OH&S DRAFT
[Form of Underwriting Agreement - Subject to Additional Review]
1,000,000 SHARES OF COMMON STOCK
SNOWDANCE, INC.
UNDERWRITING AGREEMENT
New York, New York
, 1997
XXXXXXXXXX XXXX & XXXX INCORPORATED
CRUTTENDEN XXXX INCORPORATED
As Representatives of the
Several Underwriters listed on Schedule A hereto
c/o Xxxxxxxxxx Xxxx & Xxxx Incorporated
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Snowdance, Inc., a Delaware corporation (the "Company")
confirms its agreement with Xxxxxxxxxx Xxxx & Xxxx Incorporated ("Josephthal"),
Cruttenden Xxxx Incorporated ("Cruttenden") and each of the underwriters named
in Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 12), for
whom Josephthal and Cruttenden are acting as representatives (in such capacity,
Josephthal and Cruttenden each shall hereinafter sometimes be referred to as a
Representative and collectively as "you" or the "Representatives"), with respect
to the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of the Company's
common stock, $.001 par value per share ("Common Stock"), set forth in Schedule
A hereto. Such shares of Common Stock are hereinafter referred to as the "Firm
Shares."
Upon your request, as provided in Section 3(b) of this
Agreement, Skyline Partners, L.P., Xxxxxx X. Xxxxxxxxxxx and Xxxxx X.
Xxxxxxxxxxx (individually a "Selling Stockholder" and collectively, the "Selling
Stockholders") shall sell to the Underwriters, acting severally and not jointly,
up to an additional 150,000 shares of Common Stock for the purpose of covering
over-allotments, if any (the "Option Shares"). The Firm Shares and the Option
Shares are sometimes hereinafter referred to as the "Shares." The Company also
proposes to issue and sell to you warrants (the "Representatives' Warrants")
pursuant to the Representatives'
Warrant Agreement (the "Representatives' Warrant Agreement") for the purchase of
an additional 100,000 shares of Common Stock. The shares of Common Stock
issuable upon exercise of the Representatives' Warrants are hereinafter referred
to as the "Representatives' Shares." The Firm Shares, the Option Shares, the
Representatives' Warrants and the Representatives' Shares (collectively,
hereinafter referred to as the "Securities") are more fully described in the
Registration Statement and the Prospectus referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters as of the
date hereof, and as of the Closing Date (hereinafter defined) and the Option
Closing Date (hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a registration statement,
and an amendment or amendments thereto, on Form SB-2 (No. 333-33369), including
any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Firm Shares and the Option Shares under the Securities Act
of 1933, as amended (the "Act"), which registration statement and amendment or
amendments have been prepared by the Company in conformity with the requirements
of the Act, and the rules and regulations (the "Regulations") of the Commission
under the Act. The Company will promptly file a further amendment to said
registration statement in the form heretofore delivered to the Underwriters, and
will not file any other amendment thereto to which the Underwriters shall have
objected in writing after having been furnished with a copy thereof. Except as
the context may otherwise require, such registration statement, as amended, on
file with the Commission at the time the registration statement becomes
effective (including the prospectus, financial statements, schedules, exhibits
and all other documents filed as a part thereof or incorporated therein
(including, but not limited to those documents or information incorporated by
reference therein) and all information deemed to be a part thereof as of such
time pursuant to paragraph (b) of Rule 430(A) of the Regulations)), is
hereinafter called the "Registration Statement", and the form of prospectus in
the form first filed with the Commission pursuant to Rule 424(b) of the
Regulations, is hereinafter called the "Prospectus." For purposes hereof, "Rules
and Regulations" mean the rules and regulations adopted by the Commission under
either the Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as applicable.
(b) Neither the Commission nor any state regulatory
authority has issued any order preventing or suspending the use of any
Preliminary Prospectus, the Registration Statement or the Prospectus or any part
of any thereof and no proceedings for a stop order suspending the effectiveness
of the Registration Statement or any of the Company's securities have been
instituted or are pending or to the Company's knowledge, threatened. Each of the
Preliminary Prospectus, the Registration Statement and the Prospectus at the
time of filing thereof conformed with the requirements of the Act and the Rules
and Regulations, and none of the Preliminary Prospectus, Registration Statement
or Prospectus at the time of filing thereof contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
and necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that this representation and
warranty does not apply to statements made in reliance upon and in conformity
with written information
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furnished to the Company with respect to the Underwriters by or on behalf of the
Underwriters expressly for use in such Preliminary Prospectus, Registration
Statement or Prospectus.
(c) When the Registration Statement becomes effective
and at all times subsequent thereto up to the Closing Date and each Option
Closing Date, if any, and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Underwriters or a
dealer, the Registration Statement and the Prospectus will contain all
statements which are required to be stated therein in accordance with the Act
and the Rules and Regulations, and will conform to the requirements of the Act
and the Rules and Regulations; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, will 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, in light of the
circumstances under which they were made, not misleading, provided, however,
that this representation and warranty does not apply to statements made or
statements omitted in reliance upon and in conformity with information furnished
to the Company in writing by or on behalf of any Underwriter expressly for use
in the Preliminary Prospectus, Registration Statement or Prospectus or any
amendment thereof or supplement thereto.
(d) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the state of its
incorporation. Except as described in the Prospectus, the Company does not own
an interest in any corporation, partnership, trust, joint venture or other
business entity. The Company is duly qualified and licensed and in good standing
as a foreign corporation in each jurisdiction in which its ownership or leasing
of any properties or the character of its operations requires such qualification
or licensing. The Company has all requisite corporate power and authority, and
the Company has obtained any and all necessary authorizations, approvals,
orders, licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including, without limitation,
those having jurisdiction over environmental or similar matters), to own or
lease its properties and conduct its business as described in the Prospectus;
the Company is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all federal, state and local laws, rules and regulations; and the
Company has not received any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license, certificate,
franchise, 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 otherwise, or the earnings, position, prospects,
value, operation, properties, business or results of operations of the Company.
The disclosures in the Registration Statement concerning the effects of federal,
state and local laws, rules and regulations on the Company's business as
currently conducted and as contemplated are correct in all material respects and
do not omit to state a material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which they were made.
(e) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, under
"Capitalization" and "Description of Capital Stock" and will have the adjusted
capitalization set forth therein on the Closing Date and the Option Closing
Date, if any, based upon the assumptions set forth therein, and the Company is
not a party to or bound by any instrument, agreement or other arrangement
providing for it to
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issue any capital stock, rights, warrants, options or other securities, except
for this Agreement, the Representatives' Warrant Agreement and as described in
the Prospectus. The Securities and all other securities issued or issuable by
the Company conform or, when issued and paid for, will conform, in all respects
to all statements with respect thereto contained in the Registration Statement
and the Prospectus. All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and non-assessable
and the holders thereof have no rights of rescission with respect thereto, and
are not subject to personal liability by reason of being such holders; and none
of such securities were issued in violation of the preemptive rights of any
holders of any security of the Company or similar contractual rights granted by
the Company. The Securities are not and will not be subject to any preemptive or
other similar rights of any stockholder, have been duly authorized and, when
issued, paid for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable and will conform to the
description thereof contained in the Prospectus; the holders thereof will not be
subject to any liability solely as such holders; all corporate action required
to be taken for the authorization, issue and sale of the Securities has been
duly and validly taken; and the certificates representing the Securities will be
in due and proper form. Upon the issuance and delivery pursuant to the terms
hereof of the Securities to be sold by the Company hereunder, the Underwriters
or the Representatives, as the case may be, will acquire good and marketable
title to such Securities free and clear of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity of any kind
whatsoever.
(f) The financial statements, including the related
notes and schedules thereto, included in the Registration Statement, each
Preliminary Prospectus and the Prospectus fairly present the financial position,
income, changes in cash flow, changes in stockholders' equity, and the results
of operations of the Company at the respective dates and for the respective
periods to which they apply and the pro forma financial information included in
the Registration Statement and Prospectus presents fairly, on a basis consistent
with that of the audited financial statements included therein, what the
Company's pro forma capitalization would have been for the respective periods
and as of the respective dates to which they apply after giving effect to the
adjustments described therein. Such financial statements have been prepared in
conformity with generally accepted accounting principles and the Rules and
Regulations, consistently applied throughout the periods involved. There has
been no adverse change or development involving a material prospective change in
the condition, financial or otherwise, or in the earnings, position, prospects,
value, operation, properties, business, or results of operations of the Company
whether or not arising in the ordinary course of business, since the date of the
financial statements included in the Registration Statement and the Prospectus,
and the outstanding debt, the property, both tangible and intangible, and the
business of the Company conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus. Financial
information set forth in the Prospectus under the headings "Summary Financial
Data," "Selected Financial Data," "Capitalization," and "Management's Discussion
and Analysis of Financial Condition and Results of Operations," fairly present,
on the basis stated in the Prospectus, the information set forth therein, have
been derived from or compiled on a basis consistent with that of the audited
financial statements included in the Prospectus.
(g) The Company (i) has paid all federal, state,
local, and foreign taxes for which it is liable, including, but not limited to,
withholding taxes and amounts payable under
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Chapters 21 through 24 of the Internal Revenue Code of 1986 (the "Code"), and
has furnished all information returns it is required to furnish pursuant to the
Code, (ii) has established adequate reserves for such taxes which are not due
and payable, and (iii) does not have any tax deficiency or claims outstanding,
proposed or assessed against it.
(h) No transfer tax, stamp duty or other similar tax
is payable by or on behalf of the Underwriters in connection with (i) the
issuance by the Company of the Securities, (ii) the purchase by the Underwriters
of the Securities from the Company and the purchase by the Representatives of
the Representatives' Warrants from the Company, (iii) the consummation by the
Company of any of its obligations under this Agreement or the Representatives'
Warrant Agreement, or (iv) resales of the Shares in connection with the
distribution contemplated hereby.
(i) The Company maintains insurance policies,
including, but not limited to, general liability and property insurance, which
insures the Company and its employees, against such losses and risks generally
insured against by comparable businesses. The Company (A) has not failed to give
notice or present any insurance claim with respect to any matter, including but
not limited to the Company's business, property or employees, under the
insurance policy or surety bond in a due and timely manner, (B) does not have
any disputes or claims against any underwriter of such insurance policies or
surety bonds or has not failed to pay any premiums due and payable thereunder,
or (C) has not failed to comply with all conditions contained in such insurance
policies and surety bonds. There are no facts or circumstances under any such
insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company.
(j) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or circumstances
that may give rise to the same), or involving the properties or business of, the
Company which (i) questions the validity of the capital stock of the Company,
this Agreement or the Representatives' Warrant Agreement or of any action taken
or to be taken by the Company pursuant to or in connection with this Agreement
or the Representatives' Warrant Agreement, (ii) is required to be disclosed in
the Registration Statement which is not so disclosed (and such proceedings as
are summarized in the Registration Statement are accurately summarized in all
material respects), or (iii) might materially and adversely affect the
condition, financial or otherwise, or the earnings, position, prospects,
stockholders' equity, value, operation, properties, business or results of
operations of the Company.
(k) The Company has full legal right, power and
authority to authorize, issue, deliver and sell the Securities, enter into this
Agreement and the Representatives' Warrant Agreement and to consummate the
transactions provided for in such agreements; and this Agreement and the
Representatives' Warrant Agreement have each been duly and properly authorized,
executed and delivered by the Company. Each of this Agreement and the
Representatives' Warrant Agreement constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws affecting creditors' rights generally, (ii) as enforceability of
any indemnification or contribution provisions may be limited under applicable
laws or the
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public policies underlying such laws and (iii) that the remedies of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceedings may be brought. None of the Company's issue and sale of the
Securities, execution or delivery of this Agreement or the Representatives'
Warrant Agreement, its performance hereunder and thereunder, its consummation of
the transactions contemplated herein and therein, or the conduct of its business
as described in the Registration Statement, the Prospectus, and any amendments
or supplements thereto, conflicts with or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of the Company pursuant to the terms of, (i)
the certificate of incorporation or by-laws of the Company, (ii) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over the Company or
any of its activities or properties.
(l) Except as described in the Prospectus, no consent,
approval, authorization or order of, and no filing with, any court, regulatory
body, government agency or other body, domestic or foreign, is required for the
issuance of the Shares pursuant to the Prospectus and the Registration
Statement, the issuance of the Representatives' Warrants, the performance of
this Agreement and the Representatives' Warrant Agreement and the transactions
contemplated hereby and thereby, including without limitation, any waiver of any
preemptive, first refusal or other rights that any entity or person may have for
the issue and/or sale of any of the Shares, or the Representatives' Warrants,
except such as have been or may be obtained under the Act or may be required
under state securities or Blue Sky laws in connection with the Underwriters'
purchase and distribution of the Shares, and the Representatives' Warrants to be
sold by the Company hereunder.
(m) All executed agreements, contracts or other
documents or copies of executed agreements, contracts or other documents filed
as exhibits to the Registration Statement to which the Company is a party or by
which it may be bound or to which any of its assets, properties or business may
be subject have been duly and validly authorized, executed and delivered by the
Company, and constitute the legal, valid and binding agreements of the Company,
enforceable against the Company, in accordance with their respective terms. The
descriptions in the Registration Statement of agreements, contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown with respect thereto on Form SB-2, and there
are no contracts or other documents which are required by the Act to be
described in the Registration Statement or filed as exhibits to the Registration
Statement which are not described or filed as required, and the exhibits which
have been filed are in all material respects complete and correct copies of the
documents of which they purport to be copies.
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(n) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus, and
except as may otherwise be indicated or contemplated herein or therein, the
Company has not (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, (ii) entered into any
transaction other than in the ordinary course of business, or (iii) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock of any class, and there has not been any change in the capital stock, or
any material change in the debt (long or short term) or liabilities or material
adverse change in or affecting the general affairs, management, financial
operations, stockholders' equity or results of operations of the Company.
(o) No default exists in the due performance and
observance of any term, covenant or condition of any license, contract,
indenture, mortgage, installment sale agreement, lease, deed of trust, voting
trust agreement, stockholders agreement, partnership agreement, note, loan or
credit agreement, purchase order, or any other agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which the Company is a party or by which the Company may be bound
or to which the property or assets (tangible or intangible) of the Company is
subject or affected.
(p) The Company has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance with all
federal, state, local, and foreign laws and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours. There are no pending investigations involving the Company by the U.S.
Department of Labor, or any other governmental agency responsible for the
enforcement of such federal, state, local, or foreign laws and regulations.
There is no unfair labor practice charge or complaint against the Company
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened against or
involving the Company or any predecessor entity, and none has ever occurred. No
representation question exists respecting the employees of the Company, and no
collective bargaining agreement or modification thereof is currently being
negotiated by the Company. No grievance or arbitration proceeding is pending
under any expired or existing collective bargaining agreements of the Company.
No labor dispute with the employees of the Company exists, or is imminent.
(q) Except as described in the Prospectus, the Company
does not maintain, sponsor or contribute to any program or arrangement that is
an "employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan" as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") ("ERISA Plans"). The Company does not maintain or contribute, now or
at any time previously, to a defined benefit plan, as defined in Section 3(35)
of ERISA. No ERISA Plan (or any trust created thereunder) has engaged in a
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code, which could subject the Company to any tax penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all reporting, disclosure and other requirements of
the Code and ERISA as they relate to any such ERISA Plan. Determination letters
have been received from the Internal Revenue Service with respect to each ERISA
Plan which is intended to comply with Code Section 401(a), stating that such
ERISA
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Plan and the attendant trust are qualified thereunder. The Company has never
completely or partially withdrawn from a "multiemployer plan."
(r) Neither the Company nor any of its employees,
directors, stockholders, partners, or affiliates (within the meaning of the
Rules and Regulations) of any of the foregoing has taken or will take, directly
or indirectly, any action designed to or which has constituted or which might be
expected to cause or result in, under the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or otherwise.
(s) Except as otherwise disclosed in the Prospectus,
none of the patents, patent applications, trademarks, service marks, trade names
and copyrights, and licenses and rights to the foregoing presently owned or held
by the Company are in dispute so far as known by the Company or are in any
conflict with the right of any other person or entity. The Company (i) owns or
has the right to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever, all patents, trademarks, service marks, trade
names and copyrights, technology and licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted or proposed to
be conducted without infringing upon or otherwise acting adversely to the right
or claimed right of any person, corporation or other entity under or with
respect to any of the foregoing and (ii) is not obligated or under any liability
whatsoever to make any payment by way of royalties, fees or otherwise to any
owner or licensee of, or other claimant to, any patent, trademark, service xxxx,
trade name, copyright, know-how, technology or other intangible asset, with
respect to the use thereof or in connection with the conduct of its business or
otherwise.
(t) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property stated in the Prospectus, to be owned or leased by it free and clear of
all liens, charges, claims, encumbrances, pledges, security interests, defects,
or other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus and liens for taxes not yet due and payable.
(u) Deloitte & Touche LLP ("D&T") whose report is
filed with the Commission as a part of the Registration Statement, are
independent certified public accountants as required by the Act and the Rules
and Regulations.
(v) The Company has caused to be duly executed legally
binding and enforceable agreements pursuant to which all of the holders of the
Common Stock and holders of securities exchangeable or exercisable for or
convertible into shares of Common Stock have executed an agreement
(individually, a "Lock-Up Agreement," collectively, the "Lock-Up Agreements")
pursuant to which each such person has agreed not to, directly or indirectly,
offer to sell, sell, grant any option for the sale of, assign, transfer, pledge,
hypothecate, distribute or otherwise encumber or dispose of any shares of Common
Stock or securities convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
(either pursuant to Rule 144 of the Rules and Regulations or otherwise) or
dispose of any beneficial interest therein for a period of not less than nine
(9) months following the effective date of the Registration Statement without
the prior written consent of Josephthal.
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The Company will cause the Transfer Agent, as defined below, to xxxx an
appropriate legend on the face of stock certificates representing all of such
securities and to place "stop transfer" orders on the Company's stock ledgers.
(w) Except as described in the Prospectus under
"Underwriting," there are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company or any of its officers, directors, stockholders,
partners, employees or affiliates that may affect the Underwriters'
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
(x) The Common Stock has been approved for quotation
on the Nasdaq Small Cap Market ("Nasdaq") and the Pacific Exchange ("PE").
(y) Neither the Company nor any of its officers,
employees, agents, or any other person acting on behalf of the Company, has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is, or may be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) which (a) might subject the Company, or any other such person to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (b) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the Company,
or (c) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company's internal
accounting controls are sufficient to cause the Company to comply with the
Foreign Corrupt Practices Act of 1977, as amended.
(z) Except as set forth in the Prospectus, no officer,
director or stockholder of the Company, or any "affiliate" or "associate" (as
these terms are defined in Rule 405 promulgated under the Rules and Regulations)
of any of the foregoing persons or entities has or has had, either directly or
indirectly, (i) an interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed to be furnished
or sold by the Company, or (B) purchases from or sells or furnishes to the
Company any goods or services, or (ii) a beneficial interest in any contract or
agreement to which the Company is a party or by which it may be bound or
affected. Except as set forth in the Prospectus under "Certain Transactions,"
there are no existing agreements, arrangements, understandings or transactions,
or proposed agreements, arrangements, understandings or transactions, between or
among the Company and any officer, director, or Principal Stockholder (as such
term is defined in the Prospectus) of the Company or any partner, affiliate or
associate of any of the foregoing persons or entities.
(bb) Any certificate signed by any officer of the
Company, and delivered to the Underwriters or to Underwriters' Counsel (as
defined herein) shall be deemed a
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representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
(cc) The minute books of the Company have been made
available to the Underwriters and contains a complete summary of all meetings
and actions of the directors, stockholders, audit committee, compensation
committee and any other committee of the Board of Directors of the Company,
respectively, since the time of its incorporation, and reflects all transactions
referred to in such minutes accurately in all material respects.
(dd) Except and to the extent described in the
Prospectus, no holders of any securities of the Company or of any options,
warrants or other convertible or exchangeable securities of the Company have the
right to include any securities issued by the Company in the Registration
Statement or any registration statement to be filed by the Company or to require
the Company to file a registration statement under the Act and no person or
entity holds any anti-dilution rights with respect to any securities of the
Company.
(ee) The Company has as of the effective date of the
Registration Statement (i) entered into an employment agreement with each of
[Xxxxxx X. Xxxxxxxxxxx and Xxxxx X. Xxxxxxxxxxx], in the form filed as Exhibits
____, ___, ___, and ____, respectively, to the Registration Statement and (ii)
purchased term key-man insurance on the life of [Xxxxxx X. Xxxxxxxxxxx and Xxxxx
X. Xxxxxxxxxxx] in the amount of $1,000,000 each, which policies name the
Company as the sole beneficiary thereof.
(ff) As of the date hereof, the Company has effected:
(i) the reorganization pursuant to which all of the partnership interests in
Ascutney Mountain Resort Hotel, L.P., Ascutney Mountain Resort, L.P. and
Ascutney Mountain Resort Realty (collectively, the "Limited Partnerships") will
be exchanged for an aggregate 2,000,000 shares of Common Stock of the Company
(the "Combination Transaction"). The Combination Transactions has been duly and
validly authorized by the Company, and all certificates, agreements, contracts,
minutes or other documents necessary to effect the Combination Transaction
(collectively, the "Combination Transaction Documents") have been duly and
validly authorized, executed and delivered and, if necessary, filed with the
appropriate regulatory body, government agency or other body, domestic or
foreign, by the appropriate parties, and constitute the legal, valid and binding
agreements of such parties, enforceable against each of them in accordance with
their respective terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or equitable,
and except as rights to indemnity or contribution may be limited by applicable
law), and none of the execution or delivery of any of the Combination
Transaction Documents by the parties thereto, the performance by the Company
hereunder or by the Company and the Limited Partnerships thereunder, or
consummation of the transactions contemplated herein or therein, conflicts with
or will conflict with or results or will result in any breach or violation of
the terms or provisions of, or constitutes or will constitute a default under,
or result in the creation or imposition of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity of any kind
whatsoever upon, any property or assets (tangible or intangible) of the Company
pursuant to the terms of, (A) the certificate of incorporation or by-laws of the
Company, (B) any license, contract, collective
- 10 -
bargaining agreement, indenture, mortgage, deed of trust, lease, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any other
agreement or instrument to which the Company is a party or by which it is or may
be bound or to which its respective properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, or (C) any statute,
judgment, decree, order, rule or regulation applicable to the Company of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any of its activities or properties. The
Combination Transaction Documents effectively convey to the Company all right,
title and interest to the business of the Company as described in the
Prospectus; and the descriptions in the Registration Statement of the
Reorganization are accurate and fairly present the information required to be
shown with respect thereto by Form SB-2.
2. Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders represents and warrants to,
and agrees with, the Underwriters as of the date hereof, and as of the Option
Closing Date, if any, with respect to such Selling Stockholders respective
Option Shares as follows:
(a) Such Selling Stockholder has now and will have on
each Option Closing Date, if any, good and valid title to the Option Shares free
and clear of any lien, charge, claim, encumbrance, pledge, security interest,
stockholders' agreement, voting trust, community property right, defect in
title, equitable interest or other equities or restrictions of any kind
whatsoever (including any liability for estate or inheritance taxes and claims
of any creditor, devisee, legatee or beneficiary); other than as described in
this Agreement or disclosed in the Registration Statement or Prospectus, there
are no outstanding options, warrants, rights or other agreements or arrangements
with respect to any of the Option Shares; the Selling Stockholder has and will
have on each Option Closing Date, if any, full right, power and authority to
sell, transfer and deliver the Option Shares hereunder; and upon delivery of the
Option Shares against payment of the purchase price therefor as contemplated in
this Agreement, each of the Underwriters, who has purchased in good faith and
without notice of any adverse claim, will receive good and marketable title to
the Option Shares purchased by it, free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, stockholders' agreement, voting trust,
community property right, defect in title, equitable interests or other equities
or restrictions of any kind whatsoever (including any liability for estate or
inheritance taxes and claims of any creditor, devisee, legatee or beneficiary).
(b) Such Selling Stockholder has duly authorized (if
applicable), executed and delivered, in the forms theretofore furnished by the
Representatives, a Stock Power (the "Stock Power") a Power of Attorney (the
"Power of Attorney") and a Letter of Transmittal and a Custody Agreement (the
"Custody Agreement"); each of the Custody Agreement and the Seller Lock-Up
Agreement constitutes a legal, valid and binding agreement of the Selling
Stockholder, enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles.
- 11 -
(c) All authorizations, approvals, consents and orders
necessary for the execution and delivery by such Selling Stockholder of this
Agreement, the Custody Agreement and the Seller Lock-Up Agreement and the sale
and delivery of the Option Shares hereunder (other than such authorizations,
approvals, orders or consents as may be necessary under federal or state
securities laws) have been obtained and are in full force and effect; and such
Selling Stockholder has full right, power and authority to enter into and
perform its obligations under this Agreement, the Custody Agreement, the Stock
Power, the Power of Attorney and the Seller Lock-Up Agreement.
(d) Such Selling Stockholder has not distributed and
will not distribute any prospectus or other offering material in connection with
the distribution of the Securities.
(e) This Agreement has been duly authorized (if
applicable), executed and delivered by such Selling Stockholder and is a legal,
valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws relating to or affecting creditors' rights
generally, (ii) as enforceability of any indemnification or contribution
provisions may be limited under applicable laws or the public policies
underlying such laws and (iii) that the remedies of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings may be
brought. The execution, delivery and performance of this Agreement, the Custody
Agreement and the Seller Lock-Up Agreement and the consummation of the
transactions contemplated hereby and thereby by such Selling Stockholder has not
conflicted and will not conflict with and has not resulted and will not result
in a breach of or default under (i) any will, license, contract, indenture,
mortgage, lease, deed of trust, voting trust agreement, bond, debenture,
stockholders' agreement, note, loan or credit agreement or other agreement or
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder is or may be bound or to which any of its properties (including the
Option Shares) is or may be subject, or any indebtedness, or (ii) any statute,
judgment, decree, order, rule or regulation applicable to such Selling
Stockholder of any arbitrator, court, regulatory body or administrative agency
or other governmental agency or body, domestic or foreign, having jurisdiction
over such Selling Stockholder or any of such Selling Stockholder's activities or
properties (including the Option Shares), except for conflicts, breaches and
defaults which will not adversely affect the consummation by such Selling
Stockholder of the transactions contemplated hereby.
(f) The sale of the Option Shares hereunder is not
prompted by any information concerning the Company or any of the Subsidiaries
which is material and adverse to the Company and the Subsidiaries taken as a
whole and which is not set forth in the Prospectus; the information relating to
such Selling Stockholder, the transactions between such Selling Stockholder or
its employees, agents or affiliates, if any, and the Company or any of the
Subsidiaries and all securities of the Company or any of the subsidiaries owned
by such Selling Stockholder (collectively, "Seller Information") set forth in
the Registration Statement and the Prospectus, as so amended or supplemented,
does not and at the Closing Date and each Option Closing Date, if any, will 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; all information furnished by or on behalf of such Selling
Stockholder in writing for
- 12 -
use in each Preliminary Prospectus, the Registration Statement and the
Prospectus, or any amendment or supplement thereto, is and at the Closing Date
and each Option Closing Date, if any, will be true, correct and complete in all
material respects; and there are not now and will not be at the Closing Date and
each Option Closing Date, if any, any agreements, contracts or other documents
or instruments providing for indemnification, contribution or reimbursement to
such Selling Stockholder or its employees, agents, or affiliates, if any, (as
defined in Section 8) by the Company or any of the Subsidiaries with respect to
the offer or sale of the Option Shares or the distribution contemplated hereby
(other than those provisions of the By-Laws or the Certificate of Incorporation,
as amended, of the Company relating to the indemnification of directors of the
Company in their capacity as such).
(g) Nothing material has come to the attention of such
Selling Stockholder to cause such Selling Stockholder to believe that the
Company's representations and warranties contained in this Agreement are
inaccurate in any material respect.
(h) There is not pending or, to the knowledge of such
Selling Stockholder, threatened against such Selling Stockholder or involving
its properties or activities any material action, inquiry, investigation, suit
or proceeding (and, to the knowledge of such Selling Stockholder, there are no
circumstances that would be expected to give rise to the same) which (i)
questions the validity of this Agreement, the Custody Agreement, the Stock
Power, the Power of Attorney, the Seller Lock-Up Agreement or any action taken
or to be taken by such Selling Stockholder in connection herewith or therewith,
(ii) has or reasonably would be expected to materially adversely affect the
Company which is not disclosed in the Prospectus or (iii) reasonably would be
expected to adversely affect the consummation by such Selling Stockholder of the
transactions contemplated hereby or thereby.
(i) Except as and to the extent disclosed in the
Registration Statement or the Prospectus, such Selling Stockholder does not have
any registration rights, rights of first refusal, co-sale rights, preemptive
rights or other similar rights with respect to any securities of the Company;
such Selling Stockholder has waived all of those rights which it may have with
respect to the Option Shares and the transactions contemplated hereby; and such
Selling Stockholder does not have any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any capital
stock, rights, warrants, options or other securities from the Company, other
than those disclosed in the Registration Statement or the Prospectus.
(j) Such Selling Stockholder has not since the initial
filing of the Registration Statement with the Commission (i) sold, bid for,
purchased, attempted to induce any person to purchase or paid anyone any
compensation for soliciting purchases of any securities of the Company or (ii)
paid or agreed to pay to any person any compensation for soliciting another
person or entity to purchase any securities of the Company (in each case, except
for the sale of the Option Shares to the Underwriters hereunder and except as
permitted by federal and state securities laws).
(k) Such Selling Stockholder has not taken and will
not take, directly or indirectly, any action which is designed to or which has
constituted or which might
- 13 -
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the distribution of the
Securities.
(l) Any certificate signed by or on behalf of such
Selling Stockholder and delivered to the Underwriters or Underwriters' Counsel
shall be deemed a representation and warranty by such Selling Stockholder to the
Underwriters or Underwriters' Counsel as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities and
Representatives' Warrants.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter, and
each Underwriter, severally and not jointly, agrees to purchase from the Company
at a price of $_______ [93% of the initial public offering price] per share of
Common Stock, that number of Firm Shares set forth in Schedule A opposite the
name of such Underwriter, plus any additional number of Firm Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 12 hereof.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, each Selling Stockholder hereby grants an
option to the Underwriters, severally and not jointly, to purchase all or any
part of an additional 150,000 shares of Common Stock at a price of $____ [93% of
the initial public offering price] per share of Common Stock. The option granted
hereby will expire 45 days after (i) the date the Registration Statement becomes
effective, if the Company has elected not to rely on Rule 430A under the Rules
and Regulations, or (ii) the date of this Agreement if the Company has elected
to rely upon Rule 430A under the Rules and Regulations, and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Shares upon notice by the Representatives to the
Company and the Selling Stockholders setting forth the number of Option Shares
as to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for any such Option Shares. Any such time and
date of delivery (an "Option Closing Date") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Date, as
hereinafter defined, unless otherwise agreed upon by the Representatives, the
Company and the Selling Stockholders. Nothing herein contained shall obligate
the Underwriters to make any over-allotments. No Option Shares shall be
delivered unless the Firm Shares shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of Xxxxxxxxxx
Xxxx & Xxxx Incorporated at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place as shall be agreed upon by the Representatives and
the Company. Such delivery and payment shall be made at 10:00 a.m. (New York
City time) on _______________, 1997 or at such other time and date as shall be
agreed upon by the Representatives and the Company, but not less than three (3)
nor more than seven (7) full business days after the effective date of the
Registration Statement (such time
- 14 -
and date of payment and delivery being herein called "Closing Date"). In
addition, in the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates
for, such Option Shares shall be made at the above mentioned office of the
Representatives or at such other place as shall be agreed upon by the
Representatives, the Company and the Selling Stockholders on each Option Closing
Date as specified in the notice from the Representatives to the Company.
Delivery of the certificates for the Firm Shares and to the order of the Selling
Stockholders for the Option Shares, if any, shall be made to the Underwriters
against payment by the Underwriters, severally and not jointly, of the purchase
price for the Firm Shares and to the order of the Selling Stockholders for the
Option Shares, if any, to the order of the Company for the Firm Shares and the
Option Shares, if any, by New York Clearing House funds. In the event such
option is exercised, each of the Underwriters, acting severally and not jointly,
shall purchase that proportion of the total number of Option Shares then being
purchased which the number of Firm Shares set forth in Schedule A hereto
opposite the name of such Underwriter bears to the total number of Firm Shares,
subject in each case to such adjustments as the Representatives in their
discretion shall make to eliminate any sales or purchases of fractional shares.
Certificates for the Firm Shares and the Option Shares, if any, shall be in
definitive, fully registered form, shall bear no restrictive legends and shall
be in such denominations and registered in such names as the Underwriters may
request in writing at least two (2) business days prior to the Closing Date or
the relevant Option Closing Date, as the case may be. The certificates for the
Firm Shares and the Option Shares, if any, shall be made available to the
Representatives at such office or such other place as the Representatives may
designate for inspection, checking and packaging no later than 9:30 a.m. on the
last business day prior to Closing Date or the relevant Option Closing Date, as
the case may be.
(d) On the Closing Date, the Company shall issue and
sell to the Representatives, Representatives' Warrants at a purchase price of
$.001 per warrant, which warrants shall entitle the holders thereof to purchase
an aggregate of 100,000 shares of Common Stock. The Representatives' Warrants
shall be exercisable for a period of four years commencing one year from the
effective date of the Registration Statement at a price equaling one hundred
twenty percent (120%) of the initial public offering price of the shares of
Common Stock. The Representatives' Warrant Agreement and form of Warrant
Certificate shall be substantially in the form filed as Exhibit 4.3 to the
Registration Statement. Payment for the Representatives' Warrants shall be made
on the Closing Date.
4. Public Offering of the Shares. As soon after the
Registration Statement becomes effective as the Representatives deem advisable,
the Underwriters shall make a public offering of the Shares (other than to
residents of or in any jurisdiction in which qualification of the Shares is
required and has not become effective) at the price and upon the other terms set
forth in the Prospectus. The Representatives may from time to time increase or
decrease the public offering price after distribution of the Shares has been
completed to such extent as the Representatives, in their discretion deem
advisable. The Underwriters may enter into one of more agreements as the
Underwriters, in each of their sole discretion, deem advisable with one or more
broker-dealers who shall act as dealers in connection with such public offering.
5. Covenants and Agreements of the Company and the Selling
Stockholders.
- 15 -
(a) The Company covenants and agrees with each of the
Underwriters as follows:
i) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable and will not at any time, whether before or after the
effective date of the Registration Statement, file any amendment to the
Registration Statement or supplement to the Prospectus or file any document
under the Act or Exchange Act before termination of the offering of the Shares
by the Underwriters of which the Representatives shall not previously have been
advised and furnished with a copy, or to which the Representatives shall have
objected or which is not in compliance with the Act, the Exchange Act or the
Rules and Regulations.
ii) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Representatives and confirm the
notice in writing, (i) when the Registration Statement, as amended, becomes
effective, if the provisions of Rule 430A promulgated under the Act will be
relied upon, when the Prospectus has been filed in accordance with said Rule
430A and when any post-effective amendment to the Registration Statement becomes
effective, (ii) of the issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceeding, suspending the effectiveness
of the Registration Statement or any order preventing or suspending the use of
the Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or the institution of proceedings for that purpose, (iii) of the
issuance by the Commission or by any state securities commission of any
proceedings for the suspension of the qualification of any of the Securities for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that purpose, (iv) of the receipt of any comments from the
Commission; and (v) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information. If the Commission or any state securities commission
authority shall enter a stop order or suspend such qualification at any time,
the Company will make every effort to obtain promptly the lifting of such order.
iii) The Company shall file the Prospectus (in form
and substance satisfactory to the Representatives) or transmit the Prospectus by
a means reasonably calculated to result in filing with the Commission pursuant
to Rule 424(b)(1) (or, if applicable and if consented to by the Representatives,
pursuant to Rule 424(b)(4)) not later than the Commission's close of business on
the earlier of (i) the second business day following the execution and delivery
of this Agreement and (ii) the fifteenth business day after the effective date
of the Registration Statement.
iv) The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Securities which
differs from the corresponding prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Rules and
Regulations), and will furnish the Representatives with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not
- 16 -
file any such prospectus to which the Representatives or Xxxxxx, Xxxxxxxxxx &
Xxxxxxxxx LLP ("Underwriters' Counsel"), shall object.
v) The Company shall endeavor in good faith, in
cooperation with the Representatives, at or prior to the time the Registration
Statement becomes effective, to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as the Representatives may
designate to permit the continuance of sales and dealings therein for as long as
may be necessary to complete the distribution, and shall make such applications,
file such documents and furnish such information as may be required for such
purpose; provided, however, the Company shall not be required to qualify as a
foreign corporation or file a general or limited consent to service of process
in any such jurisdiction. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Representatives agrees that such action
is not at the time necessary or advisable, use all reasonable efforts to file
and make such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such qualification.
vi) During the time when a prospectus is required to
be delivered under the Act, the Company shall use all reasonable efforts to
comply with all requirements imposed upon it by the Act and the Exchange Act, as
now and hereafter amended and by the Rules and Regulations, as from time to time
in force, so far as necessary to permit the continuance of sales of or dealings
in the Securities in accordance with the provisions hereof and the Prospectus,
or any amendments or supplements thereto. If at any time when a prospectus
relating to the Securities or the Representatives' Shares is required to be
delivered under the Act, any event shall have occurred as a result of which, in
the opinion of counsel for the Company or Underwriters' Counsel, the Prospectus,
as then amended or supplemented, includes an untrue statement of a material fact
or omits to state any 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, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will notify the Representatives
promptly and prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act, each such amendment or
supplement to be satisfactory to Underwriters' Counsel, and the Company will
furnish to the Underwriters copies of such amendment or supplement as soon as
available and in such quantities as the Underwriters may request.
vii) As soon as practicable, but in any event not
later than 45 days after the end of the 12-month period beginning on the day
after the end of the fiscal quarter of the Company during which the effective
date of the Registration Statement occurs (90 days in the event that the end of
such fiscal quarter is the end of the Company's fiscal year), the Company shall
make generally available to its security holders, in the manner specified in
Rule 158(b) of the Rules and Regulations, and to the Representatives, an
earnings statement which will be in the detail required by, and will otherwise
comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the
Rules and Regulations, which statement need not be audited unless required by
the Act, covering a period of at least 12 consecutive months after the effective
date of the Registration Statement.
viii) During a period of seven years after the date
hereof, the Company will furnish to its stockholders, as soon as practicable,
annual reports (including financial
- 17 -
statements audited by independent public accountants) and unaudited quarterly
reports of earnings, and will deliver to the Representatives:
a) concurrently with furnishing such quarterly reports
to its stockholders, statements of income of the Company for
each quarter in the form furnished to the Company's
stockholders and certified by the Company's principal
financial or accounting officer;
b) concurrently with furnishing such annual reports to
its stockholders, a balance sheet of the Company as at the end
of the preceding fiscal year, together with statements of
operations, stockholders' equity, and cash flows of the
Company for such fiscal year, accompanied by a copy of the
certificate thereon of independent certified public
accountants;
c) as soon as they are available, copies of all
reports (financial or other) mailed to stockholders;
d) as soon as they are available, copies of all
reports and financial statements furnished to or filed with
the Commission, the NASD or any securities exchange;
e) every press release and every material news item or
article of interest to the financial community in respect of
the Company, or its affairs which was released or prepared by
or on behalf of the Company; and
f) any additional information of a public nature
concerning the Company (and any future subsidiary) or its
businesses which the Representatives may request.
During such seven-year period, if the Company has an active
subsidiary, the foregoing financial statements will be on a consolidated basis
to the extent that the accounts of the Company and its subsidiary are
consolidated, and will be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
ix) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same entity as the Transfer Agent) for its Common Stock.
x) The Company will furnish to the Representatives or
on the Representatives' order, without charge, at such place as the
Representatives may designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or post-effective amendments
thereto (two of which copies will be signed and will include all financial
statements and exhibits), the Prospectus, and all amendments and supplements
thereto, including any prospectus prepared after the effective date of the
Registration Statement, in each case as soon as available and in such quantities
as the Representatives may request.
- 18 -
xi) On or before the effective date of the
Registration Statement, the Company shall provide the Representatives with true
copies of duly executed, legally binding and enforceable agreements pursuant to
which for a period of 9 months from the effective date of the Registration
Statement, the holders of all shares of Common Stock and holders of securities
exchangeable or exercisable for or convertible into shares of Common Stock,
agree that it or he or she will not directly or indirectly, issue, offer to
sell, sell, grant an option for the sale of, assign, transfer, pledge,
hypothecate, distribute or otherwise encumber or dispose of any shares of Common
Stock or securities convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
(either pursuant to Rule 144 of the Rules and Regulations or otherwise) or
dispose of any beneficial interest therein, except as expressly set forth in the
respective Lock-up Agreements. During the 9 month period commencing with the
effective date of the Registration Statement, the Company shall not, without the
prior written consent of the Representatives, sell, contract or offer to sell,
issue, transfer, assign, pledge, hypothecate, distribute, or otherwise dispose
of, directly or indirectly, any shares of Common Stock or any options, rights or
warrants with respect to any shares of Common Stock. On or before the Closing
Date, the Company shall deliver instructions to the Transfer Agent authorizing
it to place appropriate legends on the certificates representing the securities
subject to the Lock-up Agreements and to place appropriate stop transfer orders
on the Company's ledgers.
xii) Neither the Company, nor any of its officers,
directors, stockholders, nor any of their respective affiliates (within the
meaning of the Rules and Regulations) will take, directly or indirectly, any
action designed to, or which might in the future reasonably be expected to cause
or result in, stabilization or manipulation of the price of any securities of
the Company.
xiii) The Company shall apply the net proceeds from
the sale of the Securities in the manner, and subject to the conditions, set
forth under "Use of Proceeds" in the Prospectus. Except as described in the
Prospectus, no portion of the net proceeds will be used, directly or indirectly,
to acquire any securities issued by the Company.
xiv) The Company shall timely file all such reports,
forms or other documents as may be required (including, but not limited to, a
Form SR as may be required pursuant to Rule 463 under the Act) from time to
time, under the Act, the Exchange Act, and the Rules and Regulations, and all
such reports, forms and documents filed will comply as to form and substance
with the applicable requirements under the Act, the Exchange Act, and the Rules
and Regulations.
xv) The Company shall furnish to the Representatives
as early as practicable prior to each of the date hereof, the Closing Date and
each Option Closing Date, if any, but no later than two (2) full business days
prior thereto, a copy of the latest available unaudited interim financial
statements of the Company (which in no event shall be as of a date more than
thirty (30) days prior to the date of the Registration Statement) which have
been read by the Company's independent public accountants, as stated in their
letter to be furnished pursuant to Section 7(k) hereof.
- 19 -
xvi) The Company shall cause the Common Stock to be
quoted on Nasdaq and the PE, or such other regional exchange as the
Representatives shall reasonably request, and for a period of seven (7) years
from the date hereof, use its best efforts to maintain the Nasdaq and PE or
other exchange quotation of the Common Stock to the extent outstanding.
xvii) For a period of five (5) years from the Closing
Date, the Company shall furnish to the Representatives at the Representatives'
request and at the Company's sole expense, (i) daily consolidated transfer
sheets relating to the Common Stock, (ii) the list of holders of all of the
Company's securities and (iii) a Blue Sky "Trading Survey" for secondary sales
of the Company's securities prepared by counsel to the Company.
xviii) As soon as practicable, (i) but in no event
more than 5 business days before the effective date of the Registration
Statement, file a Form 8-A with the Commission providing for the registration
under the Exchange Act of the Securities and (ii) but in no event more than 30
days from the effective date of the Registration Statement, take all necessary
and appropriate actions to be included in Standard and Poor's Corporation
Descriptions and Xxxxx'x OTC Manual and to continue such inclusion for a period
of not less than seven (7) years.
xix) The Company hereby agrees that it will not for a
period of thirteen (13) months from the effective date of the Registration
Statement, adopt, propose to adopt or otherwise permit to exist any employee,
officer, director, consultant or compensation plan or arrangement permitting the
grant, issue or sale of any shares of Common Stock or other securities of the
Company (i) in an amount greater than an aggregate of 150,000 shares of Common
Stock, (ii) at an exercise or sale price per share less than the greater of (a)
the initial public offering price of the Shares set forth herein and (b) the
fair market value of the Common Stock on the date of grant or sale, (iii) to any
direct or indirect beneficial holder on the date hereof of more than 10% of the
issued and outstanding shares of Common Stock at an exercise price greater than
110% of the fair market value of the Common Stock on the date of the grant, (iv)
with the payment for such securities with any form of consideration other than
cash, (v) upon payment of less than the full purchase or exercise price for such
shares of Common Stock or other securities of the Company on the date of grant
or issuance, or (vi) permitting the existence of stock appreciation rights,
phantom options or similar arrangements.
xx) Until the completion of the distribution of the
Shares, the Company shall not without the prior written consent of the
Representatives and Underwriters' Counsel, issue, directly or indirectly, any
press release or other communication or hold any press conference with respect
to the Company or its activities or the offering contemplated hereby, other than
trade releases issued in the ordinary course of the Company's business
consistent with past practices with respect to the Company's operations.
xxi) For a period equal to the lesser of (i) seven (7)
years from the date hereof, and (ii) the sale to the public of the
Representatives' Shares, the Company will not take any action or actions which
may prevent or disqualify the Company's use of Form SB-2 (or other appropriate
form) for the registration under the Act of the Representatives' Shares.
xxii) For a period of five (5) years after the
effective date of the Registration Statement, Josephthal shall have the right to
designate for election Xxx Xxxxxx to
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the Company's Board of Directors (the "Board"). In the event Josephthal elects
not to exercise such right, then it may designate one (1) individual to attend
meetings of the Company's Board. The Company shall notify Josephthal of each
meeting of the Board and the Company shall send to such individual all notices
and other correspondence and communications sent by the Company to members of
the Board. Such individual shall be reimbursed for all out-of-pocket expenses
incurred in connection with his attendance of meetings of the Board.
xxiii) For a period of three (3) years from the date
hereof, Josephthal shall have a right of first refusal for any sale of
securities to be made by the Company or any of its affiliates, which right shall
be assignable by Josephthal to any of its affiliates. The Company, for a period
of three (3) years from the date hereof, will consult, and cause its affiliates
to consult, with Josephthal with regard to any such sale of securities and will
offer, or cause any of its affiliates to offer to Josephthal the opportunity, on
terms not more favorable to the Company, or its affiliates than they can secure
elsewhere, to purchase or sell any such securities. If Josephthal fails to
accept in writing a proposal under this paragraph made by the Company or any of
its affiliates within 15 business days after receipt of a written detailed
notice containing such proposal, then Josephthal shall not have further claim or
right with respect to such proposal. If, thereafter, such proposal is modified,
the Company shall again consult, and cause each present or future affiliate to
consult, with Josephthal in connection with such modification and shall in all
respects have the same obligations and adopt the same procedures with respect to
the modified proposal as are provided herein with respect to the original
proposal.
(b) Each Selling Stockholder severally covenants and agrees as
to himself, herself or itself with the Underwriters that:
i) Such Selling Stockholder consents to the use of
the Prospectus and any amendment or supplement
thereto by the Underwriters and all dealers to whom
the Option Shares may be sold, both in connection
with the offering or sale of the Option Shares and
for such period of time thereafter as such Prospectus
is required by law to be delivered in connection
therewith.
ii) Such Selling Stockholder has reviewed the
Registration Statement and the Prospectus and will
comply with all agreements and satisfy all conditions
on his, her or its part to be complied with or
satisfied pursuant to this Agreement, the Stock
Power, the Custody Agreement, and the Power of
Attorney at or prior to the Closing Date, and will
advise his, her or its Attorney-in-Fact prior to the
Closing Date or Option Closing Date, if any, as
applicable, if any statement to be made on behalf of
such Selling Stockholder in the certificates
contemplated by Sections 7(h) and 7(j) hereof would
be inaccurate if made as of such Closing Date.
6. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the
Closing Date and the Option Closing Date (to the extent not paid at the Closing
Date) all expenses and fees (other
- 21 -
than fees of Underwriters' Counsel, except as provided in (iv) below) incident
to the performance of the obligations of the Company under this Agreement and
the Representatives' Warrant Agreement, including, without limitation, (i) the
fees and expenses of accountants and counsel for the Company, (ii) all costs and
expenses incurred in connection with the preparation, duplication, printing,
(including mailing and handling charges) filing, delivery and mailing (including
the payment of postage with respect thereto) of the Registration Statement and
the Prospectus and any amendments and supplements thereto and the printing,
mailing (including the payment of postage with respect thereto) and delivery of
this Agreement, the Agreement Among Underwriters, the Selected Dealer
Agreements, and related documents, including the cost of all copies thereof and
of the Preliminary Prospectuses and of the Prospectus and any amendments thereof
or supplements thereto supplied to the Underwriters and such dealers as the
Underwriters may request, in quantities as hereinabove stated, (iii) the
printing, engraving, issuance and delivery of the Securities including, but not
limited to, (x) the purchase by the Underwriters of the Shares and the purchase
by the Representatives of the Representatives' Warrants from the Company, (y)
the consummation by the Company of any of its obligations under this Agreement
and the Representatives' Warrant Agreement, and (z) resale of the Shares by the
Underwriters in connection with the distribution contemplated hereby, (iv) the
qualification of the Securities under state or foreign securities or "Blue Sky"
laws and determination of the status of such securities under legal investment
laws, including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum," the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and disbursements and fees of counsel in connection therewith
(such fees not to exceed $50,000), (v) costs and expenses in connection with due
diligence investigations, including but not limited to the fees of any
independent counsel or consultant retained, (vi) fees and expenses of the
transfer agent and registrar, (vii) applications for assignments of a rating of
the Securities by qualified rating agencies, (viii) the fees payable to the
Commission and the NASD, and (ix) the fees and expenses incurred in connection
with the quotation of the Securities on Nasdaq, the PE and any other exchange.
(b) If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 7 or Section 13, the
Company shall reimburse and indemnify the Representatives for all of their
actual out-of-pocket expenses, including the fees and disbursements of
Underwriters' Counsel, less any amounts already paid pursuant to Section 6(c)
hereof.
(c) The Company further agrees that, in addition to
the expenses payable pursuant to subsection (a) of this Section 6, it will pay
to the Representatives on the Closing Date by certified or bank cashier's check
or, at the election of the Representatives, by deduction from the proceeds of
the offering contemplated herein a non-accountable expense allowance equal to
two and one-half percent (2.5%) of the gross proceeds received by the Company
from the sale of the Firm Shares, all of which shall be paid upon the Closing
Date. In the event the Representatives elect to exercise the over-allotment
option described in Section 2(b) hereof, the Selling Stockholders agree to pay
to the Representatives on the Option Closing Date (by certified or bank
cashier's check or, at the Representatives' election, by deduction from the
proceeds of the Option Shares) a non-accountable expense allowance equal to two
and one-half percent (2.5%) of the gross proceeds received by the Selling
Stockholders from the sale of the Option Shares.
- 22 -
7. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters hereunder shall be subject to the continuing
accuracy of the representations and warranties of the Company and the Selling
Stockholders herein as of the date hereof and as of the Closing Date and each
Option Closing Date, if any, with respect to the Company and the Selling
Stockholders, as the case may be, as if they had been made on and as of the
Closing Date or each Option Closing Date, as the case may be; the accuracy on
and as of the Closing Date or Option Closing Date, if any, of the statements of
the officers of the Company and of the Selling Stockholders made pursuant to the
provisions hereof; and the performance by the Company and the Selling
Stockholders on and as of the Closing Date and each Option Closing Date, if any,
of their respective covenants and obligations hereunder and to the following
further conditions:
(a) The Registration Statement shall have become
effective not later than 12:00 Noon, New York time, on the date of this
Agreement or such later date and time as shall be consented to in writing by the
Representatives, and, at the Closing Date and each Option Closing Date, if any,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or shall be pending or contemplated by the Commission and any request on the
part of the Commission for additional information shall have been complied with
to the reasonable satisfaction of Underwriters' Counsel. If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, the price of the
Shares and any price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been transmitted to
the Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to the Closing Date the Company
shall have provided evidence satisfactory to the Representatives of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Rules and Regulations.
(b) The Representatives shall not have advised the
Company that the Registration Statement, or any amendment thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material, or
omits to state a fact which, in the Representatives' opinion, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material, or
omits to state a fact which, in the Representatives' opinion, is material and is
required to be stated therein or is necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the
Representatives shall have received from Underwriters' Counsel, such opinion or
opinions with respect to the organization of the Company, the validity of the
Securities, the Representatives' Warrants, the Registration Statement, the
Prospectus and other related matters as the Representatives may request and
Underwriters' Counsel shall have received such papers and information as they
request to enable them to pass upon such matters.
(d) At Closing Date, the Underwriters shall have
received the favorable opinion of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, counsel to the
Company, dated the Closing Date,
- 23 -
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
i) the Company (A) has been duly organized and is
validly existing as a corporation in good standing under the
laws of its jurisdiction, (B) is duly qualified and licensed
and in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such
qualification or licensing, and (C) has all requisite
corporate power and authority; and the Company has obtained
any and all necessary authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies (including,
without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its
properties and conduct its business as described in the
Prospectus; the Company is and has been doing business in
material compliance with all such authorizations, approvals,
orders, licenses, certificates, franchises and permits and all
federal, state and local laws, rules and regulations; the
Company has not received any notice of proceedings relating to
the revocation or modification of any such authorization,
approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially
adversely affect the business, operations, condition,
financial or otherwise, or the earnings, business affairs,
position, prospects, value, operation, properties, business or
results of operations of the Company. The disclosures in the
Registration Statement concerning the effects of federal,
state and local laws, rules and regulations on the Company's
business as currently conducted and as contemplated are
correct in all material respects and do not omit to state a
fact necessary to make the statements contained therein not
misleading in light of the circumstances in which they were
made;
ii) to the best of such counsel's knowledge, the
Company does not own an interest in any other corporation,
partnership, joint venture, trust or other business entity;
iii) the Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and
any amendment or supplement thereto, under "Capitalization"
and "Description of Capital Stock," and the Company is not a
party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock,
rights, warrants, options or other securities, except for this
Agreement, the Representatives' Warrant Agreement and as
described in the Prospectus. The Securities, and all other
securities issued or issuable by the Company conform in all
material respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus.
All issued and outstanding securities of the Company have been
duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of
rescission with respect thereto, and are not subject to
personal liability by reason of being such holders; and none
of such securities were issued in violation of the preemptive
rights of any holders of any security
- 24 -
of the Company. The Shares, the Representatives' Warrants and
the Representatives' Shares to be sold by the Company
hereunder and under the Representatives' Warrant Agreement are
not and will not be subject to any preemptive or other similar
rights of any stockholder, have been duly authorized and, when
issued, paid for and delivered in accordance with the terms
hereof, will be validly issued, fully paid and non-assessable
and conform to the description thereof contained in the
Prospectus; the holders thereof will not be subject to any
liability solely as such holders; all corporate action
required to be taken for the authorization, issue and sale of
the Shares, the Representatives' Warrants and the
Representatives' Shares has been duly and validly taken; and
the certificates representing the Shares and the
Representatives' Warrants are in due and proper form. The
Representatives' Warrants constitute valid and binding
obligations of the Company to issue and sell, upon exercise
thereof and payment therefor, the number and type of
securities of the Company called for thereby. Upon the
issuance and delivery pursuant to this Agreement and the
Representatives' Warrant Agreement of the Shares and the
Representatives' Warrants, respectively, to be sold by the
Company, the Underwriters and the Representative,
respectively, will acquire good and marketable title to such
Securities free and clear of any pledge, lien, charge, claim,
encumbrance, pledge, security interest, or other restriction
or equity of any kind whatsoever. No transfer tax is payable
by or on behalf of the Underwriters in connection with (A) the
issuance by the Company of the Shares, (B) the purchase by the
Underwriters and the Representatives of the Shares and the
Representatives' Warrants, respectively, from the Company, (C)
the consummation by the Company of any of its obligations
under this Agreement or the Representatives' Warrant
Agreement, or (D) resales of the Shares in connection with the
distribution contemplated hereby;
iv) the Registration Statement is effective under the
Act, and, if applicable, filing of all pricing information has
been timely made in the appropriate form under Rule 430A, and
no stop order suspending the use of the Preliminary
Prospectus, the Registration Statement or Prospectus or any
part of any thereof or suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or, to the
best of such counsel's knowledge, threatened or contemplated
under the Act;
v) each of the Preliminary Prospectus, the
Registration Statement, and the Prospectus and any amendments
or supplements thereto (other than the financial statements
and other financial and statistical data included therein, as
to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the
Rules and Regulations;
vi) to the best of such counsel's knowledge, (A)
there are no agreements, contracts or other documents required
by the Act to be described in the Registration Statement and
the Prospectus and filed as exhibits to the Registration
Statement other than those described in the Registration
Statement (or required
- 25 -
to be filed under the Exchange Act if upon such filing they
would be incorporated, in whole or in part, by reference
therein) and the Prospectus and filed as exhibits thereto, and
the exhibits which have been filed are correct copies of the
documents of which they purport to be copies; (B) the
descriptions in the Registration Statement and the Prospectus
and any supplement or amendment thereto of contracts and other
documents to which the Company is a party or by which it is
bound, including any document to which the Company is a party
or by which it is bound, incorporated by reference into the
Prospectus and any supplement or amendment thereto, are
accurate in all material respects and fairly represent the
information required to be shown by Form SB-2; (C) there is
not pending or threatened against the Company any action,
arbitration, suit, proceeding, inquiry, investigation,
litigation, governmental or other proceeding (including,
without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign,
pending or threatened against (or circumstances that may give
rise to the same), or involving the properties or business of
the Company which (x) is required to be disclosed in the
Registration Statement which is not so disclosed (and such
proceedings as are summarized in the Registration Statement
are accurately summarized in all material respects), (y)
questions the validity of the capital stock of the Company or
this Agreement or the Representatives' Warrant Agreement, or
of any action taken or to be taken by the Company pursuant to
or in connection with any of the foregoing; (D) no statute or
regulation or legal or governmental proceeding required to be
described in the Prospectus is not described as required; and
(E) there is no action, suit or proceeding pending, or
threatened, against or affecting the Company before any court
or arbitrator or governmental body, agency or official (or any
basis thereof known to such counsel) in which there is a
reasonable possibility of an adverse decision which may result
in a material adverse change in the condition, financial or
otherwise, or the earnings, position, prospects, stockholders'
equity, value, operation, properties, business or results of
operations of the Company, which could adversely affect the
present or prospective ability of the Company to perform its
obligations under this Agreement or the Representatives'
Warrant Agreement or which in any manner draws into question
the validity or enforceability of this Agreement or the
Representatives' Warrant Agreement;
vii) the Company has full legal right, power and
authority to enter into each of this Agreement and the
Representatives' Warrant Agreement, and to consummate the
transactions provided for herein and therein; and each of this
Agreement and the Representatives' Warrant Agreement have been
duly authorized, executed and delivered by the Company. Each
of this Agreement and the Representatives' Warrant Agreement,
assuming due authorization, execution and delivery by each
other party thereto constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms (except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any
action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law), and none of
the
- 26 -
Company's execution or delivery of this Agreement and the
Representatives' Warrant Agreement, its performance hereunder
or thereunder, its consummation of the transactions
contemplated herein or therein, or the conduct of its business
as described in the Registration Statement, the Prospectus,
and any amendments or supplements thereto, the Prospectus and
any amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or
violation of any of the terms or provisions of, or constitutes
or will constitute a default under, or result in the creation
or imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of
any kind whatsoever upon, any property or assets (tangible or
intangible) of the Company pursuant to the terms of, (A) the
certificate of incorporation or by-laws of the Company, (B)
any license, contract, indenture, mortgage, deed of trust,
voting trust agreement, stockholders agreement, note, loan or
credit agreement or any other agreement or instrument to which
the Company is a party or by which it is or may be bound or to
which any of its respective properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, or (C)
any statute, judgment, decree, order, rule or regulation
applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or
body (including, without limitation, those having jurisdiction
over environmental or similar matters), domestic or foreign,
having jurisdiction over the Company or any of its activities
or properties;
viii) except as described in the Prospectus, no
consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other
body (other than such as may be required under Blue Sky laws,
as to which no opinion need be rendered) is required in
connection with the issuance of the Shares pursuant to the
Prospectus, the issuance of the Representatives' Warrants, and
the Registration Statement, the performance of this Agreement
and the Representatives' Warrant Agreement, and the
transactions contemplated hereby and thereby;
ix) the properties and business of the Company
conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus;
and the Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and
personal property stated in the Prospectus to be owned or
leased by it, in each case free and clear of all liens,
charges, claims, encumbrances, pledges, security interests,
defects or other restrictions or equities of any kind
whatsoever, other than those referred to in the Prospectus and
liens for taxes not yet due and payable;
x) to the best knowledge of such counsel, the Company
is not in breach of, or in default under, any term or
provision of any license, contract, indenture, mortgage,
installment sale agreement, deed of trust, lease, voting trust
agreement, stockholders' agreement, partnership agreement,
note, loan or credit agreement or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is a party
or by which the Company may be bound or to which the property
or assets
- 27 -
(tangible or intangible) of the Company is subject or
affected; and the Company is not in violation of any term or
provision of its certificate of incorporation by-laws, or in
violation of any franchise, license, permit, judgment, decree,
order, statute, rule or regulation;
xi) the statements in the Prospectus under
"BUSINESS," "MANAGEMENT," "PRINCIPAL STOCKHOLDERS," "CERTAIN
TRANSACTIONS," "DESCRIPTION OF CAPITAL STOCK," and "SHARES
ELIGIBLE FOR FUTURE SALE" have been reviewed by such counsel,
and insofar as they refer to statements of law, descriptions
of statutes, licenses, rules or regulations or legal
conclusions, are correct in all material respects;
xii) the Shares have been accepted for quotation on
Nasdaq and the PE;
xiii) the persons listed under the caption "PRINCIPAL
STOCKHOLDERS" in the Prospectus are the respective "beneficial
owners" (as such phrase is defined in regulation 13d-3 under
the Exchange Act) of the securities set forth opposite their
respective names thereunder as and to the extent set forth
therein;
xiv) except as described in the Prospectus, no
person, corporation, trust, partnership, association or other
entity has the right to include and/or register any securities
of the Company in the Registration Statement, require the
Company to file any registration statement or, if filed, to
include any security in such registration statement;
xv) except as described in the Prospectus, there are
no claims, payments, issuances, arrangements or understandings
for services in the nature of a finder's or origination fee
with respect to the sale of the Securities hereunder or
financial consulting arrangement or any other arrangements,
agreements, understandings, payments or issuances that may
affect the Underwriters' compensation, as determined by the
NASD;
xvi) assuming due execution by the parties thereto
other than the Company, the Lock-up Agreements are legal,
valid and binding obligations of parties thereto, enforceable
against the party and any subsequent holder of the securities
subject thereto in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles
in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law);
xvii) except as described in the Prospectus, the
Company does not (A) maintain, sponsor or contribute to any
ERISA Plans, (B) maintain or contribute, now or at any time
previously, to a defined benefit plan, as defined in Section
- 28 -
3(35) of ERISA, and (C) has never completely or partially
withdrawn from a "multiemployer plan";
xviii) neither the execution of the Combination
Transaction Documents nor the consummation of the transactions
contemplated thereby, nor the consummation of any other of the
transactions contemplated herein or therein by the Limited
Partnerships, nor the fulfillment of the terms hereof or
thereof by the Limited Partnerships, will conflict with,
result in a breach of, or constitute a default under the
respective articles of incorporation or by-laws of any of the
Limited Partnerships or the terms of any other agreement or
instrument to which any of the Limited Partnerships or any of
their respective subsidiaries is a party or by which any of
their prospective properties are bound or affected, or any
order, regulation or judgement applicable to any of the
Limited Partnerships or any of their respective subsidiaries
of any court regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over any
of the Limited Partnerships or any of their prospective
subsidiaries; and
xiv) the Combination Transaction Documents (i) have
been duly authorized, executed and delivered by the Limited
Partnerships and constitute valid and binding obligations of
the Limited Partnerships enforceable in accordance with their
respective terms and (ii) effectively convey from the Limited
Partnerships to the Company all right, title and interest to
the business of the Limited Partnerships as described in the
Prospectus.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement, the Prospectus, and related matters were discussed and,
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which lead
them to believe that either the Registration Statement or any amendment thereto,
at the time such Registration Statement or amendment became effective or the
Preliminary Prospectus or Prospectus or amendment or supplement thereto as of
the date of such opinion contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (it being understood that such
counsel need express no opinion with respect to the financial statements and
schedules and other financial and statistical data included in the Preliminary
Prospectus, the Registration Statement or Prospectus).
Such opinion shall not state that it is to be governed or
qualified by, or that it is otherwise subject to, any treatise, written policy
or other document relating to legal opinions, including, without limitation, the
Legal Opinion Accord of the ABA Section of Business Law (1991), or any
comparable State bar accord.
- 29 -
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance satisfactory to Underwriters'
Counsel) of other counsel acceptable to Underwriters' Counsel, familiar with the
applicable laws; (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company, and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and that the
Representatives and they are justified in relying thereon. Such opinion shall
also state that Underwriters' counsel is entitled to rely thereon.
At each Option Closing Date, if any, the Underwriters shall
have received the favorable opinion of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, counsel to
the Company, dated the Option Closing Date, addressed to the Underwriters and in
form and substance satisfactory to Underwriters' Counsel confirming as of Option
Closing Date the statements made by Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, in its
opinion delivered on the Closing Date.
(e) On the Closing Date, the Underwriters shall have
received the favorable opinion of Sonnenschein, Nath & Xxxxxxxxx, in its
capacity as counsel for the Selling Shareholders, dated the Closing Date,
addressed to the Underwriters, in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
i) Each Selling Stockholder has full legal
right, power and authority to enter into this Agreement and to
sell, assign, transfer and deliver in the manner provided
herein the Selling Stockholders' Shares sold by such Selling
Stockholder; this Agreement has been duly authorized, executed
and delivered by such Selling Stockholder; and this Agreement,
assuming due authorization, execution and delivery by each
other party hereto and further assuming it is a valid and
binding agreement of the Underwriters, is a valid and legally
binding agreement of such Selling Stockholder, enforceable
against such Selling Stockholder in accordance with its terms
(except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally and by
general principles of equity relating to the availability of
remedies and except its rights to indemnity and contribution
may be limited by applicable law);
ii) None of the execution, delivery or
performance of this Agreement, the Stock Power, the Power of
Attorney, and the Custody Agreement by such Selling
Stockholder and the consummation by such Selling Stockholder
of the transactions herein and therein contemplated, to the
best of such counsel's knowledge, conflict with or result in a
breach of, or default under, any indenture, mortgage, deed of
trust, voting trust agreement, stockholders agreement, note
agreement or other agreement or other instrument to which such
Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which
- 30 -
any of the property of such Selling Stockholders is subject,
or the charter or by-laws of any such Selling Stockholders
that is a corporation, and nothing has come to such counsel's
attention which causes such counsel to believe that such
actions will result in any violation of any law, rule,
administrative regulation or court decree applicable to such
Selling Stockholder (other than state securities or blue sky
laws or regulations, as to which counsel need not express any
opinion);
iii) A Stock Power, Power of Attorney, and
the Custody Agreement have been duly authorized, executed and
delivered by each Selling Stockholder and, assuming the due
authorization, execution and delivery of the Custody Agreement
by the other parties thereto, each constitutes the valid and
binding agreement of each Selling Stockholder enforceable in
accordance with its terms (except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally and by general
principles of equity relating to availability of remedies and
except as rights to indemnity or contribution may be limited
by applicable law); and
iv) Upon the delivery of the Selling
Stockholders' Shares to be included in the Selling
Stockholders' Shares and sold hereunder by such Selling
Stockholders and payment therefor in accordance with the terms
of this Agreement, the Underwriters will have acquired all
rights of such Selling Stockholder to the Selling
Stockholders' Shares sold by such Selling Stockholder
hereunder, and in addition will have acquired good and
marketable title to such Selling Stockholders' Shares free and
clear of any adverse claim.
At each Option Closing Date, if any, the Underwriters
shall have received the favorable opinion of each of Sonnenschein, Nath &
Xxxxxxxxx, dated the Option Closing Date, addressed to the Underwriters and in
form and substance satisfactory to Underwriters' Counsel confirming as of Option
Closing Date the respective statements made by each of Sonnenschein, Nath &
Xxxxxxxxx, in their respective opinions delivered on the Closing Date.
(f) On or prior to each of the Closing Date and the
Option Closing Date, if any, Underwriters' Counsel shall have been furnished
such documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 7, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of the Company, or the Selling Stockholders herein contained.
(g) Prior to each of the Closing Date and each Option
Closing Date, if any, (i) there shall have been no material adverse change nor
development involving a prospective change in the condition, financial or
otherwise, prospects, stockholders' equity or the business activities of the
Company, whether or not in the ordinary course of business, from the latest
dates as of which such condition is set forth in the Registration Statement and
Prospectus; (ii) there shall have been no transaction, not in the ordinary
course of business, entered into by the Company, from the latest date as of
which the financial condition of the Company is set forth
- 31 -
in the Registration Statement and Prospectus which is materially adverse to the
Company; (iii) the Company shall not be in default under any provision of any
instrument relating to any outstanding indebtedness; (iv) the Company shall not
have issued any securities (other than the Securities); the Company shall not
have declared or paid any dividend or made any distribution in respect of its
capital stock of any class; and there has not been any change in the capital
stock of the Company, or any material change in the debt (long or short term) or
liabilities or obligations of the Company (contingent or otherwise); (v) no
material amount of the assets of the Company shall have been pledged or
mortgaged, except as set forth in the Registration Statement and Prospectus;
(vi) no action, suit or proceeding, at law or in equity, shall have been pending
or threatened (or circumstances giving rise to same) against the Company, or
affecting any of its properties or business before or by any court or federal,
state or foreign commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may adversely affect the business,
operations, prospects or financial condition or income of the Company, except as
set forth in the Registration Statement and Prospectus; and (vii) no stop order
shall have been issued under the Act and no proceedings therefor shall have been
initiated, threatened or contemplated by the Commission.
(h) At each of the Closing Date and each Option
Closing Date, if any, the Underwriters shall have received a certificate of the
Company signed by the principal executive officer and by the chief financial or
chief accounting officer of the Company, dated the Closing Date or Option
Closing Date, as the case may be, to the effect that each of such persons has
carefully examined the Registration Statement, the Prospectus and this
Agreement, and that:
i) The representations and warranties of the Company
in this Agreement are true and correct, as if made on and as
of the Closing Date or the Option Closing Date, as the case
may be, and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior
to such Closing Date or Option Closing Date, as the case may
be;
ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued,
and no proceedings for that purpose have been instituted or
are pending or, to the best of each of such person's
knowledge, after due inquiry are contemplated or threatened
under the Act;
iii) The Registration Statement and the Prospectus
and, if any, each amendment and each supplement thereto,
contain all statements and information required to be included
therein, and none of the Registration Statement, the
Prospectus nor any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading and neither the
Preliminary Prospectus nor any supplement thereto included 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, in light of the circumstances
under which they were made, not misleading; and
- 32 -
iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (a) the Company has not incurred up to and
including the Closing Date or the Option Closing Date, as the
case may be, other than in the ordinary course of its
business, any material liabilities or obligations, direct or
contingent; (b) the Company has not paid or declared any
dividends or other distributions on its capital stock; (c) the
Company has not entered into any transactions not in the
ordinary course of business; (d) there has not been any change
in the capital stock of the Company or any material change in
the debt (long or short-term) of the Company; (e) the Company
has not sustained any material loss or damage to its property
or assets, whether or not insured; (g) there is no litigation
which is pending or threatened (or circumstances giving rise
to same) against the Company, or any affiliated party of any
of the foregoing which is required to be set forth in an
amended or supplemented Prospectus which has not been set
forth; and (h) there has occurred no event required to be set
forth in an amended or supplemented Prospectus which has not
been set forth.
References to the Registration Statement and the Prospectus in this subsection
(h) are to such documents as amended and supplemented at the date of such
certificate.
(i) On the Closing Date, the Underwriters shall have
received a certificate dated the Closing Date, from each Selling Stockholder
(which may be signed by the Attorney-in- Fact) to the effect that each such
Selling Stockholder has carefully examined the Registration Statement and the
Prospectuses and this Agreement, and that:
i) The representations and warranties of such Selling
Stockholder in this Agreement are true and correct, as if made
at and as of the Closing Date, and such Selling Stockholder
has complied with all the agreements and satisfied all the
conditions to be performed or satisfied by such Selling
Stockholder at or prior to the Closing date; and
ii) The Registration Statement and Prospectuses and,
if any, each amendment and each supplement thereto, contain
all statements required to such Selling Stockholder's
knowledge to be included therein regarding such Selling
Stockholder, and none of the Registration Statement nor any
amendment thereto includes any untrue statement of a material
fact regarding such Selling Stockholder or omits to state any
material fact regarding such Selling Stockholder required to
such Selling Stockholder's knowledge to be stated therein or
necessary to make the statements therein regarding such
Selling Stockholder not misleading, and no Prospectus (an any
supplements thereto) or any Preliminary Prospectus includes or
included any untrue statement of a material fact regarding
such Selling Stockholder or omits or omitted to state a
material fact regarding such Selling Stockholder required to
such Selling Stockholder's knowledge to be stated therein or
necessary in order to make the statements therein regarding
such Selling Stockholder, in light of the circumstances under
which they are made, not misleading.
- 33 -
(j) By the Closing Date, the Underwriters will have
received clearance from the NASD as to the amount of compensation allowable or
payable to the Underwriters, as described in the Registration Statement.
(k) At the time this Agreement is executed, the
Underwriters shall have received a letter, dated such date, addressed to the
Underwriters in form and substance satisfactory (including the non-material
nature of the changes or decreases, if any, referred to in clause (iii) below)
in all respects to the Underwriters and Underwriters' Counsel, from Deloitte &
Touche LLP;
i) confirming that they are independent certified
public accountants with respect to the Company within the
meaning of the Act and the applicable Rules and Regulations;
ii) stating that it is their opinion that the
financial statements and supporting schedules of the Company
included in the Registration Statement comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations
thereunder and that the Representatives may rely upon the
opinion of Deloitte & Touche LLP with respect to such
financial statements and supporting schedules included in the
Registration Statement;
iii) stating that, on the basis of a limited review
which included a reading of the latest available unaudited
interim financial statements of the Company, a reading of the
latest available minutes of the stockholders and board of
directors and the various committees of the boards of
directors of the Company, consultations with officers and
other employees of the Company responsible for financial and
accounting matters and other specified procedures and
inquiries, nothing has come to their attention which would
lead them to believe that (A) the pro forma financial
information contained in the Registration Statement and
Prospectus does not comply as to form in all material respects
with the applicable accounting requirements of the Act and the
Rules and Regulations or is not fairly presented in conformity
with generally accepted accounting principles applied on a
basis consistent with that of the audited financial statements
of the Company or the unaudited pro forma financial
information included in the Registration Statement, (B) the
unaudited financial statements and supporting schedules of the
Company included in the Registration Statement do not comply
as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and
Regulations or are not fairly presented in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements of the Company included in the Registration
Statement, or (C) at a specified date not more than five (5)
days prior to the effective date of the Registration
Statement, there has been any change in the capital stock of
the Company, any change in the long-term debt of the Company,
or any decrease in the stockholders' equity of the Company or
any decrease in the net current assets or net assets of the
Company as compared with amounts shown in the June 30, 1997
balance sheets included in the Registration Statement, other
- 34 -
than as set forth in or contemplated by the Registration
Statement, or, if there was any change or decrease, setting
forth the amount of such change or decrease, and (D) during
the period from June 30, 1997 to a specified date not more
than five (5) days prior to the effective date of the
Registration Statement, there was any decrease in net revenues
or net earnings of the Company or increase in net earnings per
common share of the Company, in each case as compared with the
corresponding period beginning June 30, 1996 other than as set
forth in or contemplated by the Registration Statement, or, if
there was any such decrease, setting forth the amount of such
decrease;
iv) setting forth, at a date not later than five (5)
days prior to the date of the Registration Statement, the
amount of liabilities of the Company (including a break-down
of commercial paper and notes payable to banks);
v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and
earnings, statements and other financial information
pertaining to the Company set forth in the Prospectus in each
case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general
accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of
specified readings, inquiries and other appropriate procedures
(which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set
forth in the letter and found them to be in agreement; and
vi) statements as to such other matters incident to
the transaction contemplated hereby as the Representatives may
request.
(l) At the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received from Deloitte & Touche LLP a letter, dated
as of the Closing Date or the Option Closing Date, as the case may be, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (k) of this Section hereof except that the specified date referred
to shall be a date not more than five days prior to the Closing Date or the
Option Closing Date, as the case may be, and, if the Company has elected to rely
on Rule 430A of the Rules and Regulations, to the further effect that they have
carried out procedures as specified in clause (v) of subsection (k) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Representatives and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (v).
(m) The Company shall have delivered to the
Representatives a letter from Deloitte & Touche LLP addressed to the Company
stating that they have not during the immediately preceding two year period
brought to the attention of the Company's management any "weakness" as defined
in Statement of Auditing Standards No. 60 "Communication of Internal Control
Structure Related Matters Noted in an Audit," in any of the Company's internal
controls.
- 35 -
(n) On each of the Closing Date and Option Closing
Date, if any, there shall have been duly tendered to the Representatives for the
several Underwriters' accounts the appropriate number of Shares.
(o) No order suspending the sale of the Securities in
any jurisdiction designated by the Representatives pursuant to subsection (A)(v)
of Section 5 hereof shall have been issued on either the Closing Date or the
Option Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(p) On or before the Closing Date, the Company shall
have executed and delivered to the Representatives, (i) the Representatives'
Warrant Agreement substantially in the form filed as Exhibit 4.3 to the
Registration Statement in final form and substance satisfactory to the
Representatives, and (ii) the Representatives' Warrants in such denominations
and to such designees as shall have been provided to the Company.
(q) On or before the Closing Date, the Shares shall
have been duly approved for quotation on Nasdaq and the PE subject to official
notice of issuance.
(r) On or before the Closing Date, there shall have
been delivered to the Representatives all of the Lock-Up Agreements, in form and
substance satisfactory to Underwriters' Counsel.
(s) On or before the Closing Date, the Company shall
have effected the Combination Transaction as described in the Prospectus.
If any condition to the Underwriters' obligations hereunder to
be fulfilled prior to or at the Closing Date or the relevant Option Closing
Date, as the case may be, is not so fulfilled, the Representatives may terminate
this Agreement or, if the Representatives so elect, it may waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
8. Indemnification.
(a) The Company and the Selling Stockholders, agree to
indemnify and hold harmless each of the Underwriters (for purposes of this
Section 8 "Underwriter" shall include the officers, directors, partners,
employees, agents and counsel of the Underwriter, including specifically each
person who may be substituted for an Underwriter as provided in Section 12
hereof), and each person, if any, who controls the Underwriter ("controlling
person") within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all losses, claims, damages, expenses or
liabilities, joint or several (and actions, proceedings, investigations,
inquiries, and suits in respect thereof), whatsoever (including but not limited
to any and all costs and expenses whatsoever reasonably incurred in
investigating, preparing or defending against such action, proceeding,
investigation, inquiry or suit, commenced or threatened, or any claim
whatsoever), as such are incurred, to which the Underwriter or such controlling
person may become subject under the Act, the Exchange Act or any other statute
or at common law or otherwise or under the laws of foreign countries, arising
out of or based upon (A) any untrue statement or alleged untrue statement of a
material
- 36 -
fact contained (i) in any Preliminary Prospectus, the Registration Statement or
the Prospectus (as from time to time amended and supplemented); (ii) in any
post-effective amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Securities; or (iii) in any application or other document
or written communication (in this Section 8 collectively called "application")
executed by the Company or based upon written information furnished by the
Company filed, delivered or used in any jurisdiction in order to qualify the
Securities under the securities laws thereof or filed with the Commission, any
state securities commission or agency, Nasdaq, PSE or any other securities
exchange, (B) the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading (in the case of the Prospectus, in the light of the circumstances
under which they were made), or (C) any breach of any representation, warranty,
covenant or agreement of the Company contained herein or in any certificate by
or on behalf of the Company or any of its officers delivered pursuant hereto
unless, in the case of clause (A) or (B) above, such statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company with respect to any Underwriter by or on behalf of such Underwriter
expressly for use in any Preliminary Prospectus, the Registration Statement or
any Prospectus, or any amendment thereof or supplement thereto, or in any
application, as the case may be.
The liability of each Selling Stockholder under this paragraph
shall be limited to the proportion thereof which the number of shares of Common
Stock sold by such Selling Stockholder bears to all shares of Common Stock
purchased by the Underwriters, but in no event shall such Selling Stockholder be
liable under this paragraph for an amount exceeding the aggregate purchase price
received by such Selling Stockholder from the Underwriters for the shares of
Common Stock sold by such Selling Stockholder hereunder. Neither Selling
Stockholder will be liable to the Underwriters or any person controlling the
Underwriters with respect to (i) any untrue statement or omission or alleged
untrue statement or omission made by the Company or by any other Selling
Stockholder or (ii) any breach of any representation, warranty, covenant or
agreement of the Company.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company or the Selling Stockholder may have
at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the Registration Statement, and each other
person, if any, who controls the Company within the meaning of the Act, and each
Selling Stockholder to the same extent as the foregoing indemnity from the
Company to the Underwriters but only with respect to statements or omissions, if
any, made in any Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or in any application
made in reliance upon, and in strict conformity with, written information
furnished to the Company with respect to any Underwriter by such Underwriter
expressly for use in such Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or in any such
application, provided that such written information or omissions only pertain to
disclosures in the Preliminary Prospectus, the Registration Statement or
Prospectus directly relating to the transactions effected by the Underwriters in
connection with this Offering. The Company and each Selling Stockholder
acknowledges that the statements with respect to the public offering of
- 37 -
the Securities set forth under the heading "Underwriting" and the stabilization
legend in the Prospectus have been furnished by the Underwriters expressly for
use therein and constitute the only information furnished in writing by or on
behalf of the Underwriters for inclusion in the Prospectus.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which the Underwriters may have at common law or
otherwise.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action, suit or
proceeding, such indemnified party shall, if a claim in respect thereof is to be
made against one or more indemnifying parties under this Section 8, notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this Section 8 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may have otherwise). In case any such
action, investigation, inquiry, suit or proceeding is brought against any
indemnified party, and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties will be entitled to
participate therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action at the expense of the indemnifying
party, (ii) the indemnifying parties shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action, investigation, inquiry, suit or proceeding on behalf of
the indemnified party or parties), in any of which events such fees and expenses
of one additional counsel shall be borne by the indemnifying parties. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action,
investigation, inquiry, suit or proceeding or separate but similar or related
actions, investigations, inquiries, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 8 to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was not
unreasonably withheld. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action,
investigation, inquiry, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party form all liability arising out of such claim, action, suit or
proceeding
- 38 -
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 8, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Section 8 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions, investigations, inquiries, suits or proceedings in respect thereof) (A)
in such proportion as is appropriate to reflect the relative benefits received
by each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the Securities or (B) if the
allocation provided by clause (A) 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 each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is a contributing party
and the Underwriters are the indemnified party, the relative benefits received
by the Company and/or the Selling Stockholders on the one hand, and the
Underwriters, on the other, shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities (before deducting
expenses) bear to the total underwriting discounts received by the Underwriters
hereunder, in each case as set forth in the table on the Cover Page of the
Prospectus. 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 Selling Stockholders or by the Underwriters, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
expenses or liabilities (or actions, investigations, inquiries, suits or
proceedings in respect thereof) referred to above in this subdivision (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action,
claim, investigation, inquiry, suit or proceeding. Notwithstanding the
provisions of this subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by the Underwriters hereunder. 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. For purposes of this Section 8, each person, if
any, who controls the Company within the meaning of the Act, each officer of the
Company who has signed the Registration Statement, and each director and each
Selling Stockholder of the Company shall have the same rights to contribution as
the Company, subject in each case to this subparagraph (d). Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit, inquiry, investigation or proceeding against such party in respect
to which a claim for contribution may be made against another party or parties
under this subparagraph (d), notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties shall
- 39 -
not relieve the party or parties from whom contribution may be sought from any
obligation it or they may have hereunder or otherwise than under this
subparagraph (d), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may have at common
law or otherwise.
9. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company or of any Selling
Stockholder submitted pursuant hereto, shall be deemed to be representations,
warranties and agreements at the Closing Date and the Option Closing Date, as
the case may be, and such representations, warranties and agreements of the
Company and the Selling Stockholders, as the case may be, and their respective
indemnity agreements contained in Section 8 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
any Underwriter, the Company, any Selling Stockholder, any controlling person of
any Underwriter, or the Company or any Selling Stockholder, and shall survive
termination of this Agreement or the issuance, sale and delivery of the
Securities to the Underwriters and the Representatives, as the case may be.
10. Effective Date.
(a) This Agreement shall become effective at 10:00
a.m., New York City time, on the next full business day following the date
hereof, or at such earlier time after the Registration Statement becomes
effective as the Representatives, in their discretion, shall release the Shares
for sale to the public; provided, however, that the provisions of Sections 6, 8
and 11 of this Agreement shall at all times be effective. For purposes of this
Section 10, the Shares to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Representatives of telegrams to
securities dealers releasing such shares for offering or the release by the
Representatives for publication of the first newspaper advertisement which is
subsequently published relating to the Shares.
11. Termination.
(a) Subject to subsection (b) of this Section 11, the
Representatives shall have the right to terminate this Agreement, after the date
hereof, (i) if any domestic or international event or act or occurrence has
materially disrupted, or in the Representatives's opinion will in the immediate
future materially adversely disrupt the financial markets; or (ii) any material
adverse change in the financial markets shall have occurred; or (iii) if trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Boston Stock Exchange, the
Chicago Board of Trade, the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange, the Commission or any other government authority having
jurisdiction; or (iv) if trading of any of the securities of the Company shall
have been suspended, or any of the securities of the Company shall have been
delisted, on any exchange or in any over-the-counter market; or (v) if the
United States shall have become involved in a war or major hostilities, or if
there shall have been an escalation in an existing war or major hostilities or a
national emergency shall have been declared in the United States; or (vi) if a
banking moratorium has been declared by a state or federal authority;
- 40 -
or (vii) if a moratorium in foreign exchange trading has been declared; or
(viii) if the Company shall have sustained a loss material or substantial to the
Company by fire, flood, accident, hurricane, earthquake, theft, sabotage or
other calamity or malicious act which, whether or not such loss shall have been
insured, will, in the Representatives' opinion, make it inadvisable to proceed
with the delivery of the Securities; or (viii) if there shall have occurred any
outbreak or escalation of hostilities or any calamity or crisis or there shall
have been such a material adverse change in the conditions or prospects of the
Company, or such material adverse change in the general market, political or
economic conditions, in the United States or elsewhere as in the
Representatives' judgment would make it inadvisable to proceed with the
offering, sale and/or delivery of the Securities or (ix) if either Xxxxxx X.
Xxxxxxxxxxx or Xxxxx X. Xxxxxxxxxxx shall no longer serve the Company in his or
her present capacity.
(b) If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 11(a) the Company
shall promptly reimburse and indemnify the Representatives for all of their
actual out-of-pocket expenses, including the fees and disbursements of counsel
for the Underwriters (less amounts, if any, previously paid pursuant to Section
6(c) above). Notwithstanding any contrary provision contained in this Agreement,
if this Agreement shall not be carried out within the time specified herein, or
any extension thereof granted to the Representatives, by reason of any failure
on the part of the Company to perform any undertaking or satisfy any condition
of this Agreement by it to be performed or satisfied (including, without
limitation, pursuant to Section 7 or Section 13) then, the Company shall
promptly reimburse and indemnify the Representatives for all of their actual
out-of-pocket expenses, including the fees and disbursements of counsel for the
Underwriters. In addition, the Company shall remain liable for all Blue Sky
counsel fees (such fees not to exceed $50,000) and expenses and filing fees.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement (including, without limitation,
pursuant to Sections 7, 11, 12 and 13 hereof), and whether or not this Agreement
is otherwise carried out, the provisions of Section 6 and Section 8 shall not be
in any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
12. Substitution of the Underwriters. If one or more of the
Underwriters shall fail (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 6, Section 11 or
Section 13 hereof) to purchase the Securities which it or they are obligated to
purchase on such date under this Agreement (the "Defaulted Securities"), the
Representatives shall have the right, within 24 hours thereafter, to make
arrangement for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not
exceed 10% of the total number of Firm Shares to be purchased
on such date, the non-defaulting Underwriters shall be
obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
- 41 -
(b) if the number of Defaulted Securities exceeds 10%
of the total number of Firm Shares, this Agreement shall
terminate without liability on the part of any non-defaulting
Underwriters.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Representatives shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
13. Default by the Company or any Selling Stockholder. If the
Company or any Selling Stockholders shall fail at the Closing Date or at any
Option Closing Date, as applicable, to sell and deliver the number of Shares
which it is obligated to sell hereunder on such date, then this Agreement shall
terminate (or, if such default shall occur with respect to any Option Shares to
be purchased on an Option Closing Date, the Underwriters may at the
Representatives' option, by notice from the Representatives to the Company,
terminate the Underwriters' obligation to purchase Option Shares from the
Company on such date) without any liability on the part of any non-defaulting
party other than pursuant to Section 6, Section 8 and Section 11 hereof. No
action taken pursuant to this Section shall relieve the Company or any Selling
Stockholder, as the case may be, from liability, if any, in respect of such
default.
14. Notices. All notices and communications hereunder, except
as herein otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representatives c/o Xxxxxxxxxx Xxxx & Xxxx Incorporated, 000 Xxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxx, with a copy to
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxxx X. Xxxxxx, Esq. Notices to the Company shall be directed to
the Company at Snowdance, Inc., Xxxxx 00, Xxxxxxxxxxx, Xxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxxxxx, Chief Executive Officer, with a copy to Xxxxxxxxxxxx Xxxx
& Xxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxxx, Esq. .
15. Parties. This Agreement shall inure solely to the benefit
of and shall be binding upon, the Underwriters, the Company, the Selling
Stockholders and the controlling persons, directors and officers referred to in
Section 8 hereof, and their respective successors, legal representatives and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provisions herein contained. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
16. Construction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the choice of law or conflict of laws principles.
- 42 -
17. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which taken together shall be deemed to be one and the same instrument.
18. Entire Agreement; Amendments. This Agreement and the
Representatives' Warrant Agreement constitute the entire agreement of the
parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Representatives,
the Company and the Selling Stockholders.
If the foregoing correctly sets forth the understanding among
the Underwriters, the Company and the Selling Stockholders, please so indicate
in the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us.
Very truly yours,
SNOWDANCE, INC.
By:
--------------------------------
Xxxxxx X. Xxxxxxxxxxx
Chief Executive Officer
Confirmed and accepted as of
the date first above written.
XXXXXXXXXX XXXX & XXXX INCORPORATED
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By:
------------------------------------------
CRUTTENDEN XXXX INCORPORATED
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By:
------------------------------------------
- 43 -
SELLING STOCKHOLDERS
By:
------------------------------------------
As Attorney-in-Fact for the Selling
Stockholders Named in Schedule B hereto.
- 44 -
SCHEDULE A
================================================================================
Number of Firm Shares
Name of Underwriters to be Purchased
-------------------- ---------------------
--------------------------------------------------------------------------------
Xxxxxxxxxx Xxxx & Xxxx Incorporated........................
Cruttenden Xxxx Incorporated...............................
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total................................................. 1,000,000
=========
================================================================================
- 45 -
SCHEDULE B
================================================================================
Number of Firm Shares
Name of Selling Stockholder to be Purchased
-------------------- ---------------------
--------------------------------------------------------------------------------
Skyline Partners, L.P......................................
Xxxxxx X. Xxxxxxxxxxx......................................
Xxxxx X. Xxxxxxxxxxx.......................................
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total................................................. 150,000
=========
================================================================================
- 46 -
