1
LLGM DRAFT
2,100,000 SHARES(1)
GRANITE FINANCIAL, INC.
COMMON STOCK
FORM OF PURCHASE AGREEMENT
, 1997
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XXXXX XXXXXXX INC.
XXXXXXX XXXXX AND ASSOCIATES, INC.
CRUTTENDEN XXXX INCORPORATED
As Representatives of the several
Underwriters named in Schedule I hereto
c/o Xxxxx Xxxxxxx Inc.
Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Granite Financial, Inc., a Delaware corporation (the "Company"),
proposes to sell to the several Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 2,100,000 shares (the "Firm Shares") of the
Company's Common Stock, $0.001 par value per share (the "Common Stock"). The
Company has also granted to the several Underwriters an option to purchase up to
315,000 additional shares of Common Stock (the "Option Shares") on the terms and
for the purposes set forth in Section 3 hereof. In addition, the Company
proposes to sell to Xxxxx Xxxxxxx Inc. and Xxxxxxx Xxxxx & Associates, Inc.,
individually and not in their capacity as Representatives (as hereinafter
defined), four-year warrants exercisable commencing one year from the date of
the Company's Prospectus (as hereinafter defined) and for a period of four years
thereafter (the "Representatives' Warrants") to purchase up to one hundred fifty
thousand (150,000) shares of Common Stock (the "Representatives' Warrant
Stock"), which sale will be consummated in accordance with the terms and
conditions of the Representatives' Stock Purchase Warrant (the "Representatives'
Stock Purchase Warrant"), the form of which is filed as an exhibit to the
Registration Statement described below. The Firm Shares and any Option Shares
issued pursuant to this Agreement are herein collectively called the
"Securities."
The Company hereby confirms its agreement with respect to the sale of
the Securities to the several Underwriters, for whom you are acting as
Representatives (the "Representatives").
1. Registration Statement and Prospectus. A registration
statement on Form SB-2 (File No. 333-___________ ) with respect to the
Securities, the Representatives' Warrants and the Representatives' Warrant
Stock, including a preliminary form of prospectus, has been prepared by
the Company in conformity with the requirements of the Securities Act of 1933,
as amended (the "Act"), and the rules and regulations ("Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission; one
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(1) Plus an option to purchase up to an additional 390,000 shares of
Common Stock to cover over-allotments.
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or more amendments to such registration statement have also been so prepared
and have been, or will be, so filed; and, if the Company has elected to rely
upon Rule 462(b) of the Rules and Regulations to increase the size of the
offering registered under the Act, the Company will prepare and file with the
Commission a registration statement with respect to such increase pursuant to
Rule 462(b). Copies of such registration statement(s) and amendments and each
related preliminary prospectus have been delivered to you.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to
the registration statement and an amended prospectus (including a term sheet
meeting the requirements of Rule 434 of the Rules and Regulations). If the
Company has elected to rely upon Rule 430A of the Rules and Regulations, it
will prepare and file a prospectus (or a term sheet meeting the requirements of
Rule 434) pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. Such registration
statement as amended at the time it is or was declared effective by the
Commission, and, in the event of any amendment thereto after the effective date
and prior to the First Closing Date (as hereinafter defined), such registration
statement as so amended (but only from and after the effectiveness of such
amendment), including a registration statement (if any) filed pursuant to Rule
462(b) of the Rules and Regulations increasing the size of the offering
registered under the Act and information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rules 430A(b)
and 434(d) of the Rules and Regulations, is hereinafter called the
"Registration Statement." The prospectus included in the Registration
Statement at the time it is or was declared effective by the Commission is
hereinafter called the "Prospectus," except that if any prospectus (including
any term sheet meeting the requirements of Rule 434 of the Rules and
Regulations provided by the Company for use with a prospectus subject to
completion within the meaning of Rule 434 in order to meet the requirements of
Section 10(a) of the Act) filed by the Company with the Commission pursuant to
Rule 424(b) (and Rule 434, if applicable) of the Rules and Regulations or any
other such prospectus provided to the Underwriters by the Company for use in
connection with the offering of the Securities (whether or not required to be
filed by the Company with the Commission pursuant to Rule 424(b) of the Rules
and Regulations) differs from the prospectus on file at the time the
Registration Statement is or was declared effective by the Commission, the term
"Prospectus" shall refer to such differing prospectus (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations) from and after the
time such prospectus is filed with the Commission or transmitted to the
Commission for filing pursuant to such Rule 424(b) (and Rule 434, if
applicable) or from and after the time it is first provided to the Underwriters
by the Company for such use. The term "Preliminary Prospectus" as used herein
means any preliminary prospectus included in the Registration Statement prior
to the time it becomes or became effective under the Act and any prospectus
subject to completion as described in Rule 430A or Rule 434 of the Rules and
Regulations. For purposes of this Agreement, all references to the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("XXXXX").
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2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters as
follows:
(a) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each
Preliminary Prospectus, at the time of filing thereof, did not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; except that the foregoing shall not apply to
statements in or omissions from any Preliminary Prospectus in reliance
upon, and in conformity with, written information furnished to the
Company by you, or by any Underwriter through you, specifically for
use in the preparation thereof.
(b) As of the time the Registration Statement (or any
post-effective amendment thereto, including a registration statement
(if any) filed pursuant to Rule 462(b) of the Rules and Regulations
increasing the size of the offering registered under the Act) is or
was declared effective by the Commission, upon the filing or first
delivery to the Underwriters of the Prospectus (or any supplement to
the Prospectus (including any term sheet meeting the requirements of
Rule 434 of the Rules and Regulations)) and at the First Closing Date
and the Second Closing Date (as hereinafter defined), (i) the
Registration Statement and the Prospectus (in each case, as so amended
and/or supplemented) conformed or will conform in all material
respects to the requirements of the Act and the Rules and Regulations,
(ii) the Registration Statement (as so amended) did not or will not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (iii) the Prospectus (as so
supplemented) did not or will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they are or were made, not misleading; except
that the foregoing shall not apply to statements in or omissions from
any such document in reliance upon, and in conformity with, written
information furnished to the Company by you, or by any Underwriter
through you, specifically for use in the preparation thereof. Each
Preliminary Prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was (or, with
respect to any Prospectus not yet delivered, will be) identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T
under the Act. If the Registration Statement has been declared
effective by the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceeding for that purpose has been initiated or, to the Company's
knowledge, threatened by the Commission.
(c) The consolidated financial statements of the Company,
together with the Notes thereto, set forth in the Registration
Statement and the Prospectus comply in all material respects with the
requirements of the Act and the Rules and Regulations and fairly
present the financial condition of the Company as of the dates
indicated and the results of operations and changes in cash flows for
the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein); and the supporting
schedules included in the Registration Statement present fairly the
information required to be stated therein. No other financial
statements or
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schedules are required to be included in the Registration Statement or
Prospectus. Xxxxxxxx Xxxxx Xxxxxxx & Xxxxxxx PC, which has expressed
its opinion with respect to the audited consolidated financial
statements and schedules filed as a part of the Registration Statement
and included in the Registration Statement and the Prospectus, are
independent public accountants as required by the Act and the Rules
and Regulations.
(d) Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation. Each of
the Company and its subsidiaries has full corporate power and
authority to own its properties and conduct its business as currently
being carried on and as described in the Registration Statement and
the Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes
such qualification necessary and in which the failure to so qualify
would have a material adverse effect upon its business, condition
(financial or otherwise) or properties, taken as a whole.
(e) Except as contemplated in the Prospectus, 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 incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and there
has not been any change in the capital stock (other than a change in
the number of outstanding shares of Common Stock due to the issuance
of shares upon the exercise of outstanding options or warrants), or
any material change in the short-term or long-term debt, or any
issuance of options, warrants, convertible securities or other rights
to purchase the capital stock, of the Company or any of its
subsidiaries, or any material adverse change, or any development
involving a prospective material adverse change, in the general
affairs, condition (financial or otherwise), business, key personnel,
property, prospects, net worth or results of operations of the Company
and its subsidiaries, taken as a whole.
(f) Except as set forth in the Prospectus, there is not
pending or, to the best knowledge of the Company, threatened or
contemplated, any action, suit or proceeding to which the Company or
any of its subsidiaries is a party before or by any court or
governmental agency, authority or body, or any arbitrator, which might
result in any material adverse change in the condition (financial or
otherwise), business, prospects, net worth or results of operations of
the Company and its subsidiaries, taken as a whole.
(g) There are no contracts or documents of the Company or
any of its subsidiaries that are required to be filed as exhibits to
the Registration Statement by the Act or by the Rules and Regulations
that have not been so filed.
(h) The Company has full corporate power and authority to
execute, deliver and perform its obligations under this Agreement and
the Representatives' Stock Purchase Warrant, including, without
limitation, to authorize, issue and sell the Securities, the
Representatives' Warrants and the Representatives' Warrant Stock as
contemplated herein and therein. Each of this Agreement and the
Representatives' Stock Purchase Warrant has been duly authorized,
executed and delivered by the Company, and constitutes a valid, legal
and binding obligation of the Company, enforceable in accordance with
its terms, except as rights to indemnity
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under this Agreement or the Representatives' Stock Purchase Warrant may
be limited by bankruptcy, insolvency, reorganization and moratorium
laws or similar laws affecting the rights of creditors generally and
subject to general principles of equity.
(i) The execution, delivery and performance of this
Agreement and the Representatives' Stock Purchase Warrant and the
consummation of the transactions herein and therein contemplated will
not conflict with, or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, (i) any
statute, rule or regulation, (ii) any agreement or instrument to which
either the Company or any subsidiary is a party or by which either the
Company or any subsidiary is bound or to which any of their property is
subject, (iii) the Company's or any subsidiary's charter or by-laws, or
(iv) any order, rule, regulation or decree of any court or governmental
agency or body having jurisdiction over the Company, any subsidiary or
any of their respective properties. No consent, approval,
authorization or order of, or filing with, any court or governmental
agency or body is required for the execution, delivery and performance
of this Agreement or the Representatives' Stock Purchase Warrant or for
the consummation of the transactions contemplated hereby or thereby,
including the issuance or sale of the Securities, the Representatives'
Warrants and the Representatives' Warrant Stock by the Company, except
such as may be required under the Act or any securities or "blue sky"
laws of any state or jurisdiction.
(j) All of the issued and outstanding shares of capital
stock of the Company, including the outstanding shares of Common Stock,
are duly authorized and validly issued, fully paid and nonassessable,
have been issued in compliance with all federal and state securities
laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and the
holders thereof are not subject to personal liability by reason of
being such holders; the Securities that may be sold hereunder by the
Company have been duly authorized and, when issued, delivered and paid
for in accordance with the terms hereof, will have been validly issued
and will be fully paid and nonassessable, and the holders thereof will
not be subject to personal liability by reason of being such holders;
and the capital stock of the Company, including the Common Stock,
conforms to the description thereof in the Registration Statement and
the Prospectus. Except as otherwise stated in the Registration
Statement and the Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the
Company's charter, by-laws or any agreement or other instrument to
which the Company is a party or by which the Company is bound. Neither
the filing of the Registration Statement nor the offering or sale of
the Securities, the Representatives' Warrants or the Representatives'
Warrant Stock as contemplated by this Agreement and the
Representatives' Stock Purchase Warrant gives rise to any rights for or
relating to the registration of any shares of Common Stock or other
securities of the Company. All of the issued and outstanding shares of
capital stock of each of the Company's subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable,
and, except as otherwise described in the Registration Statement and
the Prospectus and except for any directors' qualifying shares, the
Company owns of record and beneficially, free and clear of any security
interests, claims, liens, proxies, equities or other encumbrances, all
of the issued and outstanding shares of such stock. Except as described
in the Registration Statement and the Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to
purchase or acquire from the Company or any subsidiary of the Company
any shares of the capital stock of the Company or any subsidiary of the
Company. The Company
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has an authorized and outstanding capitalization as set forth in the
Registration Statement and the Prospectus.
(k) The Company and each of its subsidiaries holds, and
is operating in compliance in all material respects with, all
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders of any governmental or
self-regulatory body required for the conduct of its business and all
such franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and
effect; and the Company and each of its subsidiaries is in compliance
in all material respects with all applicable federal, state, local and
foreign laws, regulations, orders and decrees.
(l) The Company and its subsidiaries have good and
marketable title to all property described in the Registration
Statement and the Prospectus as being owned by them, in each case free
and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Registration
Statement and the Prospectus; the property held under lease by the
Company and its subsidiaries is held by them under valid, subsisting
and enforceable leases with only such exceptions with respect to any
particular lease as do not interfere in any material respect with the
conduct of the business of the Company or its subsidiaries; the
Company and each of its subsidiaries owns, possesses or otherwise has
the right to use all patents, patent applications, trademarks, service
marks, tradenames, trademark registrations, service xxxx
registrations, copyrights, licenses, inventions, proprietary or other
confidential information, trade secrets and rights necessary for the
conduct of the business of the Company and its subsidiaries as
currently carried on and as described in the Registration Statement
and the Prospectus (collectively, the "Intangibles"); except as stated
in the Registration Statement and the Prospectus, no name that the
Company or any of its subsidiaries uses and no other aspect of the
business of the Company or any of its subsidiaries will involve or
give rise to any infringement of, or license or similar fees for,
asserted Intangibles of others and neither the Company nor any of its
subsidiaries has received any notice alleging any such infringement or
fee; and, to the Company's best knowledge, there is no infringement by
others of the Company's or any of its subsidiaries' Intangibles.
(m) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in breach of or
otherwise in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note,
indenture, loan agreement or any other material contract, lease or
other instrument to which it is subject or by which any of them may be
bound, or to which any of the material property or assets of the
Company or any of its subsidiaries is subject.
(n) The Company and its subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns
required to be filed and are not in default in the payment of any
taxes that were payable pursuant to said returns or any assessments
with respect thereto, other than any which the Company or any of its
subsidiaries is contesting in good faith.
(o) The Company has not distributed and will not
distribute any prospectus or other offering material in connection
with the offering and sale of the Securities other than
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any Preliminary Prospectus or the Prospectus or other materials
permitted by the Act to be distributed by the Company.
(p) The Common Stock is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and is qualified as a Nasdaq National Market security
of The Nasdaq Stock Market, Inc. The Company has taken no action
designed to terminate, or likely to have the effect of terminating,
the registration of the Common Stock under the Exchange Act, or the
qualification of the Common Stock on the Nasdaq National Market, nor
has the Company received any notification that the Commission or The
Nasdaq Stock Market, Inc. is contemplating terminating such
registration or qualification. The Securities have been conditionally
approved for quotation on the Nasdaq National Market and the Company's
Registration Statement on Form 8-A registering the Common Stock is
effective.
(q) Other than the subsidiaries of the Company listed in
Exhibit 21 to the Registration Statement, the Company owns no capital
stock or other equity or ownership or proprietary interest in any
corporation, partnership, association, trust or other entity.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(s) Other than as contemplated by this Agreement, the
Company has not incurred any liability for any finder's or broker's
fee or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(t) Neither the Company nor any of its affiliates is
presently doing business with the government of Cuba or with any
person or affiliate located in Cuba.]
(u) The Company and each of its subsidiaries are insured
by insurers of recognized financial responsibility against such losses
and risks and of the types and in such amounts as are prudent and
customary in the business in which they are engaged by similarly
situated companies, including, but not limited to, real and personal
property owned or leased by the Company, against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect, and
neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage from
similar insurers as may be necessary to continue its business at a
comparable cost.
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(v) The Company has been advised concerning the
Investment Company Act of 1940, as amended (the "1940 Act"), and the
rules and regulations thereunder, and has in the past conducted, and
intends in the future to conduct, its affairs in such a manner as to
ensure that it will not become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the 1940
Act and such rules and regulations.
(w) Neither the Company nor any of the subsidiaries, nor
any director, officer, agent, employee or other person associated with
or acting on behalf of the Company or any such subsidiary has,
directly or indirectly (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related
to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds, (iii) violated
any provisions of the Foreign Corrupt Practices Act of 1977, as
amended, or (iv) made any bribe, rebate, payoff, influence payment,
kick back or other unlawful payment.
(x) Neither the Company nor any of its officers,
directors or affiliates has taken, nor will take, directly or
indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization in violation of law or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(y) Except as set forth in the Registration Statement and
the Prospectus, (i) the Company is in material compliance with all
rules, ordinances, laws and regulations relating to occupational
health and safety and to the use, treatment, storage and disposal of
toxic substances and protection of the environment ("Laws") that are
applicable to its business, (ii) the Company has received no notice
from any governmental authority or third party of an asserted claim
under Laws, which claim is required to be disclosed in the
Registration Statement and the Prospectus, (iii) to its best
knowledge, the Company is not likely to be required to make future
material capital expenditures to comply with Laws, and (iv) no
property that is owned and, to the best of the Company's knowledge, no
property that is leased or occupied by the Company, has been
designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et seq.), or otherwise designated as
a contaminated site under applicable state or local law.
(z) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the
benefit of any of the officers or directors of the Company or any of
the members of the families of any of them, except as disclosed in the
Registration Statement and the Prospectus.
(aa) To the best of the Company's knowledge, no labor
disturbance by the employees of the Company exists or is imminent. No
collective bargaining agreement exists with any of the Company's
employees and, to the best of the Company's knowledge, no such
agreement is imminent. None of the Company's independent lease
originators has indicated that he, she or it intends to terminate its
relationship with the Company or reduce the volume of potential leases
submitted to the Company.
(bb) The Representatives' Warrants have been duly and
validly authorized by the Company and, upon delivery to Xxxxx Xxxxxxx
Inc. and Xxxxxxx Xxxxx & Associates, Inc., in accordance with the
Representatives' Stock Purchase Warrant, will be duly issued and
constitute valid, legal and binding obligations of the Company.
(cc) The Representatives' Warrant Stock has been duly
authorized and reserved for issuance upon the exercise of the
Representatives' Warrants and when issued upon payment of the exercise
price therefor will be validly issued, fully paid and nonassessable
shares of Common Stock.
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Any certificate signed by any officer of the Company
and delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
3. Purchase, Sale and Delivery of Securities.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell the Firm Shares to the several
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto. The purchase price for each Firm
Share shall be $____ per share, which shall reflect an underwriting discount of
____% payable to the Underwriters. In making this Agreement, each Underwriter
is contracting severally and not jointly; except as provided in paragraph (c)
of this Section 3 and in Section 8 hereof, the agreement of each Underwriter is
to purchase only the respective number of Firm Shares specified in Schedule I.
The Firm Shares will be delivered by the Company to you for
the accounts of the several Underwriters against payment of the purchase price
therefor by certified or official bank check or other next day funds payable to
the order of the Company at the offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx
Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location
as may be mutually acceptable, at 9:00 a.m. Central Time on the third (or if
the Securities are priced, as contemplated by Rule 15c6-1(c) under the Exchange
Act, after 4:30 p.m. Eastern Time, the fourth) full business day following the
date hereof, or at such other time and date as you and the Company determine
pursuant to Rule 15c6-1(a) under the Exchange Act, such time and date of
delivery being herein referred to as the "First Closing Date." If the
Representatives so elect, delivery of the Firm Shares may be made by credit
through full fast transfer to the accounts at The Depository Trust Company
designated by the Representatives. Certificates representing the Firm Shares,
in definitive form and in such denominations and registered in such names as
you may request upon at least two business days' prior notice to the Company,
will be made available for checking and packaging not later than 10:30 a.m.,
Central Time, on the business day next preceding the First Closing Date at the
offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be mutually acceptable.
(b) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants to the several Underwriters an option to
purchase all or any portion of the Option Shares at the same purchase price as
the Firm Shares for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the effective date of this Agreement upon notice (confirmed in
writing) by the Representatives to the Company setting forth the aggregate
number of Option Shares as to which the several Underwriters are exercising the
option, the names and denominations in which the certificates representing the
Option Shares are to be registered and the date and time, as determined by you,
when such Option Shares are to be delivered, such time and date being herein
referred to as the "Second Closing" and the "Second Closing Date,"
respectively; provided, however, that the Second Closing Date shall not be
earlier than the First Closing Date nor earlier than the second business day
after the date on which the option shall
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have been exercised. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage of the total number of Option Shares
to be purchased by the several Underwriters as the number of Firm Shares
purchased by such Underwriter is of the total number of Firm Shares purchased
by the several Underwriters, as adjusted by the Representatives in such manner
as the Representatives deem advisable to avoid fractional shares. No Option
Shares shall be sold and delivered unless the Firm Shares previously have been,
or simultaneously are, sold and delivered.
The Option Shares will be delivered by the Company to you for
the accounts of the several Underwriters against payment of the purchase price
therefor by certified or official bank check or other next day funds payable to
the order of the Company at the offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx
Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location
as may be mutually acceptable at 9:00 a.m., Central Time, on the Second Closing
Date. If the Representatives so elect, delivery of the Option Shares may be
made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Representatives. Certificates representing the
Option Shares in definitive form and in such denominations and registered in
such names as you have set forth in your notice of option exercise, will be
made available for checking and packaging not later than 10:30 a.m., Central
Time, on the business day next preceding the Second Closing Date at the office
of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be mutually acceptable.
(c) It is understood that you, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated
to) make payment to the Company on behalf of any Underwriter for the Securities
to be purchased by such Underwriter. Any such payment by you shall not relieve
any such Underwriter of any of its obligations hereunder. Nothing herein
contained shall constitute any of the Underwriters an unincorporated
association or partner with the Company.
4. Covenants.
The Company covenants and agrees with the several Underwriters
as follows:
(a) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best
efforts to cause the Registration Statement and any post-effective
amendments thereto to become effective as promptly as possible; the
Company will notify you promptly of the time when the Registration
Statement or any post-effective amendment to the Registration
Statement has become effective or any supplement to the Prospectus
(including any term sheet within the meaning of Rule 434 of the Rules
and Regulations) has been filed and of any request by the Commission
for any amendment or supplement to the Registration Statement or the
Prospectus or additional information; if the Company has elected to
rely on Rule 430A of the Rules and Regulations, the Company will
prepare and file a prospectus (or term sheet within the meaning of
Rule 434 of the Rules and Regulations) containing the information
omitted therefrom pursuant to Rule 430A of the Rules and Regulations
with the Commission within the time period required by, and otherwise
in accordance with the provisions of, Rules 424(b), 430A and 434, if
applicable, of the Rules and Regulations; if the Company has elected
to rely upon Rule 462(b) of the Rules and Regulations to increase the
size of the offering registered under the Act, the Company will
prepare and file a registration statement with respect to such
increase with the
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Commission within the time period required by, and otherwise in
accordance with the provisions of, Rule 462(b); the Company will
prepare and file with the Commission, promptly upon your request, any
amendments or supplements to the Registration Statement or the
Prospectus (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations) that, in your opinion, may be necessary or
advisable in connection with the distribution of the Securities by the
Underwriters; and the Company will not file any amendment or
supplement to the Registration Statement or the Prospectus (including
any term sheet within the meaning of Rule 434 of the Rules and
Regulations) to which you shall reasonably object by notice to the
Company after having been furnished a copy thereof a reasonable time
prior to the filing.
(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose; and
the Company will promptly use its best efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such a stop order
should be issued.
(c) Within the time during which a prospectus (including
any term sheet within the meaning of Rule 434 of the Rules and
Regulations) relating to the Securities is required to be delivered
under the Act, the Company will comply with all requirements imposed
upon it by the Act and the Exchange Act, as now and hereafter amended,
by the Rules and Regulations, as from time to time in force
(including, without limitation, filing all registrations, statements
and other documents required to be filed with the Commission pursuant
to the Exchange Act within the time periods required by the Exchange
Act and the rules and regulations thereunder as from time to time in
force), so far as necessary to permit the continuance of sales of or
dealings in the Securities as contemplated by the provisions hereof
and the Prospectus. If during such period any event occurs as a
result of which the Prospectus would include an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then existing,
not misleading, or if during such period it is necessary to amend the
Registration Statement or supplement the Prospectus to comply with the
Act, the Company will promptly notify you and will amend the
Registration Statement or supplement the Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect
such compliance.
(d) The Company will use its best efforts to qualify the
Securities for sale under the securities or "blue sky" laws of such
states or jurisdictions as you reasonably designate and to continue
such qualifications in effect so long as required for the distribution
of the Securities, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or to execute
a general consent to service of process in any state or jurisdiction.
(e) The Company will furnish to the Underwriters copies
of the Registration Statement (six of which will be signed and will
include all exhibits), each Preliminary Prospectus, the Prospectus,
and all amendments and supplements (including any term sheet
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within the meaning of Rule 434 of the Rules and Regulations) to such
documents, in each case as soon as available and in such quantities as
you may from time to time reasonably request. The copies of the
Registration Statement and each amendment thereto furnished to you
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T under the Act.
(f) During a period of five years commencing with the
date hereof, the Company will furnish to the Representatives, and to
each Underwriter who may so request in writing, copies of all periodic
and special reports furnished to the stockholders of the Company and
all information, documents and reports filed with the Commission, the
National Association of Securities Dealers, Inc., The Nasdaq Stock
Market, Inc. or any securities exchange.
(g) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than 15 months after the end of the Company's current fiscal quarter,
an earnings statement (which need not be audited) covering a 12-month
period beginning after the effective date of the Registration
Statement that shall satisfy the provisions of Section 11(a) of the
Act and Rule 158 of the Rules and Regulations.
(h) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is prevented
from becoming effective under the provisions of Section 9(a) hereof or
is terminated, will pay or cause to be paid (i) all expenses
(including transfer taxes allocated to the respective transferees)
incurred in connection with the delivery to the Underwriters of the
Securities, (ii) all expenses and fees (including, without limitation,
fees and expenses of the Company's accountants and counsel but, except
as otherwise provided below, not including fees of the Underwriters'
counsel) in connection with the preparation, printing, filing,
delivery, and shipping of the Registration Statement (including the
financial statements therein and all amendments, schedules, and
exhibits thereto), the Securities, each Preliminary Prospectus, the
Prospectus, and any amendment thereof or supplement thereto, and the
printing, delivery, and shipping of this Agreement and other
underwriting documents, including Blue Sky Memoranda, (iii) all filing
fees and fees and disbursements of the Underwriters' counsel incurred
in connection with the qualification of the Securities for offering
and sale by the Underwriters or by dealers under the securities or
"blue sky" laws of the states and other jurisdictions that you shall
designate in accordance with Section 4(d) hereof, (iv) the fees and
expenses of any transfer agent or registrar, (v) the filing fees
incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities,
(vi) listing fees, if any, and (vii) all other costs and expenses
incident to the performance of its obligations hereunder that are not
otherwise specifically provided for herein. If the sale of the
Securities provided for herein is not consummated by reason of action
by the Company pursuant to Section 9(a) hereof that prevents this
Agreement from becoming effective, or by reason of any failure,
refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition
of the Underwriters' obligations hereunder required to be fulfilled by
the Company is not fulfilled, the Company will reimburse the several
Underwriters for all out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in connection
with their investigation, preparing to market and marketing the
Securities or in contemplation of performing their obligations
hereunder. The Company
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shall not in any event be liable to any of the Underwriters for loss
of anticipated profits from the transactions covered by this
Agreement.
(i) The Company will apply the net proceeds from the sale
of the Securities to be sold by it hereunder for the purposes set
forth in the Prospectus.
(j) The Company will not, without your prior written
consent, offer for sale, sell, contract to sell, grant any option for
the sale of or otherwise issue or dispose of any Common Stock or any
securities convertible into or exchangeable for, or any options,
warrants or rights to purchase or acquire, shares of Common Stock,
except to the Underwriters pursuant to this Agreement for a period of
180 days after the commencement of the public offering of the
Securities by the Underwriters.
(k) The Company either has caused to be delivered to you
or will cause to be delivered to you prior to the effective date of
the Registration Statement a letter from each of the Company's
directors and officers and holders of 5% or more of its outstanding
Common Stock stating that such person agrees that he, she or it will
not, without your prior written consent, offer for sale, sell,
contract to sell or otherwise dispose of any shares of Common Stock or
rights to purchase Common Stock, except to the Underwriters pursuant
to this Agreement, for a period of 180 days after commencement of the
public offering of the Securities by the Underwriters.
(l) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might reasonably be
expected to cause or result in, or that has constituted, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities, and has
not effected any sales of Common Stock that are required to be
disclosed in response to Item 701 of Regulation S-K under the Act that
have not been so disclosed in the Registration Statement.
(m) The Company will not incur any liability for any
finder's or broker's fee or agent's commission in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
[(n) The Company will inform the Florida Department of
Banking and Finance at any time prior to the consummation of the
distribution of the Securities by the Underwriters if it commences
engaging in business with the government of Cuba or with any person or
affiliate located in Cuba. Such information will be provided within
90 days after the commencement thereof or after a change occurs with
respect to previously reported information.]
(o) The Company will use its best efforts to cause the
Common Stock to be approved for quotation on the Nasdaq National
Market or listed on a national securities exchange as long as the
Company is required to file periodic reports under the Exchange Act.
5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy, as of the date
hereof and at each of the First Closing Date and
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the Second Closing Date (each, a "Closing Date"), as if made at such Closing
Date, of and compliance with all representations, warranties and agreements of
the Company contained herein, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 p.m., Central Time, on the date of this
Agreement, or such later time and date as you, as the Representatives
of the several Underwriters, shall approve and all filings required by
Rules 424, 430A and 434 of the Rules and Regulations shall have been
timely made; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereof shall have been issued
by the Commission; no proceedings for the issuance of such an order
shall have been initiated or threatened; and any request of the
Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to your satisfaction.
(b) No Underwriter shall have advised the Company that
the Registration Statement or the Prospectus, or any amendment thereof
or supplement thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), contains an untrue statement
of fact that, in your opinion, is material, or omits to state a fact
that, in your opinion, is material and is required to be stated
therein or necessary to make the statements therein not misleading.
(c) Except as contemplated in the Prospectus, 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 shall have incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and there
shall not have been any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to the
issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt
of the Company, or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock of the
Company or any of its subsidiaries, or any material adverse change or
any development involving a prospective material adverse change
(whether or not arising in the ordinary course of business), in the
general affairs, condition (financial or otherwise), business, key
personnel, property, prospects, net worth or results of operations of
the Company and its subsidiaries, taken as a whole, that, in your
judgment, makes it impractical or inadvisable to offer or deliver the
Securities on the terms and in the manner contemplated in the
Prospectus.
(d) On each Closing Date, there shall have been furnished
to you, as Representatives of the several Underwriters, an opinion of
Berliner Xxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Company, dated
such Closing Date and addressed to you, to the effect that:
i) Each of the Company and its subsidiaries has
been duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of
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incorporation. Each of the Company and its subsidiaries has full
corporate power and authority to own its properties and conduct its
business as currently being carried on and as described in the
Registration Statement and the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which it owns or leases real property or in which the
conduct of its business makes such qualification necessary and in
which the failure to so qualify would have a material adverse effect
upon the business, condition (financial or otherwise) or properties of
the Company and its subsidiaries, taken as a whole.
ii) The capital stock of the Company conforms as
to legal matters to the description thereof contained in the
Prospectus under the caption "Description of Capital Stock." All of
the issued and outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable, and the holders thereof are not subject to personal
liability by reason of being such holders. The Securities to be
issued and sold by the Company hereunder have been duly authorized
and, when issued, delivered and paid for in accordance with the terms
of this Agreement, will have been validly issued and will be fully
paid and nonassessable, and the holders thereof will not be subject to
personal liability by reason of being such holders.
iii) Except as otherwise stated in the
Registration Statement and the Prospectus, there are no preemptive
rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of Common Stock
pursuant to the Company's charter, by-laws or any agreement or other
instrument known to such counsel to which the Company is a party or by
which the Company is bound. To the best of such counsel's knowledge,
neither the filing of the Registration Statement nor the offering or
sale of the Securities as contemplated by this Agreement or the
Representatives' Warrants or the Representatives' Warrant Stock as
contemplated by the Representatives' Stock Purchase Warrant, gives
rise to any rights for or relating to the registration of any shares
of Common Stock or other securities of the Company.
iv) All of the issued and outstanding shares of
capital stock of each of the Company's subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable,
and, to the best of such counsel's knowledge, except as otherwise
described in the Registration Statement and the Prospectus and except
for directors' qualifying shares, the Company owns of record and
beneficially, free and clear of any security interests, claims, liens,
proxies, equities or other encumbrances, all of the issued and
outstanding shares of such stock. To the best of such counsel's
knowledge, except as described in the Registration Statement and the
Prospectus, there are no options, warrants, agreements, contracts or
other rights in existence to purchase or acquire from the Company or
any subsidiary any shares of the capital stock of the Company or any
subsidiary of the Company.
v) The Registration Statement has become
effective under the Act and, to the best of such counsel's knowledge,
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of such counsel, threatened by the
Commission.
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vi) The descriptions in the Registration
Statement and the Prospectus of statutes, legal and governmental
proceedings, contracts and other documents are accurate and fairly
present the information required to be shown; and such counsel does
not know of any statutes or legal or governmental proceedings required
to be described in the Prospectus that are not described therein as
required, or of any contracts or documents of a character required to
be described in the Registration Statement or the Prospectus or
included as exhibits to the Registration Statement that are not
described or included therein as required.
vii) The Company has full corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and the Representatives' Stock Purchase Warrant, including,
without limitation, to authorize, issue and sell the Securities, the
Representatives' Warrants and the Representatives' Warrant Stock as
contemplated herein and therein. Each of this Agreement and the
Representatives' Stock Purchase Warrant has been duly authorized,
executed and delivered by the Company and constitutes a valid, legal
and binding obligation of the Company enforceable in accordance with
its terms, except as rights to indemnity under this Agreement or the
Representatives' Stock Purchase Warrant may be limited by federal or
state securities laws and except as such enforceability may be limited
by bankruptcy, insolvency, reorganization and moratorium laws or
similar laws affecting the rights of creditors generally and subject to
general principles of equity.
viii) The execution, delivery and performance of
this Agreement and the Representatives' Stock Purchase Warrant and the
consummation of the transactions herein and therein contemplated will
not conflict with, or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, (A) any
statute, rule or regulation, (B) any agreement or instrument known to
such counsel to which either the Company or any subsidiary is a party
or by which either the Company or any subsidiary is bound or to which
any of their property is subject, (C) the Company's or any subsidiary's
charter or by-laws, or (D) any order, rule, regulation or decree known
to such counsel of any court or governmental agency or body having
jurisdiction over the Company or any subsidiary or any of their
respective properties or assets. No consent, approval, authorization
or order of, or filing with, any court or governmental agency or body
is required for the execution, delivery and performance of this
Agreement or the Representatives' Stock Purchase Warrant or for the
consummation of the transactions contemplated hereby and thereby,
including the issuance or sale of the Securities, the Representatives'
Warrants and the Representatives' Warrant Stock by the Company, except
such as may be required under the Act or state securities or "blue sky"
laws.
ix) To the best of such counsel's knowledge, the
Company and each of its subsidiaries holds, and is operating in
compliance in all material respects with, all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates
and orders of any governmental or self-regulatory body required for
the conduct of its business, and all such franchises, grants,
authorizations, licenses, permits, easements, consents, certifications
and orders are valid and in full force and effect.
x) To the best of such counsel's knowledge,
neither the Company nor any of its subsidiaries is in violation of its
respective charter or by-laws. To the best of such counsel's
knowledge, neither the Company nor any of its subsidiaries is in
breach of or otherwise in default in the performance of any material
obligation, agreement or condition contained in any bond, debenture,
note, indenture, loan agreement or any other material contract, lease
or other instrument to which it is subject or by which any of them may
be
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bound, or to which any of the material property or assets of the
Company or any of its subsidiaries is subject.
xi) The Representatives' Warrants have been duly
and validly authorized by the Company and, upon delivery to Xxxxx
Xxxxxxx Inc. and Xxxxxxx Xxxxx & Associates, Inc., in accordance with
the Representatives' Stock Purchase Warrant will be duly issued and
valid, legal and binding obligations of the Company.
xii) The Representatives' Warrant Stock to be issued
by the Company pursuant to the terms of the Representatives' Warrants
has been duly authorized and, upon issuance and delivery against
payment therefor in accordance with the terms of the Representatives'
Stock Purchase Warrant will be duly and validly issued and fully paid
and nonassessable, and to such counsel's knowledge, will not have been
issued in violation of or subject to any preemptive right, co-sale
right, registration right, right of first refusal or other similar
right of stockholders.
xiii) The Registration Statement and the
Prospectus, and any amendment thereof or supplement thereto (including
any term sheet within the meaning of Rule 434 of the Rules and
Regulations), comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations; and on the
basis of conferences with officers of the Company, examination of
documents referred to in the Registration Statement and the Prospectus
and such other procedures as such counsel deemed appropriate, nothing
has come to the attention of such counsel that causes such counsel to
believe that the Registration Statement or any amendment thereof, at
the time the Registration Statement became effective and as of such
Closing Date (including any Registration Statement filed under Rule
462(b) of the Rules and Regulations), 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 and as of such
Closing Date), as amended or supplemented, includes any untrue
statement of material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or
other financial data included in any of the documents mentioned in
this clause (xi).
Such other matters as you may reasonably request.
In rendering such opinion such counsel may rely (i) as to
matters of law other than Colorado law, the General Corporation Law of the
State of Delaware, and federal law, upon the opinion or opinions of local
counsel, provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local
counsel are satisfactory to them and that they believe they and you are
justified in relying thereon and (ii) as to matters of fact, to the extent such
counsel deems reasonable, upon certificates of officers of the Company and its
subsidiaries, provided that the extent of such reliance is specified in such
opinion.
(e) On each Closing Date, there shall have been furnished
to you, as the Representatives of the several Underwriters, such
opinion or opinions of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., counsel
for the several Underwriters, dated such Closing Date and addressed to
you, with respect to the formation of the Company, the validity of the
Securities, the Registration Statement, the Prospectus and other
related matters as you reasonably may request, and such counsel shall
have received such papers and information as they request to enable
them to pass upon such matters.
(f) On each Closing Date you, as the Representatives of
the several Underwriters, shall have received a letter of Xxxxxxxx
Xxxxx Xxxxxxx & Xxxxxxx PC dated such Closing Date and addressed to
you, confirming that they are independent public accountants within
the meaning of the Act and are in compliance with the applicable
requirements relating to the qualifications of accountants under Rule
2-01 of Regulation S-X of the Commission, and stating, as of the date
of such letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified
financial information is given
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in the Prospectus, as of a date not more than five days prior to the
date of such letter), the conclusions and findings of said firm with
respect to the financial information and other matters covered by its
letter delivered to you concurrently with the execution of this
Agreement, and the effect of the letter so to be delivered on such
Closing Date shall be to confirm the conclusions and findings set
forth in such prior letter.
(g) On each Closing Date, there shall have been furnished
to you, as the Representatives of the Underwriters, a certificate,
dated such Closing Date and addressed to you, signed by the Chief
Executive Officer and by 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, in all material
respects, as if made at and as of such Closing Date, and the Company
has complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to such Closing
Date;
ii) No stop order or other order suspending the
effectiveness of the Registration Statement or any amendment thereof
or the qualification of the Securities for offering or sale has been
issued, and no proceeding for that purpose has been instituted or, to
the best of their knowledge, is contemplated by the Commission or any
state or regulatory body; and
iii) The signers of said certificate have
carefully examined the Registration Statement and the Prospectus, and
any amendments thereof or supplements thereto (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations),
and (A) such documents contain all statements and information required
to be included therein, the Registration Statement, or any amendment
thereof, does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Prospectus, as amended or supplemented, does not include any untrue
statement of material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading, (B) since the effective date of
the Registration Statement, there has occurred no event required to be
set forth in an amended or supplemented prospectus that has not been
so set forth, (C) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its subsidiaries has incurred any
material liabilities or obligations, direct or contingent, or entered
into any material transactions, not in the ordinary course of
business, or declared or paid any dividends or made any distribution
of any kind with respect to its capital stock, and except as disclosed
in the Prospectus, there has not been any change in the capital stock
(other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding
options or warrants), or any material change in the short-term or
long-term debt, or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock, of the
Company, or any of its subsidiaries, or any material adverse change or
any development involving a prospective material adverse change
(whether or not arising in the ordinary course of business), in the
general affairs, condition (financial or otherwise), business, key
personnel, property, prospects, net worth or results of
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operations of the Company and its subsidiaries, taken as a whole, and
(D) except as stated in the Registration Statement and the Prospectus,
there is not pending, or, to the knowledge of the Company, threatened
or contemplated, any action, suit or proceeding to which the Company
or any of its subsidiaries is a party before or by any court or
governmental agency, authority or body, or any arbitrator, that might
result in any material adverse change in the condition (financial or
otherwise), business, prospects or results of operations of the
Company and its subsidiaries, taken as a whole.
(h) The Common Stock is qualified as a Nasdaq National
Market security of The Nasdaq Stock Market, Inc., and the Common
Stock, including the Securities, is approved for quotation thereon.
(i) The Company shall have furnished to you and counsel
for the Underwriters such additional documents, certificates and
evidence as you or they may have reasonably requested.
(j) The Representatives' Stock Purchase Warrant shall have
been entered into by the Company and Xxxxx Xxxxxxx Inc. and Xxxxxxx
Xxxxx & Associates, Inc., and the Representatives' Warrants shall have
been issued and sold to Xxxxx Xxxxxxx Inc. and Xxxxxxx Xxxxx &
Associates, Inc., pursuant thereto.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and counsel for the Underwriters. The Company
will furnish you with such conformed copies of such opinions, certificates,
letters and other documents as you shall reasonably request.
6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under
the Act or otherwise (including in settlement of any litigation if
such settlement is effected with the written consent of the Company),
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, including the information deemed to be a part
of the Registration Statement at the time of effectiveness pursuant to
Rules 430A and 434(d) of the Rules and Regulations, if applicable, any
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation
thereof.
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In addition to its other obligations under Section
6(a), the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in Section 6(a), it will
reimburse each Underwriter on a monthly basis for all reasonable legal
fees or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of the Company's obligation to
reimburse the Underwriters for such expenses and the possibility that
such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the
Underwriter that received such payment shall promptly return it to the
party or parties that made such payment, together with interest
thereon, compounded daily, determined on the basis of the prime rate
(or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by ___________ (the "Prime
Rate"). Any such interim reimbursement payments that are not made to
an Underwriter within 30 days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request. This
indemnity agreement shall be in addition to any liabilities that the
Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise (including
in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), or arise out of or are based
upon the omission or 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 the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any such amendment or
supplement, in reliance upon and in conformity with written
information furnished to the Company by you, or by such Underwriter
through you, specifically for use in the preparation thereof, and will
reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending
against any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party shall not relieve
the indemnifying party from any liability that it may have to any
indemnified party. In case any such action shall be brought against
any indemnified party, and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish,
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jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of the indemnifying party's election so to
assume the defense thereof, the indemnifying party shall not be liable
to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
provided, however, that if, in the sole judgment of the
Representatives, it is advisable for the Underwriters to be
represented as a group by separate counsel, the Representatives shall
have the right to employ a single counsel to represent the
Representatives and all Underwriters who may be subject to liability
arising from any claim in respect of which indemnity may be sought by
the Underwriters under subsection (a) of this Section 6, in which
event the reasonable fees and expenses of such separate counsel shall
be borne by the indemnifying party or parties and reimbursed to the
Underwriters as incurred (in accordance with the provisions of the
second paragraph in subsection (a) above). An indemnifying party
shall not be obligated under any settlement agreement relating to any
action under this Section 6 to which it has not agreed in writing.
(d) If the indemnification provided for in this Section 6
is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as
a result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above, (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting
expenses) received by the Company bears to the total underwriting
discounts and commissions received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and
the parties' relevant intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in the first sentence of this subsection (d). The amount
paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim that is the
subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), no
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Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 6
shall be in addition to any liability that the Company may otherwise
have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the
Act; and the obligations of the Underwriters under this Section 6
shall be in addition to any liability that the respective Underwriters
may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who,
with his consent, is named in the Registration Statement as about to
become a director of the Company), to each officer of the Company who
has signed the Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters and the Company contained in Section 6 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Securities to and by the Underwriters
hereunder.
8. Substitution of Underwriters.
If any Underwriter or Underwriters shall fail to take up and
pay for the amount of Firm Shares agreed by such Underwriter or Underwriters to
be purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased does not aggregate
more than 10% of the total number of Firm Shares set forth in Schedule I
hereto, the remaining Underwriters shall be obligated to take up and pay for
(in proportion to their respective underwriting obligations hereunder as set
forth in Schedule I hereto except as may otherwise be determined by you) the
Firm Shares that the withdrawing or defaulting Underwriter or Underwriters
agreed but failed to purchase.
If any Underwriter or Underwriters shall fail to take up and
pay for the number of Firm Shares agreed by such Underwriter or Underwriters to
be purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the number of Firm Shares not purchased aggregates more than
10% of the total number of Firm Shares set forth in Schedule I hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall
terminate. In the event of any such termination, the Company shall not be
under any liability to any Underwriter (except to the extent provided in
Section 6 hereof) nor shall any Underwriter (other than an Underwriter who
shall have failed,
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otherwise than for some reason permitted under this Agreement, to purchase the
number of Firm Shares agreed by such Underwriter to be purchased hereunder) be
under any liability to the Company (except to the extent provided in Section 6
hereof).
If Firm Shares to which a default relates are to be purchased
by the non-defaulting Underwriters or by any other person or persons, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, the Prospectus and any other documents,
as well as any other arrangements, may be effected. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 8.
9. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at 10:00 a.m.,
Central Time, on the first full business day following the effective
date of the Registration Statement, or at such earlier time after the
effective time of the Registration Statement as you in your discretion
shall first release the Securities for sale to the public; provided,
that if the Registration Statement is effective at the time this
Agreement is executed, this Agreement shall become effective at such
time as you in your discretion shall first release the Securities for
sale to the public. For the purpose of this Section 9(a), the
Securities shall be deemed to have been released for sale to the
public upon release by you of the publication of a newspaper
advertisement relating thereto or upon release by you of telexes
offering the Securities for sale to securities dealers, whichever
shall first occur. By giving notice as hereinafter specified before
the time this Agreement becomes effective, you, as the Representatives
of the several Underwriters, or the Company may prevent this Agreement
from becoming effective without liability of any party to any other
party, except that the provisions of Section 6 hereof shall at all
times be effective.
(b) You, as the Representatives of the several
Underwriters, shall have the right to terminate this Agreement by
giving notice as hereinafter specified at any time at or prior to the
First Closing Date, and the option referred to in Section 3(b) hereof,
if exercised, may be cancelled at any time prior to the Second Closing
Date, if (i) the Company shall have failed, refused or been unable, at
or prior to such Closing Date, to perform any agreement on its part to
be performed hereunder, (ii) any other condition of the Underwriters'
obligations hereunder is not fulfilled, (iii) trading in the Common
Stock has been suspended by the Commission or the Nasdaq National
Market, (iv) trading generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been
wholly suspended, (v) minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have
been required, on the New York Stock Exchange, the American Stock
Exchange, or the Nasdaq National Market, by such Exchange or the
Nasdaq National Market or by order of the Commission or any other
governmental authority having jurisdiction, (vi) a banking moratorium
shall have been declared by federal, New York, Minnesota or Colorado
authorities, or (vii) there has occurred any material adverse change
in the financial markets in the United States or an outbreak of major
hostilities (or an escalation thereof) in which the United States is
involved, a declaration of war by the United States Congress, any
other substantial national or international calamity or any other
event or occurrence of a similar character shall have occurred since
the execution of this
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Agreement that, in your judgment, makes it impractical or inadvisable
to proceed with the completion of the sale of and payment for the
Securities. Any such termination shall be without liability of any
party to any other party hereto except that the provisions of Section
6 hereof shall at all times be effective.
(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section
9, the Company shall be notified promptly by you by telephone or
telegram, confirmed by letter. If the Company elects to prevent this
Agreement from becoming effective, you shall be promptly notified by
the Company by telephone or telegram, confirmed by letter.
10. Default by the Company. If the Company shall fail at the
First Closing Date to sell and deliver the number of Securities that it is
obligated to sell hereunder, then this Agreement shall terminate without any
liability on the part of any non-defaulting party. No action taken pursuant to
this Section 10 shall relieve the Company from liability, if any, in respect of
such default.
11. Information Furnished by Underwriters. The statements set
forth in the last paragraph of the cover page and under the caption
"Underwriting" in any Preliminary Prospectus and in the Prospectus constitute
the written information furnished by or on behalf of the Underwriters referred
to in Sections 2(a) and (b) and Section 6(a) hereof.
12. Notices. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to the Representatives
c/o Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000, except that notices given to an Underwriter
pursuant to Section 6 hereof shall be sent to such Underwriter at the address
stated in the Underwriters' Questionnaire furnished by such Underwriter in
connection with this offering; if to the Company, shall be mailed, telegraphed
or delivered to it at Granite Financial, Inc., 0000 Xxxx 00xx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxx 00000 Attention: Xxxxxxx X. Xxxxxx, or in each case to
such other address as the person to be notified may have requested in writing.
All notices given by telegram shall be promptly confirmed by letter. Any party
to this Agreement may change its address for notices by sending to the parties
to this Agreement written notice of a new address for such purpose.
13. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6 hereof. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or corporation
any legal or equitable remedy or claim under or in respect of this Agreement or
any provision herein contained. The term "successors and assigns" as herein
used shall not include any purchaser, as such purchaser, of any of the
Securities from any of the several Underwriters.
14. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
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Please sign and return to the Company the enclosed duplicates
of this Agreement whereupon this Agreement will become a binding agreement
between the Company and the several Underwriters in accordance with its terms.
Very truly yours,
GRANITE FINANCIAL, INC.
By:
-------------------------------------
Title:
-----------------------------------
Confirmed as of the date first
above mentioned, on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
XXXXX XXXXXXX INC.
By:
-----------------------------------
Managing Director
XXXXXXX XXXXX & ASSOCIATES, INC.
By:
-----------------------------------
Managing Director
CRUTTENDEN XXXX INCORPORATED
By:
-----------------------------------
Managing Director
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SCHEDULE I
Underwriter Number of Firm Shares(1)
----------- ---------------------
Xxxxx Xxxxxxx Inc.
Xxxxxxx Xxxxx and Associates
Cruttenden Xxxx Incorporated
Total. . . . . . . . . . . . . . . . . . . . . . 2,600,000
=========
------------------
(1) The Underwriters may purchase up to an additional 315,000 shares of
Common Stock to the extent the option to purchase the Option Shares
described in Section 3(b) of the Agreement is exercised, in the
proportions and in the manner described in the Agreement.
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