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1,100,000 SHARES OF COMMON STOCK
1,100,000 COMMON STOCK PURCHASE WARRANTS
▇▇▇▇▇▇ INDUSTRIES, INC.
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
UNDERWRITING AGREEMENT
December 10, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.,
as Representative of the Several Underwriters
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Syndicate Department
Ladies and Gentlemen:
▇▇▇▇▇▇ Industries, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule I hereto (the "Underwriters") 700,000 shares of its common stock, par
value $.10 per share (the "Common Stock"), and 1,100,000 Common Stock Purchase
Warrants, and those certain stockholders of the Company named in Schedule II
hereto (the "Selling Stockholders") propose to sell to the Underwriters 400,000
shares of Common Stock. Each such Common Stock Purchase Warrant shall entitle
the holder thereof to purchase one share of Common Stock at an exercise price
equal to 120% of the public offering price per share of Common Stock during the
first 13 months of the warrant's term and 130% during the remaining 12 months of
the warrant's term. The Common Stock Purchase Warrants shall expire 25 months
after the closing of the offering, unless such term is extended pursuant to the
Warrant Agreement governing the terms of the Common Stock Purchase Warrants (the
"Warrant Agreement"). The Warrant Agreement shall be in the form of the Warrant
Agreement attached as an exhibit to the Registration Statement on Form S-1 (as
amended from time to time, the "Registration Statement") on file with the
Securities and Exchange Commission (the "Commission") covering the offer and
sale of the shares of Common Stock, the Common Stock Purchase Warrants, and the
shares of Common Stock issuable upon the exercise of the Common Stock Purchase
Warrants on the date the Commission declares the Registration Statement
effective (the "Effective Date").
The 1,100,000 shares of Common Stock to be purchased by the
Underwriters are hereinafter referred to as the "Firm Shares" and the 1,100,000
Common Stock Purchase Warrants
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to be purchased by the Underwriters as the "Firm Warrants." The Firm Shares and
the Firm Warrants are hereinafter collectively referred to as the "Firm
Securities." In addition, the Company and the Selling Stockholders propose to
grant to the several Underwriters, solely for the purpose of covering over-
allotments in the sale of the Firm Securities, the option described in Section
2 of this Agreement (this "Agreement") to purchase up to 165,000 additional
shares of Common Stock (the "Additional Shares") and 165,000 additional Common
Stock Purchase Warrants (the "Additional Warrants"). The Additional Shares and
the Additional Warrants are hereinafter collectively referred to as the
"Additional Securities."
The Firm Warrants and the Additional Warrants are hereinafter
collectively referred to as the "Warrants"; the Shares of Common Stock to be
issued or sold upon the exercise of the Warrants as the "Warrant Shares"; and
the Firm Securities, the Additional Securities, and the shares of Common Stock
issuable upon the exercise of the Firm Warrants and the Additional Warrants as
the "Offered Securities." This Agreement, the Warrant Agreement, the Managing
Underwriters' Warrant Agreement, and the Registration Rights Agreement (as such
terms are defined herein) are hereinafter collectively referred to as the
"Operative Documents."
You, as the representative of the Underwriters (the
"Representative"), have advised the Company and the Selling Stockholders that
you and the other Underwriters desire to purchase, severally and not jointly,
the Firm Shares and Firm Warrants as described on Schedule I hereto and that you
have been authorized by the Underwriters to execute this Agreement on their
behalf.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Commission in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), the Registration
Statement (File No. 333-39767), including a prospectus subject to completion,
relating to the Offered Securities. The prospectus in the form included in the
Registration Statement when the Commission declares the Registration Statement
effective, or if the prospectus included in the Registration Statement omits
information in reliance upon Rule 430A under the Securities Act and such
information is included in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Securities Act or as part of a post-effective amendment to
the Registration Statement after the Registration Statement becomes effective,
the prospectus as so filed, is referred to in this Agreement as the
"Prospectus." The prospectus subject to completion in the form included in the
Registration Statement at the time of the initial filing of such Registration
Statement with the Commission and as such prospectus is amended from time to
time until the date of the Prospectus is referred to in this Agreement as the
"Prepricing Prospectus."
2. AGREEMENTS TO SELL AND PURCHASE. The Company and the
Selling Stockholders (in accordance with Schedule II hereto) hereby agree,
severally and not jointly, to sell the Firm Securities to the Underwriters, and
upon the basis of the representations, warranties and agreements of the Company
and the Selling Stockholders contained herein and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company and the Selling Stockholders at a purchase price of
$11.28 per Firm
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Share and $.094 per Firm Warrant, the number of Firm Shares and Firm Warrants
set forth opposite the name of such Underwriter in Schedule I hereto (or such
number of Firm Shares and Firm Warrants as adjusted pursuant to Section 11
hereof).
The Company and the Selling Stockholders hereby also agree to
sell to the Underwriters, and upon the basis of the representations, warranties
and agreements of the Company and the Selling Stockholders herein contained and
subject to all the terms and conditions set forth herein, the Underwriters shall
have the right for 30 days after the Closing Date (as defined herein) to
purchase from the Selling Stockholders up to an aggregate of 165,000 Additional
Shares and to purchase from the Company 165,000 Additional Warrants at a price
identical to the price per Firm Share and Firm Warrant, respectively, set forth
above. The Additional Shares and Additional Warrants may be purchased solely for
the purpose of covering over-allotments, if any, made in connection with the
offering of the Firm Securities. If any Additional Shares and Additional
Warrants are to be purchased, each Underwriter, severally and not jointly,
agrees to purchase the number of Additional Shares and Additional Warrants
(subject to such adjustments as you may determine to avoid fractional shares)
that bears the same proportion to the total number of Additional Shares and
Additional Warrants to be purchased by the Underwriters as the number of Firm
Shares and Firm Warrants, respectively, set forth opposite the name of such
Underwriter in Schedule I hereto (or such number of Firm Shares and Firm
Warrants as adjusted pursuant to Section 11 hereof) bears to the total number of
Firm Shares and Firm Warrants. Upon any election by the Underwriters to purchase
less than all the Additional Shares and Additional Warrants, the aggregate
number of Additional Shares and Additional Warrants to be purchased from the
Company by all the Underwriters shall be in the same proportion as the maximum
number of Additional Shares and Additional Warrants that may be purchased from
the Company as set forth on Schedule II hereto.
At the Closing (as defined herein), the Company shall sell to
the Representative and Southwest Securities, Inc. (collectively with the
Representative, the "Managing Underwriters") a warrant (the "Managing
Underwriters' Warrant") for $10 entitling the holder thereof to (i) purchase up
to 110,000 shares of Common Stock for five years after the Closing Date for an
exercise price per share equal to $14.40 per share, and (ii) purchase up to
110,000 Warrants, identical to the Firm Warrants and the Additional Warrants,
for an exercise price per Warrant equal to $.12 per Warrant. The Managing
Underwriters' Warrant shall be exercisable with respect to the shares of Common
Stock for a period of four years commencing one year after the Closing Date, and
the Managing Underwriters' Warrant shall be exercisable with respect to the
Warrants for a period of 13 months commencing one year after the Closing Date.
The Managing Underwriters' Warrant shall also contain the other terms and
conditions as set forth in the Managing Underwriters' Warrant Agreement included
as an exhibit to the Registration Statement on the Effective Date (the "Managing
Underwriters' Warrant Agreement"). In addition, the holders of the Managing
Underwriters' Warrant shall be entitled to the registration rights with respect
to the resale of the Managing Underwriters' Warrant, the resale of the shares of
Common Stock issuable upon the exercise of such warrant, the resale of the
Warrants issuable upon the exercise of such warrant, and the issuance of the
shares of Common Stock issuable upon the exercise of such Warrants as set forth
in the Registration Rights Agreement included as an exhibit to the Registration
Statement on the Effective Date (the "Registration Rights
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Agreement"). As used herein, "Managing Underwriters' Securities" shall mean the
Managing Underwriters' Warrant, including the shares of Common Stock and
Warrants issuable upon the exercise thereof and the shares of Common Stock
issuable upon the exercise of such Warrants. At the Closing, the Company also
shall pay to the Managing Underwriters a fee equal to 1.00% of the Company's
gross proceeds from its sale of the Firm Securities (the "Financial Advisory
Fee").
3. TERMS OF PUBLIC OFFERING. The Company and the Selling
Stockholders have been advised by you that the Underwriters propose to make a
public offering of their respective portions of the Firm Securities and any
Additional Securities as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable, and initially
to offer the Firm Securities and any Additional Securities upon the terms set
forth in the Prospectus.
4. DELIVERY OF CERTAIN SECURITIES AND PAYMENT THEREFOR. You
contemplate that the delivery to the Underwriters of the Firm Securities and
payment therefor (the "Closing") shall be made at the office of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., New York
City time, on December 16, 1997 (the "Closing Date"). The place of closing for
the Firm Securities and the Closing Date may be varied by you as you consider
advisable.
Delivery to the Underwriters of and payment for any Additional
Securities to be purchased by the Underwriters shall be made at the office of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m.,
New York City time, on such date or dates (each an "Additional Closing Date,"
which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than three nor later than ten business days after
the giving of the notice hereinafter referred to) as shall be specified in a
written notice from you on behalf of the Underwriters to the Company of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional Securities. Such notice may be given to the Company by you at any
time within 30 days after the Closing Date. The place of closing for the
Additional Securities and the Additional Closing Date may be varied by you as
you consider advisable.
Certificates for the Firm Securities and for any Additional
Securities to be purchased hereunder shall be registered in such names and in
such denominations as you shall request prior to 1:00 p.m., New York City time,
not later than the second full business day preceding the Closing Date or the
Additional Closing Date, as the case may be. Such certificates shall be made
available to you in New York, New York for inspection and packaging not later
than 9:30 a.m., New York City time, on the business day immediately preceding
the Closing Date or the Additional Closing Date, as the case may be. The
certificates evidencing the Firm Securities and any Additional Securities to be
purchased hereunder shall be delivered to you, for the respective accounts of
the several Underwriters, on the Closing Date or the Additional Closing Date, as
the case may be, against payment of the purchase price therefor by wire transfer
to accounts designated in writing to you by the Company and each of the Selling
Stockholders or by certified or official bank check or checks payable in New
York Clearing House funds. Time
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shall be of the essence and delivery at the time and place specified in
this Agreement is a further condition to the obligations of each Underwriter.
5. COVENANTS AND AGREEMENTS. The Company and each Selling
Stockholder severally, and not jointly, covenants and agrees with the several
Underwriters as follows (except with respect to the covenants and agreements
below made by the Company, for which the Selling Stockholders shall bear no
responsibility):
a. The Company will cause the Registration Statement and
any post-effective amendments thereto to be prepared in conformity with
the requirements of the Securities Act. In addition, the Company will
use its best efforts to cause the Registration Statement and any
post-effective amendments thereto to become effective and will advise
you promptly, and if requested by you, will confirm such advice in
writing (i) when the Registration Statement has become effective and
when any post-effective amendment thereto becomes effective; (ii) if
Rule 430A under the Securities Act is used, when the Prospectus has
been timely filed pursuant to Rule 424(b) under the Securities Act;
(iii) of any request by the Commission for amendments or supplements to
the Registration Statement, any Prepricing Prospectus or the Prospectus
or for additional information; (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Offered
Securities for offering or sale in any jurisdiction or the initiation
of any proceeding for such purposes and (v) of any change in the
Company's condition (financial or other), business, properties, net
worth, results of operations, or prospects or of any event that comes
to the attention of the Company that makes any statement made in the
Registration Statement or the Prospectus (as then amended or
supplemented) untrue in any material respect or that requires the
making of any additions thereto or changes therein in order to make the
statements therein not misleading in any material aspect, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Securities Act or any other law. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will use its
best efforts to obtain the withdrawal of such order at the earliest
possible time.
b. The Company will furnish to you, without charge, three
signed duplicate originals of the Registration Statement as originally
filed with the Commission and of each amendment thereto, including
financial statements and all exhibits thereto, and will also furnish to
you, without charge, such number of conformed copies of the
Registration Statement as originally filed and of each amendment
thereto as you may reasonably request.
c. The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the
Prospectus of which you shall not previously have been advised (with a
reasonable opportunity to review such amendment or supplement) or to
which you have reasonably objected after being so advised.
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d. The Company will prepare and file with the Commission,
upon your reasonable request, any amendments or supplements to the
Registration Statement or Prospectus, in form and substance reasonably
satisfactory to counsel for the Company, as in the opinion of Akin,
Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel for the Underwriters, may
be necessary or advisable in connection with the distribution of the
Offered Securities and the exercise of the Warrants included therein,
and will use its best efforts to cause the same to become effective as
promptly as possible. The Company will keep the Registration Statement
effective for the term of the Firm Warrants and Additional Warrants
with respect to the issuance and sale of the related Warrant Shares.
e. Prior to the execution and delivery of this Agreement,
the Company has delivered to you, without charge, in such quantities as
you have requested copies of each form of the Prepricing Prospectus.
The Company and the Selling Stockholders have consented to the use, in
accordance with the provisions of the Securities Act and with the
securities or Blue Sky laws of the jurisdictions in which the Offered
Securities are offered by the several Underwriters and by dealers,
prior to the date of the Prospectus, of each Prepricing Prospectus so
furnished.
f. As soon after the execution and delivery of this
Agreement as is practicable and thereafter from time to time for such
period as in the reasonable opinion of counsel for the Underwriters a
prospectus is required by the Securities Act to be delivered in
connection with sales by any Underwriter or a dealer, and for so long a
period as you may request for the distribution of the Offered
Securities, the Company will deliver to each Underwriter, without
charge, as many copies of the Prospectus (and of any amendment or
supplement thereto) as they may reasonably request. The Company and the
Selling Stockholders consent to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of
the Securities Act and with the securities or Blue Sky laws of the
jurisdictions in which the Offered Securities are offered by the
several Underwriters and by all dealers to whom Offered Securities may
be sold, both in connection with the offering and sale of the Offered
Securities and for such period of time thereafter as the Prospectus is
required by the Securities Act to be delivered in connection with sales
by any Underwriter or dealer. If at any time during the period during
which a Prospectus is required to be delivered in accordance with the
Securities Act any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriters is required
to be set forth in the Prospectus (as then amended or supplemented) or
should be set forth therein in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus
to comply with the Securities Act or any other law, the Company will
forthwith prepare and, subject to Sections 5(a) and 5(c) hereof, file
with the Commission and use its best efforts to cause to become
effective as promptly as possible an appropriate supplement or
amendment thereto, and will furnish to each Underwriter who has
previously requested Prospectuses, without charge, a reasonable number
of copies thereof.
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g. The Company and the Selling Stockholders will cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the Offered Securities for offering
and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may reasonably
designate and will file such consents to service of process or other
documents as may be reasonably necessary in order to effect such
registration or qualification; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction
where it is not now required to be qualified or to take any action that
would subject it to service of process in suits, other than those
arising out of the offering or sale of the Offered Securities, in any
jurisdiction where it is not now so subject.
h. The Company will make generally available to its
security holders as soon as practicable, but not later than 45 days
after the end of the 12 month period beginning at the end of the fiscal
quarter of the Company during which the Effective Date occurs, or 90
days if such 12 month period coincides with the Company's fiscal year,
a consolidated earnings statement (in form complying with the
provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act), which need not be audited, covering such 12 month
period.
i. During the period beginning on the date hereof and
ending on the fifth anniversary of the Closing Date, the Company will
furnish to you and, upon your request, to each of the other
Underwriters, (i) as soon as available, a copy of each proxy statement,
quarterly or annual report or other report of the Company mailed to
stockholders or filed with the Commission, the National Association of
Securities Dealers, Inc. (the "NASD") or any securities exchange or the
Nasdaq National Market (as defined herein) and (ii) from time to time
such other information concerning the Company as you may reasonably
request.
j. If this Agreement is terminated after the execution
hereof (other than pursuant to Section 11 hereof), including any
termination by the Underwriters because of breach of any representation
and warranty of, or failure to perform any agreement by, the Company or
any Selling Stockholder herein or to comply with any of the terms or
provisions hereof, the Company agrees to reimburse you and the other
Underwriters for all actual accountable out-of pocket expenses
(including travel expenses and fees and expenses of counsel for the
underwriters) reasonably incurred by the Underwriters in connection
herewith.
k. The Company will apply the net proceeds from the sale of
the Offered Securities to be sold by it substantially in conformity
with the purposes set forth under "Use of Proceeds" in the Prospectus.
l. If Rule 430A under the Securities Act is used, the
Company will timely file the Prospectus pursuant to Rule 424(b) under
the Securities Act.
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m. Prior to the Closing Date or the Additional Closing
Date, as the case may be, the Company will furnish to you, as promptly
as possible, copies of any unaudited interim consolidated financial
statements of the Company and its subsidiaries for any quarterly period
subsequent to the periods covered by the financial statements appearing
in the Prospectus.
n. The Company will comply in all material respects with
all provisions of the undertakings contained in the Registration
Statement.
o. Neither the Company nor any Selling Stockholder will
take any action constituting, or which might reasonably be expected to
constitute or result in, stabilization or manipulation of the trading
price of the Common Stock or the Warrants to facilitate the sale or
resale of the Offered Securities.
p. The Company will use its best efforts to qualify or
register the shares of Common Stock and the Warrants for sale in
non-issuer transactions under (or obtain exemptions from the
application of) the Blue Sky laws of each state where necessary to
permit market making transactions and secondary trading if you, based
on advice of counsel, advise the Company that such qualification,
registration or exemption is necessary or desirable, and will comply
with such Blue Sky laws and will continue such qualifications,
registrations and exemptions in effect for a period of five years after
the Closing Date.
q. The Company will timely file with the NASD Automated
Quotation National Market System (the "Nasdaq National Market") or such
other exchange upon which its securities are listed all documents and
notices required by the Nasdaq National Market or such other applicable
exchange of companies that have issued securities that are traded on
such market.
r. So long as the Company shall be subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company shall furnish to its stockholders and
warrant holders annual reports containing financial statements of the
Company audited by its independent certified public accountants and
will make available to such stockholders and warrant holders upon their
request quarterly reports for the first three quarters of its fiscal
year containing financial information, which may be unaudited.
s. So long as the Company shall be subject to the reporting
requirements of the Exchange Act, the Company will, from time to time,
after the date the Registration Statement becomes effective, file with
the Commission such reports as are required by the Securities Act and
Exchange Act and with state securities commissions in states where the
Offered Securities have been sold by the Underwriters such reports as
are required to be filed by the securities acts and the regulations of
those states.
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t. The Company will cause the Selling Stockholders and each
officer, director and employee of the Company or any Subsidiary (as
defined herein) who owns shares of Common Stock or options or warrants
to acquire shares of Common Stock and who is listed on Schedule III
attached hereto to enter into an agreement with the Representative to
the effect that, for the period beginning on the date hereof and ending
120 days from the Effective Date, such Selling Stockholder, officer,
director and employee will not, without the prior written consent of
the Representative, directly or indirectly, offer, sell, offer to sell,
grant any option to purchase or otherwise sell or dispose of any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable therefor (other than in connection with a conversion,
exercise or exchange in which the holder retains the shares of Common
Stock) or with respect to which such person has the power of
disposition, provided that at any time during such period after the
seventh day following the Effective Date such person may sell shares of
Common Stock at a price of $13.00 per share or more.
u. The Prospectus and any amendment or supplement thereto
will at all times up to and including the Closing Date and any
Additional Closing Date, and during such longer period as the
Prospectus may be required to be delivered in connection with the
issuance and/or sale by the Company or the Selling Stockholders of
shares of Common Stock or Warrants or the exercise of any of the
Warrants, comply in all material respects with the provisions of the
Securities Act and will not contain any untrue statement of a material
fact and will not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
v. Until the second anniversary of the Effective Date:
(i) All members of the Audit and Compensation Committees
of the Company's Board of Directors (the "Board of
Directors") shall be Independent Directors as defined in
the Bylaws of the Company attached as an exhibit to the
Registration Statement on the date hereof.
(ii) Article V of the Company's Bylaws, which concerns
certain corporate governance matters, shall not be modified
or rescinded without the approval of the holders of 66 2/3%
of the outstanding shares of Common Stock.
(iii) The Company shall not (x) issue or sell shares of
Common Stock or securities convertible into, or
exchangeable for, or options or other rights to acquire,
shares of Common Stock to ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇ or any relative or affiliate of any such person
(collectively, the "Executives"), except for issuances of
shares of Common Stock upon the exercise of stock options
and warrants outstanding on the date hereof and described
in the Prospectus, or (y) increase any compensation payable
to any of the Executives, unless such issuance or
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sale of securities or increase of compensation is
unanimously approved by the Compensation Committee of the
Board of Directors.
(iv) The Company shall base the compensation for the
Company's directors and executive officers upon standards
established with the assistance of an outside compensation
specialist.
w. At the Closing, the Company will enter into the Managing
Underwriters' Warrant Agreement and the Registration Rights Agreement.
x. The Company will not reprice any stock options or
warrants before the second anniversary of the Closing Date.
y. The Company and the Selling Stockholders will do and
perform all things required to be done and performed under this
Agreement by them prior to the Closing Date and use their best efforts
to satisfy all conditions precedent within their control to the
delivery of the Offered Securities.
z. The Company and the Selling Stockholders will comply in
all material respects with the Operative Documents.
aa. At the Closing, the Company will enter into the Warrant
Agreement with American Stock Transfer & Trust Company ("American Stock
Transfer" or the "Warrant Agent").
bb. At the Closing, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, and ▇▇▇▇▇▇
▇. ▇▇▇▇▇ will repay all indebtedness owed to the Company or any
Subsidiary (as defined herein), including the indebtedness evidenced by
their non-negotiable promissory notes payable to the Company set forth
as exhibits to the Registration Statement on the Effective Date.
6. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The
Company represents and warrants to each Underwriter on the date hereof, and
shall be deemed to represent and warrant to each Underwriter on the Closing Date
and any Additional Closing Date, that:
a. Each Prepricing Prospectus included as part of the
Registration Statement as originally filed or as part of any amendment
or supplement thereto, or filed pursuant to Rule 424(a) under the
Securities Act, complied when so filed in all material respects with
the provisions of the Securities Act, except that this representation
and warranty does not apply to statements in or omissions from such
Prepricing Prospectus (or any amendment or supplement thereto) made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by or on behalf of any
Underwriter through you expressly for use therein. The Commission has
not issued any order preventing or suspending the use of any Prepricing
Prospectus.
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b. The Registration Statement, in the form in which it
becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective, and the
Prospectus, and any supplement or amendment thereto when filed with the
Commission under Rule 424(b) under the Securities Act, will comply in
all material respects with the provisions of the Securities Act and
will not at any such times contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, except that
this representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectus (or any
amendment or supplement thereto) made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by or on behalf of any Underwriter through you
expressly for use therein.
c. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware, with
full power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as described in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), and is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure
to so register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth,
results of operations or prospects of the Company and the Subsidiaries
taken as a whole (a "Material Adverse Effect").
d. Except for the subsidiaries listed in Exhibit 21.1 to
the Registration Statement as of the date hereof, the Company does not
own a material interest in or control, directly or indirectly, any
other corporation, partnership, joint venture, association, trust or
other business organization that is material to the business of the
Company. Each of the subsidiaries described on Exhibit 21.1 to the
Registration Statement as of the date hereof (collectively, the
"Subsidiaries") is a corporation duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization,
with full power and authority to own, lease and operate its properties
and to conduct its business as presently conducted and as described in
the Registration Statement and the Prospectus (and any amendment or
supplement thereto), and is duly registered and qualified to conduct
its business and is in good standing in each other jurisdiction or
place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure
to so register or qualify does not have a Material Adverse Effect. All
of the outstanding shares of capital stock of each of the Subsidiaries
has been duly authorized and validly issued, are fully paid and
nonassessable, and are owned by the Company directly, or indirectly
through one of the other Subsidiaries, free and clear of any security
interest, lien, adverse claim, equity or other encumbrance.
e. The capitalization of the Company is and will be as set
forth in the Prospectus as of the date set forth therein. All of the
outstanding shares of Common
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Stock have been, and as of the Closing Date will be, duly authorized
and validly issued, are fully paid and nonassessable and free of any
preemptive or similar rights; the Firm Shares to be issued and sold to
the Underwriters by the Company hereunder have been duly authorized
and, when issued and delivered to the Underwriters against payment
therefor in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable and free of any preemptive or similar
rights; the capital stock of the Company conforms in all material
respects to the description thereof in the Registration Statement and
the Prospectus (and any amendment or supplement thereto); and the
delivery of certificates for the Firm Shares and the Additional Shares
pursuant to the terms of this Agreement and payment for the Firm Shares
and the Additional Shares will pass valid title to the Firm Shares and
the Additional Shares, free and clear of any claim, encumbrance or
defect in title to the several Underwriters purchasing the Firm Shares
and the Additional Shares. The certificates for the Firm Shares and the
Additional Shares are in valid and sufficient form.
f. The Firm Shares and Additional Shares to be sold to the
Underwriters by the Selling Stockholders were duly authorized and
validly issued, are fully paid and nonassessable, and were not issued
in violation of any preemptive or similar rights.
g. There are no legal or governmental proceedings pending
or, to the knowledge of the Company after reasonable inquiry and
investigation, threatened, against the Company or any of the
Subsidiaries, or to which the Company, any of the Subsidiaries, or any
of their respective properties is subject, that are required to be
described in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) but are not described as required.
Except as described in the Prospectus, there is no action, suit,
inquiry, proceeding, or investigation by or before any court or
governmental or other regulatory or administrative agency or commission
pending or, to the knowledge of the Company after reasonable inquiry
and investigation, threatened, against or involving the Company or any
Subsidiary, which might individually or in the aggregate prevent or
adversely affect the transactions contemplated by this Agreement or
result in a Material Adverse Effect, nor is there any basis for any
such action, suit, inquiry, proceeding, or investigation. There are no
agreements, contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement thereto) or to be filed as
an exhibit to the Registration Statement that are not described or
filed as required by the Securities Act. All such contracts to which
the Company or any Subsidiary is a party have been duly authorized,
executed and delivered by the Company or such Subsidiary, constitute
valid and binding agreements of the Company or such Subsidiary and are
enforceable against and by the Company or such Subsidiary in accordance
with the terms thereof except (i) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (ii) as the enforceability of any
indemnification provision may be limited under federal or state
securities laws and (iii) as the remedy of specific forms of equitable
relief may be subject to equitable defenses and discretion of the court
before which any
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13
proceeding may be brought (collectively, the "Enforceability
Exceptions"), and neither the Company nor any Subsidiary, nor to the
Company's knowledge after reasonable inquiry and investigation, any
other party, is in breach of or default under any of such contracts.
h. Neither the Company nor any of the Subsidiaries is in
violation in any material respect of its certificate or articles of
incorporation or bylaws, or other organizational documents, or of any
law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries or of any decree
of any court or governmental agency or body having jurisdiction over
the Company or any of the Subsidiaries, or in default in the
performance of any obligation, agreement or condition contained in (i)
any bond, debenture, note or any other evidence of indebtedness, or
(ii) any material agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by which any
of them or any of their respective properties may be bound; and to the
Company's knowledge after reasonable inquiry and investigation there
does not exist any state of facts that constitutes an event of default
on the part of the Company or any Subsidiary as defined in such
documents or which, with notice or lapse of time or both, would
constitute such an event of default.
i. The execution and delivery of this Agreement and the
performance by the Company of its obligations under this Agreement,
including the issuance and sale of the Offered Securities on the terms
set forth in this Agreement, have been duly and validly authorized by
the Company, and this Agreement has been duly executed and delivered by
the Company and constitutes the valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its
terms subject to the Enforceability Exceptions.
j. The execution and delivery of the Warrant Agreement and
the performance by the Company of its obligations under the Warrant
Agreement have been duly and validly authorized by the Company, and at
the Closing the Warrant Agreement will be duly executed and delivered
by the Company and constitute the valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its
terms subject to the Enforceability Exceptions.
k. The execution and delivery of the Managing Underwriters'
Warrant Agreement and the performance by the Company of its obligations
under the Managing Underwriters' Warrant Agreement have been duly and
validly authorized by the Company, and at the Closing the Managing
Underwriters' Warrant Agreement will be duly executed and delivered by
the Company and constitute the valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its
terms subject to the Enforceability Exceptions.
l. The execution and delivery of the Registration Rights
Agreement and the performance by the Company of its obligations under
the Registration Rights Agreement have been duly and validly authorized
by the Company, and at the Closing the
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Registration Rights Agreement will be duly executed and delivered by
the Company and constitute the valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its
terms subject to the Enforceability Exceptions.
m. The Warrants have been duly and validly authorized by
the Company for issuance and sale pursuant to this Agreement and, when
issued and countersigned in accordance with the terms of the Warrant
Agreement and delivered against payment therefor in accordance with the
terms hereof and thereof, will be validly issued and the legal, valid
and binding obligations of the Company subject to the Enforceability
Exceptions. The Company has duly reserved a sufficient number of shares
of Common Stock for the issuance of the Warrant Shares upon the
exercise of the Warrants and has duly and validly authorized the
issuance of such Warrant Shares upon the exercise of the Warrants. Upon
the exercise of the Warrants and the payment of the exercise price
thereof, the respective Warrant Shares will be validly issued, fully
paid and nonassessable, and not issued in violation of any preemptive
or similar rights. The Warrants conform in all material respects to the
description thereof contained in the Prospectus.
n. The Managing Underwriters' Warrant has been duly and
validly authorized by the Company for issuance and sale pursuant to
this Agreement and, when payment is made therefor in accordance with
the terms hereof and the Managing Underwriters' Warrant Agreement, will
be validly issued and the legal, valid and binding obligation of the
Company subject to the Enforceability Exceptions. The Company has duly
reserved a sufficient number of its shares of Common Stock for the
issuance of the shares of Common Stock upon the exercise of the
Managing Underwriters' Warrant, including the shares of Common Stock
issuable upon the exercise of the Warrants issuable upon the exercise
of the Managing Underwriters' Warrant, and has duly and validly
authorized the issuance of such shares of Common Stock upon the
exercise of the Managing Underwriters' Warrant and the Warrants
issuable upon the exercise of the Managing Underwriters' Warrant. Upon
the exercise of the Managing Underwriters' Warrant and the shares of
Common Stock issuable upon the exercise of the Warrants issuable upon
the exercise of the Managing Underwriters' Warrant, and the payment of
the exercise price thereof, the respective shares of Common Stock will
be validly issued, fully paid and nonassessable, and not issued in
violation of any preemptive or similar rights. The Managing
Underwriters' Warrant conforms in all material respects to the
description thereof contained in the Prospectus.
o. Neither the issuance and sale of the Offered Securities,
the execution, delivery or performance of this Agreement and the other
Operative Documents by the Company nor the consummation by the Company
of the transactions contemplated hereby or thereby (i) requires any
consent, approval, authorization or other order of, or registration or
filing with, any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required
under the Securities Act and compliance with the securities or Blue Sky
laws of various jurisdictions) or conflicts with or will conflict with
or constitutes or will constitute a
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breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the
Company or any of the Subsidiaries or (ii) conflicts or will conflict
with or constitutes a breach of, or a default under, any agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their
respective properties is bound, or violates any statute, law,
regulation, filing, judgment, injunction, order or decree applicable to
the Company or any of the Subsidiaries or any of their respective
properties, or results in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
of the Subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them is
bound or to which any of the property or assets of any of them is
subject.
p. Except as set forth in the Prospectus, the Company does
not have outstanding and at the Closing Date (and any Additional
Closing Date) will not have outstanding any options to purchase, or any
warrants to subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell, any shares of
Common Stock or any such options, warrants or convertible securities or
obligations. No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of
the Registration Statement that have not been satisfied or heretofore
waived in writing.
q. The financial statements, together with related
schedules and notes, included in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), comply as to form
in all material respects with the applicable accounting requirements of
the Securities Act for Registration Statements on a Form S-1 and
present fairly the consolidated financial position, results of
operations and changes in cash flows of the Company and the
Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply;
such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein;
and the other financial and statistical information and data set forth
in the Registration Statement and Prospectus (and any amendment or
supplement thereto) is accurately presented and prepared on a basis
consistent with such financial statements and the books and records of
the Company. No other financial statements or schedules are required to
be included in the Registration Statement. Neither the Company nor any
Subsidiary has undergone any Material Adverse Effect since the date of
the most recent balance sheet included in the financial statements set
forth in the Prospectus.
r. Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to
the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or
supplement thereto), (i) the Company and its Subsidiaries have not
incurred any liabilities or obligations, indirect, direct or
contingent, or entered into any transaction that is not in the ordinary
course of business or that could result in a material
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reduction in the future earnings of the Company and the Subsidiaries;
(ii) the Company and the Subsidiaries have not sustained any material
loss or interference with respect to their businesses or properties
from fire, flood, windstorm, accident or other calamity, whether or not
covered by insurance; (iii) the Company has not paid or declared any
dividends or other distributions with respect to its capital stock and
the Company and its Subsidiaries are not in default in the payment of
principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock (other than upon the sale
of the Offered Securities and the Managing Underwriters' Warrant
hereunder and upon the exercise of options and warrants described in
the Prospectus) or indebtedness material to the Company and the
Subsidiaries (other than in the ordinary course of business); and (v)
there has not been any material adverse change, or any development
involving or that may reasonably be expected to involve a potential
future material adverse change in the condition (financial or
otherwise), business, properties, net worth, results of operations or
prospects of the Company and the Subsidiaries.
s. The Company and each of the Subsidiaries has good and
marketable title to all property (real and personal) described in the
Prospectus as being owned by it, free and clear of all liens, claims,
security interests or other encumbrances except (i) such as are
described in the financial statements included in the Prospectus or
(ii) such as are not materially burdensome and do not interfere in any
material respect with the use of the property or the conduct of the
business of the Company and the Subsidiaries taken as a whole. The
property (real and personal) held under lease by each of the Company
and the Subsidiaries is held by it under valid, subsisting and
enforceable leases, with only such exceptions as in the aggregate are
not material and do not interfere in any material respect with the
conduct of the business of the Company and the Subsidiaries taken as a
whole.
t. The Company has not distributed and will not distribute
any offering material in connection with the offering and sale of the
Offered Securities other than the Prepricing Prospectus and the
Prospectus.
u. The Company has not taken, directly or indirectly, any
action constituting, or which might reasonably be expected to
constitute or result in, stabilization or manipulation of the trading
price of the Common Stock to facilitate the sale or resale of the
Offered Securities.
v. The Company is not, and does not intend to conduct its
business in a manner in which it would become, an "investment company"
under the Investment Company Act of 1940, as amended.
w. The Company and each of the Subsidiaries have all
permits, licenses, franchises, approvals, consents and authorizations
of governmental or regulatory authorities (hereinafter "permit" or
"permits") as are necessary to own their respective properties and to
conduct their respective businesses in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus; the
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Company and each of the Subsidiaries have fulfilled and performed all
of their material obligations with respect to each such permit and no
event has occurred that allows, or after notice or lapse of time would
allow, revocation or termination of any such permit or result in any
other material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be set forth
in the Prospectus.
x. The Company and the Subsidiaries have complied and will
comply with wage and hour determinations issued by the U.S. Department
of Labor under the Service Contract Act of 1965 and the Fair Labor
Standards Act in paying its employee salaries, fringe benefits, and
other compensation for the performance of work or other duties in
connection with contracts with the U.S. government. The Company and the
Subsidiaries have complied and will comply with the terms of all
certifications and representations made to the U.S. government in
connection with the submission of any bid or proposal or any contract.
The Company and the Subsidiaries have complied and will comply with
their obligations under their agreements and contracts with the U.S.
government and agencies thereof. Neither the Company nor any of the
Subsidiaries is involved in any labor dispute that might reasonably be
expected to result in a Material Adverse Effect nor, to the knowledge
of the Company after reasonable investigation and inquiry, is any such
dispute threatened.
y. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
z. Neither the Company nor any Subsidiary has, directly or
indirectly, (i) made any unlawful contribution to any candidate for
political office, or failed to disclose fully any contribution in
violation of law; or (ii) made any payment to any federal, state or
foreign governmental official, or other person charged with similar
public or quasi-public duties, other than payments required or
permitted by the laws of the United States and applicable foreign
jurisdictions.
aa. The Company and the Subsidiaries have obtained all
required permits, licenses and other authorizations, if any, which are
required under federal, state, local and foreign statutes, ordinances
and other laws relating to pollution or protection of the environment
("Environmental Laws"). The Company and the Subsidiaries are in
compliance with all terms and conditions of all required permits,
licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws. There is no pending or, to the knowledge of the
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Company after reasonable inquiry and investigation, threatened civil or
criminal litigation, notice of violation, or administrative proceeding
relating to the Environmental Laws involving the Company or the
Subsidiaries. There have not been and there are not any past, present,
or to the Company's knowledge after reasonable inquiry and
investigation, foreseeable future events, conditions, circumstances,
activities, practices, incidents, actions or plans relating to the
Company or the Subsidiaries that may interfere with or prevent
continued compliance with, or that may give rise to any common law or
legal liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation under the
Environmental Laws.
bb. Each of the Company and the Subsidiaries has sufficient
trademarks, trade names, registered service marks, patents, patent
applications, patent rights, licenses, permits, copyright protection
and governmental or other authorizations currently required for the
conduct of its business, and each of the Company and the Subsidiaries
is in all material respects complying therewith, and the products and
services, and the marks associated therewith, used by the Company and
each Subsidiary do not violate or infringe any trademarks, trade names,
registered service marks, patents, patent rights, licenses, permits or
copyrights held or owned by any other party. Neither the Company nor
any Subsidiary has received any notice of violation or infringement of
or conflict with asserted rights of others with respect to any
trademarks, trade names, registered service marks, patents, patent
rights, licenses, permits, copyrights or authorizations owned or used
by the Company, any Subsidiary or any other person. Other than as
disclosed in the Prospectus, the expiration of any such trademarks,
trade names, registered service marks, patents, patent rights,
licenses, permits, copyrights and governmental or other authorizations
would not materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the Company
and its Subsidiaries, taken as a whole, and neither the Company nor any
Subsidiary has received any notice of violation or infringement of or
conflict with asserted rights of others with registered service marks,
patents, patent rights, licenses, permits, copyrights or authorizations
owned or used by the Company, any Subsidiary or any other person.
cc. The Company has filed with the Nasdaq National Market
an application for listing on the Nasdaq National Market of the
additional shares of Common Stock that the Company will issue in this
offering, the Warrants, and the shares of the Common Stock issuable
upon the exercise of the Warrants. The Nasdaq National Market has
approved this application, subject to the occurrence of the Closing.
The Company has previously filed with the Nasdaq National Market
applications for the listing on the Nasdaq National Market of all
outstanding shares of Common Stock, including the shares that are
subject to sale under the Company's stock option plans and warrants
previously issued to certain directors and officers. The Nasdaq
National Market has approved all of such applications.
dd. All federal, state and local tax returns required to be
filed by or on behalf of the Company or any Subsidiary have been filed
(or are the subject of a valid extension) with the appropriate federal,
state and local authorities and all such tax returns,
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as filed, are accurate in all material respects. All federal, state and
local taxes (including estimated tax payments) required to be shown on
all such tax returns or claimed to be due from or with respect to the
business of the Company or any Subsidiary have been paid or reflected
as a liability on the consolidated financial statements of the Company
for the appropriate periods, except for those taxes or claims therefor
which are being contested by the Company in good faith and for which
appropriate reserves are reflected in the Company's consolidated
financial statements. All deficiencies asserted as a result of any
federal, state or local tax audits have been paid or finally settled
and no issue has been raised in any such audit that, by application of
the same or similar principles, reasonably could be expected to result
in a proposed deficiency for any other period not so audited. To the
Company's knowledge after reasonable inquiry and investigation, no
state of facts exists or has existed that would constitute grounds for
the assessment of any tax liability with respect to the periods that
have not been audited by appropriate federal, state or local
authorities. There are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any federal, state or
local tax return of the Company or any Subsidiary. On the Closing Date,
and any Additional Closing Date, all stock transfer and other taxes
that are required to be paid in connection with the sale of the Firm
Securities, Additional Securities and Managing Underwriters' Warrant to
be sold by the Company or the Selling Stockholders will have been fully
paid by the Company and the Selling Stockholders and all laws imposing
such taxes will have been complied with.
ee. Except as set forth in the Prospectus, there are no
transactions with affiliates, as defined in Rule 405 promulgated under
the Securities Act, which are required by the Securities Act and the
applicable rules and regulations thereunder to be disclosed in the
Registration Statement.
ff. The Company has procured the written agreement of the
Selling Stockholders, and each officer, director and employee of the
Company or any Subsidiary who owns shares of Common Stock or options or
warrants to acquire shares of Common Stock and who is listed on
Schedule III attached hereto not to sell, offer to sell or contract to
sell, or otherwise dispose of or transfer, directly or indirectly, any
shares of Common Stock owned or controlled, or hereafter acquired, by
such persons, or any rights to purchase any of such shares of Common
Stock (other than in connection with a conversion, exercise or exchange
in which the holder retains the shares of Common Stock), for the period
beginning on the date hereof and ending 120 days after the Effective
Date for each such Selling Stockholder, officer, director and employee
without the prior written consent of the Representative, provided that
at any time during such period after the seventh day following the
Effective Date such person may sell shares of Common Stock at a price
of $13.00 per share or more.
gg. No officer, director, nominee for director or
stockholder of the Company has any direct or indirect affiliation or
association with any member of the NASD.
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hh. The Company and each of the Subsidiaries has its
property adequately insured against loss or damage by fire, maintains
adequate insurance against liability for negligence, and maintains such
other insurance in such nature and amounts of coverage as is usually
maintained by companies engaged in the same or similar business.
ii. To the Company's knowledge after reasonable inquiry and
investigation, the Company has not incurred any liability for any
finder's fees or similar payments in connection with any of the
transactions herein contemplated.
jj. Neither the Company, any of the Subsidiaries, nor to
the Company's knowledge after reasonable inquiry and investigation, any
of their respective officers, directors, employees, agents or any other
person acting on their behalf, has directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or an agent of a customer or supplier,
or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is,
or may be in a position to help or hinder their respective businesses
(or assist in connection with any actual or proposed transaction) which
(a) reasonably may subject any of them to any damage or penalty in any
civil, criminal or governmental litigation or proceeding; (b) if not
given in the past, could have resulted in a Material Adverse Effect; or
(c) if not continued in the future, could reasonably be expected to
result in a Material Adverse Effect. The internal accounting controls
and procedures of the Company and the Subsidiaries are sufficient to
enable them to comply with the Foreign Corrupt Practices Act of 1977,
as amended.
kk. The Company has entered into the amended and restated
employment agreements with ▇▇▇ ▇▇▇▇▇, Chairman and Chief Executive
Officer of the Company, ▇▇▇▇▇ ▇▇▇▇, President of the Company, and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ that are attached as exhibits to the Registration
Statement on the date hereof (collectively, the "Employment
Agreements"). The execution and delivery of the Employment Agreements
and the performance by the Company of its obligations under the
Employment Agreements has been duly and validly authorized by the
Company, and the Employment Agreements have been duly executed and
delivered by the Company and the employees that are parties thereto and
constitute the valid and legally binding agreements of the Company and
such employees, enforceable against and by the Company and such
employees in accordance with their terms subject to the Enforceability
Exceptions. No payment under any Employment Agreement will constitute
an "excess parachute payment" under Section 280G of the Internal
Revenue Code of 1986, as amended.
ll. The Company has amended and restated the Bylaws as set
forth as an exhibit to the Registration Statement on the Effective
Date.
mm. As contemplated under Section 3.02 of the Joint Venture
Agreement, dated as of August 26, 1997 (the "ATI Agreement"), between
the Company
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and Advanced Techcom, Inc. ("ATI"), the Company and ATI approached
ATI's bank and requested such bank to increase ATI's line of credit
with the bank by $1,000,000 based upon the Company's guarantee of such
incremental borrowing or delivery of a letter of credit with respect
thereto. As the bank nevertheless declined to increase the line of
credit, the Company will not provide any financing to ATI pursuant to
the ATI Agreement or otherwise. In addition, the Company has abandoned
the ATI Agreement because of the bank's failure to increase ATI's line
of credit and for other reasons. The Company's abandonment of the ATI
Agreement will not have a Material Adverse Effect.
nn. None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Offered Securities, the
application of the proceeds from the issuance and sale of the Offered
Securities and the consummation of the transactions contemplated
thereby as set forth in the Prospectus, will violate Regulations G, T,
U or X promulgated by the Board of Governors of the Federal Reserve
System or analogous foreign laws and regulations.
oo. There exist no conditions that would constitute a
default by the Company or the Selling Stockholders (or an event which
with notice or the lapse of time, or both, would constitute a default)
under this Agreement or any of the other Operative Documents.
pp. The Company has applied for and obtained a CUSIP number
for the Warrants.
qq. The Company and the Subsidiaries have obtained proper
export licenses for all foreign sales and will obtain proper export
licenses for all future foreign sales.
rr. The Company has terminated its agreement with Stonegate
Securities, Inc., dated July 25, 1997, pursuant to its terms.
ss. Since July 28, 1996, the Company has not issued any
securities except pursuant to an issuance registered under the
Securities Act (with respect to securities registered or qualified
under the applicable state securities or Blue Sky laws) or exempt from
registration under the Securities Act (and registration or
qualification under applicable state securities or Blue Sky laws).
tt. The issuance of the Offered Securities (including the
issuance of shares of Common Stock upon the exercise of the Warrants)
and the issuance of the Managing Underwriters' Warrant (including the
issuance of shares of Common Stock and Warrants upon the exercise
thereof and the issuance of shares of Common Stock upon the exercise of
such Warrants) will not cause an anti-dilution event to occur in any
material respect with respect to any of the Company's outstanding
securities, including any outstanding stock options or warrants.
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Each certificate signed by an officer of the Company and
delivered to the Representative or counsel for the Representative shall be
deemed to be a representation and warranty by the Company to the Underwriters as
to the matters covered thereby.
7. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLING
STOCKHOLDERS. Each Selling Stockholder, severally, and not jointly, represents
and warrants to each Underwriter on the date hereof, and shall be deemed to
represent and warrant to each Underwriter on the Closing Date and any Additional
Closing Date, that:
a. All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder of
this Agreement, and for the sale and delivery of the Firm Shares and
Additional Shares to be sold by such Selling Stockholder hereunder,
have been obtained; and such Selling Stockholder has, as to himself or
herself the full right, power and authority to enter into this
Agreement, and to sell, assign, transfer and deliver the Firm Shares
and Additional Shares to be sold by such Selling Stockholder hereunder.
b. This Agreement has been duly executed and delivered by
such Selling Stockholder and constitute the valid and binding agreement
of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms subject to the Enforceability
Exceptions.
c. The performance of this Agreement and the consummation
of the transactions contemplated herein will not result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any statute, indenture, mortgage, deed of trust, voting trust
agreement, note agreement, lease or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling
Stockholder or his or her properties are bound, or under any order,
rule or regulation of any court or governmental agency or body
applicable to such Selling Stockholder or his or her business or
property.
d. Such Selling Stockholder has, and immediately prior to
the Closing Date such Selling Stockholder will have, good and valid
title to the Firm Shares and Additional Shares to be sold by such
Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities, stockholder agreements, voting trusts or claims
of any nature whatsoever, and upon delivery of such Firm Shares and
Additional Shares and payment therefor pursuant hereto, good and valid
title to such Firm Shares and Additional Shares, free and clear of all
liens, encumbrances, equities, stockholder agreements, voting trusts or
claims of any nature whatsoever, will pass to the several Underwriters.
e. Such Selling Stockholder will not from the date hereof
until 120 days after the Effective Date, directly or indirectly, sell,
offer to sell, contract to sell or otherwise dispose of or transfer any
shares of Common Stock or rights to purchase shares
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of Common Stock (other than in connection with a conversion, exercise
or exchange in which the holder retains the shares of Common Stock),
otherwise than hereunder without the prior written consent of the
Representative, provided that any time during such period after the
seventh day following the Effective Date such person may sell shares of
Common Stock at a price of $13.00 per share or more.
f. Such Selling Stockholder has not taken, directly or
indirectly, any action constituting or which might reasonably be
expected to constitute or result in, stabilization or manipulation of
the trading price of the Common Stock to facilitate the sale or resale
of the Offered Securities.
g. No consent, approval, authorization or order of, or any
filing of declaration with, any court or governmental agency or body is
required for the consummation by such Selling Stockholder of the
transactions on its part contemplated herein, except such as have been
obtained under the Securities Act and such as may be required under
state securities or Blue Sky laws or the by-laws and rules of the NASD
in connection with the purchase and distribution by the Underwriters of
the Firm Shares and Additional Shares to be sold by such Selling
Stockholder.
h. All information with respect to such Selling Stockholder
contained in the Registration Statement, the Prepricing Prospectus and
the Prospectus (as amended or supplemented, if the Company shall have
filed with the Commission any amendment or supplement thereto) complied
and will comply in all material respects with all applicable provisions
of the Securities Act, contains and will contain all statements
required to be stated therein in accordance with the Securities Act,
and does not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
i. Such Selling Stockholders have not distributed and will
not distribute any offering material in connection with the offering
and sale of the Offered Securities other than the Prepricing Prospectus
and the Prospectus.
j. On the Closing Date (and any Additional Closing Date),
all stock transfer and other taxes (other than income taxes) that are
required to be paid in connection with the sale and transfer of the
Firm Shares (and Additional Shares) to be sold by such Selling
Stockholder to the several Underwriters hereunder will have been fully
paid for by such Selling Stockholder and all laws imposing such taxes
will have been fully complied with.
k. The Firm Shares and Additional Shares to be sold to the
Underwriters by such Selling Stockholder were duly authorized and
validly issued, are fully paid and nonassessable, and were not issued
in violation of any preemptive or similar rights.
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In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Stockholder agrees to deliver to you at least two days prior to the Closing a
properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
Each Selling Stockholder hereby grants an irrevocable power of
attorney to ▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ (the "Attorneys-in-Fact"), with full
power of substitution and re-substitution to execute and deliver any agreements
or documents related to this offering on behalf of such Selling Stockholder,
deliver the Firm Shares and Additional Shares to be sold by such Selling
Stockholder hereunder or otherwise to act on behalf of such Selling Stockholder
in connection with the transactions contemplated by this Agreement. Prior to the
date of this Agreement, each Selling Stockholder has delivered to the
Attorneys-in-Fact certificates in negotiable form representing all the Firm
Shares and Additional Shares to be sold by such Selling Stockholder hereunder,
to be held by the Attorneys-in-Fact until such time as the Attorneys-in-Fact
shall deliver such Firm Shares and Additional Shares to the Underwriters or if
this Agreement is terminated prior to such delivery, to return such Firm Shares
and Additional Shares to such Selling Stockholder. Each Selling Stockholder
specifically agrees that the Firm Shares and Additional Shares represented by
the certificates held in custody with respect to such Selling Stockholder are
subject to the interest of the Underwriters hereunder, and that the arrangements
made by such Selling Stockholder for the custody, and the appointment by such
Selling Stockholder of the Attorneys-in-Fact by the , are to that extent
irrevocable.
Each certificate signed by such Selling Stockholder, or by an
Attorney-in-Fact on behalf of such Selling Stockholder, and delivered to the
Representative or counsel for the Representative shall be deemed to be a
representation and warranty by such Selling Stockholder to the Underwriters as
to the matters covered thereby.
8. EXPENSES. Whether or not the transactions contemplated
hereby are consummated or this Agreement becomes effective or is terminated, the
Company and the Selling Stockholders, jointly and severally, shall be
responsible for and shall pay or cause to be paid the following: (i) all fees,
disbursements and expenses of the Company's and each Selling Stockholder's
respective counsel and accountants in connection with the registration of the
Offered Securities under the Securities Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement and the
Prospectus and amendments and supplements thereto and the mailing and delivering
of copies thereof and of any Prepricing Prospectus to the Underwriters and
dealers; (ii) all registration and filing fees of the Commission; (iii) all
printing and delivery (including, without limitations postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, the Prospectus, each Prepricing Prospectus, the
Operative Documents, the Blue Sky memoranda, the Agreement Among Underwriters,
the Selected Dealers Agreement, any ancillary agreements and documents, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Firm Securities and
Additional Securities; (iv) all expenses in connection with the qualification of
the Firm Securities and
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Additional Securities for offering and sale under state securities laws or Blue
Sky laws, including the reasonable fees of the counsel for the Underwriters in
connection therewith; (v) all filing fees incident to securing the review by the
NASD of the terms of the sale of the Offered Securities; (vi) all Nasdaq
National Market listing, designation and other filing fees; (vii) all costs of
preparing stock and warrant certificates; (viii) all costs and charges of any
transfer agent, warrant agent or registrar; (ix) all costs of the tax stamps, if
any, in connection with the issuance and delivery of the Firm Securities and
Additional Securities to the respective Underwriters; (x) all expenses in
connection with the "road shows"; (xi) all fees, disbursements and expenses of
the Warrant Agent's counsel in connection with the review of the Warrant
Agreement ; (xii) all other fees, costs and expenses referred to in Item 13 of
the Registration Statement, except that the Financial Advisory Fee shall only be
payable if the Closing occurs; and (xiii) all other costs and expenses incurred
in the performance of the obligations of the Company and the Selling
Stockholders hereunder that are not otherwise specifically provided for in this
section. In addition, in the event that the proposed offering is terminated for
the reasons set forth in Section 5(j) hereof, the Company agrees to reimburse
the Underwriters as provided in Section 5(j).
9. INDEMNIFICATION AND CONTRIBUTION. The Company and each of
the Selling Stockholders, jointly and severally, agree to indemnify and hold
harmless you and each other Underwriter, the directors, officers, employees and
agents of each Underwriter, and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees and costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or in any application or other document executed by the Company or any
Selling Stockholder, or arising out of or based upon any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of or based upon any
inaccuracy in the representations and warranties of the Company or any of the
Selling Stockholders contained herein or any failure of the Company or any of
the Selling Stockholders to perform their respective obligations under this
Agreement, any other Operative Document, or applicable law, except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon an untrue statement or omission or alleged untrue statement or omission
that has been made in any Prepricing Prospectus, the Registration Statement, or
the Prospectus or omitted therefrom in reliance upon and in conformity with the
information furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that with respect to any untrue statement or omission made in any
Prepricing Prospectus, the indemnity agreement contained in this paragraph shall
not inure to the benefit of any Underwriter (or to the benefit of any other
person entitled to such indemnification) from whom the person asserting any such
losses, claims, damages or liabilities purchased the Offered Securities
concerned if both (i) a copy of the Prospectus was not sent or given to such
person at or prior to the written confirmation of the sale of such Offered
Securities to such person as required by the Securities Act, and (ii) the untrue
statement or omission in the Prepricing Prospectus was corrected in the
Prospectus. Notwithstanding anything in this Section 9, in no event shall any
Selling Stockholder's obligation under the preceding sentence exceed the total
net proceeds from
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the offering received by such Selling Stockholder (it being agreed that the
Company shall bear the balance.)
If any action or claim shall be brought against any
Underwriter, any director, officer, employee or agent of any Underwriter, or any
person controlling any Underwriter (the "indemnified parties") in respect of
which indemnity may be sought against the Company and the Selling Stockholders
(the "indemnifying parties"), the indemnified party shall promptly notify in
writing the indemnifying parties, and such indemnifying parties shall assume the
defense thereof, including the employment of counsel reasonably acceptable to
the indemnified party and payment of all fees and expenses. The indemnified
party shall have the right to employ separate counsel (but the indemnifying
parties shall not be liable for the fees and expenses of more than one counsel)
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel reasonably acceptable to the indemnified party or (iii) the named
parties to any such action (including any impleaded parties) include the
indemnified party and the indemnifying parties, and the indemnified party shall
have been advised by its counsel that one or more legal defenses may be
available to the indemnified party that may be unavailable to the indemnifying
parties, or that representation of such indemnified party and any indemnifying
parties by the same counsel would be inappropriate under applicable standards of
professional conduct due to actual or potential differing interests between them
(in which case the indemnifying parties shall not have the right to assume the
defense of such action on behalf of the indemnified party (notwithstanding their
obligation to bear the fees and expenses of such counsel)). The indemnifying
parties shall not be liable for any settlement of any such action effected
without their written consent, which may not be unreasonably withheld, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, the indemnifying parties agree to indemnify and
hold harmless any indemnified party from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment, but in the case
of a judgment only to the extent provided in this Section 9.
Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and the Selling Stockholders, to the same extent as the foregoing indemnity from
the Company and the Selling Stockholders, but only with respect to information
furnished in writing by or on behalf of such Underwriter through you expressly
for use in the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto. If any action or claim shall
be brought or asserted against the Company, any of its directors, any such
officers, any such controlling person or the Selling Stockholders based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any Underwriter pursuant to this paragraph, such Underwriter shall have
the rights and duties of the indemnifying party in the preceding paragraph
(except that if the Company shall have assumed the defense thereof such
Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof), and the Company, its directors,
any such officers, and any
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such controlling persons and the Selling Stockholders shall have the rights and
duties given to the indemnified party in such paragraph.
If the indemnification provided for in this Section 9 is
unavailable or insufficient for any reason whatsoever in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then the persons
otherwise responsible for providing such indemnification shall contribute to the
amount paid or payable by the persons otherwise entitled to such indemnification
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and each of the Selling Stockholders on the one hand and
the Underwriters on the other hand from the offering of the Offered Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Stockholders on the one hand and the Underwriters on
the other hand in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Stockholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholders bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus; provided that, in the event that the Underwriters shall have
purchased any Additional Securities hereunder, any determination of the relative
benefits received by the Company and the Selling Stockholders or the
Underwriters from the offering of the Offered Securities shall include the net
proceeds (before deducting expenses) received by the Company and the Selling
Stockholders, and the underwriting discounts and commissions received by the
Underwriters, from the sale of such Additional Securities, in each case computed
on the basis of the respective amounts set forth in the notes to the table on
the cover page of the Prospectus. The relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and the
Selling Stockholders on the one hand or by the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, each of the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by a pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
as a result of the losses, claims, damages, liabilities and expenses referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
underwriting discounts and commissions with respect to the Firm Securities and
Additional Securities underwritten by it and distributed to
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the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay with respect to the public offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 9 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in Schedule I
hereto (or such numbers of Firm Shares increased as set forth in Section 11
hereof), and not joint.
Notwithstanding anything to the contrary in this Section 9,
any losses, claims, damages, liabilities or expenses for which a person is
entitled to indemnification or contribution under this Section 9 shall be paid
by the person required to provide such indemnification or contribution as such
losses, claims, damages, liabilities or expenses are incurred. The indemnity,
contribution and reimbursement agreements contained in this Section 9 and the
representations and warranties of the Company and each of the Selling
Stockholders, respectively, set forth in this Agreement shall remain operative
and in full force and effect, regardless of (i) any investigation made by or on
behalf of any Underwriter, any person controlling any Underwriter, the Company,
its directors or officers, any person controlling the Company or any of the
Selling Stockholders, (ii) acceptance of any Firm Securities and Additional
Securities and payment therefor hereunder and (iii) any termination of this
Agreement. A successor to any Underwriter, any person controlling any
Underwriter, the Company, its directors or officers, any person controlling the
Company or any of the Selling Stockholders, shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this
Section 9.
Any controversy arising out of the operation of the interim
reimbursement arrangements set forth in this Section 9, including the amounts of
any requested reimbursement payments and the method of determining such amounts,
shall be settled by arbitration conducted under the provisions of the
Constitution and Rules of the Board of Governors of the New York Stock Exchange,
Inc. or pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Such an arbitration
will be limited to the operation of the interim reimbursement provisions
contained in this Section 9, and will not resolve the ultimate propriety or
enforceability of the obligation to reimburse expenses created by the provisions
of this Section 9.
10. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Securities hereunder are
subject to the following conditions:
a. The Registration Statement shall have become
effective not later than 10:00 a.m. New York City time, on the day
following the date hereof, or at such later date and time as shall be
consented to in writing by you, and all filings required by Rules
424(b) and 430A under the Securities Act shall have been timely made.
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b. You shall be reasonably satisfied that since the
respective dates as of which information is given in the Registration
Statement and Prospectus, (i) there shall not have been any change in
the capital stock (other than pursuant to the exercise of outstanding
options disclosed in the Prospectus or granted under the stock option
plans described in the Prospectus) of the Company or any of the
Subsidiaries or any material change in the indebtedness (other than in
the ordinary course of business) of the Company or any of the
Subsidiaries, (ii) except as set forth or contemplated by the
Registration Statement or the Prospectus, no material verbal or written
agreement or other transaction shall have been entered into by the
Company or any of the Subsidiaries that was not in the ordinary course
of business or that could reasonably be expected to result in a
material reduction in the future earnings of the Company and the
Subsidiaries, (iii) no loss or damage (whether or not insured) to the
property of the Company or any of the Subsidiaries shall have been
sustained that has a Material Adverse Effect, (iv) no legal or
governmental action, suit or proceeding affecting the Company or any of
the Subsidiaries that is material to the Company and the Subsidiaries
or that affects or could reasonably be expected to affect the
transactions contemplated by this Agreement shall have been instituted
or threatened, and (v) there shall not have been any material change in
the condition (financial or otherwise), business, management,
properties, net worth, results or operations or prospects of the
Company and the Subsidiaries.
c. You shall have received an opinion of Blau,
Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C., counsel for the Company and the
Selling Stockholders, dated the Closing Date, in form and substance
reasonably satisfactory to you and your counsel, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, with full power and authority to own, lease
and operate its properties and to conduct its business as
presently conducted and as described in the Registration
Statement and the Prospectus (and any amendment or supplement
thereto), and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its
business requires such registration or qualification, except
where the failure to so register or qualify does not have a
Material Adverse Effect.
(ii) The Company has no subsidiaries material to its
operations or business other than the Subsidiaries set forth
in Exhibit 21.1 to the Registration Statement; and each of the
Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of the
jurisdiction of its organization, with full power and
authority to own, lease and operate its properties and to
conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement
thereto); and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its
business requires such registration or qualification, except
where the failure to so register or qualify does not have a
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Material Adverse Effect; and all of the outstanding shares of
capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and
nonassessable, and are owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and
clear of any perfected security interest, or to the knowledge
of such counsel, any other security interest, lien, adverse
claim, equity or other encumbrance.
(iii) The authorized capital stock of the Company,
including the Common Stock and the Warrants, conforms in all
material respects to the description thereof under the caption
"Description of Securities" in the Prospectus and such
statements present fairly the matters respecting such
securities required to be set forth in the Registration
Statement and the Prospectus.
(iv) All of the outstanding shares of Common Stock
have been, and as of the Closing Date will be, duly authorized
and validly issued, are fully paid and nonassessable and free
of preemptive rights; the Firm Shares to be issued and sold to
the Underwriters by the Company hereunder have been duly
authorized, and when issued and delivered to the Underwriters
against payment therefor in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free
of any preemptive rights; and the delivery of certificates for
the Firm Shares and the Additional Shares pursuant to the
terms of this Agreement and payment for the Firm Shares and
the Additional Shares will pass valid title to the Firm Shares
and the Additional Shares, free and clear of any claim,
encumbrance or defect in title to the several Underwriters
purchasing the Firm Shares and the Additional Shares, assuming
that such Underwriters purchased such shares in good faith and
without notice of any adverse claim.
(v) The Firm Shares and Additional Shares to be sold
to the Underwriters by the Selling Stockholders were duly
authorized and validly issued, are fully paid and
nonassessable, and were not issued in violation of any
preemptive or similar rights.
(vi) (A) The Registration Statement has become
effective under the Securities Act, and to the knowledge of
such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or
contemplated by the Commission; (B) the Registration Statement
and the Prospectus and each amendment or supplement thereto
(except for the financial statements and the notes thereto,
schedules, and other financial and statistical data included
therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the
requirements of the Securities Act; and (C) to the knowledge
of such counsel, the descriptions in the Prospectus of
statutes, regulations and governmental proceedings insofar as
they purport to summarize certain of the provisions thereof,
are accurate and present fairly in all material respects the
information required to be presented.
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(vii) Neither the Company nor any of the Subsidiaries
is in violation of its certificate or articles of
incorporation or bylaws, or other organizational documents, or
to the knowledge of such counsel, of any law, ordinance,
administrative or governmental rule or regulation applicable
to the Company or any of the Subsidiaries or of any decree of
any court or governmental agency or body having jurisdiction
over the Company or any of the Subsidiaries, or to the
knowledge of such counsel, in default in the performance of
any obligation, agreement or condition contained in (A) any
bond, debenture, note or any other evidence of indebtedness,
or (B) any agreement, indenture, lease or other instrument to
which the Company or any of the Subsidiaries is a party or by
which any of them or any of their respective properties may be
bound; and to the knowledge of such counsel, there does not
exist any state of facts that constitutes an event of default
on the part of the Company or any Subsidiary as defined in
such documents or which, with notice or lapse of time or both,
would constitute such an event of default.
(viii) The execution and delivery of this Agreement
and the performance by the Company of its obligations under
this Agreement, including the issuance and sale of the Offered
Securities on the terms set forth in this Agreement, have been
duly and validly authorized by the Company, and this Agreement
has been duly executed and delivered by the Company.
(ix) The execution and delivery of the Warrant
Agreement and the performance by the Company of its
obligations under the Warrant Agreement have been duly and
validly authorized by the Company, and the Warrant Agreement
has been duly executed and delivered by the Company, and
assuming due authorization, execution and delivery by each of
the other parties thereto, constitutes the valid and legally
binding agreement of the Company, enforceable against the
Company in accordance with its terms subject to the
Enforceability Exceptions.
(x) The execution and delivery of the Managing
Underwriters' Warrant Agreement and the performance by the
Company of its obligations under the Managing Underwriters'
Warrant Agreement have been duly and validly authorized by the
Company, and the Managing Underwriters' Warrant Agreement has
been duly executed and delivered by the Company, and assuming
due authorization, execution and delivery by each of the other
parties thereto, constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms subject to the Enforceability
Exceptions.
(xi) The execution and delivery of the Registration
Rights Agreement and the performance by the Company of its
obligations under the Registration Rights Agreement have been
duly and validly authorized by the Company, and
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the Registration Rights Agreement has been duly executed and
delivered by the Company, and assuming due authorization,
execution and delivery by each of the other parties thereto,
constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with
its terms subject to the Enforceability Exceptions.
(xii) Such counsel has reviewed all agreements,
contracts, indentures, leases or other documents or
instruments referred to in the Registration Statement and the
Prospectus and such agreements, contracts, indentures, leases
or other documents or instruments are fairly summarized and
disclosed therein, and filed as exhibits thereto as required,
and such counsel does not know of any agreements, contracts,
indentures, leases or other documents or instruments required
to be so summarized and disclosed or filed which have not been
so summarized, disclosed and filed.
(xiii) The Warrants have been duly and validly
authorized by the Company for issuance and sale pursuant to
this Agreement, and when issued and countersigned in
accordance with the terms of the Warrant Agreement and
delivered against payment therefor in accordance with the
terms hereof and thereof, will be validly issued and the
legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms
subject to the Enforceability Exceptions; the Company has duly
reserved a sufficient number of its shares of Common Stock for
the issuance of the Warrant Shares upon the exercise of the
Warrants; the Company has duly and validly authorized the
issuance of such Warrant Shares upon the exercise of the
Warrants; upon the exercise of the Warrants and the payment of
the exercise price thereof, the respective Warrant Shares will
be validly issued, fully paid and nonassessable, and not
issued in violation of any preemptive or similar rights.
(xiv) The Managing Underwriters' Warrant has been
duly and validly authorized by the Company for issuance and
sale pursuant to this Agreement, and when payment is made
therefor in accordance with the terms hereof and the Managing
Underwriters' Warrant Agreement and assuming due
authorization, execution and delivery by each other party
thereto, will be validly issued and the legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to the
Enforceability Exceptions; the Company has duly reserved a
sufficient number of its shares of Common Stock for the
issuance of the shares of Common Stock upon the exercise of
the Managing Underwriters' Warrant, including the shares of
Common Stock issuable upon the exercise of the Warrants
issuable upon the exercise of the Managing Underwriters'
Warrant; the Company has duly and validly authorized the
issuance of the shares of Common Stock upon the exercise of
the Managing Underwriters' Warrant, including the shares of
Common Stock issuable upon the exercise of the Warrants
issuable upon the exercise of the Managing Underwriters'
Warrant; upon the exercise of the Managing Underwriters'
Warrant and the shares of
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Common Stock issuable upon the exercise of the Warrants
issuable upon the exercise of the Managing Underwriters'
Warrant, and the payment of the exercise price thereof, the
respective shares of Common Stock will be validly issued,
fully paid and nonassessable, and not issued in violation of
any preemptive or similar rights; and the Managing
Underwriters' Warrant conforms in all material respects to the
description thereof contained in the Prospectus.
(xv) To the knowledge of such counsel, neither the
issuance and sale of the Offered Securities, the execution,
delivery or performance of this Agreement and the other
Operative Documents by the Company nor the consummation by the
Company of the transactions contemplated hereby or thereby (A)
requires any consent, approval, authorization or other order
of, or registration or filing with, any court, regulatory
body, administrative agency or other governmental body, agency
or official or conflicts with or will conflict with or
constitutes or will constitute a breach of, or a default
under, the certificate or articles of incorporation or bylaws,
or other organizational documents, of the Company or any of
the Subsidiaries (other than approval or consent required
under the securities laws or state blue sky laws) or (B)
conflicts or will conflict with or constitutes a breach of, or
a default under, any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is
a party or by which any of them or any of their respective
properties may be bound, or violates any statute, law,
regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of the Subsidiaries or any of
their respective properties, or results in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries
pursuant to the terms of any agreement or instrument to which
any of them is a party or by which any of them may be bound or
to which any of the property or assets of any of them is
subject.
(xvi) To the knowledge of such counsel, except as
described in the Prospectus, the Company does not have
outstanding any options to purchase, or any warrants to
subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell, any
shares of Common Stock or any such options, warrants or
convertible securities or obligations.
(xvii) Except as set forth in the Prospectus, to the
knowledge of such counsel, the Company and each of the
Subsidiaries has good and marketable title to all property
(real and personal) described in the Prospectus as being owned
by it, free and clear of all liens, claims, security interests
or other encumbrances except (A) such as are described in the
financial statements included in the Prospectus or (B) such as
are not materially burdensome and do not interfere in any
material respect with the conduct of the business of the
Company and the Subsidiaries taken as a whole; to the
knowledge of such counsel the property (real and personal)
held under lease by each of the Company and the Subsidiaries
is held by it under valid, subsisting and enforceable leases,
with only such
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exceptions as in the aggregate are not material and do not
interfere in any material respect with the conduct of the
business of the Company and the Subsidiaries taken as a whole.
(xviii) To the knowledge of such counsel, (A) there
are no legal or governmental proceedings pending or threatened
against the Company or any of the Subsidiaries, or to which
the Company or any of the Subsidiaries, or any of their
property, is subject, that are required to be described in the
Registration Statement or Prospectus (or any amendment or
supplement thereto) that are not described as required
therein, and (B) there are no agreements, contracts,
indentures, leases or other instruments that are required to
be described in the Registration Statement or the Prospectus
or to be filed as an exhibit to the Registration Statement
that are not described or filed as required, as the case may
be.
(xix) To the knowledge of such counsel, neither the
Company nor any of the Subsidiaries is in violation of any
law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental
agency or body having jurisdiction over the Company or any of
the Subsidiaries.
(xx) The Company is not an "investment company" under
the Investment Company Act of 1940, as amended, and if the
Company conducts its business and uses the proceeds of the
offering as set forth in the Prospectus, will not become an
"investment company" and will not be required to register
under such act.
(xxi) To the knowledge of such counsel, the Company
and each of the Subsidiaries have all permits as are necessary
to own their respective properties and to conduct their
respective businesses substantially in the manner described in
the Prospectus, the Company and each of the Subsidiaries have
fulfilled and performed all of their obligations with respect
to such permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or
termination of any such permit or result in any other material
impairment of the rights of the holder of any such permit.
(xxii) The forms of certificates for the Common Stock
and the Warrants conform in all material respects with the
requirements of the Delaware General Corporation Law.
(xxiii) To the knowledge of such counsel, no consent,
approval, authorization or order has been or is required for
the performance of this Agreement by each of the Selling
Stockholders or the consummation of the transactions
contemplated by this Agreement, in connection with the Firm
Shares and Additional Shares to be sold by the Selling
Stockholders hereunder, except
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consents, approvals, authorizations or orders that have been
duly obtained and are in full force and effect.
(xxiv) This Agreement has been duly executed and
delivered by each Selling Stockholder; and the performance of
this Agreement and the consummation of the transactions
contemplated herein will not result in a breach or violation
of any of the terms or provisions of, or constitute a default
under, any statute, indenture, mortgage, deed of trust, voting
trust agreement, note agreement, lease or other agreement or
instrument of which such counsel is aware to which any of the
Selling Stockholders is a party or by which any of the Selling
Stockholders or their properties are bound, or under any
order, rule or regulation, known to such counsel, of any court
or governmental agency or body applicable to any of the
Selling Stockholders or the business or property of any of the
Selling Stockholders.
(xxv) Each Selling Stockholder has good and valid
title to the Firm Shares and Additional Shares to be sold by
such Selling Stockholder hereunder, free and clear of all
liens, encumbrances, equities, stockholder agreements, voting
trusts or claims of any nature whatsoever, and upon delivery
of such Firm Shares and Additional Shares and payment therefor
pursuant hereto, good and valid title to such Firm Shares and
Additional Shares, free and clear of all liens, encumbrances,
equities, stockholder agreements, voting trusts or claims of
any nature whatsoever, will pass to the several Underwriters.
In rendering such opinion, counsel may rely, to the extent such
counsel deems such reliance proper, upon an opinion or opinions, each
dated the Closing Date, of other counsel as to matters governed by the
laws of jurisdictions other than the United States or the States of
Delaware or New York, provided that (i) each such local counsel is
acceptable to you and your counsel, (ii) counsel shall state in its
opinion that it believes that it and you are justified in relying
thereon, and (iii) such reliance is expressly authorized by each
opinion so relied upon and a copy of each such opinion is delivered to
you and is in form and substance satisfactory to you and your counsel.
In rendering such opinion, counsel may rely, to the extent such counsel
deems such reliance proper, as to matters of fact upon certificates of
officers of the Company, the Selling Stockholders, and government
officials. Copies of all such certificates shall be acceptable to you
and your counsel and furnished to you and your counsel at the Closing.
In addition, such counsel shall state that such
counsel has participated in conferences with officers and other
representatives of the Company, counsel for the Underwriters,
representatives of the independent public accountants for the Company,
and the Underwriters, at which the contents of the Registration
Statement and Prospectus and related matters were discussed, and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus, on
the basis of the foregoing, no facts have come to such counsel's
attention that lead such counsel to
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believe (i) that the Registration Statement or any amendment or
supplement thereto (other than the financial statements, schedules and
reports thereon, and other financial and statistical data included
therein, as to which such counsel need not comment), as of its
effective date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) that
the Prospectus or any amendment or supplement thereto (other than
financial statements, schedules and reports thereon, and other
financial and statistical data included therein, as to which such
counsel need not comment), as of its issue date and as of the Closing
Date, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
d. You shall have received an opinion of Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., as counsel for the Underwriters, dated
the Closing Date, with respect to such matters related to this offering
as you may reasonably request, and the Company and its counsel shall
have furnished to your counsel such documents as your counsel may
reasonably request for the purpose of enabling your counsel to pass
upon such matters.
e. You shall have received comfort letters addressed
to you and dated the date hereof and the Closing Date from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, independent certified public accountants, in the forms
heretofore approved by you.
f. No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall be pending, threatened or contemplated by the
Commission; no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Offered
Securities under the securities or Blue Sky laws of any jurisdiction
shall be in effect and no proceeding for such purpose shall be pending,
threatened or contemplated by the Commission or the authorities of any
jurisdiction; any request for additional information on the part of the
staff of the Division of Corporation Finance of the Commission or any
such authorities shall have been complied with to the satisfaction of
such staff or such authorities; after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have
been filed unless a copy thereof was first submitted to you and you did
not object thereto in good faith; and all of the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all respects on and as of the date hereof and on and as of
the Closing Date as if made on and as of the Closing Date, and you
shall have received a certificate, dated the Closing Date and signed by
the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you) to the effect
set forth in this Section 10(f) and in Sections 10(b) and 10(g) hereof.
g. Neither the Company nor any Selling Stockholder
shall have failed in any respect at or prior to the Closing Date to
have performed or complied with any of
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such person's agreements herein contained and required to be performed
or complied with by such person hereunder at or prior the Closing Date.
h. You shall have received a certificate, dated on
and as of the Closing Date, by or on behalf of the Selling Stockholders
to the effect that as of the Closing Date each Selling Stockholder's
representations and warranties in this Agreement are true and correct
as if made on and as of such Closing Date, and that each Selling
Stockholder has performed all of his or her obligations and satisfied
all the conditions on his or her part to be performed or satisfied at
or prior to the Closing Date.
i. The Company and each of the Selling Stockholders
shall have furnished or caused to have been furnished to you such
further certificates and documents as you shall have reasonably
requested.
j. At or prior to the Closing Date, you shall have
received the written commitment of each of the individuals named on
Schedule III hereto not to sell, offer to sell, contract to sell, or
otherwise dispose of or transfer any shares of Common Stock or rights
to purchase any shares of Common Stock (other than in connection with a
conversion, exercise or exchange in which the holder retains the shares
of Common Stock), directly or indirectly, except to the Underwriters
pursuant to this Agreement, for a period of 120 days, after the
Effective Date without the prior written consent of the Representative,
provided that any time during such period after the seventh day
following the Effective Date such person may sell shares of Common
Stock at a price of $13.00 per share or more.
k. Prior to the date of this Agreement, the issuance
and sale of the Offered Securities to be sold by the Company and the
Managing Underwriters' Warrant shall have been approved by all
requisite corporate action of the Company.
l. The NASD shall have indicated that it had no
objection to the underwriting arrangements pertaining to the sale of
the Firm Securities and the Additional Securities and the participation
by the Underwriters in the sale thereof.
m. No action shall have been taken by the Commission
or the NASD the effect of which would make it improper for members of
the NASD to execute transactions (as principal or agent) in any of the
Offered Securities, and no proceedings for the taking of such action
shall have been instituted or shall be pending or contemplated by the
Commission or the NASD.
n. The Company and the Warrant Agent shall have
entered into the Warrant Agreement and the Representative shall have
received counterparts, conformed as executed, thereof.
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o. The Company and the Managing Underwriters shall
have entered into the Managing Underwriters' Warrant Agreement and the
Representative shall have received counterparts, conformed as executed,
thereof.
p. The Company and the Managing Underwriters shall
have entered into the Registration Rights Agreement and the
Representative shall have received counterparts, conformed as executed,
thereof.
q. The Warrants shall have been approved for listing
on the Nasdaq National Market.
r. The Company and ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall have entered into the respective Employment
Agreements and the Representative shall have received counterparts,
conformed as executed, thereof.
s. The Company shall have amended its Bylaws as set
forth in the exhibit included in the Registration Statement on the
Effective Date.
▇. ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
shall have repaid all indebtedness owed to the Company or any
Subsidiary, including the indebtedness evidenced by their
non-negotiable promissory notes payable to the Company set forth as
exhibits to the Registration Statement on the Effective Date.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
The several obligations of the Underwriters to purchase
Additional Securities hereunder are subject to the satisfaction on and as of
each Additional Closing Date of the conditions set forth in this Section 10,
except that if an Additional Closing Date is other than the Closing Date, the
certificates, opinions and letters shall be as of such Additional Closing Date.
If any of the conditions hereinabove provided for in this
Section 10 shall not have been satisfied when and as required by this Agreement,
this Agreement may be terminated by you by notifying the Company and the Selling
Stockholders of such termination in writing (which you may deliver by facsimile
transmission) prior to the Closing, but you shall be entitled to waive any of
such conditions.
11. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective upon execution and delivery by all of the parties hereto and the
release of notification of the effectiveness of the Registration Statement by
the Commission; provided, however, that the provisions of Sections 8 and 9 shall
at all times be effective following the execution and delivery of this Agreement
by the parties hereto.
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If any one or more of the Underwriters shall fail or refuse to
purchase Firm Securities that it or they have agreed to purchase hereunder, and
the aggregate number of Firm Securities that such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Firm Securities, each non-defaulting Underwriter
shall be obligated, severally, in the proportion that the number of Firm
Securities set forth opposite its name in Schedule I hereto bears to the
aggregate number of Firm Securities set forth opposite the names of all
nondefaulting Underwriters or in such other proportion as you may specify in the
Agreement Among Underwriters, to purchase the Firm Securities that such
defaulting Underwriter or Underwriters agreed, but failed or refused to
purchase. In that event, the Representative, for the accounts of the several
nondefaulting Underwriters, may take up and pay for all or any part of such Firm
Securities to be purchased by each nondefaulting Underwriter under this section,
and may postpone the Closing Date to a time not exceeding three full business
days after the Closing Date determined as provided in Section 4 of this
Agreement. If any Underwriter or Underwriters shall fail or refuse to purchase
Firm Securities and the aggregate number of Firm Securities with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Securities and the nondefaulting Underwriters do not purchase such Firm
Securities, another person or persons to substitute for the defaulting
Underwriters and purchase such Firm Securities is not found, or other
arrangements satisfactory to you, the Company and the Selling Stockholders for
the purchase of such Firm Securities are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
nondefaulting Underwriter, the Company or the Selling Stockholders. In any such
case that does not result in termination of this Agreement, either you or the
Company and each of the Selling Stockholders shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. As used in this Agreement,
the term "Underwriter" includes any person substituted for an Underwriter under
this Section 11. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement.
12. TERMINATION OF AGREEMENT. This Agreement shall be subject
to termination in your absolute discretion, without liability on the part of any
Underwriter to the Company or any of the Selling Stockholders by notice to the
Company and each of the Selling Stockholders, if on or prior to the Closing Date
or the Additional Closing Date (if different from the Closing Date and then only
as to the Additional Securities), as the case may be, in your sole judgment, (i)
trading in the Common Stock or the Warrants shall have been suspended by the
Commission or the Nasdaq National Market; (ii) trading in securities generally
on the New York Stock Exchange, American Stock Exchange or Nasdaq National
Market shall have been suspended or materially limited, or minimum or maximum
prices shall have been generally established on such exchange or market, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by any
such exchange or market or by order of the Commission or any court or other
governmental authority; (iii) a general moratorium on commercial banking
activities shall have been declared by either federal or New York state
authorities; (iv) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or change
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in political, financial or economic conditions or other material event the
effect of which on the financial markets of the United States is such as to make
it, in your judgment, impracticable or inadvisable to market the Offered
Securities or to enforce contracts for the sale of the Offered Securities; (v)
except as set forth in the Prospectus, there shall be pending or threatened
against the Company or any of the Subsidiaries or notification has been received
by the Company or any of the Subsidiaries of the threat of any material legal or
governmental proceeding or action relating generally to the business or
prospects of the Company or any of the Subsidiaries which could have a Material
Adverse Effect (including action with respect to credit or interest rates) or
which in your reasonable judgment makes it impracticable or inadvisable to
proceed with the offering; (vi) any of the certificates, opinions or other
documents to be delivered on the date of this Agreement or at the Closing Date
(or the Additional Closing Date with respect to any Additional Securities) are
not in form reasonably satisfactory to counsel to the Underwriters; (vii) any
conditions set forth in Section 10 of this Agreement shall not have been
satisfied; or (viii) the Company is merged or consolidated or all or
substantially all of the capital stock or assets of the Company are acquired by
another company or group, or there exists a binding legal commitment for the
foregoing or any other material change of ownership or control occurs.
13. INFORMATION FURNISHED BY THE UNDERWRITERS. The Company and
the Selling Stockholders acknowledge that the statements set forth in the last
paragraph on the cover page of the Prospectus and in the third, fifth, sixth and
seventh paragraphs under the caption "Underwriting" in any Prepricing Prospectus
and in the Prospectus, constitute the only information furnished by or on behalf
of the Underwriters through you or on your behalf as such information is
referred to in Sections 6(a), 6(b) and 9 hereof.
14. MISCELLANEOUS. Notice given pursuant to any of the
provisions of this Agreement shall be in writing and shall be delivered (i) if
to the Company or the Selling Stockholders, to the office of the Company at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, President,
Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇ (with a copy to Blau, Kramer, Wactlar &
▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire, Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇), or
(ii) if to you, as Representative of the Underwriters, to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Inc., ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Senior Vice President, Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇ (with copy to
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C., Facsimile Number
(▇▇▇) ▇▇▇-▇▇▇▇).
This Agreement has been and is made solely for the benefit of
the several Underwriters, the Company, the Selling Stockholders, the other
persons entitled to indemnification and contribution under Section 9 hereof, and
their respective successors and assigns. No other person shall acquire or have
any right under or by virtue of this Agreement. Neither of the terms "successor"
and "successors and assigns" as used in this Agreement shall include a purchaser
from any Underwriter of any of the Offered Securities solely by reason of such
person's status as such a purchaser.
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This Agreement constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof, except for the
section of the Letter of Intent, dated October 30, 1997, between the Company and
you, entitled "Investment Banking Agreement," which shall remain in full force
and effect.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to choice of
law principles thereunder. Time is of the essence in this Agreement.
All representations and warranties, covenants and agreements
of the Company and the Selling Stockholders contained in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Underwriters and shall survive delivery of and
payment for the Offered Securities to and by the Underwriters. The agreements
contained in Sections 5(j), 8 and 9 shall survive the termination of this
Agreement, including any termination pursuant to Section 12.
For purposes of this Agreement, any representation and
warranty concerning the Company or any Subsidiary concerning any liabilities,
obligations, or violations of the Company or such Subsidiary shall be deemed to
refer to the Company and each of its predecessors or such Subsidiary and each of
its predecessors, respectively.
The Company, each of the Selling Stockholders and the
Underwriters each hereby irrevocably waive any right they may have to a trial by
jury in respect to any claim based upon or arising out of this Agreement or the
transactions contemplated hereby.
This Agreement may be signed in various counterparts which
together shall constitute one and the same agreement.
Subject to Section 11 hereof, this Agreement shall be
effective when, but only when, at least one counterpart hereof shall have been
executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Stockholders and the several
Underwriters.
Very truly yours,
▇▇▇▇▇▇ INDUSTRIES, INC.
By: ___________________________________
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
Selling Stockholders:
____________________________________________
▇▇▇ ▇. ▇▇▇▇▇
____________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
CONFIRMED as of the date first above mentioned, on behalf of
itself and the other several Underwriters named in Schedule I
hereto:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
By: __________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
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SCHEDULE I
UNDERWRITERS
Number Number
of Firm of Firm
Name Shares Warrants
---- ------ --------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc................................... 550,000 550,000
Southwest Securities, Inc..................................... 550,000 550,000
--------- ---------
TOTAL....................................... 1,100,000 1,100,000
========= =========
I-1
44
SCHEDULE II
OFFERED SECURITIES
Additional Additional
Firm Shares Firm Warrants Shares Warrants
----------- ------------- ------ --------
Company .................... 700,000 1,100,000 - 165,000
--------- --------- ------- -------
Selling Stockholders:
▇▇▇ ▇. ▇▇▇▇▇ ...... 315,000 -- 129,938 --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ... 42,500 -- 17,531 --
▇▇▇▇▇ ▇▇▇▇▇▇ ...... 42,500 -- 17,531 --
--------- --------- ------- -------
Total Selling
Stockholders .... 400,000 0 165,000 0
--------- --------- ------- -------
TOTAL ...................... 1,100,000 1,100,000 165,000 165,000
========= ========= ======= =======
II-1
45
SCHEDULE III
INDIVIDUALS SUBJECT TO LOCK-UP AGREEMENTS
Adm. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (▇▇▇.)
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. Silver
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Adm. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (▇▇▇.)
III-1
