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EXHIBIT 1.1
UNDERWRITING AGREEMENT
______________, 1996
X.X. Xxxxxx & Co., Inc.
as Representative of the Several Underwriters
named in Schedule I hereto
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Gentlemen:
JUBILEE GAMING ENTERPRISES, INC., a Minnesota corporation (the "Company"),
confirms its agreement with X.X. Xxxxxx & Co., Inc. ("Xxxxxx") and each of the
underwriters named in Schedule I hereto (collectively, the "Underwriters,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 9), for whom Xxxxxx is acting as representative (in such
capacity, Xxxxxx shall hereinafter be referred to as "you" or the
"Representative") with respect to the sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of the respective numbers
of units ("Units"), each Unit consisting of one share ("Shares") of the
Company's Common Stock, $___ par value per share ("Common Stock"), and one
redeemable warrant to purchase one additional share of Common Stock each (the
"Redeemable Warrants"), set forth in Schedule II hereto. The Shares and
Redeemable Warrants will be immediately separately tradable following issuance,
and are hereinafter referred to as the "Firm Units" or, after separation, the
"Firm Securities."
Each Redeemable Warrant is exercisable commencing on the date of issuance
and ending five years from the date of the Prospectus, as hereinafter defined,
unless previously redeemed by the Company. Each Redeemable Warrant shall
entitle the holder to purchase one share of Common Stock at an exercise price
(the "Warrant Exercise Price") of $6.50 per share. Commencing ninety (90) days
from the date of the Prospectus, the Redeemable Warrants may be redeemed by the
Company at a redemption price of $.01 per Redeemable Warrant on thirty (30)
days' prior written notice, provided that the average closing bid price of the
Common Stock equals or exceeds, for any twenty (20) consecutive trading days
prior to the notice of redemption, $10.00 (hereinafter the "Notice Price").
Both the Warrant Exercise Price and the Notice Price are subject to adjustment.
Upon your request, as provided in Section 2(b) of this Agreement, the
Company shall also sell to the Underwriters, acting severally and not jointly,
up to an additional 180,000 Units for the purpose of covering over-allotments,
if any. Such 180,000 Units, and the 180,000 Shares and 180,000 Redeemable
Warrants underlying such Units, are hereinafter referred to as the "Option
Units." The Company also proposes to issue and sell to you warrants (the
"Representative's Warrants") pursuant to the Representative's Warrant Agreement
(the "Representative's Warrant Agreement") for the purchase of an additional
120,000 Units. The Units issuable upon exercise of the Representative's
Warrants, and the 120,000 Shares and 120,000 Redeemable Warrants underlying
such Units, are hereinafter referred to as the "Representative's Securities."
The Firm Units, the Option Units, the Representative's Warrants and the
Representative's Securities (collectively, hereinafter referred to as the
"Securities") are more fully described in the Registration Statement and the
Prospectus referred to below.
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1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, each Underwriter
that:
(a) A registration statement (File No.333-______) on Form SB-2 relating to
the public offering of the Securities, including a preliminary form of
prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") promulgated thereunder, and has been
filed with the Commission under the Act. "Preliminary Prospectus" shall mean
each prospectus filed pursuant to Rule 430 of the Rules and Regulations. The
registration statement (including all financial schedules and exhibits) as
amended at the time it becomes effective and the final prospectus included
therein are respectively hereinafter referred to as the "Registration
Statement", and the "Prospectus", except that (i) if the prospectus first filed
by the Company pursuant to Rule 424(b) or Rule 430A of the Rules and
Regulations or otherwise utilized and not required to be so filed shall differ
from said prospectus as then amended, the term "Prospectus" shall mean the
prospectus first filed pursuant to Rule 424(b) or Rule 430A or so utilized from
and after the date on which it shall have been filed or utilized, and (ii) if
such registration statement or prospectus is amended or such prospectus is
supplemented after the effective date of such registration statement and prior
to the Option Closing Date (as defined in Section 2(b)), the term "Registration
Statement" shall include such registration statement as so amended or
supplemented, or both, as the case may be, and the term "Prospectus" shall
include the prospectus as so amended or supplemented, or both, as the case may
be.
(b) At the time the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (as defined herein) and each
Option Closing Date (as defined herein), 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, (i) the Registration Statement and Prospectus
will in all material respects conform to the requirements of the Act and the
Rules and Regulations, and (ii) neither the Registration Statement nor the
Prospectus will include any untrue statement of a material fact or omit to
state any material fact required to be stated therein, in light of the
circumstances in which they were made, or necessary to make the statements
therein not misleading; provided, however, that the Company makes no
representations, warranties or agreements as to information contained in or
omitted from the Registration Statement or Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf
of you or by or on behalf of any Underwriter for use in the preparation
thereof. It is understood that the statements set forth in the Prospectus with
respect to stabilization, the material set forth in the second paragraph under
the heading "Underwriting" and the identity of counsel to the Underwriters
under the heading "Legal Matters" constitute the only information furnished in
writing by you, or by any Underwriter through you, for inclusion in the
Registration Statement and Prospectus, as the case may be.
(c) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Minnesota, with
full power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus and is duly qualified to do
business as a foreign corporation and is in good standing in all other
jurisdictions in which the nature of its business or the character or location
of its properties requires such qualification, except where failure to so
qualify will not materially affect its business, properties or financial
condition.
(d) The authorized capital stock of the Company as of the Effective Date
is set forth under "Capitalization" in the Prospectus. The shares of issued
and outstanding capital stock of the Company set forth thereunder have been
duly authorized, validly issued and are fully paid and non-assessable; except
as set forth in the Prospectus, no options, warrants or other rights
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to purchase, agreements or other obligations to issue, or agreements or other
rights to convert any obligation into, any shares of capital stock of the
Company have been granted or entered into by the Company. The Securities
conform in all material respects to all statements relating thereto contained
in the Registration Statement and Prospectus.
(e) The Securities are duly authorized and, when issued, delivered and
paid for pursuant to this Agreement, will be duly authorized, validly issued,
fully paid and non-assessable and free of preemptive rights of any security
holder of the Company.
(f) This Agreement has been duly and validly authorized, executed and
delivered by the Company and, assuming due execution by the other party or
parties hereto, constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
the rights of creditors generally. The Company has full power and lawful
authority to authorize, issue and sell the Securities to be sold by it
hereunder on the terms and conditions set forth herein, and no consent,
approval, authorization or other order of anyone, including any governmental
authority, is required in connection with the authorization, issuance and sale
of the Securities or the Representative's Warrant, except such as may be
required under the Act or state or corporate securities laws, all of which have
been duly obtained.
(g) The Company is not in violation, breach or default of or under, and
the consummation of the transactions herein contemplated, and the fulfillment
of the terms of this Agreement will not conflict with, or, with or without
giving the notice or the passage of time or both, result in a breach of, any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance pursuant to the terms
of, any indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the property or assets of the Company are
subject, nor will such action result in any violation of the provisions of the
certificate of incorporation or the by-laws of the Company, or any statute or
any order, rule or regulation applicable to the Company of any court or of any
regulatory authority or other governmental body having jurisdiction over the
Company, or any judgment or order of any court or other tribunal by which the
Company may be bound; in each case where the breach or default would have a
material adverse effect on the Company.
(h) Subject to the qualifications stated in the Prospectus, the Company
has good and marketable title to all properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges, encumbrances
or restrictions, or any other rights whatsoever of any other entity or person,
except such as are not materially significant or important in relation to its
business; all of the leases and subleases under which the Company is the lessor
or sublessor of properties or assets or under which the Company holds
properties or assets as lessee or sublessee as described in the Prospectus are
in full force and effect and, except as described in the Prospectus, the
Company is not in default with respect to any of the terms or provisions of any
of such leases or subleases and, except as described in the Prospectus, no
claim has been asserted by anyone adverse to rights of the Company as lessor,
sublessor, lessee or sublessee under any of the leases or subleases to which it
is a party, or affecting or questioning the right of the Company to continued
possession of the leased or subleased premises or assets under any such lease
or sublease except as described or referred to in the Prospectus; and the
Company owns or leases all such properties described in the Prospectus as are
necessary to its operations as now conducted.
(i) Except as set forth in the Prospectus, the Company owns or possesses
adequate rights to use all material patents, patent applications, trademarks,
xxxx registrations, copyrights and licenses necessary for the conduct of its
business and has not received any notice of conflict with the asserted rights
of others in respect thereof. All patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights,
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franchises and other intangible properties and assets (all of the foregoing
being herein called "Intangibles") that the Company owns or has pending, or
under which it is licensed are accurately described in the Prospectus. There
is no right under any Intangible, necessary to the business of the Company as
presently conducted or as the Prospectus indicates it contemplates conducting,
except as accurately described in the Prospectus. Except as set forth in the
Prospectus, to the knowledge of the Company, it has not infringed, is not
infringing, and has not received notice of infringement with respect to,
asserted Intangibles of others, except for such infringement or alleged
infringement that has not had, or cannot be reasonably expected to have, a
material adverse effect on the financial condition, results of operations,
business, properties, assets or future prospects of the Company. Except as
accurately described in the Prospectus, to the knowledge of the Company, there
is no infringement by others of any of the Intangibles of the Company. Except
as accurately described in the Prospectus, to the knowledge of the Company,
there is no Intangible of any other entity or person which has had or may in
the future have a material adverse effect on the financial condition, results
of operations, business, properties, assets or future prospects of the Company.
(j) To the knowledge of the Company, Schecter Dokken Kanter Xxxxxxx &
Xxxxxx, Ltd., who have given their report on certain financial statements filed
and to be filed with the Commission as a part of the Registration Statement,
which are included in the Prospectus, are with respect to the Company
independent public accountants as required by the Act and the Rules and
Regulations.
(k) The financial statements and schedules, together with related notes,
set forth in the Prospectus or the Registration Statement present fairly the
financial position and results of operations and changes in cash flows of the
Company on the basis stated in the Registration Statement, at the respective
dates and for the respective periods to which they apply. Said statements and
schedules and related notes have been prepared in accordance with generally
accepted accounting principles applied on a basis which is consistent during
the periods involved. To the knowledge of the Company, no other financial
statements are required by Form SB-2 or otherwise to be included in the
Registration Statement or the Prospectus. There has at no time been a material
adverse change in the financial condition, results of operations, business,
properties, or assets of the Company from the latest information set forth in
the Registration Statement or the Prospectus, except as properly described in
the Prospectus; and, except as set forth in the Prospectus, there is no fact
known to the Company which could reasonably be expected to have a material and
adverse effect on the future prospects of the Company (other than political or
economic matters of general applicability or as properly described in the
Prospectus).
(l) Except as set forth in the Prospectus, subsequent to the respective
dates as of which information is given in the Registration Statement and
Prospectus, the Company has not incurred any liabilities or obligations, direct
or contingent, not in the ordinary course of business, or entered into any
transaction not in the ordinary course of business, which is material to the
business of the Company, and there has not been any change in the capital stock
of, or any incurrence of long-term debt by, the Company or any issuance of
options (except for the issuance of options pursuant to the Company's 1996
Stock Option Plan), warrants or other rights to purchase the capital stock of
the Company or any adverse change or any development involving, so far as the
Company can now reasonably foresee, a prospective adverse change in its
condition (financial or other), net worth, results of operations, business,
management or properties which would be material to the business or financial
condition of the Company, and the Company has not become party to, and neither
the business nor the property of the Company has become the subject of, any
material litigation whether or not in the ordinary course of business.
(m) Except as set forth in the Prospectus, there is not now pending nor,
to the knowledge of the Company, threatened, any action, suit or proceeding
(including those related to environmental matters, discrimination on the basis
of age, sex, religion or race, or any
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regulatory matters) to which the Company is a party before or by any court or
governmental agency or body, which could result in any material adverse change
in the condition (financial or other), business prospects, net worth or
properties of the Company; and no labor disputes involving the employees of the
Company exist which could be expected to materially adversely affect the
conduct of the business, property or operations or the financial condition or
earnings of the Company.
(n) Except as set forth in the Prospectus, the Company (i) has paid all
federal, state, local and foreign taxes for which it is liable to the extent
such taxes are due and payable, including, but not limited to, withholding
taxes and amounts payable under Chapters 21 through 24 of the Internal Revenue
Code of 1986, as amended (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.
(o) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed
in accordance with management's general or specific authorizations; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(p) Except as set forth in the Prospectus, the Company has sufficient
licenses, permits and other governmental authorizations currently required for
the conduct of its business or the ownership of its property as described in
the Prospectus and is in all material respects complying therewith. To the
best knowledge of the Company, none of the activities or business of the
Company is in violation of, or could cause the Company to violate, any law,
rule, regulation or order of the United States, any state, county or locality,
or of any agency or locality, the violation of which would have a material
adverse impact upon the condition (financial or otherwise), business, property,
prospective results of operations or net worth of the Company.
(q) The Company has not, directly or indirectly, at any time (i) made any
contributions to any candidate for political office, or if made, failed to
disclose fully any such contribution made in violation of law, or (ii) made any
payment to any state, federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments or contributions required or allowed by applicable law. The Company's
internal accounting controls and procedures are sufficient to cause the Company
to comply in all material respects with the Foreign Corrupt Practices Act of
1977, as amended.
(r) On the Closing Dates (as defined in Section 2 (c)), all transfer or
other taxes (including franchise, capital stock or other tax, other than income
taxes imposed by any jurisdiction), if any, which are required to be paid in
connection with the sale and transfer of the Securities to the Underwriters
hereunder will have been fully paid or provided for by the Company and all laws
imposing such taxes will have been fully complied with.
(s) Any contract, agreement, instrument, lease or license required to be
described in the Registration Statement or the Prospectus has been properly
described therein. Any contract, agreement, instrument, lease, or license
required to be filed as an exhibit to the Registration Statement has been filed
with the Commission as an exhibit to the Registration Statement.
(t) The Company has not taken and will not take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected
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to constitute, the stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Securities hereunder.
(u) The Company has no subsidiaries.
(v) Except as described in the Prospectus, there are no claims, payments,
issuances, arrangements or understandings, 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 issuances 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").
(w) Neither the Commission nor, to the knowledge of the Company, the "blue
sky" or securities authority of any jurisdiction has issued an order (a "Stop
Order") suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus, the
Registration Statement, or any amendment or supplement thereto, refusing to
permit the effectiveness of the Registration Statement, or suspending the
registration or qualification of the Securities, nor, to the knowledge of the
Company, has any of such authorities instituted or threatened to institute any
proceedings with respect to a Stop Order.
(x) The Company has all requisite power and authority to execute, deliver,
and perform this Agreement. All necessary corporate proceedings of the Company
have been duly taken to authorize the execution, delivery and performance of
this Agreement by the Company. This Agreement has been duly authorized,
executed and delivered by the Company, is the legal, valid and binding
obligation of the Company, and is enforceable as to the Company in accordance
with its terms (subject to applicable bankruptcy, insolvency and other laws
affecting creditors' rights generally and except as rights to indemnity and
contribution hereunder may be limited by federal or state securities laws and
public policy). No consent, authorization, approval, order, lien, certificate,
or permit of or from, or declaration or filing with, any federal, state, local
or other governmental authority or any court or other tribunal is required for
the execution, delivery, or performance of this Agreement by the Company
(except filings under the Act which have been or will be made before the
Closing Date and such consents consisting only of consents under "blue sky" or
securities laws which have been obtained at or prior to the date of this
Agreement). No consent of any party to any contract, agreement, instrument,
lease, license, arrangement, or understanding to which the Company is a party,
or to which any of its properties or assets are subject, is required for the
execution, delivery or performance or this Agreement; and the execution,
delivery, and performance of this Agreement will not violate, result in a
breach of, conflict with, or (with or without the giving of notice or the
passage of time or both) entitle any party to terminate or call a default under
any such material contract, agreement, instrument, lease, license, arrangement
or understanding, or violate or result in a breach of any term of the articles
of incorporation or by-laws of the Company, or violate, result in a breach of,
or conflict with, any law, rule, regulation, order, judgment, or decree binding
on the Company or to which any of its operations, businesses, properties, or
assets is subject.
(y) The Company has caused to be duly executed agreements ("Lock-up
Agreements") pursuant to which each of the Company's officers, directors and
principal stockholders has agreed not to, directly or indirectly, offer to
sell, sell, grant any option for the sale of, assign, transfer, pledge,
hypothecate or other 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 18 months following the Closing
Date without the prior written consent of the Representative. The Company has
no reason to believe that the Lock-up Agreements are not legally binding upon,
and enforceable against, the respective security holder signatories
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thereto. The Company will cause the Transfer Agent 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.
(z) The Securities have been approved for quotation on the National
Association of Securities Dealers, Inc. Automated Quotation System Small Cap
Market ("NASDAQ"), subject to notice of issuance.
(aa) Except as set forth in the Prospectus, no officer, director,
principal stockholder or partner 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, principal stockholder of the Company, or any partner, affiliate or
associate of any of the foregoing persons or entities required to be set forth
in the Prospectus.
(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 representation and warranty by the Company to the Underwriters as to
the matters covered thereby.
(cc) The minute book of the Company has been made available to the
Underwriters and contains a complete record in all material respects of all
meetings and actions of the directors and stockholders of the Company,
respectively, since the time of its respective incorporation and accurately
reflects all transactions referred to in such minutes 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 in any other
registration statement to be filed by the Company or to require the Company to
file a registration statement under the Act and except as described in the
Registration Statement, no person or entity holds any price protection
anti-dilution rights with respect to any securities of the Company.
(ee) The Company has entered into a warrant agreement substantially in the
form filed as Exhibit 4.1 to the Registration Statement (the "Warrant
Agreement") with Norwest Bank Minnesota, National Association, in form and
substance satisfactory to the Representative, with respect to the Redeemable
Warrants.
2. Purchase, Delivery and Sale of the Units.
(a) Subject to the terms and conditions of this Agreement, and upon the
basis of the representations, warranties and agreements herein contained, the
Company agrees to issue and sell to the Underwriters, and the Underwriters
agree, severally and not jointly, to buy from the Company, at $________ per
Unit at the place and time hereinafter specified, the number of Units set forth
opposite each Underwriter's name in Schedule I hereto (the "Firm Units").
Delivery of the Firm Units against payment therefor shall take place at
the offices of X.X. Xxxxxx & Co., Inc., 0000 Xx. Xxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 (or at such other place as may be designated by agreement between
you and the Company) at 10:00 a.m. New York time on ___________, 1996, or at
such later time and date as you may designate,
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such time and date of payment and delivery for the Firm Units being herein
called the "First Closing Date." Time shall be of the essence and delivery at
the time and place specified in this subsection (a) is a further condition to
the obligations of the Underwriters hereunder.
(b) In addition, subject to the terms and conditions of this Agreement,
and upon the basis of the representations, warranties and agreements herein
contained, the Company hereby grants an option to the Underwriters to purchase
all or any part of an aggregate of 180,000 additional Units at the same price
per Unit as the Underwriters shall pay for the Firm Units being sold pursuant
to the provisions of subsection (a) of this Section 2 (such additional Units
being referred to herein as the "Option Units"). This option may be exercised
within 45 days after the Effective Date upon notice by you to the Company
advising it as to the amount of Option Units as to which the option is being
exercised, the names and denominations in which the certificates for such
Option Units are to be registered and the time and date when such certificates
are to be delivered. Such time and date shall be determined by you but shall
not be earlier than four and not later than ten full business days after the
exercise of said option, nor in any event prior to the First Closing Date, and
such time and date is referred to herein as the "Option Closing Date." Delivery
of the Option Units against payment therefor shall take place at the offices of
X.X. Xxxxxx & Co., Inc., 0000 Xx. Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (or at
such other place as may be designated by agreement between you and the
Company). Time shall be of the essence and delivery at the time and place
specified in this subsection (b) is a further condition to the obligations of
the Underwriters hereunder.
The Option granted hereunder may be exercised only to cover
over-allotments in the sale by the Underwriters of Firm Units referred to in
subsection (a) above.
(c) The Company will make the certificates for the Securities to be
purchased by the Underwriters hereunder available to you for inspection at
least two full business days prior to the First Closing Date or the Option
Closing Date (which are collectively referred to herein as the "Closing Dates"
and individually as a "Closing Date"), as the case may be. The certificates
shall be in such names and denominations as you may request, at least two full
business days prior to the relevant Closing Dates. Time shall be of the
essence and the availability of the certificates at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters.
Definitive certificates in negotiable form for the Securities to be
purchased by the Underwriters hereunder will be delivered by the Company to you
for the several accounts of the Underwriters against payment of the purchase
price by you, for the several accounts of the Underwriters, at your option, by
certified or bank cashier's checks in New York Clearing House funds or by wire
transfer, payable to the order of the Company or up to three designees of the
Company.
In addition, in the event the Underwriters exercise the option to purchase
from the Company all or any portion of the Option Units pursuant to the
provisions of subsection (b) above, payment for such Option Units shall be made
to or upon the order of the Company by you, for the several accounts of the
Underwriters, at your option, by certified or bank cashier's checks payable in
New York Clearing House funds or by wire transfer, at the offices of X.X.
Xxxxxx & Co., Inc. at the time and date of delivery of such Option Shares as
required by the provisions of subsection (b) above, against receipt of the
certificates for such Option Units by you, for the several accounts of the
Underwriters, registered in such names and in such denominations as you may
request.
It is understood that the Underwriters propose to offer the Units to be
purchased hereunder to the public upon the terms and conditions set forth in
the Registration Statement, after the Registration Statement becomes effective.
(d) On the Closing Date, the Company shall issue and sell to the
Representative Representative's Warrants, for an aggregate purchase price of
$5.00, which warrants shall
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entitle the holders thereof to purchase an aggregate of 120,000 Units. The
Representative's Warrants shall be exercisable for a period of four (4) years
commencing one (1) 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 Units. The Representative's Warrant Agreement and form
of Warrant Certificate shall be substantially in the form filed as Exhibit 4.6
to the Registration Statement. Payment for the Representative's Warrants shall
be made on the Closing Date.
3. Covenants of the Company.
The Company covenants and agrees with the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and, upon notification from the Commission that
the Registration Statement has become effective, will so advise you and will
not at any time, whether before or after the Effective Date, file any amendment
to the Registration Statement or supplement to the Prospectus of which you
shall not previously have been advised and furnished with a copy or to which
you or counsel for the Underwriters shall have objected in writing or which is
not in compliance with the Act and the Rules and Regulations. At any time
prior to the later of (A) the completion by the Underwriters of the
distribution of the Securities contemplated hereby (but in no event more than
nine months after the Effective Date) and (B) 25 days after the Effective Date,
the Company will prepare and file with the Commission, promptly upon your
request, any amendments or supplements to the Registration Statement or
Prospectus which, in your reasonable opinion, may be necessary or advisable in
connection with the distribution of the Securities.
Promptly after you or the Company is advised thereof, you will advise the
Company or the Company will advise you, as the case may be, and confirm the
advice in writing, of the receipt of any comments of the Commission, of the
effectiveness of any post-effective amendment to the Registration Statement, of
the filing of any supplement to the Prospectus or any amended Prospectus, of
any request made by the Commission for amendment of the Registration Statement
or for supplementing of the Prospectus or for additional information with
respect thereto, of the issuance by the Commission or any state or regulatory
body of any stop orders or other order suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Securities for offering in any jurisdiction, or the institution of any
proceedings for any of such purposes, and will use its best efforts to prevent
the issuance of any such order and, if issued, to obtain as soon as possible
the lifting thereof.
The Company has caused to be delivered to you copies of each Preliminary
Prospectus, and the Company has consented and hereby consents to the use of
such copies for the purposes permitted by the Act. The Company authorizes the
Underwriters and selected dealers to use the Prospectus in connection with the
sale of the Securities for such period as in the opinion of counsel for the
Underwriters the use thereof is required to comply with the applicable
provisions of the Act and the Rules and Regulations. In case of the happening,
at any time within such period as a Prospectus is required under the Act to be
delivered in connection with sales by an underwriter or dealer, of any event of
which the Company has knowledge and which materially affects the Company or the
Securities, or which in the opinion of counsel for the Company or counsel for
the Underwriters should be set forth in an amendment to the Registration
Statement or a supplement to the Prospectus in order to make the statements
therein not then misleading, in light of the circumstances existing at the time
the Prospectus is required to be delivered to a purchaser of the Securities, or
in case it shall be necessary to amend or supplement the Prospectus to comply
with the Act or with the Rules and Regulations, the Company will notify you
promptly and forthwith prepare and furnish to you copies of such amended
Prospectus or of such supplement to be attached to the Prospectus, in such
quantities as you may reasonably request, in order that the Prospectus, as so
amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any
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material facts necessary in order to make the statements in the Prospectus, in
the light of the circumstances under which they are made, not misleading. The
preparation and furnishing of any such amendment or supplement to the
Registration Statement or amended Prospectus or supplement to be attached to
the Prospectus shall be without expense to the Underwriters, except that in
case the Underwriters are required, in connection with the sale of the
Securities, to deliver a Prospectus nine months or more after the Effective
Date, the Company will upon request of and at the expense of the Underwriters,
amend or supplement the Registration Statement and Prospectus and furnish the
Underwriters with reasonable quantities of prospectuses complying with Section
10(a)(3) of the Act.
The Company will comply with the Act, the Rules and Regulations and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder in connection with the issuance and
offering of the Securities.
(b) The Company will use its best efforts to qualify or register the
Securities for sale under the securities or "blue sky" laws of such
jurisdictions as you may designate and will make such applications and the
Company will furnish such information to counsel for the Underwriters as may be
required for that purpose and to comply with such laws, provided that the
Company shall not be required to qualify as a foreign corporation or a dealer
in securities or to execute a general consent to service process in any
jurisdiction in any action other than one arising out of the offering or sale
of the Securities. The Company will, from time to time, prepare and file such
statements and reports as are or may be required to continue such qualification
in effect for so long a period as you may reasonably request.
(c) If the sale of the Securities provided for herein is not consummated
due to the Company's breach of any representation or warranty or condition
contained in this Agreement, or because of the Company's actions or failure to
take such actions as are reasonably required hereunder, and the Representative
is prepared, and desires at its option, to perform in accordance with the terms
herein, the Company shall pay all costs and expenses incident to the
performance of the Company's obligations hereunder in accordance with Section 8
hereof.
(d) The Company will furnish to you as early as practicable prior to the
Closing Date and any Additional Closing Date, as the case may be, but no less
than two full business days prior thereto, a copy of the latest available
unaudited interim financial statements of the Company which have been read by
the Company's independent certified public accountants, as stated in their
letters to be furnished pursuant to Section 4(e) hereof.
(e) For so long as the Company is a reporting company under either Section
12(b), Section 12(g) or Section 15(d) of the Exchange Act, the Company, at its
expense, will furnish to its stockholders an annual report (including financial
statements audited by independent public accountants), in reasonable detail and
at its expense, will furnish to you during the period ending five years from
the date hereof, (i) as soon as practicable after the end of each fiscal year,
a balance sheet of the Company and any subsidiaries as at the end of such
fiscal year, together with statements of income, stockholders' equity and cash
flows of the Company and any subsidiaries as at the end of such fiscal year,
all in reasonable detail and accompanied by a copy of the certificate or report
thereon of independent public accountants; (ii) as soon as they are available,
a copy of all quarterly financial statements; (iii) as soon as they are
available, a copy of all reports (financial or other) mailed to security
holders; (iv) as soon as they are available, a copy of all non-confidential
reports and financial statements furnished to or filed with the Commission; and
(v) such other information as you may from time to time reasonably request.
(f) In the event the Company has an active subsidiary or subsidiaries,
such financial statements referred to in subsection (e) above will be on a
consolidated basis to the extent the accounts of the Company and its subsidiary
or subsidiaries are consolidated in reports furnished to its stockholders
generally.
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(g) The Company will deliver to you at or before the First Closing Date
two signed copies of the Registration Statement including all financial
statements and exhibits filed therewith, and of all amendments thereto. The
Company will deliver to or upon your order, from time to time until the
Effective Date as many copies of any Preliminary Prospectus filed with the
Commission prior to the Effective Date as the Underwriters may reasonably
request. The Company will deliver to you on the Effective Date and thereafter
for so long as a Prospectus is required to be delivered under the Act, from
time to time, as many copies of the Prospectus, in final form, or as thereafter
amended or supplemented, as the Underwriters may from time to time reasonably
request.
(h) The Company will make generally available to its security holders and
deliver to you as soon as it is practicable to do so, but in no event later
than 90 days after the end of 12 months after the end of its current fiscal
quarter, an earnings statement (which need not be audited) covering a period of
at least 12 consecutive months beginning after the Effective Date which shall
satisfy the requirements of Section 11(a) of the Act.
(i) The Company will, promptly upon your request, prepare and file with
the Commission any amendments or supplements to the Registration Statement,
preliminary Prospectus or Prospectus and take any other action, which in the
opinion of Morse, Zelnick, Rose & Lander, LLP, counsel to the Underwriters, may
be reasonably necessary or advisable in connection with the distribution of the
Securities and will use its best efforts to cause the same to become effective
as promptly as possible.
(j) Prior to the Effective Date, the persons identified in Paragraph 1(y)
shall have executed the Lock-up Agreements described therein. You shall have
received written waivers of demand and/or piggy back registration rights, if
any, from all the holders thereof prior to the Effective Date of the
Registration Statement.
(k) The Company shall upon the initial filing of the Registration
Statement make all filings required to obtain approval for listing for
quotation of the Securities on the National Association of Securities Dealers,
Inc. ("NASDAQ") National Market System and shall use its best efforts to
maintain such listing for at least five years from the date of this Agreement.
In the event that the Securities do not initially qualify for listing on the
NASDAQ National Market System, such Securities shall be listed on the NASDAQ
SmallCap System. Within ten days after the Effective Date, the Company shall
cause the Company to be listed in Xxxxx'x OTC Industrial Manual and shall use
its best efforts to cause such listing to be maintained for five years from the
date of this Agreement [Boston Stock Exchange].
(l) The Company represents that it has not taken, and agrees that it will
not take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Common Stock or Securities or
to facilitate the sale or resale of the Common Stock or Securities.
(m) During the 90-day period commencing as of the First Closing Date, the
Company will not, without your prior written consent, which consent shall not
be unreasonably withheld, grant options to purchase shares of Common Stock at a
price less than the closing bid price of the Common Stock on the Effective
Date. Furthermore, during the 24-month period commencing on the Effective Date
no options shall be granted by the Company to its officers or directors
pursuant to any stock option plan unless such option is either (a) not
exercisable during such 24-month period, or (b) the shares issuable upon
exercise of such option are subject to a lock-up agreement with the
Representative restricting the sale of such shares during such 24 month period.
(n) Prior to the Closing Date or any Additional Closing Date, as the case
may be, the Company will not issue any press release or other communication
directly or indirectly and will hold no press conference with respect to the
Company, or its financial condition, results
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of operations, business, properties, or assets, or this offering, without your
prior written consent, which consent will not be unreasonably withheld.
(o) During the period of the offering, and for a period of twelve (12)
months from the Effective Date, the Company will not sell or otherwise dispose
of any securities of the Company, except for shares of Common Stock issuable
upon exercise of options, warrants or convertible securities outstanding on the
Effective Date or options granted under stock option plans, without your prior
written consent, which consent shall not be unreasonably withheld.
(p) The Company will reserve and keep available that number of its
authorized but unissued shares of Common Stock, which are issuable upon
exercise of the Warrants and Representatives' Warrant outstanding from time to
time.
(q) Within ninety (90) days from the First Closing Date, the Company shall
deliver to you, at the Company's expense, three bound volumes in form and
content acceptable to you, containing the Registration Statement and all
exhibits filed therewith, and all amendments thereto, and all other
correspondence, filings, certificates and other documents filed and/or
delivered in connection with this offering.
(r) On or prior to the Effective date, the Company shall retain a public
relations firm, reasonably acceptable to you, for a period of two years from
the Effective Date or such other firm reasonable acceptable to you.
(s) On or prior to the Closing Date, the Company shall enter into a one
year consulting agreement with you pursuant to which you will consult with the
Company or corporate financing and other financial service matters for a fee of
$72,000 payable in full on the Closing Date.
(t) 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.
(u) For a period of three (3) years from the Closing Date, the Company
shall, as the Representative may reasonably request, but not more often than
monthly, furnish to the Representative at the Company's sole expense, (i) daily
consolidated transfer sheets relating to the Common Stock and Redeemable
Warrants and (ii) the list of holders of all of the Company's securities.
(v) For a period of three (3) years from the date of the Prospectus, the
Company agrees that the Representative shall have the right, and the Company
shall allow, two non-voting observers designated by you to receive notice of
and to attend all meetings of the Company's Board of Directors. Such
individuals shall be reimbursed for all reasonable out-of-pocket expenses
incurred in connection with their attendance at meetings of the Board and shall
be compensated for their attendance in the same manner as the Company
compensates its non-employee directors.
(w) Upon the exercise of any Warrant or Warrants on or after ____________,
1998 (i.e. one year from the Effective Date), the Company will pay you a fee of
7% of the aggregate exercise price of the Warrants, of which a percentage may
be reallowed to the dealer who solicited the exercise (which may also be you)
if (i) you provide bona fide services; (ii) the market price of the Company's
Common Stock is greater than the exercise price of the Warrants on the date of
exercise; (iii) the exercise of the Warrant was solicited by a member of the
National Association of Securities Dealers, Inc.; (iv) the Warrant is not held
in a discretionary account; (v) the disclosure of the compensation arrangements
has been made in documents provided to customers, both as part of the original
offering and at the time of exercise; (vi) the exercise of the Warrant was not
solicited; and (vii) the transaction was not in
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violation of Rule 10b-6 promulgated under the Exchange Act. The Company agrees
not to solicit the exercise of any Warrants other than through you and will not
authorize any other dealer to engage in such solicitation without your prior
written consent. No fee will be paid on Warrants exercised at any time without
solicitation by you. In addition, no warrant solicitation fee will be paid to
any NASD member unless such member has been designated in writing by the
warrantholder.
(x) For a period of two years fro the date of the Prospectus, the Company
shall, if it participates in any merger, consolidation or other transaction
which the Representatives have brought to the Company (including an acquisition
of assets or stock for which it pays, in whole or in part, with shares of the
Company's Common Stock or other securities) pay for the Representatives'
services an amount equal to 5% of the first $3,000,000 of value paid or
received in the transaction, 2 1/2% of any consideration paid over $3,000,000
and not greater than $5,000,000 and 2% of all such value above $5,000,000; in
addition, during such two-year period, if someone other than the
Representatives brings such a merger, consolidation or other transaction to the
Company, and the Representatives render advice in connection therewith, then
upon consummation of the transaction the Company shall pay to the
Representatives as a fee the aforesaid amount or as otherwise agreed to between
the Company and the Representatives.
(y) The Company will cause a Registration Statement under the Exchange Act
to be declared effective concurrently with the completion of the offering of
the Securities.
4. Conditions of Underwriters' Obligations.
The obligations of the several Underwriters to purchase and pay for the
Units which they have agreed to purchase hereunder are subject to the accuracy
(as of the date hereof, and as of the Closing Dates) of and compliance with the
representations, warranties and covenants of the Company herein, to the
performance by the Company of its obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective and you shall
have received notice thereof not later than 4:00 p.m., New York time, on the
date following the date of this Agreement, or at such later time or on such
later date as to which you may agree in writing; on the Closing Dates, no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that or any similar purpose shall have been
instituted or shall be pending or, to the knowledge of any Underwriter or to
the knowledge of the Company, shall be contemplated by the Commission; any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of Morse, Zelnick, Rose &
Lander, LLP, counsel to the Underwriters; and no stop order shall be in effect
denying or suspending effectiveness of the Registration Statement nor shall any
stop order proceedings with respect thereto be instituted or pending or
threatened under the Act.
(b) At the First Closing Date, you shall have received the opinion, dated
as of the First Closing Date, of Xxxxxx and Xxxxxx, counsel for the Company, in
form and substance satisfactory to counsel for the Underwriters, to the effect
that:
(i) the Company has been duly organized and is validly existing as
a corporation in good standing under the laws of its state of
incorporation and is duly authorized to transact business as a foreign
corporation in good standing in each other jurisdiction in which the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
and in good standing would not have a material adverse effect on the
Company;
(ii) to the best knowledge of such counsel, (a) the Company has
obtained, or is in the process of obtaining, all licenses, permits and
other governmental authorizations
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necessary to the conduct of its business as described in the Prospectus,
and (b) such obtained licenses, permits and other governmental
authorizations are in full force and effect, and the Company is in all
material respects complying therewith;
(iii) the authorized capitalization of the Company is as set forth
under "Capitalization" in the Prospectus; all of the Company's
outstanding securities requiring authorization for issuance by the
Company's Board of Directors have been duly authorized and validly
issued, are fully paid and non-assessable and conform in all material
respects to the description thereof contained in the Prospectus; the
outstanding securities of the Company have not been issued in violation
of the preemptive rights of any stockholder, under the Minnesota Business
Corporation Act or the Company's certificate of incorporation or by-laws
and the stockholders of the Company do not have any statutory preemptive
rights or, to the best of such counsel's knowledge, other than as set
forth in the Prospectus, other rights to subscribe for or to purchase,
and there are no restrictions upon the voting of any of the Common Stock;
the Units, the Common Stock, the Warrants and the Representatives'
Warrant conform to the respective descriptions thereof contained in the
Prospectus; the Securities to be issued as contemplated in the
Registration Statement have been duly authorized and, when issued and
paid for, will be non-assessable and free of preemptive rights under the
Minnesota Business Corporation Act or the Company's certificate of
incorporation or by-laws, and, to the best of such counsel's knowledge,
contractual preemptive rights, and no personal liability will attach to
the ownership thereof; a sufficient number of shares of Common Stock have
been reserved for issuance upon exercise of the Warrants, the
Representatives' Warrant (without regard to the anti-dilution provisions
thereof) and upon such issuance upon exercise in accordance with the
terms of the Representatives' Warrant, when the purchase price is paid,
will be fully paid, non-assessable and free of preemptive rights under
the Minnesota Business Corporation Act or the Company's certificate of
incorporation or by-laws and, to the best of such counsel's knowledge,
contractual preemptive rights, and no personal liability will attach to
the ownership thereof; and to the best of such counsel's knowledge,
except as set forth in the Prospectus, neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any registration rights or
other rights, other than those which have been waived or satisfied, for
or relating to the registration of the Securities;
(iv) this Agreement, the Warrant Agreement and the Representatives'
Warrant, have been duly and validly authorized, executed and delivered by
the Company and, assuming due execution and delivery by you, all of such
agreements are, or when duly executed will be, the valid, legally binding
and enforceable obligations of the Company except (i) as limited by
applicable bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights, or (ii) as limited by general principles of
equity; provided, however, that no opinion need be expressed as to the
enforceability of the indemnity provisions contained in Section 6 or the
contribution provisions contained in Section 7 of this Agreement;
(v) the certificates evidencing the shares of Common Stock and the
Warrants are in valid and proper form;
(vi) except as disclosed in the Prospectus, such counsel knows of
no pending legal or governmental proceedings to which the Company is a
party which could materially adversely affect the business, property,
financial condition or operations of the Company or which question the
validity of the Securities, this Agreement or the Representatives'
Warrant, or of any action taken or to be taken by the Company pursuant to
this Agreement or the Representatives' Warrant; except as disclosed in
the Prospectus, no such proceedings are known to such counsel to be
threatened against the Company; and there are no governmental proceedings
or regulations known to such
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counsel required to be described or referred to in the Registration
Statement which are not so described or referred to;
(vii) to the knowledge of such counsel, the Company is not in
violation of or default under this Agreement, the Warrant Agreement or
the Representatives' Warrant, and the execution and delivery hereof and
thereof and the incurrence of the obligations herein and therein set
forth and the consummation of the transactions herein or therein
contemplated will not result in a violation of, or constitute a default
under, the certificate of incorporation or by-laws of the Company, or, to
the best of such counsel's knowledge, in the performance or observation
of any material obligation, agreement, covenant or condition contained in
any bond, debenture, note or other evidence of indebtedness or in any
contract, indenture, mortgage, loan agreement, lease, joint venture or
other agreement or instrument to which the Company is a party or, to the
best of such counsel's knowledge, in a violation of any material order,
rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign applicable to
the Company or to which it is subject;
(viii) the Registration Statement has become effective under the
Act, and to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement is in effect, no proceedings
for that purpose have been instituted or are pending before, or
threatened by, the Commission and the Registration Statement and the
Prospectus (except for the financial statements and other financial and
statistical data contained therein, or omitted therefrom, as to which
such counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the Rules and
Regulations;
(ix) during the course of the preparation of the Registration
Statement, such counsel has participated in conferences with officers and
other representatives of the Company, the Representative and independent
public accountants of the Company, at which conferences the contents of
the Registration Statement and the Prospectus contained therein and
related matters were discussed and, although such counsel need not pass
upon and does not assume any responsibility for the adequacy, accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus contained therein (except as specified in
such counsel's opinion), solely on the basis of the foregoing without
independent check and verification, no facts have come to such counsel's
attention which lead it to believe that the Registration Statement or any
amendment thereto, at the time the Registration Statement or amendment
became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading or the Prospectus or any
amendment or supplement thereto, at the time they were filed pursuant to
Rule 424(b) or at the date hereof, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading (except that no
view need be expressed as to (i) financial information and statistical
data and information included in the Registration Statement or the
Prospectus, (ii) information included in the Registration Statement or
the Prospectus which was furnished by or on behalf of the
Representatives, or (iii) information included in the second paragraph
of the "Underwriting" section of the Prospectus).
(x) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and
other documents are accurate and complete in all material respects and
such counsel is familiar with the contracts and other documents referred
to in the Registration Statement and the Prospectus and any such
amendment or supplement, or filed as exhibits to the Registration
Statement, and such counsel does not know of any contracts or documents
of a character required to be
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summarized (other than real property leases) or described therein or to be
filed as exhibits thereto which are not so summarized, described or filed;
(xi) no authorization, approval, consent or license of any
governmental or regulatory authority or agency is necessary in connection
with the authorization, issuance, transfer, sale or delivery of the
Securities by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the
taking of any action contemplated herein, or the issuance of the
Representative's Warrant or the Shares and Warrants underlying the
Representative's Warrant, other than registration or qualification of the
Securities under applicable state or foreign securities or blue sky laws
(as to which such counsel need express no opinion) and registration under
the Act;
(xii) the statements in the Registration Statement under the
captions "Business," "Use of Proceeds," "Management - Executive
Compensation" (other than the data contained in the Executive
Compensation table), "Principal Shareholders", "Certain Transactions",
"Description of Units", "Description of Capital Stock" and "Shares
Eligible for Future Resale" 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;
(xiii) to the knowledge of such counsel, no holders of Common Stock
or other securities of the Company have any registration rights with
respect to Common Stock, except as described in the Prospectus or which
have been validly waived or satisfied. All registration rights known to
such counsel have been so described and have been validly waived or
satisfied with respect to the transaction contemplated hereby;
(xiv) the Company is not required, and will not be required as a
result of this offering, to be registered as an "investment company"
under the Investment Company Act of 1940, as amended.
Such opinion shall also cover such matters incident to the
transactions contemplated hereby as you or counsel for the Underwriters shall
reasonably request. In rendering such opinion, such counsel may rely upon
certificates of any officer of the Company or public officials as to matters of
fact; may exclude all matters relating to Colorado gaming laws and regulations
and may be limited to the laws of the United States and the State of Minnesota.
(c) All corporate proceedings and other legal matters relating to this
Agreement, the Registration Statement, the Prospectus, and other related
matters shall be reasonably satisfactory to or approved by Morse, Zelnick, Rose
& Lander, LLP, counsel to the Underwriters, and you shall have received from
such counsel a signed opinion, dated as of the First Closing Date, with respect
to the validity of the issuance of the Securities, the form of the Registration
Statement and Prospectus (other than the financial statements and other
financial data contained therein), the execution of this Agreement and other
related matters as you may reasonably require. The Company shall have
furnished to counsel for the Underwriters such documents as they may reasonably
request for the purpose of enabling them to render such opinion.
(d) At the First Closing Date, you shall have received the opinion, dated
as of the First Closing Date, of Isaacson, Rosenbaum, Xxxxx and Xxxx, P.C. with
respect to all matters governed by Colorado gaming laws and regulations in form
and substance satisfactory to counsel for the Underwriters.
(e) At the time this Agreement is executed and at the Closing Date and any
Additional Closing Date, as the case may be, you shall have received a letter,
addressed to the Underwriters and in form and substance satisfactory to you,
with reproduced copies or signed
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counterparts thereof for each of the Underwriters, from Schecter Dokken Kanter
Xxxxxxx & Xxxxxx Ltd, dated the date of delivery:
(i) confirming that they are, and during the period covered by
their report(s) included in the Registration Statement and the Prospectus
they were, independent certified public accountants with respect to the
Company within the meaning of the Act and the public Regulations and
stating that the response to Item 10 of the Registration Statement is
correct insofar as it related to them;
(ii) stating that, in their opinion, the financial statements and
schedules of the Company included in the Registration Statement examined
by them comply in form in all material respects with the applicable
accounting requirements of the Act and the Regulations;
(iii) stating that, on the basis of procedures (but not an
examination made in accordance with generally accepted auditing
standards) consisting of a reading of the latest available unaudited
interim financial statements of the Company (with an indication of the
date of the latest available unaudited interim financial statements), a
reading of the latest available minutes of the stockholders and Board of
Directors of the Company and committees of such board, inquiries to
certain 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 that caused them to
believe that (A) the unaudited financial statements and schedules of the
Company included in the Registration Statement and Prospectus do not
comply in form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations under either such act or are not fairly presented
in conformity with generally accepted accounting principles (except to
the extent that certain footnote disclosures regarding any stub period
may have been omitted in accordance with the applicable rules of the
Commission under the Exchange Act) applied on a basis consistent with
that of the audited financial statements appearing therein, (B) any
unaudited financial information of the Company included in the Prospectus
was not determined on a basis substantially consistent with the
corresponding information in the audited statements of operations, (C)
there was any change in the capital stock or debt of the Company or any
decrease in the net current assets or stockholders' equity of the Company
as of the date of the latest available monthly financial statements of
the Company or as of a specified date not more than five business days
prior to the date of such letter, each as compared with the amounts shown
in the December 31, 1995 balance sheet included in the Registration
Statement and Prospectus, other than as properly described in the
Registration Statement and Prospectus or any change or decrease (which
shall be set forth therein) which you in your sole discretion shall
accept, or (D) there was any decrease in revenue, net earnings, or net
earnings per share of Common Stock of the Company during the period of
December 31, 1995 to the date of the latest available monthly financial
statements of the Company or to a specified date not more than five
business days prior to the date of such letter, each as compared with the
corresponding prior year period, other than as properly described in the
Registration Statement and Prospectus or any decrease (which shall be set
forth therein) which you in your sole discretion shall accept; and
(iv) stating that they have compared specific numerical data and
financial information pertaining to the Company set forth in the
Registration Statement, each Preliminary Prospectus, and the Prospectus,
if applicable, which have been specified by you prior to the date of this
Agreement, to the extent that such data and information may be derived
from the general accounting records 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
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(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.
(f) At each of the Closing Dates, (i) the representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects with the same effect as if made on and as of such Closing
Date, and the Company shall have performed all of its obligations hereunder and
satisfied all the conditions on its part to be satisfied at or prior to such
Closing Date; (ii) the Registration Statement and the Prospectus and any
amendments or supplements thereto shall contain all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations, and shall in all material respects conform to the requirements
thereof, and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto shall contain any untrue statements 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 in
which they were made, not misleading; (iii) there shall have been, since the
respective dates as of which information is given, no material adverse change
in the business, properties, condition (financial or otherwise), results of
operations, capital stock, long-term or short-term debt or general affairs of
the Company from that set forth in the Registration Statement and the
Prospectus, except changes which the Registration Statement and Prospectus
indicate might occur after the Effective Date, and the Company shall not have
incurred any material liabilities or entered into any agreement not in the
ordinary course of business other than as referred to in the Registration
Statement and Prospectus; and (iv) except as set forth in the Prospectus, no
action, suit or proceeding at law shall be pending or threatened against the
Company which would be required to be disclosed in the Registration Statement,
and no proceedings shall be pending or threatened against the Company before or
by any commission, board or administrative agency in the United States or
elsewhere, wherein an unfavorable decision, rule or finding would materially
and adversely affect the business, property, condition (financial or
otherwise), results of operations or general affairs of the Company. In
addition, you shall have received, at the First Closing Date, a certificate
signed by the Chief Executive Officer and the principal financial or accounting
officer of the Company, dated as of the First Closing Date, evidencing
compliance with the provisions of this subsection (f).
(g) Upon exercise of the option provided for in Section 2(b) hereof, the
obligations of the several Underwriters to purchase and pay for the Option
Shares referred to therein will be subject (as of the date hereof and as of the
Option Closing Date) to the following additional conditions:
(i) the Registration Statement shall remain effective at the Option
Closing Date, no stop order suspending the effectiveness thereof shall
have been issued, and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of any Underwriter
or the knowledge of the Company, shall be contemplated by the Commission,
and any reasonable request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction
of Morse, Zelnick, Rose & Lander, LLP, counsel to the Underwriters;
(ii) at the Option Closing Date there shall have been delivered to
you the signed opinion of Xxxxxx and Xxxxxx, counsel to the Company, and
Isaacson, Rosenbaum, Xxxxx and Levy, P.C., dated as of the Option Closing
Date, in form and substance reasonably satisfactory to Morse, Zelnick,
Rose & Lander, LLP, counsel to the Underwriters, which opinion shall be
substantially the same in scope and substance as the opinion furnished to
you at the First Closing Date pursuant to Sections 4(b) and 4(d) hereof,
respectively, except that such opinion, where appropriate, shall cover
the Option Units rather than the Firm Units. If the First Closing Date
is the same as the Option Closing Date, such opinions may be combined;
(iii) at the Option Closing Date, there shall have been delivered
to you a certificate of the Chief Executive Officer and the principal
financial or accounting
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officer of the Company dated the Option Closing Date, in form and
substance satisfactory to Morse, Zelnick, Rose & Lander, LLP, counsel to
the Underwriters, substantially the same in scope and substance as the
certificate furnished to you at the First Closing Date pursuant to
Section 4 (f) hereof;
(iv) at the Option Closing Date, there shall have been delivered to
you a letter in form and substance satisfactory to you from Schecter
Dokken Kanter Xxxxxxx & Xxxxxx Ltd.,, dated the Option Closing Date and
addressed to you, confirming the information in each of their letters
referred to in Section 4(e) hereof as of the date thereof and stating
that, without any additional investigation required, nothing has come to
their attention during the period from the ending date of their review
referred to in said letter to a date not more than five (5) days prior to
the Option Closing Date which would require any change in said letter if
it were required to be dated the Option Closing Date;
(v) all proceedings taken at or prior to the Option Closing Date in
connection with the sale and issuance of the Option Units shall be
reasonably satisfactory in form and substance to you, and you and Morse,
Zelnick, Rose & Lander, LLP, counsel to the Underwriters, shall have been
furnished with all such documents, certificates and opinions as you may
request in connection with this transaction in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Company or its compliance with any of the covenants or
conditions contained herein.
(h) If any of the conditions herein provided for in this Section shall not
have been completely fulfilled in all material respects as of the date
indicated, this Agreement and all obligations of the Underwriters under this
Agreement may be canceled at, or at any time prior to, each Closing Date by
your notifying the Company of such cancellation in writing or by telegram at or
prior to the applicable Closing Date. Any such cancellation shall be without
liability of any Underwriter to the Company, except as otherwise provided
herein.
(i) On or before the Closing Date, the Company shall have executed and
delivered to the Warrant Agent the Warrant Agreement substantially in the form
filed as Exhibit 4.1 to the Registration Statement, in final form and substance
satisfactory to the Representative and its counsel.
(j) The Company shall have entered into a Financial Consulting Agreement
with the Representative providing for the payment to the Representative,
commencing on the Closing Date, of a six thousand dollar ($6,000) per month
retainer for a period of twelve (12) months, all of which shall be payable in
advance at the Closing.
(k) The Company shall have entered into a Merger and Acquisition Agreement
with the Representative in final form and substance satisfactory to the
Representative and its counsel.
5. Conditions of the Obligations of the Company.
The obligation of the Company to sell and deliver the Units is subject to
the following conditions:
(a) The Registration Statement shall have become effective not later than
4:00 p.m. New York time, on the date following the date of this Agreement, or
on such later date or time as the Company and you may agree in writing.
(b) On the Closing Dates, no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the Act or any
proceedings therefor initiated or threatened by the Commission.
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If the conditions to the obligations of the Company provided for in this
Section have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the Option Closing Date, then only
the obligation of the Company to sell and deliver the Option Units on exercise
of the option provided for in Section 2(b) hereof shall be affected.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
each officer, director, employee and agent of such Underwriter and each person,
if any, who controls such Underwriter, within the meaning of the Act, from and
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees), joint
or several, to which such Underwriter or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
(A) the Registration Statement, any Preliminary Prospectus, the Prospectus, or
any amendment thereof or supplement thereto, (B) any blue sky application or
other document executed by the Company specifically for that purpose or based
upon written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Securities under the
securities laws thereof (any such application, document or information being
hereinafter called a "Blue Sky Application"), or arise out of or are based upon
the omission or alleged omission to state in the Registration Statement, any
supplement thereto, or in any Blue Sky Application, a material fact required to
be stated therein or necessary to make the statements therein not misleading,
in light of the circumstances in which they were made; provided, however, that
the Company will not be liable in any such case to the extent, but only to the
extent, that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company through you by or on behalf of any
Underwriter specifically for use in the preparation of the Registration
Statement or any such amendment or supplement thereof or any such Blue Sky
Application or any such Preliminary Prospectus or the Prospectus or any such
amendment or supplement thereto. This indemnity will be in addition to any
liability which the Company may otherwise have.
(b) Xxxxxx, severally and each other Underwriter, severally, but not
jointly, agrees to indemnify and hold harmless the Company, each of its
directors, each nominee (if any) for director named in the Prospectus, each of
its officers who have signed the Registration Statement, and each person, if
any, who controls the Company, within the meaning of the Act, from and against
any losses, claims, damages or liabilities (which shall, for all purposes of
this Agreement, include, but not be limited to, all reasonable costs of defense
and investigation and all reasonable attorneys' fees) to which the Company or
any such director, nominee, officer or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged untrue statement or omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or omission or alleged untrue statement or omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company through you by or on behalf of any
Underwriter and with respect to any Underwriter specifically for use in
preparation thereof, provided that such written information or omissions only
pertain to disclosures in the Preliminary Prospectus, the Registration
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Statement or Prospectus directly relating to the transactions effected by the
Underwriters in connection with this Offering. The Company acknowledges that
the statements with respect to the public offering of 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. This indemnity will be in
addition to any liability which any Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section, notify in writing the indemnifying party of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that the fees and expenses of such counsel
shall be at the expense of the indemnifying party if (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying party
or (ii) the named parties to any such action (including any impleaded parties)
include both such Underwriter or such controlling person and the indemnifying
party, and the indemnified party or parties shall have reasonably concluded
that the indemnified party or parties have one or more legal defenses available
to it which are in conflict to those available to the indemnifying party (in
which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party or parties, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys). The indemnifying party shall be free to settle any
claim or action in respect to which indemnity may be sought against it pursuant
to this Section; provided, however, that the indemnifying party shall not
settle any such claim or action if such settlement would result in the
imposition against the indemnified party or parties of a judgment, decree or
order in the nature of equitable relief without the consent of the indemnified
party, which shall not be unreasonably withheld in light of all factors of
importance to such indemnified party.
7. Contribution.
In order to provide for just and equitable contribution under the Act in
any case in which (i) the indemnified party makes claims for indemnification
pursuant to Section 6 hereof 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 Section 6 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
Underwriter, then the Company and each person who controls the Company, in the
aggregate, and such Underwriter shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
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costs of defense and investigation and all reasonable attorneys' fees) in
either such case (after contribution from others) in such proportions that such
Underwriter is responsible in the aggregate for that portion of such losses,
claims, damages or liabilities represented by the percentage that the
underwriting discount per Unit appearing on the cover page of the Prospectus
bears to the public offering price per Unit appearing thereon, and Company
shall be responsible for the remaining portion; provided, however, that (a) if
such allocation is not permitted by applicable law, then the relative fault of
the Company and such Underwriter and controlling persons, in the aggregate, in
connection with the statements or omissions which resulted in such damages and
other relevant equitable considerations shall also be considered. The relative
fault shall be determined by reference to, among other things, whether in the
case of an untrue statement of a material fact or the omission to state a
material fact, such statement or omission relates to information supplied by
the Company or such Underwriter, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if the respective obligations of the Company and the
Underwriters to contribute pursuant to this Section 7 were to be determined by
pro rata or per capita allocation of the aggregate damages (even if the
Underwriters have to be treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the first sentence of this Section 7 and (b) that the
contribution of any Underwriter shall not be in excess of its proportionate
share of the portion of such losses, claims, damages or liabilities for which
such Underwriter is responsible. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. As used in this paragraph, the word "Company" includes any
officer, director, or person who controls the Company within the meaning of
Section 15 of the Act. The Underwriters' obligations to contribute pursuant to
this Section 7 are several in proportion to their respective underwriting
obligations and not joint. If the full amount of the contribution specified in
this paragraph is not permitted by law, then each Underwriter and each person
who controls each Underwriter shall be entitled to contribution from the
Company to the full extent permitted by law. The foregoing contribution
agreement shall in no way affect the contribution liabilities of any persons
having liability under Section 11 of the Act other than the Company and the
Underwriters. No contribution shall be requested with regard to the settlement
of any matter from any party who did not consent to the settlement; provided,
however, that such consent shall not be unreasonably withheld in light of all
factors of importance to such party.
8. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the sale of the
Units to the Underwriters is consummated, the Company will pay all costs and
expenses incident to the performance of this Agreement by the Company,
including but not limited to the fees and expenses of counsel to the Company
and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the
Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), each Preliminary Prospectus and the
Prospectus, as amended or supplemented, the fee of the National Association of
Securities Dealers, Inc. ("NASD") in connection with the filing required by the
NASD relating to the offering of the Securities contemplated hereby; all
expenses, including reasonable fees and disbursements of counsel to the
Underwriters, in connection with the qualification of the Securities under the
state securities or Blue Sky Laws which you shall designate; the cost of
printing and furnishing to the Underwriters copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus, this Agreement, the
Selling Agreement and the Blue Sky Memorandum; the cost of printing the
certificates representing the Shares and Warrants, the expenses of Company due
diligence meetings and presentations, and the expense (which shall not exceed
$10,000) of placing one or more "tombstone" advertisements as directed by you.
The Company shall pay any and all taxes (including any transfer, franchise,
capital stock or other tax imposed by any jurisdiction) on sales to the
Underwriters hereunder. The Company will also pay all costs and expenses
incident to the furnishing of any amended Prospectus or of any supplement to be
attached to
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the Prospectus as called for in Section 3 (a) of this Agreement except as
otherwise set forth in said Section.
(b) In addition to the foregoing expenses, the Company shall at the First
Closing Date pay to you the balance of a non-accountable expense allowance of
$180,000, of which $20,000 has been paid. In the event the over-allotment
option is exercised in part or in full, the Company shall pay to you at the
Option Closing Date, as a non-accountable expense allowance, an amount equal to
3% of the gross proceeds received upon exercise of the over-allotment option.
In the event the proposed offering is terminated for any reason, the
Representative shall return any portion of the $20,000 advanced by the Company
not previously expended in connection with the proposed offering for actual
accountable out-of-pocket expenses. If the proposed offering is not completed
due to the Company's breach of any representation, warranty, covenant or
condition contained in this Agreement, or because of the Company's actions or
failure to take such actions as are reasonably required hereunder, and the
Representatives are prepared to perform in accordance with the terms herein,
the Company shall be liable for all of the Representative's actual accountable
out-of-pocket expenses, including reasonable legal fees.
(c) No person is entitled either directly or indirectly to compensation
from the Company, from any Underwriter or from any other person for services as
a finder in connection with the proposed offering, and the Company agrees to
indemnify and hold harmless each Underwriter, and the Underwriters agree to
indemnify and hold harmless, severally and not jointly, the Company from and
against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all attorneys' fees) to which
the indemnified party may become subject insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon the claim of any person (other than an employee of the party
claiming indemnity) or entity that he or it is entitled to a finder's fee in
connection with the proposed offering by reason of such person's or entity's
influence or prior contact with the indemnifying party.
9. Substitution of Underwriters.
If any Underwriter defaults in its obligation to purchase the number of
Units which it has agreed to purchase under this Agreement, you shall be
obligated to purchase all of the Units not purchased by the defaulting
Underwriter unless such purchase shall cause you to be in violation of the net
capital requirements of Rule 15c3-1 of the Exchange Act, in which case you, and
any other underwriters satisfactory to you who so agree, shall have the right,
but shall not be obligated, to purchase (in such proportions as may be agreed
upon among them) all of the Units. If you or the other underwriters
satisfactory to you do not elect to purchase the Units which the defaulting
Underwriter or Underwriters agreed but failed to purchase, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or
the Company except for the payment of expenses to be borne by the Company and
the Underwriters as provided in Section 8(a) and the indemnity and contribution
agreements of the Company and the Underwriters contained in Sections 6 and 7
hereof.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have for damages caused by its default. If the other
underwriters satisfactory to you are obligated or agree to purchase the Units
of a defaulting Underwriter, either you or the Company may postpone the First
Closing Date for up to seven full business days in order to affect any changes
that may be necessary in the Registration Statement, the Prospectus or in any
other document or agreement, and to file promptly any amendments or any
supplements to the Registration Statement or the Prospectus which in your
opinion may thereby be made necessary.
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10. Effective Date.
The Agreement shall become effective upon its execution, except that you
may, at your option, delay its effectiveness until 4:00 p.m., New York time, on
the first full business day following the Effective Date, or at any such
earlier time after the Effective Date as you in your discretion shall first
commence the initial public offering by the Underwriters of any of the Shares.
The time of the initial public offering shall mean the time of release by you
of the first newspaper advertisement with respect to the Securities, or the
time when the Securities are first generally offered by the Underwriters to
dealers by letter or telegram, whichever shall first occur. This Agreement may
be terminated by you at any time before it becomes effective as provided above
except that Sections 3(c), 6, 7, 8, 13, 14, 15 and 16 shall remain in effect
notwithstanding such termination.
11. Termination.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 13, 14, 15 and 16,
may be terminated at any time prior to the First Closing Date, and the option
referred to in Section 2 (b), if exercised, may be canceled, at any time prior
to the Option Closing Date, by you if in your judgment it is impracticable to
offer for sale or to enforce contracts made by the Underwriters for the resale
of the Units agreed to be purchased hereunder, by reason of (i) the Company
having sustained a material loss, whether or not insured, by reason of fire,
earthquake, flood, accident or other calamity, or from any labor dispute or
court or government action, order or decree, (ii) trading in securities on the
New York Stock Exchange or the American Stock Exchange having been suspended or
limited, (iii) material governmental restrictions having been imposed on
trading in securities generally which are not in force and effect on the date
hereof, (iv) a banking moratorium having been declared by federal or New York
State authorities, (v) an outbreak of major international hostilities or other
national or international calamity having occurred, (vi) the passage by the
Congress of the United States or by any state legislative body of similar
impact, of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting institute
or board, or any governmental executive, which is reasonably believed likely by
you to have a material adverse impact on the business, financial condition or
financial statements of the Company, (vii) any material adverse change in the
financial or securities markets beyond normal fluctuations in the United States
having occurred since the date of this Agreement, or (viii) any material
adverse change having occurred, since the respective dates for which
information is given in the Registration Statement and Prospectus, in the
earnings, business, prospects or general condition of the Company, financial or
otherwise, whether or not arising in the ordinary course of business.
(b) If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 11 or in Section 10, the
Company shall be promptly notified by you, by telephone or telegram, confirmed
by letter.
12. Representative's Warrant.
On the First Closing Date, the Company will issue to you, for total
consideration of $5.00 and upon the terms and conditions set forth in the form
of Representatives' Warrant annexed as an exhibit to the Registration
Statement, a Representatives' Warrant to purchase, in the aggregate, one Unit
for each Firm Unit sold in the Offering. In the event of conflict in the terms
of this Agreement and the Representatives' Warrant, the language of the
Representatives' Warrant shall control.
13. Representations, Warranties and Agreements to Survive Delivery.
The respective indemnities, agreements, representations, warranties and
other statements of the Company or its Affiliates, where appropriate, and the
Underwriters, set forth in or made pursuant to this Agreement will remain in
full force and effect regardless of any
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investigation made by or on behalf of the Underwriters, the Company or any of
its officers or directors or any controlling persons and will survive delivery
of and payment for the Units and the termination of this Agreement.
14. Notice.
All communications hereunder will be in writing and, except as
otherwise expressly provided herein, if sent to any Underwriter, will be
mailed, delivered or telecopied and confirmed to it at X.X. Xxxxxx & Co., Inc.
0000 Xx. Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000-0X00, with a copy sent to
Xxxxxxx X. Xxxx, Esq., Morse, Zelnick, Rose & Lander, LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or if sent to the Company, will be mailed, delivered, or
telecopied and confirmed to it at 0000 Xxxx 00xx Xxxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxx 00000, with a copy sent to Xxxxxx and Xxxxxx, 0000 XXX
Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000 Attention: Xxxxx X. Xxxxxx, Esq. and
Xxxxxxx X. Xxxxxx, Esq.
15. Parties in Interest.
The Agreement herein set forth is made solely for the benefit of the
Underwriters, the Company and, to the extent expressed, the Affiliates, any
person controlling the Company, or any Underwriter, and directors of the
Company, nominees for directors of the Company (if any) named in the
Prospectus, the officers of the Company who have signed the Registration
Statement, and their respective executors, administrators, successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" shall not include any
purchaser, as such purchaser, from any Underwriter of the Securities.
16. Applicable Law.
This Agreement will be governed by, and construed in accordance with, the
laws of the State of New York applicable to agreements made and to be entirely
performed within New York.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this agreement, whereupon it shall become a
binding agreement between the Company and you, as Representative of the several
Underwriters, in accordance with its terms.
Yours very truly,
JUBILEE GAMING ENTERPRISES, INC.
By:________________________________
Xxxxx X. Xxxxxxx
Chief Executive Officer
Dated: ______________, 1997
The foregoing Underwriting Agreement is hereby confirmed and accepted as
of the date first above written.
X.X. XXXXXX & CO., INC.
By:________________________________
Authorized Officer
Dated: ______________, 1997
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SCHEDULE I
Underwriting Agreement dated __________, 1996
UNDERWRITER NUMBER OF FIRM UNITS TO BE PURCHASED
X.X. Xxxxxx & Co., Inc.
Total 1,200,000
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SCHEDULE II
Redeemable Warrant
27
