NATURAL GAS VEHICLE SYSTEMS, INC.
1,500,000 Shares
Common Stock
UNDERWRITING AGREEMENT
January __, 1997
COMMONWEALTH ASSOCIATES
As Representative of the several Underwriters
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Gentlemen:
Natural Gas Vehicle Systems, Inc., a Delaware corporation (the "Company"),
hereby confirms its agreement (this "Agreement") with the several underwriters
named in Schedule 1 hereto (the "Underwriters"), for whom you have been duly
authorized to act as representative (in such capacity, the "Representative"), as
set forth below.
1. Securities. Subject to the terms and conditions herein contained, the
Company proposes to issue and sell to the several Underwriters an aggregate of
1,500,000 shares (the "Firm Securities") of the Company's Common Stock, par
value $.01 per share (the "Common Stock"). The Company also proposes to grant to
the several Underwriters an option to purchase up to an additional 225,000
shares of Common Stock as set forth in Schedule 2 hereto (the "Option
Securities") if requested by the Representative as provided in Section 3 of this
Agreement. The Firm Securities and the Option Securities are referred to herein,
collectively, as the "Securities."
The Company also proposes to issue and sell to the Representative,
warrants (the "Representative Warrants") pursuant to the Representative Warrant
Agreement (the "Representative Warrant Agreement") to purchase up to 150,000
shares of Common Stock. The shares of Common Stock issuable upon exercise of the
Representative Warrants are hereinafter referred to as the "Representative
Securities." The Firm Securities, the Option Securities, the Representative
Warrants and the Representative Securities are more fully described in the
Registration Statement and the Prospectus referred to below.
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each of the several Underwriters as of the
date hereof, and as of the Firm Closing Date (as hereinafter defined) and any
Option Closing Date (as hereinafter defined), if any, as follows:
(a) A registration statement on Form SB-2 (File No. 333-14185) with
respect to the Securities, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and one
or more amendments to such registration statement may have been so filed. After
the execution of this Agreement, the Company will file with the Commission
either (i) if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, either (A) if the
Company relies on Rule 434 under the Act, a Term Sheet (as hereinafter defined)
relating to the Securities, that shall identify the Preliminary Prospectus (as
hereinafter defined) that it supplements containing such information as is
required or permitted by Rules 434, 430A and 424(b) under the Act or (B) if the
Company does not rely on Rule 434 under the Act, a prospectus in the form most
recently included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or permitted by
Rule 424(b) under the Act, and in the case of either clause (i)(A) or (i)(B) of
this sentence as have been provided to and approved by the Representative prior
to the execution of this Agreement, or (ii) if such registration statement, as
it may have been amended, has not been declared by the Commission to be
effective under the Act, an amendment to such registration statement, including
a form of prospectus, a copy of which amendment has been furnished to and
approved by the Representative prior to the execution of this Agreement. As used
in this Agreement, the term "Registration Statement" means such registration
statement, as amended at the time when it was or is declared effective,
including all financial statement schedules and exhibits thereto and including
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); the term
"Prospectus" means: (x) if the Company relies on Rule 434 under the Act, the
Term Sheet relating to the Securities that is first filed pursuant to Rule
424(b)(7) under the Act, together with the Preliminary Prospectus identified
therein that such Term Sheet supplements; (y) if the Company does not rely on
Rule 434 under the Act, the prospectus first filed with the Commission pursuant
to Rule 424(b) under the Act; or (z) if the Company does not rely on Rule 434
under the Act and if no prospectus is required to be filed pursuant to Rule
424(b) under the Act, such term means the prospectus included in the
Registration Statement; and the term "Term Sheet" means any term sheet that
satisfies the requirements of Rule 434 under the Act. Any reference herein to
the "date" of a Prospectus that includes a Term Sheet shall mean the date of
such Term Sheet.
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(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. When any Preliminary Prospectus was filed
with the Commission it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was or is
declared effective, it (i) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading. When the
Prospectus or any Term Sheet that is a part thereof or any amendment or
supplement to the Prospectus is filed with the Commission pursuant to Rule
424(b) (or, if the Prospectus or part thereof or such amendment or supplement is
not required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
declared effective) and on the Firm Closing Date and any Option Closing Date
(both as hereinafter defined), the Prospectus, as amended or supplemented at any
such time, (i) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material respects
with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (ii) did not or will not include any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein.
(c) The Company is a corporation duly organized, validly existing
and in good standing in the jurisdiction of its incorporation, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify would not
result in a material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company.
(d) The Company does not, directly or indirectly, (i) own any
capital stock of any corporation or joint stock company, interest in any
partnership or limited liability company or other equity interest or
participation in any person, or (ii) control any other
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person, other than as described in Exhibit 21 to the Registration Statement
(each of which so described in Exhibit 21, a "Subsidiary"). Each Subsidiary is a
corporation duly organized, validly existing and in good standing in the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify would not result in a material adverse change in the
condition (financial or other), business, prospects, properties, net worth or
results of operations of such Subsidiary; all the outstanding shares of capital
stock of each of the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable, and are owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and clear of any security
interest, lien, encumbrance, equity, claim or other defect; and there is no
outstanding warrant, option or other right to purchase or otherwise acquire any
capital stock of, or any other equity interest or participation in, any
Subsidiary nor any security or instrument convertible into or exchangeable for
any capital stock of, or any other equity interest or participation in, any
Subsidiary nor any agreement, arrangement or understanding entitling any other
person to exercise control over any Subsidiary. Other than with respect to the
Subsidiaries, the Company does not control, directly or indirectly, any
corporation, partnership, joint venture, association or other business
organization.
(e) The Company has the authorized, issued and outstanding
capitalization, and the capital stock of the Company conforms to the description
thereof, set forth in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus). All of the issued shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable. The Firm Securities and the Option Securities have been
duly authorized and upon the issuance and sale thereof on the Firm Closing Date
or the related Option Closing Date (as the case may be), and after payment
therefor in accordance herewith, will be validly issued, fully paid and
nonassessable. No holders of outstanding shares of capital stock of the Company
are entitled as such to any preemptive or other rights to subscribe for any of
the Securities, and, except as set forth in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), no
holder of securities of the Company has any right to require the Company to
register the offer or sale of any securities under the Registration Statement or
within 18 months following the effective date thereof.
(f) The Company is the lawful issuer of the Securities to be offered
and sold by it hereunder and upon sale and delivery of, and payment for, such
Securities, as provided herein, the Company will convey to the Underwriters good
and marketable title to such Securities, free and clear of any security
interest, lien, encumbrance, equity, claim or other defect.
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(g) Except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there are no
outstanding (i) securities or obligations of the Company convertible into or
exchangeable for any capital stock of the Company, (ii) warrants, options or
rights to subscribe for or purchase from the Company any such capital stock or
any such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any such warrants,
options or rights.
(h) The consolidated financial statements and schedules of the
Company and its Subsidiaries included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present the financial position of the Company and
its Subsidiaries and the results of operations and changes in financial
condition as of the dates and periods therein specified. Such financial
statements and schedules have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein) and include all financial
information required to be included by the Act. The financial information
presented under the captions "Prospectus Summary," "Capitalization," "Selected
Consolidated Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) fairly
present, on the basis stated in the Prospectus (or such Preliminary Prospectus),
the information included therein.
(i) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company and its Subsidiaries and delivered their report with
respect to the audited financial statements and schedules included in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), are independent public
accountants within the meaning of the Act and the applicable rules and
regulations thereunder.
(j) The Company has full power (corporate and other) to enter into
this Agreement and the Financial Advisory Agreement described in the Prospectus
(the "Financial Advisory Agreement") and to carry out all the terms and
provisions hereof and thereof to be carried out by it. The execution and
delivery of this Agreement and the Financial Advisory Agreement have been duly
authorized by the Company and this Agreement and the Financial Advisory
Agreement have been duly executed and delivered by the Company, and are the
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms. The execution and delivery of the
Representative's Warrant Agreement and the Representative's Warrants have been
duly authorized by the Company and the Representative's Warrant Agreement, upon
due execution and delivery thereof by the Company, and the Representative's
Warrants, upon issuance thereof and payment therefor in accordance with the
Representative's Warrant Agreement, shall be valid and binding obligations of
the Company to issue and sell the number and type of securities of the Company
provided for therein, enforceable against the Company in accordance with their
respective
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terms. The Representative's Securities have been duly authorized and reserved
for issuance, and, when issued upon exercise of the Representative's Warrant and
payment therefor in accordance therewith and the Representative's Warrant
Agreement, will be validly issued, fully paid and nonassessable. No holders of
outstanding shares of capital stock of the Company are entitled to any
preemptive or other rights to subscribe for any of the Representative's
Securities.
(k) No legal or governmental proceedings are pending to which the
Company or any of its Subsidiaries is a party or to which the property of the
Company or any of its Subsidiaries is subject that are required to be described
in the Registration Statement or the Prospectus and are not described therein
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), and, to the best knowledge of the Company, after due inquiry, no
such proceedings have been threatened against the Company or any of its
Subsidiaries or with respect to any of their respective properties; and no
contract or other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) or filed as required.
(l) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the issuance and sale of
the Representative's Warrant and, upon exercise thereof, the Representative's
Securities to the Representative pursuant to the Representative's Warrant
Agreement, the compliance by the Company with the provisions of this Agreement,
the Financial Advisory Agreement and the Representative's Warrant Agreement, and
the consummation of the other transactions contemplated herein or therein do not
(i) require the consent, approval, authorization, registration or qualification
of or with any governmental authority, except such as have been obtained, such
as may be required under state securities or blue sky laws or the National
Association of Securities Dealers, Inc. (the "NASD") and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act, or (ii) conflict
with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries or any of their
respective properties is bound, or the charter documents or by-laws of the
Company or any of its Subsidiaries, or any law or any judgment, decree, order,
rule or regulation of any court or other governmental authority or any
arbitrator applicable to the Company or any of its Subsidiaries.
(m) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), neither the Company
nor any of its Subsidiaries has sustained any material loss or interference with
its businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor
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dispute or any legal or governmental proceeding and there has not been any
material adverse change, or any development involving a prospective material
adverse change, in the condition (financial or other), business, prospects,
properties, net worth, or results of operations of the Company or any of its
Subsidiaries, except in each case as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(n) The Company has not directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, attempted to induce any person to purchase, or paid anyone any
compensation for soliciting purchases of, the Securities or (B) paid or agreed
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company (except for the sale of Securities by the
Company under this Agreement).
(o) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), (i) neither the
Company nor any of its Subsidiaries has incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not
in the ordinary course of business; (ii) neither the Company nor any of its
Subsidiaries has purchased any of the Company's outstanding capital stock, nor
declared, set aside, paid or otherwise made any dividend or distribution of any
kind on its capital stock; and (iii) there has not been any material change in
the capital stock, short-term debt or long-term debt of the Company or any of
its Subsidiaries, except in each case as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(p) Each of the Company and each of its Subsidiaries has good and
marketable title in fee simple to all items of real property and marketable
title to all personal property owned by it, in each case free and clear of any
security interest, lien, encumbrance, equity, claim or other defect, except such
as do not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company and each of its Subsidiaries, and any real property and improvements
thereon held under lease by the Company and each of its Subsidiaries are held
under valid, subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made or proposed to be made of such
property and improvements by the Company and each of its Subsidiaries, in each
case except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(q) No labor dispute with the employees of the Company or any of its
Subsidiaries exists or is threatened or imminent that could result in a material
adverse change in the condition (financial or other), business, prospects,
properties, net worth or results of
7
operations of the Company, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(r) The Company owns or possesses a valid license or other right to
use all material patents, patent applications, trademarks, service marks, trade
names, brand names, trade dress, copyrights and other proprietary or
confidential information currently employed by it in connection with its
business, and neither the Company nor any of its Subsidiaries have received any
notice of infringement of or conflict with asserted rights of any third party
with respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company, except
as described in or contemplated by the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(s) The Company and each of its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the business in which it is engaged;
neither the Company nor any of its Subsidiaries have been refused any insurance
coverage sought or applied for; and the Company does not have any reason to
believe that it will not be able to renew existing insurance coverage for it and
its Subsidiaries as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a cost
that would not materially and adversely affect the condition (financial or
other), business prospects, properties, net worth or results of operations of
the Company or any of its Subsidiaries, except as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(t) Each of the Company and each of its Subsidiaries has all
authorizations, approvals, orders, licenses, certificates and permits necessary
or appropriate to conduct its business, and has been and is conducting its
business in compliance therewith and with all applicable federal, state and
local laws, rules and regulations; and neither the Company nor any of its
Subsidiaries have received any notice of proceedings relating to the revocation
or modification of any such authorization, approval, order, license, certificate
or permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company or any of its Subsidiaries. The disclosure in the
Registration Statement and the Prospectus (or, if the Prospectus in not in
existence, the most recent Preliminary Prospectus), concerning the effects of
federal, state and local laws, rules and regulations on the business of the
Company and each of its Subsidiaries as currently conducted and as contemplated
are correct and complete in all respects.
(u) Neither the Company nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the transactions contemplated by this Agreement or the
Representative's Warrant Agreement or the
8
conduct of its business as described in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) will not cause the Company or any of its Subsidiaries to
become an investment company subject to registration under such act.
(v) The Company and its Subsidiaries have filed on a consolidated
basis all foreign, federal, state and local income, franchise and other tax
returns that are required to be filed or have requested extensions thereof
(except in any case in which the failure so to file would not have a material
adverse effect on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company or any of its
Subsidiaries) and have paid all taxes required to be paid by them and any other
assessment, fine or penalty levied against them, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith and for which an adequate
reserve has been recorded on the Company's financial statements in accordance
with generally accepted accounting principles, or as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(w) Neither the Company nor any of its Subsidiaries is in violation
of any federal or state law, rule or regulation relating to occupational safety
and health or to the storage, handling or transportation of hazardous or toxic
materials and the Company and each of its Subsidiaries have received all
permits, licenses or other approvals required of them under applicable federal
and state occupational safety and health and environmental laws and regulations
to conduct their business, and the Company and each of its Subsidiaries is in
compliance with all terms and conditions of any such permit, license or
approval, except any such violation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals which would not, singly or in the
aggregate, materially and adversely affect the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company or any of its Subsidiaries, except as described in or contemplated by
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). The Company and each of its Subsidiaries are in
material compliance with all applicable federal, state and local environmental
laws and regulations including, without limitation, those applicable to
emissions to the environment, waste management and waste disposal (collectively,
the "Environmental Laws"), and to the Company's knowledge under current law,
there are no existing circumstances that would prevent, interfere with, or
materially increase the cost of such compliance in the future.
(x) Each certificate signed by any officer of the Company and
delivered to the Representative or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
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(y) The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance 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 asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) Neither the Company or any of its Subsidiaries nor any employee
or agent of the Company or any Subsidiary has made any payment of funds of the
Company or any Subsidiary, or received or retained any funds in violation of any
law, rule or regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.
(aa) The Company has not, directly or indirectly, at any time (i)
made any contributions to any candidate for political office, or failed to
disclose fully any such contribution in violation of law or (ii) made any
payment to any state, federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments or contributions required or allowed by applicable law. The Company's
internal accounting controls and procedures are sufficient to cause the Company
to comply in all material respects with the Foreign Corrupt Practices of 1977,
as amended.
(bb) Except as set forth in the Registration Statement or Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), there is no material claim under any Environmental Law, including
common law, pending or threatened against the Company or any of its Subsidiaries
and, to the Company's knowledge, under applicable law, there are no past or
present actions, activities, circumstances, events or incidents, including,
without limitation, releases of any material into the environment that would
reasonably be expected to form the basis of any material claim against the
Company or any of its Subsidiaries.
(cc) No default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, lease or other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective properties is bound or may be affected.
(dd) The Company has not distributed and, prior to the later of (i)
the Firm Closing Date and (ii) the completion of the distribution of the
Securities, will not distribute any offering material in connection with the
offering and sale of the Securities other than the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the
10
Prospectus or any amendment or supplement thereto, or other materials, if any,
permitted by the Act.
(ee) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Securities to facilitate the sale or resale
thereof.
(ff) Neither the Company, nor any person acting on behalf of the
Company, has employed or engaged any person to act as a broker, finder or other
intermediary in connection with the offering of the Securities or any of the
transactions contemplated hereby, and no person is entitled to any fee,
commission or other compensation relating to any such employment or engagement.
(gg) To the Company's knowledge, except as previously disclosed in
writing by the Company to the Representative, no officer, director or
stockholder of the Company has any National Association of Securities Inc. (the
"NASD") affiliation.
3. Purchase, Sale and Delivery of the Securities and the Representative's
Warrants. (a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters, severally and not jointly, agrees to purchase from the
Company, at a purchase price of $__________ per share, the number of Firm
Securities set forth opposite the name of such Underwriter in Schedule 1 hereto.
One or more certificates in definitive form for the Firm Securities that the
several Underwriters have agreed to purchase hereunder, and in such denomination
or denominations and registered in such name or names as the Representative
shall request upon notice to the Company not later than 5:00 p.m., New York City
time, on the second business day prior to the Firm Closing Date, shall be
delivered by or on behalf of the Company to the Representative for the
respective accounts of the Underwriters, against payment by or on behalf of the
Underwriters of the purchase price therefor by certified or official bank check
or checks drawn upon or by a New York Clearing House bank and payable in
next-day funds to the order of the Company. Delivery of the documents,
certificates and opinions described in Section 7 of this Agreement and payment
for the Firm Securities shall be made at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau &
Klimpl, LLP, 1211 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and delivery of the Firm Securities shall be made at the offices of the
Representative, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 9:30
a.m., New York City time, on January __, 1997, or at such other place, time or
date as the Representative and the Company may agree upon or as the
Representative may determine pursuant to Section 9 hereof, such time and date of
delivery against payment being herein referred to as the "Firm Closing Date".
The Company will make such certificate or certificates for the Firm Securities
available for checking and packaging by the Representative at the offices in New
York, New York of the Company's transfer agent or registrar or the
11
Representative not later than 5:00 p.m., New York City time, on the business day
prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, (i) the Company hereby grants to the several Underwriters an option
to purchase, severally and not jointly, the Option Securities. The purchase
price to be paid for any Option Securities shall be the same price per share as
the price per share for the Firm Securities set forth above in paragraph (a) of
this Section 3. The option granted hereby may be exercised as to all or any part
of the Option Securities from time to time within forty-five (45) business days
after the date of the Prospectus (or, if such 45th business day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when the
New York Stock Exchange is open for trading). The Underwriters shall not be
under any obligation to purchase any of the Option Securities prior to the
exercise of such option. The Representative may from time to time exercise the
option granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Company setting forth the aggregate number of Option Securities
as to which the several Underwriters are then exercising the option and the date
and time for delivery of and payment for such Option Securities. Any such date
of delivery shall be determined by the Representative but shall not be earlier
than two business days or later than three business days after such exercise of
the option and, in any event, shall not be earlier than the Firm Closing Date.
The time and date set forth in such notice, or such other time on such other
date as the Representative and the Company may agree upon or as the
Representative may determine pursuant to Section 9 hereof, is herein called the
"Option Closing Date" with respect to such Option Securities. Upon exercise of
the option as provided herein, the Company shall become obligated to sell to
each of the several Underwriters, and, subject to the terms and conditions
herein set forth, each of the Underwriters (severally and not jointly) shall
become obligated to purchase from the Company, the same percentage of the total
number of the Option Securities as to which the several Underwriters are then
exercising the option as such Underwriter is obligated to purchase of the
aggregate number of Firm Securities, as adjusted by the Representative in such
manner as it deems advisable to avoid fractional shares. If the option is
exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section 3,
except that reference therein to the Firm Securities and the Firm Closing Date
shall be deemed, for purposes of this paragraph (b), to refer to such Option
Securities and Option Closing Date, respectively.
(c) You, individually and not as the Representative, may (but shall
not be obligated to) make payment on behalf of any Underwriter or Underwriters
for any of the Securities to be purchased by such Underwriter or Underwriters.
No such payment shall relieve such Underwriter or Underwriters from any of its
or their obligations hereunder.
12
(d) On the Firm Closing Date, the Company shall issue and sell to
the Representative the Representative's Warrants, at an aggregate purchase price
of $150, pursuant to the Representative's Warrant Agreement. The
Representative's Warrant Agreement and form of Representative's Warrant shall be
substantially in the forms filed as exhibits to the Registration Statement.
4. Offering by the Underwriters. Upon the Company's authorization of the
release of the Firm Securities, the several Underwriters propose to offer such
securities for sale to the public upon the terms set forth in the Prospectus. If
the option set forth in Section 3(b) of this Agreement is exercised, then upon
the Company's authorization of the release of the Option Securities, the several
Underwriters propose to offer such securities for sale to the public upon the
terms set forth in the Prospectus.
5. Covenants of the Company. Except as otherwise stated below, the Company
covenants and agrees with each of the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and any
amendments thereto to become effective as promptly as possible. If required, the
Company will file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 424(b) and 434 under the
Act. During any time when a prospectus relating to the Securities is required to
be delivered under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act and the rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (ii) will not file with the
Commission the prospectus, Term Sheet or amendment referred to in the second
sentence of Section 2(a) hereof, any amendment or supplement to such prospectus,
Term Sheet or any amendment to the Registration Statement of which the
Representative shall not previously have been advised and furnished with a copy
for a reasonable period of time prior to the proposed filing and as to which
filing the Representative shall not have given its consent. The Company will use
its best efforts to prepare and file with the Commission, in accordance with the
rules and regulations of the Commission, promptly upon request by the
Representative or counsel for the Underwriters, any amendments to the
Registration Statement or amendments or supplements to the Prospectus that may
be necessary or advisable in connection with the distribution of the Securities
by the several Underwriters, and the Company will use its best efforts to cause
any such amendment to the Registration Statement to be declared effective by the
Commission as promptly as possible. The Company will advise the Representative,
promptly after receiving notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or declared effective or the
Prospectus or any amendment or supplement thereto has been filed and will
provide evidence satisfactory to the Representative of each such filing or
effectiveness.
13
(b) The Company will advise the Representative, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any amendment thereto or any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for offering
or sale in any jurisdiction, (iii) the institution, threatening or contemplation
of any proceeding for any such purpose or (iv) any request made by the
Commission for amending the Registration Statement, for amending or
supplementing the Prospectus or for additional information. The Company will use
its best efforts to prevent the issuance of any such stop order and, if any such
stop order is issued, to obtain the withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the Securities
for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representative may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or supplement the Prospectus to comply with the Act or the rules or
regulations of the Commission thereunder, the Company will promptly notify the
Representative thereof and, subject to Section 5(a) hereof, the Company will
prepare and file with the Commission, at the Company's expense, an amendment to
the Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
Representative and to counsel for the Underwriters a signed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto), (ii) to each other
Underwriter, a conformed copy of such registration statement and each amendment
thereto (in each case without exhibits thereto) and (iii) so long as a
prospectus relating to the Securities is required to be delivered under the Act,
as many copies of each Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto as the Representative may reasonably request; without
limiting the application of clause (iii) of this sentence, the Company, not
later than (A) 6:00 p.m., New York City time, on the date of determination of
the public offering price, if such determination occurred or occurs at or prior
14
to 12:00 noon, New York City time, on such date or (B) 6:00 p.m., New York City
time, on the business day following the date of determination of the public
offering price, if such determination occurred or occurs after 12:00 noon, New
York City time, on such date, will deliver to the Representative, without
charge, as many copies of the Prospectus and any amendment or supplement thereto
as the Representative may reasonably request for the purposes of confirming
orders that are expected to settle on the Firm Closing Date.
(f) The Company will use its best efforts to have the Securities
listed, subject to notice of issuance, on the Nasdaq SmallCap Market
concurrently with the effectiveness of the Registration Statement. The Company
will use its best efforts to comply in all material respects with all applicable
maintenance requirements of such Market.
(g) The Company will furnish to the Representative as early as
practicable prior to the Firm Closing Date and the Option Closing Date, if any,
but not later than two business days prior thereto, a copy of the latest
available unaudited consolidated and consolidating interim financial statements,
if any, of the Company and its Subsidiaries which have been read by KPMG Peat
Marwick LLP, as stated in their letter to be furnished pursuant to section 7(d)
hereof.
(h) The Company, as soon as practicable, will make generally
available to its securityholders and to the Representative a consolidated
earnings statement of the Company and its Subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(i) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(j) The Company will not, directly or indirectly, without the prior
written consent of the Representative, issue, sell, offer to sell, contract to
sell, grant any option for sale of or otherwise sell or dispose (or announce any
issuance, sale, offer of sale, contract of sale, grant of any option to purchase
or other sale or disposition) of any securities of the Company for a period of
six (6) months after the date of the Prospectus, except the (i) Firm Securities,
(ii) the Option Securities, if any, (iii) the Representative's Warrants and the
Representative's Securities, (iv) shares of Common Stock and Preferred Stock,
par value $.01 per share, of the Company issuable upon the exercise of
outstanding warrants, and (v) any grants of options and issuances of Common
Stock upon exercise thereof pursuant to the Amended and Restated Natural Gas
Vehicles, Inc. Stock Option Plan or the Company's 1996 Combined Incentive and
Nonqualified Stock Option Plan.
(k) The Company will not, without the prior written consent of the
Representative, for six (6) months from the date of the Prospectus file any
registration statement relating to the offer or sale of the Company's securities
(including any registration statement on Form S-8 or Form S-4).
15
(l) The Company will obtain the agreements described in Section 7(f)
hereof prior to the Firm Closing Date.
(m) The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company.
(n) The Company will not issue press releases or engage in any other
form of publicity through and including 25 days after the Registration Statement
becomes effective without the prior written consent of the Representative, other
than normal and customary releases issued in the ordinary course of the
Company's business.
(o) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date, any
rumor, publication or event relating to or affecting the Company or any of its
Subsidiaries shall occur as a result of which in your opinion the market price
of the Common Stock has been or is likely to be materially affected (regardless
of whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus), the Company will, after written notice from you
advising the Company to the effect set forth above, forthwith prepare, consult
with you concerning the substance of, and disseminate a press release or other
public statement, reasonably satisfactory to you, responding to or commenting on
such rumor, publication or event.
(p) The Company will furnish to the Representative, during the
period ending on the first anniversary hereof, promptly upon request of the
Representative, copies of the Company's quarterly stock transfer sheets, and
during the period ending on the fifth anniversary of the date hereof, (i) as
soon as available, a copy of each report of the Company sent to stockholders or
filed with the Commission, and (ii) from time to time such other information
concerning the Company as the Representative may request.
(q) During the period ending on the third anniversary hereof, the
Company shall not, without the prior written consent of the Representative,
appoint or engage any accounting firm to audit its financial statements, other
than a "Big-Six" accounting firm.
6. Expenses. The Company will pay all costs and expenses incident to the
performance of the Company's obligations under this Agreement, whether or not
the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (a) the printing or other
16
production of documents with respect to the transactions, including any costs of
printing the registration statement originally filed with respect to the
Securities and any amendment thereto, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto, this Agreement, the
Representative's Warrant Agreement, the Selected Dealer Agreement and any blue
sky memoranda, (b) all arrangements relating to the delivery to the Underwriters
of copies of the foregoing documents, (c) the fees and disbursements of the
counsel, the accountants and any other experts or advisors retained by the
Company, (d) the preparation, issuance and delivery to the Underwriters of any
certificates evidencing the Securities, including transfer agent's and
registrar's fees, (e) the qualification of the Securities under state securities
and blue sky laws, including filing fees and fees and disbursements of counsel
for the Underwriters relating thereto, (f) the filing fees of the Commission and
the National Association of Securities Dealers, Inc. relating to the Securities,
(g) any quotation of the Securities on the Nasdaq SmallCap Market relating to
the Securities, (h) any meetings with prospective investors in the Securities
(other than as shall have been specifically approved by the Representative to be
paid for by the Underwriters), (i) advertising relating to the offering of the
Securities (other than as shall have been specifically approved by the
Representative to be paid for by the Underwriters), including five (5)
"tombstone" advertisements (one in the Wall Street Journal, one in ▇▇▇▇▇▇'▇, one
in Investor's Dealers Digest and one in each of two industry publications
mutually selected by the Company and the Representative) with a maximum expense
for all five in the aggregate of $40,000, and (j) four sets of leather bound
volumes of the registration and offering documents for delivery to or at the
direction of the Representative. If the sale of the Securities provided for
herein is not consummated within 120 days of the initial filing, the Company
will pay reasonable Blue Sky counsel fees as billed. Blue Sky fees may be
increased in the event that special work is required, provided, however, that
the Company agrees in advance to such increased fees. If the sale of the
Securities provided for herein is not consummated for any reason, the Company
shall pay the Representative's accountable counsel fees (in addition to Blue Sky
fees) and other accountable out-of-pocket expenses up to $75,000 in total. In
addition to the foregoing, if any Securities are sold to the Underwriters
pursuant hereto, the Company shall reimburse the Representative for its expenses
on the basis of a non-accountable expense allowance in the amount of 2% of the
gross offering proceeds to be received by the Company. The non-accountable
expense allowance, based on the gross proceeds from the sale of the Firm
Securities, shall be deducted from the funds to be paid for the Firm Securities,
pursuant to Section 3 of this Agreement, on the Firm Closing Date. If any Option
Securities are sold, the non-accountable expense allowance based on the gross
proceeds from the sale of the Option Securities shall be deducted from the funds
to be paid for the Option Securities, pursuant to Section 3 of this Agreement,
on the Option Closing Date.
7. Conditions of the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representative's sole discretion, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm Closing
Date, to the accuracy of the statements of the Company's
17
officers made pursuant to the provisions hereof, to the performance by the
Company of its covenants and agreements hereunder and to the following
additional conditions:
(a) If the Registration Statement or any amendment thereto filed
prior to the Firm Closing Date has not been declared effective as of the time of
execution hereof, the Registration Statement or such amendment shall have been
declared effective not later than 11:00 a.m., New York time, on the date on
which the amendment to the registration statement originally filed with respect
to the Securities or to the Registration Statement, as the case may be,
containing information regarding the initial public offering price of the
Securities has been filed with the Commission, or such later time and date as
shall have been consented to by the Representative; if required, the Prospectus
or any Term Sheet that constitutes a part thereof and any amendment or
supplement thereto shall have been filed with the Commission in the manner and
within the time period required by Rules 424(b) and 434 under the Act; no stop
order suspending the effectiveness of the Registration Statement or any
amendment thereto shall have been issued, and no proceedings for that purpose
shall have been instituted or threatened or, to the knowledge of the Company or
the Representative, shall be contemplated by the Commission; and the Company
shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Representative shall have received an opinion, dated the
Firm Closing Date, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, counsel for the Company,
to the effect that:
(i) The Company is a corporation duly organized, validly
existing and in good standing in the jurisdiction of its incorporation,
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus, and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction where
the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify would not result in a material adverse change in the condition
(financial or other), business prospects, properties, net worth or results
of operations of the Company;
(ii) The Company does not, directly or indirectly, (i) own any
capital stock of any corporation or joint stock company, interest in any
partnership or limited liability company or other equity interest or
participation in any person, or (ii) control any other person, other than
the Subsidiaries; each Subsidiary is a corporation duly organized, validly
existing and in good standing in the jurisdiction of its incorporation,
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus, and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction where
the nature of its properties or the conduct of its business requires
18
such registration or qualification, except where the failure so to
register or qualify would not result in a material adverse change in the
condition (financial or other), business, prospects, properties, net worth
or results of operations of such Subsidiary; all the outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable, and are owned by the
Company directly, or indirectly through one of the other Subsidiaries,
free and clear of any security interest, lien, encumbrance, equity, claim,
or other defect; and, to the best of such counsel's knowledge, there is no
outstanding warrant, option or right to purchase or otherwise acquire any
capital stock of, or any other equity interest or participation in, any
Subsidiary nor any security or instrument convertible into or exercisable
for any capital stock of, or any other equity interest or participation
in, any Subsidiary nor any agreement, arrangement or understanding
entitling any other person to exercise control over any Subsidiary;
(iii) The Company has the authorized, issued and outstanding
capitalization, and the capital stock of the Company conforms to the
description thereof, set forth in the Prospectus; all of the issued shares
of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, have been issued in
compliance with all applicable federal and state securities laws and were
not issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities; the Firm Securities have
been duly authorized by all necessary corporate action of the Company and,
when issued and delivered to and paid for by the Underwriters pursuant to
this Agreement, will be validly issued, fully paid and nonassessable; the
Securities have been duly approved for inclusion, subject to issuance, for
trading on the Nasdaq SmallCap Market; no holders of outstanding shares of
capital stock of the Company are entitled as such to any preemptive or
other rights to subscribe for any of the Securities; and no holder of
securities of the Company has any right which has not been waived to
require the Company to register the offer or sale of any securities under
the Registration Statement;
(iv) The statements set forth under the heading "Description
of Capital Stock" in the Prospectus, insofar as such statements purport to
summarize certain provisions of the capital stock of the Company, provide
a fair summary of such provisions; and the statements set forth under the
headings "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business," "Management,"
"Principal Stockholders," "Certain Transactions" and "Description of
Capital Stock" in the Prospectus, insofar as such statements describe
agreements, statements of law, descriptions of statutes, licenses, rules
or regulations, legal conclusions, documents or proceedings, are correct
and complete in all material respects;
19
(v) The Company has full power (corporate and other) to enter
into this Agreement and the Financial Advisory Agreement and to carry out
all the terms and provisions hereof and thereof to be carried out by it;
the execution and delivery of this Agreement and the Financial Advisory
Agreement have been duly authorized by all necessary corporate action of
the Company and this Agreement and the Financial Advisory Agreement have
been duly executed and delivered by the Company and are the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms; the execution and delivery of the
Representative's Warrant Agreement and the Representative's Warrants have
been duly authorized by the Company and the Representative's Warrant
Agreement and the Representative's Warrants have been duly executed and
delivered by the Company and are valid and binding obligations of the
Company to issue and sell the number and type of securities of the Company
provided for therein, the Representative's Securities have been duly
authorized and reserved for issuance by the Company and, when issued upon
exercise of the Representative's Warrant and payment transfer in
accordance therewith and the Representative's Warrant Agreement, will be
validly issued, fully paid and nonassessable; and no holders of
outstanding shares of capital stock of the Company are entitled as such to
any preemptive or other rights to subscribe for any of the
Representative's Securities.
(vi) (A) No legal or governmental proceedings are pending to
which the Company or any of its Subsidiaries is a party or to which the
property of the Company or any of its Subsidiaries is subject that are
required to be described in the Registration Statement or the Prospectus
and are not described therein, and, to the best knowledge of such counsel,
no such proceedings have been threatened against the Company or any of its
Subsidiaries with respect to any of their respective properties and (B) no
contract or other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as required;
(vii) The issuance, offering and sale of the Firm Securities
to the Underwriters by the Company pursuant to this Agreement, the
issuance and sale of the Representative's Warrants and, upon exercise
thereof, the Representative's Securities to the Representative pursuant to
the Representative's Warrant Agreement, the compliance by the Company with
the provisions of this Agreement, the Financial Advisory Agreement and the
Representatives Warrant Agreement and the consummation of the other
transactions contemplated herein or therein do not (A) require the
consent, approval, authorization, registration or qualification of or with
any governmental authority, except such as have been obtained and such as
may be required under state securities or blue sky laws or the NASD, or
(B) conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, lease or other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
its
20
Subsidiaries or any of their respective properties is bound, or the
charter documents or by-laws of the Company or any of its Subsidiaries, or
any law or any judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable to the Company
or any of its Subsidiaries;
(viii) The Registration Statement is effective under the Act;
any required filing of the Prospectus, or any Term Sheet that constitutes
a part thereof, pursuant to Rules 424(b) and 434 has been made in the
manner and within the time period required by Rules 424(b) and 434; and no
stop order suspending the effectiveness of the Registration Statement or
any amendment thereto has been issued, and no proceedings for that purpose
have been instituted or threatened or, to the best knowledge of such
counsel, are contemplated by the Commission; and
(ix) The registration statement originally filed with respect
to the Securities and each amendment thereto (including the Registration
Statement) and the Prospectus (in each case, other than the financial
statements and schedules and other financial and statistical information
contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the rules and regulations of the Commission
thereunder.
Such counsel shall also state that they have no reason to believe that the
Registration Statement, as of its effective date, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date or the date of such opinion, contains or contained
any untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials; provided that such counsel shall
expressly state in its opinion that it is so relying on any such certificate,
that it deems such reliance proper and that the Underwriters and counsel to the
Underwriters may likewise properly rely on any such certificate.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the Firm
Closing.
(c) The Representative shall have received an opinion, dated the
Firm Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau & Klimpl, LLP, counsel for the
Underwriters, with respect to the issuance and sale of the Firm Securities, the
Registration Statement and the Prospectus, and such other related matters as the
Representative may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to render such opinion.
21
(d) The Representative shall have received from KPMG Peat Marwick
LLP, a letter or letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Representative, to the
effect that:
(i) they are independent accountants with respect to the
Company and its Subsidiaries within the meaning of the Act and the
applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules examined by them and included in the Registration
Statement and the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
rules and regulations thereunder;
(iii) on the basis of their limited review in accordance with
standards established by the American Institute of Certified Public
Accountants of any interim unaudited consolidated financial statements of
the Company and its Subsidiaries as indicated in their report included in
the Registration Statement and the Prospectus, carrying out certain
specified procedures (which do not constitute an examination made in
accordance with generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the comments
set forth in this paragraph (iii), a reading of the minute books and other
records of proceedings of the respective stockholders, boards of directors
and any committees thereof of the Company and each of its Subsidiaries and
inquiries of certain officials of the Company and each of its Subsidiaries
who have responsibility for financial and accounting matters, nothing has
come to their attention that caused them to believe that:
(A) the unaudited consolidated financial statements of the
Company included in the Registration Statement and the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related rules and
regulations thereunder or are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in
the Registration Statement and the Prospectus; and
(B) at a specific date not more than five business days prior
to the date of such letter, there has been any change in the capital
stock or long-term debt of the Company or any of its Subsidiaries or
any decreases in net current assets or stockholders' equity of the
Company or any of its Subsidiaries, in each case compared with
amounts shown on the September 30, 1996 unaudited balance sheet
included in the Registration Statement and the Prospectus, or for
the period from September 30, 1996 to such specified date there were
any decreases or increases, as compared with the corresponding
period in the
22
preceding year, in net sales, cost of sales, research and
development expenses, selling expenses, general and administrative
expenses, loss from operations, net interest expense, equity in
losses of joint ventures, net loss or net loss per share of the
Company or any of its Subsidiaries, except in all instances for
changes, decreases or increases set forth in such letter; and
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information included in the Registration Statement and the
Prospectus that are specified by the Representative, have compared such
amounts, percentages and financial information with the relevant
accounting and financial records of the Company and each of its
Subsidiaries identified in such letter and with information derived from
such records and have found them to be in agreement.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company and each of its Subsidiaries as to the
significance thereof, unless the Representative deems such explanation
unnecessary, and (B) such changes, decreases or increases do not, in the sole
judgment of the Representative, make it impractical or inadvisable to proceed
with the purchase and delivery of the Securities as contemplated by the
Registration Statement, as amended as of the Firm Closing Date.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto at the Firm Closing.
(e) The Representative shall have received a certificate, dated the
Firm Closing Date, of the Chairman of the Board, the President and the Chief
Financial Officer of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein not
misleading; and the Prospectus, as amended or supplemented as of the Firm
Closing Date, does not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and the Company has performed all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to the Firm Closing Date;
23
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened or, to the
best of the Company's knowledge, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its Subsidiaries has sustained any material
loss or interference with its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or otherwise), business, prospects, net worth or
results of operations of the Company or any of its Subsidiaries, except in
each case as described in or contemplated by the Prospectus (exclusive of
any amendment or supplement thereto).
(f) The Representative shall have received from each person who is
on the date on which the Registration Statement becomes effective a director,
officer or beneficial owner of any of the Company's outstanding Common Stock or
any warrant, option or other right to purchase or otherwise acquire Common Stock
or any security or instrument convertible into or exchangeable for Common Stock
that is exercisable, convertible or exchangeable on such date, an agreement to
the effect that such person will not issue, sell, offer or contract to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any such securities of the Company to the public (pursuant to Rule
144 under the Act or otherwise) for a period of eighteen (18) months from the
date of the Prospectus without the prior written consent of the Representative,
and that any such sale or other disposition not involving any offering to the
public may be made only if the person purchasing or otherwise acquiring such
securities agrees in writing likewise to be bound by the terms and conditions of
such agreement.
(g) Prior to the commencement of the offering of the Securities, the
Securities shall have been included for trading on the Nasdaq SmallCap Market.
(h) On or before the Firm Closing Date, the Company shall have
executed and delivered to the Representative, the Representative's Warrant
Agreement, substantially in the form filed as an exhibit to the Registration
Statement, and the Representative's Warrants, substantially in the form
prescribed therein, in such denominations and to such designees as shall have
been provided to the Company.
(i) On or before the Firm Closing Date, the Company shall have
executed and delivered to the Representative the Financial Advisory Agreement
and paid to the Representative the advisory fee as provided therein.
24
(j) On or before the Firm Closing Date, the Representative and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
All opinions, certificates, letters and other documents delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory in all material respects to the Representative and
counsel for the Underwriters. The Company shall furnish to the Representative
such conformed copies of such opinions, certificates, letters and other
documents in such quantities as the Representative and counsel for the
Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase
and pay for any Option Securities shall be subject, in their discretion, to each
of the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
8. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), against any
claims, losses, damages or liabilities (including attorneys' fees and
reimbursable expenses), joint or several, to which such Underwriter or such
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such claims, losses, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any breach of any representation, warranty or agreement of
the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities under the securities or
blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or
any Application a material fact required to be stated therein or necessary
to make the statements therein not misleading, or
25
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including without
limitation, slides, videos, films and tape recordings,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such claim, loss,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representative specifically for use therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have. The Company will not, without the prior written consent of the Underwriter
or Underwriters purchasing, in the aggregate, more than fifty percent (50%) of
the Securities, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Underwriter or
any person who controls any such Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act is a party to such claim, action, suit
or proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling persons
from all liability arising out of such claim, action, suit or proceeding.
(b) Each Underwriter will, severally and not jointly, indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any claims, losses, damages or liabilities (including
attorneys' fees and reimbursable expenses) to which the Company or any such
director, officer or controlling person of the Company may become subject under
the Act, the Exchange Act or otherwise, insofar as such claims, losses, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or any Application or (ii) the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company, any such director, officer
or controlling person in connection with
26
investigating or defending any such claim, loss, damage, liability or any action
in respect thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party under this Section 8,
except to the extent that such omission actually prejudices the Company's
defense of such claim, or otherwise than under this Section 8. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel selected by the indemnifying party and reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by such indemnified party
of counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representative in the case of paragraph (a) of this Section 8,
representing the indemnified parties under such paragraph (a) who are parties to
such action or actions) or (ii) the indemnifying party does not promptly retain
counsel reasonably satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 8 is unavailable or insufficient,
for any reason, to hold
27
harmless an indemnified party in respect of any claims, losses, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such claims, losses,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that result in such claims, losses,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault of the parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Underwriters, the parties' relative intents, knowledge, access to information
and opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take into account the equitable considerations
referred to above in this paragraph (d). Notwithstanding any other provision of
this paragraph (d), no Underwriter shall be obligated to make contributions
hereunder that in the aggregate exceed the total public offering price of the
Securities purchased by such Underwriter under this Agreement, less the
aggregate amount of any damages that such Underwriter has otherwise been
required to pay in respect of the same or any substantially similar claim, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute hereunder are several in proportion to their respective underwriting
obligations and not joint, and contributions among Underwriters shall be
governed by the provisions of the Agreement Among Underwriters. For purposes of
this paragraph (d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company.
9. Default of Underwriters. If one or more Underwriters default in their
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed
28
to purchase is ten percent or less of the aggregate number of Firm Securities or
Option Securities to be purchased by all of the Underwriters at such time
hereunder, the other Underwriters may make arrangements satisfactory to the
Representative for the purchase of such Securities by other persons (who may
include one or more of the non-defaulting Underwriters, including the
Representative), but if no such arrangements are made by the Firm Closing Date
or the related Option Closing Date, as the case may be, the other Underwriters
shall be obligated severally in proportion to their respective commitments
hereunder to purchase the Firm Securities or Option Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase. If one or
more Underwriters so default with respect to an aggregate number of Securities
that is more than ten percent of the aggregate number of Firm Securities or
Option Securities, as the case may be, to be purchased by all of the
Underwriters at such time hereunder, and if arrangements satisfactory to the
Representative are not made prior to 5:00 p.m., New York City time, on the
second business day after such default for the purchase by other persons (who
may include one or more of the non-defaulting Underwriters, including the
Representative) of the Securities with respect to which such default occurs,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company other than as provided in Section 10
hereof. In the event of any default by one or more Underwriters as described in
this Section 9, the Representative shall have the right to postpone the Firm
Closing Date or the Option Closing Date, as the case may be, established as
provided in Section 3 hereof for not more than seven business days in order that
any necessary changes may be made in the arrangements or documents for the
purchase and delivery of the Firm Securities or Option Securities, as the case
may be. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 9. Nothing herein shall
relieve any defaulting Underwriter from liability for its default.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated with respect to the
Firm Securities or any Option Securities in the sole discretion of the
Representative by notice to the Company given prior to the Firm Closing Date or
the related Option Closing Date, respectively, in the event that the Company
shall have refused, been unable or otherwise failed to perform all obligations
and satisfy all conditions on its part to be performed or satisfied hereunder at
or prior thereto or, if at or prior to the Firm Closing Date or such Option
Closing Date, respectively,
29
(i) the Company or any of its Subsidiaries shall have, in the
sole judgment of the Representative, sustained any material loss or
interference with its business or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding or there shall
have been any material adverse change, or any development involving a
prospective material adverse change (including without limitation a change
in management or control of the Company), in the condition (financial or
other), business, prospects, properties, net worth or results of
operations of the Company or any of its Subsidiaries, except in each case
as described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended by
the Commission or the Nasdaq SmallCap Market or trading in securities
generally on the New York Stock Exchange or the Nasdaq SmallCap Market
shall have been suspended or minimum or maximum prices shall have been
established on such exchange or market system;
(iii) a banking moratorium shall have been declared by New
York or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representative, makes it impractical or inadvisable
to proceed with the public offering or the delivery of the Securities as
contemplated by the Registration Statement, as amended.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by Underwriters. The statements set forth in the
last paragraph on the front cover page and under the heading "Underwriting" in
any Preliminary Prospectus or the Prospectus (to the extent such statements
relate to the Underwriters) constitute the only information furnished by any
Underwriter through the Representative to the Company for the purposes of
Sections 2(b) and 8 hereof. The Underwriters confirm that such statements (to
such extent) are correct.
13. Notices. All communications hereunder shall be in writing and, if sent
to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Commonwealth Associates, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, 11th Floor, New
30
York, New York 10017, in each case, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau &
Klimpl, LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, fax no.
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.; and if sent to the Company,
shall be delivered or sent by mail, telex or facsimile transmission and
confirmed in writing to the Company at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; fax number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: President, in each case,
with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, fax no. (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
14. Successors. This Agreement shall inure to the benefit of and shall be
binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing in this Agreement is intended
or shall be construed to give any other person any legal or equitable right,
remedy or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person, except that (i) the indemnities of the
Company contained in Section 8 of this Agreement shall also be for the benefit
of any person or persons who control any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act and (ii) the indemnities
of the Underwriters contained in Section 8 of this Agreement shall also be for
the benefit of the directors of the Company, the officers of the Company who
have signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Securities from any Underwriter shall be deemed a
successor because of such purchase.
15. Applicable Law. The validity and interpretation of this Agreement, and
the terms and conditions set forth herein, shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
provisions relating to conflicts of laws.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
31
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and each of the
several Underwriters.
Very truly yours,
NATURAL GAS VEHICLE SYSTEMS, INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
COMMONWEALTH ASSOCIATES
By: COMMONWEALTH ASSOCIATES MANAGEMENT
COMPANY, INC., General Partner
By: _______________________________
Name: _________________________
Title:_________________________
For itself and as Representative.
32
SCHEDULE 1
UNDERWRITERS; FIRM SECURITIES
Number of Firm
Securities to
Underwriter be Purchased
----------- ------------
Commonwealth Associates....................
---------
Total...................................... 1,500,000
SCHEDULE 2
UNDERWRITERS; OPTION SECURITIES
Number of Firm
Securities to
Underwriter be Purchased
----------- ------------
Commonwealth Associates....................
---------
Total...................................... 225,000
