for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that if the
defendants in any such action include both the indemnified party and
the indemnifying party, and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties, in which event the fees
and expenses of such separate counsel shall be borne by the
indemnifying party. Any such indemnifying party shall not be liable to
any such indemnified party on account of any settlement of any claim or
action effected without the consent of such indemnifying party.
8. Contribution.
(a) In order to provide for just and equitable contribution in any
action in which the Underwriters or the Company (or any person who
controls the Underwriters or the Company within the meaning of Section
15 of the Securities Act) makes claim for indemnification pursuant to
Section 7 hereof, but such indemnification is unavailable or
insufficient to hold harmless and indemnify a party under Section 7,
then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in Section 7 above (i) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from
the offering of the Shares hereunder or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in such clause (i) but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection
with the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company 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 of the
Shares (before deducting expenses) received by the Company 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. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8 were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable
considerations referred to in the first sentence of this Section 8. The
amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this
Section 8 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the
subject of this Section 8. Notwithstanding the provisions of this
Section 8, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 8 to contribute are several
in proportion to the respective underwriting obligations and not joint.
(b) Promptly after receipt by a party to this Agreement of notice of
the commencement of any action, suit or proceeding, such person will,
if a claim for contribution in respect thereof is to be made against
another party (the "Contributing Party"), notify the Contributing Party
of the commencement thereof; but the omission so to notify the
Contributing Party will not relieve the Contributing Party from any
liability which it may have to any party other than under this Section
8. Any notice given pursuant to Section 7 hereof shall be deemed to be
like notice hereunder. In case any such action, suit or proceeding is
brought against any party, and such person notifies a Contributing
Party of the commencement thereof, the Contributing Party will be
entitled to participate therein with the notifying party and any other
Contributing Party similarly notified.
9. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective immediately after the time at
which the Registration Statement shall become effective under the
Securities Act.
(b) Until the First Closing Date, this Agreement may be terminated by
the Representative on behalf of the Underwriters, at its option, by
giving notice to the Company, and the option referred to in Section
2(b), if exercised, may be cancelled at any time prior to the Second
Closing Date, if (i) the Company shall have failed, refused, or been
unable, at or prior to such Closing Date, to perform any agreement on
its part to be performed hereunder, (ii) any other condition of the
Underwriters' obligations hereunder is not fulfilled or waived by the
Representative, (iii) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or in the over-the-counter
market shall have been suspended, (iv) minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for
securities shall be required, on the New York Stock Exchange, Nasdaq,
the American Stock Exchange, or in the over-the-counter market, by such
Exchange or by Nasdaq or by order of the SEC or any other governmental
authority having jurisdiction, (v) a banking moratorium shall have been
declared by federal, New York, or Minnesota authorities, (vi) there
shall have been such a serious, unusual and material change in general
economic, monetary, political or financial conditions, or the effect of
international conditions on the financial markets in the United States
shall be such as, in the judgment of the Representative, makes it
inadvisable to proceed with the delivery of the Shares, (vii) the
enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of any court or other
governmental authority which, in the judgment of the Representative,
materially and adversely affects or will materially and adversely
affect the business or operations of the Company, or (viii) there shall
be a material outbreak of hostilities or material escalation and
deterioration in the political and military situation between the
United States and any foreign power, or a formal declaration of war by
the United States of America shall have occurred. Any such termination
shall be without liability of any party to any other party, except as
provided in Sections 7 and 8 hereof; provided, however, that the
Company shall remain obligated to pay costs and expenses to the extent
provided in Section 4 hereof.
(c) If the Representative elects to prevent this Agreement from
becoming effective or to terminate this Agreement as provided in this
Section 9, it shall notify the Company promptly by telegram or
telephone, confirmed by letter sent to the address specified in Section
12 hereof. If the Company shall elect to prevent this Agreement from
becoming effective, it shall notify the Underwriters promptly by
telegram or telephone, confirmed by letter sent to the addresses
specified in Section 12 hereof.
10. Default by the Company. If the Company shall fail at the First Closing Date
to sell and deliver the number of Shares which it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any non-defaulting party. No action taken pursuant to this Section shall
relieve the Company from liability, if any, in respect of such default.
11. Survival of Indemnities, Contribution Agreements, Warranties and
Representations. The respective indemnity and contribution agreements of the
Company and the Underwriters contained in Sections 7 and 8; the representations
and warranties of the Company set forth in Section 1 hereof; and the covenants
and agreements of the Company set forth in Section 3 hereof, shall remain
operative and in full force and effect, regardless of any investigation made by,
or on behalf of, the Underwriters, the Company, any of its officers and
directors, or any controlling person referred to in Sections 7 and 8, and shall
survive the delivery of and payment for the Shares. The aforesaid indemnity and
contribution agreements shall also survive any termination or cancellation of
this Agreement. Any successor of any party or of any such controlling person, or
any legal representative of such controlling person, as the case may be, shall
be entitled to the benefit of the respective indemnity and contribution
agreements.
12. Notices. All notices or communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telegraphed, and confirmed, as follows:
If to the Representative or
the Underwriters, to: ▇. ▇. ▇▇▇▇▇▇▇▇ & Company
Midwest Plaza, Suite 1100
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to: Winthrop & Weinstine, P.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
If to the Company, to: Eco Soil Systems, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Pillsbury Center South
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
13. Information Furnished by the Underwriters. The statements relating to the
stabilization activities of the Underwriters and the statements under the
caption "Underwriting" in any Preliminary Prospectus and in the Prospectus
constitute the written information furnished by, or on behalf of, the
Underwriters specifically for use with reference to the Underwriters referred to
in Section 1(a)(ii) and Section 7(a) hereof.
14. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Company and their respective successors
and assigns, and the officers, directors and controlling persons referred to in
Sections 7 and 8. Nothing expressed in this Agreement is intended or shall be
construed to give any person or corporation, other than the parties hereto,
their respective successors and assigns, and the controlling persons, officers
and directors referred to in Sections 7 and 8 any legal or equitable right,
remedy or claim under, or in respect of, this Agreement or any provision herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective executors, administrators, successors, assigns and
such controlling persons, officers and directors, and for the benefit of no
other person or corporation. No purchaser of any Shares from the Underwriters
shall be construed a successor or assign merely by reason of such purchase.
15. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of Minnesota.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed counterpart of this
Agreement, whereupon it will become a binding agreement among the Company and
the Underwriters in accordance with its terms.
Very truly yours,
ECO SOIL SYSTEMS, INC.
By__________________________________
Signature
____________________________________
Name Typed or Printed
Its ________________________________
Title Typed or Printed
ACCEPTANCE
The foregoing Underwriting Agreement is hereby confirmed and accepted by us, on
behalf of ourselves and the other several Underwriters named in Schedule I
hereto, as of the date first above written.
▇. ▇. ▇▇▇▇▇▇▇▇ & Company
As Representative
By ____________________________________
Signature
_______________________________________
Name Type or Printed
Its____________________________________
Title Typed or Printed
SCHEDULE I
Number of
Underwriters Firm Shares (1)
▇. ▇. ▇▇▇▇▇▇▇▇ & Company
----------
Total..........................................3,300,000
==========
------------------
(1) The Underwriters may purchase up to an additional 495,000 Option
Shares, to the extent the option described in Section 2(b) of the
Agreement is exercised, in the proportions and in the manner described
in the Agreement.
APPENDIX A
FORM OF "LOCK-UP" AGREEMENT
▇. ▇. ▇▇▇▇▇▇▇▇ & COMPANY
Midwest Plaza, Suite 1100
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Eco Soil Systems, Inc.
Ladies and Gentlemen:
The undersigned, a beneficial owner of common stock (the "Common Stock") of Eco
Soil Systems, Inc. (the "Company"), understands and acknowledges that the
Company is intending to file with the Securities and Exchange Commission a
Registration Statement on Form SB-2 (the "Registration Statement") for the
registration of the offer and sale of shares of Common Stock, including shares
subject to the Underwriters' over-allotment option (collectively, the "Shares").
The undersigned further understands that the Company, as issuer, and ▇. ▇.
▇▇▇▇▇▇▇▇ & Company, on behalf of the underwriters (collectively, the
"Underwriters") named in Schedule I to that certain proposed underwriting
agreement expected to be entered into in connection with the public offering of
the Shares by the Underwriters (the "Underwriting Agreement"), contemplate
entering into such Underwriting Agreement.
In order to induce the Underwriters to proceed with the public offering, the
undersigned agrees, for the benefit of the Company and the Underwriters, that
should such public offering be effectuated, the undersigned will not, without
the prior written consent of ▇. ▇. ▇▇▇▇▇▇▇▇ & Company, during the 180 days
commencing on the effective date of the Registration Statement:
(i) offer to sell, contract to sell, pledge, hypothecate, transfer
or otherwise dispose of, grant any rights with respect to
(collectively, a "Disposition"), any shares of Common Stock of
the Company, and options, warrants and other rights to
purchase any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for shares of
Common Stock now owned or hereafter acquired by the
undersigned (collectively, "Securities") or with respect to
which the undersigned has or hereafter acquires the power of
Disposition; or
(ii) effect any Disposition of any Securities
other than by gifts to donees who agree in writing to be bound by the same
restriction, or by will or the laws of descent, in which case the Securities
also will be subject to the same restriction.
The undersigned hereby agrees to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of the Securities except in
compliance with this Agreement.
Dated:_______________, 1996. Very truly yours,
_________________________________
Signature
_________________________________
Name Typed or Printed
APPENDIX B
FORM OF REPRESENTATIVE'S WARRANTS
