1
Exhibit 1.1
1,400,000 Shares
NEW WEST EYEWORKS, INC.
Common Stock
(Par Value $0.01 Per Share)
FORM OF UNDERWRITING AGREEMENT
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New York, New York
February __, 1997
Xxxxxxxxxx & Co. Inc.
As Representative of the
Underwriters
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
New West Eyeworks, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell upon the terms and conditions herein contained, an
aggregate of 1,000,000 shares of its common stock par value, $0.01 (the "Common
Stock), to the underwriters named in Schedule I (the "Underwriters") for whom
you are acting as representative (the "Representative"). In addition, the
selling stockholders named in Schedule II hereto (the "Selling Stockholders")
propose to sell in the respective amounts set forth opposite their names on
Schedule II hereto, to the several Underwriters an aggregate of 400,000 shares
of Common Stock presently owned by such Selling Stockholders. The 1,000,000
shares of Common Stock to be issued and sold to the Underwriters by the Company
and the 400,000 shares of Common Stock to be sold to the Underwriters by the
Selling Stockholders are hereinafter referred to as "Firm Shares."
In addition, upon the terms and conditions herein contained, the
Company proposes to issue and sell to the several Underwriters up to an
additional 210,000 shares of Common Stock (the "Option Shares").
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The Firm Shares and the Option Shares are hereinafter collectively referred to
as the "Shares."
The Company also proposes to issue and sell to the Representative
and its affiliates warrants (the "Representative's Warrants") pursuant to the
Representative's Warrant Agreement between the Company and the Representative,
dated as of February 7, 1997, for the purchase of up to an aggregate of 66,563
shares of Common Stock. The shares of Common Stock issuable upon exercise of the
Representative's Warrants are hereinafter referred to as the "Warrant Shares."
The Company and the Selling Stockholders wish to confirm as follows
their respective agreements with you in connection with the several purchases of
the Shares by the Underwriters.
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, the Effective Date (as defined below), the Closing Date (as defined
below) and, if later, the Option Closing Date (as defined below), as follows:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, and an amendment or
amendments thereto, on Form S-2 (No. 333-18709), including any related
preliminary prospectus for the registration of sale of the Shares, under the
Securities Act of 1933, as amended (the "Act"), which registration statement and
amendment or amendments have been prepared by the Company in conformity with the
requirements of the Act, and the rules and regulations (the "Rules and
Regulations") of the Commission under the Act. The term "preliminary prospectus"
as used herein means a preliminary prospectus as contemplated by Rule 430 or
Rule 430A ("Rule 430A") of the Rules and Regulations included at any time as
part of the registration statement. The Company will promptly file a further
amendment to said registration statement in the form heretofore delivered to the
Underwriters and will not thereafter file any other amendment thereto except in
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accordance with Section 5(a) hereof. Such registration statement, as amended, on
file with the Commission (including the prospectus, financial statements,
schedules, exhibits and all other documents filed as a part thereof or
incorporated therein and all information deemed to be a part thereof as of such
time pursuant to paragraph (b) of Rule 430(A) of the Rules and Regulations) at
the time it becomes effective (the "Effective Date") 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 Rules and Regulations, or if no
such filing is required, the form of final prospectus included in the
Registration Statement at the Effective Date is hereinafter called the
"Prospectus."
(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 Prospectus or part thereof and no proceedings for
a stop order have been instituted or are pending or, to the best knowledge of
the Company, threatened. The Registration Statement, each preliminary prospectus
and the Prospectus at the time of filing thereof conformed in all material
respects with the requirements of the Act and the Rules and Regulations. At the
Effective Date and at all times subsequent thereto up to the Closing Date and,
if later, the Option Closing Date and during such longer period as the
Prospectus may be required to be delivered in connection with sales by the
Underwriters or a dealer, the Registration Statement and the Prospectus will in
all material respects conform to the requirements of the Act and the Rules and
Regulations.
(c) On the Effective Date and when any post-effective amendment to
the Registration Statement becomes effective, no part of the Registration
Statement or any such amendment did or will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. At the Effective Date,
the date any amendment or supplement to the Prospectus is filed with the
Commission, the Closing Date and, if later, the Option Closing Date, the
Prospectus did not and will not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the
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statements therein, in light of the circumstances under which they were made,
not misleading. On the date any preliminary prospectus or any supplement thereto
was issued, such preliminary prospectus or supplement did not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The foregoing representations and warranties in Section
1(b) hereof and this Section 1(c) do not apply to any statements or omissions
made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by or on behalf of such
Underwriter expressly for inclusion in the Registration Statement or the
Prospectus or any amendment or supplement thereto. For all purposes of this
Agreement, the name of the Representative as set forth on the front and back
covers of, and the first 7 paragraphs and the last paragraph under the
"Underwriting" section of any preliminary prospectus or the Prospectus,
constitute the only information relating to any Underwriter furnished in writing
to the Company by or on behalf of such Underwriter expressly for inclusion in
any preliminary prospectus, the Prospectus or the Registration Statement.
(d) Each of the Company and Alexis Holding Company, Inc. (the
"Subsidiary"), which is the only subsidiary, other than Eye Care Partners, an
Arizona general partnership, which is not a significant subsidiary (as defined
in the Rules and Regulations) of the Company, has been duly organized and is
validly existing as a corporation in good standing under the laws of the state
of its incorporation. Except for the Company's ownership of the stock of the
Subsidiary, and the Company's ownership of any subsidiaries which are not
significant subsidiaries and as set forth in the Prospectus, neither the Company
nor the Subsidiary owns any equity or long-term debt interest in any
corporation, partnership, trust, joint venture or other business entity. The
Company and the Subsidiary are each 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 qualify or be licensed
would not have a material adverse effect on the business, properties, business
prospects, results
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of operations or condition (financial or otherwise) of the Company and the
Subsidiary taken as a whole. The Company owns all of the outstanding capital
stock of the Subsidiary free and clear of any liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions of any
kind whatsoever; such stock has been validly issued without violation of any
preemptive or similar rights and is fully paid and non-assessable. Each of the
Company and the Subsidiary has all requisite power and authority (corporate and
otherwise), and 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,
except where the failure to obtain such authorizations, approvals, orders,
licenses, certificates, franchises or permits would not have a material adverse
effect on the business, properties, business prospects, results of operations or
condition (financial or otherwise) of the Company and the Subsidiary taken as a
whole; each of the Company and the Subsidiary is and is doing business in
compliance in all material respects with all such authorizations, approvals,
orders, licenses, certificates, franchises and permits and all federal, state,
local and foreign laws, rules and regulations; and neither the Company nor the
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license, certificate,
franchise, or permit. The disclosures in the Registration Statement concerning
the effects of laws, rules and regulations on the Company's and the Subsidiary's
business as currently conducted and as contemplated are correct in all material
respects and do not omit to state a material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made. Complete and correct copies of the certificate of
incorporation and of the by-laws of the Company and the Subsidiary and all
amendments thereto have been delivered to the Representative, and, except as set
forth in the Registration Statement, no changes therein will be made subsequent
to the date hereof and prior to the Closing Date or, if later, the Option
Closing Date.
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(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under "Capitalization" and will
have the adjusted capitalization set forth therein on the Closing Date and, if
later, the Option Closing Date, based upon the assumptions set forth therein.
Neither the Company nor the Subsidiary is 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,
warrants issued under the Representative's Warrant Agreement between the Company
and Xxxxx & Co., Inc., dated December 31, 1993 and as described in the
Prospectus. The Shares, the Representative's Warrants and the Warrant Shares
when issued and paid for will conform, and all other securities issued or
issuable by the Company conform, to the description thereof contained in the
Registration Statement and the Prospectus. All issued and outstanding securities
of the Company have been duly authorized and validly issued and, in the case of
equity securities, are fully paid and non-assessable; the holders of securities
of the Company 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 or similar rights of any
holders of any security of the Company except as have been duly waived. The
Shares, the Representative's Warrants and the Warrant Shares are not and will
not be subject to any preemptive or similar rights, have been duly authorized
and, when issued, paid for and delivered in accordance with the terms hereof and
thereof, will be validly issued, fully paid and non-assessable and will conform
to the description thereof contained in the Prospectus; the holders thereof will
not be subject to any liability solely as such holders; all corporate action
required to be taken for the authorization, issuance and sale of the Shares, the
Representative's Warrants and the Warrant Shares has been duly and validly
taken; and the certificates representing the Shares, the Representative's
Warrants and the Warrant Shares will be in due and proper form. Upon the
issuance and delivery pursuant to the terms hereof of the Common Stock to be
sold by the Company hereunder, the Underwriters will acquire good and marketable
title to such Common Stock free and clear of any lien, charge,
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claim, encumbrance, pledge, security interest, defect or other restriction of
any kind whatsoever.
(f) The consolidated financial statements of the Company and the
Subsidiary, together with the related notes and schedules thereto, included in
the Registration Statement and the Prospectus fairly present the consolidated
financial position, results of operations and cash flows of the Company and the
Subsidiary at the respective dates and for the respective periods to which they
apply; and such financial statements have been prepared in conformity with
generally accepted accounting principles and the Rules and Regulations,
consistently applied throughout the periods involved. No other financial
statements or schedules of the Company are required by the Act or the Rules and
Regulations to be included in the Registration Statement or the Prospectus.
Except as disclosed in the Registration Statement and the Prospectus, there has
been no material adverse change or development involving a prospective change in
the condition (financial or otherwise), results of operations, business,
properties, or business prospects of the Company and the Subsidiary taken as a
whole 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 each of the Company and the
Subsidiary, conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(g) Each of the Company and the Subsidiary (i) has paid all
federal, state, local, and foreign taxes for which it is liable, including, but
not limited to, withholding taxes and amounts payable under Chapters 21 through
24 of the Internal Revenue Code of 1986 (the "Code"), and has furnished all
information returns it is required to furnish pursuant to the Code, except where
the failure to pay such taxes or furnish such returns would not have a material
adverse effect on the business, properties, business prospects, results of
operations or condition (financial or otherwise) of the Company and the
Subsidiary taken as a whole, (ii) has established adequate reserves for such
taxes which are not due and payable, and (iii) has not received any notice of
any tax deficiency or claims outstanding, proposed or assessed against it.
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(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 Shares, (ii) the purchase by the Underwriters of the Shares from
the Company or (iii) the consummation by the Company of any of its obligations
under this Agreement.
(i) The Company and the Subsidiary maintain insurance of the types,
against the risks and in amounts adequate for their business and the Company
believes customary to their industry, all of which insurance is in full force
and effect.
(j) Except as disclosed in the Prospectus, there is no action,
suit, proceeding, inquiry or investigation (including, without limitation, those
relating to environmental or similar matters) pending or, to the knowledge of
the Company, threatened against or involving the properties or business of the
Company or the Subsidiary or against any of the officers or directors of the
Company or its Subsidiary in their capacity as such which (i) relates to the
capital stock of the Company or this Agreement, the Representative's Warrant
Agreement or any action taken or to be taken pursuant to or in connection with
any of them (ii) is required to be disclosed in the Prospectus which is not
completely and accurately disclosed therein to the extent required, or (iii)
might in the event of an unfavorable ruling materially and adversely affect the
Company and the Subsidiary taken as a whole or their combined condition
(financial or otherwise), results of operations, business, properties, or
business prospects.
(k) The Company has all necessary corporate power and authority to
enter into this Agreement and the Representative's Warrant Agreement and to
consummate the transactions provided for in such agreements; and this Agreement
and the Representative's Warrant Agreement have each been duly authorized,
executed and delivered by the Company. This Agreement and the Representative's
Warrant Agreement each constitute a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms (assuming
due execution and delivery thereof by the Underwriters, the Representative or
parties other than the Company to the Representative's
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Warrant Agreement, as the case may be) 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. The Company's execution and delivery of this
Agreement and the Representative's Warrant Agreement, its performance hereunder
and thereunder, its consummation of the transactions contemplated herein and
therein, and the conduct of its business as described in the Registration
Statement and the Prospectus, does not and will not (with the giving of notice
or the passage of time or both) conflict with or result in any breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction of any kind whatsoever
upon, any property or assets (tangible or intangible) of the Company or the
Subsidiary pursuant to the terms of (i) the articles of incorporation or by-laws
of any of the Company or the Subsidiary, (ii) any material license, contract,
indenture, mortgage, deed of trust, voting trust agreement, stockholders
agreement, note, indebtedness, loan or credit agreement or any other material
agreement or instrument to which the Company or the Subsidiary is a party or by
which any of them is or may be bound or to which any of their properties or
assets (tangible or intangible) is or may be subject, or (iii) in any material
respect, any statute, judgment, decree, order, rule or regulation applicable to
the Company or the Subsidiary 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
Subsidiary or any of their respective activities or properties.
(l) 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 performance of this Agreement and the transactions
contemplated hereby except such as have been or will be obtained under the
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Act, the Rules and Regulations, the Rules of Conduct of the National Association
of Securities Dealers, Inc. or under state securities or Blue Sky laws in
connection with the Underwriters' purchase and distribution of the Shares to be
sold by the Company hereunder and the Representative's Warrant Agreement.
(m) All agreements filed as exhibits to the Registration Statement
to which either the Company or the Subsidiary is a party or by which either of
them may be bound or to which any of their respective assets, properties or
businesses may be subject have been duly and validly authorized, executed and
delivered by the Company or the Subsidiary, as the case may be, and constitute
the legal, valid and binding agreements of the Company or the Subsidiary, as the
case may be, enforceable against them in accordance with their respective terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting the 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).
The descriptions in the Registration Statement of contracts and other documents
are complete and accurate to the extent required by the Act. There are no
contracts or other documents which are required by the Act to be described in
the Registration Statement or filed as exhibits to the Registration Statement
which are not described or filed as required, and the exhibits which have been
filed are 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 the Subsidiary has (i) issued any debt securities or incurred any liability
or obligation, direct or contingent, for borrowed money, other than capital
leases involving less than $50,000, (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.
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(o) No default (and no condition which with the giving of notice or
the passage of time or both would become a default) exists in the due
performance and observance of any term, covenant or condition of any license,
contract, indenture, mortgage, installment sale agreement, lease, deed of trust,
voting trust agreement, stockholders agreement, 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 the
Subsidiary is a party or by which the Company or the Subsidiary may be bound or
to which any of the property or assets (tangible or intangible) of the Company
or the Subsidiary is subject or affected, except where such default would not
have a material adverse effect on the business, properties, business prospects,
results of operations or condition (financial or otherwise) of the Company and
the Subsidiary taken as a whole. Neither the Company nor the Subsidiary is, nor
at the Closing Date or, if later the Option Closing Date, will either of them
be, in violation of any provision of its certificate of incorporation or
by-laws.
(p) The Subsidiary has no employees. The Company has generally
enjoyed a satisfactory employer-employee relationship with its employees and is
in compliance in all material respects with all federal, state, local, and
foreign laws and regulations to which it is subject respecting employment and
employment practices, terms and conditions of employment and wages and hours.
Except as disclosed in the Prospectus, there are no pending investigations
involving the Company by the U.S. Department of Labor, or any other governmental
agency responsible for the enforcement of such federal, state, local, or foreign
laws and regulations. There is no unfair labor practice charge or complaint
against the Company pending before the National Labor Relations Board or any
strike, picketing, boycott, dispute, slowdown or stoppage pending or to the
knowledge of the Company threatened against or involving the Company, or to the
knowledge of the Company any predecessor entity, and to the knowledge of the
Company none has ever occurred. No representation question exists respecting the
employees of the Company. The Company is not, has not been party to, nor is
engaged in discussions contemplating, any collective bargaining agreement.
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Except for matters disclosed in the Registration Statement and Prospectus, no
labor dispute with the employees of the Company exists, or, to the best
knowledge of the Company, is imminent.
(q) Neither the Company nor the Subsidiary maintains, sponsors or
contributes to any program or arrangement (an "ERISA Plan") 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")
other than (i) as disclosed in the Registration Statement and Prospectus and
(ii) employee welfare benefit plans which are not material to the Company and
the Subsidiary taken as a whole and which do not provide post-retirement health,
medical or life insurance benefits. Neither the Company nor the Subsidiary
maintains or contributes to, or has a material liability, contingent or
otherwise, to, a defined benefit plan, as defined in Section 3(35) of ERISA. No
ERISA Plan (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code, which could subject the Company or the Subsidiary to any tax penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to any such ERISA Plan. The
Company has obtained a determination letter from the Internal Revenue Service
with respect to each ERISA Plan which is intended to comply with Code Section
401(a), stating that such ERISA Plan and the attendant trust are qualified
thereunder. Neither the Company nor the Subsidiary has any liability with
respect to any "multiemployer plan," whether on account of any complete or
partial withdrawal from any such plan or otherwise.
(r) Except as disclosed in the Registration Statement and the
Prospectus, no holder of any securities of the Company or of any options,
warrants or other convertible or exchangeable securities of the Company
exercisable for or convertible or exchangeable for securities of the Company has
the right to include any securities issued by the Company in the Registration
Statement or any registration statement to
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be filed by the Company within eighteen (18) months of the date hereof or to
require the Company to file a registration statement under the Act during such
eighteen (18) month period and any such rights disclosed in the Registration
Statement and the Prospectus have been duly waived with respect to the offering
of the Shares hereunder.
(s) Neither the Company nor the Subsidiary has taken, and each of
the Company and the Subsidiary will use its best efforts to cause each of its
respective officers, directors and affiliates (within the meaning of the Rules
and Regulations) not to take, directly or indirectly, any action designed to or
which has constituted or which might reasonably be expected to cause or result
in, stabilization or manipulation under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of the price of any security of the Company. The
Company has not distributed any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, any
preliminary prospectus, the Prospectus or any other materials, if any, permitted
by the Act.
(t) Except as otherwise disclosed in the Prospectus and to the best
knowledge of the Company, none of the patents, patent applications, trademarks,
service marks, trade names and copyrights, and licenses and rights to the
foregoing presently owned or held by the Company and the Subsidiary, conflict
with the right of any other person or entity or are in dispute. To the best
knowledge of the Company, each of the Company and the Subsidiary (i) owns or has
the right to use, free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects or other restrictions of any kind
whatsoever, all patents, trademarks, service marks, trade names and copyrights,
technology and licenses and rights with respect to the foregoing, used in the
conduct of its business as now conducted or proposed to be conducted without
infringing upon or otherwise acting adversely to the right or claimed right of
any person, corporation or other entity under or with respect to any of the
foregoing and (ii) is not obligated or under any liability whatsoever to make
any payments by way of royalties, fees or otherwise to any owner or licensee of,
or other claimant to, any patent, trademark, service xxxx, trade name,
copyright, knowhow,
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technology or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise, except where such
obligation or liability would not have a material adverse effect on the
business, properties, business prospects, results of operations or condition
(financial or otherwise) of the Company and the Subsidiary taken as a whole.
(u) The Company and the Subsidiary each 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, designs, processes, works of authorship, computer
programs and technical data and information (collectively herein "intellectual
property") that are material to its business, properties and operations, free
and clear of and without violating any right, lien, or claim of others,
including without limitation, former employers of its employees.
(v) The Company and the Subsidiary each have good and marketable
title to, or valid and enforceable leasehold estates in, all items of real and
personal property described in the Prospectus as owned or leased by it, as the
case may be, in each case free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects, or other restrictions of any
kind whatsoever, except as disclosed in the Registration Statement and in the
Prospectus and those which are not material and do not and will not materially
interfere with the use made and proposed to be made of such properties by the
Company and the Subsidiary.
(w) Price Waterhouse LLP (the "Accountants"), whose report is filed
with the Commission as a part of the Registration Statement, are independent
certified public accountants as required by the Act and the Rules and
Regulations. The statements included in the Registration Statement or the
Prospectus with respect to the Accountants pursuant to Item 509 of Regulation
S-K of the Rules and Regulations are true and correct to the extent required by
the Act.
(x) Except as disclosed in the Registration Statement and the
Prospectus and as set forth herein
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and in the Agreement Among Underwriters dated the date hereof, there are no
claims, payments, security issuances, arrangements or understandings for
services in the nature of a finder's or origination fee with respect to the sale
of the Shares hereunder or any other arrangements, agreements, understandings,
payments or security issuance with respect to the Company or any of its
officers, directors, employees or affiliates that may affect the Underwriters'
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
(y) The Company will maintain its listing on the Automated
Quotation System of the National Association of Securities Dealers, Inc.
("NASDAQ") and on the Pacific Stock Exchange and will list the Shares issued by
the Company in the offering on the NASDAQ and Pacific Stock Exchange. The
Company agrees to apply for inclusion on the Nasdaq Stock Market's National
Market when it becomes eligible.
(z) Neither the Company, the Subsidiary, nor any of their
respective officers, employees, agents or any other person acting on behalf of
any of the Company or the Subsidiary, has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or employee
of any governmental agency (domestic or foreign) or instrumentality of any
government (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a position to
help or hinder the business of the Company or the Subsidiary (or assist the
Company or the Subsidiary in connection with any actual or proposed transaction)
which (a) might subject the Company or the Subsidiary or any other such person
to any material 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 and the Subsidiary taken as a whole, or (c) if not continued in
the future, might materially and adversely affect the condition (financial or
otherwise), results of operations, business, properties, or business prospects
of the Company and the Subsidiary taken as a
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whole. Each of the Company's and the Subsidiary's internal accounting controls
are sufficient to cause each of the Company and the Subsidiary to comply with
the Foreign Corrupt Practices Act of 1977, as amended.
(aa) Except as set forth in the Prospectus, no officer, director or
stockholder of any of the Company or the Subsidiary, or any "affiliate" or
"associate" (as these terms are defined in Rule 405 promulgated under the Rules
and Regulations) of any such person or entity or the Company or the Subsidiary,
has or has had in the Company's last full fiscal year, either directly or
indirectly, (i) at least a 10% equity interest or any other material 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 either the Company
or the Subsidiary in an amount in excess of 5% of: (x) the Company's
consolidated gross revenues for its last full fiscal year; or (y) the person's
or entity's consolidated gross revenues for its last full fiscal year; or which
are otherwise material to the Company and the Subsidiary taken as a whole, or
(B) purchases from or sells or furnishes to either the Company or the Subsidiary
any goods or services in an amount in excess of 5% of: (x) the Company's
consolidated gross revenues for its last full fiscal year; or (y) the person's
or entity's consolidated gross revenues for its last full fiscal year; or which
are otherwise material to the Company and the Subsidiary taken as a whole, or
(ii) a beneficial interest in any material contract or agreement to which the
Company or the Subsidiary is a party or by which any of them may be bound or
affected. Except as set forth in the Prospectus under "Certain Transactions",
there are no existing material agreements, arrangements, understandings or
transactions, or proposed material agreements, arrangements, understandings or
transactions, between or among any of the Company or the Subsidiary, on the one
hand, and any officer, director, or stockholder of any of the Company or the
Subsidiary, or any affiliate or associate of any such person or entity, and each
such agreement, arrangement, understanding or transaction disclosed is on terms
at least as favorable to the Company and the Subsidiary as those which they
could have obtained from unrelated parties.
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17
(bb) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to the Underwriters' counsel shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
(cc) On or before the Closing Date, the Company will have amended
the employment agreements with each of Xxxxxx X. Xxxxxxxx and Xxxxx Xxxx to
extend them until December 31, 1999. The Company has obtained a key-man life
insurance policy in the amount of $2,000,000 on the life of Xx. Xxxx, which
policy is in full force and effect, is owned by the Company and names the
Company as the beneficiary.
(dd) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(ee) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
(ff) The Company is in compliance with its covenants under that
Credit Agreement between the Company and U.S. Bank of Washington, National
Association (the "Bank"), as amended through the date hereof and that Loan
Agreement between the Company and The Second National Bank of Xxxxxx (the
"Second Bank"), as amended through the date hereof, and is not in breach of any
representation and warranty thereunder. The Company has obtained all requisite
consents or approvals required from the Bank and Second Bank for the
transactions contemplated by this Agreement and
- 17 -
18
such consents and approvals are in full force and effect.
2. Representations and Warranties of the Selling Stockholders. Each
Selling Stockholder represents and warrants to, and agrees with, the
Underwriters as of the date hereof, the Effective Date, the Closing Date and, if
later, the Option Closing Date, as follows:
(a) Such Selling Stockholder has now and (if such Selling
Stockholder has agreed to sell Shares on the Option Closing Date) will have on
the Option Closing Date, good, valid and marketable title to the Shares to be
sold by such Selling Stockholder to the Underwriters, free and clear of any
liens, charges, claims, encumbrances, pledges, security interests, restrictions,
shareholders' agreements, voting trusts, community property rights or defects in
title whatsoever; such Selling Stockholder has full right, power and authority
to sell, transfer and deliver the Shares to be sold by it under this Agreement;
and upon delivery of such Shares and payment of the purchase price therefor as
contemplated in this Agreement, each of the Underwriters will receive good and
marketable title to the Shares purchased by it from the Selling Stockholders,
free and clear of any lien, charge, claim, encumbrance, pledge, security
interest, restriction, shareholders' agreement, voting trust, community property
right or defect in title whatsoever; and other than as described in the
Registration Statement and the Prospectus or created hereby, there are no
outstanding options, warrants, rights, or other agreements or arrangements
requiring such Selling Stockholder at any time to transfer any Common Stock to
be sold hereunder by such Selling Stockholder.
(b) Such Selling Stockholder has all necessary partnership
power and authority to enter into this Agreement and a Custody Agreement and
Power of Attorney (as defined in paragraph (h) below) and to consummate the
transactions provided for herein and therein; and each of this Agreement and a
Custody Agreement and Power of Attorney has been duly authorized, executed and
delivered by such Selling Stockholder. Each of this Agreement and Custody
Agreement and Power of Attorney constitutes a legal, valid and binding agreement
of such Selling Stockholder
- 18 -
19
enforceable against such Selling Stockholder in accordance with its respective
terms (assuming due execution and delivery thereof by the Underwriters and the
Company or the Custodian (as defined below), as the case may be, 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. Such Selling Stockholder's
execution and delivery of each of this Agreement and a Custody Agreement and
Power of Attorney, the performance hereunder and thereunder and consummation of
the transactions contemplated herein and therein by such Selling Stockholder,
does not and will not (with the giving of notice or the passage of time or both)
conflict with or result in a breach of, or default under, the partnership
agreement and other similar organizational documents of such Selling
Stockholder, any material indenture, mortgage, deed of trust, voting trust
agreement, stockholders' agreement, note, loan or credit agreement, or other
agreement or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder is or may be bound or to which any of its property is
or may be subject, or, in any material respect, any indebtedness, statute,
judgment, decree, order, rule or regulation applicable to such Selling
Stockholder of any arbitrator, court, regulatory body or administrative agency
or other governmental agency or body, domestic or foreign, having jurisdiction
over such Selling Stockholder or any of its activities or properties.
(c) Such Selling Stockholder has reviewed and is familiar
with the Registration Statement, the registration statement originally filed
with the Commission and each amendment thereto, the Prospectus and each
preliminary prospectus. Neither the Registration Statement nor the Prospectus
contains any untrue statement (i) of a material fact relating to such Selling
Stockholder or omits to state any material fact relating to such Selling
Stockholder and (ii) to the actual knowledge of such Selling Stockholder of any
other material fact, or omits to state any other material fact, in each case
necessary in order to make the statements therein, as to the Prospectus in the
- 19 -
20
light of the circumstances under which they were made, not misleading. The
aggregate obligations of a Selling Stockholder pursuant to (ii) of this Section
2 and any recovery thereunder shall (1) be proportional to the number of Shares
sold by such Selling Stockholder to the total number of Shares sold in the
offering, and (2) together with any other liability of such Selling Stockholder
referred to in Section 8(f), not exceed the product of (A) the public offering
price per share for the Common Stock less the applicable underwriting discount
times (B) the number of Shares sold by such Selling Stockholder. All information
furnished by or on behalf of such Selling Stockholder for use in the
Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto is correct and complete in all material
respects.
(d) There is no action, suit, proceeding, inquiry or
investigation, pending or, to the knowledge of such Selling Stockholder,
threatened against such Selling Stockholder or to which its property is subject
which (i) challenges the validity of this Agreement or of any action taken or to
be taken by such Selling Stockholder hereunder or (ii) which is required to be
disclosed in the Registration Statement and the Prospectus.
(e) Such Selling Stockholder has not taken, and will not
take, directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation under the Exchange Act of the price of any security of the Company
to facilitate the sale or resale of the Shares.
(f) Any certificate signed by or on behalf of such Selling
Stockholder and delivered to the Underwriters or to counsel for the Underwriters
shall be deemed a representation and warranty by such Selling Stockholder to the
Underwriters as to the matters covered thereby.
(g) As soon as such Selling Stockholder is advised thereof,
such Selling Stockholder will advise the Representative and confirm such advice
in writing, (i) of receipt by such Selling Stockholder, or by any representative
of such Selling Stockholder, of any communication from the Commission relating
to the
- 20 -
21
Registration Statement, the Prospectus or any preliminary prospectus, or any
notice or order of the Commission relating to the Company or such Selling
Stockholder in connection with the transactions contemplated by this Agreement
and (ii) of the happening of any event relating to such Selling Stockholder
during any time when a prospectus relating to the Shares is required to be
delivered that in the judgment of such Selling Stockholder makes any statement
relating to such Selling Stockholder made in the Registration Statement or the
Prospectus untrue or that requires the making of any changes in the Registration
Statement or the Prospectus in order to make the statements therein, in light of
the circumstances in which they were made, not misleading.
(h) Each of the Selling Stockholders has executed and
delivered a custody agreement and power of attorney (the "Custody Agreement and
Power of Attorney"), among Mesirow Financial, Inc. (the "Custodian"), Xxxxxx X.
Xxxxxx, Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx, Xx. (hereinafter collectively
and individually referred to as the "Attorney-in-Fact") and such Selling
Stockholder, to the Representative. Certificates in negotiable form, with blank
stock powers, for the Shares have been placed in custody, for the purpose of
making delivery of such Shares under this Agreement and the Custody Agreement
and Power of Attorney. Each of the Selling Stockholders agrees that the Shares
represented by the certificates held in custody for it under the Custody
Agreement and Power of Attorney are for the benefit of and coupled with and
subject to the interest hereunder of the Custodian, the Attorney-in-Fact, the
Underwriters and the Company, that the arrangements made by such Selling
Stockholder for such custody and the appointment of the Custodian and the
Attorney-in-Fact by such Selling Stockholder are irrevocable, and that the
obligations of such Selling Stockholder hereunder shall not be terminated by
operation of law, whether by the liquidation of such Selling Stockholder or the
occurrence of any other event. If such Selling Stockholder should be liquidated
or if any other such event should occur before the delivery of the Shares
hereunder, certificates for the Shares shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement and actions taken by
the Attorney-in-Fact and the Custodian pursuant to the
- 21 -
22
Custody Agreement and Power of Attorney shall be as valid as if such liquidation
or other event had not occurred, regardless of whether or not the Custodian or
the Attorney-in-Fact, or either of them, shall have received notice thereof.
(i) Such Selling Stockholder will deliver to the
Representative prior to or on the Effective Date a properly completed and
executed United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell an aggregate of
1,000,000 Firm Shares and the Selling Stockholders severally agree to sell an
aggregate of 400,000 Firm Shares to the Underwriters in the respective amounts
set forth in Schedule II, and the Underwriters, severally and not jointly, agree
to purchase from the Company and such Selling Stockholders, at the price per
share set forth below, the number of Firm Shares set forth in Schedule I
opposite the name of such Underwriter, subject to such adjustment as the
Representative in its discretion shall make to eliminate any sales or purchases
of fractional shares, plus any additional numbers of Firm Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 12 hereof.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements, herein contained, but subject to other terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters to purchase up to an additional 105,000 Option Shares and the
Selling Stockholder so listed in Schedule II hereby grants an option to the
Underwriters to purchase up to an additional 105,000 Option Shares, each Option
Share to be purchased at the same purchase price per share set forth below to be
paid by the Underwriters to the Company for the Firm Shares. The options granted
hereby will expire 30 days after the effective date of this Agreement and may be
exercised in whole or in part
- 22 -
23
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 Representative to the Company and the Selling Stockholder setting
forth the number of Option Shares as to which the several Underwriters are then
exercising the option and the time and date of payment and delivery for such
Option Shares. Option Shares shall be sold by the Company and the Selling
Stockholder in the ratio of one to one, subject to such adjustment as the
Representative in its discretion shall make to eliminate any sale or purchase of
fractional shares. Any such time and date of delivery (an "Option Closing Date")
shall be determined by the Representative, but shall not be later than three
full business days after the exercise of said option, nor in any event prior to
Closing Date, as hereinafter defined, unless otherwise agreed upon by the
Representative and the Company and such Selling Stockholder. 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 I hereto
opposite the name of such Underwriter bears to the total number of Firm Shares,
subject in each case to such adjustments as the Representative in its discretion
shall make to eliminate any sales or purchases of fractional shares. 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 Xxxxxx & Xxxxxx, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall be agreed upon
by the Representative and the Company. Such delivery and payment shall be made
at 10:00 a.m. (New York City time) three (3) days after the Effective Date or at
such other time and date as shall be agreed upon by the Representative, the
Company, and the Attorney-in-Fact (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
- 23 -
24
for, the Option Shares shall be made at the above mentioned office of Xxxxxx &
Xxxxxx or at such other place as shall be agreed upon by the Representative and
the Company, on each Option Closing Date as specified in the notice from the
Representative to the Company. Delivery by the Company and the Custodian of the
certificates for the Firm Shares and the Option Shares, if any, shall be made to
the Representative for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representative of the
purchase price for the Firm Shares and the Option Shares, if any, to the order
of the Company or the applicable Selling Stockholder, as the case may be, in
immediately available funds. Certificates for the Firm Shares and the Option
Shares, if any, shall be in definitive, fully registered form, shall bear no
restrictive legends and shall be in such denominations and registered in such
names as the Representative may request in writing at least two (2) business
days prior to 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 Representative at such office or such other place as the
Representative 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.
The purchase price per Share to be paid by each of the
Underwriters, severally and not jointly, to the Company and the Selling
Stockholders for the Shares purchased hereunder will be the same for each Share
and will be $[_____] per share. Neither the Company nor the Selling Stockholders
shall be obligated to sell any Shares hereunder unless all Firm Shares to be
sold by the Company and the Selling Stockholders are purchased and paid for
hereunder. In accordance with the terms hereof, the Company and the Selling
Stockholders agree to issue and sell, against payment therefor, the Firm Shares
to the Underwriters.
4. Public Offering of the Shares. As soon after the Registration
Statement becomes effective as the Representative deems advisable, the
Underwriters shall make a public offering of the Shares (other than to residents
of or in any jurisdiction in which
- 24 -
25
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 Representative
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
Representative, in its sole discretion deems advisable.
5. Covenants of the Company. The Company covenants and agrees with
each of the Underwriters as follows:
(a) 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, except pursuant to Section 1(a) at any
time, whether before or after the Effective Date: (i) file any amendment to the
Registration Statement or supplement to the Prospectus; or (ii) file any
document under the Exchange Act before termination of the offering of the Shares
by the Underwriters; of which the Representative shall not previously have been
advised and furnished with a copy, or to which the Representative shall have
reasonably objected or which is not in compliance with the Act, the Exchange Act
or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representative and confirm the notice in
writing, (i) when the Registration Statement becomes effective, 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 any preliminary
prospectus or the Prospectus, or any amendment or supplement thereto, or the
institution of any proceeding for that purpose, (iii) of the issuance by any
state securities commission of any proceedings for the suspension of the
qualification of the Shares 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
- 25 -
26
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 use its best efforts to obtain
promptly the lifting of such order.
(c) The Company shall, to the extent required, file the
Prospectus (in form and substance satisfactory to the Representative) 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 Representative, pursuant to Rule 424(b)(4)).
(d) The Company will give the Representative 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 Shares which differs
from the corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Rules and Regulations),
will furnish the Representative 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 Representative shall
object.
(e) The Company shall endeavor in good faith, in cooperation
with the Representative, at or prior to the time the Registration Statement
becomes effective, to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as the Representative may reasonably
designate, 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 Representative agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and make such statements or
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27
reports at such times as are or may reasonably be required by the laws of such
jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be
delivered under the Act, the Company shall use all reasonable efforts to comply
with all requirements imposed upon it by the Act and the Exchange Act, as now
and hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Shares 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 Shares is required to be delivered under the Act, any event shall have
occurred as a result of which, in the opinion of counsel for the Company or
Underwriters' Counsel (as defined below), the Prospectus, as then amended or
supplemented, includes an untrue statement of a material fact or omits to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend the Prospectus to comply with the Act, the Company will
notify the Representative 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 the Representative, and
the Company will furnish to the Representative copies of such amendment or
supplement in the numbers reasonably requested.
(g) 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.
(h) The Company will furnish to the Representative or on the
Representative's order, without charge, at such place as the Representative may
reasonably 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
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28
prospectus prepared after the Effective Date, in each case as soon as available
and in such quantities as the Representative may reasonably request.
(i) On or before the Effective Date, the Company shall deliver duly
executed legally binding and enforceable agreements in form and substance
satisfactory to the Representative pursuant to which each of the Company's
officers (including all officers named in the table under the heading
"Management" in the Prospectus), directors and beneficial owners of 5% or more
of the Company's outstanding Common Stock shall agree not to, directly or
indirectly, issue, offer to sell, sell, grant any option for the sale of,
assign, transfer, pledge, hypothecate or otherwise encumber or dispose of any
shares of Common Stock or securities convertible into or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
owned as of the Effective Date (either pursuant to Rule 144 of the Rules and
Regulations or otherwise) or dispose of any beneficial interest therein
for a period of 180 days from the Effective Date without the prior written
consent of the Representative (the "Lockup").
(j) Neither the Company nor the Subsidiary will take, and each of
the Company and the Subsidiary will use their best efforts to cause each of
their respective officers, directors and affiliates (within the meaning of the
Rules and Regulations) not to 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 under the Exchange Act of the price of any
security of the Company.
(k) The Company shall apply the net proceeds from the sale of the
Shares substantially in the manner set forth under "Use of Proceeds" in the
Prospectus. No portion of the net proceeds will be used, directly or indirectly
to acquire any securities issued by the Company.
(l) 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 Rules and Regulations, and all such reports, forms
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29
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.
(m) 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 consolidated 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 Accountants, as stated in their letters to be furnished
pursuant to Section 7(j) hereof.
(n) The Company shall cause the Shares sold by the Company in the
offering to be listed on the NASDAQ and listed on the Pacific Stock Exchange
through the Option Closing Date and during such period as the Prospectus as
amended or supplemented is required by law to be delivered in connection with
sales of Shares by any Underwriter or dealer and shall use its best efforts to
maintain for a period of five (5) years from the date hereof the NASDAQ
quotation of the Common Stock or quotation of the Common Stock on the Nasdaq
Stock Market's National Market, if such quotation is approved.
(o) For a period of two (2) years from the Closing Date, the
Company may extend an invitation to the Representative to attend meetings of the
Board of Directors of the Company (the "Board"). The Company shall reimburse the
Representative's designee for his or her out-of-pocket expenses reasonably
incurred in connection with his or her attendance of the Board meetings.
(p) For a period equal to the lesser of (i) seven years from the
date hereof, and (ii) the sale to the public of the Warrant Shares, the Company
will not take any action or actions which may prevent or disqualify the
Company's use of Form S-1, or if applicable S-2 or S-3 (or other appropriate
form), for the registration under the Act of the Warrant Shares.
(q) The Company shall use its best efforts to continue its
inclusion in Standard & Poor's Corporation
- 29 -
30
Descriptions or Xxxxx'x OTC Manual for a period of not less than five (5) years,
except in the event the Common Stock is approved for quotation on the Nasdaq
Stock Market's National Market.
(r) The Company shall furnish to the Representative, within ninety
(90) days following the Option Closing Date, three (3) bound volumes of all
papers and documents utilized in the offering.
(s) Following the Effective Date, the Company shall, at its sole
cost and expense, prepare and file such blue sky trading applications with such
jurisdictions as the Representative may reasonably request after consultation
with the Company.
(t) The Company shall execute the Representative's Warrant
Agreement on or before the Closing Date, and shall issue to the Representative,
on behalf of itself and its affiliates on the Closing Date the Representative's
Warrants.
6. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company hereby agrees to
pay all expenses and fees (other than fees of counsel to the Underwriters,
except as provided in (iv) below) incident to the performance of the obligations
of the Company under this 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,
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement, each preliminary prospectus and the
Prospectus and any amendments and supplements thereto and the printing, mailing
and delivery of this Agreement, the Selected Dealer Agreements, the Agreement
Among Underwriters, Underwriters' Questionnaires, Custody Agreement and Power of
Attorney and related documents, including the cost of all copies thereof
supplied to the Underwriters in quantities as hereinabove stated, (iii) the
printing, engraving, issuance and delivery of the Shares including any transfer
or other taxes payable thereon, (iv) the qualification of the Shares under
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31
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" and the "Supplemental Blue Sky
Memorandum," if any, and disbursements and fees of counsel in connection
therewith, (v) costs and expenses in connection with the "road show,"
information meetings and presentations and bound volumes, (vi) fees and expenses
of the transfer agent, (vii) the fees payable to the NASD, (viii) the fees and
expenses incurred in connection with the listing of the Shares to be sold by the
Company on the NASDAQ and the Pacific Stock Exchange and (ix) advertising costs
and expenses including "tombstone" advertisements and prospectus memorabilia up
to $7,500.
(b) Each of the Selling Stockholders agrees that it will pay all
stock transfer taxes, stamp duties and other similar taxes, if any, payable (i)
upon the sale, issuance or delivery of the Shares to be sold by such Selling
Stockholder to the Underwriters, and (ii) in connection with the consummation by
such Selling Stockholder of any of its obligations under this Agreement, and
further authorizes the payment of any such amount by deduction from the proceeds
of the Shares to be sold by such Selling Stockholder under this Agreement.
(c) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 6, it will pay to the
Representative a non-accountable expense allowance equal to $75,000, of which
$25,000 has been paid to date. The Company will pay $50,000 on the Closing Date
by certified or bank cashier's check or, at the election of the Representative,
by deduction from the proceeds of the offering contemplated herein.
(d) Each of the Selling Stockholders is responsible for payment of
underwriters' discounts and commissions attributable to the Shares sold by such
Selling Stockholder and an allocable portion of the expenses of counsel for the
Selling Stockholders above $[ ].
7. Conditions of the Underwriter's Obligations. The obligations of
the Underwriters hereunder shall be
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32
subject to the continuing accuracy of the representations and warranties of the
Company and the Selling Stockholders herein as of the date hereof and as of the
Closing Date and, if later, the Option Closing Date, as if they had been made on
and as of the Closing Date or the Option Closing Date, as the case may be; the
accuracy on and as of the Closing Date, or, if later, the Option Closing Date,
of the statements of the officers or representatives of the Company and of the
Selling Stockholders made pursuant to the provisions hereof; and the performance
by each of the Company and such Selling Stockholder on and as of the Closing
Date and, if later, the Option Closing Date, of each of its covenants and
obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 P.M., New York time, on the date of this Agreement or such later
date and time as shall be consented to in writing by Representative, and, at the
Closing Date and, if later, the Option Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued under the
Act 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.
(b) The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representative's opinion, is material, or omits to state a
fact which, in the Representative's 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 Representative's opinion, is material, or omits to state a
fact which, in the Representative's opinion, is material or is necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(c) The Underwriters shall have received an opinion from Xxxxxx &
Xxxxxx ("Underwriters' Counsel"),
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33
dated the Closing Date and, if later, the Option Closing Date, which opinion
shall be satisfactory to the Representative.
(d) The Underwriters shall have received an opinion from Xxxxxxx
Xxxxxxx & Xxxxxx P.L.L., counsel to the Company, dated the Closing Date, and, if
later, the Option Closing Date, in a form satisfactory to the Representative.
(e) The Underwriters shall have received an opinion from Sidley &
Austin, counsel to the Selling Stockholders, dated the Closing Date, and, if
later, the Option Closing Date, in a form satisfactory to the Representative.
(f) On or prior to each of the Closing Date and the Option Closing
Date, if any, the Representative and Underwriters' Counsel shall have been
furnished such documents, certificates and opinions as they may reasonably
require for the purpose of enabling Underwriters' Counsel to review or pass upon
the matters contemplated by the opinion referred to in subsection (c) of this
Section 7, or in order to evidence the accuracy, completeness or satisfaction of
any of the representations, warranties or conditions herein contained.
(g) Prior to each of the Closing Date and each Option Closing Date,
if any (i) there shall have been no material adverse change nor development
involving a prospective change in the business, properties, business prospects,
results of operations or condition (financial or otherwise) of the Company and
the Subsidiary taken as a whole, 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 either
Company or the Subsidiary, from the latest date as of which the financial
condition of any of the Company or the Subsidiary is set forth in the
Registration Statement and Prospectus which is adverse to the Company and the
Subsidiary taken as a whole; (iii) neither the Company nor the Subsidiary shall
be in default under any
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34
provision of any instrument relating to any outstanding indebtedness which
default may materially adversely affect the business, properties, business
prospects, results of operations or condition (financial or otherwise) of the
Company and the Subsidiary taken as a whole; (iv) no amount of the assets of any
of the Company or the Subsidiary shall have been pledged or mortgaged, except as
set forth in the Registration Statement and Prospectus; (v) no action, suit or
proceeding, at law or in equity, shall have been pending or to its knowledge
threatened against either the Company or the Subsidiary, or affecting either of
their respective properties or businesses 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,
properties, business prospects, results of operations or condition (financial or
otherwise) of the Company and the Subsidiary taken as a whole, except as set
forth in the Registration Statement and Prospectus; and (vi) Xxxxx Xxxx shall
continue to serve the Company in his present capacity.
(h) At each of the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received a certificate of the Company as to (i)
below 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 has been issued, and no proceedings for that
purpose have been instituted or are pending or, to the
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35
best of each of such person's knowledge, are contemplated or
threatened under the Act; and
(iii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus and except as disclosed or contemplated therein, none of
the Company or the Subsidiary 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; the Company has
not paid or declared any dividends or other distributions on its
Common Stock; none of the Company or the Subsidiary has entered
into any transactions not in the ordinary course of business; and
there has not been any change in the capital stock or long-term
debt or any increase in the short-term borrowings (other than any
increase in the short-term borrowings in the ordinary course of
business) of either the Company or the Subsidiary; neither the
Company nor the Subsidiary has sustained any material loss or
damage to its property or assets, whether or not insured; and there
is no litigation which is pending, or, to the best of such person's
knowledge, threatened against any of the Company or the Subsidiary
which is required to be set forth in an amended or supplemented
Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in this
subsection (h) are to such documents as amended and supplemented at the date of
such certificate.
(i) At the Closing Date the Underwriters shall have received a
certificate from each Selling Stockholder, executed on its behalf by the
general partner thereof, dated the Closing Date, to the effect that the
representations and warranties of such Selling Stockholder in this Agreement
are true and correct, as
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36
if made on and as of the Closing Date and such Selling Stockholder 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.
(j) Concurrently with the execution and delivery of this Agreement,
the Accountants shall have furnished to the Representative a letter, dated the
date of its delivery, addressed to the Representative and the Company and in
form and substance satisfactory to the Representative, confirming that they are
independent accountants with respect to the Company as required by the Act and
the Rules and Regulations and with respect to certain financial and other
statistical and numerical information contained in the Registration Statement.
(k) At the Closing Date and, if later, the Option Closing Date, the
Accountants shall have furnished to the Representative a letter, dated the date
of its delivery, which shall confirm, on the basis of a review in accordance
with the procedures set forth in the letter from the Accountants, that nothing
has come to their attention during the period from the date of the letter
referred to in the prior paragraph to a date (specified in the letter) not more
than five days prior to the Closing Date or the Option Closing Date, as the case
may be, which would require any change in their letter dated the date hereof if
it were required to be dated and delivered at the Closing Date and the Option
Closing Date.
(l) No order suspending the sale of the Shares in any jurisdiction
designated by the Representative 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 to its
knowledge or that of the Company shall be contemplated.
(m) The Company shall have entered into the Representative's
Warrant Agreement on or before the Closing Date, and on the Closing Date, the
Company shall issue to the Representative, on behalf of itself and its
affiliates, the Representative's Warrants,
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37
which warrants shall entitle the holders thereof to purchase an aggregate of
66,563 shares of Common Stock. The Representative's Warrants shall be
exercisable at a price of $8.00 per share of Common Stock for a period
terminating on December 23, 2001. The Representative's Warrant Agreement and
form of Representative's Warrants shall be substantially in the form filed as
Exhibit 4.11 to the Registration Statement.
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 Representative may terminate this
Agreement or, if the Representative so elects, it my 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, including specifically each person who may be substituted for an
Underwriter (as provided in Section 12 hereof) and each person, if any, who
controls any Underwriter ("controlling person") within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions in
respect thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever), as such are
incurred, to which such 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
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 or Common Stock of the Company issued or issuable
upon exercise of the warrants issued pursuant to the Warrant Agreement; or (iii)
in any application or other
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38
document or written communication (in this Section 8 collectively called
("application") executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Common
Stock under the securities laws thereof or filed with the Commission, any state
securities commission or agency, the NASDAQ or any securities exchange; or the
omission or alleged omission therefrom of a material fact necessary to make any
statement therein not misleading (in the case of the Prospectus in the light of
the circumstances under which they were made), unless such statement or omission
was made in reliance upon and in conformity with information relating to any
Underwriter furnished in writing to the Company by or on behalf of such
Underwriter expressly for inclusion in the Prospectus or the Registration
Statement; PROVIDED HOWEVER, that the foregoing indemnification with respect to
each preliminary prospectus shall not inure to the benefit of any Underwriter if
a copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to the person asserting any such losses,
claims, damages, expenses or liabilities, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage, expense or liability.
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 Selling Stockholder agrees to indemnify and hold harmless
each of the Underwriters, including specifically each person who may be
substituted for an Underwriter (as provided in Section 12 hereof) and each
person, if any, who controls any Underwriter ("controlling person") within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all losses, claims, damages, expenses or liabilities, joint or several
(and actions in respect thereof), whatsoever (including but not limited to any
and all expenses whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, commenced or
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39
threatened, or any claim whatsoever), as such are incurred, to which such
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 any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus (as from time to time
amended and supplemented), or the omission or alleged omission therefrom of a
material fact necessary to make any statement therein not misleading (in the
case of the Prospectus, in the light of the circumstances under which they were
made), but only with respect to statements or omissions made relating to such
Selling Stockholder, unless such statement or omission was made in reliance upon
and in conformity with information relating to any Underwriter furnished in
writing to the Company by or on behalf of such Underwriter expressly for
inclusion in the Prospectus or the Registration Statement; PROVIDED HOWEVER,
that the foregoing indemnification with respect to each preliminary prospectus
shall not inure to the benefit of any Underwriter if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to the person asserting any such losses, claims, damages, expenses
or liabilities, if required by law so to have been delivered, at or prior to the
written confirmation of the same of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, expense or liability.
The indemnity agreement in this subsection (b) shall be in addition
to any liability which such Selling Stockholder may have at common law or
otherwise.
(c) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, each other person, if any,
who controls the Company within the meaning of the Act, and each Selling
Stockholder, such Selling Stockholder's general partners and the officers and
directors thereof and each of the persons, if any,
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40
who controls such Selling Stockholder within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company and such Selling Stockholder to the Underwriters but
only with respect to statements or omissions, if any, made in the Prospectus or
the Registration Statement in reliance upon, and in strict conformity with,
written information furnished to the Company with respect to any Underwriter by
or on behalf of such Underwriter expressly for use in the Prospectus or the
Registration Statement.
(d) 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 is brought
against any indemnified party, and it notifies an indemnifying party or parties
of the commencement thereof, the indemnifying party or parties will be entitled
to participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties, unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action, (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
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41
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 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 or separate but similar
and related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in the 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 is not unreasonably withheld.
(e) In order to provide for just and suitable 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 in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by the respective contributing parties and the
party to be indemnified from the offering of the Shares 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 (A) above but also the relative fault of each of the contributing
parties and the party to be indemnified 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
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42
the Company and one or more Selling Stockholders are contributing parties and
the Underwriters are the indemnified party, the relative benefits received by
the Company and such Selling Stockholder 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 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, a Selling
Stockholder 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 in
respect thereof) referred to above in this subparagraph (e), shall be deemed to
include any legal or other expense reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subparagraph (e), the Underwriters shall
not be required to contribute any amount in excess of the underwriting discount
applicable to the Shares purchased by the Underwriters hereunder. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, each person,
if any, who controls the Company within the meaning of the Act, each officer of
the Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subparagraph (e). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this subparagraph (e), 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
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43
from any obligation it or they may have hereunder or otherwise than under this
subparagraph (e), except to the extent that such party or parties has been
prejudiced in any material respect 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.
(f) The aggregate obligations of a Selling Stockholder pursuant to
this Section 8, together with the aggregate obligations of such Selling
Stockholders for a breach of Section 2(c), (d)(ii) and (f) with respect to any
matters covered by Section 2(c) and (d)(ii), shall not exceed the product of (A)
the public offering price per share for the Common Stock less the applicable
underwriting discount times (B) the number of Shares sold by such Selling
Stockholder.
9. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company or of each of the Selling
Stockholders 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 each of the Selling Stockholders, 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, each of the Selling Stockholders, or any controlling person, and
shall survive termination of this Agreement or the issuance and delivery of the
Shares to the Underwriters.
10. Effective Date. 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 Representative, in its discretion, shall release the Shares for
the 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 Representative of telegrams to
securities dealers
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44
releasing such shares for offering or the release by the Representative for
publication of the first newspaper advertisement which is subsequently published
relating to the Shares.
11. Termination.
(a) The Representative shall have the right to terminate this
Agreement, (i) if any calamitous domestic or international event or act or
occurrence has materially disrupted, or in the Representative's opinion will in
the immediate future materially disrupt, general securities markets in the
United States; or (ii) if trading on the New York Stock Exchange, the American
Stock Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction; or (iii) if the United States shall have become
involved in a war or major hostilities; or (iv) if a banking moratorium has been
declared by a New York State or federal authority; or (v) if a moratorium in
foreign exchange trading has been declared; or (vi) if the Company or the
Subsidiary shall have sustained a loss material or substantial to the Company
and the Subsidiary taken as a whole 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 Representative's opinion,
make it inadvisable to proceed with the delivery of the Shares; or (vii) if
there shall have been such material adverse change in the conditions or
prospects of the Company and the Subsidiary taken as a whole, or such material
adverse general market conditions as in the Representative's opinion would make
it inadvisable to proceed with the offering, sale and/or delivery of the Shares.
(b) If this Agreement is terminated by the Representative in
accordance with the provisions of Section 7 or Section 11 in a situation where
termination pursuant to Section 12(b) does not apply, the Company shall promptly
reimburse and indemnify the Underwriters for the amount of all of their
out-of-pocket expenses, including the fees and
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45
disbursements of counsel for the Underwriters (less amounts previously paid
pursuant to Section 6(c) above), provided that in the event of such termination
pursuant to Section 11(a), such amount shall not exceed $40,000, of which
$25,000 has been paid to date. Except as otherwise provided in the immediately
preceding sentence, any election hereunder or any termination of this Agreement
(including, without limitation, pursuant to Section 7 hereof), and whether or
not this Agreement is otherwise carried out, the provisions of Section 6 and
Section 8 shall not be in any way affected by such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
12. Substitution of the Underwriters. If one or more of the
Underwriters shall fail (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 7 or Section 11
hereof) to purchase the Shares which it or they are obligated to purchase on
such date under this Agreement (the "Defaulted Securities"), the Representative
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not
exceed 10% of the total number of Firm Shares to be purchased on such date, the
non-defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of
the total number of Firm Shares, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in
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46
respect of any default of such Underwriter under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Representative shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements and the Representative shall provide the
Company notice of the Closing Date no less than 24 hours prior thereto.
13. 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
Representative at Xxxxxxxxxx & Co. Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Syndicate Department, with a copy to Xxxxxx & Xxxxxx, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxx, Esq. Notices to
the Company shall be directed to the Company at 0000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxx, Xxxxxxx 00000, Attention: Xx. Xxxxx Xxxx, with a copy to Xxxxxxx Xxxxxxx
& Xxxxxx P.L.L., One Cleveland Center, 20th Floor, 0000 Xxxx Xxxxx Xx.,
Xxxxxxxxx, Xxxx 00000, Attention: Xxxx X. Xxxxxx, Esq. Notices to the Selling
Stockholder shall be directed to Mesirow Private Equity Investments, Inc., 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxx, XX 00000, Attention: Xx. Xxxxxxx X. Xxxxxx, Xx.,
with a copy to Sidley & Austin, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000,
Attention: Xxxx X. Xxxx, Esq.
14. Parties. This Agreement shall inure solely to the benefit of
and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 8 hereof, and their
respective successors, legal representatives and assigns, and each of the
Selling Stockholders and their successors, legal representatives and assigns and
no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained. No purchaser of Shares from any Underwriter shall
be deemed to be successor by reason merely of such purchase.
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47
15. 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.
16. 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.
17. Representative of Underwriters. Pursuant to the Agreement Among
Underwriters dated the date hereof, Xxxxxxxxxx & Co. Inc., as the
Representative, is authorized by the Underwriters to enter into this Agreement
and to take all such action necessary or advisable in order to carry out the
provisions of this Agreement, including the sale and distribution of the Shares.
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48
If the foregoing correctly sets forth the understanding among the
Underwriters and the Company and the Selling Stockholder, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us.
Very truly yours,
NEW WEST EYEWORKS, INC.
By:______________________________
Name:
Title:
MESIROW CAPITAL PARTNERS II
MESIROW CAPITAL PARTNERS III
MESIROW CAPITAL PARTNERS IV
By: MESIROW FINANCIAL SERVICES, INC.,
general partner for each
By:______________________________
Name: Xxxxxxx X. Xxxxxx, Xx.
Title:
Confirmed and accepted as of
the date first above written:
XXXXXXXXXX & CO. INC.,
as Representative of the
several Underwriters named in
Schedule I hereto.
By: _______________________
Name:
Title:
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49
UNDERWRITERS
Number of Firm Shares
Name of Underwriter to be Purchased
------------------- ---------------
Xxxxxxxxxx & Co. Inc.
Mesirow Financial, Inc.
----------
Total 1,400,000
==========
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50
SELLING STOCKHOLDERS
Number of Firm Shares
Name of Selling Stockholder to be Sold
--------------------------- ----------
Mesirow Capital Partners II 106,642
Mesirow Capital Partners III 123,501
Mesirow Capital Partners IV 169,857
----------
Total 400,000
==========
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