1
EXHIBIT 1.1
2,472,500 SHARES OF COMMON STOCK
SOUND ADVICE, INC.
UNDERWRITING AGREEMENT
New York, New York
__________ __, 2000
XXXXXXXXXX & CO. INC.
XXXX, XXXX & CO.
as representatives of the several Underwriters
named in Schedule A hereto
c/o Fahnestock & Co. Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Sound Advice, Inc., a Florida corporation (the "Company"), proposes to
issue and sell to the Underwriters named in SCHEDULE A hereto (the
"Underwriters") 1,800,000 shares (the "Company Shares") of Common Stock, $.01
par value, (such class of stock being herein called the "Common Stock"), of the
Company. In addition, certain shareholders of the Company named in SCHEDULE B
hereto (the "Selling Shareholders"), propose to sell to the Underwriters an
additional 350,000 shares of Common Stock (the "Selling Shareholder Shares").
The Company shares and the Selling Shareholder Shares are herein called the
"Firm Shares." In addition, certain of the Selling Shareholders named in
SCHEDULE B who beneficially own the shares set forth opposite their names under
the caption "Option Shares" will grant to the Underwriters an option to purchase
up to an additional 322,500 shares of Common Stock (the "Option Shares") for the
purpose of covering over-allotments in connection with the sale of Firm Shares.
The Firm Shares and any Option Shares purchased pursuant to this Underwriting
Agreement are herein called "Shares."
The Company also proposes to issue and sell to the Underwriters
warrants (the "Underwriters' Warrants") pursuant to the Underwriters' Warrant
Agreement among the Company and the Underwriters (the "Underwriters' Warrant
Agreement") for the purchase of an additional aggregate 200,000 shares of Common
Stock. The shares of Common Stock issuable upon exercise of the Underwriters'
Warrants are hereinafter referred to as the "Underwriters' Shares." The Firm
Shares, the Option Shares, the Underwriters' Warrants and the Underwriters'
Shares (collectively, hereinafter referred to as the "Securities") are more
fully described in the Registration Statement and the Prospectus referred to
below.
2
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters as of the
date hereof, and as of the Closing Date (hereinafter defined) and the Option
Closing Date (hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form S-1 (No. 333-_____), including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Securities under the Securities Act of 1933, as amended (the "Act"),
which registration statement and amendment or amendments have been prepared by
the Company in conformity with the requirements of the Act, and the rules and
regulations (the "Regulations") of the Commission under the Act. The Company
will promptly file a further amendment to said registration statement in the
form heretofore delivered to the Underwriters, and will not file any other
amendment thereto to which the Underwriters shall have objected to in writing
after having been furnished with a copy thereof. Except as the context may
otherwise require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, schedules, exhibits and all other
documents filed as a part thereof or incorporated therein (including, but not
limited to, those documents or information incorporated by reference therein)
and all information deemed to be a part thereof as of such time pursuant to
paragraph (b) of Rule 430(A) of the Regulations), is hereinafter called the
"Registration Statement", and the form of prospectus in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations, is hereinafter
called the "Prospectus." For purposes hereof, "Rules and Regulations" mean the
rules and regulations adopted by the Commission under either the Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority
has issued any order preventing or suspending the use of any Preliminary
Prospectus, the Registration Statement or the Prospectus or any part of any
thereof and no proceedings for a stop order suspending the effectiveness of the
Registration Statement or any of the Company's securities have been instituted
or are pending or to the Company's knowledge, threatened. Each of the
Preliminary Prospectus, Registration Statement and Prospectus at the time of
filing thereof conformed with the requirements of the Act and the Rules and
Regulations, and none of the Preliminary Prospectus, Registration Statement or
Prospectus at the time of filing thereof contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
and necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, provided, however, that this
representation and warranty does not apply to statements made or statements
omitted in reliance upon and in conformity with written information furnished to
the Company with respect to the Underwriters by or on behalf of any Underwriter
expressly for use in such Preliminary Prospectus, Registration Statement or
Prospectus.
(c) When the Registration Statement becomes effective and at
all times subsequent thereto, the Registration Statement and the Prospectus will
contain all statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations, and will conform to the requirements
of the Act and the Rules and Regulations; neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, will contain any untrue
statement of a material fact or omit to state any material fact required to be
2
3
stated therein or necessary to make the statements therein not misleading,
provided, however, that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in conformity with
written information furnished to the Company with respect to the Underwriters by
or on behalf of any Underwriter expressly for use in the Preliminary Prospectus,
Registration Statement or Prospectus or any amendment thereof or supplement
thereto.
(d) Each of the Company and its subsidiaries, all of which are
identified in the Registration Statement (each, a "Subsidiary and, collectively
the "Subsidiaries"), has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
organization. Neither the Company nor the Subsidiaries owns an interest in any
corporation, partnership, trust, joint venture or other business entity, except
as described in the Registration Statement. Each of the Company and its
Subsidiaries is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires such qualification or
licensing. Each of the Company and its Subsidiaries has all requisite corporate
power and authority, and each of the Company and its Subsidiaries has obtained
any and all necessary authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties and conduct
its business as described in the Prospectus; each of the Company and its
Subsidiaries is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all federal, state and local laws, rules and regulations; and
neither the Company nor the Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such authorization, approval,
order, license, certificate, franchise, or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the condition, financial or otherwise, or the
earnings, position, prospects, value, operation, properties, business or results
of operations of the Company and its Subsidiaries, taken as a whole. The
disclosures in the Registration Statement concerning the effects of federal,
state and local laws, rules and regulations on the Company's and the
Subsidiaries' business as currently conducted and as contemplated are correct in
all material respects and do not omit to state a material fact necessary to make
the statements contained therein not misleading in light of the circumstances in
which they were made. Neither the Company nor any Subsidiary is party to any
joint venture or partnership agreement.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, under "Capitalization" and
"Description of Securities" and will have the adjusted capitalization set forth
therein on the Closing Date and the Option Closing Date, if any, based upon the
assumptions set forth therein, and the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this Agreement,
the Underwriters' Warrant Agreement and as described in the Prospectus. The
Securities and all other securities issued or issuable by the Company conform
or, when issued and paid for, will conform, in all material respects to all
statements with respect thereto contained in the Registration Statement and the
3
4
Prospectus. All issued and outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and the
holders thereof have no rights of rescission with respect thereto, and are not
subject to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company or similar contractual rights granted by the
Company. The Securities are not and will not be subject to any preemptive or
other similar rights of any shareholder, have been duly authorized and, when
issued, paid for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable and will conform to the description
thereof contained in the Prospectus; the holders thereof will not be subject to
any liability solely by reason of being such holders; all corporate action
required to be taken for the authorization, issue and sale of the Securities has
been duly and validly taken; and the certificates representing the Securities
will be in due and proper form. Upon the issuance and delivery pursuant to the
terms hereof of the Securities to be sold by the Company or the Selling
Shareholders hereunder, the Underwriters will acquire good and marketable title
to such Securities free and clear of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity of any kind
whatsoever.
(f) KPMG LLP, the accountants who have certified the financial
statements filed and to be filed with the Commission as part of the Registration
Statement, each Preliminary Prospectus and the Prospectus, are independent
public accountants within the meaning of the Act and the Regulations. The
consolidated financial statements, including the related notes and schedules
thereto, included in the Registration Statement, each Preliminary Prospectus and
the Prospectus fairly present the financial position, income, changes in cash
flow, changes in shareholders' equity, and the results of operations of the
Company and the Subsidiaries at the respective dates and for the respective
periods to which they apply and the pro forma financial information included in
the Registration Statement and Prospectus presents fairly, on a basis consistent
with that of the audited financial statements included therein, what the
Company's pro forma capitalization would have been for the respective periods
and as of the respective dates to which they apply after giving effect to the
adjustments described therein. Such financial statements have been prepared in
conformity with generally accepted accounting principles and the Regulations,
consistently applied throughout the periods involved. There has been no adverse
change or development involving a material prospective change in the condition,
financial or otherwise, or in the earnings, position, prospects, value,
operation, properties, business, or results of operations of the Company and the
Subsidiaries, whether or not arising in the ordinary course of business, since
the date of the financial statements included in the Registration Statement and
the Prospectus, and the outstanding debt, the property, both tangible and
intangible, and the business of the Company and the Subsidiaries conform in all
material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus. Financial information set forth in the Prospectus
under the headings "Summary Consolidated Financial Data," "Selected Consolidated
Financial Data," "Capitalization," and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," fairly present, on the basis
stated in the Prospectus, the information set forth therein, have been derived
from or compiled on a basis consistent with that of the audited financial
statements included in the Prospectus.
(g) Each of the Company and the Subsidiaries (i) has paid all
federal, state, local, and foreign taxes for which it is liable and for which
payment is due, including, but not limited to, withholding taxes and amounts
payable under Chapters 21 through 24 of the Internal Revenue Code of 1986 (the
"Code"), and has furnished all information returns it is required to furnish
4
5
pursuant to the Code, (ii) has established adequate reserves for such taxes
which are not due and payable, and (iii) does not have any tax deficiency or
claims outstanding, proposed or assessed against it.
(h) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriters in connection with (i) the issuance
by the Company of the Securities, (ii) the purchase by the Underwriters of the
Securities to be sold by the Company or any Selling Shareholder hereunder and
the purchase by the Underwriters of the Underwriters' Warrants from the Company,
(iii) the consummation by each of the Company or any Selling Shareholder of any
of its obligations under this Agreement or the Underwriters' Warrant Agreement,
as the case may be or (iv) resales of the Shares in connection with the
distribution contemplated hereby.
(i) Each of the Company and the Subsidiaries maintains
insurance policies, including, but not limited to, general liability, product
liability and property insurance, which insures the Company, the Subsidiaries
and their respective employees, against such losses and risks generally insured
against by comparable businesses. Neither the Company nor any of the
Subsidiaries (A) has failed to give notice or present any insurance claim with
respect to any matter, including but not limited to the Company's business,
property or employees, under the insurance policy or surety bond in a due and
timely manner, (B) has any disputes or claims against any underwriter of such
insurance policies or surety bonds or has not failed to pay any premiums due and
payable thereunder or (C) has failed to comply with all conditions contained in
such insurance policies and surety bonds. There are no facts or circumstances
under any such insurance policy or surety bond which would relieve any insurer
of its obligation to satisfy in full any valid claim of the Company or any
Subsidiary.
(j) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or circumstances
that may give rise to the same), or involving the properties or business of, the
Company or any of the Subsidiaries which (i) questions the validity of the
capital stock of the Company, this Agreement or the Underwriters' Warrant
Agreement or of any action taken or to be taken by the Company pursuant to or in
connection with this Agreement or the Underwriters' Warrant Agreement, (ii) is
required to be disclosed in the Registration Statement which is not so disclosed
(and such proceedings as are summarized in the Registration Statement are
accurately summarized in all material respects) or (iii) except for matters
disclosed in the Prospectus, might materially and adversely affect the
condition, financial or otherwise, or the earnings, position, prospects,
shareholders' equity, value, operation, properties, business or results of
operations of the Company.
(k) The Company has full legal right, corporate power and
authority to authorize, issue, deliver and sell the Securities (other than the
Selling Shareholder Shares), enter into this Agreement and the Underwriters'
Warrant Agreement and to consummate the transactions provided for in such
agreements; and this Agreement and the Underwriters' Warrant Agreement have each
been duly and properly authorized, executed and delivered by the Company. Each
of this Agreement and the Underwriters' Warrant Agreement constitutes a legal,
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
5
6
conveyance or similar laws affecting creditors' rights generally, (ii) as
enforceability of any indemnification or contribution provisions may be limited
under applicable laws or the public policies underlying such laws and (iii) that
the remedies of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceedings may be brought. None of the Company's issue and
sale of the Securities, execution or delivery of this Agreement or the
Underwriters' Warrant Agreement, its performance hereunder and thereunder, its
consummation of the transactions contemplated herein and therein, or the conduct
of its business as described in the Registration Statement, the Prospectus, and
any amendments or supplements thereto, conflicts with or will conflict with or
results or will result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under, or result in
the creation or imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any kind whatsoever
upon, any property or assets (tangible or intangible) of the Company or the
Subsidiaries pursuant to the terms of, (i) the articles of incorporation or
bylaws of any of the Company or the Subsidiaries, (ii) any license, contract,
indenture, mortgage, deed of trust, voting trust agreement, shareholders
agreement, note, loan or credit agreement or any other agreement or instrument
to which any of the Company or the Subsidiaries is a party or by which it is or
may be bound or to which any of its properties or assets (tangible or
intangible) is or may be subject, or any indebtedness or (iii) any statute,
judgment, decree, order, rule or regulation applicable to any of the Company or
the Subsidiaries of any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body (including, without limitation,
those having jurisdiction over environmental or similar matters), domestic or
foreign, having jurisdiction over any of the Company or the Subsidiaries or any
of its activities or properties.
(l) Except as described in the Prospectus, no consent,
approval, authorization or order of, and no filing with, any court, regulatory
body, government agency or other body, domestic or foreign, is required for the
issuance of the Shares pursuant to the Prospectus and the Registration
Statement, the issuance of the Underwriters' Warrants, the performance of this
Agreement and the Underwriters' Warrant Agreement and the transactions
contemplated hereby and thereby, including without limitation, any waiver of any
preemptive, first refusal or other rights that any entity or person may have for
the issue and/or sale of any of the Shares or the Underwriters' Warrants, except
such as have been or may be obtained under the Act or may be required under
state securities or Blue Sky laws in connection with the Underwriters' purchase
and distribution of the Shares, and the Underwriters' Warrants to be sold by the
Company hereunder and under the Underwriters' Warrant Agreement.
(m) All executed agreements, contracts or other documents or
copies of executed agreements, contracts or other documents filed as exhibits to
the Registration Statement to which any of the Company or the Subsidiaries is a
party or by which it may be bound or to which any of its assets, properties or
business may be subject have been duly and validly authorized, executed and
delivered by the Company, and constitute the legal, valid and binding agreements
of the Company or the Subsidiaries, as the case may be, enforceable against the
Company, in accordance with their respective terms. The descriptions in the
Registration Statement of agreements, contracts and other documents are accurate
in all material respects and fairly present the information required to be shown
with respect thereto on Form S-1, and there are no contracts or other documents
which are required by the Act to be described in the Registration Statement or
6
7
filed as exhibits to the Registration Statement which are not described or filed
as required, and the exhibits which have been filed are in all material respects
complete and correct copies of the documents of which they purport to be copies.
(n) Subsequent to the respective dates as of which information
is set forth in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, neither the Company
nor any of the Subsidiaries has (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, (ii) entered
into any transaction other than in the ordinary course of business or (iii)
declared or paid any dividend or made any other distribution on or in respect of
its capital stock of any class, and there has not been any change in the capital
stock, or any material change in the debt (long or short term) or liabilities or
material adverse change in or affecting the general affairs, management,
financial operations, shareholders' equity or results of operations of the
Company or any of the Subsidiaries.
(o) No default exists in the due performance and observance of
any term, covenant or condition of any license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust agreement,
shareholders agreement, partnership agreement, note, loan or credit agreement,
purchase order, or any other agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries may be bound or to which the property or assets (tangible or
intangible) of the Company is subject or affected.
(p) Each of the Company and the Subsidiaries has generally
enjoyed a satisfactory employer-employee relationship with its employees and is
in compliance with all federal, state, local, and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours. There are no pending investigations involving
the Company or any of the Subsidiaries by the U.S. Department of Labor, or any
other governmental agency responsible for the enforcement of such federal,
state, local, or foreign laws and regulations. There is no unfair labor practice
charge or complaint against the Company or any of the Subsidiaries pending
before the National Labor Relations Board or any strike, picketing, boycott,
dispute, slowdown or stoppage pending or threatened against or involving the
Company or any of the Subsidiaries, or any predecessor entity, and none has ever
occurred. No representation question exists respecting the employees of the
Company or any of the Subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company and the
Subsidiaries. No grievance or arbitration proceeding is pending under any
expired or existing collective bargaining agreements of the Company or any of
the Subsidiaries. No labor dispute with the employees of the Company exists, or,
is imminent.
(q) Except as described in the Prospectus, neither the Company
nor any of the Subsidiaries maintains, sponsors or contributes to any program or
arrangement that is an "employee pension benefit plan," an "employee welfare
benefit plan," or a "multiemployer plan" as such terms are defined in Sections
3(2), 3(1) and 3(37), respectively, of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") ("ERISA Plans"). Neither the Company nor any
of the Subsidiaries maintains or contributes, now or at any time previously, to
a defined benefit plan, as defined in Section 3(35) of ERISA. No ERISA Plan (or
7
8
any trust created thereunder) has engaged in a "prohibited transaction" within
the meaning of Section 406 of ERISA or Section 4975 of the Code, which could
subject the Company or any of the Subsidiaries to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each ERISA Plan is in
compliance with all reporting, disclosure and other requirements of the Code and
ERISA as they relate to any such ERISA Plan. The Company has never completely or
partially withdrawn from a "multiemployer plan."
(r) Neither the Company, the Subsidiaries, nor any of their
employees, directors, shareholders, partners, or affiliates (within the meaning
of the Regulations) of any of the foregoing has taken or will take, directly or
indirectly, any action designed to or which has constituted or which might be
expected to cause or result in, under the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or otherwise.
(s) None of the patents, patent applications, trademarks,
service marks, service names, trade names and copyrights, and none of the
licenses and rights to the foregoing presently owned or held by the Company or
any of the Subsidiaries are in dispute or are in any conflict with the right of
any other person or entity. Each of the Company and the Subsidiaries (i) owns or
has the right to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever, all patents, patent applications, trademarks,
service marks, service names, trade names and copyrights, technology and
licenses and rights with respect to the foregoing, used in the conduct of its
business as now conducted or proposed to be conducted without infringing upon or
otherwise acting adversely to the right or claimed right of any person,
corporation or other entity under or with respect to any of the foregoing and
(ii) is not obligated or under any liability whatsoever to make any payment by
way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, patent application, trademark, service xxxx, service
name, trade name, copyright, know-how, technology or other intangible asset,
with respect to the use thereof or in connection with the conduct of its
business or otherwise.
(t) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental or other proceeding,
domestic or foreign, pending or threatened (or circumstances that may give rise
to the same) against the Company which challenges the exclusive rights of the
Company with respect to any trademarks, trade names, service marks, service
names, copyrights, patents, patent applications or licenses or rights to the
foregoing used in the conduct of its business, or which challenge the right of
the Company to use any technology presently used or contemplated to be used in
the conduct of its business.
(u) Each of the Company and the Subsidiaries owns and has the
unrestricted right to use all trade secrets, know-how (including all other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), inventions, technology, designs, processes, works of authorship,
computer programs and technical data and information (collectively herein
"intellectual property") that are material to the development, manufacture,
operation and sale of all products and services sold or proposed to be sold by
the Company or any of the Subsidiaries, free and clear of and without violating
any right, lien, or claim of others, including without limitation, former
employers of its employees; provided, however, that the possibility exists that
8
9
other persons or entities, completely independently of the Company or any of the
Subsidiaries, or their employees or agents, could have developed trade secrets
or items of technical information similar or identical to those of the Company
or any of the Subsidiaries. Neither the Company nor any of the Subsidiaries is
aware of any such development of similar or identical trade secrets or technical
information by others.
(v) Each of the Company and the Subsidiaries has good and
marketable title to, or valid and enforceable leasehold estates in, all items of
real and personal property stated in the Prospectus, to be owned or leased by it
free and clear of all liens, charges, claims, encumbrances, pledges, security
interests, defects, or other restrictions or equities of any kind whatsoever,
other than those referred to in the Prospectus, taxes, lessor's interests and
liens for taxes not yet due and payable.
(w) The Company has caused to be duly executed legally binding
and enforceable agreements pursuant to which the holders of the Common Stock and
holders of securities exchangeable or exercisable for or convertible into shares
of Common Stock agreed not to, directly or indirectly, offer to sell, sell,
grant any option for the sale of, assign, transfer, pledge, hypothecate,
distribute or otherwise encumber or dispose of any shares of Common Stock or
securities convertible into, exercisable or exchangeable for or evidencing any
right to purchase or subscribe for any shares of Common Stock (either pursuant
to Rule 144 of the Rules and Regulations or otherwise) or dispose of any
beneficial interest therein for a period of not less than 90 days following the
effective date of the Registration Statement without the prior written consent
of Xxxxxxxxxx. During the 90-day period commencing on the effective date of the
Registration Statement, neither the Company nor any Selling Shareholder shall,
without the prior written consent of the Underwriters, sell, contract or offer
to sell, issue, transfer, assign, pledge, distribute, or otherwise dispose of,
directly or indirectly, any shares of Common Stock or any options, rights or
warrants with respect to any shares of Common Stock other than the Securities
pursuant hereto and other than up to _______ shares of Common Stock reserved for
issuance upon the exercise of options under the Company's Stock Option Plans as
described in the Prospectus which shares are also subject to such restriction.
The Company will cause the Transfer Agent, as defined below, to place "stop
transfer" orders on the Company's stock ledgers.
(x) Except as described in the Prospectus under
"Underwriting," there are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company, the Subsidiaries or any of their respective officers,
directors, shareholders, partners, employees or affiliates that may affect the
Underwriters' compensation, as determined by the National Association of
Securities Dealers, Inc. ("NASD").
(y) The Securities have been approved for listing on the
Nasdaq National Market ("Nasdaq").
(z) Neither the Company nor any of the Subsidiaries nor any of
their respective officers, employees, agents, or any other person acting on
behalf of the Company or the Subsidiaries, has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or employee
of any governmental agency (domestic or foreign) or instrumentality of any
9
10
government (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a position to
help or hinder the business of the Company (or assist the Company or the
Subsidiaries in connection with any actual or proposed transaction) which (a)
might subject the Company or the Subsidiaries, or any other such person to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (b) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the Company
or any Subsidiary, or (c) if not continued in the future, might adversely affect
the assets, business, operations or prospects of the Company or any of the
Subsidiaries. The Company's and each Subsidiary's internal accounting controls
are sufficient to cause the Company to comply with the Foreign Corrupt Practices
Act of 1977, as amended.
(aa) Except as set forth in the Prospectus, no officer,
director or shareholder of the Company, or any "affiliate" or "associate" (as
these terms are defined in Rule 405 promulgated under the 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 any Subsidiary, or (B) purchases from or sells or furnishes to
the Company or any Subsidiary any goods or services, or (ii) a beneficial
interest in any contract or agreement to which the Company or any Subsidiary is
a party or by which it may be bound or affected. Except as set forth in the
Prospectus under "Certain Transactions," there are no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among the Company and
any officer, director, or Principal Shareholder (as such term is defined in the
Prospectus) of the Company or any Subsidiary, or any partner, affiliate or
associate of any of the foregoing persons or entities.
(bb) Any certificate signed by any officer of the Company or
any Subsidiary, 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 books of each of the Company and the
Subsidiaries have been made available to the Underwriters and contains a
complete summary of all meetings and actions of the directors, shareholders,
audit committee, compensation committee and any other committee of the Board of
Directors of each of the Company and the Subsidiaries, since the time of its
incorporation, and reflects all transactions referred to in such minutes
accurately in all material respects.
(dd) Except and to the extent described in the Prospectus, no
holders of any securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right to include
any securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company or to require the Company to
file a registration statement under the Act and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
(ee) The Company has as of the effective date of the
Registration Statement entered into, and there remains in effect, valid and
10
11
binding, employment agreements with each of Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxx X. Xxxxxxxxx and Xxxxxxxxxxx X'Xxxx in the forms filed as Exhibits ___,
___, ___ and ___, respectively, to the Registration Statement.
(ff) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder (except as otherwise indicated) represents and warrants, for
such Selling Shareholder only and not for any other Selling Shareholder, to, and
agrees with, each of the Underwriters as of the date hereof, and as of the
Closing Date and the Option Closing Date, if any, as follows:
(a) Such Selling Shareholder has full right, power and
authority to enter into this Agreement, the Power of Attorney (the "Power of
Attorney") and the Custody Agreement (the "Custody Agreement") hereinafter
referred to and at the date hereof such Selling Shareholder has, and at the time
of delivery of the Selling Shareholder Shares to the Underwriters hereunder such
Selling Shareholder will have, full right, power and authority to sell and
deliver the Selling Shareholder Shares to be sold by such Selling Shareholder to
the Underwriters, and at the date hereof such Selling Shareholder is, and at the
time of delivery of Selling Shareholders Shares to the Underwriters such Selling
Shareholder will be, the lawful owner of and has, and will have, marketable
title to such shares free and clear of any claims, liens, encumbrances or
security interests.
(b) The performance of this Agreement, the Power of Attorney
and the Custody Agreement, and the consummation of the transactions herein and
therein contemplated, will not conflict with or result in a breach of, or
default under, any agreement, indenture or other instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder is bound, or
any law, rule, administrative regulation or court decree. This Agreement, the
Power of Attorney and the Custody Agreement have been validly authorized,
executed and delivered by such Selling Shareholder and each constitutes the
valid and binding agreement of such Selling Shareholder.
(c) When the Registration Statement becomes effective, and at
all times subsequent thereto, the Registration Statement and Prospectus and any
amendments thereof and supplements thereto will not contain any untrue statement
of a material fact regarding such Selling Shareholder or omit to state a
material fact regarding such Selling Shareholder required to be stated therein
or necessary in order to make the statements therein regarding such Selling
Shareholder not misleading.
(d) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Common Stock.
(e) Certificates in negotiable form representing all of the
Selling Shareholder Shares to be sold by such Selling Shareholder have been
placed in custody under a Custody Agreement, in the form heretofore furnished to
you, duly executed and delivered by such Selling Shareholder to the Company, as
custodian (the "Custodian"), and such Selling Shareholder has duly executed and
delivered a Power of Attorney, in the form heretofore furnished to you,
11
12
appointing, each of Xxxxx Xxxxxxxx and Xxxxxxx X. Xxxxxxxxx as such Selling
Shareholder's attorney-in-fact (together, the "Attorneys-in-Fact") with
authority to execute and deliver this Agreement on behalf of such Selling
Shareholders, to authorize the delivery of the Selling Shareholder Shares to be
sold by such Selling Shareholders hereunder and otherwise to act on behalf of
such Selling Shareholder in connection with the transactions contemplated by
this Agreement and the Custody Agreement.
(f) The Selling Shareholder Shares held in custody for such
Selling Shareholder under the Custody Agreement are subject to the interests of
the Underwriters hereunder, and the arrangements made by such Selling
Shareholder for such custody, as well as the appointment by such Selling
Shareholder of the Attorney-in-Fact, are, to that extent, irrevocable. Each
Selling Shareholder specifically agrees that the obligations of the Selling
Shareholders hereunder shall not be terminated by operation of law, whether by
the death or incapacity of any individual Selling Shareholder or by the
occurrence of any other event. If any individual Selling Shareholder should die
or become incapacitated, or if any other such event should occur, before the
delivery of the Stock hereunder, certificates representing the Selling
Shareholder Shares shall be delivered by or on behalf of such Selling
Shareholder in accordance with the terms and conditions of this Agreement and of
the Custody Agreement, and the actions taken by the Attorney-in-Fact pursuant to
the Power of Attorney shall be as valid as if such death, incapacity or other
event had not occurred, whether or not the Custodian or the Attorney-in-Fact
shall have received notice of such death, incapacity or other event.
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES AND UNDERWRITERS'
WARRANTS.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, and subject to the terms and conditions herein
set forth (i) the Company agrees to sell to each Underwriter, and each
Underwriter, severally and not jointly, agrees to purchase from the Company at a
price of $____ per share, that number of Company Shares set forth in Schedule A
opposite the name of such Underwriter, and (ii) each Selling Shareholder agrees,
severally and not jointly, to sell to the Underwriters, and the Underwriters,
severally and not jointly, agree to purchase from each Selling Shareholder at a
price of $____ per share, that number of Selling Shareholder Shares set forth in
Schedule B opposite the name of such Selling Shareholder.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of the
Option Shares. The option granted hereby will expire 30 days after (i) the date
the Registration Statement becomes effective, if the Company has elected not to
rely on Rule 430A under the Rules and Regulations, or (ii) the date of this
Agreement if the Company has elected to rely upon Rule 430A under the Rules and
Regulations, and may be exercised in whole or in part from time to time only for
the purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Firm Shares upon notice by the Underwriters to
the Company setting forth the number of Option Shares as to which the several
12
13
Underwriters are then exercising the option and the time and date of payment and
delivery for any such Option Shares. In the event that the Underwriters exercise
less than the full over-allotment option, the number of Option shares to be sold
by each Selling Shareholder shall be in the proportion that the number of Option
Shares listed opposite each Selling Shareholder's name bears to the total number
of Option Shares. Any such time and date of delivery (an "Option Closing Date")
shall be determined by the Underwriters, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Date, as hereinafter defined, unless otherwise agreed upon by the
Underwriters and the Company. Nothing herein contained shall obligate the
Underwriters to make any over-allotments. No Option Shares shall be delivered
unless the Firm Shares shall be simultaneously delivered or shall theretofore
have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of Xxxxxxxxxx &
Co. Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as
shall be agreed upon by the Underwriters and the Company. Such delivery and
payment shall be made at 10:00 a.m. (New York City time) on _____________, 2000
or at such other time and date as shall be agreed upon by the Underwriters and
the Company, but not less than three (3) nor more than seven (7) full business
days after the effective date of the Registration Statement (such time and date
of payment and delivery being herein called the "Closing Date"). In addition, in
the event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates
for, such Option Shares shall be made at the above-mentioned office of the
Underwriters or at such other place as shall be agreed upon by the Underwriters
and the Company on each Option Closing Date as specified in the notice from the
Underwriters to the Company.
(d) Delivery of the certificates for the Firm Shares and the
Option Shares, if any, shall be made to the Underwriters against payment by the
Underwriters, severally and not jointly, of the purchase price for the Firm
Shares and the Option Shares, if any, to the order of the Company for the Firm
Shares and the Option Shares, if any, by New York Clearing House funds. In the
event such option is exercised, each of the Underwriters, acting severally and
not jointly, shall purchase that proportion of the total number of Option Shares
then being purchased which the number of Firm Shares set forth in Schedule A
hereto opposite the name of such Underwriter bears to the total number of Firm
Shares, subject in each case to such adjustments as the Underwriters in their
discretion shall make to eliminate any sales or purchases of fractional shares.
Delivery of certificates for the Selling Shareholder Shares shall be made on
behalf of the Selling Shareholders by the Custodian to the Underwriters against
payment by the Underwriters, severally and not jointly, of the purchase price
therefor in New York Clearing House Funds. Certificates for the Firm Shares and
the Option Shares, if any, and the shares sold by the Selling Shareholders shall
be in definitive, fully registered form, shall bear no restrictive legends and
shall be in such denominations and registered in such names as the Underwriters
may request in writing at least two (2) business days prior to the Closing Date
or the relevant Option Closing Date, as the case may be. The certificates for
the Firm Shares and the Option Shares, if any, shall be made available to the
Underwriters at such office or such other place as the Underwriters may
designate for inspection, checking and packaging no later than 9:30 a.m. on the
last business day prior to Closing Date or the relevant Option Closing Date, as
the case may be.
13
14
(e) On the Closing Date, the Company shall issue and sell to
the Underwriters, one or more Underwriters' Warrants at a purchase price of $.01
per warrant, which warrants shall entitle the holders thereof to purchase an
aggregate of 200,000 shares of Common Stock. The Underwriters' Warrants shall be
exercisable for a period of four years commencing one year after the effective
date of the Registration Statement at a price equaling one hundred and twenty
percent (120%) of the public offering price of the Firm Shares. The
Underwriters' Warrant Agreement and form of Warrant Certificate shall be
substantially in the form filed as Exhibit 4.2 to the Registration Statement.
Payment for the Underwriters' Warrants shall be made by the Underwriters on the
Closing Date.
4. PUBLIC OFFERING OF THE SHARES. As soon after the Registration
Statement becomes effective as the Underwriters deem advisable, the Underwriters
shall, subject to the terms and conditions hereof, make a public offering of the
Firm Shares and such of the Option Shares as they may determine (other than to
residents of or in any jurisdiction in which qualification of the Shares is
required and has not become effective) at the price and upon the other terms set
forth in the Prospectus. The Underwriters may from time to time increase or
decrease the public offering price after distribution of the Shares has been
completed to such extent as the Underwriters, in their discretion deem
advisable. The Underwriters may enter into one of more agreements as the
Underwriters, in each of their sole discretion, deem advisable with one or more
broker-dealers who shall act as dealers in connection with such public offering.
5. COVENANTS AND AGREEMENTS OF THE COMPANY.
(a) The Company covenants and agrees with each of the
Underwriters as follows:
(i) The Company shall use its best efforts to cause
the Registration Statement and any amendments thereto to
become effective as promptly as practicable and will not at
any time, whether before or after the effective date of the
Registration Statement, file any amendment to the Registration
Statement or supplement to the Prospectus or file any document
under the Act or Exchange Act before termination of the
offering of the Shares by the Underwriters of which the
Underwriters shall not previously have been advised and
furnished with a copy, or to which the Underwriters shall have
objected or which is not in compliance with the Act, the
Exchange Act or the Regulations.
(ii) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Underwriters
and the Selling Shareholders and confirm the notice in
writing, (i) when the Registration Statement, as amended,
becomes effective, if the provisions of Rule 430A promulgated
under the Act will be relied upon, when the Prospectus has
been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes
effective, (ii) of the issuance by the Commission of any stop
order or of the initiation, or the threatening, of any
proceeding, suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the
Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto, or the institution of proceedings for that
purpose, (iii) of the issuance by the Commission or by any
state securities commission of any proceedings for the
14
15
suspension of the qualification of any of the Securities for
offering or sale in any jurisdiction or of the initiation, or
the threatening, of any proceeding for that purpose, (iv) of
the receipt of any comments from the Commission; and (v) of
any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the
Prospectus or for additional information. If the Commission or
any state securities commission authority shall enter a stop
order or suspend such qualification at any time, the Company
will make every effort to obtain promptly the lifting of such
order.
(iii) The Company shall file the Prospectus (in form
and substance satisfactory to the Underwriters) or transmit
the Prospectus by a means reasonably calculated to result in
filing with the Commission pursuant to Rule 424(b)(1) (or, if
applicable and if consented to by the Underwriters, pursuant
to Rule 424(b)(4)) not later than the Commission's close of
business on the earlier of (i) the second business day
following the execution and delivery of this Agreement and
(ii) the fifteenth business day after the effective date of
the Registration Statement.
(iv) The Company will give the Underwriters and the
Selling Shareholders notice of its intention to file or
prepare any amendment to the Registration Statement (including
any post-effective amendment) or any amendment or supplement
to the Prospectus (including any revised prospectus which the
Company proposes for use by the Underwriters in connection
with the offering of the Securities which differs from the
corresponding prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not
such revised prospectus is required to be filed pursuant to
Rule 424(b) of the Regulations), and will furnish the
Underwriters with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file any such prospectus
to which the Underwriters or Xxxxxx, Xxxxx & Xxxxxxx LLP
("Underwriters' Counsel"), shall object.
(v) The Company shall endeavor in good faith, in
cooperation with the Underwriters, at or prior to the time the
Registration Statement becomes effective, to qualify the
Securities for offering and sale under the securities laws of
such jurisdictions as the Underwriters may designate to permit
the continuance of sales and dealings therein for as long as
may be necessary to complete the distribution, and shall make
such applications, file such documents and furnish such
information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a
foreign corporation or file a general or limited consent to
service of process in any such jurisdiction. In each
jurisdiction where such qualification shall be effected, the
Company will, unless the Underwriters agree that such action
is not at the time necessary or advisable, use all reasonable
efforts to file and make such statements or reports at such
times as are or may reasonably be required by the laws of such
jurisdiction to continue such qualification.
15
16
(vi) During the time when a prospectus is required to
be delivered under the Act, the Company shall use all
reasonable efforts to comply with all requirements imposed
upon it by the Act and the Exchange Act, as now and hereafter
amended and by the Regulations, as from time to time in force,
so far as necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions
hereof and the Prospectus, or any amendments or supplements
thereto. If at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any
event shall have occurred as a result of which, in the opinion
of counsel for the Company or Underwriters' Counsel, the
Prospectus, as then amended or supplemented, includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with
the Act, the Company will notify the Underwriters promptly and
prepare and file with the Commission an appropriate amendment
or supplement in accordance with Section 10 of the Act, each
such amendment or supplement to be satisfactory to
Underwriters' Counsel, and the Company will furnish to the
Underwriters copies of such amendment or supplement as soon as
available and in such quantities as the Underwriters may
request.
(vii) As soon as practicable, but in any event not
later than 45 days after the end of the 12-month period
beginning on the day after the end of the fiscal quarter of
the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the
end of such fiscal quarter is the end of the Company's fiscal
year), the Company shall make generally available to its
security holders, in the manner specified in Rule 158(b) of
the Regulations, and to the Underwriters, an earnings
statement which will be in the detail required by, and will
otherwise comply with, the provisions of Section 11(a) of the
Act and Rule 158(a) of the Regulations, which statement need
not be audited unless required by the Act, covering a period
of at least 12 consecutive months after the effective date of
the Registration Statement.
(viii) During a period of five years after the date
hereof, the Company will furnish to its shareholders annual
reports (including financial statements audited by independent
public accountants) and will deliver to the Underwriters:
(a) concurrently with furnishing such
quarterly reports to its shareholders, statements of
income of the Company for each quarter in the form
furnished to the Company's shareholders and certified
by the Company's principal financial or accounting
officer;
(b) concurrently with furnishing such annual
reports to its shareholders, a balance sheet of the
Company as at the end of the preceding fiscal year,
together with statements of operations, shareholders'
equity, and cash flows of the Company for such fiscal
year, accompanied by a copy of the report thereon of
independent certified public accountants;
16
17
(c) as soon as they are available, copies of
all reports (financial or other) mailed to
shareholders;
(d) as soon as they are available, copies of
all reports and financial statements furnished to or
filed with the Commission, the NASD or any securities
exchange;
(e) every press release and every material
news item or article of interest to the financial
community in respect of the Company, or its affairs
which was released or prepared by or on behalf of the
Company; and
(f) any additional information of a public
nature concerning the Company (and any future
subsidiary) or its businesses which the Underwriters
may request.
During such five (5) year period, if the Company has
an active subsidiary, the foregoing financial statements will
be on a consolidated basis to the extent that the accounts of
the Company and its subsidiary are consolidated, and will be
accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(ix) The Company will maintain a Transfer Agent and,
if necessary under the jurisdiction of incorporation of the
Company, a Registrar (which may be the same entity as the
Transfer Agent) for its Common Stock.
(x) The Company will furnish to the Underwriters or
on the Underwriters' order, without charge, at such place as
the Underwriters may designate, copies of each Preliminary
Prospectus, the Registration Statement and any pre-effective
or post-effective amendments thereto (two of which copies will
be signed and will include all financial statements and
exhibits), the Prospectus, and all amendments and supplements
thereto, including any prospectus prepared after the effective
date of the Registration Statement, in each case as soon as
available and in such quantities as the Underwriters may
request.
(xi) On or before the effective date of the
Registration Statement, the Company shall provide the
Underwriters with true copies of duly executed, legally
binding and enforceable agreements pursuant to which for a
period of not less than 90 days from the effective date of the
Registration Statement, holders of all shares of Common Stock
and holders of securities exchangeable or exercisable for or
convertible into shares of Common Stock, will not directly or
indirectly, issue, offer to sell, sell, grant an option for
the sale of, assign, transfer, pledge, hypothecate, distribute
or otherwise encumber or dispose of any shares of Common Stock
or securities convertible into, exercisable or exchangeable
for or evidencing any right to purchase or subscribe for any
shares of Common Stock (either pursuant to Rule 144 of the
Rules and Regulations or otherwise) or dispose of any
beneficial interest therein without the prior written consent
17
18
of Xxxxxxxxxx (collectively, the "Lock-up Agreements"). On or
before the Closing Date, the Company shall deliver
instructions to the Transfer Agent authorizing it to place
appropriate stop transfer orders on the Company's ledgers.
During the 90-day period commencing with the effective date of
the Registration Statement, the Company shall not, without the
prior written consent of Xxxxxxxxxx, sell, contract or offer
to sell, issue, transfer, assign, pledge, hypothecate,
distribute, or otherwise dispose of, directly or indirectly,
any shares of Common Stock or any options, rights or warrants
with respect to any shares of Common Stock. During the 90-day
period commencing with the effective date of the Registration
Statement, the Company shall not file any registration
statement with the Securities and Exchange Commission on Form
S-8 without the prior written consent of the Underwriters.
(xii) Neither the Company nor any of the
Subsidiaries, nor any of their officers, directors,
shareholders, nor any of their respective affiliates (within
the meaning of the Rules and Regulations) will take, directly
or indirectly, any action designed to, or which might in the
future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any securities
of the Company.
(xiii) The Company shall apply the net proceeds from
the sale of the Securities in the manner, and subject to the
conditions, set forth under "Use of Proceeds" in the
Prospectus. Except as described in the Prospectus, no portion
of the net proceeds will be used, directly or indirectly, to
acquire any securities issued by the Company.
(xiv) The Company shall timely file all such reports,
forms or other documents as may be required from time to time,
under the Act, the Exchange Act, and the Regulations, and all
such reports, forms and documents filed will comply as to form
and substance with the applicable requirements under the Act,
the Exchange Act, and the Rules and Regulations.
(xv) The Company shall furnish to the Underwriters as
early as practicable prior to each of the date hereof, the
Closing Date and each Option Closing Date, if any, but no
later than two (2) full business days prior thereto, a copy of
the latest available unaudited interim financial statements of
the Company (which in no event shall be as of a date more than
thirty (30) days prior to the date of the Registration
Statement) which have been read by the Company's independent
public accountants, as stated in their letter to be furnished
pursuant to Section 6(j) hereof.
(xvi) The Company shall cause the Common Stock to be
quoted on the Nasdaq or a National Securities exchange and for
a period of three (3) years from the date hereof, and use its
best efforts to maintain the Nasdaq quotation or exchange
listing of the Common Stock to the extent outstanding.
(xvii) For a period of five (5) years from the
Closing Date, the Company shall furnish to the Underwriters at
the Underwriters' request and at the Company's sole expense,
18
19
(i) daily consolidated transfer sheets relating to the Common
Stock, (ii) the list of holders of all of the Company's
securities and (iii) a Blue Sky "Trading Survey" for secondary
sales of the Company's securities prepared by counsel to the
Company.
(xviii) The Company hereby agrees that it will not
without the written consent of a majority of the Company's
shareholders who are not affiliates of the Company at such
time or the vote of a majority of such non-affiliate
shareholders, voting at a duly held shareholder's meeting for
a period of thirteen (13) months from the effective date of
the Registration Statement, adopt, propose to adopt or
otherwise permit to exist any employee, officer, director,
consultant or compensation plan or arrangement permitting the
grant, issue or sale of any shares of Common Stock or other
securities of the Company (i) in an amount greater than an
aggregate of _________ shares of Common Stock, (ii) at an
exercise or sale price per share less than the fair market
value of the Common Stock on the date of grant or sale, (iii)
with the payment for such securities with any form of
consideration other than cash, (iv) upon payment of less than
the full purchase or exercise price for such shares of Common
Stock or other securities of the Company.
(xix) Until the completion of the distribution of the
Shares, and for 25 days thereafter, the Company shall not
without the prior written consent of the Underwriters and
Underwriters' Counsel, issue, directly or indirectly, any
press release or other communication or hold any press
conference with respect to the Company or its activities or
the offering contemplated hereby.
(xx) For a period equal to the lesser of (i) seven
years from the date hereof and (ii) the sale to the public of
the Underwriters' Shares, the Company will use reasonable
efforts not to take any action or actions which may prevent or
disqualify the Company's use of Form S-3 (or other appropriate
form) for the registration under the Act of the Underwriters'
Shares.
6. PAYMENT OF EXPENSES.
(a) The Company hereby agrees to pay on each of the Closing
Date and the Option Closing Date (to the extent not paid at the Closing Date)
all expenses and fees (other than fees of Underwriters' Counsel, except as
provided in (iv) below) incident to the performance of the obligations of the
Company under this Agreement and the Underwriters' Warrant Agreement, including,
without limitation, (i) the fees and expenses of accountants and counsel for the
Company, (ii) all costs and expenses incurred in connection with the
preparation, duplication, printing, (including mailing and handling charges)
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments and
supplements thereto and the printing, mailing (including the payment of postage
with respect thereto) and delivery of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreements, and related documents, including
the cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
19
20
Underwriters and such dealers as the Underwriters may request, in quantities as
hereinabove stated, (iii) the printing, engraving, issuance and delivery of the
Securities including, but not limited to, (x) the purchase by the Underwriters
of the Shares and the purchase by the Underwriters of the Underwriters' Warrants
from the Company, (y) the consummation by the Company and the Selling
Shareholders of any of their obligations under this Agreement and the
Underwriters' Warrant Agreement, and (z) resale of the Shares by the
Underwriters in connection with the distribution contemplated hereby, (iv) the
qualification of the Securities under state or foreign securities or "Blue Sky"
laws and determination of the status of such securities under legal investment
laws, including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum," the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and disbursements and fees of counsel in connection therewith,
(v) costs and expenses in connection with due diligence investigations,
including but not limited to the fees of any independent counsel or consultant
retained, (vi) fees and expenses of the transfer agent and registrar, (vii) the
fees payable to the Commission and the NASD and (viii) the fees and expenses
incurred in connection with the quotation of the Securities on the Nasdaq
National Market and any other exchange. Notwithstanding any other provision of
this Agreement, whether or not the offering contemplated hereby is successfully
completed, it shall be the Company's obligation to bear all of its expenses in
connection with the proposed offering, including, but not limited to, the
following: filing fees, printing and duplicating costs, all postage and mailing
expenses with respect to the transmission of prospectuses, registrar and
transfer agent fees, costs and expenses related to "Tombstone" advertisements,
the Company's "road show" and information meetings and presentation costs, its
own counsel and accounting fees, costs of due diligence investigations, bound
volumes, prospectus memorabilia, issue and transfer taxes, if any, and "Blue
Sky" filing fees, counsel fees and expenses.
(b) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 6 or Section 12, the Company shall
reimburse and indemnify the Underwriters for all of their actual out-of-pocket
expenses, including the fees and disbursements of Underwriters' Counsel, but not
in excess of $100,000, less any amounts already paid pursuant to Section 5(c)
hereof.
(c) The Company further agrees that, in addition to the
expenses payable pursuant to subsection (a) of this Section 5, it will pay to
the Underwriters on the Closing Date by certified or bank cashier's check or, at
the election of the Underwriters, by deduction from the proceeds of the offering
contemplated herein the balance of a non-accountable expense allowance equal to
$75,000, $30,000 of which has been paid as of the date hereof.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of each of
the representations and warranties of the Company and the Selling Shareholders
contained herein as of the date hereof and as of the Closing Date and each
Option Closing Date, if any, as if it had been made on and as of the Closing
Date or each Option Closing Date, as the case may be; the accuracy on and as of
the Closing Date or Option Closing Date, if any, of the statements of the
officers of the Company made pursuant to the provisions hereof; and the
performance by the Company and each of the Selling Shareholders on and as of the
Closing Date and each Option Closing Date, if any, of their respective covenants
and obligations hereunder and to the following further conditions:
20
21
(a) The Registration Statement shall have become effective not
later than 12:00 Noon, New York time, on the date of this Agreement or such
later date and time as shall be consented to in writing by the Underwriters,
and, at the Closing Date and each Option Closing Date, if any, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending or contemplated by the Commission and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Underwriters' Counsel. If the Company has elected to
rely upon Rule 430A of the Regulations, the price of the Shares and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Rules and Regulations
within the prescribed time period, and prior to the Closing Date the Company
shall have provided evidence satisfactory to the Underwriters of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Rules and Regulations.
(b) The Underwriters shall not have advised the Company that
the Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Underwriters' opinion, is material, or omits to
state a fact which, in the Underwriters' opinion, is material and is required to
be stated therein or is necessary to make the statements therein not misleading,
or that the Prospectus, or any supplement thereto, contains an untrue statement
of fact which, in the Underwriters' opinion, is material, or omits to state a
fact which, in the Underwriters' opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Underwriters shall
have received from Underwriters' Counsel, such opinion or opinions with respect
to the organization of the Company, the validity of the Securities, the
Underwriters' Warrants, the Registration Statement, the Prospectus and other
related matters as the Underwriters requests and Underwriters' Counsel shall
have received such papers and information as they request to enable them to pass
upon such matters.
(d) At Closing Date, the Underwriters shall have received the
favorable opinion of Xxxxxxxxx Xxxxxxx, P.A., counsel to the Company, dated the
Closing Date, addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) each of the Company and the Subsidiaries (A) has
been duly organized, except as to the Subsidiaries which shall
be to the knowledge of Counsel, and based upon certificates of
good standing or authorization or the like received from
applicable jurisdictions, is validly existing as a corporation
in good standing under the laws of its jurisdiction, (B) is
duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations
requires such qualification or licensing, except where the
failure to be so qualified and in good standing has no
material adverse effect on the Company, and (C) has all
requisite corporate power and authority; and the Company has
21
22
obtained any and all necessary authorizations, approvals,
orders, licenses, certificates, franchises and permits of and
from all governmental or regulatory officials and bodies
(including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its
properties and conduct its business as described in the
Prospectus. The disclosures in the Registration Statement
concerning the effects of federal, state and local laws, rules
and regulations on the Company's business as currently
conducted and as contemplated are correct in all material
respects;
(ii) the Company owns, directly or indirectly, one
hundred percent (100%) of the outstanding capital stock of
each of the Subsidiaries, and all such shares have been
validly issued, are fully paid and nonassessable and were not
in violation of any statutory preemptive rights;
(iii) the Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and
any amendment or supplement thereto, under "Capitalization"
and "Description of Securities" and, to the best of such
counsel's knowledge, is not a party to or bound by any
instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Underwriters'
Warrant Agreement and as described in the Prospectus. The
Securities, and all other securities issued or issuable by the
Company conform in all material respects to all statements
with respect thereto contained in the Registration Statement
and the Prospectus. All issued and outstanding securities of
the Company have been duly authorized and validly issued and
are fully paid and nonassessable; the holders thereof have, to
such counsel's knowledge, no rights of rescission with respect
thereto, and are not subject to personal liability by reason
of being such holders; and none of such securities were issued
in violation of the preemptive rights of any holders of any
security of the Company. The Shares, the Underwriters'
Warrants and the Underwriters' Shares to be sold by the
Company hereunder and under the Underwriters' Warrant
Agreement are not and will not be subject to any preemptive or
other similar rights of any shareholder, have been duly
authorized and, when issued, paid for and delivered in
accordance with the terms hereof, will be validly issued,
fully paid and nonassessable and conform to the description
thereof contained in the Prospectus; the holders thereof will
not be subject to any liability solely as such holders; all
corporate action required to be taken for the authorization,
issue and sale of the Shares, the Underwriters' Warrants and
the Underwriters' Shares has been duly and validly taken, and
the certificates representing the Shares and the Underwriters'
Warrants are in due and proper form. The Underwriters'
Warrants constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment
therefor, the number and type of securities of the Company
called for thereby. Upon the issuance and delivery pursuant to
this Agreement and the Underwriters' Warrant Agreement of the
Shares and the Underwriters' Warrants, respectively, to be
22
23
sold by the Company, the Underwriters will acquire good and
marketable title to the Shares and the Underwriters' Warrants
free and clear of any pledge, lien, charge, claim,
encumbrance, security interest, or other restriction or equity
of any kind whatsoever. No transfer tax is payable by or on
behalf of the Underwriters in connection with (A) the issuance
by the Company of the Securities, (B) the purchase by the
Underwriters of the Shares and the Underwriters' Warrants from
the Company, (C) the consummation by the Company of any of its
obligations under this Agreement or the Underwriters' Warrant
Agreement or (D) resales of the Securities in connection with
the distribution contemplated hereby;
(iv) the Registration Statement is effective under
the Act, and, if applicable, filing of all pricing information
has been timely made in the appropriate form under Rule 430A,
and to the knowledge of such counsel, no stop order suspending
the use of the Preliminary Prospectus, the Registration
Statement or Prospectus or any part of any thereof or
suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been
instituted or are pending or, to the best of such counsel's
knowledge, threatened or contemplated under the Act;
(v) each of the Preliminary Prospectus, the
Registration Statement, and the Prospectus and any amendments
or supplements thereto (other than the financial statements
and related notes and other financial and statistical data
included therein, as to which no opinion need be rendered)
comply as to form in all material respects with the
requirements of the Act and the Regulations;
(vi) to the best of such counsel's knowledge, (A)
there are no agreements, contracts or other documents required
by the Act to be described in the Registration Statement and
the Prospectus and filed as exhibits to the Registration
Statement other than those described in the Registration
Statement (or required to be filed under the Exchange Act if
upon such filing they would be incorporated, in whole or in
part, by reference therein) and the Prospectus and filed as
exhibits thereto, and the exhibits which have been filed are
correct copies of the documents of which they purport to be
copies; (B) the descriptions in the Registration Statement and
the Prospectus and any supplement or amendment thereto of
contracts and other documents to which the Company or any
Subsidiary is a party or by which it is bound, including any
document to which the Company or any Subsidiary is a party or
by which it is bound, incorporated by reference into the
Prospectus and any supplement or amendment thereto, are
accurate in all material respects and fairly represent the
information required to be shown by Form S-1; (C) there is no
pending or threatened against the Company or any Subsidiary
any action, arbitration, suit, proceeding, inquiry,
investigation, litigation, governmental or other proceeding
(including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign,
pending or threatened against (or circumstances that may give
rise to the same), or involving the properties or business of
the Company or any Subsidiary which (x) is required to be
disclosed in the Registration Statement which is not so
disclosed, (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all
material respects), (y) questions the validity of the capital
stock of the Company or this Agreement or the Underwriters'
Warrant Agreement, or of any action taken or to be taken by
the Company pursuant to or in connection with any of the
foregoing; (D) no statute or regulation or legal or
governmental proceeding required to be described in the
23
24
Prospectus is not described as required; and (E) there is no
action, suit or proceeding pending, or threatened, against or
affecting the Company or any Subsidiary before any court or
arbitrator or governmental body, agency or official (or any
basis thereof known to such counsel) in which there is a
reasonable possibility of an adverse decision which may result
in a material adverse change in the condition, financial or
otherwise, or results of operations of the Company and its
Subsidiaries, taken as a whole, which could materially
adversely affect the present or prospective ability of the
Company to perform its obligations under this Agreement or the
Underwriters' Warrant Agreement or which in any manner draws
into question the validity or enforceability of this Agreement
or the Underwriters' Warrant Agreement;
(vii) the Company has full legal right, power and
authority to enter into each of this Agreement and the
Underwriters' Warrant Agreement and to consummate the
transactions provided for herein and therein; and each of this
Agreement and the Underwriters' Warrant Agreement has been
duly authorized, executed and delivered by the Company. Each
of this Agreement and the Underwriters' Warrant Agreement,
assuming due authorization, execution and delivery by each
other party thereto constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms (except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors'
rights and the application of equitable principles in any
action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law), and none of
the Company's execution or delivery of this Agreement and the
Underwriters' Warrant Agreement, its performance hereunder or
thereunder, its consummation of the transactions contemplated
herein or therein, or the conduct of its business as described
in the Registration Statement, the Prospectus and any
amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or
violation of any of the terms or provisions of, or constitutes
or will constitute a default under, or result in the creation
or imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of
any kind whatsoever upon, any property or assets (tangible or
intangible) of the Company or any Subsidiary pursuant to the
terms of (A) the articles of incorporation or bylaws of the
Company or any Subsidiary, (B) to our knowledge, any license,
contract, indenture, mortgage, deed of trust, voting trust
agreement, shareholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the
Company is a party or by which it is or may be bound or to
which any of its respective properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, or (C)
to our knowledge, any statute, judgement, decree, order, rule
or regulation applicable to the Company or any Subsidiary of
any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body (including,
24
25
without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having
jurisdiction over the Company or any Subsidiary, or any of
their activities or properties;
(viii) except as described in the Prospectus, no
consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other
body (other than such as may be required under Blue Sky laws,
as to which no opinion need be rendered) is required in
connection with the issuance of the Shares pursuant to the
Prospectus, the issuance of the Underwriters' Warrants, the
performance of this Agreement and the Underwriters' Warrant
Agreement and the transactions contemplated hereby and
thereby;
(ix) to the best knowledge of such counsel, neither
the Company nor any of its Subsidiaries is in breach of, or in
default under, any term or provision of any license, contract,
indenture, mortgage, installment sale agreement, deed of
trust, lease, voting trust agreement, shareholders' agreement,
partnership agreement, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for
borrowed money, or any other agreement or instrument to which
the Company or any Subsidiary is a party or by which the
Company or any Subsidiary may be bound or to which the
property or assets (tangible or intangible) of the Company or
any Subsidiary is subject or affected; and neither the Company
nor any of the Subsidiaries is in violation of any term or
provision of its articles of incorporation or bylaws, or to
such Counsel's knowledge, in violation of any franchise,
license, permit, judgment, decree, order, statute, rule or
regulation;
(x) the statements in the Prospectus under
"Management," "Principal and Selling Shareholders," "Certain
Transactions" and "Description of Capital Stock" 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;
(xi) the Securities will be validly included on the
Nasdaq National Market (A) at 9:00 a.m. on the business day
immediately following the date of this Agreement, if this
Agreement is executed after 5:00 p.m. New York City time and
(B) immediately upon the execution hereof, if this Agreement
is executed prior to 5:00 p.m. New York City time;
(xii) to the best knowledge of such counsel, except
as described in the Prospectus, no person, corporation, trust,
partnership, association or other entity has the right to
include and/or register any securities of the Company in the
Registration Statement, require the Company to file any
registration statement or, if filed, to include any security
in such registration statement;
(xiii) assuming due execution by the parties thereto
other than the Company, the Lock-up Agreements are legal,
valid and binding obligations of parties thereto, enforceable
against the party and any subsequent holder of the securities
subject thereto in accordance with its terms (except as such
25
26
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles
in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law);
and
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement and the Prospectus; and related matters were discussed
and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Preliminary Prospectus, the Registration Statement and
Prospectus, on the basis of the foregoing, no facts have come to the attention
of such counsel which lead them to believe that either the Registration
Statement or any amendment thereto, at the time such Registration Statement or
amendment became effective or the Preliminary Prospectus or Prospectus or
amendment or supplement thereto as of the date of such opinion contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(it being understood that such counsel need express no opinion with respect to
the financial statements and schedules and other financial and statistical data
included in the Preliminary Prospectus, the Registration Statement or
Prospectus).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of responsible officers of the Company and the
Subsidiaries, and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company and the Subsidiaries,
provided that copies of any such statements or certificates shall be delivered
to Underwriters' Counsel if requested. The opinion of such counsel for the
Company and the Subsidiaries shall state that the opinion of any such other
counsel is in form satisfactory to such counsel and that the Underwriters and
they are justified in relying thereon. Such opinion shall also state that
Underwriters' Counsel is entitled to rely thereon.
(e) On the Closing Date there shall have been furnished to you
the opinion of _________________________________, special counsel for the
Selling Shareholders, dated such Closing Date and in form and substance
satisfactory to Underwriter's Counsel, to the effect that:
(i) this Agreement has been validly authorized,
executed and delivered by or on behalf of each of the Selling
Shareholders.
26
27
(ii) a Power of Attorney and the Custody Agreement
have been validly authorized, executed and delivered by each
of the Selling Shareholders.
(iii) if shares of Common Stock are sold by a Selling
Shareholder on such Closing Date, marketable title to the
shares sold by such Selling Shareholder hereunder, free and
clear of any liens, claims, encumbrances and security
interests whatsoever (other than those as may have been
created by the Underwriters), has been transferred to, and is
vested in, the Underwriter who has purchased such shares
hereunder.
In rendering such opinion as to questions of the law of
jurisdictions other than the states of Florida and New York or the United
States, such counsel may rely upon an opinion (dated such Closing Date,
addressed to the Underwriters and in form satisfactory to you) of counsel
acceptable to Underwriter's Counsel. Such opinion of counsel for the Selling
Shareholders shall state that the opinion of other such counsel is in form and
substance satisfactory to counsel for the Selling Shareholders and, in their
opinion, you and they are justified in relying on such other opinion.
(f) At each Option Closing Date, if any, the Underwriters
shall have received the favorable opinion of Xxxxxxxxx Xxxxxxx, P.A., or other
counsel acceptable to the Underwriter, counsel to the Company and the
Subsidiaries, dated the Option Closing Date, addressed to the Underwriters and
in form and substance satisfactory to Underwriters' Counsel confirming as of the
Option Closing Date the statements made by Xxxxxxxxx Traurig, P.A., or other
counsel acceptable to the Underwriter, in its opinion delivered on the Closing
Date.
(g) On or prior to each of the Closing Date and the Option
Closing Date, if any, Underwriters' Counsel shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of the Company or the Selling Shareholders, or herein contained.
(h) Prior to each of the Closing Date and each Option Closing
Date, if any, (i) there shall have been no material adverse change nor
development involving a prospective change in the condition, financial or
otherwise, prospects, shareholders' equity or the business activities of the
Company, whether or not in the ordinary course of business, from the latest
dates as of which such condition is set forth in the Registration Statement and
Prospectus; (ii) there shall have been no transaction, not in the ordinary
course of business, entered into by the Company or any of the Subsidiaries, from
the latest date as of which the financial condition of the Company and the
Subsidiaries is set forth in the Registration Statement and Prospectus which is
materially adverse to the Company or any of the Subsidiaries; (iii) the Company
shall not be in default under any provision of any instrument relating to any
outstanding indebtedness; (iv) neither the Company nor any of the Subsidiaries
shall have issued any securities (other than the Securities); neither the
Company nor any of the Subsidiaries shall have declared or paid any dividend or
27
28
made any distribution in respect of its capital stock of any class; and there
has not been any change in the capital stock of the Company or any of the
Subsidiaries, or any material change in the debt (long or short term) or
liabilities or obligations of the Company or any of the Subsidiaries (contingent
or otherwise); (v) no material amount of the assets of the Company or any of the
Subsidiaries shall have been pledged or mortgaged, except as set forth in the
Registration Statement and Prospectus; (vi) no action, suit or proceeding, at
law or in equity, shall have been pending or, to the best knowledge of the
Company, threatened (or circumstances giving rise to same) against the Company
or any of the Subsidiaries, or affecting any of its properties or business
before or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
adversely affect the business, operations, prospects or financial condition or
income of the Company, except as set forth in the Registration Statement and
Prospectus; and (vii) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated, to the best knowledge of the
Company, threatened or contemplated by the Commission.
(i) At each of the Closing Date and each Option Closing Date,
if any, the Underwriters shall have received a certificate of the Company signed
by the principal executive officer and by the chief financial or chief
accounting officer of the Company, dated the Closing Date or Option Closing
Date, as the case may be, to the effect that each of such persons has carefully
examined the Registration Statement, the Prospectus and this Agreement, and
that:
(i) The representations and warranties of the Company
in this Agreement are true and correct as if made on and as of
the Closing Date or the Option Closing Date, as the case may
be, and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior
to such Closing Date or Option Closing Date, as the case may
be;
(ii) No stop order suspending the effectiveness of
the Registration Statement or any part thereof has been
issued, and no proceedings for that purpose have been
instituted or are pending or, to the best of each of such
person's knowledge, after due inquiry, are contemplated or
threatened under the Act;
(iii) The Registration Statement and the Prospectus
and, if any, each amendment and each supplement thereto,
contain all statements and information required to be included
therein, and none of the Registration Statement, the
Prospectus nor any amendment or supplement thereto includes
any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading and neither the
Preliminary Prospectus nor any supplement thereto included any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus and except as disclosed in the Prospectus, (a)
neither the Company nor any of the Subsidiaries has incurred
up to and including the Closing Date or the Option Closing
Date, as the case may be, other than in the ordinary course of
its business, any material liabilities or obligations, direct
or contingent; (b) neither the Company nor any of its
Subsidiaries has paid or declared any dividends or other
distributions on its capital stock; (c) neither the Company
28
29
nor any of the Subsidiaries has entered into any material
transactions not in the ordinary course of business; (d) there
has not been any change in the capital stock of the Company or
any material change in the debt (long or short-term) of the
Company or any of the Subsidiaries; (e) neither the Company
nor any of the Subsidiaries has sustained any material loss or
damage to its property or assets, whether or not insured; (g)
there is no litigation which is pending or, to the best
knowledge of the Company, threatened (or circumstances giving
rise to same) against the Company, or any affiliated party of
any of the foregoing which is required to be set forth in an
amended or supplemented Prospectus which has not been set
forth; and (h) there has occurred no event required to be set
forth in an amended or supplemented Prospectus which has not
been set forth.
References to the Registration Statement and the Prospectus in this subsection
(i) are to such documents as amended and supplemented at the date of such
certificate.
(j) On the Closing Date there shall have been furnished to you
a certificate, dated such Closing Date and addressed to you, signed by or on
behalf of the Selling Shareholders, to the effect that the representations and
warranties of the Selling Shareholders in this Agreement are materially correct
on and as of the date of this Agreement and on and as of such Closing Date, as
if made on and as of such Closing Date, and that the Selling Shareholders have
complied with all the agreements and satisfied all the conditions on their part
to be performed or satisfied at or prior to such Closing Date.
(k) By the Closing Date, the Underwriters will have received
clearance from the NASD as to the amount of compensation allowable or payable to
the Underwriters, as described in the Registration Statement.
(l) At the time this Agreement is executed, the Underwriters
shall have received a letter, dated such date, addressed to the Underwriters in
form and substance satisfactory (including the non-material nature of the
changes or decreases, if any, referred to in clause (iii) below) in all respects
to the Underwriters and Underwriters' Counsel, from KPMG LLP:
(i) confirming that they are independent public
accountants with respect to the Company within the meaning of
the Act and the applicable Regulations;
(ii) stating that it is their opinion that the
financial statements and supporting schedules of the Company
included in the Registration Statement comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Regulations thereunder and
that the Underwriters may rely upon the opinion of KPMG LLP
with respect to such financial statements and supporting
schedules included in the Registration Statement;
29
30
(iii) stating that, on the basis of a limited review
which included a reading of the latest available unaudited
interim financial statements of the Company and the
Subsidiaries, a reading of the latest available minutes of the
shareholders and Board of Directors and the various committees
of the Board of Directors of the Company, consultations with
officers and other employees of the Company and the
Subsidiaries responsible for financial and accounting matters
and other specified procedures and inquiries, nothing has come
to their attention which would lead them to believe that (A)
the unaudited financial statements and supporting schedules of
the Company and the Subsidiaries included in the Registration
Statement do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the
Regulations or are not fairly presented in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements of the Company and the Subsidiaries
included in the Registration Statement, or (B) at a specified
date not more than five (5) days prior to the effective date
of the Registration Statement, there has been any change in
the capital stock of the Company, any change in the long-term
debt of the Company or any of the Subsidiaries, or any
decrease in the shareholders' equity of the Company or any of
the Subsidiaries or any decrease in the net current assets or
net assets of the Company as compared with amounts shown in
the ______________, 2000 balance sheet included in the
Registration Statement, other than as set forth in or
contemplated by the Registration Statement, or, if there was
any change or decrease, setting forth the amount of such
change or decrease, and (C) during the period from
___________, 2000 to a specified date not more than five (5)
days prior to the effective date of the Registration
Statement, there was any decrease in net revenues or net
earnings of the Company or any of the Subsidiaries or increase
in net earnings per common share of the Company, in each case
as compared with the corresponding period in the prior year
other than as set forth in or contemplated by the Registration
Statement, or, if there was any such decrease, setting forth
the amount of such decrease;
(iv) setting forth, at a date not later than five (5)
days prior to the date of the Registration Statement, the
amount of liabilities of the Company and the Subsidiaries
(including a break-down of notes payable to the banks);
(v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and
earnings, statements and other financial information
pertaining to the Company and the Subsidiaries set forth in
the Prospectus in each case to the extent that such amounts,
numbers, percentages, statements and information may be
derived from the general accounting records, including work
sheets, of the Company and the Subsidiaries and excluding any
questions requiring an interpretation by legal counsel, with
the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with
generally accepted auditing standards) set forth in the letter
and found them to be in agreement; and
30
31
(m) statements as to such other matters incident to the
transaction contemplated hereby as the Underwriters may request.
(n) At the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received from KPMG LLP a letter, dated as of the
Closing Date or the Option Closing Date, as the case may be, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(i) of this Section hereof except that the specified date referred to shall be a
date not more than five days prior to the Closing Date or the Option Closing
Date, as the case may be, and, if the Company has elected to rely on Rule 430A
of the Rules and Regulations, to the further effect that they have carried out
procedures as specified in clause (v) of subsection (k) of this Section with
respect to certain amounts, percentages and financial information as specified
by the Underwriters and deemed to be a part of the Registration Statement
pursuant to Rule 430A(b) and have found such amounts, percentages and financial
information to be in agreement with the records specified in such clause (v).
(o) At the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received a letter, dated such date, addressed to the
Underwriters in form and substance satisfactory in all respects to the
Underwriters and counsel to the Underwriters, from KPMG LLP containing
statements and information of the type ordinarily included in accountant's
"comfort letters" to Underwriters with respect to financial information
contained in the Registration Statement and the Prospectus.
(p) The Company shall have delivered to the Underwriters a
letter from KPMG LLP addressed to the Company stating that they have not during
the immediately preceding two-year period brought to the attention of the
Company's management any "weakness" as defined in Statement of Auditing
Standards No. 60 "Communication of Internal Control Structure Related Matters
Noted in an Audit," in any of the Company's internal controls.
(q) On each of the Closing Date and Option Closing Date, if
any, there shall have been duly tendered to the Underwriters for their
respective accounts the appropriate number of Shares.
(r) No order suspending the sale of the Securities in any
jurisdiction designated by the Underwriters pursuant to subsection (e) of
Section 5 hereof shall have been issued on either the Closing Date or the Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(s) On or before the Closing Date, the Company shall have
executed and delivered to the Underwriters, (i) the Underwriters' Warrant
Agreement substantially in the form filed as Exhibit 4.2 to the Registration
Statement in final form and substance satisfactory to the Underwriters, and (ii)
the Underwriters' Warrants in such denominations and to such designees as shall
have been provided to the Company
(t) On or before the Closing Date, the Shares shall have been
duly approved for listing on Nasdaq, subject to official notice of issuance.
31
32
(u) On or before the Closing Date, there shall have been
delivered to the Underwriters all of the Lock-up Agreements, in form and
substance satisfactory to Underwriters' Counsel.
(v) If any condition to the Underwriters' obligations
hereunder to be fulfilled prior to or at the Closing Date or the relevant Option
Closing Date, as the case may be, is not so fulfilled, the Underwriters may
terminate this Agreement or, if the Underwriters so elect, it may waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each of
the Underwriters (for purposes of this Section 8 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the Underwriter,
and each person, if any, who controls the Underwriter ("controlling person")
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, from and against any and all losses, claims, damages, expenses or
liabilities, joint or several (and actions, proceedings, investigations,
inquiries, and suits in respect thereof), whatsoever (including but not limited
to any and all costs and expenses whatsoever reasonably incurred in
investigating, preparing or defending against such action, proceeding,
investigation, inquiry or suit, commenced or threatened, or any claim
whatsoever), as such are incurred, to which the Underwriter or such controlling
person may become subject under the Act, the Exchange Act or any other statute
or at common law or otherwise or under the laws of foreign countries, arising
out of or based upon (A) any untrue statement or alleged untrue statement of a
material fact contained (i) in any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time amended and supplemented);
(ii) in any post-effective amendment or amendments or any new registration
statement and prospectus in which is included securities of the Company issued
or issuable upon exercise of the Securities; or (iii) in any application or
other document or written communication (in this Section 8 collectively called
"application") executed by the Company or based upon written information
furnished by the Company filed, delivered or used in any jurisdiction in order
to qualify the Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq or any other
securities exchange, (B) the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading (in the case of the Prospectus, in the light of the
circumstances under which they were made), or (C) any breach of any
representation, warranty, covenant or agreement of the Company contained herein
or in any certificate by or on behalf of the Company or any of its officers
delivered pursuant hereto unless, in the case of clause (A) or (B) above, such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to any Underwriter by or on
behalf of such Underwriter expressly for use in any Preliminary Prospectus, the
Registration Statement or any Prospectus, or any amendment thereof or supplement
thereto, or in any application, as the case may be.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each Selling Shareholder,
each of the Company's directors, each of the Company's officers who has signed
the Registration Statement, and each other person, if any, who controls the
32
33
Company or any Selling Shareholder within the meaning of the Act, to the same
extent as the foregoing indemnity from the Company to the Underwriters but only
with respect to statements or omissions or alleged omissions, if any, made in
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any application made in reliance
upon, and in strict conformity with, written information furnished to the
Company with respect to any Underwriter by such Underwriter expressly for use in
such Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any such application, provided
that such written information or omissions only pertain to disclosures in the
Preliminary Prospectus, the Registration Statement or Prospectus directly
relating to the transactions effected by the Underwriters in connection with
this Offering. The Company 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.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which the Underwriters may have at common law or
otherwise.
(c) Each Selling Shareholder severally, but not jointly, will
indemnify and hold harmless the Company, each of the Company's directors, each
of the Company's officers who signed the Registration Statement, each person, if
any, who controls the Company within the meaning of the 1933 Act, the
Underwriters and each person, if any, who controls the Underwriters within the
meaning of the 1933 Act against any loss, claim, damage or liability to which
the Company, the Underwriter or any such director or officer or controlling
person may become subject, under the 1933 Act or otherwise, insofar as such
loss, claim, damage or liability (or action in respect thereof) arises out of or
is based upon (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in the Registration Statement (including each Preliminary
Prospectus and the Prospectus as a part thereof) or any amendment thereof or
supplement thereto, or (B) in any Blue Sky Application, or (ii) the omission or
alleged omission to state in the Registration Statement (including any
Preliminary Prospectus and the Prospectus as a part thereof) or any amendment
thereof or 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, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Selling Shareholder specifically for use in the preparation of the
Registration Statement or any such amendment thereof or supplement thereto or
any such Blue Sky Application or any such Preliminary Prospectus or the
Prospectus or any such amendment thereof or supplement thereto; and will
reimburse any legal or other expenses reasonably incurred by the Company, or the
Underwriters or any such director or officer or controlling person in connection
with investigating or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action, and further
provided, however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any untrue statement, alleged untrue
statement, omission or alleged omission made in any Preliminary Prospectus but
eliminated or remedied in the Prospectus, such indemnity agreement shall not
inure to the benefit of the Underwriters from whom the person asserting any
33
34
loss, claim, damage or liability purchased the Stock which is the subject
thereof (or to the benefit of any person who controls such Underwriter), if a
copy of the Prospectus was not sent or given to such person with or prior to the
written confirmation of the sale of such shares of Common Stock to such person;
and further provided, however, that the Selling Shareholders will be liable
under the foregoing indemnity agreement only to the extent of the proceeds
received by them from the sale of their stock to the Underwriters pursuant to
the terms hereof. This indemnity agreement is in addition to any liability which
such Selling Shareholder may otherwise have.
(d) The Company will indemnify and hold harmless each Selling
Shareholder and each person, if any, who controls such Selling Shareholder,
against any loss, claim, damage or liability, joint or several, to which such
Selling Shareholder or such controlling person may be subject, under the Act or
otherwise, insofar as such loss, claim, damage or liability (or action in
respect thereof) arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in the Registration
Statement (including any Preliminary Prospectus and the Prospectus as a part
thereof) or any amendment or supplement thereof, or (B) in 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 shares of
Common Stock sold hereunder under the securities laws thereof (any such
application, document or information being hereinafter called a "Blue Sky
Application"), or (ii) the omission or alleged omission to state in the
Registration Statement (including any Preliminary Prospectus and the Prospectus
as a part thereof) or any amendment or supplement thereof or in any Blue Sky
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each Selling
Shareholder for any legal or other expenses reasonably incurred by such Selling
Shareholder in connection with investigating or defending against or appearing
as a third party witness in connection with any such loss, claim, damage,
liability or action; 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 by or on
behalf of any Selling Shareholder 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 thereof or supplement thereto.
(e) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 8, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action, investigation,
inquiry, suit or proceeding is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
34
35
parties shall have the right to employ its or their own counsel in any such case
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in correction with
the defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action, investigation, inquiry, suit or proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses of one
additional counsel shall be borne by the indemnifying parties. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action, investigation,
inquiry, suit or proceeding or separate but similar or related actions,
investigations, inquiries, suits or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances. Anything in this Section 8
to the contrary notwithstanding, an indemnifying party shall not be liable for
any settlement of any claim or action effected without its written consent;
PROVIDED, HOWEVER, that such consent was not unreasonably withheld. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, investigation, inquiry,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(f) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes claim for indemnification
pursuant to this Section 8, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 8 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions, investigations, inquiries, suits or proceedings in respect thereof) (A)
in such proportion as is appropriate to reflect the relative benefits received
by each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the Securities or (B) if the
allocation provided by clause (A) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company or any Selling
Shareholder is the contributing party and the Underwriters are the indemnified
35
36
party, the relative benefits received by the Company or such Selling
Shareholder, as the case may be, on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Shares (before deducting expenses) bear to the total
underwriting discounts received by the Underwriters hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, any Selling
Shareholder or by the Underwriters, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, expenses or liabilities (or actions,
investigations, inquiries, suits or proceedings in respect thereof, referred to
above in this subdivision (f) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, claim, investigation, inquiry, suit
or proceeding. Notwithstanding the provisions of this subdivision (f) the
Underwriters shall not be required to contribute any amount in excess of the
underwriting discount applicable to the Securities purchased by the Underwriters
hereunder. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person, if any, who controls the Company or any Selling
Shareholder within the meaning of the Act, each officer of the Company who has
signed the Registration Statement, and each director of the Company shall have
the same rights to contribution as the Company or such Selling Shareholder, as
the case may be, subject in each case to this subparagraph (f). Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit, inquiry, investigation or proceeding against such party in
respect to which a claim for contribution may be made against another party or
parties under this subparagraph (f), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have hereunder or otherwise than under this
subparagraph (f), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may have at common
law or otherwise.
9. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company or certificates delivered
on behalf of any Selling Shareholder submitted pursuant hereto, shall be deemed
to be representations, warranties and agreements at the Closing Date and the
Option Closing Date, as the case may be, and such representations, warranties
and agreements of the Company and the indemnity agreements contained in Section
8 hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, the Company, any
controlling person of any Underwriter, the Company, and shall survive
termination of this Agreement or the issuance, sale and delivery of the
Securities to the Underwriters and the Underwriters, as the case may be.
10. EFFECTIVE DATE.
36
37
(a) This Agreement shall become effective at 10:00 a.m., New
York City time, on the next full business day following the date hereof, or at
such earlier time after the Registration Statement becomes effective as the
Underwriters, in their discretion, shall release the Securities for sale to the
public; PROVIDED, HOWEVER, that the provisions of Sections 6, 8 and 11 of this
Agreement shall at all times be effective. For purposes of this Section 10, the
Shares to be purchased hereunder shall be deemed to have been so released upon
the earlier of dispatch by the Underwriters of telegrams to securities dealers
releasing such shares for offering or the release by the Underwriters for
publication of the first newspaper advertisement which is subsequently published
relating to the Shares.
11. TERMINATION.
(a) Subject to subsection (b) of this Section 11, the
Underwriters shall have the right to terminate this Agreement, after the date
hereof, (i) if any domestic or international event or act or occurrence has
materially disrupted, or in the Underwriters' opinion will in the immediate
future materially adversely disrupt the financial markets; or (ii) any material
adverse change in the financial markets shall have occurred; or (iii) if trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, Nasdaq, the National Association of
Securities Dealers, Inc., the Commission or any other government authority
having jurisdiction; or (iv) if trading of any of the securities of the Company
shall have been suspended, or any of the securities of the Company shall have
been delisted, on any exchange or in any over-the-counter market; or (v) if the
United States shall have become involved in a war or major hostilities, or if
there shall have been an escalation in an existing war or major hostilities or a
national emergency shall have been declared in the United States; or (vi) if a
banking moratorium has been declared by a state or federal authority; or (vii)
if a moratorium in foreign exchange trading has been declared; or (viii) if the
Company shall have sustained a loss material or substantial to the Company by
fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall have been insured, will,
in the Underwriters' opinion, make it inadvisable to proceed with the delivery
of the Securities; or (viii) if there shall have occurred any outbreak or
escalation of hostilities or any calamity or crisis or there shall have been
such a material adverse change in the conditions or prospects of the Company, or
such material adverse change in the general market, political or economic
conditions, in the United States or elsewhere as in the Underwriters' judgment
would make it inadvisable to proceed with the offering, sale and/or delivery of
the Securities or (ix) if Xxxxx Xxxxxxxx or Xxxxxxx X. Xxxxxxxxx shall no longer
serve the Company in their present capacity.
(b) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 11(a) the Company shall promptly
reimburse and indemnify the Underwriters for all of their actual out-of-pocket
expenses, including the fees and disbursements of counsel for the Underwriters
(less amounts previously paid pursuant to Section 6(c) above). Notwithstanding
any contrary provision contained in this Agreement, if this Agreement shall not
be carried out within the time specified herein, or any extension thereof
granted to the Underwriters, by reason of any failure on the part of the Company
to perform any undertaking or satisfy any condition of this Agreement by it to
be performed or satisfied (including, without limitation, pursuant to Section 7
or Section 13) then, the Company shall promptly reimburse and indemnify the
37
38
Underwriters for all of their actual out-of-pocket expenses, including the fees
and disbursements of counsel for the Underwriters (less amounts previously paid
pursuant to Section 6(c) above). Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any termination of this
Agreement (including, without limitation, pursuant to Sections 7, 11, 12 and 13
hereof), and whether or not this Agreement is otherwise carried out, the
provisions of Section 6 and Section 8 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
12. DEFAULT BY THE COMPANY. If the Company or any Selling Shareholder
shall fail at the Closing Date or at any Option Closing Date, as applicable, to
sell and deliver the number of Shares which it is obligated to sell hereunder on
such date, then this Agreement shall terminate (or, if such default shall occur
with respect to any Option Shares to be purchased on an Option Closing Date, the
Underwriters may at the Underwriters' option, by notice from the Underwriters to
the Company, terminate the Underwriters' obligation to purchase Option Shares
from the Company on such date) without any liability on the part of any
non-defaulting party other than pursuant to Section 6, Section 8 and Section 11
hereof. No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect of such default.
13. SUBSTITUTION OF UNDERWRITERS. If one of the Underwriters shall fail
or refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 7, 11, or 12 hereof to purchase
and pay for the number of Shares agreed to be purchased by such Underwriter upon
tender to you of such shares in accordance with the terms hereof, then (unless
within 48 hours after such default arrangements satisfactory to the Company and
the non-defaulting Underwriter shall have been made for the purchase of the
defaulted Stock by another Underwriter or Underwriters) this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or on
the part of the Company except as otherwise provided in Sections 5 and 8 hereof.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this paragraph. Nothing in this Section 13,
and no action taken hereunder, shall relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
14. NOTICES. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Underwriters c/o Fahnestock & Co. Inc., 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxxx, with a copy to Xxxxxx, Xxxxx &
Bockius LLP, 5300 First Union Financial Center, 000 Xxxxx Xxxxxxxx Xxxxxxxxx,
Xxxxx, Xxxxxxx 00000-0000, Attention: Xxxx X. Xxxxxxxx, Esq. Notices to the
Company shall be directed to the Company at 0000 Xxxxxxxxx Xxxx., Xxxxx Xxxxx,
Xxxxxxx 00000, Attention: Xxxxx Xxxxxxxx, President, with a copy to Xxxxxxxxx
Traurig, P.A., 0000 Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, Attention: Xxxx X.
Xxxxxxx, Esq.
15. PARTIES. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriters, the Company, the Selling Shareholders
and the controlling persons, directors and officers referred to in Section 8
hereof, and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any legal or equitable right,
38
39
remedy or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
16. CONSTRUCTION. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
18. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Underwriters'
Warrant Agreement constitute the entire agreement of the parties hereto and
supersede all prior written or oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may not be amended
except in a writing, signed by the Underwriters, the Company and the Selling
Shareholders.
If the foregoing correctly sets forth the understanding between the
Underwriters, the Company and the Selling Shareholders, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us.
[Signature page to follow]
39
40
Very truly yours,
SOUND ADVICE, INC.
By: /s/ XXXXX XXXXXXXX
---------------------------------
Xxxxx Xxxxxxxx
Chief Executive Officer, President and
Chairman of the Board of Directors
40
41
XXXXXX XXXXXXXXXX
By:
-----------------------------------
Attorney-in-Fact
XXXXXXX XXXXXXX
By:
-----------------------------------
Attorney-in-Fact
___________, SELLING SHAREHOLDER
By:
-----------------------------------
Attorney-in-Fact
___________, SELLING SHAREHOLDER
By:
-----------------------------------
Attorney-in-Fact
___________, SELLING SHAREHOLDER
By:
-----------------------------------
Attorney-in-Fact
41
42
___________, SELLING SHAREHOLDER
By:
-----------------------------------
Attorney-in-Fact
___________, SELLING SHAREHOLDER
By:
-----------------------------------
Attorney-in-Fact
42
43
Confirmed and accepted as of the date first above written.
XXXXXXXXXX & CO. INC.
By:
--------------------------------
Name:
Title:
As Attorneys-in-Fact for each of the
Underwriters
XXXX, XXXX & CO.
By:
--------------------------------
Name:
Title:
As Attorneys-in-Fact for each of the
Underwriters
43
44
SCHEDULE A
UNDERWRITER NUMBER OF SHARES
----------- ----------------
Xxxxxxxxxx & Co. Inc.
Xxxx, Xxxx & Co.
44
45
SCHEDULE B
NUMBER OF
SELLING SHAREHOLDER NUMBER OF SHARES OPTION SHARES
------------------- ---------------- -------------
Xxxxxx Xxxxxxxxxx -------------------------- -------------
Xxxxxxx Xxxxxxx -------------------------- -------------
-------------------- -------------------------- -------------
-------------------- -------------------------- -------------
-------------------- -------------------------- -------------
-------------------- -------------------------- -------------
-------------------- -------------------------- -------------
-------------------- -------------------------- -------------
45
